UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ending March 31, 1995
[ ] 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 0-26314
JAMES RIVER BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1740210
(State of Incorporation) (I.R.S. Employer Identification No.)
101 EAST WASHINGTON STREET, SUFFOLK, VIRGINIA 23434
(Address of principal executive officers)(Zip Code)
(804) 539-0241
(Registrant's Telephone Number, Including Area Code
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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. At March 31, 1996,
the issuer had 2,448,855 outstanding shares of its $5.00 par value common stock.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---- ----
(unaudited)
<S> <C>
ASSETS
Cash and due from depository institutions $ 11,370 $ 12,264
Interest-bearing bank balances 100 -
Federal funds sold and securities purchased under
resale agreements or similar arrangements 24,094 11,832
Investment securities available-for-sale
(amortized cost: $89,591 in 1996 and $62,036
in 1995) 89,655 63,107
Investment securities held-to-maturity (fair
value: $12,354 in 1996 and $23,071 in 1995) 12,443 22,867
Loans, net 214,509 206,516
Premises and equipment, net 6,524 5,439
Intangible assets 2,973 160
Other assets 5,257 4,095
---------- -----------
Total Assets $ 366,925 $ 326,280
========= =========
LIABILITIES
Noninterest-bearing deposits $ 32,866 $ 32,851
Interest-bearing deposits 295,190 254,513
------- -------
Total deposits 328,056 287,364
Accounts payable and other liabilities 2,182 2,031
----- -----
Total liabilities 330,238 289,395
------- -------
SHAREHOLDERS' EQUITY
Common stock, $5 par, 10,000,000 shares
authorized, 2,448,855 issued and oustanding in
in 1996 and 2,448,502 in 1995 12,245 12,244
Additional paid-in capital 3,454 3,447
Retained earnings 20,945 20,487
Net unrealized gain on securities
available-for-sale, net of income taxes 43 707
-------- ------
Total Shareholders' Equity 36,687 36,885
------ ------
Total Liabilities and Shareholders' Equity $ 366,925 $ 326,280
========= =========
</TABLE>
The notes to financial statements are an integral part of these statements.
<PAGE>
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
----------- ------------
<S> <C>
INTEREST INCOME
Interest and fees on loans $ 4,821 $ 4,019
Interest and dividends on securities 1,301 1,477
Interest on temporary investments 153 131
------- --------
Total Interest Income 6,275 5,627
------ -------
INTEREST EXPENSE
Interest on deposits 3,117 2,755
Interest on short-term borrowings - 8
------- ------
Total Interest Expense 3,117 2,763
------ -------
Net Interest Income 3,158 2,864
Provision for loan losses 127 41
--------- -------
Net Interest Income after provision
for loan losses 3,031 2,823
--------- --------
NONINTEREST INCOME
Service charges on deposit accounts 257 202
Non-deposit fees and commissions 26 30
Securities (losses), gains, net 5 (46)
Other income 62 57
-------- -------
Total Noninterest Income 350 243
-------- -------
NONINTEREST EXPENSE
Personnel expense 1,191 1,084
Occupancy and equipment expense 187 176
Merger expense 530 -
Other expense 819 767
-------- --------
Total NonInterest Expense 2,727 2,027
-------- --------
EARNINGS
Income before income taxes 654 1,039
Income tax expense 196 233
-------- ------
Net income $ 458 $ 806
=========== ===========
Earnings Per Common and Common Equivalent
Share $ .19 $ .33
Cash Dividends Paid $ .00 $ .04
=========== ===========
Average Shares Outstanding 2,479,793 2,461,701
</TABLE>
The notes to financial statements are an integral part of these statements.
