<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the three months ended March 31, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
SEC Commission File No : 0-22578
FIRST PATRIOT BANKSHARES CORPORATION
-------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
State of Virginia 54-1514125
- ------------------------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2071 Chain Bridge Road, Vienna, Virginia 22182
- ---------------------------------------- ------
(Address of principal executive office) (Zip Code)
</TABLE>
Registrant's telephone number, including area code : (703) 471-0900
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No .
--- ---
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<S> <C>
Common stock, $2.50 par value per share Outstanding at April 30, 1997
- --------------------------------------- -----------------------------
(Title of Class) 2,020,929 shares
----------------
</TABLE>
1
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FIRST PATRIOT BANKSHARES CORPORATION
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
- ------ --------------------- ----
<S> <C> <C>
Item 1. Condensed Financial Statements (unaudited)
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996.......................................... 3
Consolidated Statements of Operations
Three months ended March 31, 1997 and 1996.................................... 4
Consolidated Statements of Stockholders' Equity
Three months ended March 31, 1997 and 1996.................................... 5
Consolidated Statements of Cash Flows
Three months ended March 31, 1997 and 1996.................................... 6
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
</TABLE>
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
2
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FIRST PATRIOT BANKSHARES CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
(dollars in thousands) 1997* 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Earning assets
Loans $117,854 $119,604
Loans held for sale 8,746 8,264
Allowance for loan losses (1,748) (1,530)
- ----------------------------------------------------------------------------------------------------------------------
Loans, net of allowance for loan losses 124,852 126,338
Investments available for sale at fair value 37,338 40,838
Federal funds sold 5,341 9,943
- ----------------------------------------------------------------------------------------------------------------------
Total earning assets, net of allowance for loan losses 167,531 177,119
Cash and due from banks 6,094 6,775
Premises and equipment, net 5,262 5,195
Other assets 2,873 2,763
- ----------------------------------------------------------------------------------------------------------------------
Total assets $181,760 $191,852
======================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Non-interest bearing deposits $26,913 $33,466
Interest bearing deposits 122,321 120,863
- ----------------------------------------------------------------------------------------------------------------------
Total deposits 149,234 154,329
Other borrowings 16,577 21,179
Accrued expenses and other liabilities 1,205 1,819
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 167,016 177,327
- ----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Total stockholders' equity 14,744 14,525
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $181,760 $191,852
======================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
* Unaudited
3
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FIRST PATRIOT BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------------------------------
(dollars in thousands) 1997 1996
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $3,278 $2,790
Interest on investments 701 468
Interest on federal funds sold 86 162
- -------------------------------------------------------------------------------------------------------------------------
Total interest income 4,065 3,420
INTEREST EXPENSE
Interest on deposits 1,425 1,125
Interest on other borrowings 227 237
- -------------------------------------------------------------------------------------------------------------------------
Total interest expense 1,652 1,362
- -------------------------------------------------------------------------------------------------------------------------
Net interest income 2,413 2,058
Provision for loan losses 218 127
- -------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 2,195 1,931
NON-INTEREST INCOME
Service charges on deposit accounts 259 138
Other income 381 385
Gain on sale of loans and investments, net 12 (8)
- -------------------------------------------------------------------------------------------------------------------------
Total non-interest income 652 515
NON-INTEREST EXPENSE
Salaries and benefits 1,027 914
Occupancy and equipment 297 164
Other operating expense 701 726
- -------------------------------------------------------------------------------------------------------------------------
Total non-interest expense 2,025 1,804
- -------------------------------------------------------------------------------------------------------------------------
Income before income tax 822 642
Income tax expense 275 251
- -------------------------------------------------------------------------------------------------------------------------
Net income $547 $391
=========================================================================================================================
Earnings per share (note 2):
Earnings per common share and common equivalent share $0.24 $0.17
=========================================================================================================================
Earnings per common share-assuming full dilution $0.24 $0.17
=========================================================================================================================
See accompanying notes to consolidated financial statements.
