U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended Commission File No. 33-9686
March 31, 1999
CENTRAL VIRGINIA BANKSHARES, INC.
Virginia 54-1467806
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2036 New Dorset Road
P. O. Box 39
Powhatan, Virginia 23139
(Address of Principal Executive Office)
(804) 598-4216
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No (not subject to filing requirements
for the past 90 days).
As of March 31, 1999, 1,916,991 shares were outstanding.
<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
QUARTERLY REPORT ON FORM 10-QSB
May 17, 1999
INDEX
<TABLE>
<CAPTION>
<S> <C>
Part I. Financial Information Page No.
Item 1 Financial Statements
Consolidated Balance Sheet - Three
Months Ended March 31, 1999 and 1998.....................................................................3
Consolidated Statement of Income - Three
Months Ended March 31, 1999 and 1998.....................................................................4
Consolidated Statement of Cash Flows - Three
Months Ended March 31, 1999 and 1998.....................................................................5
Note to Consolidated Financial Statements -
March 31, 1999 and 1998 (Unaudited)......................................................................6
Item 2. Management Discussion and Analysis of Financial
Condition and Results of Operations................................................................7
Part II. Other Information
Item 6 Exhibits and Reports on Form 8-K...................................................................13
Signatures.....................................................................................................14
</TABLE>
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<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
ASSETS March 31, 1999 March 31, 1998
------ -------------- --------------
<S> <C> <C>
Cash and due from banks $5,243,268 $4,395,602
Federal funds sold 0 7,958,000
-------------- --------------
Total cash and cash equivalents $5,243,268 $12,353,602
Securities available for sale 28,218,948 23,267,101
Securities held to maturity (approximate market
value 1999 $27,941,872; 1998 $18,519,614) 27,394,378 18,132,306
Mortgage loans held for sale 585,050 1,221,054
Loans, net 115,264,841 89,302,104
Bank premises and equipment, net 4,671,529 3,719,626
Accrued interest receivable 1,383,809 1,141,122
Other assets 2,222,215 2,669,309
-------------- --------------
Total assets $184,984,038 $151,806,224
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
Deposits:
Demand deposits $22,092,274 $18,854,183
Interest bearing demand deposits and NOW accounts 34,234,363 24,040,025
Savings deposits 19,155,250 14,893,757
Time deposits, $100,000 and over 15,465,108 13,332,699
Other time deposits 65,725,943 57,845,085
-------------- --------------
$156,672,938 $128,965,749
Federal funds purchased and securities sold under repurchase
agreements 5,339,128 941,213
FHLB advance 5,000,000 5,000,000
Note payable 36,000 45,000
Accrued interest payable 385,998 343,815
Other liabilities 367,917 353,481
-------------- --------------
Total liabilities $167,801,981 $135,649,258
-------------- --------------
STOCKHOLDERS' EQUITY
Capital stock, common, par value $1.25; authorized
6,000,000 shares; issued 1,916,991 shares 1999;
1,909,726 shares 1998 $2,396,239 $2,387,158
Surplus 4,271,392 4,173,923
Retained earnings 10,570,517 9,371,473
Accumulated other comprehensive income (56,091) 224,412
-------------- --------------
Total stockholders' equity $17,182,057 $16,156,966
-------------- --------------
Total liabilities and stockholders' equity $184,984,038 $151,806,224
============== ==============
Loan to Deposit Ratio 73.57% 69.24%
Book Value $8.96 $8.46
</TABLE>
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<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------------------------
1999 1998
---- ----
<S> <C> <C>
Interest income
Interest and fees on loans $2,494,015 $2,150,362
Interest on securities:
U.S. Government agencies and corporations 395,143 381,280
U.S. Treasury notes 31,554 26,525
States and political subdivisions 398,773 240,610
Other 86,932 18,913
Interest on federal funds sold 165 50,561
