|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous: UAM FUNDS TRUST, PRES14A, 2000-11-09 |
Next: POTOMAC BANCSHARES INC, 10QSB, EX-27, 2000-11-09 |
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
XX Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For quarterly period ended September 30, 2000
-----------------------------------
Transition report under Section 13 or 15(d) of the Exchange Act
--------
For the transition period from to
------------- -----------------------
Commission file number 0-24958
Potomac Bancshares, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
West Virginia 55-0732247
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
111 East Washington Street, Charles Town WV 25414-1071
(Address of Principal Executive Offices) (Zip Code)
304-725-8431
(Issuer's Telephone Number, Including Area Code)
NO CHANGE
(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 XXX No
--------------- ---------------
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No Not applicable
--------------- ---------------
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: 600,000 shares
--------------
Transitional Small Business Disclosure Format (check one):
Yes No XXX
--------------- ---------------
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
POTOMAC BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(000 OMITTED)
<TABLE>
<CAPTION>
(Unaudited)
September 30 December 31
2000 1999
---------------- ---------------
<S> <C> <C>
Assets:
Cash and due from banks $ 5,804 $ 5,523
Securities purchased under agreements to resell
and federal funds sold 8,072 15,531
Securities held to maturity (fair value of $20,994 at
September 30, 2000 and $14,917 at December 31, 1999) 20,918 15,007
Securities available for sale, at fair value 22,453 27,281
Loans, net of allowance for loan losses of $1,273 at
September 30, 2000 and $1,218 at December 31, 1999 84,272 77,112
Other real estate owned 123 202
Bank premises and equipment, net 3,063 2,143
Accrued interest receivable 1,182 1,112
Other assets 988 803
------------ ------------
Total Assets $ 146,875 $ 144,714
============ ============
Liabilities and Stockholders' Equity:
Liabilities:
Non-interest bearing deposits $ 17,715 $ 16,034
Interest bearing deposits 110,130 110,650
------------ ------------
Total Deposits 127,845 126,684
Accrued interest payable 290 308
Other liabilities 965 1,034
------------ ------------
Total Liabilities $ 129,100 $ 128,026
------------ ------------
Stockholders' Equity:
Common stock par value $1.00 per share (5,000,000 shares
authorized, 600,000 shares issued and outstanding) $ 600 $ 600
Surplus 5,400 5,400
Accumulated other comprehensive income (loss) (146) (256)
Undivided profits 11,921 10,944
------------ ------------
Total Stockholders' Equity 17,775 16,688
------------ ------------
Total Liabilities and Stockholders' Equity $ 146,875 $ 144,714
============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
POTOMAC BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(000 omitted except for per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30 Ended September 30
---------------------------- --------------------------
2000 1999 2000 1999
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 1,844 $ 1,678 $ 5,256 $ 5,010
Interest on securities held to maturity
Taxable 339 356 986 1,083
Interest and dividends on securities available for sale
Taxable 333 360 1,083 1,019
Dividends 8 7 23 22
Interest on securities purchased under agreements
to resell and federal funds sold 82 122 332 372
---------- ---------- ---------- ----------
Total Interest Income $ 2,606 $ 2,523 $ 7,680 $ 7,506
Interest Expense:
Interest on deposits $ 993 $ 1,041 $ 2,953 $ 3,173
Interest on federal funds purchased 1 -- 1 --
---------- ---------- ---------- ----------
Total Interest Expense $ 994 $ 1,041 $ 2,954 $ 3,173
---------- ---------- ---------- ----------
Net Interest Income $ 1,612 $ 1,482 $ 4,726 $ 4,333
Provision for Loan Losses 38 50 88 125
---------- ---------- ---------- ----------
Net Interest Income after
Provision for Loan Losses $ 1,574 $ 1,432 $ 4,638 $ 4,208
---------- ---------- ---------- ----------
Other Income:
Commissions and fees from fiduciary activities $ 131 $ 138 $ 404 $ 463
Service charges on deposit accounts 99 88 273 257
Fees for other customer services 46 48 116 137
Other operating income 13 15 62 91
---------- ---------- ---------- ----------
Total Other Income $ 289 $ 289 $ 855 $ 948
---------- ---------- ---------- ----------
Other Expenses:
Salaries and employee benefits $ 739 $ 662 $ 2,181 $ 1,906
Net occupancy expense of premises 52 57 165 153
Furniture and equipment expenses 130 110 315 318
Other operating expenses 259 287 816 930
---------- ---------- ---------- ----------
Total Other Expenses $ 1,180 $ 1,116 $ 3,477 $ 3,307
---------- ---------- ---------- ----------
