Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 2000
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission file number: 000-24561
RESOURCE BANKSHARES CORPORATION
-------------------------------
(Exact name of Registrant as specified in its charter)
Virginia 54-1904386
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3720 Virginia Beach Blvd., Virginia Beach, Virginia 23452
--------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 757-463-2265
-------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$1.50 par value
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, or any amendment to
this Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant based on the closing sale price on February 23, 2001 as reported in
The Wall Street Journal, was $34,244,166. For the purpose of the foregoing
calculation only, directors and executive officers of the registrant have been
deemed affiliates.
The number of shares outstanding of the registrant's common stock as of February
23, 2001: 2,615,214.
Documents Incorporated by Reference
In accordance with General Instruction G(3) of Form 10-K, the information called
for in Part III is incorporated by reference from the Company's Proxy Statement
to be filed no later than April 30, 2001, in connection with the Company's 2001
Annual Meeting of Shareholders.
TABLE OF CONTENTS
PART I...................................................................... 3
Item 1. Business...................................................... 3
Item 2. Properties.................................................... 18
Item 3. Legal Proceedings............................................. 18
Item 4. Submission of Matters to a Vote of Security Holders........... 19
PART II..................................................................... 20
Item 5. Market for Registrants Common Stock and Related Stockholder
Matters...................................................... 20
Item 6. Selected Consolidated Financial Data.......................... 21
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 23
Item 7a. Quantitative and Qualitative Disclosures about Market Risk.... 27
Item 8. Financial Statements and Supplementary Data................... 28
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure..................................... 28
PART III.................................................................... 29
Item 10. Directors and Executive Officers of the Registrant............ 29
Item 11. Executive Compensation........................................ 29
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 29
Item 13. Certain Relationships and Related Transactions................ 29
PART IV..................................................................... 29
Item 14. Exhibits, Financial Statements, Schedules and Reports of
Form 8-K..................................................... 29
2
PART I
In addition to historical information, the following discussion contains
forward looking statements that are subject to risks and uncertainties that
could cause the Company's actual results to differ materially from those
anticipated. These forward looking statements include, but are not limited to,
statements regarding the Company's management of credit risk, credit policies
generally, allowances for loan losses, and the affect of interest rates on the
Company's profitability. Several factors, including the local and national
economy and the demand for residential mortgage loans, could have a material
affect on the Company's anticipated results. Readers are cautioned not to place
undue reliance on these forward looking statements, which reflect management's
analysis only as of the date of this document.
Item 1. Business
- ------- --------
Resource Bankshares Corporation (the "Company"), a Virginia corporation,
was established in 1998 and is headquartered in Virginia Beach, Virginia. The
Company was capitalized as the result of a two for one share exchange with
Resource Bank (the "Bank"), a Virginia state chartered bank. In the share
exchange, the shareholders of the Bank exchanged each of their shares of Bank
common stock for two shares of the Company's common stock, and the Bank became a
wholly owned subsidiary of the Company. The Company conducts virtually all of
its business through the Bank. In this Form 10-K, the term "Company" refers to
Resource Bankshares Corporation and Resource Bank collectively, unless the
context otherwise requires.
The Bank opened for business September 1, 1988. After four years of initial
losses the Bank was recapitalized, and a new management team and new Board of
Directors took control January 1, 1993. Headquartered in Virginia Beach, the
Bank operates four full service banking offices - one each in Virginia Beach,
Chesapeake, Newport News, and Herndon, Virginia. The Bank acquired two branches,
Herndon and Reston in December 1997 when Eastern American Bank, FSB (Eastern
American) merged with the Bank. The Reston branch was sold during the third
quarter of 2000. All bank branches operate under the name Resource Bank. Prior
to the acquisition, the Bank operated only one banking office in Virginia Beach.
The branch location in Chesapeake, Virginia opened during the second quarter of
1999 and the Newport News, Virginia branch opened during the first quarter of
2000. The Bank also began offering online banking services, providing customers
with the ability to conduct banking business via a personal computer or other
secure browser-enabled device 24 hours per day through its Internet site, during
the first quarter of 2000.
