UNITED STATES
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 quarterly period ending MARCH 31, 1999
[ ] 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.)
1514 HOLLAND ROAD, SUFFOLK, VIRGINIA 23434
(Address of principal executive offices)(Zip Code)
(757) 934-8100
(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, 1999,
the issuer had 3,741,410 outstanding shares of its $5.00 par value common stock.
<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 period ended March
31, 1999 and 1998 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, 1998 Annual Report to
Shareholders on Form 10-K, including the 1998 consolidated financial statements
of James River Bankshares, Inc. ("James River" or the "Company").
NOTE 2. DIVIDENDS PER SHARE
Cash dividends paid in the first quarter of 1999 amounted to $.12 per
share compared to $.10 per share in the first quarter of 1998.
NOTE 3. COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and displaying
comprehensive income and its components. All of James River's other
comprehensive income relates to net unrealized gains (losses) on
available-for-sale securities.
Comprehensive income consists of the following for the three months
ended March 31.
1999 1998
------------ -------------
Net income $ 637,000 $1,330,000
Other comprehensive income (220,000) (335,000)
------------ -------------
Total comprehensive income (loss) $ 417,000 $ 995,000
============ =============-
<PAGE>
The components of other comprehensive income and related tax effects for
the three months ended March 31 are shown in the following table.
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Unrealized loss on available-for-sale securities $ (328,000) $ (66,000)
Reclassification adjustment for gains realized in income 6,000 439,000
----------- -----------
Net unrealized loss $ (334,000) (505,000)
Tax effect (114,000) (170,000)
----------- ------------
Net of tax amount $ (220,000) $ (335,000)
=========== ============
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Information contained in this Form 10-Q may contain forward looking
statements with respect to James River Bankshares, Inc.'s ("James River" or the
"Company") financial condition and results of operations. These forward looking
statements may involve certain risks and uncertainties that may cause actual
results to differ materially from those contemplated by such forward looking
statements. Risks and uncertainties that may affect the financial condition and
results of operations of James River include, but are not limited to, general
economic and business conditions, interest rate fluctuations, competition from
banks and other financial service providers, new financial products and
services, risks inherent in making loans including repayment risks and changing
collateral values, changing trends in customer profiles, technological changes,
changes in laws and regulations applicable to James River and its subsidiaries,
and risk related to Year 2000 issues, including the risks associated with
vendors and their suppliers and risks from customers. Although James River
believes that its expectations with respect to any forward looking statements
are based upon reasonable assumptions within the limits of its knowledge of its
business and operations, there can be no assurance that actual results will not
differ materially from any future results that may be expressed or implied by
forward looking statements.
FINANCIAL CONDITION
ASSETS
Total assets of James River at March 31, 1999 were $414.0 million
compared to $419.8 million at December 31, 1998, a decrease of $5.8 million or
1.4%. Net loans increased $2.9 million during the first three months of 1999.
Real estate loans decreased $708 thousand to $156.8 million at March 31, 1999,
and loans held for sale increased $484 thousand for the same period. Investment
securities increased $1.7 million, from $89.0 million at December 31, 1998 to
$90.7 million at March 31, 1999. Federal funds sold decreased $9.6 million to
$1.2 million at March 31, 1999, while interest bearing deposits increased $446
thousand during the first three months of 1999. Total earning assets decreased
$4.6 million, or 1.2%, during the same period.
At March 31, 1998, James River's total assets were $397.7 million, 4.1%,
or $16.3 million, less than the comparable 1999 period. Net loans were $274.2
million at March 31, 1999, and increase of $11.1 million over March 31, 1998,
and loans held for sale increased 74.3% to $4.1 million for the same period.
Investment securities were $90.7 at March 31, 1999, up $ 13.5 million from March
31, 1998. Interest bearing deposits and federal funds sold decreased $421
thousand and $10.5 million at March 31,1999 over March 31, 1998, respectively.
