-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CLKOQEMY7s/9rAlAMddAy3jWFiWSnp888nSWTcOVpqqcLz8LrSmQ4m/LHHbHVSXu 1Yix7AJ1M+SuRNXWJKK55A== 0000904280-97-000261.txt : 19971229 0000904280-97-000261.hdr.sgml : 19971229 ACCESSION NUMBER: 0000904280-97-000261 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971224 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLEN BURNIE BANCORP CENTRAL INDEX KEY: 0000890066 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 521782444 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 033-49890 FILM NUMBER: 97744179 BUSINESS ADDRESS: STREET 1: 101 CRAIN HIGHWAY SE CITY: GLEN BURNIE STATE: MD ZIP: 21061 BUSINESS PHONE: 4107660090 MAIL ADDRESS: STREET 1: 101 CRAIN HWY SE CITY: GLEN BURNIE STATE: MD ZIP: 21061 10-Q/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 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 33-62278 -------- GLEN BURNIE BANCORP ----------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 52-1782444 - ------------------------------------ --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 101 Crain Highway, S.E., Glen Burnie, MD 21061 --------------------------------------------------- (Address of principal executive offices) (Zip Code) 410-766-3300 --------------------------------------------------------- (Registrant's telephone number, including area code) Not applicable -------------------------------------------------------- (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. The number of outstanding shares of the registrant's common stock as of September 30, 1997 was 892,698. GLEN BURNIE BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share amounts) (Unaudited)
September 30, December 31, 1997 1996 ------------ ----------- ASSETS Cash and due from banks $ 9,421 $ 12,503 Federal funds sold 1,150 10,175 Investment securities available for sale, at fair value 45,952 54,907 Investment securities held to maturity, at cost (fair value September 30: $47,993; December 31: $41,993) 48,327 41,667 Loans receivable, net of allowance for credit losses September 30: $4,276; December 31: $5,061 109,961 124,672 Premises and equipment at cost, net of accumulated depreciation 4,430 4,154 Other real estate owned 739 602 Goodwill 436 477 Other assets 5,826 5,168 -------- -------- Total assets $226,242 $254,325 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Deposits $205,003 $232,746 Short-term borrowings 1,016 548 Other liabilities 1,366 2,444 -------- -------- Total liabilities $207,385 $235,738 -------- -------- STOCKHOLDERS' EQUITY: Common stock, par value $10, authorized 5,000,000 shares; issued and outstanding: September 30: 901,624 shares; December 31: 883,858 shares 9,016 8,839 Surplus 6,457 6,193 Retained earnings 3,180 3,290 Net unrealized appreciation on securities available for sale, net of income taxes 204 265 -------- -------- Total stockholders' equity 18,857 18,587 -------- -------- Total liabilities and stockholders' equity $226,242 $254,325 ======== ========
See accompanying notes to condensed consolidated financial statements. 2 GLEN BURNIE BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------ ---------------- 1997 1996 1997 1996 ---- ---- ---- ---- Interest income on Loans, including fees $ 2,639 $ 3,265 $ 8,253 $ 10,132 U.S. Treasury and U.S. Government agency securities 1,398 1,052 3,987 2,535 State and municipal securities 164 395 858 1,155 Other 89 76 249 256 -------- -------- -------- -------- Total interest income 4,290 4,788 13,347 14,078 -------- -------- -------- -------- Interest expense on Deposits 1,682 1,938 5,228 5,796 Short-term borrowings 15 9 60 41 -------- -------- -------- -------- Total interest expense 1,697 1,947 5,288 5,837 -------- -------- -------- -------- Net interest income 2,593 2,841 8,059 8,241 Provision for credit losses 0 375 270 2,825 -------- -------- -------- -------- Net interest income after provision for credit losses 2,593 2,466 7,789 5,416 -------- -------- -------- -------- Other income Service charges on deposit accounts 328 290 862 884 Other fees and commissions 50 15 153 158 Other non-interest income 0 80 78 101 Gains on investment securities 223 6 227 95 -------- -------- -------- -------- Total other income 601 391 1,320 1,238 -------- -------- -------- -------- Other expenses Salaries and employee benefits 1,308 1,264 3,843 3,592 Occupancy 321 324 956 1,003 Other expenses 1,425 685 4,060 1,961 -------- -------- -------- -------- Total other expenses 3,054 2,273 8,859 6,556 -------- -------- -------- -------- Income before income taxes 140 584 250 98 Income tax expense (benefit) (53) 135 (329) (317) -------- -------- -------- -------- Net income $ 193 $ 449 $ 579 $ 415 ======== ======== ======== ======== Net income per share of common stock $ 0.21 $ 0.50 $ 0.64 $ 0.46 ======== ======== ======== ======== Weighted-average shares of common stock outstanding 901,624 901,440 901,624 898,021 ======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements. 3 GLEN BURNIE BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands, except per share amounts) (Unaudited)
