1
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 six months ended June 30, 1996
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
SEC Commission File No : 0-22578
FIRST PATRIOT BANKSHARES CORPORATION
------------------------------------
(Exact name of registrant as specified in its charter)
State of Virginia 54-1514125
- ---------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2071 Chain Bridge Road, Vienna, Virginia 22182
- ---------------------------------------- -----
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code : (703) 471-0900
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 per share Outstanding at July, 31 1996
- --------------------------------------- ----------------------------
(Title of Class) 2,020,827 shares
----------------
1
2
FIRST PATRIOT BANKSHARES CORPORATION
FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION PAGE
- ------ --------------------- ----
Item 1. Condensed Financial Statements (unaudited)
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995........................................ 3
Consolidated Statements of Operations
Six months ended June 30, 1996 and 1995.................................... 4
Consolidated Statements of Stockholders' Equity
Six months ended June 30, 1996 and 1995.................................... 5
Consolidated Statements of Cash Flows
Six months ended June 30, 1996 and 1995.................................... 6
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II OTHER INFORMATION
- ------- -----------------
Item 6. Exhibits and Reports on Form 8-K
2
3
FIRST PATRIOT BANKSHARES CORPORATION
CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
(dollars in thousands) 1996* 1995
- --------------------------------------------------------------------------------------------------------------
ASSETS
Earning assets
Loans $104,958 $93,759
Loans held for sale 8,226 12,917
Allowance for loan losses (1,822) (1,332)
- --------------------------------------------------------------------------------------------------------------
Loans, net of allowance for loan losses 111,362 105,344
Investments available for sale at fair value 31,106 28,665
Federal funds sold 9,736 10,219
- --------------------------------------------------------------------------------------------------------------
Total earning assets, net of allowance for loan losses 152,204 144,228
Cash and due from banks 10,902 7,879
Premises and equipment, net 5,238 4,894
Other assets 3,180 1,790
- --------------------------------------------------------------------------------------------------------------
Total assets $171,524 $158,791
==============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Non-interest bearing deposits $33,758 $28,555
Interest bearing deposits 102,726 91,704
- --------------------------------------------------------------------------------------------------------------
Total deposits 136,484 120,259
Other borrowings 21,040 23,915
Accrued expenses and other liabilities 956 1,879
- --------------------------------------------------------------------------------------------------------------
Total liabilities 158,480 146,053
- --------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Total stockholders' equity 13,044 12,738
- --------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $171,524 $158,791
==============================================================================================================
See accompanying notes to consolidated financial statements.
* Unaudited
3
4
FIRST PATRIOT BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-----------------------------------------------------------------
(dollars in thousands) 1996* 1995* 1996* 1995*
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans $2,914 $2,257 $5,705 $4,252
Interest on investments 574 305 1,041 542
Interest on federal funds sold 19 178 181 259
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest income $3,507 $2,740 $6,927 $5,053
INTEREST EXPENSE
Interest on deposits $1,085 $926 $2,209 $1,619
Interest on other borrowings 269 161 507 294
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest expense $1,354 $1,087 $2,716 1,913
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income $2,153 $1,653 $4,211 3,140
Provision for loan losses 363 44 490 82
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses $1,790 $1,609 $3,721 $3,058
NON-INTEREST INCOME
Service charges on deposit accounts $149 $92 $287 $194
Other income 402 412 786 657
Gain on sale of loans and investments, net 243 125 235 165
- -----------------------------------------------------------------------------------------------------------------------------------
Total non-interest income $794 $629 $1,308 $1,016
NON-INTEREST EXPENSE
Salaries and benefits $968 $895 $1,882 $1,623
Occupancy and equipment 270 273 536 484
Other operating expense 721 628 1,345 1,102
