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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 ended June 30, 2001
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
Commission File Number 000-22283
VIRGINIA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-1829288
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
24 South Augusta Street, Staunton, Virginia 24401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (540) 885-1232
NONE
(Former name, former address and former fiscal year,
if changed since last report.)
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:
Class: Common Stock, $5.00 par value
Outstanding as of August 8, 2001: 3,979,483
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VIRGINIA FINANCIAL CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income 3
Consolidated Balance Sheets 5
Consolidated Statements of Cash Flows 6
Consolidated Statements of Changes in Stockholders' Equity 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition 11
Item 3. Quantitative and Qualitative Disclosure about Market Risk 12
Item 4. Virginia Financial Corporation and Subsidiaries Average
Balances, Income and Expense, Yields and Rates 13
Part II. Other Information
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature 15
Exhibit 11. 16
Part 1
Item 1.
VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
Three Months Ended
JUNE 30 JUNE 30
2001 2000
------ ------
Interest Income:
Interest and Fee Income on Loans:
Secured by Real Estate $5,350 $4,948
To Finance Agriculture & Farmers 49 59
Commercial & Industrial 941 973
Individuals for Household & Personal 662 771
Obligations of State & Political Tax-Exempt 59 7
Interest and Dividend Income on Securities:
U.S. Treas & U.S. Gov't Agencies 679 1,346
Collateralized Mortgage Obligations 147 --
Mortgage Backed Securities 66 --
State & Political-Taxable 117 94
State & Political-Tax Exempt 425 438
Other Domestic Debt Securities 9 11
Equity Securities 73 22
Interest on Earning Deposits Due From Banks 1 2
Interest on Federal Funds Sold 202 27
Other Interest Income 21 24
------ ------
Total Interest Income 8,801 8,722
------ ------
Interest Expense:
Interest on Deposits:
NOW Accounts 237 308
Money Market Accounts 494 519
Other Savings Deposits 316 310
CD's of 100M or More 528 357
All Other Time Deposits 2,527 2,162
Interest on Fed Funds Purch'd
& Repurchase Agreements 167 213
Interest on Other Borrowed Money -- 207
------ ------
Total Interest Expense 4,269 4,076
------ ------
Net Interest Income 4,532 4,646
Provision for Loan Losses 257 197
------ ------
Net Interest Income after Provision for Loan Losses 4,275 4,449
------ ------
Noninterest Income:
Trust Department Income 351 405
Service Charges on Deposit Accts 397 363
Other Fee Income 571 336
All Other Non-Interest Income 35 36
------ ------
Total Noninterest Income 1,354 1,140
------ ------
Gains on securities 99 --
------ ------
Noninterest Expense:
Salaries & Employee Benefits 2,411 2,087
Expense of Premises & Fixed Assets 476 478
Computer Services 283 279
Other Non-Interest Expense 839 747
------ ------
Total Non-Interest Expense 4,009 3,591
------ ------
Income Before Income Taxes 1,719 1,998
Provision for Income Taxes 442 547
------ ------
Net Income $1,277 $1,451
====== ======
Per Share Data, Net Income, basic and diluted $ 0.32 $ 0.36
Cash Dividends $ 0.17 $ 0.17
The accompanying notes are an integral part of these statements
3
Part 1
Item 1.
VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
Six Months Ended
JUNE 30 JUNE 30
2001 2000
------- -------
Interest Income:
Interest and Fee Income on Loans:
Secured by Real Estate $10,781 $ 9,542
To Finance Agriculture & Farmers 104 121
Commercial & Industrial 1,979 1,895
Individuals for Household & Personal 1,358 1,541
Obligations of State & Political Tax-Exempt 118 9
Interest and Dividend Income on Securities:
U.S. Treas & U.S. Gov't Agencies 1,803 2,693
Collateralized Mortgage Obligations 147 --
Mortgage Backed Securities 66 --
State & Political-Taxable 236 188
State & Political-Tax Exempt 823 886
Other Domestic Debt Securities 20 21
Equity Securities 145 51
Interest on Earning Deposits Due From Banks 2 31
Interest on Federal Funds Sold 239 34
Other Interest Income 46 49
------- -------
Total Interest Income 17,867 17,061
------- -------
Interest Expense:
Interest on Deposits:
NOW Accounts 531 609
Money Market Accounts 924 1,004
Other Savings Deposits 612 616
CD's of 100M or More 1,049 678
All Other Time Deposits 5,038 4,201
Interest on Fed Funds Purch'd
& Repurchase Agreements 367 391
Interest on Other Borrowed Money 32 365
------- -------
Total Interest Expense 8,553 7,864
------- -------
Net Interest Income 9,314 9,197
Provision for Loan Losses 408 406
------- -------
Net Interest Income after Provision for Loan Losses 8,906 8,791
------- -------
Noninterest Income:
Trust Department Income 664 853
Service Charges on Deposit Accts 814 735
Other Fee Income 1,022 701
All Other Non-Interest Income 66 74
------- -------
Total Noninterest Income 2,566 2,363
------- -------
Gains on securities 102 16
------- -------
Noninterest Expense:
Salaries & Employee Benefits 4,426 3,874
Expense of Premises & Fixed Assets 996 947
Computer Services 568 559
Other Non-Interest Expense 1,640 1,566
------- -------
Total Non-Interest Expense 7,630 6,946
------- -------
Income Before Income Taxes 3,944 4,224
Provision for Income Taxes 1,069 1,172
------- -------
Net Income $ 2,875 $ 3,052
======= =======
Per Share Data Net Income, basic and diluted $ 0.72 $ 0.77
Cash Dividends $ 0.34 $ 0.34
The accompanying notes are an integral part of these statements
4
VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)
JUNE 30 DECEMBER 31
2001 2000
-------- --------
Assets
Cash & Due from Banks $ 24,577 $ 18,146
Interest Earning Deposits Due From Banks 71 53
Federal Funds Sold 10,800 --
Securities (fair value: 2001, $113,392;
2000, $132,107) 113,143 132,345
Loans held for resale 8,519 2,383
Loans, net of allowance for loan losses, 2001, $3,904;
2000, $3,894 332,376 329,625
Bank Premises and Equipment, net 8,684 7,739
Deposit Intangibles 1,944 2,023
Other Assets 7,191 7,488
-------- --------
Total Assets $507,305 $499,802
======== ========
Liabilities and Stockholders' Equity
Liabilities
Deposits
Demand $ 73,777 $ 71,114
NOW Accounts 51,359 53,900
Money Market Checking 54,702 55,043
Savings 42,838 40,416
Time Deposits 212,236 204,768
-------- --------
Total Deposits 434,912 425,241
Securities Sold Under
Agmt. to Repurchase 17,297 12,495
Other Borrowed Money -- 3,000
Federal Funds Purchased -- 6,000
Other Liabilities 2,135 2,140
-------- --------
Total Liabilities $454,344 $448,876
-------- --------
Stockholders' Equity
Common Stock $ 19,898 $ 19,905
Surplus 12,994 13,027
Undivided Profits 19,403 17,882
Accumulated Other Comprehensive Income 666 112
-------- --------
Total Stockholders' Equity $ 52,961 $ 50,926
-------- --------
Total Liabilities
and Stockholders' Equity $507,305 $499,802
======== ========
The accompanying notes are an integral part of these statements
5
VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
Six Months Ended
JUNE JUNE
2001 2000
-------- --------
Cash Flows from Operating Activities
Interest received $ 18,232 $ 16,874
Fees and other non-interest income 2,521 2,351
Interest paid (8,514) (7,758)
Origination of loans available for sale (34,936) (11,959)
Proceeds from sale of loans availabe for sale 28,800 11,783
Cash paid to suppliers and employees (7,140) (6,016)