Income before Income Tax Expense $ 683 $ 605 $ 2,016 $ 1,849
Income Tax Expense 251 226 739 678
---------- ---------- ---------- ----------
Net Income $ 432 $ 379 $ 1,277 $ 1,171
========== ========== ========== ==========
Earnings Per Share, basic and diluted $ .72 $ .63 $ 2.13 $ 1.95
========== ========== ========== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
POTOMAC BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(000 Omitted)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other
Common Capital Undivided Comprehensive Comprehensive
Stock Surplus Profits Income Income Total
------------- ------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1998 $ 600 $ 5 400 $ 10 091 $ 105 $ 16 196
Comprehensive income
Net income -- -- 1 171 -- $1 171 1 171
Other comprehensive income
net of tax, unrealized
holding (losses) arising
during the period -- -- -- (252) (252) (252)
------
Comprehensive income $ 919
======
Cash dividends -- -- (300) -- (300)
------- -------- --------- ------- ---------
Balances, September 30, 1999 $ 600 $ 5 400 $ 10 962 $ (147) $ 16 815
======= ======== ========= ======= =========
Balances, December 31, 1999 $ 600 $ 5 400 $ 10 944 $ (256) $ 16 688
Comprehensive income
Net income -- -- 1 277 -- $1 277 1 277
Other comprehensive income
net of tax, unrealized
holding gains arising
during the period -- -- -- 110 110 110
------
Comprehensive income $ 1 387
========
Cash dividends -- -- (300) -- (300)
------- -------- --------- ------- ---------
Balances, September 30, 2000 $ 600 $ 5 400 $ 11 921 $ (146) $ 17 775
======= ======== ========= ======= =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
POTOMAC BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000 Omitted)
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
-------------------------------------
September 30 September 30
2000 1999
---------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1 277 $ 1 171
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 88 125
Depreciation 191 192
Amortization -- 7
Deferred tax (benefit) (35) --
Discount accretion and premium amortization on
securities, net (27) 27
(Gain) on sale of real estate (19) (59)
(Gain) on sale of equipment (6) --
(Increase) in accrued interest receivable (70) (52)
(Increase) in other assets (203) (17)
(Decrease) in accrued interest payable (18) (36)
Increase (decrease) in other liabilities (69) 32
----------- ---------
Net cash provided by operating activities $ 1 109 $ 1 390
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturity of securities held to maturity $ 4 000 $ 2 000
Proceeds from maturity of securities available for sale 5 000 3 550
Purchase of securities held to maturity (9 890) --
Purchase of securities available for sale -- (6 204)
Net (increase) in loans (7 248) (1 139)
Purchases of bank premises and equipment (1 111) (737)
Proceeds from sale of real estate 95 211
Proceeds from sale of equipment 6 --
----------- ---------
Net cash (used in) investing activities $ (9 148) $ (2 319)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in non-interest bearing deposits $ 1 681 $ (313)
Net increase (decrease) in interest bearing deposits (520) 33
Cash dividends (300) (300)
----------- ---------
Net cash provided by (used in) financing activities $ 861 $ (580)
----------- ---------
(Decrease) in cash and cash equivalents $ (7 178) $ (1 509)
CASH AND CASH EQUIVALENTS
Beginning 21 054 18 129
-------- ---------
Ending $ 13 876 $ 16 620
======== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 2 972 $ 3 209
=========== =========
Income taxes $ 809 $ 741
=========== =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Other real estate acquired in settlement of loans $ -- $ 312
=========== =========
Loans made on sale of real estate $ -- $ 249
=========== =========
Unrealized gain (loss) on securities available for sale $ 166 $ (382)
=========== =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
POTOMAC BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 (UNAUDITED) AND DECEMBER 31, 1999
1. In the opinion of management, the accompanying financial statements contain
all adjustments (consisting of only normal recurring accruals) necessary to
present fairly the financial position as of September 30, 2000, and
December 31, 1999, the results of operations for the three months ended
September 30, 2000 and 1999, and the results of operations and cash flows
for the nine months ended September 30, 2000 and 1999. The statements
should be read in conjunction with Notes to Consolidated Financial
Statements included in the Potomac Bancshares, Inc. annual report for the
year ended December 31, 1999. The results of operations for the nine month
periods ended September 30, 2000 and 1999, are not necessarily indicative
of the results to be expected for the full year.