Nine Months Ended September 30, --------------------- 1997 1996 -------- -------- Cash flows from operating activities: Net income $ 579 $ 415 Adjustments to reconcile net income to net cash provided by operating activities Depreciation, amortization, and accretion 261 (501) Provision for credit losses 270 2,825 Changes in assets and liabilities: (Increase) decrease in other assets (580) 2,809 Decrease in other liabilities (1,088) (1,849) -------- -------- Net cash provided (used) by operating activities $ (558) $ 3,699 -------- -------- Cash flows from investing activities: Proceeds from disposals of investment securities 31,848 13,135 Purchases of investment securities (29,450) (31,595) Decrease in loans, net 14,441 10,981 Purchases of premises and equipment (691) (237) Purchases of other real estate (596) (156) Disposal of other real estate 407 -- Proceeds from sales of premises and equipment 5 -- -------- -------- Net cash provided (used) by investing activities 15,964 (7,872) -------- -------- Cash flows from financing activities: Increase (decrease) in deposits, net (27,743) 5,456 Increase (decrease) in short-term borrowings 468 313 Dividends paid (238) (745) Issuance of common stock -- 381 -------- -------- Net cash provided (used) by financing activities (27,513) 5,405 -------- -------- Increase (decrease) in cash and cash equivalents (12,107) 1,232 Cash and cash equivalents, beginning of year 22,678 9,468 -------- -------- Cash and cash equivalents, end of period $ 10,571 $ 10,700 ======== ========
See accompanying notes to condensed consolidated financial statements. 4 GLEN BURNIE BANCORP AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE-1 - BASIS OF PRESENTATION --------------------- The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, changes in stockholders' equity, and cash flows in conformity with generally accepted accounting principles. However, all adjustments (consisting only of normal recurring accruals) which, in the opinion of management, are necessary for a fair presentation of the unaudited consolidated financial statements have been included in the results of operations for the three and nine months ended September 30, 1997 and 1996. Information for net income per share and weighted average shares outstanding for prior periods have been restated to reflect 1% stock dividends declared in June and September 1997. Operating results for the three and nine-month periods ended September 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS Glen Burnie Bancorp, a Maryland corporation (the "Company"), and its subsidiaries, The Bank of Glen Burnie (the "Bank") and GBB Properties, Inc., both Maryland corporations, had consolidated net income of $193,000 ($0.21 per share) for the third quarter of 1997 compared to third quarter 1996 consolidated net income of $449,000 ($0.50 per share). Year to date consolidated net income for the nine months ending September 30, 1997 was $579,000 ($0.64 per share) compared to net income of $415,000 ($0.46 per share) for the same period in 1996. The decrease in third quarter net income was primarily attributable to a $284,000 accrual for a judgment rendered against the Bank in the third quarter of 1997. NET INTEREST INCOME. The Company's consolidated net interest income prior to provisions for credit losses was $2,593,000 for the third quarter of 1997 compared to $2,841,000 for the same period in 1996, a decrease of $248,000, or 8.7%. Consolidated net interest income for the nine months ended September 30, 1997 was $8,059,000 compared to $8,241,000 for the nine months ended September 30, 1996. The decreases in net interest income for the three and nine month periods were primarily attributable to lower interest income in each period. Interest income fell $498,000 (10.4%) for the three months ended September 30, 1997 and fell $731,000 (5.2%) for the nine-month period. The decline in interest income was attributable to the continued runoff of the loan portfolio. Interest expense declined $250,000 (12.8%) for the three-month period and declined $549,000, or 9.4%, for the nine months ended September 30, 1997. The Company's earnings performance continues to be impacted by a decline in earning assets and a shift in the asset mix from loans to lower yielding investment securities. Net interest margins for the three and nine months ended September 30, 1997 were 4.94% and 5.13%, respectively, compared to 5.13% and 5.11%, respectively, for the three and nine months ended September 30, 1996. The increases in net interest margin for the three and nine months ended September 30, 1997 were primarily due to the loss of accrued interest on loans charged off during the corresponding periods in 1996. PROVISION FOR CREDIT LOSSES. During the three months ended September 30, 1997, the Company made no provision for credit losses and provided $270,000 for credit losses during the nine months ended September 30, 1997 compared to $375,000 and $2,825,000 in provisions during the three and nine months ended September 30, 