---------- ----------
Total interest income $3,406,582 $2,868,251
---------- ----------
Interest expense
Interest on deposits $1,485,316 $1,261,708
Interest on federal funds purchased and securities sold under
repurchase agreements 92,729 10,306
Interest, FHLB advance 73,125 73,125
Interest on note payable 720 900
---------- ----------
Total interest expense $1,651,890 $1,346,039
---------- ----------
Net interest income $1,754,692 $1,522,212
Provision for loan losses 49,500 49,499
---------- ----------
Net interest income after provision for loan losses $1,705,192 $1,472,713
Other income
Gain on sale of securities $0 $10,200
Service charges 202,516 138,238
Other 99,870 80,369
---------- ----------
Total other income $302,386 $228,807
Other expenses
Salaries and wages $617,800 $465,900
Pensions and other employee benefits 93,601 85,715
Occupancy expense 68,445 61,745
Equipment depreciation 96,850 83,676
Equipment repairs and maintenance 45,981 43,301
Advertising and public relations 49,534 59,766
Federal insurance premiums 5,476 4,547
Office supplies, telephone and postage 115,796 92,098
Taxes and licenses 35,217 29,646
Other operating expenses 243,814 171,382
---------- ----------
Total other expenses $1,372,514 $1,097,776
---------- ----------
Income before income taxes $635,064 $603,744
Income taxes 183,962 160,939
---------- ----------
Net income $451,102 $442,805
========== ==========
Per share of common stock:
Income before income taxes $0.33 $0.32
Net income $0.24 $0.23
Weighted average shares 1,914,779 1,907,792
Return on average assets 0.99% 1.22%
Return on average equity 11.07% 11.49%
</TABLE>
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<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash Flows for Operating Activities
Net Income $451,102 $442,805
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation 119,965 103,912
Provision for loans losses 49,500 49,499
Amortization and accretion on securities (23,088) (12,555)
Realized gain on sales of securities available for sale 0 (10,200)
Change in operating assets and liabilities:
(Increase) decrease in assets:
Mortgage loans held for sale 174,416 (889,704)
Accrued interest receivable 83,786 177,758
Other assets (13,796) (1,068,236)
Increase (decrease) in liabilities:
Accrued interest payable 10,221 16,052
Other liabilities 74,324 214,641
----------- -----------
Net cash provided by operating activities $926,430 ($976,028)
----------- -----------
Cash Flows from Investing Activities
Proceeds from maturities of securities held to maturity $425,000 $250,000
Purchase of securities held to maturity (190,000) (524,835)
Proceeds from sales and maturities of securities available for sale 605,972 2,465,521
Purchase of securities available for sale (299,750) (3,045,408)
Net increase in loans made to customers (5,577,297) (455,423)
Net purchases of premises and equipment (509,807) (283,241)
----------- -----------
Net cash (used in) investing activities ($5,545,882) ($1,593,386)
----------- -----------
Cash Flows from Financing Activities
Net increase in deposits $1,946,137 $6,292,208
Net increase (decrease) in federal funds purchased and securities
sold under repurchase agreements 258,936 (252,674)
Net proceeds from issuance of capital stock 36,258 40,258
Dividends paid (191,415) (181,191)
----------- -----------
Net cash provided by financing activities $2,049,916 $5,898,601
----------- -----------
Increase (decrease) in cash and cash equivalents ($2,569,536) $3,329,187
Cash and cash equivalents:
Beginning 7,812,804 9,024,415
----------- -----------
Ending $5,243,268 $12,353,602
=========== ===========
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest $1,641,669 $1,329,987
=========== ===========
Income Taxes $0 $0
== ==
</TABLE>
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<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999 and 1998
(Unaudited)
Note 1 Basis of Presentation
These interim financial statements are unaudited; however, such information
reflects all adjustments which are, in the opinion of management, necessary to a
fair statement of the results for the interim periods presented.
All adjustments are of a normal recurring nature.
