1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
Of The Securities Exchange Act of 1934
For the quarter ended March 31, 2001 Commission file number 33-20417
-------------------- -----------------
Capital Directions, Inc.
------------------------------------
(Exact name of registrant as specified in its charter)
Michigan 38-2781737
- --------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
322 South Jefferson St., Mason, Michigan 48854-0130
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (517) 676-0500
--------------
None
--------------------------------------------
Former name, former address and former fiscal
year, if changed since last report
Indicate by checkmark 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 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
------------- ------------
As of April 27, 2001 the registrant had outstanding 598,056 shares of common
stock having a par value of $5 per share.
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CAPITAL DIRECTIONS, INC.
INDEX TO FORM 10-Q
Page
PART I - FINANCIAL INFORMATION Number
- ------------------------------ ------
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2001 and December 31, 2000......................................... 1
Consolidated Statements of Income for the Three Months
Ended March 31, 2001 and 2000................................................ 2
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2001 and 2000................................................ 3
Consolidated Statements of Comprehensive Income
for the Three Months Ended March 31, 2001 and 2000........................... 4
Notes to Interim Consolidated Financial Statements........................... 5-8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................................... 8-13
Item 3 Quantitative and Qualitative Disclosures About Market Risk................... 13
PART II - OTHER INFORMATION
- ---------------------------
Item 1 Legal Proceedings............................................................ 13
Item 2 Changes in Securities and Use of Proceeds.................................... 13
Item 3 Defaults Upon Senior Securities.............................................. 13
Item 4 Submission of Matters to a Vote of Security Holders.......................... 14
Item 5 Other Information............................................................ 14
Item 6 Exhibits and Reports on Form 8-K............................................. 14
Item 7 Signatures................................................................... 15
Index to Exhibits............................................................ 16
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PART I - FINANCIAL INFORMATION
CAPITAL DIRECTIONS, INC.
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
(In thousands, except share and per share data)
March 31, December 31,
2001 2000
---- ----
(Unaudited)
ASSETS
Cash and non interest bearing deposits $ 2,014 $ 2,603
Interest bearing deposits 51 58
Federal funds sold 4,635 5,905
--------- --------
Total cash and cash equivalents 6,700 8,566
Securities available for sale 14,479 15,670
Federal Home Loan Bank (FHLB) stock 1,967 1,967
--------- --------
Total investment securities 16,446 17,637
Loans held for sale 898 -
Loans:
Commercial and agricultural 5,482 6,038
Installment 3,703 3,688
Real estate mortgage 75,932 75,923
--------- --------
Total loans 85,117 85,649
Allowance for loan losses (1,062) (1,053)
--------- ---------
Net loans 84,055 84,596
Premises and equipment, net 1,046 947
Accrued income and other assets 3,247 3,277
--------- ---------
Total assets $ 112,392 $ 115,023
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Non interest bearing $ 9,640 $ 9,885
Interest bearing 59,231 62,538
--------- ---------
Total deposits 68,871 72,423
Long-term FHLB borrowings 28,746 28,339
Other liabilities 1,637 1,427
--------- ---------
Total liabilities 99,254 102,189
SHAREHOLDERS' EQUITY
Common stock: $5 par value, 1,300,000 shares authorized;
598,056 shares outstanding at March 31, 2001 and
December 31, 2000 2,990 2,990
Additional paid in capital 2,590 2,590
Retained earnings 7,329 7,126
Accumulated other comprehensive income,
net of tax of $118 as of March 31, 2001 and $66 as of
December 31, 2000 229 128
--------- ---------
Total shareholders' equity 13,138 12,834
--------- ---------
Total liabilities and shareholders' equity $ 112,392 $ 115,023
========= =========
See accompanying notes to consolidated financial statements.
