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.
March 31, 2000 000-24002
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, 2000, 1,927,495 shares were outstanding.
<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
QUARTERLY REPORT ON FORM 10-QSB
May 15, 2000
INDEX
<TABLE>
<CAPTION>
Part I. Financial Information Page No.
- ------------------------------ --------
<S> <C>
Item 1 Financial Statements
Consolidated Balance Sheet -
March 31, 2000 and 1999............................................................................3
Consolidated Statement of Income - Three
Months Ended March 31, 2000 and 1999...............................................................4
Consolidated Statement of Cash Flows - Three
Months Ended March 31, 2000 and 1999...............................................................5
Notes to Consolidated Financial Statements -
March 31, 2000 and 1999 (Unaudited)................................................................6
Item 2 Management Discussion and Analysis of Financial
Condition and Results of Operations.......................................................7
Part II. Other Information
- ---------------------------
Item 1 Legal Proceedings........................................................................12
Item 6 Exhibits and Reports on Form 8-K.........................................................13
Signatures...............................................................................................14
</TABLE>
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<PAGE>
PART I
ITEM 1 FINANCIAL STATEMENTS
CENTRAL VIRGINIA BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
ASSETS March 31, 2000 March 31, 1999
------ -------------- --------------
<S> <C> <C>
Cash and due from banks $ 5,600,748 $ 5,243,268
Federal funds sold 0 0
------------ ------------
Total cash and cash equivalents $ 5,600,748 $ 5,243,268
Securities available for sale 18,689,086 28,218,948
Securities held to maturity (approximate market
value 2000 $26,078,576; 1999 $27,941,872) 26,614,967 27,394,378
Mortgage loans held for sale 244,800 585,050
Loans, net 131,415,552 115,264,841
Bank premises and equipment, net 4,490,917 4,671,529
Accrued interest receivable 1,686,291 1,383,809
Other assets 3,877,609 2,222,215
------------ ------------
Total assets $192,619,970 $184,984,038
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand deposits $ 21,917,197 $ 22,092,274
Interest bearing demand deposits and NOW accounts 32,497,514 34,234,363
Savings deposits 19,198,927 19,155,250
Time deposits, $100,000 and over 14,462,424 15,465,108
Other time deposits 64,405,763 65,725,943
------------ ------------
$152,481,825 $156,672,938
Federal funds purchased and securities sold under repurchase
agreements 1,881,390 5,339,128
FHLB borrowings 20,000,000 5,000,000
Note payable 27,000 36,000
Accrued interest payable 428,113 385,998
Other liabilities 334,020 367,917
------------ ------------
Total liabilities $175,152,348 $167,801,981
============ ============
STOCKHOLDERS' EQUITY
Common stock, $1.25 par value 6,000,000 shares
authorized; 1,927,495 and 1,916,991 shares
issued and outstanding in 2000 and 1999 respectively $ 2,409,369 $ 2,396,239
Surplus 4,368,883 4,271,392
Retained earnings 11,796,687 10,570,517
Accumulated other comprehensive income (1,107,317) (56,091)
------------ ------------
Total stockholders' equity $ 17,467,622 $ 17,182,057
------------ ------------
Total liabilities and stockholders' equity $192,619,970 $184,984,038
============ ============
Loan to Deposit Ratio 86.18% 73.57%
Book Value $9.06 $8.96
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------------
2000 1999
---------- ----------
<S> <C> <C>
Interest income
Interest and fees on loans $2,999,282 $2,494,015
Interest on securities:
U.S. Government agencies and corporations 270,862 395,143
U.S. Treasury notes 15,759 31,554
States and political subdivisions 369,248 398,773
Other 127,833 86,932
Interest on federal funds sold 464 165
---------- ----------
Total interest income $3,783,448 $3,406,582
---------- ----------
Interest expense
Interest on deposits $1,449,764 $1,485,316
Interest on federal funds purchased and securities sold under
repurchase agreements 45,948 92,729
Interest on FHLB borrowings 275,541 73,125
Interest on note payable 540 720
---------- ----------
Total interest expense $1,771,793 $1,651,890
---------- ----------
Net interest income $2,011,655 $1,754,692
Provision for loan losses 60,000 49,500
---------- ----------
Net interest income after provision for loan losses $1,951,655 $1,705,192
Other income
Deposit fees and charges $ 259,957 $ 202,516
Other 92,526 99,870
---------- ----------
Total other income $ 352,483 $ 302,386
Other expenses
Salaries and wages $706,600 $617,800
Pensions and other employee benefits 130,317 93,601
Occupancy expense 78,304 68,445
Equipment depreciation 135,694 96,850