- -----------------------------------------------------------------------------------------------------------------------------------
Total non-interest expense $1,959 $1,796 $3,763 $3,209
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income tax $625 $442 $1,266 $865
Income tax expense 175 140 425 272
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $450 $302 $841 $593
===================================================================================================================================
Earnings per share (note 2):
Earnings per common share and common equivalent share $0.20 $0.14 $0.38 $0.28
===================================================================================================================================
Weighted average common and common equivalent shares 2,217,817 2,120,384 2,229,827 2,092,124
See accompanying notes to the consolidated financial statements
* Unaudited
4
5
FIRST PATRIOT BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
UNREALIZED GAIN (LOSS)
ON AVAILABLE FOR
ADDITIONAL SALE INVESTMENTS ACCUMULATED TOTAL
COMMON PAID-IN NET OF DEFERRED (DEFICIT) STOCKHOLDERS'
(dollars in thousands) STOCK CAPITAL TAXES SURPLUS EQUITY
- ----------------------------------------------------------------------------------------------------------------------------
Balance, January 1, 1995 $4,924 $5,039 ($244) $1,113 $10,832
Cash dividends paid -- -- -- (78) ($78)
Unrealized gain on available for sale investments,
net of deferred taxes -- -- 204 -- 204
Net income -- -- -- 593 593
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1995 $4,924 $5,039 ($40) $1,628 $11,551
============================================================================================================================
Balance, January 1, 1996 $5,013 $5,155 $110 $2,460 $12,738
Net proceeds from the issuance of common stock 39 113 -- -- 152
Cash dividends paid -- -- -- (122) (122)
Unrealized gain on available for sale investments,
net of deferred taxes -- -- (564) -- (564)
Net income -- -- -- 840 840
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1996 $5,052 $5,268 ($454) $3,178 $13,044
============================================================================================================================
5
6
FIRST PATRIOT BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30
---------------------------
(dollars in thousands) 1996 1995
- ----------------------------------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES
NET INCOME $841 $291
ADJUSTMENTS FOR NONCASH ITEMS INCLUDED IN NET INCOME:
Depreciation and amortization 334 98
Provision for loan losses 490 38
(Gain)/Loss on sale of loans (244) (40)
Amort. of def. gain on sale of loans (9) 0
Increase in other assets (808) (238)
Increase (decrease) in accrued expenses and other liabilities (1,181) 261
- ----------------------------------------------------------------------------------------------------
Net cash provided by operating activities (577) 410
- ----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in banking subsidiary loans (9,533) (3,509)
Proceeds from sale of loans 3,244 733
Purchase of investments (16,067) (532)
Proceeds from maturity of investments 12,771 510
Acquisition of premises and equipment (678) (471)
- ----------------------------------------------------------------------------------------------------
Net cash flow used by investing activities (10,263) (3,269)
- ----------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in demand deposits 5,203 (2,131)
Net increase in NOW and savings accounts 1,725 242
Net (decrease) increase in money market accounts (1,050) 2,583
Net increase in time deposits 10,347 2,457
Net increase (decrease) in other borrowings (2,869) 2,325
Net decrease in notes payable (6) --
Net increase in capital from new stock issues 152 --
Cash dividends paid (122) (39)
- ----------------------------------------------------------------------------------------------------
Net cash provided by financing activities 13,380 5,437
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 2,540 2,578
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 18,098 9,986
- ----------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $20,638 $12,564
====================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
INTEREST PAID TO DEPOSITORS $2,209 $830
INTEREST ON SHORT-TERM BORROWINGS 506 118
UNREALIZED LOSS ON AVAILABLE FOR SALE INVESTMENTS (688) (208)
6
7
FIRST PATRIOT BANKSHARES CORPORATION
Notes to Consolidated Financial Statements
(unaudited)
The accompanying unaudited consolidated financial statements, which
include the accounts of First Patriot Bankshares Corporation, (the "Company")
and its wholly-owned subsidiary, Patriot National Bank, (the "Bank") have been
prepared in accordance with the instructions to Form 10-Q and do not include
all of the disclosures required by generally accepted accounting principles.