Note 2 Accounting Change
On January 1, 1995, the Company adopted FASB Statement No. 114, Accounting by
Creditors for Impairment of a Loan. Statement No. 114 has been amended by FASB
Statement No. 118, Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures. Statement No. 114, as amended, requires that the
impairment of loans that have been separately identified for evaluation is to be
measured based on the present value of expected future cash flows or
alternatively, the observable market price of the loans or the fair value of the
collateral. However, for those loans that are collateral dependent (that is, if
repayment of those loans is expected to be provided solely by the underlying
collateral) and for which management has determined foreclosure is probable, the
measure of impairment of those loans is to be based on the fair value of the
collateral. Statement No. 114, as amended, also requires certain disclosures
about investments in impaired loans and the allowance for credit losses and
interest income recognized on those loans. The effect of adopting Statement No.
114, as amended, is immaterial to the interim financial statements presented
herein.
-6-
<PAGE>
ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company's net income totaled $451,102 in the first quarter of 1999,
an increase of 1.9% from the first quarter of 1998. The results for 1999 reflect
primarily an increase in net interest income resulting from an increase in
interest earning assets for the quarter. In addition, other income rose only by
32.2% in the current quarter compared to the same period last year. Net income
per fully diluted common share for the first quarter of 1999 was $.24 compared
to $.23 for the same period in 1998. The Company's annualized return on average
equity was 11.07% in the first quarter of 1999, compared to 11.49% for the first
quarter of 1998, while the return on average assets amounted to .99% and 1.22%
for these periods, respectively.
Net Interest Income. The Company's net interest income was $1,754,692
for the first quarter of 1999, compared to $1,522,212 for the first quarter of
1998. The increase in net interest income in 1999 was attributable primarily to
an increase in average interest earning assets as well as a change in the mix of
average interest earning assets. Average interest earning assets were $168.8
million for the first quarter of 1999, compared to $135.3 million for the first
quarter of 1998. The largest component change was in the average balance of
investment securities, which increased 35% from March 1998. The fully taxable
annualized yield on investment securities was 6.94% at March 31, 1999 compared
to 7.22% in the previous year.
The net interest margin is a measure of net interest income
performance. It represents the difference between interest income, including net
loan fees earned, and interest expense, reflected as a percentage of average
interest earning assets. The Company's net interest margin was 4.16% for the
first quarter of 1999, compared to 4.50% for the first quarter of 1998.
Non-Interest Income. For the first three months of 1999, non-interest
income totaled $302,386, an increase of 32.2%, or $73,579, from the same period
in 1998. Included in this increase is an increase in service charges on deposit
accounts of 46.5% or $64,278. This increase is due to the increase in the number
of deposit accounts and not an increase in the amount of the individual fees
charged. Fees received on mortgage loans originated for others increased 22.2%
to $67,141 in the first quarter of 1999.
Non-Interest Expenses. The Company's total non-interest expenses for
the first quarter of 1999 increased $274,738 or 25% compared to the same period
in 1998. Expenses related to salaries and employee benefits not treated as an
adjustment to the yield of loans originated in 1999 increased 28.9% compared to
the same period in 1998. This increase is attributable primarily to increased
staffing requirements as the Company has grown in size as well as staffing the
Cumberland branch office which was not in operation in the first quarter of
1998. Advertising and public relations expenses decreased 17.1% to $49,534. This
decrease is attributable to the first quarter of 1998 including expenses related
to the Bank beginning to utilize its new marketing information system as well as
preparing to open its new branch in Cumberland, Virginia.
Income Taxes. The Bank reported income taxes of $183,962 for the first
quarter of 1999, compared to $160,939 for the first quarter of 1998. These
amounts yielded effective tax rates of 29.0% and 26.7%, respectively. In
February, 1992 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". This
Statement superseded Statement of Financial Accounting Standards No. 96, and is
effective for fiscal years beginning after December 15, 1992. This statement was
implemented in March of 1993 and did not have a material effect upon the
financial position or results of operations of the Company.
-7-
<PAGE>
Financial Condition
Loan Portfolio. The Company is an active residential mortgage and
residential construction lender and generally extends commercial loans to small
and medium sized businesses within its primary service area. The Company's
commercial lending activity extends across its primary service area of Powhatan,
Cumberland and western Chesterfield Counties. Consistent with its focus on
providing community-based financial services, the Company does not attempt to
diversify its loan portfolio geographically by making significant amounts of
loans to borrowers outside of its primary service area.