Equipment repairs and maintenance 51,997 45,981
Advertising and public relations 27,740 49,534
Federal insurance premiums 7,966 5,476
Office supplies, telephone and postage 106,327 115,796
Taxes and licenses 35,173 35,217
Legal and professional fees 100,390 19,965
Other operating expenses 232,532 223,849
---------- ----------
Total other expenses $1,613,040 $1,372,514
---------- ----------
Income before income taxes $ 691,098 $ 635,064
Income taxes 205,574 183,962
---------- ----------
Net income $ 485,524 $ 451,102
========== ==========
Per share of common stock:
Income before income taxes $0.36 $0.33
Net income $0.25 $0.24
Weighted average shares 1,924,205 1,914,779
Dividends $0.10 $0.10
Return on average assets 1.02% 0.99%
Return on average equity 11.21% 11.07%
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash Flows for Operating Activities
Net Income $ 485,524 $ 451,102
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation 158,210 119,965
Provision for loan losses 60,000 49,500
Amortization and accretion on securities (15,995) (23,088)
Change in operating assets and liabilities:
(Increase) decrease in assets:
Mortgage loans held for sale 115,972 174,416
Accrued interest receivable (280,239) 83,786
Other assets (565,601) (13,796)
Increase (decrease) in liabilities:
Accrued interest payable 33,389 10,221
Other liabilities (5,652) 74,324
------------ ------------
Net cash provided by operating activities ($14,392) $ 926,430
------------ ------------
Cash Flows from Investing Activities
Proceeds from maturities of securities held to maturity $ 75,000 $ 425,000
Purchase of securities held to maturity - (190,000)
Proceeds from sales and maturities of securities available for sale 168,217 605,972
Purchase of securities available for sale (66,600) (299,750)
Net increase in loans made to customers (2,902,283) (5,577,297)
Net purchases of premises and equipment (46,920) (509,807)
------------ ------------
Net cash (used in) investing activities ($2,772,586) ($5,545,882)
------------ ------------
Cash Flows from Financing Activities
Net increase in deposits $ 270,824 $ 1,946,137
Net increase (decrease) in federal funds purchased and securities
sold under repurchase agreements 1,608,348 258,936
Net proceeds from FHLB borrowings 1,000,000 -
Net proceeds from issuance of capital stock 36,618 36,258
Dividends paid (192,316) (191,415)
------------ ------------
Net cash provided by financing activities $ 2,723,474 $ 2,049,916
------------ ------------
Increase (decrease) in cash and cash equivalents ($63,504) ($2,569,536)
Cash and cash equivalents:
Beginning 5,664,252 7,812,804
------------ ------------
Ending $ 5,600,748 $ 5,243,268
============ ============
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest $ 1,738,404 $ 1,641,669
============ ============
Income Taxes $0 $0
== ==
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
March 31, 2000 and 1999
(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. Comprehensive Income
A reconciliation from net income to total comprehensive income for the three
months ended March 31, 2000 and 1999 is as follows:
2000 1999
------------- -------------
Net income $ 485,524 $ 451,102
Other comprehensive income, net of tax
Unrealized holding gains (losses) arising
during the period on securities available
for sale, net of deferred income taxes 50,996 (231,018)
------------- -------------
Total comprehensive income $ 536,520 $ 220,084
------------- -------------
Note 3. Commitments and Contingencies
In May 1999, Old Republic National Title Insurance Company, in its own name and
on behalf of twelve mortgage lenders insured by Old Republic (collectively "Old
Republic"), commenced an action against the Bank that is now pending in the
Circuit Court for the County of Chesterfield, Virginia. Old Republic alleges
that after a title agency and real estate settlement business, Alliance Title
Escrow, Ltd., failed, Old Republic discovered that the president of Alliance
Title had misappropriated approximately $1.6 million entrusted to Alliance Title
by various lenders in connection with residential real estate closings in which
Old Republic had issued or agreed to issue title insurance policies. Old
Republic alleges that the Bank knew or should have known of the misappropriation
of funds from the Alliance Title accounts maintained with the Bank and that the
Bank and the co-defendant were involved in a conspiracy. Old Republic claims
compensatory damages of $1.6 million, and further claims that these damages can
be trebled and that Old Republic can recover its attorney's fees. Old Republic
has also made a claim to recover punitive damages in the amount of $350,000. The
Bank has denied all liability and is vigorously defending the case. The Bank has
made a motion to dismiss the entire case which is pending at this time. Although
the Bank is vigorously defending the case, the outcome of the litigation is
uncertain.
