FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- - ----- ACT OF 1934
For the quarterly period ended March 31, 1996
- - ----- TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-24302
COLUMBIA BANCORP
(exact name of small business issuer as specified in its charter)
Maryland 52-1545782
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10480 Little Patuxent Parkway, Columbia, Maryland 21044
(Address of principal executive offices)
(410) 465-4800
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 2,147,003 shares as of May
13, 1996.
Transitional Small Business Disclosure Format (Check one): Yes ; No X
<PAGE>
COLUMBIA BANCORP
C O N T E N T S
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Statements of Financial Condition as of
March 31, 1996 and December 31, 1995 3
Statements of Income for the Three Months
Ended March 31, 1996 and 1995 4
Statements of Stockholders' Equity for the Three
Months Ended March 31, 1996 and the Years
Ended December 31, 1995 and 1994 5
Statements of Cash Flows for the Three Months
Ended March 31, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 16
(2)
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(unaudited)
ASSETS
<S> <C> <C>
Cash and due from banks $ 10,830,310 $ 10,182,474
Federal funds sold 18,693,602 17,909,575
Investment securities (fair value $22,150,130
in 1996 and $24,740,814 in 1995) 22,268,778 24,766,654
Securities available-for-sale 6,503,374 10,574,349
Residential mortgage loans originated-for-sale 2,040,166 1,045,170
Loans:
Commercial 29,833,474 29,274,548
Real estate development and construction 96,562,304 89,877,012
Real estate mortgage:
Residential 12,612,163 12,726,384
Commercial 10,904,586 9,107,672
Retail, principally residential equity
lines of credit 50,256,762 49,225,092
Credit card 1,328,270 1,527,825
----------- -----------
Total loans 201,497,559 191,738,533
Less: Unearned income, net of deferred
origination costs 1,118,075 1,047,163
Allowance for credit losses 3,115,070 2,929,177
----------- -----------
Loans, Net 197,264,414 187,762,193
----------- -----------
Other real estate owned 80,145 89,145
Investment in and advances to
limited partnerships 426,391 450,391
Property and equipment, net 6,893,055 6,580,100
Prepaid expenses and other assets 3,692,100 3,664,577
------------ ------------
Total assets $268,692,335 $263,024,628
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand deposits $ 33,208,858 $ 32,553,238
Interest-bearing deposits 192,186,754 185,608,284
----------- -----------
Total deposits 225,395,612 218,161,522
Short-term borrowings 12,425,525 15,299,267
Accrued expenses and other liabilities 1,951,500 1,500,285
----------- -----------
Total liabilities 239,772,637 234,961,074
----------- -----------
Stockholders' equity:
Common stock, $.01 par value per share;
authorized 9,550,000 shares; outstanding
2,147,003 shares and 2,145,753 shares,
respectively 21,470 21,457
Additional paid-in capital 22,588,988 22,576,938
Retained earnings 6,322,238 5,513,921
Net unrealized loss on investments
available-for-sale (12,998) ( 48,762)
----------- -----------
Total stockholders' equity 28,919,698 28,063,554
----------- -----------
Total liabilities and
stockholders' equity $268,692,335 $263,024,628
=========== ===========
</TABLE>
See the accompanying Notes to Consolidated Financial Statements.
(3)
<PAGE>
COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
Three Months Ended
March 31
1996 1995
(unaudited)
<S> <C> <C>
Interest income:
Loans $5,493,517 $4,564,120
Investment securities 451,070 472,022
Federal funds sold 112,449 23,196
--------- ---------
Total interest income 6,057,036 5,059,338
--------- ---------
Interest expense:
Deposits 1,934,440 1,486,346
Short-term borrowings 116,369 285,467
---------- ---------
Total interest expense 2,050,809 1,771,813
---------- ---------
Net interest income 4,006,227 3,287,525
Provision for credit losses 184,600 116,000
---------- ---------
Net interest income after
provision for credit losses 3,821,627 3,171,525
---------- ---------
Noninterest income:
Gains and fees on sales of mortgage loans 177,021 145,642
Fees charged for services 218,004 147,667
Other 96,356 58,890
--------- ---------
Total noninterest income 491,381 352,199
--------- ---------
Noninterest expense:
Salaries and employee benefits 1,389,797 1,201,398
Equipment 185,133 162,519
Occupancy, net 187,991 156,076
Deposit insurance premiums and assessments 58,777 109,538
Marketing 139,992 107,467
Cash management services 98,752 89,827
Data processing 93,861 77,841
Legal and professional fees 48,558 80,470
Loss on disposition of property -- 128,466
Equity in net loss of limited partnerships 24,000 24,000
Net expense on other real estate owned 12,868 38,776
Other operating expenses 399,262 315,384
--------- ---------
Total noninterest expense 2,638,991 2,491,762
--------- ---------
Income before income taxes 1,674,017 1,031,962
Income tax expense 651,000 398,650
--------- ---------
Net income $1,023,017 $ 633,312
========= =========
Per share data:
Net income per common share:
Primary $ 0.45 $ 0.44
Fully diluted $ 0.45 $ 0.41
Cash dividends declared:
Common $ 0.10 $ 0.05
Preferred $ na $ 0.60
</TABLE>
See the accompanying Notes to Consolidated Financial Statements.