Average total assets for the three months ended March 31, 1999 increased
$24.6 million to $417.7 million from $393.1 million for the three months ended
March 31, 1998. Average investment securities increased from $82.0 million for
the quarter ended March 31, 1998 to $89.8 million for the quarter ended March
31, 1999. Average total loans increased $14.6 million during the same period.
Average interest bearing deposits increased $2.4 million and Federal funds sold
decreased $4.0 million in the first quarter of 1999 over the same period of
1998, respectively.
<PAGE>
LIABILITIES
Total liabilities at March 31, 1999 were $370.3 million compared to
$376.1 million at December 31, 1998, a 1.5%, or $5.8 million, decrease. Deposits
of James River at March 31, 1999 were $366.8 million compared to $372.8 million
at December 31, 1998, a decrease of 1.6% or $6.0 million. During the first three
months of 1999, non-interest bearing deposits decreased $3.1 million to $43.7
million, while interest bearing checking decreased $2.8 million to $323.1
million.
At March 31, 1998, total liabilities were $13.7 million less than total
liabilities at March 31, 1999. Deposits at March 31, 1999 were $366.8, $13.9
million more than the $352.9 million at March 31, 1998. Non-interest bearing
deposits and interest bearing deposits increased $4.3 million and $9.6 million
for the same period, respectively.
Average total liabilities for the quarter ended March 31, 1999 were
$373.8 million compared to $352.0 million for the quarter ended March 31, 1998,
an increase of $21.8 million. Average interest bearing deposits increased $14.9
million for the same period, while average non-interest bearing deposits
increased $5.5 million. Average Federal funds purchased increased $88,000 for
the same period.
NON-PERFORMING ASSETS
Non-performing assets of James River consist of non-accrual loans and
property acquired through foreclosure or repossession. Non-performing assets
totaled $887 thousand on March 31, 1999, compared to $654 thousand on December
31, 1998. On March 31, 1999, non-accrual loans totaled $595 thousand, of which
$504 thousand was secured by real estate. Non-accrual loans totaled $390
thousand on December 31, 1998, of which $278 thousand was secured by real
estate. Foreclosed real estate accounted for $292 thousand of non-performing
assets at March 31, 1999 compared to $264 thousand at December 31, 1998.
Management does not anticipate any material loss relating to non-performing
assets.
Loans past due 90 days or more and still accruing were $246 thousand and
$427 thousand on March 31, 1999 and December 31, 1998, respectively. Of these
loans, loans secured by real estate totaled $179 thousand on March 31, 1999 and
$307 thousand on December 31, 1998.
The recorded investment in impaired loans requiring an allowance for
loan losses as determined in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment of a Loan,"
as amended by SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures," was $1.5 million and $1.4 million at
March 31, 1999, and December 31, 1998, respectively. The portion of the
allowance for loan losses allocated to the impaired loan balance was $89
thousand and $162 thousand at March 31, 1999, and December 31, 1998,
respectively.
The allowance for loan losses is maintained by James River at what
management considers to be a realistic level consistent with the level and type
of loans, and taking into consideration the non-accrual and past due loans
detailed above. No additional provisions, other than ordinary provisions, are
being made to the allowance for loan losses.
James River's allowance for loan losses of $3.9 million was 1.4% of
total loans on March 31, 1999 compared with 1.3% on March 31, 1998. On December
31, 1998, the allowance for loan losses of $3.8 million was 1.4% of total loans.
<PAGE>
RESULTS OF OPERATIONS
NET OPERATING RESULTS
For the quarter ended March 31, 1999, James River's net income was $637
thousand compared to $1.3 million for the same period of 1998, a 52.1% decrease.
Diluted earnings per share in the first quarter decreased 51.4% to $.17 in 1999
from $.35 in 1998. In the first quarter of 1998, the Company had non-recurring
income resulting from gains on the sale of securities and from mortgage
servicing rights totaling $567 thousand before taxes. After tax, these
non-recurring items added approximately $352 thousand, or $.09 per fully diluted
share, to net income in the first quarter of 1998. Return on average assets and
return on average equity were 0.61% and 5.80%, respectively, in the first
quarter of 1999 compared to 1.35% and 12.95% in the comparable period in 1998.