2. Securities held to maturity as of September 30, 2000 and December 31, 1999
are summarized below:
<TABLE>
<CAPTION>
(000 Omitted)
September 30, 2000
--------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
------------- -------------- ---------------- -----------
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury securities $ -- $ -- $ -- $ --
Obligations of U.S. Government
agencies 20 918 66 (40) 20 944
------------- --------- ------ ------------
$ 20 918 $ 66 $ (40) $ 20 944
============= ========= ====== ============
</TABLE>
<TABLE>
<CAPTION>
(000 Omitted)
December 31, 1999
--------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
------------- -------------- ---------------- -----------
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury securities $ 2 000 $ 2 $ -- $ 2 002
Obligations of U.S. Government
agencies 13 007 1 (93) 12 915
------------- --------- ------ ------------
$ 15 007 $ 3 $ (93) $ 14 917
============= ========= ====== ============
</TABLE>
<PAGE>
Securities available for sale as of September 30, 2000 and December 31,
1999 are summarized below:
<TABLE>
<CAPTION>
(000 Omitted)
September 30, 2000
--------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
------------- -------------- ---------------- -----------
<S> <C> <C> <C> <C>
Securities available for sale:
U.S. Treasury securities $ -- $ -- $ -- $ --
Obligations of U.S. Government
agencies 22,225 -- (222) 22,003
Federal Home Loan Bank stock 450 -- -- 450
------------- --------- ------ ------------
$ 22,675 $ -- $ (222) $ 22,453
============= ========= ====== ============
</TABLE>
<TABLE>
<CAPTION>
(000 Omitted)
December 31, 1999
--------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
------------- -------------- ---------------- -----------
<S> <C> <C> <C> <C>
Securities available for sale:
U.S. Treasury securities $ 2,000 $ 1 $ -- $ 2,001
Obligations of U.S. Government
agencies 25,220 -- (390) 24,830
Federal Home Loan Bank stock 450 -- -- 450
------------- --------- ------ ------------
$ 27,670 $ 1 $ (390) $ 27,281
============= ========= ====== ============
</TABLE>
3. The consolidated loan portfolio, stated at face amount, is composed of the
following:
<TABLE>
<CAPTION>
(000 Omitted)
September 30 December 31
2000 1999
-------------- ------------
<S> <C> <C>
Real estate loans:
Construction and land development $ 14 $ 31
Secured by farmland 2,964 2,605
Secured by 1-4 family residential 45,804 43,798
Other real estate loans 12,126 11,859
Loans to farmers (except those secured by real estate) 540 389
Commercial and industrial loans (except those secured
by real estate) 2,460 2,435
Loans to individuals for personal expenditures 21,428 16,879
All other loans 209 334
----------- -----------
Total loans $ 85,545 $ 78,330
=========== ===========
</TABLE>
4. The following is a summary of transactions in the reserve for loan losses:
<TABLE>
<CAPTION>
(000 Omitted)
September 30 December 31
2000 1999
-------------- -------------
<S> <C> <C>
Balance at beginning of period $ 1,218 $ 1,140
Provision charged to operating expense 88 125
Recoveries added to the reserve 27 42
Loan losses charged to the reserve (60) (89)
----------- -----------
Balance at end of period $ 1,273 $ 1,218
=========== ==========
</TABLE>
<PAGE>
5. Information about impaired loans as of September 30, 2000 and December 31,
1999 is as follows:
<TABLE>
<CAPTION>
(000 Omitted)
----------------------------------
September 30 December 31
2000 1999
------------ -----------