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CAPITAL DIRECTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
- --------------------------------------------------------------------------------
(In thousands, except share and per share data)
Three Months Ended
March 31,
2001 2000
---- ----
Interest and Dividend Income
Interest and fees on loans $ 1,734 $ 1,766
Federal funds sold 49 5
Interest and dividends on investment securities:
Taxable 232 125
Tax exempt 39 43
Other interest income - 1
--------- ---------
Total interest income 2,054 1,940
Interest Expense
Deposits 584 596
Short term borrowings 1 9
Long-term borrowings 409 285
--------- ---------
Total interest expense 994 890
--------- ---------
Net Interest Income 1,060 1,050
Provision for loan losses - 6
--------- ---------
Net interest income after provision for loan losses 1,060 1,044
Non Interest Income
Service charges on deposit accounts 79 70
Other operating income 105 91
--------- ---------
Total non interest income 184 161
Non Interest Expense
Salaries and employee benefits 376 374
Premises and equipment 83 78
Other operating expense 198 189
--------- ---------
Total non interest expense 657 641
--------- ---------
Income before income tax expense 587 564
Income tax expense 181 173
--------- ---------
Net Income $ 406 $ 391
========= =========
Average common shares outstanding 598,056 597,112
Basic earnings per common share $ 0.68 $ 0.66
Diluted earnings per common share $ 0.67 $ 0.65
Dividends per share of common stock, declared $ 0.34 $ 0.30
See accompanying notes to consolidated financial statements.
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CAPITAL DIRECTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
- --------------------------------------------------------------------------------
(In thousands)
Three Months Ended
March 31,
2001 2000
---- ----
Cash flows from operating activities
Net income $ 406 $ 391
Adjustments to reconcile net income to net cash from
operating activities
Depreciation 31 28
Provision for loan losses - 6
Net amortization (accretion) on securities (3) 1
Loans originated for sale (1,223) -
Proceeds from sale of loans originated for sale 326 -
Net gain on sales of loans originated for sale (1) -
Changes in assets and liabilities:
Accrued interest receivable (25) (16)
Accrued interest payable (11) 2
Other assets 3 44
Other liabilities 221 140
--------- ---------
Net cash from operating activities (276) 596
Cash flows from investing activities
Securities available for sale:
Purchases - (536)
Maturities, calls and principal payments 1,347 149
Net change in loans 541 1,086
Premises and equipment expenditures (130) (8)
--------- ---------
Net cash from investing activities 1,758 691
Cash flows from financing activities
Net change in deposits (3,552) (1,416)
Federal funds purchased - (1,700)
Proceeds from long-term FHLB borrowings 3,000 2,500
Repayment of long-term FHLB borrowings (2,593) (1,090)
Proceeds from shares issued upon exercise of stock options - 21
Dividends paid (203) (179)
--------- ---------
Net cash from financing activities (3,348) (1,864)
---------- ---------
Net change in cash and cash equivalents (1,866) (577)
Cash and cash equivalents at beginning of year 8,566 3,151
--------- ---------
Cash and cash equivalents at March 31 $ 6,700 $ 2,574
========= =========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 1,005 $ 888
Income taxes - federal $ 195 $ 176
See accompanying notes to consolidated financial statements.
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CAPITAL DIRECTIONS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
For the three months ended March 31, 2001 and 2000
- --------------------------------------------------------------------------------
(In thousands)
Three Months Ended
March 31,
2001 2000
---- ----
Net income $ 406 $ 391
Other comprehensive income (loss),
net
Unrealized holding gains (losses)
on securities available for sale
arising during period 153 (41)
Tax effects (52) 14
----------- -----------
Other comprehensive income (loss), net 101 (27)
----------- -----------
Comprehensive income $ 507 $ 364
=========== ===========
See accompanying notes to consolidated financial statements.
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CAPITAL DIRECTIONS, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management of the Registrant, the accompanying
Consolidated Financial Statements contain all adjustments (consisting only
of normal recurring items) necessary to present fairly the consolidated
financial position of the Registrant as of March 31, 2001 and December 31,
2000 and results of operations and cash flows for the three month periods
ended March 31, 2001 and 2000.
2. The results of operations for the three months ended March 31, 2001 are
not necessarily indicative of the results to be expected for the full
year.
3. The accompanying unaudited Consolidated Financial Statements and the notes
thereto should be read in conjunction with the Notes to Consolidated
Financial Statements and the notes included therein, for the fiscal year
end 2000, included in the Registrant's 2000 Annual Report on Form 10-K.