Additionally, in March 2000, the trustee in bankruptcy for Alliance Title filed
an adversary proceeding against Alliance Title's former president and the Bank
in the United States Bankruptcy Court for the Eastern District of Virginia. The
complaint seeks judgment against the Bank and the former president of Alliance
Title on a number of different theories of recovery, including that payments
made by Alliance Title to the Bank in the 90-day period prior to bankruptcy
constitute preferential payments under federal bankruptcy law and are therefore
recoverable by the trustee. Although the Bank denies the allegations of the
trustee and is vigorously defending the case, the outcome of this litigation is
uncertain at this time.
-6-
<PAGE>
ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company's net income totaled $485,524 in the first quarter of 2000,
an increase of 7.6% from the first quarter of 1999. The results for 2000 reflect
primarily an increase in net interest income resulting from an increase in
interest earning assets (primarily loans) for the quarter. In addition, other
income rose by 16.6% in the current quarter compared to the same period last
year. Net income per fully diluted common share for the first quarter of 2000
was $.25 compared to $.24 for the same period in 1999. The Company's annualized
return on average equity was 11.21% in the first quarter of 2000, compared to
11.07% for the first quarter of 1999, while the return on average assets
amounted to 1.02% and .99% for these periods respectively.
Net Interest Income. The Company's net interest income was $2,011,655
for the first quarter of 2000, compared to $1,754,692 for the first quarter of
1999. The increase in net interest income in 2000 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 $178.9
million for the first quarter of 2000 compared to $168.8 million for the first
quarter of 1999. The largest component change was in the average balance of
loans, which increased 16.8% from March 1999. Average investment securities
dropped 15.7%, or $8.8 million from March 31, 1999 to March 31, 2000. The fully
taxable annualized yield on investment securities was 7.13% at March 31, 2000
compared to 6.94% 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 4.72% for the
first quarter of 2000, compared to 4.49% for the first quarter of 1999.
Non-Interest Income. For the first three months of 2000, non-interest
income totaled $352,483, an increase of 16.6%, or $50,097 from the same period
in 1999. Included in this increase is an increase in deposit fees and charges of
28.4% or $57,441. This increase is due to an increase in the number of deposit
accounts in addition to a slight increase in the amount of some of the fees
charged.
Non-Interest Expenses. The Company's total non-interest expenses for
the first quarter of 2000 increased $240,526 or 17.5% compared to the same
period in 1999. Expenses related to salaries and employee benefits not treated
as an adjustment to the yield on loans originated in 2000 increased 17.1%
compared to the same period in 1999. Advertising and public relations expense as
well as office supplies, telephone, and postage expense decreased 44% and 8.2%,
respectively, as the Company has instituted a cost review and reduction program
in the new year. Equipment depreciation expense is up 40.1% as the result of new
equipment purchases in 1999 that replaced or upgraded existing data processing
systems. Legal and professional fees increased $80,425 as the result of the
Company's defense in ongoing litigation.
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<PAGE>
Income Taxes. The Bank reported income taxes of $205,574 for the first
quarter of 2000, compared to $183,962 for the first quarter of 1999. These
amounts yielded effective tax rates of 29.7% and 29.0%, 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.
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, 2000, loans increased $2.8 million from December 31, 1999
and $16.1 million from March 31, 1999. The loan to deposit ratio was 86.18% at
March 31, 2000, compared to 84.47% at December 31, 1999 and 73.57% at March 31,
1999. As of March 31, 2000, real estate loans accounted for 54.0% of the loan
portfolio, consumer loans were 23.7%, 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.
-8-
<PAGE>
The following table summarizes non-performing loans:
<TABLE>
<CAPTION>
March 31 December 31 March 31
2000 1999 1999
---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C>
Loans accounted for on a non-accrual basis $ 229 $ 109 $ 244
Loans contractually past due 90 days or
more as to interest or principal payments
(not included in non-accrual loans above) 1,062 1,680 494
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 $1,581 $1,789 $ 738
====== ====== ======
</TABLE>
Management is not aware of any other loans at March 31, 2000 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 1.15% at March 31, 2000; 1.14% at December 31, 1999; and 1.13% at
March 31, 1999, respectively. At March 31, 2000 the ratio of the allowance for
loan losses to non-performing loans was 97.5%, compared to 83.1% at December 31,
1999 and 178.6% at March 31, 1999.
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 $60,000 for the quarter ended
March 31, 2000 and $49,500 for the same period in 1999. 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.
-9-
<PAGE>
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 2000, total securities
decreased to $45.3 million or 23.5% of total assets at March 31, 2000 compared
to $55.6 million or 30% 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 7.13% for the first quarter of 2000, compared to 7.06% for the
same period in 1999. The book value of the entire portfolio exceeded the market
value by $2.2 million at March 31, 2000.