Income taxes paid (969) (1,000)
-------- --------
Net cash provided by (used in) operating activities $ (2,006) $ 4,275
-------- --------
Cash Flows from Investing Activities
Proceeds from maturities and calls of securities $ 46,616 $ 2,992
Proceeds from sales of securities 7,861 1,681
Purchases of securities (34,335) (751)
Net increase in loans (3,259) (28,476)
Capital expenditures (1,454) (328)
Net decrease (increase) in other assets (372) 4
Proceeds from sale of other real estate 118 49
-------- --------
Net cash provided by (used in) investing activities $ 15,175 $(24,829)
-------- --------
Cash Flows from Financing Activities
Net increase in certificates of deposit $ 7,468 $ 8,414
Net increase in demand & savings deposits 2,202 4,548
Net decrease in federal funds purchased (6,000) (1,175)
Net decrease in Federal Home Loan Bank advances (3,000) --
Net increase in securities sold
under repurchase agreements 4,803 3,435
Payment to repurchase common stock (40) (532)
Dividends paid (1,353) (1,356)
-------- --------
Net cash provided by financing activities $ 4,080 $ 13,334
-------- --------
Net increase (decrease) in cash and cash equivalents $ 17,249 $ (7,220)
Cash and cash equivalents at beginning of year 18,199 28,158
-------- --------
Cash and cash equivalents at end of year $ 35,448 $ 20,938
======== ========
6
VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(IN THOUSANDS OF DOLLARS)
Six Months Ended
JUNE 30 JUNE 30
2001 2000
-------- --------
Reconciliation of net income to net cash provided by
operating activities
Net income $ 2,875 $ 3,052
-------- --------
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation $ 466 $ 460
Provision for loan losses 408 406
Gain on sale of assets 27 --
Provision for deferred taxes -- --
Origination of loans available for sale (34,936) (11,959)
Proceeds from sale of loans availabe for sale 28,800 11,783
Gain on sale of securities (102) (16)
Decrease in taxes payable (8) --
Decrease (increase) in interest receivable 367 (68)
Increase in interest payable 38 106
Decrease (increase) in prepaid expenses (28) 87
Increase (decrease) in accrued expenses (34) 403
Premium amortization 168 40
Decrease in deferred income (2) (8)
Decrease in fees receivable (45) (11)
-------- --------
Total Adjustments $ (4,881) $ 1,223
-------- --------
Net cash provided by operating activities $ (2,006) $ 4,275
======== ========
Supplemental schedule of non-cash investing activities:
Other real estate acquired in settlement of loans 101 313
======== ========
Unrealized gain on securities available for sale 836 209
======== ========
The accompanying notes are an integral part of these statements
7
VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2000 AND 2001
(IN THOUSANDS OF DOLLARS)
Accumulated
Other
Common Capital Retained Comprehensive Comprehensive
Stock Surplus Earnings Income (Loss) Income Total
--------- --------- --------- ------------- ------------ ---------
Balance, December 31, 1999 19,986 13,478 14,389 (1,733) 46,120
Comprehensive income:
Net income 3,052 3,052 3,052
Other comprehensive income net of tax,
Unrealized holding gains arising during
the period (net of tax, $76,495) 149
Reclassification adjustment (net of tax, $5,507) (11)
-----------
Other comprehensive income (net of tax, $70,988) 138 138 44
-----------
Total comprehensive income 3,190
===========
Cash dividends ($0.34 per share) (1,356) (1,356)
Stock repurchase of 16,190 shares (81) (451) (532)
--------- --------- --------- --------- ---------
Balance, June 30, 2000 $ 19,905 $ 13,027 $ 16,085 $ (1,595) $ 47,422
========= ========= ========= ========= =========
Accumulated
Other
Common Capital Retained Comprehensive Comprehensive
Stock Surplus Earnings Income Income Total
--------- --------- --------- ------------- ----------- ---------
Balance, December 31, 2000 19,905 13,027 17,882 112 50,926
Comprehensive income:
Net income 2,875 2,875 2,875
Other comprehensive income net of tax:
Unrealized holding gains arising during
the period (net of tax, $320,206) 621