NET INTEREST INCOME
Net interest income during the quarter ended March 31, 1999 increased
$184 thousand to $4.1 million, up 4.7% from the $3.9 million for the quarter
ended March 31, 1998. During the first quarter of 1999, income on investment
securities increased $94 thousand, or 7.7%, to $1.3 million, compared to the
first quarter of 1998. Interest expense on deposits decreased 2.2% in the first
quarter from $3.6 million in 1998 to $3.5 million for the same period in 1999.
The net interest margin in the first quarter of 1999 was 4.36% compared to 4.39%
in the first quarter of 1998.
PROVISION FOR LOAN LOSSES
The provision for loan losses during the quarter ended March 31, 1999
was $147 thousand, up $4 thousand, or 2.8%, from the respective period in 1998.
NON-INTEREST INCOME
For the three months ending March 31, 1999, non-interest income was $561
thousand, down $465 thousand, or 45.3%, compared to the respective period in
1998. The decrease was predominately attributable to non-recurring income in the
first quarter of 1998 from gains on the sale of securities and mortgage
servicing rights totaling $567 thousand.
NON-INTEREST EXPENSE
Non-interest expense during the first quarter of 1999 increased $716
thousand, or 24.0%, to $3.7 million compared with the 1998 quarter. The increase
was primarily attributable to a 29.5% increase in personnel expenses due in part
to staffing new branch offices and a mortgage subsidiary that opened in the
fourth quarter of 1998.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY AND INTEREST SENSITIVITY
Liquidity represents an institution's ability to meet present and future
financial obligations through either the sale or maturity of existing assets or
the acquisition of additional funds through liability management. Liquid assets
include cash, interest bearing deposits with banks, federal funds sold,
investments, and loans maturing within one year. As a result of James River's
management of liquid assets and the ability to generate liquidity through
liability funding, management believes that James River maintains overall
liquidity sufficient to satisfy its depositors' requirements and meet its
customers' credit needs.
At March 31, 1999, James River had $61.2 million in undisbursed loan
commitments and expects to have sufficient funds available to meet 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 $90.7 million in investment securities. Of
this amount, only $8.0 million is classified as held-to-maturity and is not
readily available for sale. Of the $82.7 million classified as
available-for-sale, $6.6 million matures in less than one year, and an
additional $39.6 million matures between 1 and 5 years.
James River has no long-term debt. Almost the entire deposit base is
made up of core deposits, with only 9.1% of total deposits composed of
certificates of deposit of $100,000 and over.
CAPITAL RESOURCES
Total shareholders' equity amounted to $43.7 million at March 31, 1999
and December 31, 1998. James River's leverage ratio was 9.86%, with a tier 1
risk-based capital ratio of 15.72% and a total risk-based capital ratio of
16.97%.
RECENT ACCOUNTING CHANGES
Financial Accounting Standards Board (FASB) Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities", was issued in
June 1998. This Statement establishes accounting and reporting standards for
derivative instruments, including certain derivative information embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. This Statement is effective for all fiscal quarters
or fiscal years beginning after June 15, 1999. Although management is currently
studying this Statement, James River does not expect this Statement to
materially affect its financial condition or results of operations.
The American Institute of Certified Public Accountants issued Statement
of Position (SOP) 98-5, "Reporting on the Costs of Start-up Activities", in
April 1998. The SOP requires such costs to be expensed as incurred instead of
being capitalized and amortized. It applies to start-up activities and costs of
organization of both development stage and established operating entities, and
it changes existing practice for some industries. The SOP broadly
<PAGE>
defines start-up activities as those one-time activities that relate to the
opening of a new facility, introduction of a new product or service, doing
business in a new territory, initiating a new process in an existing facility,
doing business with a new class of customer or beneficiary, or commencing some
new operation. The SOP is effective for financial statements for fiscal years
beginning after December 15, 1998. This SOP is not expected to materially affect
James River's financial condition or results of operations.
