UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 2002
Commission File No. 33-12756-B
COMMUNITY BANCORP, INC.
A Massachusetts Corporation
IRS Employer Identification No. 04-2841993
17 Pope Street, Hudson, Massachusetts 01749
Telephone - (978)568-8321
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
5,963,885 shares outstanding
as of September 30, 2002
PART I - FINANCIAL INFORMATION
COMMUNITY BANCORP, INC.
Item 1. CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2002 2001
------------ ------------
ASSETS
Cash and due from banks $ 22,557,175 $ 19,876,999
Federal funds sold 20,532,332 12,912,746
Securities available for sale, at market value 70,982,910 74,116,739
Securities held to maturity (market value
$105,055,259 at 9/30/02 and $99,075,447
at 12/31/01) 101,719,717 97,266,087
Mortgage loans held for sale 3,282,240 1,909,913
Loans 196,643,440 188,452,703
Less allowance for loan losses 2,761,328 2,684,517
----------- -----------
Total net loans 193,882,112 185,768,186
----------- -----------
Premises and equipment, net 5,877,232 6,140,477
Other assets 4,846,638 4,714,597
----------- -----------
Total assets $423,680,356 $402,705,744
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
Noninterest bearing $ 78,861,188 $ 78,513,849
Interest bearing 260,686,460 240,552,490
----------- -----------
Total deposits 339,547,648 319,066,339
----------- -----------
Securities sold under repurchase agreements 27,184,999 34,023,288
Borrowed funds 14,623,729 10,000,000
Other liabilities 2,391,920 3,305,118
----------- -----------
Total liabilities 383,748,296 366,394,745
----------- -----------
Stockholders' equity:
Preferred stock, $2.50 par value, 100,000
shares authorized, none issued or outstanding
Common stock, $2.50 par value, 12,000,000
shares authorized, 6,398,436 shares issued,
5,963,885 shares outstanding, (5,940,606
shares outstanding at 12/31/01) 15,996,090 15,996,090
Additional paid in capital 358,794 219,120
Undivided profits 24,578,351 21,608,513
Treasury stock, at cost, 434,551 shares,
(457,830 shares at 12/31/01) (2,192,264) (2,297,019)
Accumulated other comprehensive income 1,191,089 784,295
----------- -----------
Total stockholders' equity 39,932,060 36,310,999
----------- -----------
Total liabilities and
stockholders' equity $423,680,356 $402,705,744
=========== ===========
The accompanying notes are an integral part of these unaudited, consolidated
financial statements.
-2-
COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
-------------------- ---------------------
2002 2001 2002 2001
--------- --------- ---------- ----------
Interest income:
Interest and fees on loans $3,434,888 $3,703,721 $10,206,301$11,338,230
Interest and div. on securities:
Taxable interest 1,802,582 1,745,168 5,556,068 5,484,599
Nontaxable interest 237,123 232,040 713,752 640,885
Dividends 89,192 98,686 263,589 218,825
Interest on federal funds sold 98,979 338,310 257,116 1,149,416
--------- --------- ---------- ----------
Total interest income 5,662,765 6,117,925 16,996,826 18,831,955
--------- --------- ---------- ----------
Interest expense:
Deposits 1,165,600 1,821,468 3,659,336 5,808,359
Borrowings 211,881 298,523 635,020 1,075,232
--------- --------- --------- ---------
Total interest expense 1,377,481 2,119,991 4,294,356 6,883,591
--------- --------- --------- ---------
Net interest income 4,285,284 3,997,934 12,702,470 11,948,364
Provision for loan losses 45,000 -- 135,000 --
--------- --------- ---------- ----------
Net interest income after
provision for loan losses 4,240,284 3,997,934 12,567,470 11,948,364
--------- --------- ---------- ----------
Noninterest income:
Merchant credit card assessments 386,691 469,183 1,207,351 1,359,549
Service charges 360,799 357,906 1,065,410 1,030,470
Other charges, commissions, fees 340,176 321,277 1,029,761 969,430
Gains on sales of loans, net 43,468 48,703 147,003 153,443
Gains on sales of securities, net 3,843 -- 99,125 --
Other 25,294 25,683 76,987 80,795
--------- --------- --------- ---------
Total noninterest income 1,160,271 1,222,752 3,625,637 3,593,687
--------- --------- --------- ---------
Noninterest expense:
Salaries and benefits 1,699,772 1,447,677 5,078,543 4,681,198
Data processing and ATM network 309,075 301,060 917,481 908,336
Occupancy, net 209,149 228,333 668,248 716,580
Furniture and equipment 98,808 101,248 297,525 308,927
Credit card processing 267,560 417,212 950,215 1,189,871
Professional fees 152,092 157,975 391,110 414,766