Reclassification adjustment (net of tax, $34,761) (67)
-----------
Other comprehensive income (net of tax, $285,445) 554 554 554
-----------
Total comprehensive income 3,429
===========
Cash dividends ($0.34 per share) (1,353) (1,353)
Stock repurchase of 1,525 shares (7) (33) (40)
--------- --------- --------- --------- ---------
Balance, June 30, 2001 $ 19,898 $ 12,994 $ 19,404 $ 666 $ 52,962
========= ========= ========= ========= =========
The accompanying notes are an integral part of these statements
8
VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Interim Financial Statements
The accompanying financial statements of Virginia Financial
Corporation and its Subsidiary have not been audited by independent accountants
except for the balance sheet at December 31, 2000. In the opinion of the
company's management, the financial statements reflect all adjustments necessary
to present fairly the results of operations for the three and six month periods
ended June 30, 2001 and 2000, the company's financial position at June 30, 2001
and December 31, 2000, and cash flows for the six month periods ended June 30,
2001 and 2000. These adjustments are of a normal recurring nature.
Operating results for the three and six month periods ended June 30,
2001 are not necessarily indicative of the results that may be expected for the
year ended December 31, 2001, or any other period. The unaudited interim
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and footnotes for the year ended December 31,
2000.
On November 14, 1996, the shareholders approved an Agreement and Plan
of Reorganization and related Plan of Share Exchange, relating to the adoption
of a bank holding company structure, with Virginia Financial Corporation (herein
after referred to as "the Company"), serving as the holding company for the
Bank. This transaction was consumated on January 2, 1997.
Note 2. Securities as of June 30, 2001 and December 31, 2000 are summarized
below.
(IN THOUSANDS OF DOLLARS)
June 30, 2001 December 31, 2000
Unrealized Unrealized
Book Market Gain (Loss) Book Market Gain (Loss)
---- ------ ----------- ---- ------ -----------
Securities Available for Sale
U.S. Treasury Securities $ 5,952 $ 6,244 $ 292 $ 5,947 $ 6,159 $ 212
U.S. Agency Securities 23,005 23,345 340 34,069 34,059 (10)
Collateralized Mort. Oblig 15,737 15,768 31
Mortgage Backed 8,779 8,733 (46)
Obligations of State and
Political Subdivisions 41,343 42,008 665 30,520 30,730 210
Other Securities 7,191 6,915 (276) 5,826 5,585 (241)
-------- -------- -------- -------- -------- --------
Total Securities Available for Sale $102,007 $103,013 $ 1,006 $ 76,362 $ 76,533 $ 171
======== ======== ======== ======== ======== ========
Securities Held to Maturity
U.S. Treasury Securities $ 4,495 $ 4,569 $ 74 $ 4,493 $ 4,515 $ 22
U.S. Agency Securities -- -- -- 39,791 39,503 (288)
Obligations of State and
Political Subdivisions 5,635 5,810 175 11,528 11,556 28
Other Securities -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Securities Held to Maturity $ 10,130 $ 10,379 $ 249 $ 55,812 $ 55,574 $ (238)
======== ======== ======== ======== ======== ========
9
VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS)
Note 3. The consolidated loan portfolio, stated at face amount, is composed of
the following:
June 30, 2001 December 31, 2000
------------- -----------------
Real Estate Loans:
Construction and Land Development $ 26,255 $ 22,633
Secured by Farmland 2,283 3,738
Secured by 1-4 Family residential 142,422 129,510
Other Real Estate Loans 84,613 94,893
Loans to Farmers (Except Those Secured by Real Estate) 1,992 2,534
Commercial and Industrial Loans
(Except Those Secured by Real Estate) 45,897 45,836
Loans to Individuals for Personal Expenditures 28,836 29,916
All Other Loans 4,307 4,783
-------- --------
Total Loans 336,605 333,843
Less, Unearned Income Reflected in Loans 325 324
-------- --------
Loans, Net of Unearned Income $336,280 $333,519
======== ========
The Bank had loans in a Nonaccrual category of $965 on December 31, 2000 and
$686 on June 30, 2001.