Weighted Average Shares Outstanding-Primary 2,294,865 2,241,837
Weighted Average Shares Outstanding-Fully Diluted 2,294,865 2,241,837
</TABLE>
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FIRST PATRIOT BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
UNREALIZED GAIN (LOSS)
ON AVAILABLE FOR
ADDITIONAL SALE INVESTMENTS ACCUMULATED TOTAL
COMMON PAID-IN NET OF DEFERRED (DEFICIT) STOCKHOLDERS'
(dollars in thousands) STOCK CAPITAL TAXES SURPLUS EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1996 $5,013 $5,155 $110 $2,460 $12,738
Net proceeds from the issuance of common stock 33 94 -- -- 127
Cash dividends paid -- -- -- (61) (61)
Unrealized gain on available for sale investments,
net of deferred taxes -- -- (290) -- (290)
Net income -- -- -- 391 391
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 1996 $5,046 $5,249 ($180) $2,790 $12,905
===================================================================================================================================
Balance, January 1, 1997 $5,052 $5,458 ($289) $4,304 $14,525
Net proceeds from the issuance of common stock -- -- -- -- 0
Cash dividends paid -- -- -- (61) (61)
Unrealized gain on available for sale investments,
net of deferred taxes -- -- (266) -- (266)
Net income -- -- -- 547 547
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 1997 $5,052 $5,458 ($555) $4,789 $14,744
===================================================================================================================================
</TABLE>
5
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FIRST PATRIOT BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------------------------
(dollars in thousands) 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
NET INCOME $547 $391
ADJUSTMENTS FOR NONCASH ITEMS INCLUDED IN NET INCOME:
Depreciation and amortization 180 150
Provision for loan losses 218 127
(Gain)/Loss on sale of loans and fixed assets (11) 8
Increase in other assets 102 (394)
Increase (decrease) in accrued expenses and other liabilities (759) (549)
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 277 (267)
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in banking subsidiary loans 1,270 (6,065)
Proceeds from sale of loans and fixed assets 106 3,244
Purchase of investments (101) (16,067)
Proceeds from maturity of investments 3,198 9,511
Acquisition of premises and equipment (261) (609)
- ----------------------------------------------------------------------------------------------------------------------
Net cash flow used by investing activities 4,212 (9,986)
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in demand deposits (6,553) (1,945)
Net increase in NOW and savings accounts 1,876 3,697
Net increase in money market accounts 145 425
Net increase in time deposits (563) 2,914
Net increase (decrease) in other borrowings (4,602) (2,546)
Net decrease in notes payable (14) (3)
Net increase in capital from new stock issues 0 127
Cash dividends paid (61) (61)
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities (9,772) 2,608
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (5,283) (7,645)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 16,718 18,098
- ----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $11,435 $10,453
======================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
INTEREST PAID TO DEPOSITORS $1,396 $1,128
INTEREST ON SHORT-TERM BORROWINGS 239 239
UNREALIZED LOSS ON AVAILABLE FOR SALE INVESTMENTS (841) (272)
INCOME TAXES PAID 303 148
======================================================================================================================
</TABLE>
6
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FIRST PATRIOT BANKSHARES CORPORATION
Notes to Consolidated Financial Statements
(unaudited)
The accompanying unaudited consolidated financial statements, which
include the accounts of First Patriot Bankshares Corporation, (the "Company")
and its wholly-owned subsidiary, Patriot National Bank, (the "Bank") have been
prepared in accordance with the instructions to Form 10-Q and do not include
all of the disclosures required by generally accepted accounting principles.
All adjustments have been made, which, in the opinion of management, are
necessary for a fair presentation of the results for the interim periods
presented. Such adjustments are all of a normal and recurring nature. The
results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 1997.
NOTE 1 - ACCOUNTING POLICIES AND OTHER DATA
Reference should be made to the Notes to Consolidated Financial
Statements included in the Annual Report to Stockholders on Form 10-K for the
year ended December 31, 1996 which contain the Company's accounting policies
and other data.