All adjustments have been made, which, in the opinion of management, are
necessary for a fair presentation of the results for the interim periods
presented. Such adjustments are all of a normal and recurring nature. The
results of operations for the six months ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 1996.
NOTE 1 - ACCOUNTING POLICIES AND OTHER DATA
Reference should be made to the Notes to Consolidated Financial
Statements included in the Annual Report to Stockholders on Form 10-K for the
year ended December 31, 1995 which contain the Company's accounting policies
and other data.
NOTE 2 - COMMON STOCK AND EARNINGS PER SHARE
Common stock issued and outstanding totaled 2,020,827 shares at June
30, 1996 and 2,005,200 shares at December 31, 1995. Stock options outstanding
at June 30, 1996, and December 31, 1995, totaled 119,738 and 112,480,
respectively. Warrants outstanding totaled 271,798 at both June 30, 1996 and
December 31, 1995. The total number of options and warrants outstanding has
been retroactively adjusted for a 2% stock dividend issued on June 30, 1994 and
a two for one stock split issued on April 30, 1993.
Earnings per common share and common equivalent share were computed by
dividing net income by the weighted average number of common shares outstanding
during the period, including average common equivalent shares attributable to
dilutive stock options and warrants. The number of common shares was increased
by the number of shares issuable on the exercise of options and warrants when
the market price of the common stock exceeded the exercise price of the options
and warrants. This increase in the number of shares was reduced by the number
of common shares that are assumed to have been purchased with the proceeds from
the exercise of the options and warrants; those purchases were assumed to have
been made when the market price of the common stock exceeded the exercise price
of the options and warrants. The average number of shares used in the
determination of earnings per common share and common equivalent
7
8
shares were 2,229,827 and 2,092,124 respectively, for the six months ended June
30, 1996 and 1995. For the three months ended June 30, 1995 and 1995 the
average number of shares used in the determination of earnings per common share
and common equivalent share were 2,217,817 and 2,120,384, respectively.
8
9
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
CONSOLIDATED FINANCIAL REVIEW
Net income for the second quarter of 1996 was $450 thousand up 49%
from $302 thousand for the second quarter of 1995. Primary earnings per share
was $.20 for the first quarter of 1996 compared to $.14 for the same period in
1995. Year-to-date income totaled $841 thousand at June 30, 1996, compared to
$593 thousand at June 30, 1995, an increase of 42%. Earnings per share for the
six month period rose to $.38 from $.28 for the first half of 1995. Return on
average equity increased from 10.59% during the second quarter of 1995 to
13.89% for the second quarter of 1996. The year-to-date return on average
equity was 13.15% compared to 10.62% for the first six months of 1995. Return
on average assets increased 15% to 1.14% for the three months ended June 30,
1996. Assets totaled $171.5 million at June 30, 1996, up 8% from the year-end
balance of $158.8 million at December 31, 1995.
BALANCE SHEET ANALYSIS
LOANS
Total loans, net of unearned income, were $113.2 million at June 30,
1996 compared to $106.7 million at December 31, 1995. A schedule of
outstanding loans at June 30, 1996 and December 31, 1995 is shown below.
