<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. ONE
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 018261
COMMUNITY FINANCIAL CORPORATION
(Exact name of small business issuer as specified in its charter)
DELAWARE 54-1532044
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
38 North Central Ave., Staunton, Va. 24401
(Address of principal executive offices zip code)
(540) 886-0796
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Number of shares of Common Stock, par value per share, $.01, outstanding at
the close of business on December 31, 1995: 1,269,698.
Transitional Small Business Disclosure Format (Check one)
Yes No X
<PAGE>
<PAGE>
COMMUNITY FINANCIAL CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Statements of Financial Condition
at December 31, 1995 (unaudited) and
March 31, 1995 (audited).......................................1
Consolidated Statements of Income for the
Three Months Ended December 31, 1995 and 1994
and for the Nine Months Ended December 31, 1995
and 1994 (unaudited)...........................................2
Consolidated Statements of Cash Flows for the
Nine Months Ended December 31, 1995 and
1994 (unaudited)...............................................3
Notes to Unaudited Interim Consolidated
Financial Statements...........................................4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................6
PART II. OTHER INFORMATION - II-1
<PAGE>
<PAGE>
COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31, March 31,
1995 1995
------------ -------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Cash (including interest bearing
deposits of approximately
$1,392,000 and $2,166,000) $ 4,002,089 $ 4,582,983
Securities
Held to maturity 5,818,151 4,268,530
Available for sale 1,718,430 524,790
Investment in Federal Home Loan
Bank stock, at cost 1,250,000 1,250,000
Loans receivable, net 139,828,857 134,515,658
Real estate owned 215,525 350,308
Property and equipment, net 3,738,543 3,846,007
Accrued interest receivable
Loans 791,424 671,753
Investments 124,184 97,266
Prepaid expenses and other assets 279,049 325,660
$157,766,252 $150,432,955
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $109,822,085 $105,013,566
Advances from Federal Home Loan
Bank 25,000,000 25,000,000
Advance payments by borrowers for
taxes and insurance 122,521 152,197
Other liabilities 1,246,778 714,758
Total Liabilities 136,191,384 130,880,521
Stockholders' Equity
Preferred stock $.01 par value,
authorized 1,000,000 shares,
none outstanding
Common stock, $.01 par value,
authorized 3,000,000 shares,
1,269,698 and 1,241,878 shares
outstanding 12,697 12,419
Additional paid in capital 4,651,634 4,540,632
Retained earnings 15,903,275 14,723,799
Net unrealized gain on securities
available for sale 1,007,262 275,584
Total Stockholders' Equity 21,574,868 19,552,434
$157,766,252 $150,432,955
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
------------------ -----------------
1995 1994 1995 1994
-------- ------ ------ ------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $3,007,517 $2,466,323 $8,802,833 $7,029,810
Investment securities 115,332 81,358 324,510 215,570
Other 35,930 43,261 99,723 122,947
Total interest income 3,158,779 2,590,942 9,227,066 7,368,327
INTEREST EXPENSE
Deposits 1,300,133 1,032,555 3,723,119 2,943,439
Borrowed money 378,274 229,210 1,144,476 651,704
Total interest expense 1,678,407 1,261,765 4,867,595 3,595,143
NET INTEREST INCOME 1,480,372 1,329,177 4,359,471 3,773,184
PROVISION FOR LOAN LOSSES 31,720 25,000 99,220 76,237
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,448,652 1,304,177 4,260,251 3,696,947
NONINTEREST INCOME
Service charges, fees
and commissions 109,155 95,427 320,038 275,191
Miscellaneous 5,108 6,794 18,127 20,368
Total noninterest
income 114,263 102,221 338,165 295,559
NONINTEREST EXPENSE
Compensation & benefits 295,456 266,231 860,376 811,486
Occupancy 96,191 84,835 280,778 263,791
Data processing 72,222 64,168 227,387 191,936
Federal insurance premium 60,608 58,610 180,401 176,230
Miscellaneous 180,237 154,581 538,125 458,767
Total noninterest
expense 704,714 628,425 2,087,067 1,902,210
INCOME BEFORE TAXES 858,201 777,973 2,511,349 2,090,296
INCOME TAXES 321,818 295,122 942,440 792,230
NET INCOME $ 536,383 $ 482,851 $1,568,909 $1,298,066
EARNINGS PER SHARE $ 0.42 $ 0.39 $ 1.25 $ 1.06
DIVIDENDS PER SHARE $ 0.11 $ 0.085 $ 0.31 $ 0.255
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
------------------------
1995 1994
----------- -----------
(Unaudited)
<S> <C>> <C>
OPERATING ACTIVITIES
Net income $1,568,909 $1,298,741
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for loan losses 99,220 76,237
Depreciation 159,047 153,161
