UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2001
-----------------------------------
Commission File No. 33-12756-B
COMMUNITY BANCORP, INC.
A Massachusetts Corporation
IRS Employer Identification No. 04-2841993
17 Pope Street, Hudson, Massachusetts 01749
Telephone - (978)568-8321
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
--- ---
Common Stock
$2.50 par value
5,940,606 shares outstanding
as of July 31, 2001
PART I - FINANCIAL INFORMATION
COMMUNITY BANCORP, INC.
Item 1. CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2001 2000
------------ ------------
ASSETS
Cash and due from banks $ 19,296,043 $ 16,472,547
Federal funds sold 30,932,374 31,136,266
Securities available for sale, at market value 56,911,389 50,110,202
Securities held to maturity (market value
$90,207,774 at 6/30/01 and $92,302,813
at 12/31/00) 89,801,949 92,441,522
Mortgage loans held for sale 1,080,960 295,742
Loans 179,576,941 176,029,265
Less allowance for possible loan losses 2,767,875 2,812,392
----------- -----------
Total net loans 176,809,066 173,216,873
----------- -----------
Premises and equipment, net 6,422,888 6,234,641
Other assets, net 4,616,183 4,959,718
----------- -----------
Total assets $385,870,852 $374,867,511
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
Noninterest bearing $ 74,429,943 $ 75,969,408
Interest bearing 243,981,823 231,159,424
----------- -----------
Total deposits 318,411,766 307,128,832
----------- -----------
Federal funds purchased and securities
sold under repurchase agreements 30,452,929 33,463,166
Other liabilities 2,735,855 2,460,642
----------- -----------
Total liabilities 351,600,550 343,052,640
----------- -----------
Stockholders' equity:
Preferred stock, $2.50 par value, 100,000
shares authorized, none issued or outstanding
Common stock, $2.50 par value, 12,000,000
shares authorized, 6,398,436 shares issued,
5,940,606 shares outstanding, (5,914,441
shares outstanding at 12/31/00) 15,996,090 15,996,090
Surplus 219,120 101,378
Undivided profits 19,818,378 18,052,893
Treasury stock, at cost, 457,830 shares,
(483,995 shares at 12/31/00) (2,297,019) (2,414,762)
Accumulated other comprehensive income 533,733 79,272
----------- -----------
Total stockholders' equity 34,270,302 31,814,871
----------- -----------
Total liabilities and
stockholders' equity $385,870,852 $374,867,511
=========== ===========
<FN>
The accompanying notes are an integral part of these unaudited, consolidated
financial statements
-2-
COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2001 2000 2001 2000
---------- --------- ---------- ---------
Interest income:
Interest and fees on loans $4,002,196 $3,745,465 $7,993,191 $7,370,918
Interest and div. on securities:
Taxable interest 1,816,419 1,711,829 3,739,431 3,460,199
Nontaxable interest 209,280 147,132 408,845 293,972
Dividends 95,761 20,709 120,139 41,338
Interest on federal funds sold 358,716 377,443 811,106 548,741
--------- --------- ---------- ----------
Total interest income 6,482,372 6,002,578 13,072,712 11,715,168
--------- --------- ---------- ----------
Interest expense:
Deposits 1,946,173 1,772,705 3,986,891 3,535,924
Short term borrowings 343,623 433,289 776,709 734,493
--------- --------- --------- ---------
Total interest expense 2,289,796 2,205,994 4,763,600 4,270,417
--------- --------- --------- ---------
.
