<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the quarter period ended June 30, 1996 Commission file number 33-20417
Capital Directions, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2781737
- ------------------------------- ---------------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
322 South Jefferson St., Mason, Michigan 48854-0130
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (517) 676-0500
--------------
None
---------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report
Indicate by checkmark 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 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
--- ---
As of August 1, 1996, the registrant had outstanding 297,428 shares of common
stock having a par value of $5 per share.
<PAGE> 2
CAPITAL DIRECTIONS, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheet
June 30, 1996 and December 31, 1995................ 1
Consolidated Statement of Income for
Three and Six month periods ended
June 30, 1996 and 1995............................. 2
Consolidated Statement of Cash Flows
for Six month periods ended
June 30, 1996 and 1995............................. 3
Changes in Shareholders' Equity for
Six months ended June 30, 1996..................... 4
Notes to interim Consolidated Financial Statements. 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..... 6 - 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings................................. 10
Item 2. Changes in Securities............................. 10
Item 3. Defaults Upon Senior Securities................... 10
Item 4. Submission of Matters to a Vote of
Security Holders................................. 10
Item 5. Other Information................................. 10
Item 6. Exhibits and Reports on Form 8-K.................. 10
Item 7. Signatures........................................ 11
Index to Exhibits................................. 12
</TABLE>
<PAGE> 3
PART I
CAPITAL DIRECTIONS, INC.
CONSOLIDATED BALANCE SHEET
--------------------------
(in thousands)
<TABLE>
<CAPTION>
JUNE 30 DEC. 31
1996 1995
(UNAUDITED) (UNAUDITED)
---------------------------
<S> <C> <C>
ASSETS
Cash and non interest bearing deposits ............ $ 3,261 $ 3,725
Federal funds sold ................................ 1,682 6,050
------- -------
Total cash and cash equivalents 4,943 9,775
Securities available for sale ....................... 10,123 7,656
Securities held to maturity (fair value of $9,602 as
of June 30, 1996 and $8,261 as of December 31, 1995)
U.S. Government and agencies ...................... 4,231 2,405
State and municipal ............................... 5,306 5,630
Federal Home Loan Bank Stock ........................ 364 364
------- -------
Total securities 20,024 16,055
Loans:
Commercial and agricultural ....................... 4,355 5,869
Installment ....................................... 5,250 5,888
Real estate mortgage .............................. 40,406 37,927
------- -------
Loans 50,011 49,684
Allowance for loan losses ......................... (1,013) (995)
------- -------
Net Loans 48,998 48,689
Premises and equipment, net ......................... 593 649
Accrued income and other assets ..................... 2,705 2,667
------- -------
TOTAL ASSETS $77,263 $77,835
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing .............................. $ 8,977 $ 8,853
Interest bearing .................................. 56,198 57,355
------- -------
Total Deposits 65,175 66,208
Long-term Federal Home Loan Bank borrowings ......... 2,088 1,880
Accrued expense and other liabilities ............... 1,075 1,153
------- -------
Total Liabilities 68,338 69,241
------- -------
Shareholders' Equity:
Common stock: $5 par value, 1,300,000 shares
authorized; 297,428 shares outstanding .......... 1,487 1,487
Additional paid in capital ........................ 3,256 2,559
Retained earnings ................................. 4,210 4,522
Net unrealized gains/(losses) on securities
available for sale, net of tax of ($13) in 1995
and $14 in 1996 ................................... (28) 26
------- -------
Total Shareholders' Equity 8,925 8,594
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $77,263 $77,835
======= =======
</TABLE>
SEE NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
-1-
<PAGE> 4
CAPITAL DIRECTIONS, INC.