JUNE 30 DECEMBER 31
(dollars in thousands) 1996 1995
- ----------------------------------------------------------------------------------------------
Commercial & SBA $30,805 $32,270
Commercial mortgage 31,042 23,187
Construction 17,744 16,777
Residential Mortgage 16,081 12,431
Home Equity 5,114 5,275
Installment 4,758 4,243
SBA loans held for Sale 8,226 12,917
--------------------------------------
Total Gross Loans $113,770 $107,100
Unearned Income (586) (424)
--------------------------------------
Loans, net of unearned income $113,184 $106,676
Allowance for Loan Losses (1,822) (1,332)
--------------------------------------
Loans, net of allowance for loan losses $111,362 $105,344
======================================
9
10
Commercial mortgage loans, which are primarily comprised of fully
leased real estate, accounted for 27.4% of the loan portfolio, net of unearned
income, at June 30, 1996, compared to 21.7% at December 31, 1995. 14.2% of the
loan portfolio at June 31, 1996 consisted of residential mortgage loans as
compared to 11.6% at December 31, 1995. These loans are primarily
owner-occupied real estate. At June 30, 1996, real estate construction loans
composed approximately 15.7% of the Company's loan portfolio; unchanged from
December 31, 1995. The loans are primarily used for construction of
owner-occupied pre-sold residential homes and are considered an attractive type
of lending due to their short-term maturities and higher yields. Commercial and
S.B.A. loans totaled $30.8 million or 27.2% of the Bank's total loan portfolio
at the end of the second quarter of 1996. At December 31, 1995 these loans
amounted to $32.3 million or 30.3% of the Bank's loan portfolio. Commercial
business loans typically are made on the basis of the borrower's ability to
make payment from the cash flow of its business and are either unsecured or
secured by business assets, such as accounts receivable, equipment and
inventory.
The Bank is a "Preferred" S.B.A. lender. This designation means that
the S.B.A. has reviewed the Bank's loan procedures and determined that the Bank
meets S.B.A. standards for the underwriting and packaging of loans. At June
30, 1996 total S.B.A. loans were $19.5 million or 17.2% of total loans,
constituting one of the fastest growing segments of the Bank's loan portfolio.
Total S.B.A. loans available for sale were $8.2 million at June 30, 1996, which
was 7.3% of the Bank's total loan portfolio. S.B.A. loans are 75-90%
guaranteed by the Federal government. The guaranteed portion of S.B.A. loans
are saleable in the secondary market.
Installment loans were $4.8 million at June 30, 1996 up from $4.2
million at December 31, 1995. Installment loans consist primarily of loans to
individuals and credit card loans. Home Equity loans were down slightly from
December 31, 1995 to $5.1 million at June 30, 1996.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is maintained at a level at which
potential loan losses inherent in the loan portfolio would be absorbed. The
allowance consists of funds set aside for specific loans and a general
unallocated reserve to offset any additional allocations needed. At June 30,
1996 the allowance was $1.82 million or 1.61% of gross loans. This is up from
$1.3 million and 1.25% of gross loans at December 31, 1995. The increase in the
allowance for loan losses is due to the growth in loans and a $500 thousand
loan on non-accrual for which a portion of the reserve has been specifically
allocated, in compliance with the Financial Accounting Standards Board rule
FAS-114 (Accounting by Creditors for Impairment of a Loan).
10
11
ALLOWANCE FOR LOAN LOSSES
Six months Year ended
ended June 3 December 31
(dollars in thousands) 1996 1995
- --------------------------------------------------------------------------------------------------
Beginning Balance $1,332 $965
Provision for the period 490 372
Charge-offs -- (9)
Recoveries -- 4
- --------------------------------------------------------------------------------------------------
Balance at end of period $1,822 $1,332
==================================================================================================
Allowance to loans * 1.61% 1.25%
Net charge-offs to average loans * -- 0.01%
Net charge-offs to allowance -- 0.38%
* net of unearned income
- --------------------------------------------------------------------------------------------------
NON-PERFORMING AND PAST-DUE LOANS
Past-due loans are loans whose principal is past-due 90 or more days
but are continuing to accrue interest because collection is in progress and the
loans are well-secured. At June 30, 1996 there were four loans totaling $704
thousand that were past due 90 days or greater. Past due loans of 90 days or
greater at December 31, 1995 consisted of three loans for $223 thousand.
Non-accrual loans consist of loans that are significantly past-due and the
collection of principal and interest on these loans has been deemed by
management to be in doubt. There was one loan on non-accrual at June 30, 1996
for $500 thousand which has been fully reserved and accounts for the increase
in the provision for loan losses. There were no loans on non-accrual at
December 31, 1995.
Included in past-due loans is one loan in the amount of $633 thousand.