Net interest income 4,192,576 3,796,584 8,309,112 7,444,751
--------- --------- --------- ---------
Provision for loan losses -- -- -- --
--------- --------- --------- ---------
Net interest income after
provision for loan losses 4,192,576 3,796,584 8,309,112 7,444,751
--------- --------- --------- ---------
Noninterest income:
Merchant credit card assessments 463,837 370,766 890,366 752,794
Service charges 159,157 155,311 313,882 311,303
Other charges, commissions, fees 338,811 273,910 648,153 530,344
Gains on sales of loans, net 62,870 27,090 104,740 46,234
Other 28,993 22,516 55,112 45,874
--------- --------- --------- ---------
Total noninterest income 1,053,668 849,593 2,012,253 1,686,549
--------- --------- --------- ---------
Noninterest expense:
Salaries and benefits 1,588,356 1,474,647 3,233,521 2,902,243
Data processing and ATM network 313,249 260,321 607,276 524,400
Occupancy, net 246,205 196,892 488,247 385,317
Furniture and equipment 106,039 87,049 207,679 174,827
Credit card processing 385,335 342,149 772,659 665,096
Professional fees 98,206 101,695 219,063 188,772
Printing, stationery & supplies 61,947 67,742 119,433 126,122
Marketing and advertising 65,645 87,777 121,005 155,585
Other 360,127 310,464 719,310 624,750
--------- --------- --------- ---------
Total noninterest expense 3,225,109 2,928,736 6,488,193 5,747,112
--------- --------- --------- ---------
Income before income taxes 2,021,135 1,717,441 3,833,172 3,384,188
Income taxes 717,574 606,291 1,356,333 1,208,241
--------- --------- --------- ---------
Net income $1,303,561 $1,111,150 $2,476,839 $2,175,947
========= ========= ========= =========
-3-
Basic earnings per common share $ .220 .188 $ .418 $ .368
Diluted earnings per common share $ .220 $ .188 $ .418 $ .368
Dividends per share $ .062 $ .051 $ .120 $ .100
Basic weighted average number
of shares 5,931,980 5,904,574 5,923,259 5,911,002
Diluted weighted average number
of shares 5,941,590 5,904,574 5,926,073 5,911,002
<FN>
The accompanying notes are an integral part of these unaudited, consolidated
financial statements.
-4-
COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2001 2000 2001 2000
--------- --------- --------- ---------
Net income $1,303,561 $1,111,150 $2,476,839 $2,175,947
Other comprehensive income:
Unrealized securities gains
(losses) arising during period 115,765 (90,541) 769,362 (442,536)
Income tax (expense) benefit on
securities gains (losses)
arising during period (47,384) 37,058 (314,901) 181,130
--------- --------- --------- ---------
Net unrealized securities gains
(losses) arising during period 68,381 (53,483) 454,461 (261,406)
Less: reclassification
adjustment for securities
(gains) losses included in
income -- -- -- --
Income tax expense (benefit) on
securities (gains) losses
included in income -- -- -- --
--------- --------- --------- ---------
Net reclassification adjustments
for securities (gains) losses
included in net income -- -- -- --
--------- --------- --------- ---------
Other comprehensive income (loss) 68,381 (53,483) 454,461 (261,406)
--------- --------- --------- ---------
Comprehensive income $1,371,942 $1,057,667 $2,931,300 $1,914,541
========= ========= ========= =========
<FN>
The accompanying notes are an integral part of these unaudited, consolidated
financial statements.
-5-
COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
June 30,
------------------------
2001 2000
--------- ---------
Cash flows from operating activities:
Net income $ 2,476,839 $ 2,175,947
Adjustments to reconcile net income
to net cash provided by operating
activities:
(Increase) in mortgage loans held for sale (785,218) (856,338)
Depreciation and amortization 499,800 454,774
Amortization of investment securities
discounts and premiums, net 23,354 20,644
Increase in other liabilities 19,875 210,824
(Decrease) in taxes payable (78,639) (27,235)
(Decrease) in interest payable (28,941) (46,023)
Decrease (increase) in other assets 132,801 (5,171)
Decrease (increase) in interest receivable 160,724 (115,762)
--------- ---------
Total adjustments (56,244) (364,287)
--------- ---------
Net cash provided by operating activities 2,420,595 1,811,660
--------- ---------
Cash flows from investing activities:
Maturities and principal repayments of
securities available for sale 9,912,475 3,355,854
Maturities and principal repayments of
securities held to maturity 33,569,840 5,684,226
Purchases of securities available for sale (16,010,671) (4,036,512)
Purchases of securities held to maturity (30,887,250) (4,080,113)
Net change in federal funds sold 203,892 (22,966,564)
Net change in loans and other real estate
owned (3,531,282) (4,316,624)
Acquisition of property, plant and equipment (688,047) (524,095)
--------- ----------
Net cash used in investing activities (7,431,043) (26,883,828)
--------- ----------
Cash flows from financing activities:
Net change in deposits 11,282,934 14,083,725
Net change in repurchase agreements (3,010,237) 12,633,975
Purchase of treasury stock -- (327,132)
Sale of treasury stock 235,485 231,720
Dividends paid (674,238) (571,456)
--------- ----------
Net cash provided by financing activities 7,833,944 26,050,832
--------- ----------
Net increase in cash and due from banks 2,823,496 978,664
--------- ----------
Cash and due from banks at beginning
of period 16,472,547 21,010,959
---------- ----------
Cash and due from banks at end of period $19,296,043 $21,989,623
========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
-6-
Supplemental disclosures:
1. Cash paid for interest was $4,792,541 and $4,316,440 for the six months
ended June 30, 2001 and 2000, respectively.