Printing, stationery & supplies 61,886 61,117 180,612 180,550
Marketing and advertising 46,727 34,853 145,056 155,858
Other 304,640 329,987 953,005 1,011,569
--------- --------- --------- ---------
Total noninterest expense 3,149,709 3,079,462 9,581,795 9,567,655
--------- --------- --------- ---------
Income before income taxes 2,250,846 2,141,224 6,611,312 5,974,396
Income taxes 783,353 734,574 2,295,336 2,090,907
--------- --------- --------- ---------
Net income $1,467,493 $1,406,650 $4,315,976 $3,883,489
========= ========= ========= =========
-3-
COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Continued)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
2002 2001 2002 2001
-------- -------- -------- --------
Basic earnings per common share $ .246 $ .236 $ .725 $ .655
Diluted earnings per common share $ .245 $ .236 $ .723 $ .655
Dividends per share $ .078 $ .066 $ .226 $ .186
Basic weighted average number
of shares 5,963,885 5,940,606 5,951,947 5,929,105
Diluted weighted average number
of shares 5,986,793 5,948,455 5,969,765 5,932,877
The accompanying notes are an integral part of these unaudited, consolidated
financial statements.
-4-
COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Net income $1,467,493 $1,406,650 $4,315,976 $3,883,489
Other comprehensive income:
Unrealized securities gains
arising during period 658,361 726,708 793,253 1,496,069
Income tax on securities gains
arising during period (274,931) (297,441) (322,205) (612,341)
--------- --------- --------- ---------
Net unrealized securities gains
arising during period 383,430 429,267 471,048 883,728
--------- --------- --------- ---------
Less: reclassification
adjustment for securities
gains included in income (3,843) -- (99,125) --
Income tax on securities (gains)
included in income 1,571 -- 34,871 --
--------- --------- -------- ---------
Net reclassification adjustments
for securities (gains) losses
included in net income (2,272) -- (64,254) --
--------- --------- --------- ---------
Other comprehensive income 381,158 429,267 406,794 883,728
--------- --------- --------- ---------
Comprehensive income $1,848,651 $1,835,917 $4,722,770 $4,767,217
========= ========= ========= =========
The accompanying notes are an integral part of these unaudited, consolidated
financial statements.
-5-
COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
------------------------
2002 2001
--------- ----------
Cash flows from operating activities:
Net income $4,315,976 $ 3,883,489
Adjustments to reconcile net income
to net cash provided by operating
activities:
(Increase)decrease in mortgage loans
held for sale (1,372,327) 2,346
Provision for loan losses 135,000 --
Gain on sale of securities (99,125) --
Depreciation and amortization 733,389 758,446
Amortization of securities discounts
and premiums, net 335,190 52,459
Deferred income taxes 114 --
Net change in other liabilities (1,238,466) (102,487)
Net change in other assets (132,155) 482,677
---------- ----------
Net cash provided by operating activities 2,677,596 5,076,930
---------- ----------
Cash flows from investing activities:
Maturities and principal repayments of
securities available for sale 12,044,079 15,732,486
Maturities and principal repayments of
securities held to maturity 17,471,031 45,204,565
Purchases of securities available for sale (14,300,838) (26,070,269)
Purchases of securities held to maturity (22,119,186) (43,427,461)
Sales of securities available for sale 6,037,711 --
Net change in federal funds sold (7,619,586) (2,172,352)
Net change in loans (8,248,926) (6,981,343)
Acquisition of property, plant and equipment (470,144) (761,002)
---------- ----------
Net cash used in investing activities (17,205,859) (18,475,376)
---------- ----------
Cash flows from financing activities:
Net change in deposits 20,481,309 19,915,348
Net change in borrowings 4,623,729 --
Net change in repurchase agreements (6,838,289) (2,106,575)
Sale of treasury stock 244,429 235,485
Dividends paid (1,302,739) (1,042,555)
---------- ----------
Net cash provided by financing activities 17,208,439 17,001,703
---------- ----------
Net increase in cash and due from banks 2,680,176 3,603,257
---------- ----------
Cash and due from banks at beginning of period 19,876,999 16,472,547
---------- ----------
Cash and due from banks at end of period $22,557,175 $20,075,804
========== ==========
The accompanying notes are an integral part of these unaudited, consolidated
financial statements.
