<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 ended June 30, 1998 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 July 29, 1998 the registrant had outstanding 595,056 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 Sheets
June 30, 1998 and December 31, 1997. . . . . . . . . . . . . . . . . 1
Consolidated Statements of Income for the three and six month
periods ended June 30, 1998 and 1997 . . . . . . . . . . . . . . . . 2
Consolidated Statements of Cash Flows for the six month
periods ended June 30, 1998 and 1997 . . . . . . . . . . . . . . . . 3
Consolidated Statements of
Changes in Shareholders' Equity for six months
ended June 30, 1998. . . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Interim Consolidated Financial Statements . . . . . . . . . 5-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . . 7-10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . . . . . 11
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . . . . . 11
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . 11
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . 11
Item 7. Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Index to Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 3
CAPITAL DIRECTIONS, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
(In thousands) June 30, December 31,
1998 1997
---- ----
(Unaudited)
-----------
ASSETS
<S> <C> <C>
Cash and non interest bearing deposits $2,496 $2,188
Interest bearing deposits 35 0
Federal funds sold 8,350 0
------- -------
Total cash and cash equivalents 10,881 2,188
Securities available for sale 7,010 6,271
Securities held to maturity (fair value of $7,046 as of
June 30, 1998 and $7,705 as of December 31, 1997)
U.S. Government and agencies 2,254 2,944
State and municipal 4,003 4,539
Federal Home Loan Bank (FHLB) stock 597 364
------- -------
Total securities 13,864 14,118
Loans:
Commercial and agricultural 4,194 4,241
Installment 3,358 3,601
Real estate mortgages 60,248 53,492
Loans held for sale 1,049 0
------- -------
Total loans 68,849 61,334
Allowance for loan losses (1,025) (1,035)
------- -------
Net loans 67,824 60,299
Premises and equipment, net 598 618
Accrued income and other assets 2,953 2,734
------- -------
Total assets $96,120 $79,957
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Non interest bearing $9,388 $8,322
Interest bearing 62,794 56,099
------- -------
Total deposits 72,182 64,421
Federal funds purchased 0 450
Long-term FHLB borrowings 11,934 3,670
Other liabilities 1,413 1,200
------- -------
Total liabilities 85,529 69,741
Shareholders' equity
Common stock: $5 par value, 1,300,000 shares
authorized; 595,056 shares outstanding 2,975 2,975
Additional paid in capital 2,561 2,561
Retained earnings 5,029 4,652
Net unrealized gains/(losses) on securities available
for sale, net of tax of $13 as of June 30, 1998 and
$14 as of December 31, 1997 26 28
------- -------
Total shareholders' equity 10,591 10,216
------- -------
Total liabilities and shareholders' equity $96,120 $79,957
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
CAPITAL DIRECTIONS, INC.
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
(In thousands, except per share data) June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME
Interest and fees on loans $ 1,407 $1,173 $2,768 $ 2,320
Federal funds sold 33 26 57 35
Securities: Taxable - available for sale 105 145 226 298
Taxable - held to maturity 53 71 108 144
Tax exempt - held to maturity 50 57 102 121
Dividends on FHLB stock 10 7 17 14
Other interest income 6 - 6 2
-------- -------- -------- --------
Total interest and dividend income 1,664 1,479 3,284 2,934
INTEREST EXPENSE
Deposits 622 576 1,235 1,142
Federal funds purchased - - 1 9
Long-term FHLB borrowings 146 53 239 82
-------- -------- -------- --------
Total interest expense 768 629 1,475 1,233
-------- -------- -------- --------
NET INTEREST INCOME 896 850 1,809 1,701
-------- -------- -------- --------
Provision for loan losses (9) - (17) -
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 905 850 1,826 1,701
NON INTEREST INCOME
Service charges on deposits 72 65 140 128
Net gain (loss) on sale of securities (5) (2) (18) 5
Net gain on sales of loans (2) - (1) 7
Other income 98 76 163 149
-------- -------- -------- --------
Total non interest income 163 139 284 289
NON INTEREST EXPENSE
Salaries and employee benefits 355 341 724 684
Premises and equipment 77 83 155 166