<PAGE>
<PAGE>
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
-----------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 458 $ 806
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 107 119
Amortization of bond (discounts) and premiums (26) 176
Provision for loan losses 127 41
Loss (gain) from sales of securities (5) 46
Decrease (increase) in other assets (771) (346)
Increase (decrease) in other liabilities 157 (758)
--------------------
47 84
-------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities - available-for-sale $ 1,215 $ 3,113
Proceeds from sales of securities - held-to-maturity -- 1,022
Proceeds from maturities of securities - available-for-sale 3,984 663
Proceeds from maturities of securities - held-to-maturity 1,224 815
Purchase of securities - available-for-sale (23,568) (4,751)
Purchases of premises and equipment (157) (40)
Acquisition of other real estate -- (95)
Net increase in loans (8,120) (4,642)
Net cash and cash equivalents received in
acquisition of branches 30,484 --
---------------
5,062 (3,915)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in non-interest bearing deposits $ (2,983) $ (3,784)
Net increase (decrease) in interest bearing deposits 1,667 13,981
Net increase (decrease) in certificates of deposit 7,672 (7,400)
Issuance of stock 8 13
Cash dividends paid -- (89)
Repayment of borrowed funds -- (1,500)
Purchase of fractional shares (5) --
-------------------
$ 6,359 $ 1,221
-------------------
Net increase (decrease) in cash and cash equivalents 11,468 (2,610)
CASH AND CASH EQUIVALENTS
Beginning 24,096 22,661
------------------
Ending $ 35,564 $ 20,051
=====================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest paid $ 1,824 $ 1,748
=====================
Income taxes $ 440 $ 156
=====================
</TABLE>
The notes to financial statements are an integral part of these statements.
<PAGE>
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(dollars in thousands, except per share data)
For The Three Months Ended March 31, 1996
<TABLE>
<CAPTION>
Additional Unrealized
Common Paid-in Retained Gains
Stock Capital Earnings (Losses) Total
<S> <C>
Balance December 31, 1995 12,244 3,447 20,487 707 36,885
Net income -- -- 458 -- 458
Common stock issued in directors'
stock purchase plan 1 7 -- -- 8
Transfer of held-to-maturity securities to available-
for-sale, net of deferred income taxes of $51,
in conjunction with business combinations -- -- -- (99) (99)
Change in unrealized gain on securities
available-for-sale net of deferred income
taxes of $291 -- -- -- (565) (565)
-------- ------- -------- ----- --------
Balance March 31, 1996 $12,245 $3,454 $20,945 $ 43 $ 36,687
======== ======= ======== ==== =======
The notes to financial statements are an integral part of these statements.
</TABLE>
<PAGE>
PART 1 - FINANCIAL INFORMATION
JAMES RIVER BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all of the disclosures and notes required by generally accepted
accounting principles. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. The results of operations for the three month periods ended March
31, 1996 and 1995 are not necessarily indicative of results that may be expected
for the entire year or any interim period. The interim financial statements
should be read in conjunction with the December 31, 1995 Annual Report to
Stockholders on Form 10-K/A; including the 1995 consolidated financial
statements of James River Bankshares, Inc. (James River).
Note 2. Mergers and Acquisitions
In the first quarter of 1996, James River Bankshares, Inc. ("James
River") and its subsidiaries consummated several significant transactions.
First, in two separate transactions that both closed February 29, 1996, James
River acquired Bank of Isle of Wight, a Virginia state chartered bank in
Smithfield, Virginia and First Colonial Bank, FSB, a federal savings bank in
Hopewell, Virginia. The acquisitions of these two financial institutions were
treated as a pooling of interest and the historical financial information
included in this Form 10-Q/A is presented on that basis. Accordingly,
the consolidated financial statements of James River give effect to this merger,
and the accounts of First Colonial Savings Bank, FSB and Bank of Isle of Wight
have been combined with James River for all periods presented. In the
aggregate, these two transactions more than doubled James River's total assets
and net loans. First Colonial Bank, FSB previously had a year end of June 30.
To conform their year end to that of James River Bankshares, Inc., the following
adjustments were made to Shareholders' Equity of the company:
Net income for the six month period
ended December 31, 1995 $412,688
Cash dividends paid during the period (98,892)
Stock options exercised 24,188
Appreciation of available-for-sale
securities, net of income taxes
of $13,845 26,876
------
Total Adjustment $364,660
<PAGE>
Secondly, James River Bank, (formally known as "The Bank of Waverly") a
wholly owned subsidiary of James River, consummated the acquisition of two
branch banking offices from First Union National Bank of Virginia on March 23,
1996, one of which is located in the City of Franklin, Virginia, and one of
which is located in Courtland, Virginia, in Southampton County. The transaction
was accounted for by the purchase method of accounting. James River Bank assumed
aggregate deposit liabilities of approximately $34 million in connection with
the two branch acquisitions. In addition, equipment valued at $210,000 and land
and buildings valued at $825,000 were purchased. Also in connection with the
acquisition, intangible assets of $2,816,914 were capitalized and include
goodwill, an inseparable component of core deposit intangible, and other costs
incurred directly related to the acquisition.