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 $270,824 between December 31, 1999 and March 31,
2000. Deposits decreased by $4.2 million, or 2.7% between March 31, 1999 and
March 31, 2000. The average aggregate interest rate paid on deposits was 4.44%
in the first quarter of 2000, compared to 4.50% for the same period in 1999. 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, 2000:
Time Deposits
-------------
(Dollars in thousands)
Three months or less $ 2,491
Three to twelve months 6,400
Over twelve months 5,571
-------
Total $14,462
=======
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.
-10-
<PAGE>
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,
2000, with minimum requirements, as defined by regulation, is shown below:
Minimum Actual
Requirements March 31, 2000
------------ --------------
Tier 1 risk-based capital 4.0% 12.06%
Total risk-based capital 8.0% 13.14%
Leverage ratio 3.0% 9.06%
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
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.
-11-
<PAGE>
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.
PART II
ITEM 1 LEGAL PROCEEDINGS
In May 1999, Old Republic National Title Insurance Company, in its own
name and on behalf of twelve mortgage lenders insured by Old Republic
(collectively "Old Republic"), commenced an action against the Bank that is now
pending in the Circuit Court for the County of Chesterfield, Virginia. Old
Republic alleges that after a title agency and real estate settlement business,
Alliance Title and Escrow, Ltd., failed, Old Republic discovered that the
president of Alliance Title had misappropriated approximately $1.6 million
entrusted to Alliance Title by various lenders in connection with residential
real estate closings in which Old Republic had issued or agreed to issue title
insurance policies. Old Republic alleges that the Bank knew or should have known
of the misappropriation of funds from the Alliance Title accounts maintained
with the Bank and that the Bank and the co-defendant were involved in a
conspiracy. Old Republic claims compensatory damages of $1.6 million, and
further claims that these damages can be trebled and that Old Republic can
recover its attorney's fees. Old Republic has also made a claim to recover
punitive damages in the amount of $350,000. In March 2000, Old Republic amended
its lawsuit to add one former and two current Bank employees as defendants, but
made no other substantial changes to its allegations. The Bank has denied all
liability and is vigorously defending the case. The Bank has made a motion to
dismiss the entire case which is pending at this time. Although the Bank is
vigorously defending the case, the outcome of the litigation is uncertain.
Additionally, in March 2000, the trustee in bankruptcy for Alliance
Title filed an adversary proceeding against Alliance Title's former president
and the Bank in the United States Bankruptcy Court for the Eastern District of
Virginia. The complaint seeks judgment against the Bank and the former president
of Alliance Title on a number of different theories of recovery, including that
payments made by Alliance Title to the Bank in the 90-day period prior to
bankruptcy constitute preferential payments under federal bankruptcy law and are
therefore recoverable by the trustee. Although the Bank denies the allegations
of the trustee and is vigorously defending the case, the outcome of this
litigation is uncertain at this time.
-12-
<PAGE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 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.
-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 15, 2000 /s/ Ralph Larry Lyons
------------------------------------------
Ralph Larry Lyons, President and Chief
Executive Officer (Principal Executive Officer)
Date: May 15, 2000 /s/ Charles F. Catlett, III
------------------------------------------
Charles F. Catlett, III, Vice President and Chief
Financial Officer (Principal 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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 5,600,748
<INT-BEARING-DEPOSITS> 73,803
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 18,689,086
<INVESTMENTS-CARRYING> 26,614,967
<INVESTMENTS-MARKET> 26,078,576
<LOANS> 132,956,384
<ALLOWANCE> 1,540,832
<TOTAL-ASSETS> 192,619,970
<DEPOSITS> 152,481,825
<SHORT-TERM> 21,881,390
<LIABILITIES-OTHER> 762,133
<LONG-TERM> 27,000
0
0
<COMMON> 2,409,369
<OTHER-SE> 15,058,253
<TOTAL-LIABILITIES-AND-EQUITY> 192,619,970
<INTEREST-LOAN> 2,999,282
<INTEREST-INVEST> 784,166
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3,783,448
<INTEREST-DEPOSIT> 1,449,764
<INTEREST-EXPENSE> 1,771,793
<INTEREST-INCOME-NET> 2,011,655
<LOAN-LOSSES> 60,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,613,040
<INCOME-PRETAX> 691,098
<INCOME-PRE-EXTRAORDINARY> 691,098
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 485,524
<EPS-BASIC> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 8.46
<LOANS-NON> 423,710
<LOANS-PAST> 1,061,270
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,486,900
<CHARGE-OFFS> 17,333
<RECOVERIES> 11,265
<ALLOWANCE-CLOSE> 1,540,832
<ALLOWANCE-DOMESTIC> 830,483
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 710,349
</TABLE>