The principal economic risk associated with each of the categories of
loans in the Company's portfolio is the creditworthiness of its borrowers.
Within each category, such risk is increased or decreased depending on
prevailing economic conditions. The risk associated with the real estate
mortgage loans and installment loans to individuals varies based upon employment
levels, consumer confidence, fluctuations in value of residential real estate
and other conditions that affect the ability of consumers to repay indebtedness.
The risk associated with commercial, financial and agricultural loans varies
based upon the strength and activity of the local economies of the Company's
market areas. The risk associated with real estate construction loans varies
based upon the supply of and demand for the type of real estate under
construction. Many of the Bank's real estate construction loans are for pre-sold
or contract homes.
At March 31, 1999, loans increased $5.7 million from December 31, 1998
and $26.0 million from March 31, 1998. The loan to deposit ratio was 73.57% at
March 31, 1999, compared to 70.81% at December 31, 1998 and 69.24% at March 31,
1998. As of March 31, 1999, real estate loans accounted for 53.9% of the loan
portfolio, consumer loans were 23.8%, and commercial and industrial loans
totaled 22.3% of the loan portfolio.
Asset Quality. Non-performing loans include non-accrual loans, loans 90
days or more past due and restructured loans. Non-accrual loans are loans on
which interest accruals have been discontinued. Loans which reach non-accrual
status may not be restored to accrual status until all delinquent principal and
interest has been paid, or the loan becomes both well secured and in the process
of collection. Restructured loans are loans with respect to which a borrower has
been granted a concession on the interest rate or the original repayment terms
because of financial difficulties.
The following table summarizes non-performing loans:
<TABLE>
<CAPTION>
March 31 December 31 March 31
1999 1998 1998
---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C>
Loans accounted for on a non-accrual basis $244 $237 $106
Loans contractually past due 90 days or
more as to interest or principal payments
(not included in non-accrual loans above) 494 358 590
Loans restructured and in compliance with
modified terms (not included in non-
accrual loans or loans contractually past
due 90 days or more above) - - -
---- ---- ----
TOTAL $738 $595 $696
==== ==== ====
</TABLE>
-8-
<PAGE>
Management is not aware of any other loans at March 31, 1999 which
involve serious doubts as to the ability of such borrowers to comply with the
existing payment terms.
Management has analyzed the potential risk of loss on the Company's
loan portfolio, given the loan balances and the value of the underlying
collateral, and has recognized losses where appropriate. Non-performing loans
are closely monitored on an ongoing basis as part of the Company's loan review
process. Management reviews the loan loss allowance at the end of each month.
Based primarily on the Company's loan classification system, which classifies
problem credits as substandard, doubtful or loss, additional provisions for
losses are made monthly. The ratio of the allowance for loan losses to total
loans was 1.13% at March 31, 1999; 1.14% at December 31, 1998; and 1.31% at
March 31, 1998, respectively. At March 31, 1999 the ratio of the allowance for
loan losses to non-performing loans was 178.6%, compared to 212.9% at December
31, 1998 and 170.0% at March 31, 1998.
Management evaluates non-performing loans relative to their collateral
value and makes appropriate reductions in the carrying value of those loans
based on that review. Management believes, based on its review, that the Company
has adequate reserves to cover any future write down that may be required on
these loans.
For each period presented, the provision for loan losses charged to
operations is based on management's judgment after taking into consideration all
factors connected with the collectibility of the existing portfolio. Management
evaluates the loan portfolio in light of economic conditions, changes in the
nature and value of the portfolio, industry standards and other relevant
factors. Specific factors considered by management in determining the amounts
charged to operations include internally generated loan review reports, previous
loan loss experience with the borrower, the status of past due interest and
principal payments on the loan, the quality of financial information supplied by
the borrower and the general financial condition of the borrower.