NOTE 2 - COMMON STOCK AND EARNINGS PER SHARE
Common stock issued and outstanding totaled 2,020,929 shares at March
31, 1997 and December 31, 1996. Stock options outstanding totaled 128,351 at
March 31, 1997 and 125,137 at December 31, 1996. Warrants outstanding totaled
271,798 at both March 31, 1997 and December 31, 1996. The total number of
options and warrants outstanding has been retroactively adjusted for a 2% stock
dividend issued on June 30, 1994 and a two for one stock split issued on April
30, 1993.
Earnings per common share and common equivalent share were computed by
dividing net income by the weighted average number of common shares outstanding
during the period, including average common equivalent shares attributable to
dilutive stock options and warrants. The number of common shares was increased
by the number of shares issuable on the exercise of options and warrants when
the market price of the common stock exceeded the exercise price of the options
and warrants. This increase in the number of shares was reduced by the number
of common shares that are assumed to have been purchased with the proceeds from
the exercise of the options and warrants; those purchases were assumed to have
been made when the market price of the common stock exceeded the exercise price
of the options and warrants. The average number of shares used in the
determination of earnings per common share and common equivalent share
7
<PAGE> 8
and earnings per common share assuming full dilution were 2,294,865 and
2,241,837 respectively, for the three months ended March 31, 1997 and 1996.
8
<PAGE> 9
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
CONSOLIDATED FINANCIAL REVIEW
Net income for the first quarter of 1997 was $547 thousand up 40% from
$391 thousand for the first quarter of 1996. Primary earnings per share was
$.24 for the first quarter of 1997 compared to $.17 for the same period in
1996. This increase in net income is primarily due to continued growth in the
Bank's loan portfolio, from $109.5 million at March 31, 1996 to $126.6 million
at March 31, 1997. Return on average equity increased from 11.96% from the
first quarter of 1996 to 14.93% for the first quarter of 1997. Return on
average assets increased 21% to 1.21% from 1.00% for the first quarter of 1996.
Assets totaled $181.8 million at March 31, 1997, down from $191.9 million at
December 31, 1996. This decrease is largely attributable to cyclical
fluctuations in corporate checking account balances and cash management
repurchase accounts.
BALANCE SHEET ANALYSIS
LOANS
Total loans net of unearned income were $126.6 million at March 31,
1997 compared to $127.9 million at December 31, 1996. A schedule of
outstanding loans at March 31, 1997 and December 31, 1996 is shown below.
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
(dollars in thousands) 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial & SBA $35,408 $35,017
Commercial mortgage 36,333 37,554
Construction 18,851 19,061
Residential Mortgage 17,151 17,598
Home Equity 6,394 6,212
Installment 4,316 4,815
SBA loans held for Sale 8,746 8,264
----------------------------------------------
Total Gross Loans $127,199 $128,521
Unearned Income (599) (653)
----------------------------------------------
Loans, net of unearned income $126,600 $127,868
Allowance for Loan Losses (1,748) (1,530)
----------------------------------------------
Loans, net of allowance for loan losses $124,852 $126,338
==============================================
</TABLE>
9
<PAGE> 10
Commercial and residential mortgage loans accounted for 42.25% of the
loan portfolio, net of unearned income, at March 31, 1997, compared to 43.13%
at December 31, 1996. This decrease is due to seasonal fluctuations in these
type of loans. These loans are for primarily owner-occupied or fully leased
real estate. At March 31, 1997 real estate construction loans comprised
approximately 14.89% of the Company's loan portfolio as compared to 14.91% at
December 31, 1996. The loans are primarily used for construction of
owner-occupied pre-sold residential homes and are considered an attractive type
of lending due to their short-term maturities and higher yields. Commercial and
S.B.A. loans totaled $35.4 million or 27.97% of the Bank's total loan portfolio
at the end of the first quarter of 1997. At December 31, 1996 these loans
amounted to $35.0 million or 27.39% of the Bank's loan portfolio. Commercial
business loans typically are made on the basis of the borrower's ability to
make payment from the cash flow of its business and are either unsecured or
secured by business assets, such as accounts receivable, equipment and
inventory.