Consolidated Statement of Income
--------------------------------
(in thousands except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
(UNAUDITED) (UNAUDITED)
------------------ ------------------
<S> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME:
Loans, including fees............................. $1,106 $1,173 $2,218 $2,318
Securities:
Taxable........................................ 227 180 412 359
Tax exempt..................................... 63 59 131 118
Dividends on Federal Home Loan Bank stock......... 35 41 102 51
--------- -------- --------- --------
Total interest and dividend income 1,431 1,453 2,863 2,846
INTEREST EXPENSE:
Deposits.......................................... 576 616 1,166 1,194
Short-term borrowings............................. 0 0 0 10
Long-term Federal home Loan Bank borrowings....... 34 6 65 12
--------- -------- --------- --------
Total interest expense 610 622 1,231 1,216
--------- -------- --------- --------
NET INTEREST INCOME................................ 821 831 1,632 1,630
PROVISION FOR LOAN LOSSES.......................... 0 27 0 54
--------- -------- --------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 821 804 1,632 1,576
NON INTEREST INCOME:
Service charges on deposits....................... 71 72 138 145
Investment commission fees........................ 38 73 124 114
Other income...................................... 46 105 124 174
--------- -------- --------- --------
Total Non Interest Income 155 250 386 433
NON INTEREST EXPENSE:
Salaries and employee benefits.................... 312 285 658 581
Premises and equipment............................ 100 101 194 201
F.D.I.C. insurance assessment..................... 0 42 1 82
Investment sales expenses......................... 43 69 123 117
Other operating expenses.......................... 135 186 287 352
--------- -------- --------- --------
Total Non Interest Expense 590 683 1,263 1,333
--------- -------- --------- --------
INCOME BEFORE FEDERAL INCOME TAXES................. 386 371 755 676
INCOME TAX EXPENSE................................. 109 105 210 176
--------- -------- --------- --------
NET INCOME......................................... $277 $266 $545 $500
========= ======== ========= ========
Average common shares outstanding 297,428 297,428 297,428 297,428
Earnings per common share $.93 $.89 $1.83 $1.68
Dividends per share of
common stock, declared .27 .25 .54 .50
</TABLE>
SEE NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
-2-
<PAGE> 5
CAPITAL DIRECTIONS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1996 1995
(UNAUDITED)
----------------
<S> <C> <C>
NET CASH FROM OPERATING ACTIVITIES................. $ 585 $ 834
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of securities........... 1,776 2,055
Principal payments on securities................. 555 321
Purchase of securities........................... (6,436) (1,374)
Net (increase) decrease in loans................. (309) (214)
Property and equipment expenditures.............. (18) (11)
------- -------
NET CASH FROM INVESTING ACTIVITIES................. (4,432) 777
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in deposits......................... (1,033) (555)
Increase in long-term borrowing.................. 208 (50)
Dividends paid................................... (160) (149)
------- -------
NET CASH FROM FINANCING ACTIVITIES................. (985) (754)
------- -------
NET CHANGE IN CASH AND CASH EQUIVALENTS............ (4,832) 857
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR... 9,775 4,020
------- -------
CASH AND CASH EQUIVALENTS JUNE 30................ $ 4,943 $ 4,877
======== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR
Interest....................................... $ 1,262 $ 1,218
Income Taxes - Federal......................... $ 289 $ 147
</TABLE>
SEE NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
-3-
<PAGE> 6
CAPITAL DIRECTIONS, INC.
CONSOLIDATED STATEMENT OF
CHANGES IN SHAREHOLDERS' EQUITY
FOR SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
BALANCE - JANUARY 1, 1996................................... $8,594
Net Income through June 30................................. 545
Net change in unrealized gain/(loss) on securities
available for sale, net of tax of $28..................... (54)
Cash dividends through June 30 ($ .54 per share)........... (160)
------
BALANCE - JUNE 30, 1996..................................... $8,925
======
</TABLE>
SEE NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
-4-
<PAGE> 7
CAPITAL DIRECTIONS, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of management of the Registrant, the accompanying
consolidated financial statements contain all adjustments
(consisting only of normal recurring items) necessary to present
fairly the consolidated financial position of the Registrant as of
June 30, 1996 and December 31, 1995, the results of operations for
the three and six periods ended June 30, 1996 and 1995, the results
of cash flows for the six month periods ended June 30, 1996 and
1995, and the change in shareholders' equity for the six month
period ended June 30, 1996.