-6-
Supplemental disclosures:
1. Cash paid for interest was $4,363,268 and $6,716,231 for the nine months
ended September 30, 2002 and 2001, respectively.
2. Cash paid for income taxes was $2,315,927 and $2,070,367 for the nine
months ended September 30, 2002 and 2001, respectively.
-7-
COMMUNITY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2002
_____________________________________________________________________________
1. BASIS OF PRESENTATION
---------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by accounting principles generally accepted for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for any interim
period are not necessarily indicative of results expected for the full year.
These unaudited consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto contained in the
Company's Annual Report to shareholders and Form 10-K for the year ended
December 31, 2001.
2. RECLASSIFICATIONS
-----------------
Certain amounts in the prior period's financial statements have been
reclassified to be consistent with the current period's presentation. The
reclassifications have no effect on net income.
-8-
PART I - FINANCIAL INFORMATION
---------------------
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Summary
- -------
The Company recorded net income of $4,315,976 for the nine months ended
September 30, 2002, representing an increase of $432,487 or 11.1% over
$3,883,489 for the same period in 2001. Basic earnings per share of $.725 for
the current period represented an increase of $.070 from $.655 for the nine
months ended September 30, 2001. Diluted earnings per share of $.723 for the
current period represented an increase of $.068 from $.655 for the nine months
ended September 30, 2001.
The improvement in net income resulted primarily from an increase in net
interest income and noninterest income, and a decrease in most noninterest
expense categories, partially offset by an increase in salaries and benefits.
Deposits of $339,547,648 at September 30, 2002 increased by $20,481,309 or 6.4%
from $319,066,339 at December 31, 2001. The increase in deposits occurred in
the interest-bearing categories.
Loans of $196,643,440 at September 30, 2002 increased by $8,190,737 or 4.3%
from $188,452,703 at December 31, 2001. This increase took place in the
commercial loan and home equity loan categories, partially offset by a decrease
in the real estate mortgage category. Noncurrent loans (nonaccrual loans,
troubled debt restructurings and loans 90 days or more past due but still
accruing) totaled $270,869 and $332,981 at September 30, 2002 and December 31,
2001, respectively.
Assets of $423,680,356 at September 30, 2002 represented a $20,974,612 or 5.2%
increase from $402,705,744 at December 31, 2001.
Nine months ended September 30, 2002 as Compared To
Nine months ended September 30, 2001
------------------------------------
Net Interest Income
- -------------------
Interest income for the nine months ended September 30, 2002 was $16,996,826,
representing a decrease of $1,835,129 or 9.7% from $18,831,955 for the nine
months ended September 30, 2001, primarily due to lower interest rates in 2002,
partially offset by an increase in average loan and securities balances in
2002. Interest expense was $4,294,356, representing a decrease of $2,589,235
or 37.6% from $6,883,591 for the nine months ended September 30, 2001,
primarily due to lower interest rates in 2002, partially offset by higher
average interest bearing deposit and borrowing balances in 2002. Net interest
income for the nine months ended September 30, 2002 was $12,702,470,
representing an increase of $754,106 or 6.3% from $11,948,364 for the nine
months ended September 30, 2001.