2. Cash paid for income taxes was $1,434,972 and $1,435,276 for the six
months ended June 30 2001 and 2000, respectively.
-7-
COMMUNITY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
_____________________________________________________________________________
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by accounting principles generally accepted for
complete financial statements. 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 any interim
period are not necessarily indicative of results expected for the full year.
These unaudited consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto contained in the
Company's Annual Report to shareholders and Form 10-K for the year ended
December 31, 2000.
2. EARNINGS PER SHARE
The Company adopted Financial Accounting Standards Board Statement No. 128,
"Earnings Per Share" (SFAS No. 128), effective December 31, 1997. This
Statement requires the presentation of "basic" earnings per share, which
excludes the effect of dilution, and "diluted" earnings per share, which
includes the effect of dilution. Earnings per share is based on the weighted
average number of shares outstanding during the period.
A reconciliation between basic and diluted earnings per share from continuing
operations is as follows:
Three Months Ended
---------------------------------
June 30, 2001 June 30, 2000
------------- -------------
Net Earnings $ 1,303,561 $ 1,111,150
Basic EPS:
Basic Common Shares 5,931,980 5,904,574
Basic EPS $ .220 $ .188
Diluted EPS:
Basic common shares 5,931,980 5,904,574
Plus: Impact of Stock Options 5,494 -
Diluted commons shares 5,937,474 5,904,574
Diluted EPS $ 220 $ .188
-8-
3. COMPREHENSIVE INCOME
The Company adopted Financial Accounting Standards Board Statement No. 130,
"Reporting Comprehensive Income" (SFAS No. 130), effective January 1, 1998.
Components of comprehensive income are net income and all other non-owner
changes in equity. The Statement requires that an enterprise (a) classify
items of other comprehensive income by their nature in a financial statement
and (b) display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the equity
section of a statement of financial position.
4. OPERATING SEGMENTS
The Company has adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information", which established standards for reporting
information about operating segments in financial statements. Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision-maker, or decision making group, in deciding how to allocate
resources and in assessing performance. The adoption of SFAS No. 131 did not
have any material effect on the Company's primary financial statements or
results of operations.
The Company has identified its reportable operating business segment as
"Community Banking". The Company's community banking segment consists of
commercial and retail banking. The community banking segment is managed as a
single strategic unit and derives its revenues from a wide range of banking
services, including investing and lending activities and the acceptance of
demand, savings and time deposits. Nonreportable operating segments of the
Company's operations which do not have similar characteristics to the community
banking operations and do not meet the thresholds requiring separate disclosure
are included in the "Other" category in the disclosure of business segments
below. The nonreportable segment represents the holding company financial
information.