Other operating expense 184 151 354 316
-------- -------- -------- --------
Total non interest expense 616 575 1,233 1,166
INCOME BEFORE INCOME TAX EXPENSE 452 414 877 824
INCOME TAX EXPENSE 132 117 254 232
-------- -------- -------- --------
NET INCOME $ 320 $297 $623 $592
======== ======== ======== ========
AVERAGE COMMON SHARES OUTSTANDING 595,056 594,856 595,056 594,856
BASIC EARNINGS PER COMMON SHARE 0.54 0.50 1.05 1.00
DILUTED EARNINGS PER COMMON SHARE 0.53 0.50 1.04 0.99
DIVIDENDS PER SHARE OF COMMON STOCK, DECLARED 0.23 0.17 0.42 0.33
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
CAPITAL DIRECTIONS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Six Months Ended
(In thousands) June 30,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 623 $ 592
Adjustments to reconcile net income to net cash
from operating activities
Depreciation 61 50
Provision for loan losses (17) -
Net amortization (accretion) on securities 18 35
Net gain (loss) on sales of loans 1 (7)
Net gain (loss) on sales of securities 18 (5)
Changes in assets and liabilities:
Accrued interest receivable 32 (14)
Accrued interest payable (27) (23)
Other assets (251) (19)
Other liabilities 231 107
------- -------
689 716
CASH FLOWS FROM INVESTING ACTIVITIES
Securities available for sale:
Purchases (4,693) (529)
Maturities, call and principal payments 3,713 1,655
Securities held to maturity:
Purchases - (180)
Maturities, call and principal payments 1,223 1,058
Proceeds from sale of non-residential loans 68 180
Net change in loans (7,594) (2,386)
Premises and equipment expenditures (41) (81)
------- -------
Net cash from investing activities (7,324) (283)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits 7,761 (270)
Federal funds purchased (450) -
Proceeds from long-term FHLB borrowings 8,350 2,000
Repayment of long-term FHLB borrowings (86) (85)
Dividends paid (247) (196)
------- -------
Net cash from financing activities 15,328 1,449
------- -------
NET CHANGE IN CASH AND CASH EQUIVALENTS 8,693 1,882
Cash and cash equivalents at beginning of year 2,188 5,477
------- -------
CASH AND CASH EQUIVALENTS AT JUNE 30 $10,881 $ 7,359
======= =======
Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest $ 1,241 $ 1,156
Income taxes - federal $ 269 $ 245
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
For the six months ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Accumulated
Other
(In thousands) Common Paid in Retained Comprehensive
Stock Capital Earnings Income Total
------- ------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1997 $ 1,487 $ 2,559 $ 5,319 $ 32 $ 9,397
Net income 592 592
Unrealized gain (loss) on securities (16) (16)
--------
Comprehensive income 576
Cash dividends ($ .33 per share) (196) (196)
------- ------- ------- ---- --------
Balance, June 30, 1997 $ 1,487 $ 2,559 $ 5,715 $ 16 $ 9,777
======= ======= ======= ==== ========
Balance, January 1, 1998 $ 2,975 $ 2,561 $ 4,652 $ 28 $ 10,216
Net income 623 623
Unrealized gain (loss) on securities (2) (2)
--------
Comprehensive income 621
Cash dividends ($ .415 per share) (246) (246)
------- ------- ------- ---- --------
Balance, June 30, 1998 $ 2,975 $ 2,561 $ 5,029 $ 26 $ 10,591
======= ======= ======= ==== ========
</TABLE>
See accompanying notes to 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, 1998 and December 31,
1997, the results of operations and cash flows for the six month periods
ended June 30, 1998 and 1997, and the change in shareholders' equity for
the six month periods ended June 30, 1998 and 1997.
2. The results of operations for the six months ended June 30, 1998 are not
necessarily indicative of the results to be expected for the full year.
3. The accompanying unaudited Consolidated Financial Statements and the notes
thereto should be read in conjunction with the Notes to Consolidated
Financial Statements and the notes included therein, for the fiscal year
end, 1997, included in the Registrant's 1997 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 are
defined as all loans which are accounted for as non-accrual; loans 90 days
or more past due and still accruing interest; or loans which have been
renegotiated due to the borrowers' inability to comply with the original
terms. As of June 30, 1998, non-performing loans totaled $220,000 or .32%
of total loans. This represents an increase of $11,000 from the $209,000
balance at December 31, 1997.