<S> <C> <C>
Impaired loans for which a reserve has been provided $ -- $ 232
Impaired loans for which no reserve has been provided -- --
---------- -----------
Total impaired loans $ -- $ 232
========== ===========
Reserve provided for impaired loans, included in the
reserve for loan losses $ -- $ 69
========== ===========
Average balance in impaired loans $ 116 $ 373
========== ===========
Interest income recognized $ -- $ 22
========== ===========
</TABLE>
There were no loans on nonaccrual status at September 30, 2000. Nonaccrual
loans excluded from impaired loan disclosures under FASB 114 amounted to
$112,844 at December 31, 1999. If interest had been accrued, such income
would have been $5,377 in 1999.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Between December 31, 1999 and September 30, 2000, total assets have increased
slightly over $2,000,000. Securities purchased under agreements to resell and
federal funds sold have decreased since the high balance in 1999 was kept for
Y2K purposes. These funds have been invested in loans increasing that portfolio
by over $7,000,000 since December 31. Bank premises and equipment have continued
to increase due to the construction and renovation project that was materially
completed in September 2000. Premises has increased $920,000 since December 31.
Deposits have increased $1,200,000. Non-interest bearing deposits have increased
$1,700,000 and interest bearing deposits have decreased $500,000. The change in
total deposits since December 31, 1999 has affected various account types.
Select checking accounts (the NOW accounts that pay a higher rate of interest on
balances of $5,000 or more) have increased $1,200,000. Money market accounts
have decreased $500,000. Savings has increased $500,000 as a result in payments
on the Christmas Club accounts. Certificates of deposit have decreased
$1,700,000.
The September 30 annualized return on average assets is 1.17% compared to 1.05%
at December 31. At September 30 the annualized return on average equity is 9.88%
compared to 9.33% at December 31. The leverage capital (equity to assets) ratio
is 12.10% at September 30 compared to 11.55% at December 31.
<PAGE>
The table shown below is an analysis of the Corporation's reserve for loan
losses. Net charge-offs for the Corporation have been very low when compared
with the size of the total loan portfolio. Management monitors the loan
portfolio on a quarterly basis with the procedures that allow for problem loans
and potentially problem loans to be highlighted and watched. Based on
experience, the loan policies and the current monitoring program, management
believes the loan loss reserve is adequate.
<TABLE>
<CAPTION>
(000 Omitted)
September 30, 2000
------------------
<S> <C>
Balance at beginning of period $ 1,218
Charge-offs:
Commercial, financial and agricultural --
Real estate - construction --
Real estate - mortgage --
Consumer 60
----------
Total charge-offs 60
----------
Recoveries:
Commercial, financial and agricultural --
Real estate - construction --
Real estate - mortgage 10
Consumer 17
----------
Total recoveries 27
----------
Net charge-offs 33
Additions charged to operations 88
----------
Balance at end of period $ 1,273
==========
Ratio of net charge-offs during the period to average
loans outstanding during the period .0359%
==========
Loans are placed on nonaccrual status when a loan is specifically determined to
be impaired or when principal or interest is delinquent for 90 days or more.