Subsequent to June 30, 1996, the borrower instituted bankruptcy proceedings.
The loan is fully secured by real estate and no loss is anticipated. By virtue
of the bankruptcy proceedings, two related loans that were not past due,
amounting to approximately $213 thousand, are now technically in default. The
loans are secured by receivables and equipment and no loss is expected.
INVESTMENTS
The Company's securities portfolio is comprised of U.S. Treasury
securities, U.S. Government Agency securities, U.S. Government Agency mortgage
backed securities and tax exempt obligations of states and political
subdivisions.
SECURITIES - AVAILABLE FOR SALE
June 30, 1996 December 31, 1995
-------------------------------------------------------------------------------------
(dollars in thousands) Amortized Cost Fair Value Amortized Fair Value
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury securites $1,500 $1,502 $2,999 $3,010
U.S. Government securities 28,776 28,005 23,928 24,087
Municipal securities - Revenue
Obligations 235 234 235 233
Mortgage backed securites
Guaranteed by GNMA 557 637 678 678
All other equity securities 727 727 657 657
- --------------------------------------------------------------------------------------------------------------------------------
Total Securities $31,794 $31,106 $28,497 $28,665
================================================================================================================================
11
12
All of the company's investments at June 30, 1996 and December 31,
1995 were classified as available for sale. The Financial Accounting Standards
Board requires that available for sale securities be recorded at fair value.
The associated unrealized gains or losses on these securities are recorded, net
of tax, as a separate component of stockholders' equity. There was an
unrealized loss at June 30, 1996 of $688 thousand and an unrealized gain of
$168 thousand on December 31, 1995. The securities portfolio is summarized on
the previous page.
DEPOSITS
Total deposits were $136.5 million at June 30, 1996 up $16.2 million
from December 31, 1995. The Bank offers a full range of deposit services,
including checking accounts, savings accounts and other time deposits of
various types, ranging from daily money market accounts to longer-term
certificates of deposit. Deposits represent the primary funding source of the
Company. The increase in deposits is due to the increased number of banking
offices and marketing efforts to increase deposits to support future loan
funding needs. A summary of deposit balances at June 30, 1996 and December 31,
1995 are shown in the following schedule.
June 30 December 31
(dollars in thousands) 1996 1995
- -------------------------------------------------------------------------------------------------
NOW $10,868 $10,147
Savings 9,624 8,620
Money Market 18,121 19,171
Certificates of Deposit less than $100,000 39,325 32,117
Certificates of Deposit greater than $100,000 17,015 14,617
IRA and Keogh 7,773 7,032
- -------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits $102,726 $91,704
Non-Interest-Bearing Deposits 33,758 28,555
- -------------------------------------------------------------------------------------------------
Total Deposits $136,484 $120,259
=================================================================================================
OTHER BORROWINGS
The Company borrows short-term and long-term monies in the form of
purchased Federal Funds, repurchase agreements, master note agreements, and
from the Federal Home Loan Bank of Atlanta. At both June 30, 1996 and December
31, 1995 there were no Federal Funds Purchased. A summary of other borrowings
is presented to the right.
June 30, December 31,
(dollars in thousands) 1996 1995
- ---------------------------------------------------------------------------
Repurchase agreements $6,177 $4,916
Master note agreements 12,309 15,491
FHLB borrowings 1,361 2,309
Other long-term debt 1,193 1,199
- ---------------------------------------------------------------------------
Total Other Borrowings $21,040 $23,915
===========================================================================
12
13
INTEREST RATE SENSITIVITY
The Company monitors interest rate sensitivity of the balance sheet
and reviews asset and liability repricing weekly to minimize the earnings
sensitivity to changes in interest rates while maintaining a net interest
margin within the Company's objectives. The following table represents the
Company's interest rate sensitivity at June 30, 1996, using known maturities
and repricing schedules of loans, deposits and securities. This table presents
a position that existed at one particular day and is not necessarily indicative
of the Company's position at any other time.