The Bank is a "Preferred" S.B.A. lender. This designation means that
the S.B.A. has reviewed the Bank's loan procedures and determined that the Bank
meets S.B.A. standards for the underwriting and packaging of loans. At March
31, 1997 total S.B.A. loans were $23.9 million or 18.9% of total loans. Total
S.B.A. loans held for sale were $8.7 million at March 31, 1997, which was 6.91%
of the Bank's total loan portfolio. S.B.A. loans are 75-90% guaranteed by the
Federal government. The guaranteed portion of S.B.A. loans are saleable in the
secondary market.
Installment loans decreased from $4.8 million at December 31, 1996 to
$4.3 million at March 31, 1997. Installment loans consist primarily of loans
to individuals and credit card loans. Home Equity loans were up slightly from
December 31, 1996 to $6.2 million at March 31, 1997.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is maintained at a level at which
estimated loan losses inherent in the loan portfolio are covered. The
allowance consists of funds set aside for specific loans and a general
unallocated reserve to offset any additional allocations needed. At March 31,
1997 the allowance was $1.75 million or 1.38% of gross loans. This is up from
$1.53 million and 1.20% of gross loans at December 31, 1996. The increase in
the allowance for loan losses is due to a decision by management to increase
the unallocated portion of the allowance to bring it more in line with the
experience of similarily sized institutions.
NON-PERFORMING AND PAST-DUE LOANS
At March 31, 1997 there were seven loans totaling $1.5 million that
were past due 90 days or greater. Past due loans of 90 days or greater at
December 31, 1996 consisted of two loans for $727 thousand. There was one loan
non-accrual at March 31, 1997 that is fully
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<PAGE> 11
guaranteed by the S.B.A. At December 31, 1996, there were no loans on
non-accrual.
ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Three months Year ended
ended March 31 December 31
(dollars in thousands) 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Beginning Balance $1,530 $1,332
Provision for the period 218 751
Charge-offs (7) (553)
Recoveries 7 --
- ----------------------------------------------------------------------------------------------------
Balance at end of period $1,748 $1,530
====================================================================================================
Allowance to loans * 1.38% 1.20%
Net charge-offs to average loans * 0.00% 0.48%
Net charge-offs to allowance 0.23% 36.14%
</TABLE>
* net of unearned income
INVESTMENTS
The Company's securities portfolio is comprised of U.S. Government
Agency securities, U.S. Government Agency mortgage backed securities and tax
exempt obligations of states and political subdivisions.
SECURITIES - AVAILABLE FOR SALE
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
------------------------------------------------------------------------------------------
(dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securites $0 $0 $0 $0
U.S. Government securities 36,499 35,675 39,677 39,248
Municipal securities - Revenue
Obligations 235 235 235 235
Mortgage backed securites
Guaranteed by GNMA 588 570 607 599
All other equity securities 858 858 756 756
- ---------------------------------------------------------------------------------------------------------------------------------
Total Securities $38,179 $37,338 $41,275 $40,838
=================================================================================================================================
</TABLE>
All of the company's investments at March 31, 1997 and December 31, 1996 were
classified as available for sale. The Financial Accounting Standards Board
requires that available for sale securities be recorded at fair value. The
associated unrealized gains or losses on these
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<PAGE> 12
securities are recorded, net of tax, as a separate component of stockholders'
equity. There were unrealized losses at both March 31, 1997 and December 31,
1996 of $841 thousand and $438 thousand, respectively. The securities
portfolio is summarized on the previous page.
DEPOSITS
Total deposits were $149.2 million at March 31, 1997 down from $154.3
million at December 31, 1996. The Bank offers a full range of deposit
services, including checking accounts, savings accounts and other time
deposits of various types, ranging from daily money market accounts to
longer-term certificates of deposit. Deposits represent the primary funding
source of the Company. The decrease in deposits is primarily due to cyclical
fluctuations in corporate non-interest bearing account balances from year-end
1996. A summary of deposit balances at March 31, 1997 and December 31, 1996 is
shown in the following schedule.