The provision for loan losses totaled $49,500 for the quarter ended
March 31, 1999 and $49,499 for the same period in 1998. In the opinion of
management, the provision charged to operations has been sufficient to absorb
the current year's net loan losses while continuing to increase the allowance
for loan losses.
Securities
The Company's securities portfolio serves several purposes. Portions of
the portfolio secure certain public and trust deposits. The remaining portions
are held as investments or used to assist the Company in liquidity and asset
liability management. During the first quarter of 1999, total securities
increased to $55.6 million or 30.0% of total assets at March 31, 1999.
The securities portfolio consists of two components, investment
securities and securities available for sale. Securities are classified as
investment securities when management has the intent and the Company has the
ability at the time of purchase to hold the securities to maturity. Investment
securities are carried at cost adjusted for amortization of premiums and
accretion of discounts. Securities to be held for indefinite periods of time are
classified as available for sale and accounted for at market value. Securities
available for sale include securities that may be sold in response to changes in
market interest rates, changes in the security's prepayment risk, increases in
loan demand, general liquidity needs and other similar factors. The Company's
recent purchases of investment securities have generally been limited to
securities of high credit quality with short to medium term maturities.
The fully taxable equivalent annualized average yield on the entire
portfolio was 6.94% for the first quarter of 1999, compared to 7.22% for the
same period in 1998. The market value of the entire portfolio exceeded the book
value by $433,343 at March 31, 1999.
-9-
<PAGE>
Deposits and Short-Term Borrowings
The Company's predominate source of funds is depository accounts. The
Company's deposit base is comprised of demand deposits, savings and money market
accounts and other time deposits. The Company's deposits are provided by
individuals and businesses located within the communities served.
Total deposits grew by $1,946,137, or 1.3% between December 31, 1998
and March 31, 1999. Deposits grew by $27.7 million, or 21.5% between March 31,
1998 and March 31, 1999. The average aggregate interest rate paid on deposits
was 4.50% in the first quarter of 1999, compared to 4.06% for the same period in
1998. The majority of the Company's deposits are higher yielding time deposits
because most of its customers are individuals who seek higher yields than those
offered on savings and demand accounts.
The following table is a summary of time deposits of $100,000 or more
by remaining maturities at March 31, 1999:
Time Deposits
(Dollars in thousands)
Three months or less $ 2,364
Three to twelve months 5,684
Over twelve months 7,417
-------
Total $15,465
Capital Resources
The assessment of capital adequacy depends on a number of factors such
as asset quality, liquidity, earnings performance and changing competitive
conditions and economic forces. The Company seeks to maintain a strong capital
base to support its growth and expansion activities, to provide stability to
current operations and to promote public confidence. The Company's capital
position continues to exceed regulatory minimums.
Banking regulations also require the Bank to maintain certain minimum
capital levels in relation to Bank Assets. Capital is measured using a leverage
ratio as well as based on risk-weighting assets according to regulatory
guidelines. A comparison of the Bank's actual regulatory capital as of March 31,
1999, with minimum requirements, as defined by regulation, is shown below:
<TABLE>
<CAPTION>
Minimum Actual
Requirements March 31, 1999
------------ --------------
<S> <C> <C>
Tier 1 risk-based capital 4.0% 12.73%
Total risk-based capital 8.0% 13.77%
Leverage ratio 3.0% 8.93%
</TABLE>
Liquidity and Interest Rate Sensitivity
Liquidity. Liquidity is the ability to meet present and future
financial obligations through either the sale or maturity of existing assets or
the acquisition of additional funds through liability management. Liquid assets
-10-
<PAGE>
include cash, interest bearing deposits with banks, federal funds sold,
investments and loans maturing within one year. The Company's ability to obtain
deposits and purchase funds at favorable rates determines its liability
liquidity. As a result of the Company's management of liquid assets and the
ability to generate liquidity through liability funding, management believes
that the Company maintains overall liquidity sufficient to satisfy its
depositors' requirements and meet its customers' credit needs.