RATE SENSITIVITY ANALYSIS AT JUNE 30, 1996
Interest Sensitivity Period
-----------------------------------------------------------------------------------
After 3 months After 6 months
(dollars in thousands) Within 3 months Within 6 months Within 12 months After 12 months Total
- -----------------------------------------------------------------------------------------------------------------------------------
EARNING ASSETS:
Loans 78,454 2,032 8,081 24,617 113,184
Investment securities 2,001 1,001 701 27,403 31,106
Federal Funds Sold 9,736 -- -- 9,736
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 90,191 3,033 8,782 52,020 154,026
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS: -- -- -- 17,498 17,498
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets 90,191 3,033 8,782 69,518 171,524
===================================================================================================================================
EARNING ASSET FUNDING:
Interest-bearing deposits 46,448 6,754 19,887 29,636 102,725
Other borrowed funds 18,423 -- 1,423 0 19,846
Other long-term debt -- -- -- 1,193 1,193
Non-interest bearing funds 33,759 -- -- -- 33,759
- -----------------------------------------------------------------------------------------------------------------------------------
Earning assets funding 98,630 6,754 21,310 30,829 157,523
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES: -- -- -- 957 957
EQUITY: -- -- -- 13,044 13,044
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities & Equity 98,630 6,754 21,310 44,830 171,524
===================================================================================================================================
RATE SENSITIVITY GAP:
Period (8,439) (3,721) (12,528) 21,191 (3,497)
Cumulative (8,439) (12,160) (24,688) (3,497) --
- -----------------------------------------------------------------------------------------------------------------------------------
ADJUSTED GAP AS A PERCENT OF EARNING ASSETS:
Period -5.48% -2.42% -8.13% 13.76% -2.27%
Cumulative -5.48% -7.89% -16.03% -2.27% 0.00%
- -----------------------------------------------------------------------------------------------------------------------------------
LIQUIDITY
The Company maintains a stable base of core deposits, cash and cash
equivalents, federal funds sold, and securities available for sale to meet
potential funding needs of loan and deposit customers. The total of cash and
due from banks, available for sale securities and Federal funds sold was $51.7
million at June 30, 1996 and $46.8 million at December 31, 1995, respectively;
an increase of 9.8%.
13
14
CAPITAL REQUIREMENTS
The Company strives to maintain a level of capital that will support
future growth and sustain current operations. In doing so, The Company follows
the Federal Reserve Board risk-based capital guidelines for the holding company
and the similar guidelines of the OCC for the bank. As shown in the following
table, The Company's capital ratios are well in excess of the Federal Reserve
minimums and therefore maintains a well-capitalized position.
REGULATORY CAPITAL
Patriot Nat First Well-
Bank Bankshares Capitalized
JUNE 30 JUNE 30 Regulatory
(dollars in thousands) 1996 1996 Minimums
- --------------------------------------------------------------------------------------------------------------
CAPITAL:
Tier 1 Capital:
Shareholders' common equity $11,272 $13,044
Less disallowed intangibles -- 237
Add unrealized holding losses
on available for sale securities 454 454
- ---------------------------------------------------------------------------------------------
Total Tier 1 capital 11,726 13,261
- ---------------------------------------------------------------------------------------------
Tier 2 Capital:
Qualifying allowance for loan
losses 1,463 1,488
- ---------------------------------------------------------------------------------------------
Total Tier 2 capital 1,463 1,488
- ---------------------------------------------------------------------------------------------
Total Capital $13,189 $14,749
=============================================================================================
Gross risk-adjusted assets 117,057 119,048
Less excess allowance for loan
losses 359 331
- ---------------------------------------------------------------------------------------------
Net risk-adjusted assets 116,698 118,717
Average total assets 155,499 157,870
- ---------------------------------------------------------------------------------------------
RATIOS:
Tier 1 capital to net risk-adjusted
assets 10.05% 11.17% 6.00%
Tier 2 capital to net risk-adjusted
assets 1.25% 1.25%
- --------------------------------------------------------------------------------------------------------------
Total capital to net risk-adjusted
assets 11.30% 12.42% 10.00%
==============================================================================================================
Leverage - Tier 1 capital to
average assets 7.54% 8.40% 5.00%
- --------------------------------------------------------------------------------------------------------------
14
15
INCOME STATEMENT ANALYSIS
Interest income accounted for 82% of the Company's total income for
the second quarter of 1996. Interest income was $3.5 million for the quarter
ended June 30, 1996 compared to $2.7 million for the same period in 1995.