2. The results of the operations for the six months ended June 30, 1996
are not necessarily indicative of the results to be expected for the
full year.
3. The accompanying unaudited consolidated financial statements should
be read in conjunction with the notes to consolidated financial
statements contained the 1995 Annual Report.
4. Management determines the adequacy of the allowance for loan losses
based on an evaluation of the loan portfolio, recent loss
experience, current economic conditions and other pertinent factors.
Non-performing loans, which includes loans contractually past due
ninety days or more, loans accounted for on a non-accrual basis and
loans whose terms have been renegotiated to provide a reduction or
deferral of interest or principal because of deterioration in the
financial position of the borrower, amounted to $162,000 at June 30,
1996 and $266,000 at December 31, 1995, summarized as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
Non-performing loans 1996 1995
--------------------------------------- ------- -----------
<S> <C> <C>
Non-accrual............................ $ 62,000 17,000
90 days or more past due............... 44,000 191,000
Renegotiated........................... 56,000 58,000
-------- --------
Total.................................. $162,000 $266,000
======== ========
</TABLE>
The renegotiated loans are all in compliance with the modified terms
for both periods. As of June 30, 1996 in accordance with SFAS
No. 114, as amended (Accounting by Creditors for Impairment of a
loan), and as the registrant has defined in the 1995 annual report
there were no loans considered impaired.
5. A summary of the activity in the allowance for loan losses for the
six months ended June 30, follows:
<TABLE>
<CAPTION>
1996 1995
(In Thousands)
<S> <C> <C>
Balance - Beginning of period............... $ 995 $ 792
Provision charged to operating expense...... 0 54
Loans charged-off........................... (16) (7)
Recoveries.................................. 34 20
------ -----
Balance - end of period.................... $1,013 $ 859
====== =====
</TABLE>
6. The provision for income taxes represents federal income tax expense
calculated using annualized rates on taxable income generated during
the respective periods.
-5-
<PAGE> 8
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and
results of operations provides additional information to assess the
consolidated financial statements of the Registrant and its wholly-owned
subsidiaries. The discussion should be read in conjunction with those
statements.
The Company is not aware of any market or institutional trends,
events, or circumstances that will have or are reasonably likely to have a
material effect on liquidity, capital resources, or results of operations
except as discussed herein. Also, the Company is not aware of any current
recommendations by regulatory authorities which will have such effect if
implemented.
FINANCIAL CONDITION
Management continues to maintain a strong net interest margin this
year by growing its earning assets at a profitable spread to its funding.
The average earning assets for the first six months of 1996 was
$745,000 higher than for the same period in 1995. This was accomplished
while maintaining the average interest paying liabilities at relatively the
same level during the period. This net increase was primarily a result of
better utilization of earning assets and an average equity increase of
$849,000. This increase in earning assets has taken place in the
investment area. Loans outstanding have declined due to paydowns on several
Commercial loan participations. Commercial loan demand continues to be strong
in the area but have not been funded to date.
The tax equivalent net interest margin was 4.89% and 4.92% for the
first six months of 1996 and 1995 respectively. This relative retention of
margin is a result of the average yield on interest earnings assets being
8.44% for the first six months of 1996 compared to 8.48% for the same
comparable period in 1995 and the yield on average funding being 3.75% for
the first six months of 1996 compared to 3.69% for the same comparable
period in 1995. The volume increase in earning assets helped us maintain
net interest income and overcome the slight decline in margin.
Part of our funding strategy has been to maintain our funding base
through long-term Federal Home Loan Bank borrowings. The average Federal
Home Loan Bank borrowings is $1,765,000 higher the first half of 1996 over
the same period in 1995. Management has profitability matched these funds
to like term earning assets. This has also helped us price deposits less
aggressively with the market than we had in previous years. This strategy
has let us maintain our market share but not grow in deposits. Our tracking
of any outflow of deposits continues to indicate that most of it goes to
other types of uninsured, higher risk investments outside of banking and
the repayment of personal debt. This is consistent with the reported
national trends and is the major cause of the decline in deposits.