Additional sources of liquidity available to the Company include, but
are not limited to, loan repayments, the ability to obtain deposits through the
adjustment of interest rates and the purchasing of federal funds. To further
meet its liquidity needs, the Company also has access to the Federal Reserve
System as well as the Federal Home Loan Bank of Atlanta. In the past, growth in
deposits and proceeds from the maturity of investment securities have been
sufficient to fund the net increase in loans.
Interest Rate Sensitivity. In conjunction with maintaining a
satisfactory level of liquidity, management must also control the degree of
interest rate risk assumed on the balance sheet. Managing this risk involves
regular monitoring of the interest sensitive assets relative to interest
sensitive liabilities over specific time intervals.
Effects of Inflation
Inflation significantly affects industries having high proportions of
fixed assets or high levels of inventories. Although the Company is not
significantly affected in these areas, inflation does have an impact on the
growth of assets. As assets grow rapidly, it becomes necessary to increase
equity capital at proportionate levels to maintain the appropriate equity to
asset ratios. Traditionally, the Company's earnings and high capital retention
levels have enabled the Company to meet these needs.
The Company's reported earnings results have been affected by
inflation, but isolating the effect is difficult. The different types of income
and expense are affected in various ways. Interest rates are affected by
inflation, but the timing and magnitude of the changes may not coincide with
changes in the consumer price index. Management actively monitors interest rate
sensitivity in order to minimize the effects of inflationary trends on interest
rates. Other areas of non-interest expenses may be more directly affected by
inflation.
Year 2000 Issue
The Company is committed to being a bank that will not have any
significant Year 2000 related problems. Our Year 2000 Project Committee,
comprised of senior management, and representatives from each major business
line and functional area of the Bank, continues to progress toward having all
the Bank's systems compliant. The Committee manages and monitors the process to
determine that all areas and systems have been reviewed, certified compliant and
where possible, tested.
Our objective is to eliminate or minimize the impact to internal bank
operations from Year 2000 problems that could affect any of our individual or
business customers, as well as our ability to deliver basic banking services.
Under current banking regulations, with regard to "Year 2000 Standards
for Safety and Soundness", there are several required processes and critical
dates that all financial institutions must meet:
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<PAGE>
<TABLE>
<CAPTION>
Process Completion Date CVB Status
------- --------------- ----------
<S> <C> <C>
Review Mission-Critical Systems for Y2K Readiness 12-31-98 Complete
Renovate and Test Mission-Critical Systems 03-31-99 Complete
Renovate and Test Non Mission-Critical Systems 06-30-99 In Process
Business Resumption Contingency Planning 09-30-99 In Process
Perform Customer Risk Assessments 03-31-99 Complete
Engage in Customer and Employee Awareness 09-30-99 In Process
</TABLE>
We are evaluating and monitoring, to the extent possible, the progress
of our external vendors and service providers in becoming Year 2000 compliant.
Naturally, there are many services and functions that are beyond the direct
control of the Bank, and we are developing a detailed contingency plan that will
address what we will do should any problems with these external providers occur.
This plan will include, among other things, moving to new vendors if our
existing vendors can not continue to provide services or stay in business.
The Company continues on schedule to meet all regulatory mandated
requirements for Year 2000 readiness, specifically:
o At this time 100% of our externally supported mission-critical
systems and services have been certified compliant. We
substantially completed all testing by March 31, 1999 as required
by regulation.
o The remaining non mission-critical systems should be certified
compliant and appropriately tested by June 30, 1999. This process
in currently almost 70% completed, and we anticipate no
significant problems in meeting this requirement.
o We have developed and continue to revise our Year 2000 business
resumption plan that will outline and direct our Bank's operations
in the event of any mission-critical system failures effecting a
core business process. This plan identifies the minimum service
levels associated with these core business processes. Real time
tests are schedule for this plan in the third and early fourth
quarters, to ensure its viability, and provide valuable experience
for our branch personnel.
o The cost of the entire process of becoming Year 2000 compliant
should be less than our preliminary estimate of $200,000. A
portion of this has already been expensed in the normal course of
business during 1998. The remainder is being expensed as incurred
or where appropriate, capitalized in 1999, in accordance with
generally accepted accounting principles. There is the likelihood
that some small final portion will be expensed in the first
quarter of 2000.
o We will be conducting a comprehensive internal information and
education process with all our associates regarding Year 2000
issues and contingency plans.
o Additional correspondence and informational material will be made
available to our customers beginning in July 1999 and continuing
through the end of the year.