<TABLE>
<CAPTION>
March 31 December 31
(dollars in thousands) 1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
NOW $12,540 $12,178
Savings 12,204 10,690
Money Market 17,124 16,979
Certificates of Deposit less than $100,000 56,862 56,607
Certificates of Deposit greater than $100,000 15,021 15,858
IRA and Keogh 8,570 8,551
- ---------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits $122,321 $120,863
Non-Interest-Bearing Deposits 26,913 33,466
- ---------------------------------------------------------------------------------------------------------
Total Deposits $149,234 $154,329
=========================================================================================================
</TABLE>
OTHER BORROWINGS
The Company borrows short-term and long-term monies in the form of
purchased Federal Funds, repurchase agreements, and from the Federal Home Loan
Bank of Atlanta. At both March 31, 1997 and December 31, 1996 there were no
Federal Funds Purchased. A summary of other borrowings is presented to the
right.
<TABLE>
<CAPTION>
March 31, December 31,
(dollars in thousands) 1997 1996
-------------------------------------------------------
<S> <C> <C>
Repurchase agreements $14,276 $17,904
FHLB borrowings 1,121 1,121
Cash Overdraft 0 969
Other long-term debt 1,180 1,185
-------------------------------------------------------
Total Other Borrowings $16,577 $21,179
=======================================================
</TABLE>
INTEREST RATE SENSITIVITY
The Company monitors interest rate sensitivity of the balance sheet
and reviews asset and liability repricing weekly to minimize the earnings
sensitivity to changes in interest rates while maintaining a net interest
margin within the Company's objectives. The following table represents the
Company's interest rate sensitivity at March 31, 1997, using known maturities
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<PAGE> 13
and repricing schedules of loans, deposits and securities. This table presents
a position that existed at one particular day and is not necessarily indicative
of the Company's position at any other time.
RATE SENSITIVITY ANALYSIS AT MARCH 31, 1997
<TABLE>
<CAPTION>
Interest Sensitivity Period
----------------------------------------------------------------------------------------
After 3 months After 6 months
(dollars in thousands) Within 3 months Within 6 months Within 12 months After 12 months Total
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EARNING ASSETS:
Loans 87,335 4,165 5,897 29,203 126,600
Investment securities 235 -- -- 37,103 37,338
Federal Funds Sold -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total earning assets 87,570 4,165 5,897 66,306 163,938
===============================================================================================================================
EARNING ASSET FUNDING:
Interest-bearing deposits 58,000 12,071 16,785 35,465 122,321
Other borrowed funds 14,152 985 -- -- 15,137
Other long-term debt -- -- -- 1,180 1,180
Non-interest bearing funds 26,913 -- -- -- 26,913
- -------------------------------------------------------------------------------------------------------------------------------
Earning assets funding 99,065 13,056 16,785 36,645 165,551
===============================================================================================================================
RATE SENSITIVITY GAP:
Period (11,495) (8,891) (10,888) 29,661 (1,613)
Cumulative (11,495) (20,386) (31,274) (1,613) --
- -------------------------------------------------------------------------------------------------------------------------------
ADJUSTED GAP AS A PERCENT OF EARNING ASSETS:
Period -7.01% -5.42% -6.64% 18.09% -0.98%
Cumulative -7.01% -12.44% -19.08% -0.98% 0.00%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
LIQUIDITY
The Company maintains a stable base of core deposits, cash and cash
equivalents, federal funds sold, and securities available for sale to meet
potential funding needs of loan and deposit customers. The total of cash and
due from banks, available for sale securities (not pledged) and Federal funds
sold was $34.5 million at March 31, 1997 and $39.7 million at December 31,
1996, respectively.