Management feels that the current level in our allowance for loan
losses is very strong. At June 30, 1996 the allowance for loan losses was
equal to 2.03% of total loans outstanding compared to 1.67% at June 30,
1995 and 2.00% at December 31, 1995.
RESULTS OF OPERATIONS
Net income for the six month period ended June 30, 1996 was $545,000,
or $1.83 per share compared to earnings of $500,000, or $1.68 per share for
1995's comparable period.
The changes in margin and volume, as discussed earlier, resulted in
only a $2,000 increase in net interest income for the first six months of
1996 compared to the same period in 1995. The decrease in the provision for
loan losses is a result of our strong provision balance and its ratio to
outstanding loans.
-6-
<PAGE> 9
Monex Investment Company, Inc. contributed $1,000 to the profits of
the Company during the half of 1996 compared to a loss of $3,000 for the
same period in 1995.
The decrease of $47,000 in noninterest income for the first six months
of 1996 compared to the same period in 1995 is due primarily to a decrease
in service charges on deposits due to the servicing of a lesser number of
accounts and a non recurring item in 1995. This was offset by the increase
in Investment commission fee income due to increased sales of mutual funds
and annuities over last year.
The decrease of $70,000 in noninterest expenses is primarily due
to the F.D.I.C. premium and premises and equipment decreases. The other
decrease in other operating expense is due to a general decline and is
spread out over several areas. These decreases were offset by the increase
in wages and benefits due to additional staffing.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Management uses Federal Funds sold and purchased as its principal
source of liquidity. Other sources of liquidity include internally
generated cash flow being: repayments and maturities of loans, investments,
borrowings and growth in core deposits. The Bank also uses the Federal
Home Loan Bank system as another source of funding, a possible lower cost
for these credit services and another tool to help manage interest rate
risk and source of liquidity. Management feels it has adequate sources for
liquidity.
Interest rate sensitivity management seeks to maximize net interest
margins through periods of changing interest rates. The Bank develops
strategies to assure that desired levels of interest sensitive assets and
interest bearing liabilities mature or reprice within selected time frames.
Strategies include the use of variable rate loan products as well as
managing deposit accounts and maturities in the investment portfolio. The
following chart, using recommended regulatory standards, reflects "the rate
sensitive position" or the difference between loans and investments, and
liabilities that mature or reprice within the next year and beyond. The
financial industry has generally referred to this difference as "GAP" and
its handling as "GAP Management". At June 30, 1996, the percentage of rate