The accounting policies used in the disclosure of business segments are the
same as those described in the summary of significant accounting policies. The
consolidation adjustments reflect certain eliminations of intersegment revenue,
cash and investments in the subsidiary. Reportable segment-specific
information, and the reconciliation to consolidated financial information, are
as follows:
Adjustments
Community and
Banking Other Eliminations Consolidated
----------- ---------- ------------ ------------
June 30, 2001
Investment securities $146,713,338 $ -- $ -- $146,713,338
Net loans 176,809,066 -- -- 176,809,066
Total assets 385,870,852 -- -- 385,870,852
Total interest income 13,072,712 6,245 (6,245) 13,072,712
Total interest expense 4,769,825 -- (6,225) 4,763,600
Net interest income 8,302,887 -- 6,225 8,309,112
Net income $ 2,474,833 $2,476,839 $(2,474,833) $ 2,476,839
_____________________________________________________________________________
-9-
Adjustments
Community and
Banking Other Eliminations Consolidated
----------- ---------- ------------ ------------
June 30, 2000
Investment securities $126,646,445 $ -- $ -- $126,646,445
Net loans 166,868,076 -- -- 166,868,076
Total assets 356,132,989 -- -- 356,132,989
Total interest income 11,715,168 5,596 (5,596) 11,715,168
Total interest expense 4,276,013 -- (5,596) 4,270,417
Net interest income 7,439,155 -- 5,596 7,444,751
Net income $ 2,173,041 $2,175,947 $(2,173,041) $ 2,175,947
_____________________________________________________________________________
5. RECLASSIFICATIONS
Certain amounts in the prior period's financial statements have been
reclassified to be consistent with the current period's presentation. The
reclassifications have no effect on net income.
-10-
PART I - FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Summary
The Company recorded net income of $2,476,839 for the six months ended June 30,
2001, representing an increase of $300,892 or 13.8% over $2,175,947 for the
same period in 2000. Basic earnings per share of $.418 for the current period
represented an increase of $.050 from $.368 for the six months ended June 30,
2000.
The improvement in net income resulted primarily from an increase in net
interest income and noninterest income, partially offset by increases in
salaries and benefits, data processing and ATM network, occupancy, furniture
and equipment, credit card processing, professional fees and other expense.
Deposits of $318,411,766 at June 30, 2001 increased by $11,282,934 or 3.7% from
$307,128,832 at December 31, 2000. The increase in deposits occurred in the
interest-bearing categories.
Loans of $179,576,941 at June 30, 2001 increased by $3,547,676 or 2.0% from
$176,029,265 at December 31, 2000. This increase took place in the commercial
and prime equity loan categories, partially offset by a decrease in residential
real estate loans. Noncurrent loans (nonaccrual loans, troubled debt
restructurings and loans 90 days or more past due but still accruing) totaled
$610,699 and $560,295 at June 30, 2001 and December 31, 2000, respectively.
Assets of $385,870,852 at June 30, 2001 represented an $11,003,341 or 2.9%
increase from $374,867,511 at December 31, 2000.
Six months ended June 30, 2001 as Compared To
Six months ended June 30, 2000
---------------------------------------------
Net Interest Income
Interest income for the six months ended June 30, 2001 was $13,072,712,
representing an increase of $1,357,544 or 11.6% from $11,715,168 for the six
months ended June 30, 2001, primarily due to higher average loan, Federal funds
sold and securities balances, partially offset by lower average interest rates,
in 2001. Interest expense was $4,763,600, representing an increase of $493,183
or 11.5% from $4,270,417 for the six months ended June 30, 2000, primarily due
to higher average interest bearing deposit and repurchase agreement balances,
partially offset by lower average interest rates, in 2001. Net interest income
for the six months ended June 30, 2001 was $8,309,112, representing an increase
of $864,361 or 11.6% from $7,444,751 for the six months ended June 30, 2000.
Noninterest Income and Expense
Noninterest income for the six months ended June 30, 2001 was $2,012,253,
representing an increase of $325,704 or 19.3% from $1,686,549 for the six
months ended June 30, 2000. This increase was primarily the result of
increases in merchant credit card assessments, other charges, commissions and
fees, and gains on sales of loans.
-11-
Noninterest expense for the six months ended June 30, 2001 of $6,488,193 was up
$741,081 or 12.9% from $5,747,112 for the same period in 2000. This increase
was primarily the result of increases in salaries and employee benefits, data
processing and ATM network, occupancy, furniture and equipment, credit card
processing, professional fees, and other expense, partially offset by
reductions in printing, stationary and supplies and marketing and advertising.