The Bank serves customers throughout Virginia, providing banking services
primarily to individuals and businesses located in Hampton Roads in southeast
Virginia, Fairfax County in northern Virginia and a loan production office in
the greater Richmond metropolitan area. The Bank markets its services to
consumers, small to medium sized businesses and professional people and
emphasizes personal relationship banking. A full range of services is offered
including checking and savings accounts, certificates of deposit and charge
cards, as well as services typically associated with larger banks, such as sweep
account capacity, automatic reconcilement, and corporate credit cards. The Bank
is a Preferred Lender under the Small Business Administration (SBA) program in
both the Richmond, Virginia and Washington, DC SBA districts and ranked number
three in loan volume (32 loans totaling $5.1 million) in the Richmond district
in fiscal year 2000.
3
The Bank's mortgage division originates residential one to four family unit
mortgage loans and sells them to investors in the national secondary market.
During 2000, the Bank originated and sold mortgage loans in excess of $326
million. The mortgage division originates loans from the four bank locations as
well as from its mortgage offices in Virginia Beach, Richmond, Chesapeake,
Newport News, Reston, Virginia and Bowie, MD. Additionally, the Bank
originates loans throughout the southwestern United States through its wholesale
operations, as well as through its participation in a limited liability company
specializing in relocation services. Mortgage closing and shipping operations
are conducted at the mortgage division office in Virginia Beach, Virginia.
During June 2000, the Bank purchased CW and Company of Virginia ("CW"), a
title abstract and real estate closing agency. CW, which trades under the name
"Real Estate Investment Protection Agency," operates as a wholly owned
subsidiary of the Bank.
During August 2000, Resource Service Corporation, a wholly owned subsidiary
of the Bank, entered into a joint venture with Financial Planners Mortgage
Company, Inc. and formed a partnership titled Financial Planners Mortgage, LLP.
The partnership participates in residential one to four family mortgage loan
production.
The Bank purchased a commercial mortgage company during the first quarter
of 2001. Atlantic Mortgage & Investment Company ("Atlantic Mortgage") was
purchased from Progress Realty Advisors, Inc., a Pennsylvania corporation, and
operates as a division of Resource Bank. Atlantic Mortgage specializes in
commercial mortgage originations, placements and servicing primarily along the
Atlantic coast, with offices in Richmond and Chesapeake, Virginia and Raleigh,
North Carolina.
During the first quarter of 2001 the Bank also purchased First Jefferson
Mortgage Corporation ("First Jefferson"), a Virginia based mortgage loan
origination company. First Jefferson's business and operations have been
integrated into Resource Mortgage, a division of Resource Bank. The purchase of
First Jefferson added offices in Fort Lauderdale and Jacksonville, Florida and
Roanoke, Virginia, as well as in the Hampton Roads and Richmond areas. First
Jefferson closed over $250 million mortgage loans in 2000.
4
Average Balances, Interest Income and Expenses, and Average Yields and Rates
The following table sets forth average balances of total interest earning assets
and total interest bearing liabilities for the periods indicated, showing the
average distribution of assets, liabilities, stockholders' equity and the
related income, expense and corresponding weighted-average yields and costs.