(4)
<PAGE>
COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Information for the three months
ended March 31, 1996 is unaudited)
<TABLE>
<CAPTION>
Net
Unrealized
Loss on
Additional Investments Total
Preferred Common Paid-in Retained Available- Stockholders'
Stock Stock Capital Earnings for-Sale Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 $ 4,500 10,400 14,209,093 1,235,104 - 15,459,097
Cash dividends declared on
preferred stock - - - (540,000) - (540,000)
Cash dividends declared on
common stock - - - (145,636) - (145,636)
Stock options exercised - 2 2,498 - - 2,500
Net income - - - 2,415,664 - 2,415,664
Net unrealized loss on
investments available-
for-sale - - - - (318,548) (318,548)
------- ------- ---------- --------- -------- ----------
Balance at December 31, 1994 4,500 10,402 14,211,591 2,965,132 (318,548) 16,873,077
Cash dividends declared on
Series A preferred stock - - - (454,072) - (454,072)
Cash dividends declared on
common stock - - - (425,889) - (425,889)
Conversion of 444,000 shares
of Series A preferred stock,
net of cash in lieu of
fractional shares (4,440) 4,144 170 - - (126)
Issuance of 685,903 shares of
common stock, net of costs
of issuance - 6,859 8,380,840 - - 8,387,699
Redemption for cash of 6,000
shares of Series A preferred
stock (60) - (62,940) - - (63,000)
Stock options exercised - 52 47,277 - - 47,329
Net income - - - 3,428,750 - 3,428,750
Change in net unrealized
loss on securities
available-for-sale - - - - 269,786 269,786
-------- ------- ---------- --------- -------- ----------
Balance at December 31, 1995 - 21,457 22,576,938 5,513,921 (48,762) 28,063,554
Cash dividends declared on
common stock - - - (214,700) - (214,700)
Stock options exercised - 13 12,050 - - 12,063
Net income - - - 1,023,017 1,023,017
Change in net unrealized
loss on securities
available-for-sale - - - - 35,764 35,764
--------- -------- ---------- ---------- -------- -----------
Balance at March 31, 1996 $ - 21,470 22,588,988 6,322,238 (12,998) 28,919,698
========= ======== ========== ========== ======== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
(5)
<PAGE>
COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,023,017 $ 633,312
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 185,341 151,963
Proceeds from the sale of residential
mortgage loans originated-for-sale 10,894,500 10,064,500
Disbursements for residential mortgage loans
originated-for-sale (11,889,496) (9,870,965)
Provision for credit losses 184,600 116,000
Net (charge-offs) recoveries 1,293 (61,304)
Provision for losses on other real estate owned 9,000 538
Increase (decrease) in unearned income, net of
deferred origination costs 70,912 (28,246)
Loss on disposition of assets --- 128,466
Decrease in investment in and advances
to limited partnerships 24,000 24,000
Decrease (increase) in prepaid expenses and
other assets (29,134) 158,160
Increase in accrued expenses and other liabilities 451,090 212,082
---------- ---------
Net cash provided by operating activities 925,123 1,528,506
---------- ---------
Cash flows provided by (used in) investing activities:
Loan disbursements in excess of principal
repayments (8,571,116) (9,030,479)
Loan purchases (2,065,281) ---
Loan sales 873,120 1,585,202
Purchases of investment securities (4,493,895) (1,996,735)
Proceeds from maturities and principal
repayments of investment securities 11,102,497 2,562,645
Additions to other real estate owned --- (86,676)
Sales of other real estate owned --- 646,075
Purchases of property and equipment (516,379) (234,925)
Sales of property and equipment 19,958 ---
Proceeds received on advances to
limited partnerships --- 20,000
----------- ---------
Net cash used in investing activities (3,651,096) (6,534,893)
----------- ---------
Cash flows provided by (used in) financing activities:
Cash dividend distributed on preferred stock --- (270,000)
Cash dividend distributed on common stock (214,575) (52,013)
Proceeds from stock options exercised 12,063 ---
Net increase (decrease) in deposits 7,234,090 (251,476)