Note 3. Transfer of Held-to-Maturity Investments
In conjunction with the acquisition by James River, First Colonial Bank,
FSB transferred most of its investment portfolio from the held-to-maturity
category to available-for-sale, in order to maintain James River's existing
interest rate risk position and credit risk policy. The transfer consisted of
the entire investment portfolio of U. S. Government agency and corporation
obligations (except mortgage-backed securities), having an amortized cost of
$9.2 million. The effect of this reclassification was to reduce the net
unrealized gain on securities available-for-sale by $99,000.
During the first quarter of 1995 James River Bank sold three
held-to-maturity securities as follows:
Gross Selling Amortized Realized
Price Cost Gain
- -------------------------------------------------------------------------
Agencies(2) $763,031 $751,270 $11,761
Municipals(1) 258,750 245,396 13,354
- -------------------------------------------------------------------------
$1,021,781 $996,666 $25,115
- -------------------------------------------------------------------------
Management determined that with the demand of agricultural loans in March, 1995,
it was necessary for James River Bank to fund such loans through the sale of
investment securities. One particular available-for-sale security was sold at a
loss of $27,862. To offset this loss and increase available funding, two U. S.
Government Agency held-to-maturity securities and one municipal held-to-maturity
security were sold at a combined profit of $25,115. As a result of the above
action, all investments at James River Bank in the held-to-maturity
classification, having an amortized cost basis of $8.2 million, were
reclassified to available-for-sale. The effect of this reclassification was to
reduce the net unrealized gain on securities available-for-sale by $96,000.
<PAGE>
Note 4. Earnings and Dividends Per Share
Earnings per share for the three months ended March 31, 1996 and 1995
are determined by dividing income for the periods by 2,479,793 and
2,461,701, respectively, the weighted average number of shares of common
stock and common stock equivalents outstanding. Stock options and warrants are
regarded as common stock equivalents and are therefore considered in earnings
per share calculations, if dilutive. Common stock equivalents are computed using
the treasury stock method. There is no material difference between primary and
fully-diluted earnings per share.
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Financial Condition
Assets
Total assets of James River Bankshares, Inc. ("James River") at March
31, 1996 were $366.9 million as compared to $326.3 million at December 31, 1995,
an increase of $40.6 million or 12.4%. This increase was primarily attributable
to the receipt of $34.4 million related to the assumption of deposits in the
purchase of two branch offices by James River Bank (formerly "The Bank of
Waverly"). Although the purchase transaction did not include loans, consolidated
total loans for the first quarter grew $8.0 million, a 3.9% increase, to $217.5
million.
During the first quarter of 1996, the interest rate environment for
James River's investment portfolio experienced a significant rise in rates.
Accordingly, the values of the Company's investment securities
available-for-sale had a net decline of $664,000 or 1.0%.
Liabilities
Deposits grew $40.7 million during the first quarter, an increase of
14.2%, to $328.1 million. Aside from the $34.4 million in deposits purchased
from First Union National Bank, deposits for James River grew $6.3
million in the first quarter, an increase of 2.3%.
Non-performing Assets
Non-performing assets of James River comprise delinquent loans on which
the accrual of income has ceased or is being fully reserved, and property
acquired through foreclosure or repossession. Non-performing assets totaled
$673,000 on March 31, 1996, as compared to $698,000 on December 31, 1995. On
March 31, 1996, non-accrual loans totaled $610,000 with $593,000 secured by real
estate, with appraised values exceeding the carrying value of such loans.
Non-accrual loans totaled $639,000 on December 31, 1995, of which $612,000 was
secured by real estate, again with appraised values exceeding carrying
values. Repossessed assets make up only a small portion of non-performing
assets, totaling $63,000, with a $55,000 valuation allowance, on March 31, 1996,
compared to $59,000, with a $55,000 valuation allowance, on December 31, 1995.
Loans past due 90 days or more and still accruing were $343,000 and
$683,000 for March 31, 1996 and December 31, 1995, respectively. Of these loans,
loans secured by real estate totaled $295,000 on March 31, 1996 and $251,000 on
December 31, 1995.