Provision for Loan Losses
There was no provision for loan losses for the six months ended June 30, 2001
or 2000, reflecting management's continuing evaluation of the adequacy of the
allowance for loan losses and its belief that the allowance is adequate.
Income Taxes
Income tax expense of $1,356,333 for the six months ended June 30, 2001
compared to $1,208,241 for the same period in 2000. The increase was the
result of an increase in taxable income during the current period.
Net Income
Net income of $2,476,839 for the first six months of 2001 represented an
increase of $300,892 or 13.8% from $2,175,947 recorded for the first six months
of 2000. Basic earnings per share of $.418 for the current period represented
an increase of $.05 from $.368 for the six months ended June 30, 2000.
Three months ended June 30, 2001 as Compared To
Three months ended June 30, 2000
-----------------------------------------------
Net Interest Income
Interest income for the three months ended June 30, 2001 was $6,482,372,
representing an increase of $479,794 or 8.0% from $6,002,578 for the three
months ended June 30, 2000, primarily due to higher average loan, fed funds
sold and securities balances, partially offset by lower average interest rates,
in 2001. Interest expense was $2,289,796, representing an increase of $83,802
or 3.8% from $2,205,994 for the three months ended June 30, 2000, primarily due
to higher average interest bearing deposit and repurchase agreement balances,
partially offset by lower average interest rates, in 2001. Net interest income
for the three months ended June 30, 2001 was $4,192,576, representing an
increase of $395,992 or 10.4% from $3,796,584 for the three months ended June
30, 2000.
Noninterest Income and Expense
Noninterest income for the three months ended June 30, 2001 was $1,053,668
representing an increase of $204,075 or 24.0% from $849,593 for the three
months ended June 30, 2000. This increase was primarily the result of an
increase in merchant credit card assessments, other charges, commissions and
fees, and gains on sales of loans.
Noninterest expense for the three months ended June 30, 2001 of $3,225,109 was
up $296,373 or 10.1% from $2,928,736 for the corresponding period in 2000.
This increase was primarily the result of increases in salaries and benefits,
data processing and ATM network, occupancy, credit card processing and other
expense, partially offset by a decrease in printing, stationary and supplies,
and marketing and advertising.
-12-
Provision for Loan Losses
There was no provision for loan losses for the three months ended June 30, 2001
or 2000, reflecting management's continuing evaluation of the adequacy of the
allowance for loan losses and its belief that the allowance is adequate.
Income Taxes
Income tax expense of $717,574 for the three months ended June 30, 2001
compared to $606,291 for the corresponding period in 2000. The increase was
the result of an increase in taxable income during the current period.
Net Income
Net income of $1,303,561 for the three months ended June 30, 2001 represented
an increase of $192,411 or 17.3% from $1,111,150 recorded for the corresponding
period in 2000. Earnings per share of $.220 for the current period represented
an increase of $.032 from $.188 for the three months ended June 30,2000.
Allowance for Loan Losses
The allowance for loan losses is based on management's estimate of the amount
required to reflect the risks in the loan portfolio, based on circumstances and
conditions known or anticipated at each reporting date. The methodology for
assessing the appropriateness of the allowance consists of a review of the
following three key elements:
- The valuation allowance for loans specifically identified as impaired
- The formula allowance for the various loan portfolio classifications
- The unallocated allowance
The valuation allowance reflects specific estimates of potential losses on
individual impaired loans. When each impaired loan is evaluated, if the
difference between the net present value of the loan (or fair value of the
collateral if the loan is collateral-dependent) is lower than the recorded loan
balance, the difference represents the valuation allowance for that loan.
The formula allowance is a percentage-based reflection of historical loss
experience and assigns required allowance allocations by loan classification
based on fixed percentages of all outstanding loan balances and commitments to
extend credit. The formula allowance employs a risk-rating model that grades
loans based on their general characteristics of credit quality and relative
risk. When a loan's credit quality becomes suspect, it is placed on the
Company's internal "watch list" and its allowance allocation is increased. For
the remainder of the loan portfolio, appropriate allowance levels are estimated
based on judgments regarding the type of loan, economic conditions and trends,
potential exposure to loss and other factors.