Amortization of premium and accretion
of discount on securities, net (7,210) (15,998)
(Decrease) in net deferred loan fees (77,517) (81,344)
Decrease (increase) in deferred income
taxes 98,480 (131,761)
Decrease (increase) in other assets (99,978) 116,134
(Decrease) in other liabilities (58,098) (114,107)
Gain on sale of assets (818) -
Net cash provided by operating activities 1,682,035 1,301,063
INVESTING ACTIVITIES
Proceeds from maturities of
investment securities 2,500,000 2,525,391
Purchases of investment securities (4,042,397) (5,451,699)
Net increase in loans (5,203,178) (7,623,120)
Purchases of property and equipment (47,720) (375,569)
Proceeds from sale of loans 1,136,000 69,000
Loans originated for resale (1,136,000) -
Net cash provided (absorbed) by
investing activities (6,793,295) (10,855,997)
FINANCING ACTIVITIES
Dividends paid (389,433) (312,425)
Net increase (decrease) in deposits 4,808,519 4,721,591
Proceeds from advances and other
borrowed money 73,000,000 26,000,000
Repayments of advances and other
borrowed money (73,000,000) (27,500,000)
Proceeds from issuance of common stock 111,280 91,640
Net cash provided (absorbed) by
financing activities 4,530,366 3,000,806
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (580,894) (6,554,128)
CASH AND CASH EQUIVALENT-beginning of period 4,582,983 9,388,430
CASH AND CASH EQUIVALENTS-end of period $4,002,089 $2,834,302
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COMMUNITY FINANCIAL CORPORATION
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
NOTE 1. - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
The accompanying consolidated financial statements include the accounts of
Community Financial Corporation and its wholly-owned subsidiary, Community
Federal Savings Bank. All significant intercompany balances and transactions
have been eliminated in consolidation.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentation have been included.
Operating results for the three and nine months ended December 31, 1995, are
not necessarily indicative of the results that may be expected for the year
ending March 31, 1996.
NOTE 2. - EARNINGS PER SHARE
Earnings per share is computed based on the weighted average number of shares
of common stock outstanding during each period and is retroactively adjusted
for stock dividends and stock splits. Earnings per share for the three months
ended December 31, 1995 and 1994 have been determined by dividing net income
by the weighted number of shares of common stock outstanding during these
periods (1,269,698 and 1,230,031). Earnings per share for the nine months
ended December 31, l995 and 1994 have been determined by dividing net income
by the weighted number of shares of common stock outstanding during these
periods (1,254,220 and 1,223,396).
<PAGE>
NOTE 3. - STOCKHOLDERS' EQUITY
The following table presents the Savings Bank's capital levels at December 31,
1995, relative to the requirements applicable under the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ('FIRREA') at that date:
<TABLE>
<CAPTION>
Amount Percent Actual Actual Excess
Required Required Amount Percent Amount
-------- -------- --------- ------- ---------
<S> <C> <C> <C> <C> <C>
Tangible Capital $2,349,000 1.50% $17,829,000 11.38% $15,480,000
Core Capital 4,698,000 3.00 17,829,000 11.38 13,131,000
Risk-based Capital 7,806,000 8.00 18,566,000 19.03 10,760,000
</TABLE>
<PAGE>
<PAGE>
NOTE 3. - STOCKHOLDERS' EQUITY (cont.)
Capital distributions by the Savings Bank are limited by federal regulations
("Capital Distribution Regulation"). Capital distributions are defined to
include, in part, dividends, stock repurchases and cash-out mergers. The
Capital Distribution Regulation permits a "Tier 1" association to make capital
distributions during a calendar year up to 100% of its net income to date plus
the amount that would reduce by one-half its surplus capital ratio at the
beginning of the calendar year. Any distributions in excess of that amount
require prior notice to the Office of Thrift Supervision ("OTS") with the
opportunity for the OTS to object to the distribution. A Tier 1 association is
defined as an association that has, on a pro forma basis after the proposed
distribution, capital equal to or greater than the OTS fully phased-in capital
requirement and has not been deemed by the OTS to be "in need of more than
normal supervision". The Savings Bank is currently classified as a Tier 1
institution for these purposes. The Capital Distribution Regulation requires
that associations provide the applicable OTS District Director with a 30-day
advance written notice of all proposed capital distributions whether or not
advance approval is required by the regulation.