sensitive assets to rate sensitive liabilities within a one-year time
horizon was 95% compared to 112% at December 31, 1995.
The chart shows a liability sensitive position of $2,413 thousand,
which indicates higher net interest income may be earned if interest rates
fall during the period. Due to the limitations of GAP analysis, modeling is
also used to enhance measurement and control.
-7-
<PAGE> 10
MASON STATE BANK GAP OR INTEREST RATE RISK EXPOSURE MEASUREMENTS AS OF 06/30/96
<TABLE>
<CAPTION>
ASSETS SUBJECT TO INTEREST RATE
ADJUSTMENT WITHIN TIME HORIZON
TIME HORIZONS
IMMEDIATE AND GREATER THAN 30 DAYS
TYPE OF ASSET: LESS THAN 30 DAYS LESS THAN 90 DAYS 2ND QUARTER 3RD QUARTER 4TH QUARTER
============== ================= ================= =============== =============== ================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TOTAL COM. LOANS 7,182 9.56% 187 9.85% 815 7.62% 206 7.29% 482 6.98%
TOTAL CONSUMER LOANS 1,576 8.44% 400 9.63% 600 9.63% 600 9.63% 600 9.63%
CONSUMER RUNOFF OFFSET
TOTAL REV. CREDIT 3,431 9.77% 0 .00% 0 .00% 0 .00% 0 .00%
TOTAL MTGE. LOANS 724 7.85% 1,489 7.95% 3,728 8.17% 4,730 8.16% 4,634 8.02%
MORTGAGE RUNOFF OFFSET
TOTAL OTHER MTGES. 63 23.68% 346 8.56% 126 7.22% 126 7.22% 126 7.22%
RESERVE FOR LN. LOSS 0 .00% 0 .00% 0 .00% 0 .00% 0 .00%
------- ------ ------- ----- ------- ----- ------- ----- ------- ------
TOTAL LOANS 12,976 9.45% 2,422 8.46% 5,269 8.23% 5,662 8.26% 5,842 8.08%
INVESTMENTS-MUNI'S 0 .00% 0 .00% 142 6.02% 323 5.83% 479 6.95%
FED FUNDS 1,682 5.25% 0 .00% 0 .00% 0 .00% 0 .00%
CORPORATES 501 4.38% 504 4.91% 500 5.63% 498 5.97% 500 5.14%
MTG. BACKED PAYDOWNS 67 6.26% 133 6.26% 200 6.26% 200 6.26% 200 6.26%
INVEST-CMO'S FLOAT 130 6.43% 0 .00% 0 .00% 0 .00% 0 .00%
INVESTMENTS-ARM'S 373 7.81% 0 .00% 141 7.73% 373 7.25% 2,186 6.84%
INVESTMENTS-GOVT'S 368 8.00% 0 .00% 866 7.71% 0 .00% 0 .00%
------- ------ ------- ----- ------- ----- ------- ----- ------- ------
TOTAL INVESTMENTS 3,121 5.81% 637 5.19% 1,849 6.86% 1,394 6.32% 3,365 6.57%
TOTAL EARNING ASSETS 16,097 8.75% 3,059 7.78% 7,118 7.88% 7,056 7.88% 9,207 7.53%
NON-EARNING ASSETS 0 .00% 0 .00% 0 .00% 0 .00% 0 .00%
------- ------ ------- ----- ------- ----- ------- ----- ------- ------
TOTAL ASSETS 16,097 8.75% 3,059 7.78% 7,118 7.88% 7,056 7.88% 9,207 7.53%
<CAPTION>
ASSETS SUBJECT TO INTEREST RATE
ADJUSTMENT WITHIN TIME HORIZON
TIME HORIZONS
TYPE OF ASSET: ANNUAL TOTAL 1 - 3 YEARS 3 - 5 YEARS OVER 5 YEARS GRAND TOTAL
============== ================ ================ =============== =============== ================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TOTAL COM. LOANS 8,872 9.20% 3,918 8.58% 1,398 9.35% 1,939 9.07% 16,127 9.05%
TOTAL CONSUMER LOANS 3,776 9.13% 2,378 10.14% 1,287 10.14% 0 .00% 7,441 9.63%
CONSUMER RUNOFF OFFSET -2,400 9.63%
TOTAL REV. CREDIT 3,431 9.77% 0 .00% 0 .00% 0 .00% 3,431 9.77%
TOTAL MTGE. LOANS 15,305 8.09% 2,812 9.10% 648 9.21% 9,748 7.98% 28,513 8.18%
MORTGAGE RUNOFF OFFSET -4,000 8.18%
TOTAL OTHER MTGES. 787 9.13% 0 .00% 0 .00% 112 4.00% 899 8.49%