Note 4. Allowance for Loan Losses
Analysis of the Allowance for Loan Losses
For the Six Months Ended
June 30, 2001 June 30, 2000
------------- -------------
Balance at Beginning of Period 3,894 3,470
Charge-Offs (452) (183)
Recoveries 54 58
------- -------
Net Charge-Offs (398) (125)
Provision for Loan Losses 408 406
------- -------
Balance at End of Period $ 3,904 $ 3,751
======= =======
10
Part 1
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Net income for the second quarter of 2001 was $1,277,000 compared to
$1,451,000 for the second quarter of 2000. This represents a decrease of
$174,000 or 12.0%. Net income for the first six months of 2001 amounted to
$2,875,000, a decrease of $177,000 or 5.8% under the $3,052,000 for the
comparable period in 2000. Interest income increased $79,000 or .9% and total
average earning assets increased $22,334,000 or 5.0% comparing the six months
ended June 30, 2001 and 2000. The yield on average earning assets was 7.9% for
the six-month period ending June 30, 2001 and 2000 respectively. Interest
expense increased $689,000 or 8.8% and total average interest bearing
liabilities increased $13,356,000 or 3.7%. The cost of funds was 4.6% and 4.3%
for the first six months ended of 2001 and 2000. The net interest spread was
3.3% and 3.6% for the same six months ended of 2001 and 2000.
Non-interest income increased $214,000 or 18.8% the second quarter of 2001
compared to 2000. In comparing the six-month period ending June 30 for 2001 and
2000, non-interest income went from $2,363,000 in 2000 to $2,566,000 in 2001 for
an increase of $203,000 or 8.6%. These increases were due to an increase in
business volume generated by the secondary mortgage department. Non-interest
expenses increased $418,000 or 11.6% the second quarter of 2001 compared to
2000. Non-interest expenses increased $684,000 or 9.8% comparing the six-month
periods ending June 30, 2001 and 2000. These increases were mainly due to
increases in salaries and employee benefits, but also to increases in premises
and fixed asset expenses associated with the conversion to a new computer
system.
Financial Condition
- -------------------
Total assets increased $11,450,000 the second quarter of 2001 compared to a
increase of $14,220,000 the second quarter of 2000. Total assets have increased
$7,503,000 the first six months of 2001 compared to and increase of $17,025,000
in 2000.
During the second quarter of 2001, fed funds sold decreased $2,975,000.
Those funds contributed to an overall increase in cash & due from banks of
$7,610,000. Those sources of funds allowed for an increase in loans of
$3,139,000 and the investment portfolio of $3,101,000 during the three-month
period ending June 30, 2001. A decrease of the investment portfolio of
$19,202,000 over the first six months of 2001 has allowed for the increase in
loans of $8,887,000 and federal funds sold of $10,800,000 in that time period.
Along with those changes, deposit growth for the first six months of 2001 was
$9,671,000 which was used to reduce borrowings by $9,000,000.
During the second quarter of 2000, fed funds sold decreased $7,100,000; the
investment portfolio was reduced by $1,620,000; deposit growth was $4,791,000;
and all other short term borrowings increased by $8,550,000. Those sources of
funds were used to fund loan growth of $16,908,000 and increase cash & due from
banks by $5,783,000. The six-month period ending June 30, 2000 consisted of
deposit growth of $12,962,000, growth in securities sold under agreement to
repurchase of $3,435,000, a reduction of the investment portfolio of $3,586,000,
and a reduction in cash & due from banks of $4,020,000. Those sources of funds
were used to fund loan growth of $27,933,000.