Increase (decrease) in short-term borrowings (2,873,742) 5,393,823
----------- ------------
Net cash provided by financing activities 4,157,836 4,820,334
----------- ------------
Net increase (decrease) in cash and cash
equivalents 1,431,863 (186,053)
Cash and cash equivalents at beginning of period 28,092,049 13,527,352
----------- ------------
Cash and cash equivalents at end of period $29,523,912 $ 13,341,299
=========== ============
Supplemental disclosures of cash flow information:
Interest paid on deposits and short-term
borrowings $ 2,144,360 $ 1,993,766
Income taxes paid 120,000 25,000
Decrease in unrealized loss on securities
available-for-sale, net taxes 35,764 130,056
=========== ============
</TABLE>
See the accompanying Notes to Consolidated Financial Statements.
(6)
<PAGE>
COLUMBIA BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information as of and for the three months
ended March 31, 1996 and 1995 is unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements for Columbia Bancorp
(the "Company") have been prepared in accordance with the instructions for Form
10-QSB and, therefore, do not include all information and notes necessary for a
fair presentation of financial condition, results of operations and cash flows
in conformity with generally accepted accounting principles. The consolidated
financial statements should be read in conjunction with the audited financial
statements included in the Company's 1995 Annual Report on Form 10-KSB.
The consolidated financial statements include the accounts of the
Company's subsidiary, The Columbia Bank and its wholly-owned subsidiary McAlpine
Enterprises, Inc. (collectively, the "Bank"). All significant intercompany
balances and transactions have been eliminated.
The consolidated financial statements as of March 31, 1996 and for the
three months ended March 31, 1996 and 1995 are unaudited but include all
adjustments (consisting only of normal recurring adjustments) which the Company
considers necessary for a fair presentation of financial position and results of
operations for those periods. The Consolidated Statements of Income for the
three months ended March 31, 1996 are not necessarily indicative of the results
that will be achieved for the entire year.
NOTE 2 - PER SHARE DATA
Net income per common share is based upon the weighted average number
of common shares outstanding during the periods, adjusted by any outstanding
stock options, warrants, and other instruments determined to be common stock
equivalents.
NOTE 3 - COMMITMENTS AND CONTINGENT LIABILITIES
The Company is party to financial instruments with off-balance-sheet
risk in the normal course of business in order to meet the financing needs of
customers. These financial instruments include commitments to extend credit,
standby letters of credit and mortgage loans sold with limited recourse.
The Company applies the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments. A summary
of the financial instruments at March 31, 1996 whose contract amounts represent
potential credit risk is as follows:
March 31, 1996
(in thousands)
Commitments to extend credit(1) $103,198
Standby letters of credit 12,580
Limited recourse on mortgage
loans sold 5,790
(1) Includes unused lines of credit totaling $95.1 million
regardless of whether fee paid and whether adverse change
clauses exist. The amount also includes commitments to extend
new credit totaling $8.1 million.
(7)
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity
Liquidity describes the ability of the Company to meet financial
obligations, including lending commitments and contingencies, that arise during
the normal course of business. Liquidity is primarily needed to meet the
borrowing and deposit withdrawal requirements of the customers of the Company,
as well as to meet current and planned expenditures.
The Company's major sources of liquidity ("financing activities" as
used in the Consolidated Statements of Cash Flows) are the Bank's deposit base
and stockholders' equity. At March 31, 1996, total deposits were $225.4 million.