1996. The decreases in provisions reflect lower charge-off activity and a reduction in classified loans during the 1997 period. During the three and nine months ended September 30, 1997, the Company recorded net charge-offs of $85,000 and $1,055,000, respectively, compared to $71,000 and $3,274,000 in net charge-offs during the three and nine months ended September 30, 1996, respectively. OTHER INCOME. Other income increased $210,000 (53.7%) and $82,000 (6.6%), respectively, during the three and nine months ended September 30, 1997 compared to the prior year periods. The increase in other income reflects higher gains on the sale of investment securities during the third quarter of 1997. In order to improve its interest rate sensitivity, the Bank sold $16.0 million in long-term, fixed-rate state, county and municipal securities which had been classified as available- for-sale and invested the proceeds in adjustable-rate mortgage- backed securities issued by the Government National Mortgage Association ("GNMA"). OTHER EXPENSE. Other expense increased by $781,000, or 34.5%, for the quarter and by $2,303,000, or 35.1%, for the nine-month period primarily due to a $284,000 accrual for a judgment rendered against the Bank in the third quarter of 1997 and a $700,000 expense incurred in connection with the settlement of certain litigation during the second quarter of 1997. In addition, the Company experienced increases in other expenses due to professional fees incurred in connection with other litigation in which the Company is involved. INCOME TAXES. During the three and nine months ended September 30, 1997, the Company recorded income tax benefits of $53,000 and $329,000, respectively, compared to a tax expense of $135,000, during the three months ended September 30, 1996 and a tax benefit of $317,000 during the nine months ended September 30, 1996. Due primarily to its holdings of tax-exempt state, county and municipal securities, the Company recorded tax losses during the three and nine months ended September 30, 1997 and the nine months ended September 30, 1996. These net operating losses were applied to prior years' earnings resulting in tax benefits in each of the periods. The Company has recently reduced its holdings of tax-exempt state, county and municipal securities and reinvested the proceeds in U.S. 6 Government agency securities, the income on which is not exempt from federal taxation. Accordingly, the Company anticipates an increase in taxable income which may reduce the availability of future tax benefits. FINANCIAL CONDITION The Company's assets declined to $226,242,000 at September 30, 1997 from $254,325,000 at December 31, 1996 primarily due to a reduction in the loan portfolio. The Bank's net loans totaled $109,961,000 at September 30, 1997, compared to $124,672,000 on December 31, 1996, a decrease of $14,711,000 (11.8%). The decline was largely due to a decrease in commercial and industrial loans during the period. Commercial mortgage loans increased during the period while residential mortgages decreased slightly and lease financing and installment loans also decreased. The Bank has decided to decrease its equipment and automobile lease based lending because of the difficulties in monitoring the financial condition of the clients of lease company borrowers. The Company's total investment securities portfolio (including both investment securities available for sale and investment securities held to maturity) totaled $94,279,000 at September 30, 1997, a $2,295,000 or 3.4%, decrease from $96,574,000 at December 31, 1996. The aggregate market value of investment securities held by the Bank as of September 30, 1997 was $94,694,000 compared to $96,900,000 as of December 31, 1996, a $2,206,000 (2.3%) decrease. The fluctuations in the investment securities were a result of the decline in deposits. Deposits as of September 30, 1997 totaled $205,003,000, a decrease of $27,743,000 (11.9%) for the year to date. Demand deposits as of September 30, 1997 totaled $42,671,000, a $6,742,000 (13.6%) decrease from $49,413,000 at December 31, 1996. NOW accounts as of September 30, 1997 totaled $20,594,000, a decrease of $2,198,000 (9.6%) for the year to date. Money market accounts declined by $6,007,000 (22.9%) for the year to date to total $20,204,000 on September 30, 1997. Savings deposits increased by $4,434,000, or 9.2%, year to date. Meanwhile, certificates of deposit over $100,000 totaled $10,487,000 on September 30, 1997, an increase of $1,867,000 (21.7%) from year end. Other time deposits (made up of certificates of deposit less than $100,000 and individual retirement accounts) totaled $67,288,000 on September 30, 1997, a $10,229,000 (13.2%) decrease from December 31, 1996. ASSET QUALITY. The following table sets forth the amount of the Bank's non-accrual loans and accruing loans 90 days or more past due at the dates indicated. At each of the dates indicated, the Bank did not have any troubled debt restructurings within the meaning of Statement of Financial Accounting Standards No. 15.