RESERVE FOR LN. LOSS 0 .00% 0 .00% 0 .00% 0 .00% -1,013 .00%
------- ------ ------- ------ ------- ------ ------- ----- ------- ------
TOTAL LOANS 32,171 8.72% 9,108 9.15% 3,333 9.63% 11,799 8.12% 48,998 8.89%
INVESTMENTS-MUNI'S 944 6.43% 1,672 7.56% 645 7.55% 2,045 7.38% 5,306 7.29%
FED FUNDS 1,682 5.25% 0 .00% 0 .00% 0 .00% 1,682 5.25%
CORPORATES 2,503 5.20% 2,796 6.00% 0 .00% 0 .00% 5,299 5.62%
MTG. BACKED PAYDOWNS 800 6.26% 0 6.26%
INVEST-CMO'S FLOAT 130 6.43% 0 .00% 0 .00% 0 .00% 130 6.43%
INVESTMENTS-ARM'S 3,073 7.05% 0 .00% 0 .00% 0 .00% 3,073 7.05%
INVESTMENTS-GOVT'S 1,234 7.80% 2,530 6.48% 560 6.34% 1,792 6.85% 6,116 6.84%
------- ------ ------- ------ ------- ------ ------- ----- ------- ------
TOTAL INVESTMENTS 10,366 6.28% 6,998 6.55% 1,205 6.99% 3,837 7.13% 21,606 6.56%
TOTAL EARNING ASSETS 42,537 8.12% 16,106 8.02% 4,538 8.93% 15,636 7.88% 70,604 8.17%
NON-EARNING ASSETS 0 .00% 0 .00% 0 .00% 0 .00% 6,454 .00%
------- ------ ------- ------ ------- ------ ------- ----- ------- ------
TOTAL ASSETS 42,537 8.12% 16,106 8.02% 4,538 8.93% 15,636 7.88% 77,058 7.49%
<CAPTION>
LIABILITIES SUBJECT TO INTEREST
RATE ADJUSTMENT WITHIN TIME HORIZON
IMMEDIATE AND GREATER THAN 30 DAYS
TYPE OF LIABILITY: LESS THAN 30 DAYS LESS THAN 90 DAYS 2ND QUARTER 3RD QUARTER 4TH QUARTER
================== ================= ================= =============== =============== ================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NON-INT. BEARING DDA 451 .00% 902 .00% 1,354 .00% 1,354 .00% 1,354 .00%
NOW ACCOUNTS 328 2.00% 638 2.00% 1,449 2.00% 1,932 2.00% 1,932 2.00%
NEGOTIATED NOW 635 3.75% 1,232 3.75% 0 .00% 0 .00% 0 .00%
MONEY MARKET SAVINGS 1,577 3.36% 3,049 3.36% 3,995 3.36% 946 3.36% 946 3.36%
------- ------ ------- ----- ------- ----- ------- ----- ------- ------
TOTAL DDA ACCOUNTS 2,991 2.79% 5,821 2.77% 6,798 2.40% 4,232 1.66% 4,232 1.66%
TOTAL SAVINGS ACCTS. 475 2.25% 737 2.25% 1,421 3.23% 1,729 3.04% 1,729 3.04%
TOTAL COD 4,255 5.33% 3,474 5.33% 2,653 5.05% 2,277 4.98% 1,864 5.67%
FED FUNDS & OTHER 0 .00% 0 .00% 176 6.21% 85 5.79% 0 .00%
------- ------ ------- ----- ------- ----- ------- ----- ------- ------
TOTAL DEPOSITS 7,722 4.15% 10,032 3.62% 11,048 3.20% 8,323 2.90% 7,825 2.92%
OTHER LIABILITIES 0 .00% 0 .00% 0 .00% 0 .00% 0 .00%
------- ------ ------- ----- ------- ----- ------- ----- ------- ------
TOTAL LIABILITIES 7,722 4.15% 10,032 3.62% 11,048 3.20% 8,323 2.90% 7,825 2.92%
TOTAL CAPITAL 0 .00% 0 .00% 0 .00% 0 .00% 0 .00%
------- ------ ------- ----- ------- ----- ------- ----- ------- ------
TOTAL LIAB. & CAP. 7,722 4.15% 10,032 3.62% 11,048 3.20% 8,323 2.90% 7,825 2.92%
------- ------ ------- ----- ------- ----- ------- ----- ------- ------
GAP FIGURES 8,375 -6,973 -3,930 -1,267 1,382
CUMMULATIVE GAP 8,375 1,402 2,527 -3,795 -2,413
NET POSITION AS
A % OF TOTAL ASSETS 10.87% 1.82% -3.28% -4.92% -3.13%
RSA AS A % OF RSL 208.46% 107.90% 91.22% 89.78% 94.63%
<CAPTION>
LIABILITIES SUBJECT TO INTEREST
RATE ADJUSTMENT WITHIN TIME HORIZON