Year ended December 31
-------------------------------
2000 1999 1998
-------------------------------- -------------------------------- ----------------------------------
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance(1) Expense Rate(2) Balance(1) Expense Rate(2) Balance(1) Expense Rate(2)
-------------------------------- -------------------------------- ----------------------------------
(Dollars in thousands)
Assets
Interest Earning Assets:
Securities (3) $ 48,012 3,870 8.06% $ 21,791 1,468 6.74% $ 12,386 $ 712 5.75%
Loans (4) 263,110 22,821 8.67% 217,598 18,072 8.31% 168,271 15,352 9.12%
Interest bearing deposits in
other banks 8,487 537 6.33% 5,974 293 4.90% 11,870 623 5.25%
Other earning assets (5) 16,227 1,561 9.62% 16,118 1,548 9.60% 39,934 3,059 7.66%
------ ----- ----- ------ ----- ----- ------ ----- -----
Total interest earning
assets 335,836 28,789 8.57% 261,481 21,381 8.18% 232,461 19,746 8.49%
Non-interest earning assets:
Cash and due from banks 5,025 4,280 3,027
Premises and equipment 3,392 3,717 3,286
Other assets 8,828 5,644 4,669
Less: Allowance for loan
losses (3,083) (2,606) (2,775)
------- ------- -------
Total non-interest earning
assets 14,162 11,035 8,207
------ ------ -----
Total Assets........... $349,998 $272,516 $240,668
======== ======== ========
Liabilities and Stockholders'
Equity
Interest Bearing Liabilities:
Interest bearing deposits:
Demand/MMDA accounts $ 67,844 4,053 5.97% $ 12,362 410 3.32% $ 11,437 384 3.36%
Savings 14,618 631 4.32% 22,943 1,034 4.51% 19,334 916 4.74%
Certificates of deposit 200,137 12,296 6.14% 180,764 9,593 5.31% 158,740 9,016 5.68%
-------- ------ ----- ------- ----- ----- ------- ----- -----
Total interest bearing
deposits 282,599 16,980 6.01% 216,069 11,037 5.11% 189,511 10,316 5.44%
FHLB advances and other
borrowings 19,625 1,156 5.89% 12,506 697 5.57% 17,806 1,020 5.73%
Capital debt securities 9,200 839 9.12% 7,528 702 9.33% - - -
----- --- ----- ----- --- ----- - - -
Total interest bearing
liabilities 311,424 18,975 6.09% 236,103 12,436 5.27% 207,317 11,336 5.47%
Non-interest bearing
liabilities:
Demand deposits 16,407 16,541 13,565
Other liabilities 4,623 2,139 3,037
----- ----- -----
Total liabilities 21,030 18,680 16,602
Stockholders' equity 17,544 17,733 16,749
------ ------ ------
Total liabilities and $349,998 $272,516 $240,668
stockholders' equity ======== ======== ========
Interest spread (6) 2.48% 2.91% 3.02%
Net interest income/net
interest margin (7) $ 9,814 2.92% $ 8,945 3.42% $ 8,410 3.62%
5
(1) Average balances are computed on daily balances and Management believes
such balances are representative of the operations of the Company.
(2) Yield and rate percentages are all computed through the annualization of
interest income and expenses versus the average balance of their respective
accounts.
(3) Tax equivalent basis. The tax equivalent adjustment to net interest income
was $377 thousand, $0 and $0 for the years ended December 31, 2000, 1999
and 1998, respectively.
(4) Non-accrual loans are included in the average loan balances, and income on
such loans is recognized on a cash basis.
(5) Consists of funds advanced in settlement of loans.
(6) Interest spread is the average yield earned on earning assets, less the
average rate incurred on interest bearing liabilities.
(7) Net interest margin is net interest income, expressed as a percentage of
average earning assets.
As the largest component of income, net interest income represents the
amount that interest and fees earned on loans and investments exceeds the
interest costs of funds used to support these earning assets. Net interest
income is determined by the relative levels, rates and mix of earning assets and
interest-bearing liabilities.
For the year ended December 31, 2000, net interest income was $9.44
million, an increase of approximately $492 thousand, or 5.5% over $8.95 million
for the same period in 1999. Average interest earning assets increased $74.4
million from 1999 to 2000 while average interest bearing liabilities increased
$75.3 million. The yield on average interest earning assets for the year ended
December 31, 2000 was 8.57% compared with 8.18% for the comparable 1999 period.
The 2000 yield on loans was 8.67% compared to 8.31% in 1999. The cost on
average interest bearing liabilities increased eighty two basis points during
2000 to 6.09%, compared to 5.27% during 1999.
Net interest income for the year-ended December 31, 1999 increased 6.4%,
or $536 thousand over 1998. Average interest earning assets increased $29.0
million from 1998 to 1999 while average interest bearing liabilities increased
$28.8 million. The yield on average interest earning assets for the year ended
December 31, 1999 was 8.18% compared with 8.49% for the comparable 1998 period.