Interest income generally is not recognized on specific impaired loans unless
the likelihood of further loss is remote. Interest income on other nonaccrual
loans is recognized only to the extent of interest payments received. Following
is a table showing the risk elements in the loan portfolio.
(000 Omitted)
September 30, 2000
------------------
Nonaccrual loans $ --
Restructured loans --
Foreclosed properties 123
----------
Total nonperforming assets $ 123
==========
Loans past due 90 days accruing interest $ 59
==========
Reserve for loan losses to period end loans 1.49%
==========
Nonperforming assets to period end loans and
foreclosed properties .14%
==========
</TABLE>
There were no loans on nonaccrual status at September 30, 2000.
At September 30, 2000, other potential problem loans totalled $54,059. Loans are
viewed as potential problem loans according to the ability of such borrowers to
comply with current repayment terms. These loans are subject to constant
management attention, and their status is reviewed on a regular basis.
Management has allocated a portion of the reserve for these loans according to
the review of the potential loss in each loan situation.
<PAGE>
The comparison of the income statements for the three months and for the nine
months ended September 30, 2000 and 1999 shows increases in interest income, net
interest income and net income in 2000 compared to 1999. Interest expense
decreased in comparing these statements.
The majority of the increase in interest and fees on loans is due to increased
volume rather than increased rates. Interest on securities decreased due to a
slight decrease in volume. Interest on deposits decreased due mostly to
decreased volume rather than to decreased rates.
Year to date other income decreased in 2000 compared to 1999. Fiduciary income
has decreased due to a lesser volume of estate fees and some decrease in fees
based on decreased market values. Service charges increased due to increased
rates. Fees for other customer services decreased due to a decrease in
installment loan insurance and therefore a decrease in insurance commissions.
Other operating income decreased due to fewer sales of other real estate in 2000
compared to 1999.
Year to date other expenses have increased due to increases in salaries, group
insurance expenses and occupancy expenses related to the renovation and
remodeling although other operating expenses have decreased as a result of the
reasons described in the June 10-QSB.
Liquid assets of the Corporation include cash and due from banks, securities
purchased under agreements to resell, securities available for sale, and loans
and investments maturing within one year. The Corporation's statement of cash
flows details this liquidity. Net income after certain adjustments including
adjustments for noncash transactions provided cash from operating activities.
Funds from maturity of securities, increased deposits and cash and cash
equivalents on hand funded investing activities. Financing activities were
funded with increased deposits. Although cash and cash equivalents decreased
during this period, liquidity of the Corporation is more than adequate to meet
present and future financial obligations.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material legal proceedings to which the Registrant or its
subsidiary, directors or officers is a party or by which they, or any of them,
are threatened. All legal proceedings presently pending or threatened against
Potomac Bancshares, Inc. and its subsidiary involve routine litigation
incidental to the business of the Company or the subsidiary and are either not
material in respect to the amount in controversy or fully covered by insurance.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
2. Plan of acquisition, reorganization, arrangement, liquidation or
succession.
Not applicable
4. Instruments defining the rights of security holders, including
indentures.
Not applicable
10. Material contracts.
Not applicable
11. Statement re: computation of per share earnings.
Not applicable
15. Letter on unaudited interim financial information.
Not applicable
18. Letter on change in accounting principles.
Not applicable
19. Reports furnished to security holders.
Not applicable
22. Published report regarding matters submitted to vote of security
holders.
Not applicable
23. Consent of experts and counsel.
Not applicable
24. Power of attorney.
Not applicable
27. Financial Data Schedule.
99. Additional exhibits.
Not applicable
(b) Reports on Form 8-K:
NONE
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
POTOMAC BANCSHARES, INC.
Date November 8, 2000 /s/ William R. Harner
------------------------------- -------------------------------
William R. Harner, Senior Vice President,
Secretary and Treasurer
Date November 8, 2000 /s/ L. Gayle Marshall Johnson
------------------------------- -------------------------------
L. Gayle Marshall Johnson, Vice
President and Chief Financial Officer
|
|