YEAR 2000 PROJECT
STATE OF READINESS
In 1997 James River's board of directors established a Year 2000 Plan to
assess internal and external risks posed by the date change issue and to develop
corrective actions and contingency plans as may be determined prudent by the
assessment. The plan covers internal information technology systems,
environmental systems, and other non-information technology products and date
sensitive issues. In addition James River has communicated with suppliers and
significant customers to determine their state of readiness. The Company's
management, its board of directors, and the management and boards of the
Company's subsidiary banks receive updates at least quarterly, and more
frequently as needed, regarding progress and activities related to the Year 2000
Plan. The five phases of the plan and the progress towards completion of each
phase are described below.
o Awareness Phase - Completed third quarter 1997;
o Assessment Phase - Completed first quarter 1998;
o Renovation Phase - No significant renovation to existing systems
(principal hardware and software systems were compliant when purchased);
o Validation Phase - Completed first quarter 1999; and
o Implementation Phase - Completion expected in second quarter 1999.
Testing has been completed on the hardware and software for "mission
critical" systems and for all other software applications and hardware as well.
In addition, testing has been performed on all environmental systems, including
security systems, heating and air conditioning units, and vault timers, among
others. Testing has been completed on all personal computers and software
applications that are not deemed critical. Such software testing included
software for processing new deposit accounts and loans, as well as merchant
credit card terminals. The testing did not result in any determinable Year 2000
difficulties. A review of vault mechanisms has been completed. The review
determined that vault timers do not have embedded chips and are not dependent on
electrical or other sources of power. Consequently, the Company's management
does not expect to experience difficulty with the vaults. Reviews of security
systems reveal that such systems have battery back-up capabilities in the event
of power failure. Battery testing will be undertaken near year-end. In addition,
ATM hardware has been evaluated for Year 2000 readiness. Because of the age of
some of the equipment, vendors have been contacted to determine readiness.
Several significant outside systems that James River is dependent upon
are provided by the Federal Reserve Bank of Richmond. Testing of these systems,
which was completed in the first quarter of 1999 revealed no difficulties with
processing in Year 2000.
<PAGE>
In addition, James River relies upon outside sources for investment
securities accounting and custodial services, stock transfer services, and
disaster recovery services. In each case, James River has been provided with
information regarding vendor Year 2000 readiness.
In 1998, James River's subsidiary banks completed an assessment of large
commercial loan customers for compliance with Year 2000 issues and are preparing
another written communication to all customers regarding the status of the
Company's Year 2000 efforts. In addition, the Company initiated a communications
program directed at employees and customers that will provide written
information regarding Year 2000 issues and Company contact information at each
of the Company's locations.
James River's efforts to address Year 2000 issues are subject to
guidelines established by the Federal Financial Institutions Examination Council
("FFIEC"). Consequently, the Company's plan and its progress in implementing
that plan are subject to periodic examination by the Federal Reserve Bank of
Richmond.
THE COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUES
At this stage, James River has incurred no material incremental costs
related to year 2000. The Company's projections for this project stand at
$50,000, which is unchanged from the Company's previous estimate. In addition, a
non-cash charge of approximately $61,000 will be incurred in 1999 to maintain
back-up computer capabilities.
THE RISKS OF THE COMPANY'S YEAR 2000 ISSUES
James River is subject to a variety of Year 2000 risks for which there
are no means to measure, test, or control. One such risk is that suppliers or
vendors upon whom James River depends will not be Year 2000 ready. James River
also is subject to difficulties experienced by local governments and businesses
and those on a state or national level that could have ramifications upon the
Company and/or that of significant customers or suppliers.
Another significant risk to the Company for year 2000 is the failure of
one or more business entities that have considerable loan volume with one or
more of the Company's subsidiary banks. To assess that risk, James River
recently completed a survey of our large commercial loan customers and their
ability to continue successfully past the century date change. Preliminary
results of this process showed no significant risks. James River will continue
to analyze those customers and their efforts to comply with the requirements of
year 2000 for their business systems. Loan agreements allow the Company to
monitor these businesses and their financial performance to ensure their
on-going preparedness for year 2000.