Interest and fees on loans totaled $2.9 million for the second quarter of 1996,
up approximately 29% over the same period in 1995. Interest on investment
securities increased 88% from $305 thousand in the second quarter of 1995 to
$574 thousand as of June 30, 1996. For the six months ended June 30, 1996
interest income was $6.9 million up 37% from the first six months of 1995.
Interest on investment securities and interest and fees on loans were $1.0
million and $5.7 million respectively for the first half of 1996 as compared to
$542 thousand and $4.3 million for the first six months of 1995.
Average earning assets totaled approximately $145.8 million for the
second quarter of 1996, compared to $112.6 million for the second quarter of
1995; an increase of 29%. Average loans increased from $81.8 million in the
second quarter of 1995 to $110.0 million for the same period in 1996.
Year-to-date average earning assets were $145.2 million, up $39.8 million over
the first six months of 1995. Average loans increased from $79.3 million for
the first half of 1995 to $106.6 million for the period of January through
June, 1996.
Average interest-bearing deposits of $96.3 million in the second
quarter of 1996 increased 24.6% over the second quarter of 1995. Interest
expense was $1.4 million and $1.1 million for the quarters ended June 30, 1996
and 1995, respectively. Net interest income was $2.2 million for the quarter
ended June 30, 1996 and $1.7 million for the quarter ended June 30, 1995; an
increase of 30.2%. Year-to-date net interest income was $4.2 million, up from
$3.1 million for the six months ended June 30, 1995.
Non-interest income consists mostly of service charges and fees on
bank services and deposit accounts. Total non-interest income was $794
thousand for the second quarter of 1996 and $629 thousand for the same period
in 1995; an increase of 26.2%. Non-interest income for the six month period
ended June 30, 1996 was $1.3 million, up 28.7% over the same period in 1995.
Salaries and benefits, occupancy and equipment, and other operating
expenses make up the total of non-interest expense. These expenses increased
$163 thousand from the quarter ended June 30, 1995 to June 30, 1996 to the
current balance of $2.0 million, an increase of 9.1% Non-interest expense
totaled $3.8 million and $3.2 million for the six months ended June 30, 1996
and 1995, respectively. The increased non-interest expense is due to the
expansion of the bank from 5 branches at June 30, 1995 to 8 branches and 3 loan
production offices at June 30, 1996.
15
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FIRST PATRIOT BANKSHARES CORPORATION
- ------------------------------------
By: /s/ August 8, 1996
-----------------------------------------
Carroll C. Markley
President, Chief Executive Officer
and Director
By: /s/ August 8, 1996
------------------------------------------
Charles Wimer
Senior Vice President and Chief Financial Officer
16
17
ITEM 6. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8K.
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An annual meeting of shareholders was held on June 6, 1996 at which Homes Lowry
Horn & Johnson, Ltd. was appointed as the company's independent accountants for
the year ending December 31, 1996. Wayne W. Broadwater, John H. Rust, Jr, and
Daniel R. Bannister were elected to serve as Class A directors for the terms
expiring at the 1999 Annual Meeting of Shareholders.
Financial statements and schedules are included in Part 1, Item 1 above.
Exhibit 11 - Computation of earnings per share is on page 18.
Form 8 K - There were no reports on Form 8 K filed during the second quarter.
17