Core deposits, defined as all deposits except certificates of deposit of
$100,000 or more, totaled $217.0 million or 96.3% of total deposits.
Stockholders' equity totaled $28.9 million at March 31, 1996. Also, the Bank has
established a credit line with the Federal Home Loan Bank of Atlanta ("FHLB") as
an additional source of liquidity. At March 31, 1996, the Company had no
advances from the FHLB outstanding. Collateral must be pledged to the FHLB
before advances can be obtained. At March 31, 1996 the Company's approved credit
limit with the FHLB was $32.0 million and the Company had collateral sufficient
to borrow up to $34.0 million. Borrowings above the approved credit limit
require special approval. In addition, liquidity is also provided through the
Company's portfolio of cash, interest-bearing deposits in other banks, and
federal funds sold. Such assets totaled $29.5 million or 11.0% of total assets
at March 31, 1996.
Capital Resources
Bank holding companies currently are required to maintain a minimum
ratio of total capital to risk- weighted assets (including certain
off-balance-sheet activities, such as standby letters of credit) of 8%. At least
half of the total capital is required to be "Tier 1 capital", consisting of
common equity, retained earnings, noncumulative perpetual preferred stock and a
limited amount of cumulative perpetual preferred stock, less certain goodwill
items and other intangible assets. The remainder ("Tier 2 capital") may consist
of (a) the allowance for loan losses of up to 1.25% of risk-weighted risk
assets, (b) excess of qualifying perpetual preferred stock, (c) hybrid capital
instruments, (d) perpetual debt, (e) mandatory convertible debt securities, and
(f) a limited amount of subordinated debt and intermediate-term preferred stock
up to 50% of Tier 1 capital. The maximum amount of supplementary capital
elements that qualifies as Tier 2 capital is limited to 100% of Tier 1 capital
net of goodwill and certain other intangible assets. Total capital is the sum of
Tier 1 and Tier 2 capital less reciprocal holdings of other banking
organizations' capital instruments, investments in unconsolidated subsidiaries
and any other deductions as determined by the Federal Reserve Board (determined
on a case by case basis or as a matter of policy after formal rule-making).
In addition to the risk-based capital guidelines, the Federal Reserve
Board had adopted a minimum Tier 1 capital leverage ratio, under which a bank
holding company must maintain a minimum level of Tier 1 capital to average total
consolidated assets of at least 3% in the case of a bank holding company that
has the highest regulatory examination rating and is not contemplating
significant growth or expansion. All other bank holding companies are expected
to maintain a leverage ratio of at least 1.0% to 2.0% above the stated minimum.
The leverage capital ratio assists in the assessment of the
(8)
<PAGE>
capital adequacy of bank holding companies. Its principal objective is to place
a constraint on the maximum degree to which a banking organization can leverage
its equity capital base, even if it invests primarily in assets with low risk-
weights.
The following table summarizes the Company's capital ratios at March 31, 1996:
Minimum
Columbia Bancorp Regulatory
March 31, 1996 Requirements
Risk-based capital ratios
Tier 1 capital 12.63% 4.00%
Total capital 13.79 8.00
Tier 1 capital leverage ratio 10.88 3.00
(9)
<PAGE>
Material Changes in Financial Condition
Cash and Due from Banks
Cash and due from banks represents cash on hand, cash on deposit with
other banks and cash items in the process of collection. As a result of the
Company's cash management services provided to large, sophisticated corporate
customers (which includes processing coin and currency transactions for, and
checks received by, retail customers), the Company's cash balances may fluctuate
more widely on a daily basis and may be higher than industry averages for banks
of a similar asset size.
Loans
At March 31, 1996, the Company's loan portfolio, net of unearned
income, totaled $200.4 million, or 74.6% of its total assets of $268.7 million.
The categories of loans in the Company's portfolio are commercial, real estate
development and construction, residential and commercial mortgages and consumer.
Real estate development and construction loans constitute the largest
portion of the Company's lending activities. Since December 31, 1995, real
estate development and construction loans accounted for $6.7 million of the $9.8
million increase in total loans. Increases in commercial mortgages of $1.8
million and consumer loans of $1.0 million accounted for the remainder of the
growth. The real estate development and construction portfolio consisted of the
following at March 31, 1996:
Amount Percent
(dollars in thousands)
Residential construction (1) $52,677 54.6%
Commercial construction 1,385 1.4
Residential land development 33,888 35.1
Resident land acquisition (2) 8,612 8.9
------- -----
$96,562 100.0%
======= ======
(1) Includes $16.9 million of loans to individuals for
construction of their primary personal residences.