Noninterest Income and Expense
- ------------------------------
Noninterest income for the nine months ended September 30, 2002 was $3,625,637,
representing an increase of $31,950 or 0.9% from $3,593,687 for the nine months
ended September 30, 2001. This increase was primarily the result of increases
in gains on sales of securities, other charges commissions and fees, and
-9-
service charges, partially offset by a decrease in merchant credit card
assessments. Noninterest expense for the nine months ended September 30, 2002
of $9,581,795 increased by $14,140 or 0.15% from $9,567,655 for the same period
in 2001. This increase was primarily the result of an increase in salaries and
benefits, partially offset by decreases occupancy, credit card processing,
professional fees, marketing and advertising, and other expense.
Provision for Loan Losses
- -------------------------
The provision for loan losses for the nine months ended September 30, 2002 was
$135,000, compared to $0 for the nine months ended September 30, 2001. This
increase reflects management's continuing evaluation of the adequacy of the
allowance for loan losses.
Income Taxes
- ------------
Income tax expense of $2,295,336 for the nine months ended September 30, 2002
compared to $2,090,907 for the same period in 2001. The increase was the
result of an increase in taxable income during the current period.
Net Income
- ----------
Net income of $4,315,976 for the first nine months of 2002 represented an
increase of $432,487 or 11.1% from $3,883,489 recorded for the first nine
months of 2001. Basic earnings per share of $.725 for the current period
represented an increase of $.070 from $.655 for the nine months ended September
30, 2001. Diluted earnings per share of $.723 for the nine months ended
September 30, 2002 represented an increase of $.068 from $.655 for the nine
months ended September 30, 2001.
Three months ended September 30, 2002 as Compared To
Three months ended September 30, 2001
-------------------------------------
Net Interest Income
- -------------------
Interest income for the three months ended September 30, 2002 was $5,662,765,
representing a decrease of $455,160 or 7.4% from $6,117,925 for the three
months ended September 30, 2001, primarily due to lower interest rates in 2002,
partially offset by an increase in average loan and securities balances in
2002. Interest expense was $1,377,481, representing a decrease of $742,510 or
35.0% from $2,119,991 for the three months ended September 30, 2001, primarily
due to lower interest rates in 2002, partially offset by higher average
interest bearing deposit and borrowing balances in 2002. Net interest income
for the three months ended September 30, 2002 was $4,285,284, representing an
increase of $287,350 or 7.2% from $3,997,934 for the three months ended
September 30, 2001.
Noninterest Income and Expense
- ------------------------------
Noninterest income for the three months ended September 30, 2002 was $1,160,271
representing a decrease of $62,481 or 5.1% from $1,222,752 for the three months
ended September 30, 2001. This decrease was primarily the result of a decrease
in merchant credit card assessments, partially offset by an increase in other
charges, commissions and fees.
Noninterest expense for the three months ended September 30, 2002 of $3,149,709
was up $70,247 or 2.3% from $3,079,462 for the corresponding period in 2001,
-10-
primarily the result of increases in salaries and benefits and marketing and
advertising, partially offset by a decrease in credit card processing and other
expense.
Provision for Loan Losses
- -------------------------
The provision for loan losses for the three months ended September 30, 2002 was
$45,000, compared to $0 for the three months ended September 30, 2001. This
increase reflects management's continuing evaluation of the adequacy of the
allowance for loan losses.
Income Taxes
- ------------
Income tax expense of $783,353 for the three months ended September 30, 2002
compared to $734,574 for the corresponding period in 2001. The increase was
the result of an increase in taxable income during the current period.
Net Income
- ----------
Net income of $1,467,493 for the three months ended September 30, 2002
represented an increase of $60,843 or 4.3% from $1,406,650 recorded for the
corresponding period in 2001. Basic earnings per share of $.246 for the
current period represented an increase of $.010 from $.236 for the three months
ended September 30, 2001. Diluted earnings per share of $.245 for the three
months ended September 30, 2002 represented an increase of $.009 from $.236 for
the three months ended September 30, 2001.
Allowance for Loan Losses
- -------------------------
The allowance for loan losses is based on management's estimate of the amount
required to reflect the risks in the loan portfolio, based on circumstances and
conditions known or anticipated at each reporting date. The methodology for
assessing the appropriateness of the allowance consists of a review of the
following three key elements:
* The valuation allowance for loans specifically identified as impaired
* The formula allowance for the various loan portfolio classifications
* The imprecision allowance
The valuation allowance reflects specific estimates of potential losses on
individually impaired loans. When each impaired loan is evaluated, if the net
present value of the expected cash flows (or fair value of the collateral if
the loan is collateral-dependent) is lower than the recorded loan balance, the
difference represents the valuation allowance for that loan.