At At September 30, December 31, 1997 1996 ------------ ------------ (Dollars in thousands) Non-Accrual Loans: Real estate . . . . . . . . . . . . . $3,277 $4,000 Installment . . . . . . . . . . . . . 113 168 Credit card & related . . . . . . . . 0 0 Commercial. . . . . . . . . . . . . . 886 378 ------ ------ Total Non-Accrual Loans. . . . . . 4,276 4,546 ------ ------ Accruing Loans Past Due 90 Days or More: Real Estate . . . . . . . . . . . . . 0 87 Installment . . . . . . . . . . . . . 0 0 Credit card & related . . . . . . . . 0 0 Commercial. . . . . . . . . . . . . . 0 0 ------ ------ Total Accruing Loans Past Due 90 Days or More. . . . . . . . . 0 87 ------ ------ Total Non-Performing Loans . . . . $4,276 $4,633 ====== ====== Non-Performing Loans to Total Loans . . . . . . . . . . . . . 3.89% 3.72% ====== ====== Allowance for Credit Losses to Non-Performing Loans. . . . . . 100% 109.24% ====== ======
7 At September 30, 1997 and December 31, 1996, there were $936,000 and $1,408,000, respectively, in loans outstanding not reflected in the above table as to which known information about possible credit problems of borrowers caused management to have serious doubts as to the ability of such borrowers to comply with present loan repayment terms. Such loans consist of loans which were not 90 days or more past due but where the borrower is in bankruptcy or has a history of delinquency or the loan to value ratio is considered excessive due to deterioration of the collateral or other factors. ALLOWANCE FOR CREDIT LOSSES. The allowance for credit losses is established through a provision for credit losses charged to expense. Loans are charged against the allowance for credit losses when management believes that the collectibility of the principal is unlikely. The allowance, based on evaluations of the collectibility of loans and prior loan loss experience, is an amount that management believes will be adequate to absorb possible losses on existing loans that may become uncollectible. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions and trends that may affect the borrowers' ability to pay. Transactions in the allowance for credit losses for the nine months ended September 30, 1997 and 1996.