<PAGE>
No additional provisions, other than ordinary provisions, are being made
to the allowance for loan losses.
The allowances for possible losses on loans are maintained by James
River at what management considers to be a realistic level consistent with the
level of loans, taking into consideration the non-accrual and past due loans
detailed above.
James River's allowance for loan losses of $2.9 million was 1.35% of
total loans on March 31, 1996. On December 31, 1995, the allowance for loan
losses of $2.9 million was 1.37% of total loans. During this first quarter,
total loans increased $8.0 million or 3.9%.
The following details the allowance for loan losses for the first
quarter:
1996 1995
Balance, January 1 $ 2,861 $ 2,811
Provision for loan losses 127 41
Net charges (recoveries) to the
allowance (47) 6
------- -------
Balance, March 31, $ 2,941 $ 2,858
------- -------
RESULTS OF OPERATIONS
First Quarter of 1996 compared to First Quarter of 1995
Net Operating Results
For the quarter ended March 31, 1996, James River earned net income of
$458,000 as compared to $806,000 for the same period of 1995. The decrease was
mainly due to the charge of $530,000 to operating income for merger expenses
incurred by James River in connection with the acquisitions of First Colonial
Bank, FSB, and Bank of Isle of Wight. Without these merger expenses, net
income would have been $988,000, which represents an increase of approximately
22.6%.
Net Interest Income
Net interest income during the quarter ended March 31, 1996 increased
$294,000 to $3.2 million, up 10.3% from the $2.9 million for the quarter ended
March 31, 1995.
The increase in interest income was largely due to the $8.0 million
increase in loans for the first quarter of 1996 over the same period in 1995.
With rate changes and increased volume, interest and fee income on loans
increased 20.0% for the first
<PAGE>
quarter of 1996 to $4.8 million, $802,000 more than the $4.0 million earned in
same period of 1995. This increase was partially offset by a $176,000 decrease
in income on investment securities. Interest income on overnight investment
funds also increased $22,000 for the quarter over the same period in 1995.
Interest expense increased $354,000 to $3.1 million, a 12.8% increase
from the $2.8 million expense for the first quarter of 1995. Although interest
bearing deposits increased from $246.8 million at March 31, 1995 to $295.2
million at March 31, 1996, $34.4 million of this increase was not effective
until March 25, 1996. As previously discussed, James River Bank received
deposits of $34.4 million in connection with its acquisition of two branch
offices from First Union. Therefore, James River did not bear the full
cost of these period ending deposits for any significant period of time during
the first quarter of 1996. The greater expense incurred in the first quarter of
1996 is primarily due to the increase in average total deposits of 6.7%, or 18.2
million, for the first three months of 1996 over the same period of 1995.
Non-Interest Income
Non-interest income during the quarter ended March 31, 1996 increased by
$107,000 as compared to the same period during 1995. Customer service fees on
deposit accounts increased $55,000, due largely to new accounts and increased
fees. The investments sold account showed an increase of $51,000 in 1996 over
1995. This change consisted of the net losses of $46,000 in 1995, compared to
the net gain of $5,000 in 1996.
Non-Interest Expense
Non-interest expenses during the first quarter of 1996 increased by
$700,000 compared to 1995, an increase of 34.5%, The major components of the
increase from 1995 were an increase in personnel expense of
$107,000 and $585,000 in other expenses. The increase in personnel expense is
largely attributable to the increase in officer staff of three of the
subsidiaries, and new personnel associated with the two branches recently
purchased by James River Bank. As previously disclosed, the increase in other
expenses is primarily attributable to merger costs.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and interest sensitivity
At March 31, 1996, James River subsidiaries had $47.7 million in
undisbursed loan commitments and expect to have sufficient funds available to
meet their current loan origination commitments. Funding is expected to be in
the normal course of business primarily through loan repayments, prepayments,
and deposit growth. As additional funding, James River holds $102.1 million in
investment securities. Of this
<PAGE>
amount, only $12.3 million is classified as held-to-maturity with $206,000
maturing in less than one year. Of the $89.8 million in available-for-sale,
$13.8 million matures in less than one year, and an additional $37.8 million
matures between 1 and 5 years.