<TABLE>
<CAPTION>
June 30, December 31,
Non-performing loans 1998 1997
----------------------------- ---------- -----------
<S> <C> <C>
Non-accrual $ 131,000 $ 48,000
90 days or more past due 89,000 161,000
Renegotiated --- ---
--------- ---------
$ 220,000 $ 209,000
========= =========
</TABLE>
A loan is considered impaired when full collection of principal and interest
is not expected. There were no impaired loans in the portfolio at June 30,
1998 or December 31, 1997.
5
<PAGE> 8
5. A summary of the activity in the allowance for loan losses for the six
months ended June 30, follows:
<TABLE>
<CAPTION>
(In thousands) 1998 1997
---- ----
<S> <C> <C>
Balance - beginning of period $1,035 $1,020
Provision charged to operating period (16) 0
Loans charged-off (11) (1)
Recoveries 17 13
------ ------
Balance, end of period $1,025 $1,032
====== ======
</TABLE>
6. The provision for income taxes represents federal income tax expense
calculated using annualized rates on taxable income generated during the
respective periods.
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.
FINANCIAL CONDITION
Total assets at June 30, 1998 increased from December 31, 1997 by 18.65% or
$15,108. This increase resulted primarily from strong growth in mortgage
lending. This growth was funded largely by an increase in Federal Home Loan
Bank borrowings.
The allowance for loan losses remains strong . At June 30, 1998 the
allowance was equal to 1.51% of average total loans outstanding, down from
1.69% at December 31, 1997.
RESULTS OF OPERATIONS
Net income for the six months ended June 30, 1998 totaled $303,000 compared
to $295,000 in 1997. Basic earnings per share for 1998 were $.51 compared to
$.50 for the same period in 1997. Diluted earnings per share were $.51 for
1998 compared to $.49 in 1997.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Net interest income for the first six months of 1998 increased 5.1% or
$87,000 compared to the same period in 1997. The increase is primarily a
result of strong growth in the real estate mortgage loan portfolio. Loans
grew by $7,515,000 or 12.25% during the first half of 1998 compared to an
increase of $2,216,000 or 4.28% for the same period in 1997. Total deposits
increased 12.0% or $7,761,000. This growth was divided between interest
bearing and non interest bearing deposits. Non interest bearing deposits
increased $1,066,000 while interest bearing deposits increased $6,695,000.
Net interest margin for the first six months of 1998 was 4.64% compared to
4.94% for the same period in 1997. Lower rates, particularly in the mortgage
lending area contributed to the decline in margin.
A decrease of $5,000 in non interest income for the first six months of
1998, compared to the same period in 1997, is due primarily to losses
totaling $18,000 incurred on called securities which were partially offset
by increased fee income from ATM surcharges.
Non interest expense for the first six months of 1998 increased $67,000
compared to the same period in 1997. This is due primarily to increased
salary and benefit expenses as well as increased marketing and data
processing costs.
The provision for loan losses was reduced $17,000 for the first six months
of 1998. This reduction corresponded directly to the recoveries booked thus
far in 1998 and is in response to the previous five consecutive years of net
recoveries. The 1997 provision for the same period was $0.
The federal income tax provision for the first six months of 1998 was
$254,000, up from $232,000 for the same period in 1997. This increase
reflects a higher taxable income for 1998.
LIQUIDITY AND INTEREST RATE SENSITIVITY
The primary objective of asset/liability management is to assure the
maintenance of adequate liquidity and maximize net interest income by
maintaining appropriate maturities and balances between interest sensitive
earning assets and interest bearing liabilities. Liquidity management
insures sufficient funds are maintained to meet the cash withdrawal
requirements of depositors and the credit demand of borrowers. Sources of
liquidity include federal funds sold, investment security maturities and
principal payments. A net average balance of $2,141,000 in federal funds
sold was maintained during the first half of 1998. As a member of the
Federal Home Loan Bank system, the Bank has access to an alternate funding
source, lower cost for credit services, and an additional tool to manage
interest rate risk. Throughout the first half of 1998, the Bank used this
source of funding to offset new mortgage loan demand. Other sources of
liquidity include internally generated cash flow, repayments and maturities
of loans, borrowing and normal deposit growth. The primary source of funds
for the parent company is the upstream of dividends from the Bank.
