U. S. Securities and Exchange Commission
Washington, D.C 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003
Commission File Number 33-64520
BANK BUILDING CORPORATION
Virginia
54-1714800
9112 Virginia Avenue, Bassett, Virginia 24055
(703) 629-3331
Securities registered pursuant to Section 12-(b) of the Act:
None
Securities registered pursuant to Section 12-(g) of the Act:
400,000 Shares of Common Stock with no par value
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months, and (2) has been subject to such
filing requirements for the last 90 days. Yes No X
_______
There are 398,244 shares of stock outstanding as of May 21,
2004.
INDEX
PART 1 - FINANCIAL INFORMATION 3
ITEM 1 - FINANCIAL STATEMENTS 3
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 3
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS 4
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 6
PART II - OTHER INFORMATION 7
ITEM 1 - LEGAL PROCEEDINGS 7
ITEM 2 - CHANGES IN SECURITIES 7
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES 7
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 7
ITEM 5 - OTHER INFORMATION 7
ITEM 6 - EXHIBITS AND REPORTS ON FORMS 8-K 7
ITEM 7 - CONTROLS AND PROCEDURES 7
ITEM 8 - CERTIFICATIONS 8
EXHIBIT 99 11
Part 1 - Financial Information
Item 1 - Financial Statements
Consolidated Statements of Financial Condition
SeptembeDecember
r 30 31
2003 2002
ASSETS
Current Assets
Cash $ $
110,453 82,790
Total current assets
110,453 82,790
Proper
ty
Land
10,313,1 10,368,8
25 37
Building
26,489,0 26,414,8
83 32
36,802,2 36,783,6
08 69
Less accumulated (2,402,6
depreciation (2,912,6 67)
67)
33,889,5 34,381,0
41 02
Other assets
306,167 243,816
$ $
34,306,1 34,707,6
61 08
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Accounts payable $ $
140,130 15,584
Accrued interest 198,945 216,670
Current portion of long-term 1,667,88 868,125
debt 9
Other liabilities 145,146 141,939
Total current liabilities 2,152,11 1,242,31
0 8
Long-term debt
31,536,0 33,011,5
62 14
Deferred income taxes
90,560 90,560
Total long-term
liabilities 31,626,6 33,102,0
22 74
Shareholders' equity
Capital stock, common,
authorized 400,000 shares,
no par value, 398,244 shares - -
issued and outstanding
Retained earnings 527,429 363,216
Total shareholders' equity 527,429 363,216
$ $
34,306,1 34,707,6
61 08
Consolidated Statements of Income and Retained Earnings
Nine Months Three Months
Ended Ended
September 30 September 30
2003 2002 2003 2002
INCOME
Lease income $ $ $ $
2,861,7 2,906,1 949,07 969,83
94 66 9 3
Other income
89,518 111,989 5,651 10,539
2,951,3 3,018,1 954,73 980,37
12 55 0 2
OPERATING EXPENSES
Interest
1,917,0 2,041,0 634,99 675,84
65 96 8 6
Depreciation
510,000 405,000 170,00 135,00
0 0
Amortization
12,900 13,500 4,300 4,500
Other
250,691 192,311 70,565 61,364
2,690,6 2,651,9 879,86 876,71
56 07 3 0
Income before income
taxes 260,656 366,248 74,867 103,66
2
Income taxes
(96,443 (135,51 (27,70 (38,35
) 2) 1) 5)
Net income
164,213 230,736 47,166 65,307
Retained earnings,
beginning of period 363,216 129,232 480,26 294,66
3 1
Retained earnings, end of $ $ $ $
period 527,429 359,968 527,42 359,96
9 8
Earnings per share $ $ $ $
0.41 0.58 0.12 0.16
Consolidated Statements of Cash Flows
Nine Months
Ended
September 30
2003 2002
Cash flows from operating
activities
Net Income $164,21 $230,73
3 6
Adjustments to reconcile net
income to net cash
from operating activities
Depreciation
510,000 405,000
Amortization
12,900 13,500
Changes in
Increase (decrease) in
other assets (75,251 4,852
)
Increase (decrease) in -
receivables (23,804
)
(Decrease) increase in
accounts payable 124,546 (4,282)
(Decrease) increase in
accrued interest (17,725 (3,932)
)
(Decrease) increase in
other liabilities 3,207 135,512
Net cash from operating
activities 721,890 757,582
Cash flows from investing
activities
Purchase of property -
(18,539
)
Sale of property -
180,096
Net cash from investing
activities (18,539 180,096
)
Cash flows from financing
activities
Repayment of long-term debt
(675,68 (604,04
8) 4)
Repayment of note payable -
(225,00
0)
Net cash from financing
activities (675,68 (829,04
8) 4)
Change in cash
27,663 108,634
Cash at beginning of period
82,790 97,560
Cash at end of period $ $
110,453 206,194
BANK BUILDING CORPORATION
Notes to Consolidated Financial Statements
1. Presentation of Statements
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments (all of
which were normal recurring adjustments) considered necessary for
a fair presentation of financial position, results of operations
and cash flows for the interim periods.
The accompanying financial statements include the Company's
wholly owned subsidiary, Blackstone Properties, LLC. All
intercompany transactions between the Company and Blackstone have
been eliminated in these statements. Blackstone Properties owns
a shopping center in southside Virginia and an office complex in
Roanoke, Virginia.