In addition, the Company has risk that its internal assessment of Year
2000 issues did not identify or adequately prepare the Company for all Year 2000
issues.
THE COMPANY'S CONTINGENCY PLANS
James River continues to evaluate contingency plans with respect to the
Year 2000. The manual processing of teller work as well as other transactions
such as loan payments, general ledger entries, etc. will be the focus of the
Company's contingency plan. In 1999, the Company will evaluate the need for
training to implement this aspect of the contingency plan. In
<PAGE>
addition, the disaster recovery plans of each subsidiary will be reviewed in
1999 with respect to Year 2000 issues. Also, in conjunction with its decision to
enter into a data processing agreement with SBS Data Services, Inc., James River
decided to retain and maintain its current mainframe computer as part of its
contingency back-up plan.
Another issue that the subsidiary banks will address is the adequacy of
liquidity and related security concerns. Through various media, the public has
been cautioned to maintain above normal levels of cash. To meet expected cash
requirements and other liquidity needs, the subsidiary banks plan to establish
borrowing privileges at the Federal Reserve. In conjunction with the above
normal cash needs, the Company and its subsidiaries are reviewing insurance
coverage and needs and security measures that may be necessary.
The Company expects to finalize contingency plans by June 30, 1999 in
accordance with FFIEC mandated guidelines.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
James River's primary market risk is exposure to interest rate risk.
Fluctuations in interest rates will impact both the level of interest income and
interest expense and the market value of James River's interest-earning assets
and interest-bearing liabilities. There were no material changes in James
River's market risk management strategy, as stated in James River's 1998 Annual
Report on Form 10-K, during the first quarter of 1999.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no pending legal proceedings to which James River or its
subsidiaries are involved in 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 - None
Item 5. Other Information
On February 17, 1999, James River entered into an Agreement and Plan of
Merger ("Merger Agreement") with the State Bank of Remington, Inc. ("State
Bank"). Under the terms of the Merger Agreement , State Bank would become a
wholly owned banking subsidiary of James River and would conduct operations
as a free standing banking subsidiary. The Merger Agreement provides that
shareholders of State Bank would receive 2.9 shares of James River common
stock for each outstanding share of State Bank common stock. State Bank has
approximately 291,000 shares of common stock outstanding. The proposed
merger is subject to regulatory and shareholder approval and to certain
other conditions set forth in the Merger Agreement. Subject to satisfaction
of these conditions, James River expects the transaction to close in the
third quarter of 1999 and to be accounted for as a pooling of interests.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits - Financial Data Schedule, Exhibit 27
(b) Reports on Form 8-K - James River filed a Form 8-K on
February 3, 1999 and Forms 8-K/A on February 22, 1999 and March
8, 1999. Each of these filings related to James River's decision
to change its Independent Public Accountants.
<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: May 11, 1999 /s/ Donald W. Fulton, Jr.