CAPITAL REQUIREMENTS
In January 1989, the Federal Reserve Board published risk-based
capital guidelines in final form which are applicable to bank holding
companies. The Federal Reserve Board guidelines redefine the components of
capital, categorize assets into different risk classes and include certain
off-balance sheet items in the calculation of risk-weighted assets. These
guidelines became effective on March 15, 1989. The minimum ratio of qualified
total capital to risk-weighted assets (including certain off balance sheet
items, such as standby letters of credit) is 8.00%. At least half
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REGULATORY CAPITAL
<TABLE>
<CAPTION>
Patriot National First Patriot Well-
Bank Bankshares Corp. Capitalized
MARCH 31 MARCH 31 Regulatory
(dollars in thousands) 1997 1997 Minimums
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CAPITAL:
Tier 1 Capital:
Shareholders' common equity $12,705 $14,744
Less disallowed intangibles -- 225
Add unrealized holding losses
on available for sale securities 555 555
- ----------------------------------------------------------------------------------------------------
Total Tier 1 capital 13,260 15,074
- ----------------------------------------------------------------------------------------------------
Tier 2 Capital:
Qualifying allowance for loan
losses 1,581 1,603
- ----------------------------------------------------------------------------------------------------
Total Tier 2 capital 1,581 1,603
- ----------------------------------------------------------------------------------------------------
Total Capital $14,841 $16,677
====================================================================================================
Gross risk-adjusted assets 126,460 128,270
Less excess allowance for loan
losses 167 145
- ----------------------------------------------------------------------------------------------------
Net risk-adjusted assets 126,293 128,125
Average total assets 181,468 183,564
- ----------------------------------------------------------------------------------------------------
RATIOS:
Tier 1 capital to net risk-adjusted
assets 10.50% 11.77% 6.00%
Tier 2 capital to net risk-adjusted
assets 1.25% 1.25%
- -----------------------------------------------------------------------------------------------------------------------------
Total capital to net risk-adjusted
assets 11.75% 13.02% 10.00%
=============================================================================================================================
Leverage - Tier 1 capital to
average assets 7.31% 8.21% 5.00%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
of the total capital must be comprised of common equity, retained earnings and
a limited amount of permanent preferred stock, less goodwill ("Tier 1
capital"). The remainder ("Tier 2 capital") may consist of a limited amount of
subordinated debt, other preferred stock, certain other instruments and a
limited amount of loan and lease loss reserves. The sum of Tier 1 and Tier 2
capital is "total-risk based capital." The Company's Tier 1 capital and total
risk-based capital ratios as of March 1997 are presented in the table above.
In addition, the Federal Reserve Board has established a minimum
leverage ratio of Tier 1 capital to quarterly average assets less goodwill
("Leverage ratio") of 3.00% for bank holding companies that meet certain
specified criteria, including that they have the highest regulatory rating.
All other bank holding companies will be required to maintain a Leverage ratio
of 3.00% plus an additional amount of at least 100 to 200 basis points. The
Company's
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<PAGE> 15
Leverage ratio as of March 31, 1997 are summarized in the table above. The
guidelines also provide that banking organizations experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels, without significant
reliance on intangible assets.
The Bank is subject to capital requirements adopted by the OCC that
are substantially similar to those that apply to the Company. These ratios are
in the table on the prior page.
INCOME STATEMENT ANALYSIS
Interest income accounted for 86% of the Company's total income for
the first quarter of 1997. Interest income was $4.1 million for the quarter
ended March 31, 1997 compared to $3.4 million for the same period in 1996. The
increase in interest income is a result of increased volume in earning assets.
Interest and fees on loans totaled $3.3 million for the first quarter of 1997,
up approximately 17% over the same period in 1996. Interest on investment
securities increased 50% from $468 thousand in the first quarter of 1996 to
$701 thousand as of March 31, 1997.
Average earning assets totaled approximately $172 million for the
first quarter of 1997, compared to $145 million for the first quarter of 1996;
an increase of 19%. Average loans increased from $109.5 million in the first
quarter of 1996 to $126.6 million for the same period in 1997.
Average interest-bearing deposits in the first quarter of 1997
increased 21.8% over the first quarter of 1996. Average other borrowed funds
was $18.8 thousand for the first quarter of 1997, up $1.5 million over the same
period in 1996. Interest expense was $1.7 million and $1.4 million for the
quarters ended March 31, 1997 and 1996, respectively. Net interest income was
$2.4 million for the quarter ended March 31, 1997 and $2.1 million for the
quarter ended March 31, 1996; an increase of 17.2%.