TYPE OF LIABILITY: ANNUAL TOTAL 1 - 3 YEARS 3 - 5 YEARS OVER 5 YEARS GRAND TOTAL
================== ================ ================ =============== =============== ================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NON-INT. BEARING DDA 5,414 .00% 3,610 .00% 0 .00% 0 .00% 9,024 .00%
NOW ACCOUNTS 6,280 1.95% 2,415 2.00% 966 2.00% 0 .00% 9,661 1.97%
NEGOTIATED NOW 1,867 3.75% 0 .00% 0 .00% 0 .00% 1,867 3.75%
MONEY MARKET SAVINGS 10,513 3.36% 0 .00% 0 .00% 0 .00% 10,513 3.36%
------- ------ ------- ------ ------- ------ ------- ----- ------- ------
TOTAL DDA ACCOUNTS 24,074 2.28% 6,025 .80% 966 2.00% 0 .00% 31,065 1.97%
TOTAL SAVINGS ACCTS. 6,092 2.93% 2,665 4.05% 1,634 4.65% 0 .00% 10,391 3.49%
TOTAL COD 14,523 5.27% 7,739 6.01% 1,504 7.11% 0 .00% 23,766 5.63%
FED FUNDS & OTHER 261 6.07% 428 6.10% 473 6.10% 926 6.10% 2,088 6.10%
------- ------ ------- ------ ------- ------ ------- ----- ------- ------
TOTAL DEPOSITS 44,950 3.35% 16,857 3.84% 4,577 5.05% 926 6.10% 67,310 3.62%
OTHER LIABILITIES 0 .00% 0 .00% 0 .00% 0 .00% 1,048 .00%
------- ------ ------- ------ ------- ------ ------- ----- ------- ------
TOTAL LIABILITIES 44,950 3.35% 16,857 3.84% 4,577 5.05% 926 6.10% 68,358 3.57%
TOTAL CAPITAL 0 .00% 0 .00% 0 .00% 8,700 .00% 8,700 .00%
------- ------ ------- ------ ------- ------ ------- ----- ------- ------
TOTAL LIAB. & CAP. 44,950 3.35% 16,857 3.84% 4,577 5.05% 9,626 .59% 77,058 3.17%
------- ------ ------- ------ ------- ------ ------- ----- ------- ------
GAP FIGURES -2,413 -751 -39 6,010 0
CUMMULATIVE GAP -3,164 -3,203 2,807
NET POSITION AS
A % OF TOTAL ASSETS -3.13% -4.11% -4.16% 3.64%
RSA AS A % OF RSL 94.63% 94.88% 95.18% 103.69%
</TABLE>
-8-
<PAGE> 11
CAPITAL RESOURCES
The adequacy of the Corporation's capital is reviewed regularly to
ensure that sufficient capital is available to meet current and future
funding needs and comply with regulatory requirements. Shareholders' equity
increased $385,000 or 4.49% to $8,953,000 at June 30, 1996, which
represents 11.59% of total assets. This figure does not include the
$28,000, net of tax in net unrealized loss on available for sale
securities. At December 31, 1995, the ratio of shareholder's equity to
total assets was 11.01%. The "risk-based" capital to asset ratio, as
established by the regulatory authorities was 18.88% as of June 30, 1996
compared to 18.01% at December 31, 1995 as shown below.
Actual Required Excess
Amount_____% Amount_____% Amount_____%
Risked-Based Capital
June 30, 1996 $9,028,000 18.88 $3,826,000 8.00 $5,202,000 10.88
Management does not feel that future rate changes will have a material
impact on our capital adequacy. Management feels that capital and
shareholders' equity is and will remain adequate for 1996.
FEDERAL INCOME TAXES
The provision for Federal income taxes for the six month periods ended
June 30, 1996 and 1995 totaled $210,000 and $176,000 respectively. This
increase in taxes is primarily reflective of the increased taxable earnings
over these periods.
