UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 000-22283
Virginia Financial Group, Inc.
(Exact name of registrant as specified in its charter)
| Virginia | 54-1829288 | |
| (State or other jurisdiction of Incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 102 South Main Street, Culpeper, Virginia | 22701 | |
| (Address of principal executive offices) | (Zip Code) | |
(Registrant’s telephone number, including area code) 540-829-1633
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 report(s), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨.
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b – 2 of the Act). Yes x No ¨
As of May 5, 2004, there were 7,160,417 shares of common stock, $5.00 par value, issued and outstanding.
VIRGINIA FINANCIAL GROUP, INC.
INDEX
| Page No. | ||||
| PART I - FINANCIAL INFORMATION | ||||
| ITEM 1 |
||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6-7 | ||||
| 8-13 | ||||
| ITEM 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14-21 | ||
| ITEM 3 |
22 | |||
| ITEM 4 |
22 | |||
| PART II - OTHER INFORMATION | ||||
| ITEM 1 |
22 | |||
| ITEM 2 |
22 | |||
| ITEM 3 |
22 | |||
| ITEM 4 |
22 | |||
| ITEM 5 |
22 | |||
| ITEM 6 |
23 | |||
- 2 -
VIRGINIA FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(000 OMITTED)
| MARCH 31, 2004 |
DECEMBER 31, 2003 | |||||
| (unaudited) | ||||||
| ASSETS |
||||||
| Cash and due from depository institutions |
$ | 56,701 | $ | 43,719 | ||
| Federal funds sold |
596 | 1,222 | ||||
| Interest-bearing deposits in banks |
484 | 237 | ||||
| Securities (market value: 2004, $331,453; 2003, $364,926) |
330,841 | 364,298 | ||||
| Loans held for sale |
7,855 | 5,174 | ||||
| Loans receivable, net |
954,867 | 912,946 | ||||
| Bank premises and equipment, net |
27,113 | 27,311 | ||||
| Interest receivable |
5,930 | 5,914 | ||||
| Other real estate owned |
1,090 | 454 | ||||
| Core deposit intangibles, net |
6,073 | 6,247 | ||||
| Goodwill |
14,033 | 14,033 | ||||
| Other assets |
5,344 | 5,656 | ||||
| Total Assets |
$ | 1,410,927 | $ | 1,387,211 | ||
| LIABILITIES |
||||||
| Deposits: |
||||||
| Noninterest-bearing demand deposits |
$ | 219,413 | $ | 216,560 | ||
| Interest-bearing deposits |
990,284 | 994,214 | ||||
| Total deposits |
1,209,697 | 1,210,774 | ||||
| Federal funds purchased and securities sold under agreements to repurchase |
18,280 | 33,155 | ||||
| Short-term borrowings |
15,758 | 6,526 | ||||
| Federal Home Loan Bank advances |
14,120 | 9,140 | ||||
| Trust preferred capital notes |
20,000 | — | ||||
| Interest payable |
2,204 | 2,223 | ||||
| Other liabilities |
7,439 | 5,563 | ||||
| Commitments and contingencies |
— | — | ||||
| Total Liabilities |
1,287,498 | 1,267,381 | ||||
| STOCKHOLDERS’ EQUITY |
||||||
| Preferred stock, no par value; (Authorized 5,000,000 shares, no shares outstanding) |
— | — | ||||
| Common stock, par value $5.00 per share; (Authorized 25,000,000 shares; issued and outstanding 7,155,519 and 7,152,885 respectively) |
35,778 | 35,764 | ||||
| Capital surplus |
7,603 | 7,578 | ||||
| Retained earnings |
74,352 | 72,255 | ||||
| Accumulated other comprehensive income |
5,696 | 4,233 | ||||
| Total Stockholders’ Equity |
123,429 | 119,830 | ||||
| Total Liabilities and Stockholders’ Equity |
$ | 1,410,927 | $ | 1,387,211 | ||
See accompanying notes to consolidated financial statements.