In addition to the valuation allowance and the formula allowance, there is an
unallocated allowance that recognizes the estimation risks associated with the
valuation and the formula allowance calculations, and that reflects
management's evaluation of various conditions, the effect of which are not
directly measurable in determining the valuation and formula allowances. The
unallocated allowance is adjusted for qualitative factors including, among
others, general economic and business conditions, credit quality trends, loan
volumes and concentrations and specific industry conditions within portfolio
segments.
-13-
There are inherent uncertainties with respect to determining the adequacy of
the allowance for loan losses. Because of these inherent uncertainties, actual
losses may differ from the amounts reflected in these consolidated financial
statements. Factors considered in evaluating the adequacy of the allowance
includes previous loss experience, current economic conditions and their effect
on borrowers, the performance of individual loans in relation to contract
terms, and the estimated fair values of underlying collateral. Losses are
charged against the allowance when management believes the collectibility of
principal is doubtful.
Securities
The Company's securities portfolio consists of obligations of the U.S.
Government sponsored agencies, mortgage backed securities, obligations of
various municipalities, and corporate bonds. Those assets are used in part to
secure public deposits and as collateral for repurchase agreements. Total
securities were $146,713,338 at June 30, 2001, representing an increase of
$4,161,614 or 2.9% from $142,551,724 at December 31, 2000. Securities
classified as available for sale were $56,911,389 and $50,110,202 at June 30,
2001 and December 31, 2000 respectively. There were no sales of securities
during the six months ended June 30, 2001.
Liquidity and Capital Resources
The Company's primary sources of liquidity are customer deposits, amortization
and pay-offs of loan principal and maturities of investment securities. These
sources provide funds for loan originations, the purchase of investment
securities and other activities. Deposits are considered a relatively stable
source of funds. At June 30, 2001 and 2000, deposits were $318,411,766 and
$290,506,033, respectively. Management anticipates that deposits will grow
moderately during the remainder of 2001.
As a nationally chartered member of the Federal Reserve System, the Bank has
the ability to borrow funds from the Federal Reserve Bank of Boston by pledging
certain of its investment securities as collateral. Also, the Bank is a member
of the Federal Home Loan Bank which provides additional borrowing
opportunities.
Bank regulatory authorities have established a capital measurement tool called
"Tier 1" leverage capital. A 4.00% ratio of Tier 1 capital to assets now
constitutes the minimum capital standard for most banking organizations. At
June 30, 2001, the Company's Tier 1 leverage capital ratio was 8.74%.
Regulatory authorities have also implemented risk-based capital guidelines
requiring a minimum ratio of Tier 1 capital to risk weighted assets of 4.00%
and a minimum ratio of total capital to risk-weighted assets of 8.00%. At June
30, 2001 the Company's Tier 1 and total risk-based capital ratios were 15.69%
and 16.94%, respectively. The Bank is categorized as "well capitalized" under
the Federal Deposit Insurance Corporation Improvement Act of 1991
(F.D.I.C.I.A.).
On June 19, 2001, the Company's Board of Directors declared a second quarter
2001 cash dividend of $.062 per share of common stock to shareholders of record
at June 1, 2001, payable on July 13, 2001.
-14-
Asset/Liability Management
The Company has an asset/liability management committee which oversees all
asset/liability activities of the Company. The committee establishes general
guidelines each year and meets regularly to review the Company's operating
results and to make strategic changes when necessary.
It is the Company's general policy to reasonably match the rate sensitivity of
its assets and liabilities. A common benchmark of this sensitivity is the one
year gap position, which is a reflection of the difference between the speed
and magnitude of rate changes of interest rate sensitive liabilities as
compared with the Bank's ability to adjust the rates of it's interest rate
sensitive assets in response to such changes. The Company's positive one-year
cumulative gap position at June 30, 2001, representing the excess of repricing
assets versus repricing liabilities within a one year time frame, was 1.1%
expressed as a percentage of total assets.