4. Management determines the adequacy of the allowance for loan losses based
on an evaluation of the loan portfolio, recent loss experience, historical
performance, current economic conditions, current analyses of asset
quality and other pertinent factors. Non-performing loans are defined as
all loans which are accounted for as non-accrual; loans 90 days or more
past due and still accruing interest; or loans which have been
renegotiated due to the borrowers' inability to comply with the original
terms. As of March 31, 2001, non-performing loans totaled $126,000 or .15%
of total loans. This represents a decrease of $11,000 from the $137,000
balance at December 31, 2000.
March 31, December 31,
Non-performing Loans 2001 2000
-------------------- ---- ----
Non-accrual $ - $ -
90 days or more past due 126,000 137,000
Renegotiated - -
--------- --------
Total $ 126,000 $137,000
========= ========
Non-performing loans as a percent of:
Total loans .15% .16%
Allowance for loan losses 11.86% 13.01%
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Note 4. Analysis of the Allowance For Loan Losses (continued)
The following table summarizes changes in the allowance for loan losses arising
from loans charged off, recoveries on loans previously charged-off, and
additions or reductions to the allowance which have been charged or credited to
expense.
(Dollars in thousands) Three Twelve
Months Months
Ended Ended
March 31, December 31,
2001 2000
---- ----
Balance at beginning of period $ 1,053 $ 1,055
Charge-offs (7) (27)
Recoveries 16 19
--------- --------
Net (charge-offs) recoveries 9 (8)
Additions (reductions) to allowance
for loan losses - 6
--------- --------
Balance at end of period $ 1,062 $ 1,053
========= ========
Average loans outstanding during the period $ 85,861 $ 87,651
========= ========
Loans outstanding at end of period $ 85,117 $ 85,649
========= ========
Allowance as a percent of:
Total loans at end of period 1.25% 1.23%
======== ========
Non-performing loans at end of period 842.86% 768.61%
======== ========
Net charge-offs as a percent of:
Average loans outstanding .00% .00%
======== ========
Allowance for loan losses (.85)% .76%
========= =========
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Note 5. Earnings Per Share
A reconciliation of basic and diluted earnings per share for the three month
period ending March 31 follows:
(Dollars in thousands) Three months ended
2001 2000
---- ----
Basic earnings per share:
Net income $ 406 $ 391
======= ========
Weighted average shares outstanding
for basic earnings per share 598,056 597,112
======= ========
Per share amount $ .68 $ .66
======= ========
Diluted earnings per share:
Net income $ 406 $ 391
======= ========
Weighted average shares outstanding
for basic earnings per share 598,056 597,112
Effect of dilutive securities-
stock options 4,651 5,436
------- --------
Weighted average shares outstanding for
diluted earnings per share 602,707 602,548
======== ========
Per share amount $ .67 $ .65
======== ========
Note 6. Stock Option Plan
Options to buy common stock are granted to officers and other key employees
under a Stock Option Plan which provides for the issuance of up to 40,000 shares
of common stock. The plan provides for stock options to be granted at prices
that approximate the fair value of the stock at the respective dates of grant.
The vesting of stock options does not start until two years from the date of the
grant. After two years, the options will vest evenly over a three year period.
The plan terminates on May 20, 2003. All shares and per share amounts have been
restated for stock splits.
A summary of activity in the plan is as follows:
Weighted
Weighted Average Fair
Available Average Value of
For Options Exercise Options
Grant Outstanding Price Granted
----- ----------- ----- -------
Balance
December 31, 2000 16,593 20,207 $ 30.19
Granted (4,000) 4,000 40.00 $ 2.75
----------- -----------
Balance
March 31, 2001 12,593 24,207 $ 31.81
=========== =========== ==============
For the options outstanding at March 31, 2001, the range of exercise
prices was $12.75 to $41.50 per share with a weighted average remaining
contractual term of 7.80 years. At March 31, 2001, 10,951 stock options
were exercisable at a weighted average price of $23.43 per share. Had
compensation cost for stock options been measured using SFAS No. 123, net
income and earnings per share would have been the pro forma amounts
indicated in the following table.
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Note 6. Stock Option Plan (continued)
The proforma effect may increase in the future if more options are granted (in
thousands, except per share data).