The Company is proceeding on a well-planned process to have all systems
and core business functions ready for the Year 2000. At this time, the Company
believes that the most likely worst case Y2K scenario would not have a material
effect on the Company's results of operation, liquidity and financial condition
for the year ended December 31, 2000. The Company does not foresee a material
loss of revenue due to the Y2K issue.
-12-
<PAGE>
However, while the contingency plan is based on assessments of the likelihood of
occurrence of possible scenarios, the Company believes that no entity can
address the unlimited possible circumstances relating to Y2K issues. While
unlikely, it is acknowledged that the failure of the Company to successfully
implement its Y2K plan, or to adequately assess the likelihood of various events
relating to the Y2K issue, could have a material adverse effect on the Company's
results of operations and financial condition.
Forward-Looking Statements
Certain information contained in this discussion may include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements are generally identified by phrases
such as "the Company expects," "the Company believes" or words of similar
import. Such forward-looking statements involve known and unknown risks
including, but not limited to, changes in general economic and business
conditions, interest rate fluctuations, competition within and from outside the
banking industry, new products and services in the banking industry, risk
inherent in making loans such as repayment risks and fluctuating collateral
values, problems with technology utilized by the Company, changing trends in
customer profiles and changes in laws and regulations applicable to the Company.
Although the Company believes that its expectations with respect to the
forward-looking statements are based upon reliable assumptions within the bounds
of its knowledge of its business and operations, there can be no assurance that
actual results, performance or achievements of the Company will not differ
materially from any future results, performance or achievements expressed or
implied by such forward-looking statements.
ITEM 6 EXHIBITS AND REPORTS ON 8-K
(a) Exhibits:
27 Financial Data Schedule (filed herewith).
(b) Form 8-K. No reports were filed on Form 8-K in the
period for which this report is filed. on Form 8-K in
the period for which this report is filed.
-13-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
CENTRAL VIRGINIA BANKSHARES, INC.
(Registrant)
Date: May 17, 1999 /s/ Ralph Larry Lyons
------------------------------------------------
Ralph Larry Lyons, President and Chief Executive
Officer (Chief Financial Officer)
-14-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This summary financial information is qualified in its entirety by reference to
the Company's financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 5,243,268
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 28,218,948
<INVESTMENTS-CARRYING> 27,394,378
<INVESTMENTS-MARKET> 27,941,872
<LOANS> 115,264,841
<ALLOWANCE> 1,317,714
<TOTAL-ASSETS> 184,984,038
<DEPOSITS> 156,672,938
<SHORT-TERM> 5,339,138
<LIABILITIES-OTHER> 753,915
<LONG-TERM> 5,036,000
0
0
<COMMON> 2,396,239
<OTHER-SE> 14,785,818
<TOTAL-LIABILITIES-AND-EQUITY> 184,984,038
<INTEREST-LOAN> 2,490,015
<INTEREST-INVEST> 912,402
<INTEREST-OTHER> 165
<INTEREST-TOTAL> 3,406,582
<INTEREST-DEPOSIT> 1,485,316
<INTEREST-EXPENSE> 1,651,890
<INTEREST-INCOME-NET> 1,754,692
<LOAN-LOSSES> 49,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,372,514
<INCOME-PRETAX> 635,064
<INCOME-PRE-EXTRAORDINARY> 635,064
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 451,102
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
<YIELD-ACTUAL> 8.07
<LOANS-NON> 244,000
<LOANS-PAST> 494,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,267,000
<CHARGE-OFFS> 6,000
<RECOVERIES> 8,000
<ALLOWANCE-CLOSE> 1,318,000
<ALLOWANCE-DOMESTIC> 250,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,068,000
</TABLE>