The formula allowance is a percentage-based estimate based on historical loss
experience and assigns required allowance allocations by loan classification
based on fixed percentages of all outstanding loan balances. The formula
allowance employs a risk-rating model that grades loans based on their general
characteristics of credit quality and relative risk. When a loan's credit
quality becomes suspect, it is placed on the Company's internal "watch list"
and its allowance allocation is increased. For the remainder of the loan
portfolio, appropriate allowance levels are estimated based on judgments
regarding the type of loan, economic conditions and trends, potential exposure
to loss and other factors. Losses are charged against the allowance when
management believes the collectibility of principal is doubtful.
In addition to the valuation allowance and the formula allowance, there is an
-11-
imprecision allowance that is determined based on the totals of the valuation
and formula allowances. The imprecision allowance reflects the measurement
imprecision inherent in determining the valuation allowance and the formula
allowance. It represents 15% - 25% of the valuation and formula allowances,
depending on management's evaluation of various conditions, the effects of
which are not directly measured in determining the valuation and formula
allowances.
The evaluation of the inherent loss resulting from these conditions involves a
higher level of uncertainty because they are not identified with specific
problem credits or portfolio segments. The conditions evaluated in connection
with the imprecision allowance include the following:
* Levels of and trends in delinquencies and impaired loans
* Levels of and trends in charge-offs and recoveries
* Trends in loan volume and terms
* Effects of changes in credit concentrations
* Effects of and changes in risk selection and underwriting standards, and
other changes in lending policies, procedures and practices
* National and local economic conditions
* Trends and duration of the present business cycle
* Findings of internal and external credit review examiners
When an evaluation of these conditions signifies a change in the level of risk,
the Company adjusts the formula allowance. Periodic credit reviews enable
further adjustment to the formula allowance through the risk rating of loans
and the identification of loans requiring a valuation allowance. In addition,
the formula allowance model is designed to be self-correcting by taking into
consideration recent actual loss experience.
Securities
- ----------
The Company's securities portfolio consists of obligations of the U.S.
Government sponsored agencies, mortgage backed securities, obligations of
various municipalities, and corporate bonds. Those assets are used in part to
secure public deposits and as collateral for repurchase agreements. Total
securities were $172,702,627 at September 30, 2002, representing an increase of
$1,319,801 or 0.8% from $171,382,826 at December 31, 2001. Securities
classified as available for sale were $70,982,910 and $74,116,739 at September
30, 2002 and December 31, 2001 respectively. In addition to the redemption of
the Company's shares of stock in the regional ATM network (NYCE) when that
company was sold, the Company sold $5.9 million in variable rate and short term
available for sale bonds. The sales took place in order to take advantage of
current interest rate conditions and improve investment yields.
Liquidity and Capital Resources
- -------------------------------
The Company's primary sources of liquidity are customer deposits, amortization
and pay-offs of loan principal and maturities of securities. These sources
provide funds for loan originations, the purchase of securities and other
activities. Deposits are considered a relatively stable source of funds. At
September 30, 2002 and December 31, 2001, deposits were $339,547,648 and
$319,066,339, respectively.
As a nationally chartered member of the Federal Reserve System, the Bank has
the ability to borrow funds from the Federal Reserve Bank of Boston by pledging
certain of its securities as collateral. Also, the Bank is a member of the
-12-
Federal Home Loan Bank which provides additional borrowing opportunities. Bank
regulatory authorities have established a capital measurement tool called "Tier
1" leverage capital. A 4.00% ratio of Tier 1 capital to assets now constitutes
the minimum capital standard for most banking organizations. At September 30,
2002, the Company's Tier 1 leverage capital ratio was 9.14%. Regulatory
authorities have also implemented risk-based capital guidelines requiring a
minimum ratio of Tier 1 capital to risk weighted assets of 4.00% and a minimum
ratio of total capital to risk-weighted assets of 8.00%. At September 30, 2002
the Company's Tier 1 and total risk-based capital ratios were 16.34% and
17.51%, respectively. The Bank is categorized as "well capitalized" under the
Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA).