Three Months Three Months
Ended Ended
March 31, 2001 March 31, 2000
-------------- --------------
Net income $ 406 $ 391
Pro forma 393 388
Basic and diluted income per share:
As reported basic $ .68 $ .66
Pro forma basic .66 .65
As reported diluted .67 .65
Pro forma diluted .65 .64
The pro forma effects are computed using option pricing models. For the options
granted during the three months ended March 31, 2001 the following weighted
average assumptions as of the grant date were utilized.
Risk-free interest rate 4.95%
Expected option life 5 years
Expected stock price volatility 3.90%
Expected dividend yield 3.44%
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis of financial condition and results of
operations provides additional information to assess the Consolidated
Financial Statements of the Registrant and its wholly-owned subsidiaries.
Capital Directions, Inc. is a one-bank holding company which commenced
operations on July 22, 1988. This was facilitated by the acquisition of
100% of the outstanding shares of Mason State Bank in an exchange of common
stock. The Company and its subsidiaries provide banking and financial
services in the banking industry. Substantially all revenues and services
are derived from banking products and services. The Bank's primary services
include accepting retail deposits and making residential, consumer and
commercial loans.
The Company is not aware of any market or institutional trends, events or
circumstances that will have or are reasonably likely to have a material
effect on liquidity, capital resources, or results of operations except as
discussed herein.
Financial Condition (In thousands)
During the first quarter of 2001, the assets of the Company decreased
$2,631 or 2.3% from December 31, 2000. This decrease resulted primarily
from reduced securities balances due to maturities and lower cash supplies.
Cash and cash equivalents have decreased $1,866 or 21.78% in the
three-month period from December 31, 2000 to March 31, 2001. This is a
result of a reduction of cash and non interest bearing deposits as well as
Federal funds sold from declining deposits as discussed more fully below.
8
11
Total outstanding loans have decreased $532 during the first quarter of
2001. This is a decrease of .62% from December 31, 2000. This decline has
been due a lack of demand in the commercial loan portfolio. Real estate
loans have increased slightly. In addition, $898 in 1-4 family residential
loan are currently residing in the held-for-sale category and are
anticipated to be sold within ninety days. During the first quarter of
2001, the Company decided to sell certain loans into the secondary market
as part of its asset and liability management strategy to minimize the risk
associated with the recent reduction in interest rates. Management will
closely monitor this strategy in the near term.
The allowance for loan losses increased $9 or .85% during the three month
period ending March 31, 2001. At March 31, 2001 the allowance as a percent
of outstanding loans was 1.25% compared to 1.23% at December 31, 2000.
Management continues to maintain the allowance for loan losses at a level
considered appropriate to absorb losses inherent in the portfolio.
Total deposits have decreased $3,552 or 4.90% during the first quarter of
2001. This decline was concentrated in interest bearing accounts, with
interest bearing demand and time deposits of $100,000 or greater showing
the largest decline. This decline is primarily the result of customers
seeking alternative deposit opportunities due to the declining rate
environment.
Total shareholders' equity increased $304 or 2.37% in the first quarter of
2001. This increase was comprised of net income of $406 and an increase in
net unrealized gains on available for sale securities of $101, offset by
dividends paid of $203. Book value per share was $21.97 at March 31, 2001
compared to $21.46 at December 31, 2000.