Capital and Liquidity
- ---------------------
Total Capital for the company went from $50,926,000 to $52,961,000 for an
increase of $2,035,000 or 4.0% during the first six months of 2001. This
increase was due to an increase in the company's retained earnings and the
overall market value of the investment portfolio that is classified available
for sale. Due to regulatory guidelines, the company applies different risk
factors to all of its assets and certain off balance sheet items in determining
a total risk-based capital ratio. This ratio is the quantitative measure used
by certain regulatory agencies as a guide to ensure that a company is meeting
their necessary capital requirements. The company's ratio for the six-month
period ending June 30, 2001 of 15.34% was well over the regulators acceptable
guidelines for capital position.
Liquidity refers to the Company's ability to meet demands on cash. Such
demands can arise from several areas such as withdrawals on deposits, payments
of borrowings or loan growth. Management is constantly assessing the company's
ability to withstand such demands on cash through such methods as interest rate
risk analysis, industry comparisons, and maturity and repricing analysis of all
assets and liabilities. The Company's primary sources of liquidity come from
cash & due from banks, federal funds sold, and securities with the available for
sale classification. The Company also has the ability to borrow funds from its
correspondent banks and the Federal Home Loan Bank of Atlanta on a day-by-day
basis. Overall, management feels the Company is well stabilized in order to
handle not only the normal demands of cash, but also those that may arise above
the normal demands.
11
Future Operations
- ------------------
On June 12, 2001 Virginia Financial Corporation signed with Virginia
Commonwealth Financial Corporation a definitive agreement to join the two
companies in a merger-of-equals transaction. Upon the approval of the
shareholders of each separate company, a new company, known as Virginia
Financial Group, Inc., will be the holding company for: Planters Bank & Trust
Company of Virginia - in Staunton, Virginia, Second Bank & Trust - in Culpeper,
Virginia, Caroline Savings Bank - in Bowling Green, Virginia, Virginia Heartland
Bank - in Fredericksburg, Virginia, and Virginia Commonwealth Trust Company - in
Culpeper, Virginia. The merger is anticipated to be completed sometime during
the fourth quarter of 2001 pending the approval of the each company's
shareholders.
As of July 23, 2001 Planters Bank & Trust Company of Virginia has completed
the construction of an 18,000 square foot operations center. The new operations
center houses the bank's proof and transit department, secondary mortgage
department and other operational support departments. With the opening of this
building, the bank has taken care of its overcrowding problem at the main
office. To date, the total cost capitalized for the building is approximately
$1,320,000.
Part 1
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in information reported as of December
31, 2000, in Form 10-K.
12
VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND RATES
(000 Omitted)
Six Months Ended June 30
2001 2000
Average Income/ Yield/ Average Income/ Yield/
ASSETS Balance Expense Rate Balance Expense Rate
----------- ---------- ---------- ----------- --------- ---------
Securities:
Taxable $ 81,617 $ 2,430 5.95% $ 96,043 $ 2,965 6.17%
Tax-exempt (1) 36,189 1,248 6.90% 37,839 1,342 7.09%
----------- ---------- ---------- ----------- --------- ---------
Total Securities $ 117,806 $ 3,678 6.24% $ 133,882 $ 4,307 6.43%
Loans (net of earned income):
Taxable 332,250 14,222 8.56% 306,653 13,100 8.54%
Tax-Exempt (1) 4,328 178 8.23% 339 13 7.67%
----------- ---------- ---------- ----------- --------- ---------
Total Loans 336,578 14,400 8.56% 306,992 13,113 8.54%
Federal Home Loan Bank Stock 1,346 47 6.98% 1,282 49 7.64%
Interest Earning Deposits Due From Banks 64 2 6.25% 1,066 31 5.82%