(2) Includes $2.5 million of loans to individuals for the purchase
of residential building lots.
The real estate development and construction loan portfolio primarily
represents loans for the construction of single family dwellings. At March 31,
1996, loans to individuals for the construction of their primary personal
residences accounted for $16.9 million of the $52.7 million residential
construction portfolio. These loans are typically secured by the property under
construction, frequently include additional collateral (such as a second
mortgage on the borrower's present home), and commonly have maturities of six to
twelve months. The remaining $35.8 million of residential construction loans
represented loans to residential builders and developers. Approximately 46% of
these loans were for the construction of residential homes for which a binding
sales contract existed
(10)
<PAGE>
and the prospective buyers had been pre-qualified for permanent mortgage
financing by either third-party lenders (mortgage companies or other financial
institutions) or the Company. To date, permanent mortgage loan financing has
primarily been provided by third-party lenders. The Company attempts to obtain
the permanent mortgage loan under terms, conditions and documentation standards
which permit the sale of the mortgage loan in the secondary mortgage loan
market. The Company's practice is to immediately sell substantially all
residential mortgage loans in the secondary market with servicing released.
Loans for the development of residential land represented the second
largest component of the real estate development and construction loan portfolio
at March 31, 1996. Generally, development loans are extended only when evidence
is provided that the lots under development will be sold to builders
satisfactory to the Company.
The Company makes residential real estate development and construction
loans generally to provide interim financing on property during the construction
period. These loans are typically made for 80% or less of the appraised value of
the property. Residential real estate development and construction loan funds
are disbursed periodically as pre-specified stages of completion are attained
based upon site inspections. Interest rates on these loans are usually
adjustable.
The Company has successfully limited losses in this area of lending
through careful monitoring of development and construction loans with on-site
inspections and control of disbursements on loans in process. Development and
construction loans are secured by the properties under development/construction
and personal guarantees are typically obtained. Further, to assure that reliance
is not placed solely upon the value of the underlying collateral, the Company
considers the financial condition and reputation of the borrower and any
guarantors, the amount of the borrower's equity in the project, independent
appraisals, cost estimates and pre-construction sale information.
Allowance for Credit Losses
The Company provides for credit losses through the establishment of an
allowance for credit losses (the "Allowance") by provisions charged against
earnings. Based upon management's evaluation, monthly provisions are made to
maintain the Allowance at a level adequate to absorb potential losses within the
loan portfolio. The factors used by management in determining the adequacy of
the Allowance include the historical relationships among loans outstanding;
credit loss experience and the current level of the Allowance; a continuing
evaluation of non-performing loans and loans classified by management as having
potential for future deterioration taking into consideration collateral value
and the financial strength of the borrower and guarantors; and a continuing
evaluation of the present and future economic environment. Regular review of the
loan portfolio's quality is conducted by the Company's staff. In addition,
independent consultants, bank regulatory agencies and independent accountants
periodically review the loan portfolio. At March 31, 1996 the Allowance was
1.55% of total loans, net of unearned income. The Allowance at March 31, 1996 is
considered by management to be sufficient to address the possible risks in the
current loan portfolio.
(11)
<PAGE>
The changes in the Allowance are presented in the following table.
<TABLE>
<CAPTION>
Three months ended March 31,
1996 1995
(dollars in thousands)
<S> <C> <C>
Allowance for credit losses -
beginning of period $2,929 $2,578
Provision for credit losses 185 116
Charge-offs (5) (87)
Recoveries 6 26
----- -----
Allowance for credit losses -
end of period $3,115 $2,633
===== =====
Allowance as a percentage of loans
receivable, net of unearned income 1.55% 1.55%
Allowance as a percentage of
non-performing and past due loans (1) 256.68% 151.82%
</TABLE>
-------------------------------------
(1) Non-performing and past due loans include loans on nonaccrual
status, restructured loans and loans past due 90 days or more.