Results of Operations (In thousands)
For the first quarter of 2001, net income was $406, basic earnings per
share was $.68, and diluted earnings per share was $.67, compared to $391,
$.66, and $.65 for the same period in 2000. Average earning assets
increased to $106,415 or 6.45% from March 31, 2000 to March 31, 2001. The
average yield on earning assets increased to 7.93% for the quarter ended
March 31, 2001 from 7.90% for the comparable time period in 2000. Average
costs for rate related liabilities increased twenty-seven basis points to
4.59% at March 31, 2001 from 4.32% at March 31, 2000. Net interest margin
decreased to 4.14% for the first three months of 2001 compared to 4.32% in
the same period of 2000. This is a result of the rapidly falling rate
environment. The Company is experiencing a declining margin related
primarily to the change in the structure of earning assets. As loan demand
declined during 2000, those funds were used to increase the securities
portfolio, which tends to be at lower yields as compared to loans. The
following table illustrates the change in net interest margin for the three
months ended March 31, 2001 and March 31, 2000.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
2001 2000
---- ----
Average Yield/ Average Yield/
Balance Interest(1) Rate(1) Balance Interest(1) Rate(1)
------- ----------- ------- ------- ----------- -------
Loans (taxable) $ 85,053 $1,722 8.21% $85,550 $1,764 8.29%
Loans (non-taxable) 808 18 9.03 101 3 11.88
Taxable investment securities 13,926 232 6.76 7,645 125 6.58
Non-taxable investment securities 2,966 59 8.07 3,253 65 8.04
Federal funds sold and other 3,662 49 5.43 417 6 5.79
-------- ------ ------- ------
Total interest earning assets $106,415 $2,080 7.93% $99,966 $1,963 7.90%
======== =======
Interest bearing demand deposits $ 9,191 $ 14 .63% $11,226 $ 25 .90%
Savings deposits 22,695 179 3.20 22,696 186 3.30
Time deposits <$100,000 17,743 249 5.69 17,681 233 5.30
Time deposits $100,000 and more 9,846 142 5.85 11,027 152 5.54
Federal funds purchased 28 1 6.07 620 9 5.82
Other borrowings 28,390 409 5.86 19,518 285 5.87
-------- ------ ------- ------
Total interest bearing liabilities $ 87,893 $ 994 4.59% $82,768 $ 890 4.32%
======== ------ ======= ------
Net Interest Income/Spread $1,086 3.34% $1,073 3.58%
====== ======
Net Interest Margin 4.14% 4.32%
(1) Earning assets are presented on a fully taxable equivalent basis using
a 34% tax rate, and average yields/rates are annualized.
The two variables that have the most significant effect on the change in the net
interest income are volume and rate. The change in interest due to both volume
and rate has been allocated to volume and rate changes in proportion to the
relationship of the absolute dollar amounts of the change in each. As
illustrated in the following table, the Company had an increase in net interest
income due primarily to securities and fed funds growth as well as increased
loan rates.
Change in Net Interest Income
(Dollars in thousands)
2001 compared to 2000
Volume Rate Total
------ ---- -----
Earning Assets
--------------
Loans (taxable) $ (70) $ 28 $ (42)
Loans (non-taxable) 16 (1) 15
Taxable investment securities 105 2 107
Non-taxable investment securities (6) - (6)
Federal funds sold and other 43 - 43
----------- ----------- ----------
Total interest income 88 29 117
Interest Bearing Liabilities
----------------------------
Interest bearing demand deposits (4) (7) (11)
Savings deposits - (7) (7)
Time deposits <$100,000 1 15 16
Time deposits $100,000 or more (17) 7 (10)
Fed funds purchased (14) 6 (8)
Other borrowings 128 (4) 124
----------- ----------- ----------
Total interest expense $ 94 $ 10 $ 104
----------- ----------- ----------
Net interest Income $ (6) $ 19 $ 13
=========== =========== ==========
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The provision for loan losses was $0 during the first three months of 2001
compared to $6 for the same period of 2000. This decrease is consistent with the
balance decline experienced in the loan portfolio.
Non interest income increased $23 or 14.29% during the first quarter of 2001
when compared to the first quarter of 2000. Of this increase, 39% is
attributable to new fees for products and an increase in service charges made
effective during early 2000. This is offset by decreased customer investment
commissions. Merchant processing charges, Rabi Trust income, checking resource
fees, and debit card fees constitute the remainder of the increase.
Non interest expense increased $16 or 2.50% when comparing the first quarter of
2001 to the first quarter of 2000. Most of this increase is a result of
increased premises and equipment costs due to the renovation of the main office
facility which is currently in process. In addition, costs for postage and
supplies have increased 35.25% since the prior year.
The Federal income tax provision for the first three months of 2001 was $181, up
from $173 for the same period in 2000. This increase reflects a higher taxable
income for 2001.