NOTE 4. - SUPPLEMENTAL INFORMATION - STATEMENT OF CASH FLOWS
Total interest paid for the three months ended December 31, 1995 and 1994 was
$1,667,381 and $1,275,950. Total interest paid for the nine months ended
December 31, 1995 and 1994 was $4,845,725 and $3,692,824. Total income taxes
paid for the three months ended December 31, 1995 and 1994 was $341,526 and
$163,108. Total income taxes paid for the nine months ended December 31, 1995
and 1994 was $960,746 and $629,143.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
FINANCIAL CONDITION
The Company's total assets increased $7.3 million to $157.8 million at
December 31, 1995, due primarily to an increase in loans receivable of $5.3
million. The increase in loans receivable was due primarily to the
origination of variable rate mortgage loans. Deposits increased $4.8 million
to $109.8 million at December 31, 1995, from $105.0 million at March 3l, l995.
The increase in deposits was used to fund the increase in loans. Stockholders'
equity increased to $21.6 million at December 31, 1995, from $19.6 million at
March 31, 1995, due to earnings and an adjustment in the carrying value of
securities available for sale for the nine month period ended December 31,
1995, which was partially offset by three cash dividend payments totalling
$0.31 per share. At December 31, 1995, the Bank's non-performing assets
totalled $422,000 or 0.27% of assets. This compares to non-performing assets
of $350,000 or 0.23% of total assets as of March 31, 1995. The non-performing
assets consisted of three 1-4 family dwellings which is the real estate owned
of $216,000, loans on 1-4 family dwellings in the amount of $145,000 and
various consumer loans totalling $61,000.
<PAGE>
<PAGE>
Historically, the Bank has maintained its liquid assets above the minimum
requirements imposed by federal regulations and at a level believed adequate
to meet requirements of normal daily activities, repayment of maturing debt
and potential deposit outflows. Cash flow projections are regularly reviewed
and updated to assure that adequate liquidity is provided. As of December 31,
1995, the Bank's liquidity ratio (liquid assets as a percentage of net
withdrawable savings and current borrowings) was 6.99%, which exceeds the
regulatory requirement.
The deposits of savings associations, such as the Savings Bank, are
presently insured by the SAIF, which together with the BIF, are the two
insurance funds administered by the FDIC. Financial institutions which are
members of the BIF are experiencing substantially lower deposit insurance
premiums because the BIF has achieved its required level of reserves while the
SAIF has not yet achieved its required reserves. A recapitalization plan for
the SAIF under consideration by Congress reportedly provides for a special
assessment of 0.85% to 0.90% of deposits to be imposed on all SAIF insured
institutions to enable the SAIF to achieve its required level of reserves. If
the proposed assessment of 0.85% to 0.90% was effected based on deposits as of
March 31, 1995 (as proposed), the Savings Bank's special assessment would
amount to approximately $893,000 to $945,000, before taxes, respectively.
Accordingly, if imposed, this special assessment would reduce earnings.
Conversely, assuming the insurance premium levels for BIF and SAIF members are
again equalized, future deposit insurance premiums are expected to decrease
significantly, to as low as 0.04% from the 0.23% of deposits currently paid by
the Savings Bank, which would reduce annual non-interest expense for future
periods by approximately $200,000, before taxes, based on deposits at March
31, 1995.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Three Months Ended December 31, 1995 and 1994.
- ----------------------------------------------
General. Net income for the three months ended December 31, 1995 was $536,383
compared to $482,851 for the three months ended December 31, 1994, due
primarily to an increase in net interest income which was offset in part by an
increase in noninterest expense. Income before taxes increased to $858,201 for
the three months ended December 31, 1995 from $777,973 for the three months
ended December 31, 1994.
Interest Income. Total interest income increased to $3,158,779 for the three
months ended December 31, 1995, from $2,590,942 for the three months ended
December 31, 1994, due primarily to an increase in the yield on loans and
investments from 7.22% for the three months ended December 31, l994, to 8.39%
for the period ended December 31, l995.
Interest Expense. Total interest expense increased to $1,678,407 for the
quarter ended December 31, 1995, from $1,261,765 for the quarter ended
December 31, 1994. Interest on deposits increased to $1,300,133 for the
quarter ended December 31, 1995 from $1,032,555 for the quarter ended December
31, 1994 due primarily to an increase in the average cost of deposits from
3.79% at December 30, 1994 compared to 4.72% at December 31, 1995. Interest
expense on borrowed money increased to $378,274 for the quarter ended
December 31, 1995, from $229,210 for the quarter ended December 31, 1994, due
primarily to an increase in the cost of borrowing.