The 1999 yield on loans was 8.31%, compared to 9.12% in 1998. The cost on
average interest bearing liabilities decreased twenty basis points during 1999
to 5.27%, compared to 5.47% during 1998.
The Company's net interest margin is sensitive to the loan origination
volume of the mortgage banking division. All loans originated by the mortgage
banking division are sold, servicing released, in the secondary mortgage market.
Each mortgage loan originated is sold when the borrower locks-in the interest
rate on the loan. When the volume of mortgage loan originations increases,
typically in a declining interest rate environment, "funds advanced in
settlement of mortgage loans" increase. This balance sheet item represents funds
advanced to close mortgage loans, pending delivery of the loans to the loan
purchaser. Until a mortgage loan is transferred to the purchaser, the Company
receives interest on the loan at the note rate. Funds advanced in settlement of
mortgage loans are financed to a large extent with short term Federal Home Loan
Bank borrowings and short term certificates of deposit. While such funds
advanced contribute to net interest income, the interest rate spread on this
item is not as great as the spread on the commercial loan portfolio, which
normally carries a higher interest yield and is financed with lower cost
deposits. Thus, as funds advanced in settlement of mortgage loans increase, the
interest spread and the net interest margin decrease. The average balance of
funds advanced in settlement of mortgage loans was $16.2 million for the year
ended December 31, 2000, compared to $16.1 million in the year ended December
31, 1999 and $39.9 million in the year ended December 31, 1998.
Net interest income is affected by changes in both average interest rates
and average volumes of interest earning assets and interest bearing liabilities.
The following table sets forth the amounts of the total change in interest
income that can be attributed to changes in the volume of interest-bearing
assets and liabilities and the amount of the change that can be attributed to
changes in interest rates. The amount of the change not solely due to rate or
volume changes was allocated between the change due to rate and the change due
to volume based on the relative size of the rate and volume changes.
6
During the period of June 1999 through March 2000, the Federal Reserve
Bank increased interest rates five times, raising short term rates by 125 basis
points during this period. During the period of April 2000 through December
2000, the Federal Reserve Bank decreased interest rates one time, lowering short
term rates by 50 basis points. The net increase in market rates has resulted
in corresponding increases in the prime lending rate, as well as the cost of
interest bearing deposits including certificates of deposit. Increases in rates
seem to slow economic growth and reduce borrowing activities while decreases in
rates seem to promote economic growth and increase borrowing activities.
Year Ended December 31
----------------------
2000 compared to 1999 1999 compared to 1998 1998 compared to 1997
Increase (Decrease) Increase (Decrease) Increase (Decrease)
Due to Changes in: Due to Changes in: Due to Changes in:
---------------------------- ------------------------------ -----------------------------
Volume Rate Net Volume Rate Net Volume Rate Net
----------- ------- ------ ------------ ------- ------- ----------- ------- -------
(Dollars in thousands)
Interest Income:
Securities $2,065 $ 337 $2,402 $ 616 $ 140 $ 756 $ (211) $ (86) $ (297)
Loans (1) 3,964 798 4,762 2,069 (860) 1,209 8,721 (6) 8,715
Interest bearing deposit
in other banks 145 99 244 (291) (39) (330) 405 (14) 391
---------------------------- ------------------------------ -----------------------------
Total $6,174 $1,234 $7,408 $2,394 $ (759) $1,635 $8,915 $ (106) $8,809
---------------------------- ------------------------------ -----------------------------
Interest Expense:
Interest bearing deposits $3,782 $2,161 $5,943 $1,271 $ (550) $ 721 $4,478 $ 142 $4,620
FHLB advances and other
borrowing 608 (12) 596 138 241 379 736 (3) 733
---------------------------- ------------------------------ -----------------------------
Total $4,390 $2,149 $6,539 $1,409 $ (309) $1,100 $5,214 $ 139 $5,353
---------------------------- ------------------------------ -----------------------------
Increase (decrease) in
net interest income $1,784 ($915) $ 869 $ 985 ($450) $ 535 $3,701 ($245) $3,456
============================ ============================== =============================
(1) Loans include funds advanced in settlement of loans.