OTHER MATTERS
The Company adopted the Statement of Financial Accounting Standards
No. 122 "Accounting for Mortgage Servicing Rights" January 1, 1996. This
statement provides guidance on accounting for originated mortgage servicing
rights and purchased mortgage servicing rights related to normal servicing.
This standard has not had nor is expected to have a material impact on the
operations of the Company.
-9-
<PAGE> 12
PART II
Item 1. Legal Proceedings
There are no material pending legal proceedings to which the
Registrant or its subsidiaries, is a party or which any of its property
is subject, except for proceedings which arise in the ordinary course
of business. In the opinion of management, pending legal proceedings
will not have a material effect on the consolidated financial
statements of the Registrant or its subsidiaries as of and for the
period ended June 30, 1996.
Item 2. Changes in Securities
There have been no changes in the Registrant's securities which
would cause any shareholder's rights to be materially modified, limited
or qualified.
Item 3. Defaults Upon Senior Securities
There have been no defaults involving senior securities on the
part of the Registrant.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of security holders of the Company was held
April 25, 1996. Information concerning the matters brought to a vote of
security holders is contained in the Company's Proxy Statement and
Notice of Annual Meeting of Shareholders held April 25, 1996, as
previously filed. There have been no further matters submitted to a
vote of the Registrant's security holders during the three months ended
June 30, 1996.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
1. Exhibits required by Item 601 of Regulation S-K
See Index to Exhibits on page 12.
2. Reports on Form 8-K.
No reports on Form 8-K were filed for the three months ended
June 30, 1996.
-10-
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAPITAL DIRECTIONS, INC.
Date August 02, 1996 By: /s/ Timothy Gaylord
--------------- -------------------------
Timothy Gaylord
President
Date August 02, 1996 By: /s/ Robert G. Kennedy
--------------- -------------------------
Robert G. Kennedy
Treasurer
-11-
<PAGE> 14
INDEX TO EXHIBITS
The following exhibits are filed or incorporated by reference as part of this
report:
2 PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION
- Consolidation Agreement included in Amendment No. 1 to Form S-4
Registration Statement No. 33-20417
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES -
Not Applicable
11 STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS - Not applicable
15 LETTER REGARDING UNAUDITED INTERIM FINANCIAL INFORMATION - Not applicable
18 LETTER REGARDING CHANGE IN ACCOUNTING PRINCIPALS - Not applicable
19 PREVIOUS UNFILED DOCUMENTS - Not applicable
20 REPORT FURNISHED TO SECURITY HOLDERS - Not applicable
23 PUBLISHED REPORT REGARDING MATTERS SUBMITTED TO VOTE OF SECURITY HOLDERS -
Not applicable
24 CONSENTS OF EXPERTS AND COUNSEL - Not applicable
25 POWER OF ATTORNEY - Not applicable
27 FINANCIAL DATA SCHEDULE
28 ADDITIONAL EXHIBITS - Not applicable
-12-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1996 SECOND
QUARTER 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,261
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,682
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 10,123
<INVESTMENTS-CARRYING> 9,537
<INVESTMENTS-MARKET> 9,602
<LOANS> 50,011
<ALLOWANCE> 1,013
<TOTAL-ASSETS> 77,263
<DEPOSITS> 65,175
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,075
<LONG-TERM> 2,088
0
0
<COMMON> 1,487
<OTHER-SE> 7,438
<TOTAL-LIABILITIES-AND-EQUITY> 77,263
<INTEREST-LOAN> 2,218
<INTEREST-INVEST> 645
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,863
<INTEREST-DEPOSIT> 1,166
<INTEREST-EXPENSE> 1,231
<INTEREST-INCOME-NET> 1,632
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,263
<INCOME-PRETAX> 755
<INCOME-PRE-EXTRAORDINARY> 755
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 545
<EPS-PRIMARY> 1.83
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.89
<LOANS-NON> 62
<LOANS-PAST> 44
<LOANS-TROUBLED> 56
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 995
<CHARGE-OFFS> 16
<RECOVERIES> 34
<ALLOWANCE-CLOSE> 1,013
<ALLOWANCE-DOMESTIC> 150
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 863
</TABLE>