------------- -------------------------------------------
Donald W. Fulton, Jr., Sr. Vice President
and Chief Financial Officer
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31,
---------------------------- DECEMBER 31,
1999 1998 1998
---- ---- ----
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 13,009 $ 14,267 $ 14,268
Interest bearing deposits with banks 12,477 12,898 12,031
Federal funds sold 1,250 11,742 10,809
Securities available-for-sale, at fair value (amortized
cost of $81,835 on March 31, 1999, $65,879 on
March 31, 1998, and $78,937 on December 31, 1998) 82,719 66,562 80,155
Securities held-to-maturity, at amortized cost (fair value
of $8,178 on March 31, 1999, $10,882 on March 31, 1998,
and $9,090 on December 31, 1998) 7,985 10,668 8,862
Loans, net of allowance for loan losses 274,270 263,144 271,892
Loans held for sale, net 4,083 2,343 3,599
Premises and equipment, net 10,186 7,583 10,137
Accrued interest receivable 3,009 2,931 2,970
Intangible assets, net 2,275 2,540 2,342
Other assets 2,766 3,002 2,755
-------- -------- --------
Total Assets $414,029 $397,680 $419,820
======== ======== ========
LIABILITIES
Non-interest bearing deposits 43,700 39,380 46,805
Interest bearing deposits 323,127 313,547 325,967
-------- -------- --------
Total deposits 366,827 352,927 372,772
Accrued interest payable 783 782 810
Federal funds purchased and other short-term borrowings 1,392 700 719
Accounts payable and other liabilities 1,304 2,149 1,816
-------- -------- --------
Total Liabilities 370,306 356,558 376,117
-------- -------- --------
SHAREHOLDERS' EQUITY
Preferred stock, $5 par, 2,000,000 shares authorized,
none issued -- -- --
Common stock, $5 par, 10,000,000 shares authorized,
3,741,410 issued and outstanding at March 31, 1999,
3,680,587 at March 31, 1998, and 3,721,348 at
December 31, 1998 18,707 18,403 18,607
Additional paid-in capital 3,829 3,643 3,878
Retained earnings 20,603 18,625 20,414
Accumulated other comprehensive income 584 451 804
-------- -------- --------
Total Shareholders' Equity 43,723 41,122 43,703
-------- -------- --------
Total Liabilities and Shareholders' Equity $414,029 $397,680 $419,820
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial 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,
1999 1998
---------- ----------
<S> <C> <C>
INTEREST INCOME
Loans $ 6,062 $ 5,986
Investment securities:
Taxable 1,006 921
Exempt from federal income taxes 303 294
Federal funds sold and other 216 270
---------- ----------
Total Interest Income 7,587 7,471
---------- ----------
INTEREST EXPENSE
Deposits 3,500 3,578
Federal funds purchased and other borrowings 12 2
---------- ----------
Total Interest Expense 3,512 3,580
---------- ----------
Net Interest Income 4,075 3,891
Provision for Loan Losses 147 143
---------- ----------
Net Interest Income after Provision for Loan Losses 3,928 3,748
---------- ----------
NON-INTEREST INCOME
Service charges on deposit accounts 395 295
Other fees and commissions 122 121
Net realized gains on disposition of securities 6 439
Other income 38 171
---------- ----------
Total Non-Interest Income 561 1,026
---------- ----------
NON-INTEREST EXPENSE
Salaries and employee benefits 2,116 1,634
Occupancy 307 204
Equipment 257 229
Directors' Fees 79 87
Other 911 797
Total Non-Interest Expense 3,697 2,981
---------- ----------
Income Before Income Taxes 792 1,793
Provision for Income Taxes 155 463
---------- ----------
Net Income $ 637 $ 1,330
========== ==========
Net Income per Common Share
Basic $ 0.17 $ 0.36
========== ==========
Diluted $ 0.17 $ 0.35
========== ==========
Cash Dividends Paid per Common Share $ 0.12 $ 0.10
========== ==========
Weighted Average Number of Shares Outstanding
Basic 3,724,965 3,675,717
========== ==========
Diluted 3,759,209 3,783,614
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(DOLLARS IN THOUSANDS)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
ACCUMULATED
SHARES OF ADDITIONAL OTHER
COMMON COMMON PAID-IN RETAINED COMPREHEN-
STOCK STOCK CAPITAL EARNINGS SIVE INCOME TOTAL
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1998 3,721,348 $ 18,607 $ 3,878 $ 20,414 $ 804 $ 43,703