At March 31, 1996 and 1995, non-performing and past-due loans
totaled $1.2 million and $1.7 million, respectively. There is
no direct relationship between the size of the Allowance (and
the related provision for credit losses) and the
non-performing and past-due loans. Accordingly, the ratio of
Allowance to non-performing and past-due loans may tend to
fluctuate significantly.
Other Real Estate Owned
At March 31, 1996, other real estate owned totaling $80,000 represented
one residential building lot which was under contract of sale. The sale was
finalized in April, 1996, eliminating all other real estate owned.
(12)
<PAGE>
Results of Operations
The Company reported net income of $1.0 million for the three months
ended March 31, 1996 as compared to $633,000 for the corresponding period during
1995, representing a 61.5% increase. Net income per share on a fully-diluted
basis was $.45 for the three months ended March 31, 1996 versus $.41 for the
three months ended March 31, 1995. The percentage increase in net income per
share was much less than the percentage increase in net income as a result of
the effect of the issuance of 685,903 shares of common stock in June 1995.
Net Interest Income
Net interest income increased $719,000 or 21.9% during the three months
ended March 31, 1996 as compared to the same period in 1995. Improvement in net
interest income was the result of the continued growth of the loan portfolio.
The ratio of average loans, net of unearned income to average interest-bearing
liabilities increased from 92.4% during the three months ended March 31, 1995 to
99.5% for the same period in 1996. Correspondingly, the net yield on earning
assets increased from 6.37% to 6.61% during the respective periods.
The following table provides further analysis of the increase in net
interest income during the three months ended March 31, 1996 over the same
period in 1995.
<TABLE>
<CAPTION>
Three months ended March 31, 1996
compared to the three months ended
March 31, 1995
Increase/(Decrease)
Increase due to: (1)
(Decrease) Rate Volume
(in thousands)
<S> <C> <C> <C>
Interest income:
Loans $ 929 25 904
Investment securities and
securities available-for-sale (20) 99 (119)
Federal funds sold 89 6 83
----- ----- -----
Total interest income 998 130 868
----- ----- -----
Interest expense:
Deposits 448 161 287
Short-term borrowings (169) (67) (102)
----- ----- -----
Total interest expense 279 94 185
----- ----- -----
Net interest income $ 719 36 683
===== ===== =====
</TABLE>
(1) The changes in interest income and interest expense due to
both rate and volume have been allocated to rate and volume
changes in proportion to the absolute dollar amounts of the
change in each.
(13)
<PAGE>
Noninterest Income
Noninterest income totaled $491,000 for the three months ended March
31, 1996 as compared to $352,000 for the corresponding period of 1995,
representing an increase of $139,000. The growth in noninterest income was
primarily attributable to an increase of $70,000 in fees charged for services,
which resulted from growth in deposits, including additional cash management
customers. In addition, gains and fees on sales of mortgages increased $31,000,
reflecting a higher volume of loan sales and slightly wider pricing margins.
Noninterest Expense
Noninterest expense increased $147,000 during the three months ended
March 31, 1996 as compared to the corresponding period in 1995. Increased
business activity, including core business growth and expansion efforts,
contributed to the increase in overhead during the first quarter of 1996 as
compared to the same period in 1995. Specifically, salaries and employee
benefits increased $188,000. Equipment and net occupancy costs increased an
aggregate $55,000. These increases reflected accelerating business activity. The
net increase in overhead during the first quarter of 1996 as compared to 1995
was mitigated by the loss on disposition of property of $128,000 recorded during
the first quarter of 1995. In addition, the increase was mitigated by the net
decline in deposit insurance premiums of $51,000 during the three months ended
March 31, 1996, as compared to 1995, resulting from the reduction in the
assessment rate charged on deposits insured by the Bank Insurance Fund ("BIF")
from $.23 per $100 of deposits to $0 per $100 of deposits. Deposits assessed by
the Saving Association Insurance Fund ("SAIF") continue to be assessed at $.23
per $100 of deposits. The Bank's deposit base is currently allocated
approximately 51% to BIF and 49% to SAIF.
(14)
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held April 29, 1996,
the following directors were elected based upon the identified voting statistics
to serve a three-year term expiring upon the date of the Company's 1999 Annual
Meeting or until their respective successors are duly elected and qualified.