<PAGE>
Provision for Loan Losses. The provision for loan losses increased to $31,720
for the three months ended December 31, 1995 from $25,000 for the three months
ended December 31, 1994. The increase in the provision for loan losses is
attributable primarily to a modest increase in losses on consumer loans and
credit cards. Due to the growth in the loan portfolio and the economic
uncertainty presently existing, management feels it is prudent to monitor the
unallocated reserves and make additions as appropriate to provide for possible
unforseen losses.
Noninterest Income. Noninterest income increased to $114,263 for the three
months ended December 31, 1995, from $102,221 for the three months ended
December 31, 1994. NOW account charges increased as a result of increased
account volume.
Noninterest Expenses. Noninterest expenses increased to $704,714 for the
three months ended December 31, 1995, from $628,425 for the three months ended
December 31, 1994. Miscellaneous expenses increased primarily due to the
growth in NOW accounts while other noninterest expenses increased commensurate
with the growth of the Bank.
Taxes. Taxes increased to $321,818 for the three months ended December 31,
l995, from $295,122 for the three months ended December 31, 1994, due to the
increase in income before taxes.
Nine Months Ended December 31, 1995 and 1994
- --------------------------------------------
General. Net income for the nine months ended December 31, 1995 was
$1,568,909 compared to $1,298,066 for the nine months ended December 31, l994.
Interest Income. Total interest income increased to $9,227,066 for the nine
months ended December 31, 1995, from $7,368,327 for the nine months ended
December 31, 1994, due primarily to an increase in the yield on loans and
investments.
Interest Expense. Total interest expense increased to $4,867,595 for the nine
months ended December 31, 1995, from $3,595,143 for the nine months ended
December 31, 1994. Interest on deposits increased to $3,723,119 for
the nine months ended December 31, 1995, from $2,943,439 for the same period
last year due primarily to a higher cost of savings for the nine months ended
December 31, 1994. Interest expense on borrowed money increased to $1,144,476
for the nine months ended December 31, 1995, from $651,704 for the nine months
ended December 31, 1994, due to higher rates on such borrowings and increased
average borrowings from the Federal Home Loan Bank of Atlanta.
Provision for Loan Losses. The provision for loan losses increased to $99,220
for the nine months ended December 31, 1995, from $76,237 for the same period
last year due primarily to an increase in losses and reserves on consumer
loans and credit cards . Due to the growth in the loan portfolio and the
economic uncertainty presently existing, management feels it is prudent to
monitor unallocated reserves and make additions as appropriate to provide for
possible unforseen losses.
Noninterest Income. Noninterest income increased to $338,165 for the nine
months ended December 31, 1995, from $295,559 for the nine month period ended
December 31, 1994, due to an increase in the volume of fees and service
charges on checking accounts.
Noninterest Expenses. Noninterest expenses increased to $2,087,067 for the
nine months ended December 31, 1995, from $1,902,210 for the same period last
year. The increase is related generally to the growth of the institution and
increased checking account volume.
<PAGE>
Taxes. Taxes increased to $942,440 for the nine months ended December 31,
1995, from $792,230 for the nine months ended December 31, 1994,
due to an increase in income before taxes for the nine months ended December
31, 1995.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule Page 13
<PAGE>
<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.
COMMUNITY FINANCIAL CORPORATION
Date: March 20, 1996
By: (s) R. Jerry Giles
-------------------------------
R. Jerry Giles
Chief Financial Officer
(Duly Authorized Officer)
II-1
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
the schedule contains summary financial information extracted from the quarterly
report on form 10-qsb/a for the fiscal quarter ended december 31, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 4,404,714
<INT-BEARING-DEPOSITS> 1,392,000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,718,430
<INVESTMENTS-CARRYING> 7,068,151
<INVESTMENTS-MARKET> 0
<LOANS> 140,657,445
<ALLOWANCE> 828,588
<TOTAL-ASSETS> 157,766,252
<DEPOSITS> 109,822,085
<SHORT-TERM> 25,000,000
<LIABILITIES-OTHER> 1,246,778
<LONG-TERM> 0
0
0
<COMMON> 12,697
<OTHER-SE> 21,562,171
<TOTAL-LIABILITIES-AND-EQUITY> 157,766,252
<INTEREST-LOAN> 3,007,517
<INTEREST-INVEST> 115,332
<INTEREST-OTHER> 35,930
<INTEREST-TOTAL> 3,158,779
<INTEREST-DEPOSIT> 1,300,133
<INTEREST-EXPENSE> 1,678,407
<INTEREST-INCOME-NET> 1,480,372
<LOAN-LOSSES> 31,720
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 704,714
<INCOME-PRETAX> 858,201
<INCOME-PRE-EXTRAORDINARY> 858,201
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 536,383
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