Management believes these sources of liquidity are sufficient for the Bank
and parent company to continue current business plans.
At June 30, 1998 the securities available for sale were valued at
$7,010,000. It is not anticipated that management will use these funds due
to the optional sources available. Interest rate sensitivity management
seeks to maximize net interest margins through periods of changing interest
rates. The Bank develops strategies to assure desired levels of interest
sensitive assets and interest bearing liabilities mature or reprice within
selected time frames.
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Strategies include the use of variable rate loan products in addition to
managing deposit accounts and maturities in the investment portfolio. The
following table, 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 handing as "GAP Management". At June 30, 1998, the percentage of rate
sensitive assets to rate sensitive liabilities within the one-year time
horizon was 110.56%.
The table shows the Bank's GAP position as of June 30, 1998. The Bank has an
asset sensitive position of $4,281, which indicates higher net interest
income may be earned if rates increase during the period. Due to the
limitations of GAP analysis, modeling is also used to enhance measurement
and control. Management is continually reviewing its interest rate risk
position and modifying its strategies based on projections to minimize the
impact of future interest rate declines.
8
<PAGE> 11
<TABLE>
<CAPTION>
GAP Measurement
(Dollars in thousands)
Over
0-30 31-90 Second Third Fourth Annual 1 - 3 3 - 5 Five
ASSETS Days Days Quarter Quarter Quarter Total Years Years Years Total
- ----------------------------- ---- ----- ------- ------- ------- ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans* $11,722 $ 4,057 $ 5,356 $ 4,545 $ 4,683 $30,363 $10,064 $13,691 $20,869 $74,987
Loan repayment offset - - - - - - - - - (6,148)
Allowance for loan losses - - - - - - - - - (1,025)
Federal funds sold 8,350 - - - - 8,350 - - - 8,350
Investments** 2,272 1,344 565 225 1,706 6,112 4,174 1,114 3,264 14,664
Mortgage-backed repayments - - - - - - - - - (800)
Other non-earning assets - - - - - - - - - 5,947
---------------------------------------------------------------------------------------------------
Total $22,344 $ 5,401 $ 5,921 $ 4,770 $ 6,389 $44,825 $14,238 $14,805 $24,133 $95,975
LIABILITIES
- -----------------------------
Non interest bearing deposits 350 690 1,134 1,040 1,040 4,254 2,363 2,363 473 9,453
Interest bearing deposits 7,106 9,512 6,153 6,694 6,096 35,561 13,678 7,545 6,008 62,792
Federal funds purchased - - - - - - - - - -
Long-term FHLB borrowings - - 141 88 500 729 2,922 8,030 250 11,931
Other liabilities - - - - - - - - - 1,282
Capital - - - - - - - - - 10,517
---------------------------------------------------------------------------------------------------
Total $ 7,456 $10,202 $ 7,428 $ 7,822 $ 7,636 $40,544 $18,963 $17,938 $ 6,731 $95,975
GAP $14,888 $(4,801) $(1,507) $(3,052) $(1,247) $ 4,281 $(4,725) $(3,133) $17,402 $ -
Cumulative GAP 14,888 10,087 8,580 5,528 4,281 4,281 (444) (3,577) 13,825 -
GAP Ratio 299.68% 52.94% 79.71% 60.98% 83.67% 110.56% 75.08% 82.53% 358.54% -
</TABLE>
* Incorporates prepayment projections for certain assets which may shorten the
time frame for repricing or maturity compared to contractual runoff.
** Maturities reflect probable prepayments and calls.
CAPITAL RESOURCES
The Corporation's capital adequacy is reviewed continuously. This ensures both
compliance with regulatory requirements and availability of sufficient capital
to meet current and future funding needs.
Shareholders' equity increased $375,000 or 3.67% to $10,591,000 at June 30,
1998. This represents 11.02% of total assets. At June 30, 1997, the similar
ratio of shareholders' equity to total assets was 12.78%. The Corporation has a
strong capital position that will continue to meet our needs throughout 1998.