Liquidity and Interest Rate Risk (in thousands)
The primary objective of asset/liability management is to assure the maintenance
of adequate liquidity and maximize net interest income by maintaining
appropriate maturities and balances between interest sensitive earning assets
and interest bearing liabilities. Liquidity management ensures sufficient funds
are maintained to meet the cash withdrawal requirements of depositors and the
credit demands of borrowers.
Sources of liquidity include federal funds sold, investment security maturities
and principal payments. A net average balance of $3,635 in federal funds sold
was maintained during the first quarter of 2001. As a member of the Federal Home
Loan Bank system, the Bank has access to an alternate funding source, lower cost
for credit services, and an additional tool to manage interest rate risk. During
the first quarter of 2000, the Bank used this source of funding to offset
security purchases to be used as collateral for public deposits. Other sources
of liquidity include internally generated cash flow, repayments and maturities
of loans, borrowings and normal deposit growth. The primary source of funds for
the parent company is the upstream of dividends from the Bank. Management
believes these sources of liquidity are sufficient for the Bank and parent
company to continue current business plans.
At March 31, 2001 the securities available for sale were valued at $14,479. It
is not anticipated that management will use these funds due to the optional
sources that may be available.
Interest rate sensitivity management seeks to maximize net interest margin
through periods of changing interest rates. The Bank develops strategies to
assure desired levels of interest sensitive assets and interest bearing
liabilities mature or reprice within selected time frames.
Strategies include the use of variable rate loan products in addition to
managing deposit accounts and maturities in the investment portfolio. The
following table, using recommended regulatory standards, reflects the "rate
sensitive position" or the difference between loans and investments, and
liabilities that mature or reprice within the next year and beyond. The
financial industry has generally referred to this difference as "GAP" and its
handling as "GAP Management". Throughout the first quarter of 2000, the results
of the GAP analysis were within the Bank's policy guidelines. At March 31, 2001,
the percentage of rate sensitive assets to rate sensitive liabilities within the
one-year time horizon was 62%.
The following table shows the Company's GAP position as of March 31, 2001. The
Company has a liability sensitive position of approximately $22,138 within the
one-year time frame, which indicates higher net interest income may be earned if
rates decrease during the period. Due to the limitations of GAP analysis,
modeling is also used to enhance measurement and control.
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GAP Measurement (Dollars in thousands)
0-30 31-90 2nd 3rd 4th Annual 1-3 3-5 Over 5
Days Days Quarter Quarter Quarter Total Years Years Years Total
---- ---- ------- ------- ------- ----- ----- ----- ----- -----
Assets
- ------
Loans $ 6,178 $ 7,247 $ 3,750 $ 3,789 $ 3,110 $ 24,074 $ 7,283 $ 6,836 $46,924 $ 85,117
Loans Held-
For-Sale -- 898 -- -- -- 898 -- -- -- 898
Allowance for
loan losses -- -- -- -- -- -- -- -- -- -1,062
Investments 2,935 500 -- 2,025 528 5,988 8,226 1,520 712 16,446
Short-term
Investments 4,686 -- -- -- -- 4,686 -- -- -- 4,686
Other non-
earning assets -- -- -- -- -- -- -- -- -- 6,307
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
Total $ 13,799 $ 8,645 $ 3,750 $ 5,814 $ 3,638 $ 35,646 $ 15,509 $ 8,356 $47,636 $112,392
======== ======== ======== ======== ======== ======== ======== ======== ======= ========
Liabilities
Non interest
bearing
deposits $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 9,640
Interest
bearing
deposits 34,391 4,297 5,816 3,220 2,422 50,146 6,871 2,164 50 59,231
Long-term
FHLB
borrowings 1,000 500 1,000 5,122 16 7,638 14,961 5,253 894 28,746
Other
liabilities -- -- -- -- -- -- -- -- -- 1,637
Capital -- -- -- -- -- -- -- -- -- 13,138
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
Total $ 35,391 $ 4,797 $ 6,816 $ 8,342 $ 2,438 $ 57,784 $ 21,832 $ 7,417 $ 944 $112,392
======== ======== ======== ======== ======== ======== ======== ======== ======= ========
GAP $(21,592) $ 3,848 $ (3,066) $ (2,528) $ 1,200 $(22,138) $ (6,323) $ 939 $46,692
Cumulative
GAP $(21,592) $(17,744) $(20,810) $(23,338) $(22,138) $(22,138) $(28,461) $(27,522) $19,170
GAP ratio 39% 180% 55% 70% 149% 62% 71% 113% 2,485%
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Capital Resources
The Company's capital adequacy is reviewed regularly to ensure that
sufficient capital is available to meet current and future funding needs
and comply with regulatory requirements. Shareholders' equity, excluding
the net unrealized gain on securities available for sale, increased
$203,000 or 1.60% to $12,909,000 for the first quarter of 2001. This
represents 11.49% of total assets.