Votes Cast
For Against Withheld
John M. Bond, Jr. 1,468,121 - 6,215
William L. Hermann 1,468,176 - 6,160
Harry L. Lundy, Jr. 1,468,176 - 6,160
Mary S. Scrivener 1,468,176 - 6,160
Theodore Venetoulis 1,468,176 - 6,160
The following are those directors of the Company who will continue to
serve as directors until the expiration of their terms upon the date of the
Company's annual meeting in their respective class years or until their
respective successors are duly elected and qualified.
Class of 1997 Class of 1998
Anand S. Bhasin James Clark, Jr.
John M. Bond, Sr. Hugh F. Z. Cole
Garnett Y. Clark, Jr. William Floyd
Robert J. Gaw Herschel Langenthal
Osborne A. Payne Richard McCready
Robert N. Smelkinson James R. Moxley, Jr.
Patricia Rouse
(15)
<PAGE>
ITEM 5. OTHER INFORMATION
On February 26, 1996, the Board of Directors of the Company declared a $.10 per
share cash dividend to common stockholders of record on March 15, 1996, payable
April 8, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K are set forth below.
Exhibit No. Reference
11.1 Information used in the computation Page 18
of net income per share
27.1 Financial Data Schedule Page 19
(b) Reports on Form 8-K
None
(16)
<PAGE>
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.
COLUMBIA BANCORP
PRINCIPAL EXECUTIVE:
May 13, 1996 John M. Bond, Jr.
- - ------------------------------ -----------------
Date President and Chief
Executive Officer
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
May 13, 1996 John A. Scaldara, Jr.
- - ------------------------------ ---------------------
Date Corporate Secretary and
Chief Financial Officer
(17)
COLUMBIA BANCORP AND SUBSIDIARY
INFORMATION USED IN THE COMPUTATION
OF NET INCOME PER COMMON SHARE
For the Three Months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
1995
Fully-
1996(1) Primary Diluted
<S> <C> <C> <C>
Net income $ 1,023,017 $ 633,312 633,312
Less accumulated dividends on Series A
preferred stock --- 135,000 ---
---------- --------- -------
Adjusted net income applicable to $ 1,023,017 $ 498,312 633,312
common shares ========== ========= ========
Weighted average common shares
outstanding 2,146,467 1,040,259 1,040,259
Effect of dilutive stock options and
warrants 103,936 83,216 81,478
Effect of Series A preferred stock --- --- 412,500
---------- --------- ---------
Total weighted average shares
outstanding 2,250,403 1,123,475 1,534,237
========== ========= =========
Net income per common share $ 0.45 $ 0.44 0.41
========== ========= =========
</TABLE>
- - -------------------------------------------
(1) Represents both primary and fully-diluted earnings per share.
(18)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from pages 3-14
of Form 10-QSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> $10,830,310
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 18,693,602
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,503,374
<INVESTMENTS-CARRYING> 22,268,778
<INVESTMENTS-MARKET> 22,150,130
<LOANS> 202,419,650
<ALLOWANCE> (3,115,070)
<TOTAL-ASSETS> 268,692,335
<DEPOSITS> 225,395,612
<SHORT-TERM> 12,425,525
<LIABILITIES-OTHER> 1,951,500
<LONG-TERM> 0
0
0
<COMMON> 21,470
<OTHER-SE> 28,898,228
<TOTAL-LIABILITIES-AND-EQUITY> 268,692,335
<INTEREST-LOAN> 5,493,517
<INTEREST-INVEST> 451,070
<INTEREST-OTHER> 112,449
<INTEREST-TOTAL> 6,057,036
<INTEREST-DEPOSIT> 1,934,440
<INTEREST-EXPENSE> 2,050,809
<INTEREST-INCOME-NET> 4,006,227
<LOAN-LOSSES> 184,600
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,638,991
<INCOME-PRETAX> 1,674,017
<INCOME-PRE-EXTRAORDINARY> 1,674,017
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,023,017
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.45
<YIELD-ACTUAL> 6.61
<LOANS-NON> 1,069,609
<LOANS-PAST> 143,999
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,435,243
<ALLOWANCE-OPEN> (2,929,177)
<CHARGE-OFFS> 5,220
<RECOVERIES> 6,513
<ALLOWANCE-CLOSE> (3,115,070)
<ALLOWANCE-DOMESTIC> (3,115,070)
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