Nine Months Ended September 30, --------------------- 1997 1996 -------- -------- (Dollars in thousands) Beginning balance. . . . . . . . . . . . . . $ 5,061 $ 3,698 -------- -------- Charge-offs. . . . . . . . . . . . . . . . . 1,441 3,503 Recoveries . . . . . . . . . . . . . . . . . 386 166 -------- -------- Net charge-offs. . . . . . . . . . . . . . . 1,055 3,337 Provisions charged to operations . . . . . . 270 2,825 -------- -------- Ending balance . . . . . . . . . . . . . . . $ 4,276 $ 3,186 ======== ======== Average loans. . . . . . . . . . . . . . . . $121,358 $150,800 Net charge-offs to average loans . . . . . . 0.87% 2.21%
Net charge-offs during the nine months ended September 30, 1997 declined to $1,055,000 from $3,337,000 during the comparable period in 1996. LIQUIDITY AND CAPITAL RESOURCES The Company currently has no business other than that of the Bank and does not currently have any material funding commitments. The Company's principal sources of liquidity are cash on hand and dividends received from the Bank. The Bank is subject to various regulatory restrictions on the payment of dividends. The Bank's principal sources of funds for investments and operations are net income, deposits from its primary market area, principal and interest payments on loans, interest received on investment securities and proceeds from maturing investment securities. Its principal funding commitments are for the origination or purchase of loans and the payment of maturing deposits. Deposits are considered a primary source of funds supporting the Bank's lending and investment activities. The Bank's most liquid assets are cash and cash equivalents, which are cash on hand, amounts due from financial institutions, federal funds sold, certificates of deposit with other financial institutions that have an original maturity of three months or less and money market mutual funds. The levels of such assets are dependent on the Bank's operating financing and investment activities at any given time. The variations in levels of cash and cash equivalents are influenced by deposit flows and anticipated future deposit flows. The Bank's cash and cash equivalents (cash due 8 from banks, interest-bearing deposits in other financial institutions, and federal funds sold), as of September 30, 1997, totaled $10,571,000, a decrease of $12,107,000 (53.4%) from the December 31, 1996 total of $22,678,000. The Bank may draw on a $26,000,000 line of credit from the Federal Home Loan Bank of Atlanta. Borrowings under the line are secured by a lien on the Bank's residential mortgage loans. As of September 30, 1997, however, no amounts were outstanding under this line. The Bank also has a secured $5.0 million of credit from another commercial bank on which no amounts were outstanding on September 30, 1997. The Company experienced a $270,000, or 1.5%, increase in total stockholders' equity during the nine months ended September 30, 1997 as the increase in retained earnings resulting from net income during the period offset a decline in net unrealized appreciation on securities available for sale resulting from the disposition of certain available-for-sale securities. Surplus increased $132,000 (2.1%) during 1997 to reach $6,325,000 at September 30, 1997. The increase in the surplus account was primarily a result of the payment of a one percent stock dividend in lieu of cash dividend during the period. The Company declared an additional one percent stock dividend at the end of the third quarter payable on October 1, 1997. The Federal Reserve Board and the FDIC have established guidelines with respect to the maintenance of appropriate levels of capital by bank holding companies and state non-member banks, respectively. The regulations impose two sets of capital adequacy requirements: minimum leverage rules, which require bank holding companies and banks to maintain a specified minimum ratio of capital to total assets, and risk-based capital rules, which require the maintenance of specified minimum ratios of capital to "risk-weighted" assets. At September 30, 1997, the Bank was in full compliance with these guidelines with a Tier 1 leverage ratio of 7.42%, a Tier 1 risk-based capital ratio of 14.47% and a total risk-based capital ratio of 15.75%. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Not applicable. 9 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. During the quarter ended September 30, 1997, a judgment in the amount of $284,000 was rendered against the Bank in Elkridge National Bank v. The Bank of Glen Burnie (Case No. 03-C-96-002064 filed March 4, 1996), which the Bank has appealed. Elkridge National Bank is one of three suits filed against the Bank in the Circuit Court for Baltimore County by creditors of a company controlled by Mr. Brian Davis alleging in each case that the Bank improperly negotiated checks for loan proceeds over forged endorsements. The Bank denies liability in each of these suits and does not believe that the outcome of these suits will have a material adverse effect on the Bank. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits - The following exhibits are filed with this -------- report. 27 Financial Data Schedule (EDGAR Only) (b) Reports on Form 8-K. No reports on Form 8-K were filed ------------------- during the quarter for which this report is filed. 10 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. GLEN BURNIE BANCORP ------------------- (Registrant): Date: December 23, 1997 By:/s/ John E. Porter ---------------------------- John E. Porter Chief Financial Officer (Duly authorized officer and principal financial officer) EX-27 2 - ARTICLE 9 FIN. DATA SCHEDULE FOR 3RD QTR 10-Q
9 The schedule contains summary financial information extracted from the Condensed Consolidated Financial Statements of Glen Burnie Bancorp and its subsidiaries for the nine months ending September 30, 1997 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1997 SEP-30-1997 9,421 46 1,150 0 45,952 48,327 47,993 114,237 4,276 226,242 205,003 1,016 1,366 0 9,016 0 0 9,841 226,242 8,253 4,845 249 13,347 5,228 5,288 8,059 270 227 8,859 250 579 0 0 579 .64 .64 5.13 4,276 0 0 936 5,061 1,441 386 4,276 3,323 0 936
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