Asset/Liability Management
- --------------------------
The Company has an asset/liability management committee which oversees all
asset/liability activities of the Company. The committee establishes general
guidelines each year and meets regularly to review the Company's operating
results and to make strategic changes when necessary.
It is the Company's general policy to reasonably match the rate sensitivity of
its assets and liabilities. A common benchmark of this sensitivity is the one
year gap position, which is a reflection of the difference between the speed
and magnitude of rate changes of interest rate sensitive liabilities as
compared with the Bank's ability to adjust the rates of it's interest rate
sensitive assets in response to such changes. The Company's negative one-year
cumulative gap position at September 30, 2002, representing the excess of
repricing liabilities versus repricing assets within a one year time frame, was
0.2% expressed as a percentage of total assets.
Cautionary Statement Regarding Forward-Looking Information
- ----------------------------------------------------------
This Quarterly Report on Form 10-Q, including Management's Discussion and
Analysis of Financial Condition and Results of Operations, contains, in
addition to historical information, "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. When used in this and
other Reports filed by the Company, the words "anticipate", "estimate",
"expect", "objective", and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are subject to a
variety of risks and uncertainties. In addition to any assumptions and other
factors referred to specifically in connection with such forward-looking
statements, risk factors that could cause the Company's actual results to
differ materially from those contemplated in any forward-looking statement
include, but are not limited to, changes in political and economic conditions,
interest rate fluctuations, competitive product and pricing pressures, adverse
changes in asset quality, increased inflation, and adverse legislative or
regulatory changes.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
- ------------------------------------------------
Within the 90 day period prior to the filing of this report, an evaluation was
carried out under the supervision and with the participation of the Company's
management, including the Chief Executive Officer ("CEO") and Chief Financial
Officer ("CFO"), of the effectiveness of our disclosure controls and
procedures. Based on that evaluation, the CEO and CFO have concluded that the
Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
-13
submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms. Subsequent to the date of their
evaluation, there were no significant changes in the Company's internal
controls or in other factors that could significantly affect the disclosure
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART II - OTHER INFORMATION
Item 5. OTHER INFORMATION
On September 17, 2002, the Company's Board of Directors declared a third
quarter 2002 cash dividend of $.078 per share of common stock to shareholders
of record at September 1, 2002, payable on October 15, 2002.
On October 1, 2002, the Company initiated a tender offer to purchase up to
222,222 shares of its outstanding common stock, par value $2.50, at a price of
$13.50 per share. The tender offer expired on November 1, 2002. A total of
134,505 shares of the Company's Common Stock were validly tendered, not
withdrawn, and accepted for purchase. There was no proration.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
99.(a)(1) Certification of Financial Statements by Chief Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.(a)(2) Certification of Financial Statements by Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
The Company did not file a Form 8-K during the quarter ended
September 30, 2002.
-14-
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.
COMMUNITY BANCORP, INC.
Date: November 8, 2002 By: /s/ James A. Langway
---------------------------
James A. Langway
President & Chief Executive Officer
Principal Executive Officer
Date: November 8, 2002 By: /s/ Donald R. Hughes, Jr.
---------------------------
Donald R. Hughes, Jr.
Treasurer and Clerk,
Principal Financial Officer and
Principal Accounting Officer
-15-
CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James A. Langway, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Community Bancorp,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
-16-
DATE: November 8, 2002 /s/ James A. Langway
----------------------------
James A. Langway
President and Chief Executive Officer
I, Donald R. Hughes, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Community Bancorp,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
-17-
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
DATE: November 8, 2002 /s/ Donald R. Hughes, Jr.
------------------------------
Donald R. Hughes, Jr.
Treasurer and Clerk and
Chief Financial Officer
-18-
EXHIBIT INDEX
-------------
EXHIBIT DESCRIPTION
------- -----------
99.(a)(1) Certification of Financial Statements by Chief Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.(a)(2) Certification of Financial Statements by Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
-19-