Almost the entire deposit base is made up of core deposits with only
5.5% of total deposits composed of certificates of deposit of $100,000 and over.
CAPITAL RESOURCES
Total shareholders' equity amounted to $36.7 million at March 31, 1996.
James River's leverage ratio was 10.20%, with tier 1 risk-based capital ratio of
11.40% and a total risk-based capital ratio of 12.40%.
In the exchange of the common stock of First Colonial Bank, FSB, and
Bank of Isle of Wight for James River Bankshares, Inc. common stock, James River
purchased any fractional shares created. A total of 191 shares were purchased.
<PAGE>
PART II - OTHER INFORMATION
Item 1 . Legal Proceedings
None of James River or its subsidiaries are involved in any
pending legal proceedings other than nonmaterial legal
proceedings occurring in the ordinary course of business.
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Securities Holders -
On February 26, 1996, a Special Meeting of the Shareholders of
James River was held. At the Special Meeting, shareholders of
James River (i) voted upon a proposal to issue up to 599,541
shares of James River common stock to shareholders of First
Colonial Bank, FSB pursuant to the terms of an Agreement and Plan
of Merger dated as of June 30, 1995, as amended, between James
River and First Colonial Bank and (ii) voted upon a proposal to
issue up to 315,400 shares of James River common stock to the
shareholders of Bank of Isle of Wight pursuant to the terms of an
Agreement and Plan of Merger dated as of June 30, 1995 between
James River and Bank of Isle of Wight. See "Part I Financial
Information - Note 2." On the matter regarding the issuance of
shares of James River common stock to shareholders of First
Colonial Bank, there were 1,169,655 votes for, 12,170 votes
against and 2,474 abstentions. On the matter regarding the
issuance of shares of James River common stock to shareholders of
Bank of Isle of Wight there were 1,180,490 votes for, 1,335 votes
against and 2,474 abstentions. There were no broker non-votes on
either proposal.
Item 5. Other Information
Bank of Suffolk, a subsidiary of James River, recently agreed to
purchase a branch bank office in Suffolk from Central Fidelity
Bank. Also, First Colonial Bank, FSB, a subsidiary of James
River, has assumed a lease from NationsBank, N. A., for a branch
bank office in Hopewell. Both transactions are subject to all
necessary regulatory approvals.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits - None
<PAGE>
(b) Form 8-K
James River filed a Form 8-K dated March 23, 1996 under Item 4,
regarding the (i) decision of Frank Edward Sheffer & Co. to
decline to stand for reelection as James River's independent
public accountants after serving in that capacity for the year
ended December 31, 1995 and (ii) the appointment of Goodman &
Company, L.L.P., to serve as James River's independent certified
public accountants for the fiscal year ending December 31, 1996.
<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.
JAMES RIVER BANKSHARES, INC.
Date: August 15, 1996 /s/ Glenn T. McCall
Glenn T. McCall, Sr. Vice President
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 11,370
<INT-BEARING-DEPOSITS> 100
<FED-FUNDS-SOLD> 24,094
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 89,655
<INVESTMENTS-CARRYING> 12,433
<INVESTMENTS-MARKET> 12,354
<LOANS> 217,450
<ALLOWANCE> 2,941
<TOTAL-ASSETS> 366,925
<DEPOSITS> 328,056
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,182
<LONG-TERM> 0
0
0
<COMMON> 12,245
<OTHER-SE> 24,442
<TOTAL-LIABILITIES-AND-EQUITY> 366,925
<INTEREST-LOAN> 4,821
<INTEREST-INVEST> 1,301
<INTEREST-OTHER> 153
<INTEREST-TOTAL> 6,275
<INTEREST-DEPOSIT> 3,117
<INTEREST-EXPENSE> 3,117
<INTEREST-INCOME-NET> 3,158
<LOAN-LOSSES> 127
<SECURITIES-GAINS> 5
<EXPENSE-OTHER> 2,727
<INCOME-PRETAX> 654
<INCOME-PRE-EXTRAORDINARY> 458
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 458
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
<YIELD-ACTUAL> 8.21
<LOANS-NON> 610
<LOANS-PAST> 343
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,861
<CHARGE-OFFS> 81
<RECOVERIES> 47
<ALLOWANCE-CLOSE> 2,941
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,941
</TABLE>