Comprehensive income:
Net income -- -- -- 637 -- 637
Other comprehensive income (loss) -- -- -- -- (220) (220)
Common stock issued 564 3 7 -- -- 10
Stock options exercised 19,498 97 (56) -- -- 41
Cash dividends declared
($0.12 per share) -- -- -- (448) -- (448)
--------- --------- --------- --------- --------- ---------
Balance - March 31, 1999 3,741,410 $ 18,707 $ 3,829 $ 20,603 $ 584 $ 43,723
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(DOLLARS IN THOUSANDS)
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
ACCUMULATED
SHARES OF ADDITIONAL OTHER
COMMON COMMON PAID-IN RETAINED COMPREHEN-
STOCK STOCK CAPITAL EARNINGS SIVE INCOME TOTAL
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1997 3,672,557 $ 18,363 $ 3,572 $ 17,663 $ 786 $ 40,384
Comprehensive income:
Net income -- -- -- 1,330 -- 1,330
Other comprehensive income (loss) -- -- -- -- (335) (335)
Common stock issued 363 2 6 -- -- 8
Stock options exercised 7,667 38 65 -- -- 103
Cash dividends declared
($0.10 per share) -- -- -- (368) -- (368)
--------- --------- --------- --------- --------- ---------
Balance - March 31, 1998 3,680,587 $ 18,403 $ 3,643 $ 18,625 $ 451 $ 41,122
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
MARCH 31, MARCH 31,
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 637 $ 1,330
Adjustments to reconcile to net cash provided
by operating activities:
Provision for loan and other real estate losses 147 143
Depreciation and amortization 313 294
Amortization of bond (discounts) and premiums 5 3
Gain on disposition of securities (6) (439)
Gain on sale of loans (14) (7)
Changes in:
Loans held for sale (470) (1,547)
Interest receivable (39) 8
Other assets 125 (369)
Interest payable (27) 30
Other liabilities (512) 782
-------- --------
Net cash provided by operating activities 159 228
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities, calls, and sales of securities -
available-for-sale 5,422 9,485
Proceeds from maturities of securities - held-to-maturity 872 404
Purchase of securities - available-for-sale (8,314) (4,162)
Purchases of premises and equipment (289) (305)
Net increase in loans (2,553) (3,728)
-------- --------
Net cash provided by (used in) investing activities (4,862) 1,694
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in non-interest bearing deposits (3,105) (7,110)
Net increase (decrease) in interest bearing deposits (2,840) 12,464
Issuance of stock 51 111
Cash dividends paid (448) (368)
Proceeds from short-term borrowings 673 700
-------- --------
Net cash provided by (used in) financing activities (5,669) 5,797
-------- --------
Net increase (decrease) in cash and cash equivalents $(10,372) $ 7,719
CASH AND CASH EQUIVALENTS
Beginning 37,108 31,188
-------- --------
Ending $ 26,736 $ 38,907
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest paid $ 3,539 $ 3,550
======== ========
Income taxes $ -- $ --
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS
Real estate acquired in settlement of loans $ 28 $ 128
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-30-1999
<CASH> 13,009
<INT-BEARING-DEPOSITS> 12,477
<FED-FUNDS-SOLD> 1,250
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 82,719
<INVESTMENTS-CARRYING> 7,985
<INVESTMENTS-MARKET> 8,178
<LOANS> 282,297
<ALLOWANCE> 3,944
<TOTAL-ASSETS> 414,029
<DEPOSITS> 366,827
<SHORT-TERM> 1,392
<LIABILITIES-OTHER> 2,087
<LONG-TERM> 0
0
0
<COMMON> 18,707
<OTHER-SE> 25,016
<TOTAL-LIABILITIES-AND-EQUITY> 414,029
<INTEREST-LOAN> 6,062
<INTEREST-INVEST> 1,309
<INTEREST-OTHER> 216
<INTEREST-TOTAL> 7,587
<INTEREST-DEPOSIT> 3,500
<INTEREST-EXPENSE> 3,512
<INTEREST-INCOME-NET> 4,075
<LOAN-LOSSES> 147
<SECURITIES-GAINS> 6
<EXPENSE-OTHER> 3,697
<INCOME-PRETAX> 792
<INCOME-PRE-EXTRAORDINARY> 792
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 637
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
<YIELD-ACTUAL> 5.80
<LOANS-NON> 595
<LOANS-PAST> 246
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,827
<CHARGE-OFFS> 55
<RECOVERIES> 25
<ALLOWANCE-CLOSE> 3,944
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3,944
</TABLE>