At December 31, 2000, the similar ratio of shareholders' equity to total
assets was 11.05%. Dividends declared per common share increased by 13.33%
to $.34 per share in 2001 compared to $.30 in 2000.
Regulators established "risk-based" capital guidelines that became
effective December 31, 1990. Under the guidelines, minimum capital levels
are established for risk-based and total assets based on perceived risk in
asset categories and certain off-balance sheet items, such as loan
commitments and standby letters of credit. On March 31, 2001, the Bank has
a "risk-based" total capital to asset ratio of 19.28%. The ratio exceeds
the requirements established by regulatory agencies as shown below.
(Dollars in thousands) Minimum Required
March 31, 2001 For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Regulations
------ ----------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
Total Capital (to risk
weighted assets) $ 13,734 19.28% $ 5,697 8.00% $ 7,122 10.00%
Tier 1 capital (to risk
weighted assets) 12,842 18.03 2,849 4.00 4,273 6.00
Tier 1 capital (to
average assets) 12,842 11.48 4,475 4.00 5,594 5.00
Bank management does not perceive that future rate changes or inflation
will have a material impact on capital adequacy. It is the opinion of
management that capital and shareholders' equity is adequate and will
continue to be so throughout 2001.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required as Registrant meets requirements to be a small business filer.
Part II - Other Information
Item 1. Legal proceedings
The Company is not involved in any material pending legal proceedings to
which the Registrant or its subsidiaries is a party or which any of its
property is subject, except for proceedings which arise in the ordinary
course of business. In the opinion of management, pending legal proceedings
will not have a material effect on the consolidated financial statements of
the registrant or its subsidiaries as of and for the period ended March 31,
2001.
Item 2. Changes in Securities and Use of Proceeds
During the three months ended March 31, 2001, there weren't any changes in
the Registrant's securities, relevant to the requirements of this section,
that would cause any shareholder's rights to be materially modified,
limited or qualified.
Item 3. Defaults Upon Senior Securities
No defaults have occurred involving senior securities on the part of the
Registrant.
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Item 4. Submission of Matters to a Vote of Security Holders
No matters have been submitted to a vote of the Registrant's security
holders.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
1. Exhibits required by Item 601 of Regulation S-K
See Index to Exhibits on page 13.
2. Reports on Form 8-K
No reports on Form 8-K were filed for the three months ended March
31, 2000.
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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.
CAPITAL DIRECTIONS, INC.
Date: May 1, 2001 By: /s/ Timothy Gaylord
----------- ---------------------------------
Timothy Gaylord
President
Date: May 1, 2001 By: /s/ Lois A. Toth
----------- ------------------------------------
Lois A. Toth
. Treasurer
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Index to Exhibits
The following exhibits are filed or incorporated by reference as part of this
report:
2 Plan of Acquisition, Reorganization, Arrangement, Liquidation or
Succession - Consolidation Agreement included in Amendment No. 1 to
Form S-4 Registrant Statement No. 33-20417
3 Instruments Defining the Rights of Security Holders, Including
Debentures - Not applicable
11 Statement Regarding Computation of Per Share Earnings - Not applicable
15 Letter Regarding Unaudited Interim Financial Information - Not
applicable
18 Letter Regarding Change in Accounting Principals - Not applicable
19 Previous Unfiled Documents - Not applicable
20 Report Furnished to Security Holders - Not applicable
23 Published Report Regarding Matters Submitted to Vote of Security
Holders - Not applicable
24 Consents of Experts and Counsel - Not applicable
25 Power of Attorney - Not applicable
27 Additional Exhibits - Not applicable
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