- 3 -
VIRGINIA FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(000 OMITTED)
| THREE MONTHS ENDED MARCH 31, | ||||||
| 2004 |
2003 | |||||
| (unaudited) | (unaudited) | |||||
| Interest Income |
||||||
| Interest and fees on loans |
$ | 14,055 | $ | 12,208 | ||
| Interest on deposits in other banks |
1 | 2 | ||||
| Interest on investment securities: |
||||||
| Taxable |
95 | 114 | ||||
| Interest and dividends on securities available for sale: |
||||||
| Taxable |
2,432 | 1,920 | ||||
| Nontaxable |
748 | 894 | ||||
| Dividends |
46 | 55 | ||||
| Interest income on federal funds sold |
2 | 79 | ||||
| Total Interest Income |
17,379 | 15,272 | ||||
| Interest Expense |
||||||
| Interest on deposits |
4,535 | 4,750 | ||||
| Interest on Federal Home Loan Bank advances |
154 | 192 | ||||
| Interest on federal funds purchased and securities sold under agreements to repurchase |
72 | 48 | ||||
| Interest on other short-term borrowings |
98 | 1 | ||||
| Interest on trust preferred capital notes |
28 | — | ||||
| Total Interest Expense |
4,887 | 4,991 | ||||
| Net Interest Income |
12,492 | 10,281 | ||||
| Less: Provision for loan losses |
681 | 323 | ||||
| Net Interest Income after Provision for Loan Losses |
11,811 | 9,958 | ||||
| Other Income |
||||||
| Retail banking fees |
1,549 | 1,248 | ||||
| Fees from fiduciary activities |
776 | 779 | ||||
| Mortgage banking fees |
645 | 1,063 | ||||
| Brokerage services |
198 | 233 | ||||
| Other operating income |
289 | 312 | ||||
| Gains (losses) on securities available for sale |
— | 24 | ||||
| Total Other Income |
3,457 | 3,659 | ||||
| Other Expense |
||||||
| Compensation and employee benefits |
5,860 | 5,258 | ||||
| Net occupancy expense |
706 | 570 | ||||
| Supplies and equipment |
1,044 | 948 | ||||
| Computer services |
299 | 340 | ||||
| Marketing |
153 | 101 | ||||
| Capital stock taxes |
169 | 191 | ||||
| Professional fees |
201 | 212 | ||||
| Other operating expenses |
2,003 | 1,530 | ||||
| Total Other Expense |
10,435 | 9,150 | ||||
| Income Before Income Tax Expense |
4,833 | 4,467 | ||||
| Income tax expense |
1,378 | 1,173 | ||||
| Net Income |
$ | 3,455 | $ | 3,294 | ||
| Earnings per Share, basic and diluted |
$ | .48 | $ | .46 | ||
See accompanying notes to consolidated financial statements.
- 4 -
VIRGINIA FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(000 OMITTED)
(unaudited)
| Common Stock |
Capital Surplus |
Accumulated Other Comprehensive Income |
Retained Earnings |
Comprehensive Income |
Total |
|||||||||||||||||||
| Balance, January 1, 2003 |
$ | 35,884 | $ | 8,143 | $ | 6,210 | $ | 64,134 | $ | 114,371 | ||||||||||||||
| Net income |
— | — | — | 3,294 | 3,294 | 3,294 | ||||||||||||||||||
| Other Comprehensive Income, net of tax: |
||||||||||||||||||||||||
| Unrealized losses on securities available for sale during the period, net of tax of $(184) |
— | — | — | — | (342 | ) | — | |||||||||||||||||
| Add: reclassification adjustment, net of tax of $(8) |
— | — | — | — | (16 | ) | — | |||||||||||||||||
| Other comprehensive income |
— | — | (358 | ) | — | (358 | ) | (358 | ) | |||||||||||||||
| Comprehensive income |
— | — | — | — | $ | 2,936 | — | |||||||||||||||||
| Cash dividends |
— | — | — | (1,291 | ) | (1,291 | ) | |||||||||||||||||
| Repurchase of common stock |
(82 | ) | (368 | ) | — | — | (450 | ) | ||||||||||||||||
| Balance, March 31, 2003 |
$ | 35,802 | $ | 7,775 | $ | 5,852 | $ | 66,137 | $ | 115,566 | ||||||||||||||
| Balance, January 1, 2004 |
$ | 35,764 | $ | 7,578 | $ | 4,233 | $ | 72,255 | $ | 119,830 | ||||||||||||||
| Net income |
— | — | — | 3,455 | 3,455 | 3,455 | ||||||||||||||||||
| Other Comprehensive Income, net of tax: |
||||||||||||||||||||||||
| Unrealized gain on securities available for sale during the period, net of tax of $788 |
— | — | — | — | 1,463 | |||||||||||||||||||
| Other comprehensive income |
— | — | 1,463 | — | 1,463 | 1,463 | ||||||||||||||||||
| Comprehensive income |
— | — | — | — | $ | 4,918 | — | |||||||||||||||||