Non-interest income consists mostly of service charges and fees on
bank services and deposit accounts. Total non-interest income was $652
thousand for the first quarter of 1997 and $515 thousand for the same period in
1996; an increase of 26.6%.
Salaries and benefits, occupancy and equipment, and other operating
expenses make up the total of non-interest expense. These expenses increased
$221 thousand from March 31, 1996 to March 31, 1997 to the current balance of
$2.0 million. The increased non-interest expense is due partially to the
expansion of the bank from 8 branches at March 31, 1996 to 9 branches at March
31, 1997 and the increase in loan personnel.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FIRST PATRIOT BANKSHARES CORPORATION
- ------------------------------------
By: /s/ May 14, 1997
----------------------------------------
Carroll C. Markley
President, Chief Executive Officer
and Director
By: /s/ May 14, 1997
---------------------------------------
Charles Wimer
Senior Vice President and Chief Financial Officer
16
<PAGE> 17
ITEM 6. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8K.
Financial statements and schedules are included in Part 1, Item 1 above.
Exhibit 11 - Computation of earnings per share is on page 18.
Form 8 K - There were no reports on Form 8 K filed during the first quarter.
17
<PAGE> 1
EXHIBIT 11.0
FIRST PATRIOT BANKSHARES CORPORATION
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
--------------------------------------------------------
1997 1996
--------------------------------------------------------
<S> <C> <C> <C>
Weighted average number of shares
outstanding during the period 2,020,929 2,010,105
Shares issuable upon assumed exercise
of stock options 84,118 68,641
Shares issuable upon assumed exercise
of warrants 189,818 163,091
---------------------- -----------------------
Line A Weighted average number of common and
common equivalent shares outstanding
during the period 2,294,865 2,241,837
Additional shares issuable upon assumed
exercise of stock options-assuming
maximum dilution -- --
Additional shares issuable upon assumed
exercise of warrants-assuming
maximum dilution -- --
---------------------- -----------------------
Line B Fully diluted weighted average number of
shares outstanding during the period 2,294,865 2,241,837
====================== =======================
Line C Net income for the period $547,215 $391,000
====================== =======================
Earnings per share:
Earnings per common share and common
equivalent share (Line C divided by Line A) $0.24 $0.17
====================== =======================
Earnings per common share and common
equivalent share-assuming full
dilution (Line C divided by Line B) $0.24 $0.17
====================== =======================
</TABLE>
18
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,094
<INT-BEARING-DEPOSITS> 122,321
<FED-FUNDS-SOLD> 5,341
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 37,338
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 126,600
<ALLOWANCE> 1,748
<TOTAL-ASSETS> 181,760
<DEPOSITS> 149,234
<SHORT-TERM> 14,698
<LIABILITIES-OTHER> 1,205
<LONG-TERM> 1,879
0
0
<COMMON> 5,052
<OTHER-SE> 9,692
<TOTAL-LIABILITIES-AND-EQUITY> 181,760
<INTEREST-LOAN> 3,278
<INTEREST-INVEST> 701
<INTEREST-OTHER> 86
<INTEREST-TOTAL> 4,065
<INTEREST-DEPOSIT> 1,425
<INTEREST-EXPENSE> 1,652
<INTEREST-INCOME-NET> 2,413
<LOAN-LOSSES> 218
<SECURITIES-GAINS> 5
<EXPENSE-OTHER> 2,025
<INCOME-PRETAX> 822
<INCOME-PRE-EXTRAORDINARY> 547
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 547
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
<YIELD-ACTUAL> 5.38
<LOANS-NON> 0
<LOANS-PAST> 1,474
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,530
<CHARGE-OFFS> 7
<RECOVERIES> 7
<ALLOWANCE-CLOSE> 1,748
<ALLOWANCE-DOMESTIC> 1,748
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 211
</TABLE>