Fed Funds Sold and Repurchase Agreements 10,893 239 4.39% 1,131 34 6.01%
----------- ---------- ---------- ----------- --------- ---------
Total Earning Assets 466,687 18,366 7.87% 444,353 17,534 7.89%
---------- ---------
Less Allowance for Loan Losses (3,906) (3,622)
Total Nonearning Assets 37,916 34,776
----------- -----------
Total Assets $ 500,697 $ 475,507
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing deposits:
NOW Accounts $ 53,061 $ 531 2.00% $ 50,030 $ 609 2.43%
Money Market Savings 55,265 925 3.35% 55,618 1,004 3.61%
Regular Savings 41,303 612 2.96% 41,600 616 2.96%
Certificates of Deposit:
Less than $100,000 173,395 5,037 5.81% 162,198 4,201 5.18%
$100,000 and More 34,678 1,049 6.05% 26,998 678 5.02%
----------- ---------- ---------- ----------- --------- ---------
Total Interest Bearing Deposits 357,702 8,154 4.56% 336,444 7,108 4.23%
Fed Funds Purchased & Repurchase Agreements 16,566 367 4.43% 14,086 391 5.55%
Other Borrowed Money 1,097 32 5.83% 11,479 365 6.36%
----------- ---------- ---------- ----------- --------- ---------
Total Interest Bearing Liabilities 375,365 8,553 4.56% 362,009 7,864 4.34%
---------- ---------
Noninterest Bearing Liabilities
Demand Deposits 71,202 64,772
Other Liabilities 2,065 2,045
----------- -----------
Total Liabilities 448,632 428,826
Stockholders' Equity 52,065 46,681
----------- -----------
Total Liabilities and Stockholders' Equity $ 500,697 $ 475,507
=========== ===========
Net Interest Income $ 9,813 $ 9,670
========== =========
Interest Rate Spread 3.31% 3.55%
Interest Expense as a Percent of Average
Earning Assets 3.67% 3.54%
Net Interest Margin 4.21% 4.35%
(1) Income and yields are reported on a taxable-equivalent basis assuming a
federal tax rate of 34% in 2000 and 2001
13
VIRGINIA FINANCIAL CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As of June 30, 2001 neither the corporation nor the bank was a party to
any legal proceedings.
Item 2. Not Applicable
Item 3. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Virginia Financial Corporation's annual meeting of shareholders was
held on Monday, April 23, 2001 at the Corporation's main banking facility in
Staunton, Virginia. Information relating to the solicitation of proxies required
by this item is incorporated by reference from the Corporation's proxy statement
dated March 23, 2001 for the Corporation's Annual Meeting of Shareholders held
April 23, 2001, filed with the Commission on March 23, 2001.
One item was submitted to the shareholders to be voted upon: (1) To
elect directors of the company.
The votes cast for, or withheld for the one item were as follows:
(1) Election of Directors of the company.
Name For Withheld
---- --- --------
Lee S. Baker 3,009,630 14,900
Benham M. Black 2,990,493 34,037
Harry V. Boney 3,023,066 1,464
Jan S. Hoover 3,021,634 2,896
Martin F. Lightsey 2,994,411 30,119
James S. Quarforth 2,964,739 59,791
Item 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) A report on Form 8K was filed on June 13, 2001 with the purpose of
explaining the agreement of a merger-of-equals between Virginia Financial
Corporation and Virginia Commonwealth Financial Corporation. That report is
hereby incorporated by reference.
(b) Exhibits
The following exhibits are filed with this Form 10-Q or incorporated by
reference to previous filings.
Number Description
------- -----------
Exhibit 3. (i) Articles of Incorporation incorporated by reference to Exhibit 3.1 of
the Company's Form 8-B successor registration statement filed March 24, 1997.
(ii) Bylaws incorporated by reference to Exhibit 3.2 of the Company's Form 8-B
successor registration statement filed March 24, 1997.
Exhibit 11. EPS Computation attached.
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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.
Virginia Financial Corporation
(Registrant)
Date August 10, 2001 /s/ Fred D. Bowers
------------------------- ---------------------------------------
Fred D. Bowers, Secretary/Treasurer
(Principal Accounting Officer and Duly
Authorized Officer)
15