Cautionary Statement Regarding Forward-Looking Information
This Quarterly Report on Form 10-Q, including Management's Discussion and
Analysis of Financial Condition and Results of Operations, contains, in
addition to historical information, "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. When used in this and
other Reports filed by the Company, the words "anticipate", "estimate",
"expect", "objective", and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are subject to a
variety of risks and uncertainties. In addition to any assumptions and other
factors referred to specifically in connection with such forward-looking
statements, risk factors that could cause the Company's actual results to
differ materially from those contemplated in any forward-looking statement
include, but are not limited to, changes in political and economic conditions,
interest rate fluctuations, competitive product and pricing pressures, adverse
changes in asset quality, increased inflation, and adverse legislative or
regulatory changes.
-15-
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Shareholders was held on April 10, 2001. At that
meeting, three (3) matters were put before the shareholders for vote. Proxies
for the meeting were solicited, and a copy of the Proxy Statement dated March
13, 2001 is incorporated herein by reference and attached hereto as an exhibit.
Such Proxy Statement provides a description of the matters put before the
shareholders for vote and provides other information required under this Item
4.
The results of the voting were as follows:
1. To fix the number of Directors who shall constitute the full Board
of Directors at eleven.
Votes for: 4,297,815
Votes against: 0
2. To elect as Directors the four individuals listed as nominees in the Proxy
Statement, who, together with the seven Directors whose terms of office
did not expire at this meeting, constitute the full Board of Directors.
Director Votes For Votes Against
-------- --------- -------------
Horst Huehmer 4,290,815 7,000
Donald R. Hughes, Jr. 4,290,815 7,000
Mark Poplin 4,290,815 7,000
David W. Webster 4,290,815 7,000
3. To approve the 2001 Incentive Stock Option Plan For Key Employees.
Votes for: 4,095,506
Votes against: 55,358
Item 5. OTHER INFORMATION
On February 22, 2001, the Company's Board of Directors approved the "2001
Directors' Plan", a stock option plan which provides incentives to present and
future directors of the Company who are not employees of the Company or its
subsidiaries. The aggregate number of shares of the Company's common stock
reserved for grant under the Plan is 30,000. The Board of Directors has
granted options under the Plan for the purchase of an aggregate of 9,000 shares
of the Company's common stock at a price of $10.00 per share, the fair market
value on February 22, 2001. The granted options fully vest over a four year
period. The Company filed a Form S-8 Registration Statement with the
Securities and Exchange Commission pursuant to the Plan on April 19, 2001.
On February 22, 2001, the Company's Board of Directors approved the "2001
Incentive Stock Option Plan for Key Employees", a stock option plan which
provides incentives to present and future key employees of the Company and its
subsidiaries. The aggregate number of shares of the Company's common stock
reserved for grant under the Plan is 384,000. On February 22, 2001, the Board
of Directors granted options under the Plan, subject to the Plan's approval
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by the Company's shareholders, at the fair market value of the shares on the
approval date. The Plan was approved by the Company's shareholders at the
April 10, 2001 Annual Meeting. The granted options fully vest over a four year
period and have an exercise price of $10.00 per share, the fair market value on
April 10, 2001. The Company filed a Form S-8 Registration Statement with the
Securities and Exchange Commission pursuant to the Plan on April 19, 2001.
On June 19, 2001, the Company's Board of Directors declared a second
quarter 2001 cash dividend of $.062 per share of common stock to shareholders
of record at June 1, 2001, payable on July 13, 2001.
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Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
99 Proxy Statement dated March 13, 2001
(b) The Company did not file a Form 8-K during the quarter ended June
30, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMUNITY BANCORP, INC.
-----------------------
Date: August 6, 2001 By: /s/ James A. Langway
--------------------------
James A. Langway
President & Chief Executive Officer
Principal Executive Officer
Date: August 6, 2001 By: /s/ Donald R. Hughes, Jr.
--------------------------
Donald R. Hughes, Jr.
Treasurer and Clerk,
Principal Financial Officer and
Principal Accounting Officer
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
99 Proxy Statement dated March 13, 2001