9
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED).
Regulators established "risk-based" capital guidelines that became effective
December 31, 1990. Under the guidelines, minimum capital levels are
established for risk based and total assets based on perceived risk in asset
categories and certain off-balance-sheet items, such as loan commitments and
standby letters of credit. On June 30, 1998, the Bank had a "risk-based"
total capital to asset ratio of 18.39%. The ratio exceeds the requirements
established by regulatory agencies as shown below.
<TABLE>
<CAPTION>
CAPITAL June 30, 1998
(dollars in thousands) Risk-based Leverage
---------- --------
<S> <C> <C>
Actual amount $ 11,259 $ 10,491
Actual percent 18.39% 12.00%
Required amount $ 4,898 $ 3,496
Required percent 8.00% 4.00%
Excess amount $ 6,361 $ 6,995
</TABLE>
Bank management does not perceive that future rate changes or inflation will
have a material impact on capital adequacy. It is the opinion of management
that capital and shareholders' equity is adequate and will continue to be so
throughout 1998.
FEDERAL INCOME TAXES
The provision for federal income taxes for the six-month periods ending June
30, 1998 and 1997 totaled $254,000 and $232,000 respectively. The increase
in taxes is reflective of the increase in taxable income for the above
mentioned time periods.
OTHER MATTERS
SFAS No. 128, "Earnings per Share," was issued by the Financial Accounting
Standards Board in 1997. It requires computation of basic earnings per share
based on net income divided by the weighted average of shares outstanding
during the period as well as the computation of diluted earnings per share
which shows the dilutive effect of additional common shares issuable under
stock options. All prior period amounts have been restated to be comparable.
10
<PAGE> 13
PART II.
ITEM 1. LEGAL PROCEEDINGS
The Corporation is not involved in any 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, 1998.
ITEM 2. CHANGES IN SECURITIES
During the six months ended June 30, 1998, there weren't any changes in the
Registrant's securities, relevant to the requirements of this section, that
would cause any shareholder's rights to be materially modified, limited or
qualified.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No defaults have occurred 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 23, 1998.
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 23, 1997, as previously filed. There have been no
further matters submitted to a vote of the Registrant's security holders during
the six months ended June 30, 1998.
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 13.
2. Reports on Form 8-K No reports on Form 8-K were filed for the three months
ended June 30, 1998.
11
<PAGE> 14
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 5, 1998 By: /s/ Timothy Gaylord
-------------- -----------------------------------
Timothy Gaylord
President
Date: August 5, 1998 By: /s/ Lois A. Toth
-------------- -----------------------------------
Lois A. Toth
Treasurer
12
<PAGE> 15
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 Debentures
- 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 (filed herewith)
28 Additional Exhibits - Not applicable
13
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1998 SECOND
QUARTER 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,496
<INT-BEARING-DEPOSITS> 35
<FED-FUNDS-SOLD> 8,350
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 7,010
<INVESTMENTS-CARRYING> 6,854
<INVESTMENTS-MARKET> 7,046
<LOANS> 68,849
<ALLOWANCE> 1,025
<TOTAL-ASSETS> 96,120
<DEPOSITS> 72,182
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,413
<LONG-TERM> 11,934
0
0
<COMMON> 2,975
<OTHER-SE> 7,616
<TOTAL-LIABILITIES-AND-EQUITY> 96,120
<INTEREST-LOAN> 2,768
<INTEREST-INVEST> 516
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3,284
<INTEREST-DEPOSIT> 1,235
<INTEREST-EXPENSE> 1,475
<INTEREST-INCOME-NET> 1,809
<LOAN-LOSSES> (16)
<SECURITIES-GAINS> (18)
<EXPENSE-OTHER> 1,233
<INCOME-PRETAX> 877
<INCOME-PRE-EXTRAORDINARY> 877
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<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.04
<YIELD-ACTUAL> 4.64
<LOANS-NON> 131
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<ALLOWANCE-OPEN> 1,035
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<ALLOWANCE-CLOSE> 1,025
<ALLOWANCE-DOMESTIC> 108
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 917
</TABLE>