The results of operations for the interim period ended September
30, 2003 are not necessarily indicative of the results that may
be expected for the full year ended December 31, 2003. These
unaudited financial statements should be read in conjunction with
the financial statements, accounting policies and financial
footnotes thereto included in the Bank's 2002 Form 10-KSB filed
with the Securities and Exchange Commission.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and income and expenses during the
reporting period. Actual results could differ from those
estimates.
Except for the historical information contained in this form, the
matters set forth herein include Forward-Looking Statements
within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These Forward-Looking
Statements include, among other things, statements of goals,
plans, intentions, and expectations, regarding or based upon
desired business strategies, general economic conditions,
interest rates, developments in local and national markets, and
other matters, which, by their nature, are subject to significant
uncertainties. Because of these uncertainties and the
assumptions, actual future developments with respect to the
business of the Company may differ materially from those
contemplated by such statements.
Item 2 - Management's Discussion And Analysis Of Financial
Condition And Results Of Operations
The primary purpose of BBC is to acquire and develop property for
lease as bank offices to the Participating Banks. The selection
of sites and construction of the offices is done by the
Participating Banks that will lease the site to insure the needs
of the bank are met. There are, however, no commitments on the
part of any Participating Bank to present prospective office
properties to BBC nor are there any commitments on the part of
BBC to accept any prospective office properties offered by any of
the Participating Banks. The acquisition and development of
property is financed through loans from various sources.
The Company now owns 46 offices that are leased to various
Participating Banks under triple net operating leases. The
leasing bank is responsible for all property taxes, insurance and
maintenance costs on each leased office. The Company incurs
interest and depreciation expenses related to each office as well
as other, minimal operating costs.
The Company also owns the Westlake Corner Shopping Center near
Smith Mountain Lake. This center consists of 50,000 square feet
of space on 29 acres. The anchor tenants for the center are Food
Lion, Revco, and Family Dollar Store. First National Bank, Rocky
Mount, Virginia opened an office on a portion of this property on
June 5, 1998. As noted above, the Company also owns Blackstone
Properties, a wholly owned subsidiary, which owns a shopping
center in southside Virginia that is leased to a number of retail
tenants.
During 2001, Blackstone Properties acquired Executive Office
Park, an office complex located in Roanoke, Virginia. The
complex consists of six separate building containing
approximately 54,000 square feet of space divided into 28 suites.
For the first nine months of 2003 the Company generated net
income of $164,000 compared to $231,000 for the previous year.
As has been the case historically, the Company's principal source
of revenue is from property rental while interest expense and
depreciation remain the principal expenses.
Part II - Other Information
Item 1 - Legal Proceedings
There are no material pending legal proceedings to which the
Company is a party or to which any of the Company's property
is subject.
Item 2 - Changes in Securities
There have been no changes in the Company's securities
during the period covered by this report.
Item 3 - Defaults Upon Senior Securities
There have been no defaults on any securities.
Item 4 - Submission of Matters to a Vote of Security Holders
There were no matters presented to a vote of security
holders during the period covered by this report.
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Forms 8-K
There have been no reports on Form 8-K filed during the
period covered by this report.
Exhibit 99 - Certification of Chief Executive Officer and
Chief Financial Officer.
Item 7 - Controls and Procedures
Within ninety days of the filing of this Form 10-QSB, management,
including the Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the Company's disclosure
controls and procedures as required by Rules 13a-14 and 13a-15 of
the Securities Exchange Act of 1934. Based on this evaluation,
the Chief Executive Officer and Chief Financial Officer has
concluded that the disclosure controls and procedures are
effective to ensure that material information relating to the
Company is made known to him in connection with the filing of
this Quarterly Report for the period ended September 30, 2003.
No changes have been made in the internal controls or other
factors that could significantly affect these controls subsequent
to the date of the evaluation referred to above.
Item 8 - Certifications
I, Worth Harris Carter, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Bank
Building Corporation;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or
omit to state a material fact necessary to make the
statements made, in light of the circumstances under which
such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this
Quarterly report, fairly present in all material respects
the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods
presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15e
and 15d-15e) for the registrant and have:
a). designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to me
by others within those entities, particularly during the
period in which this quarterly report is prepared;
b). evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90
days prior to the filing date of this quarterly report (the
"Evaluation Date"); and
c). presented in this quarterly report my conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. I have disclosed, based on our most recent evaluation, to
the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
functions):
a). all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b). any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal controls; and
I have indicated in this quarterly report whether or not there
were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
DATE: May 21, 2004 /s/ Worth Harris Carter, Jr.
Worth Harris Carter, Jr.
Chairman of the Board,
President,
Chief Executive Office and
Chief Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934 the Registrant has caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
BANK BUILDING CORPORATION
DATE: May 21, 2004 BY: /s/ Worth Harris Carter,
Jr.
Worth Harris Carter, Jr.
Chairman of the Board,
President,
Chief Executive Office and
Chief Financial Officer
EXHIBIT 99
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Bank Building
Corporation (the Company) on Form 10-QSB for the period ended
September 30, 2003 as filed with the Securities Exchange
Commission on the date hereof (the Report), I, Worth Harris
Carter, Jr., Chairman, President, Chief Executive Officer, and
Chief Financial Officer of the Company certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities and Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.
DATE: May 21, 2004 /s/ Worth Harris Carter, Jr.
Worth Harris Carter, Jr.
Chairman of the Board,
President,
Chief Executive Office and
Chief Financial Officer