Interest Rate Sensitivity Analysis
Management evaluates interest sensitivity through the use of an
asset/liability management reporting model on a quarterly basis and then
formulates strategies regarding asset generation and pricing, funding sources
and pricing, and off-balance sheet commitments in order to decrease sensitivity
risk. These strategies are based on management's outlook regarding interest rate
movements, the state of the regional and national economies and other financial
and business risk factors. In addition, the Company establishes prices for
deposits and loans based on local market conditions and manages its securities
portfolio under policies that take interest risk into account.
7
The following table presents the amounts of the Company's interest
sensitive assets and liabilities that mature or re-price in the periods
indicated.
December 31, 2000
Maturing or Repricing
------------------------------------------------------------------
Within 4-12 1-5 Over
-------- ------ ----- -------
3 Months Months Years 5 Years Total
-------- ------ ----- ------- -----
(Dollars in thousands)
Interest-Earning Assets:
Investment securities $ 34,972 $ 15,573 $12,083 $19,493 $ 82,121
Loans 169,517 12,203 84,350 22,443 288,513
Interest bearing deposits 2,195 - - - 2,195
Other interest-earning assets 15,445 - - - 15,445
------- ------ ------- ------ -------
Total interest-earning assets 222,129 27,776 96,433 41,936 388,274
------- ------ ------- ------ -------
Interest-Bearing Liabilities:
Deposits
Demand and savings (1) 120,380 - 18,195 - 138,575
Time deposits, $100,000 and over 3,157 2,639 890 - 6,686
Other time deposits 98,859 68,098 4,866 50 171,873
Other interest-bearing liabilities 7,546 - 300 30,000 37,846
Capital debt securities - - - 9,200 9,200
------- ------ ------ ------ -------
Total interest-bearing liabilities 229,942 70,737 24,251 39,250 364,180
------- ------ ------ ------ -------
Period Gap $ (7,813) $(42,961) $72,182 $ 2,686 $ 24,094
-------- -------- ------- ------- --------
Cumulative Gap $ (7,813) $(50,774) $21,408 $24,094
-------- -------- ------- -------
Ratio cumulative gap to total
interest -earning assets -2.01% -13.08% 5.51% 6.21%
-------- -------- ------- -------
(1) Management has determined that interest checking, money market (except those
generated by e-banking) and savings accounts are not sensitive to changes
in related market rates and, therefore, have been placed in the 1-5 years
category.
The December 31, 2000 results of the rate sensitivity analysis show that
the Company had $7.8 million more in liabilities than assets subject to
repricing within three months or less and was, therefore, in a liability
sensitive position.
The cumulative gap at the end of one year was a negative $50.8 million, a
liability-sensitive position. Approximately $181.7 million, or 63.0% of the
total loan portfolio, matures or re-prices within one year or less. An asset-
sensitive institution's net interest margin and net interest income generally
will be impacted favorably by rising interest rates, while that of a liability
sensitive institution generally will be impacted favorably by declining rates.
Increases and decreases in the Company's mortgage banking income (which
consists primarily of gains on sales of mortgage loans) tend to offset decreases
and increases in the net interest margin. In a climate of lower or declining
8
interest rates, the Company's net interest margin will tend to decrease as the
yield on interest earning assets decreases faster than the cost of interest
bearing liabilities. Mortgage banking income, in contrast, tends to increase in
times of lower or declining interest rates, as refinancing activity leads to an
increase in mortgage loan originations. In a climate of rising or higher
interest rates, the net interest margin will tend to increase, while a decrease
in mortgage loan originations leads to a decrease in mortgage banking income.
Investment Portfolio
The following tables present certain information on the Company's investment
securities portfolio:
Securities Available for Sale (1)
2000 1999 1998
---- ---- ----
(Dollars in thousands)
U. S. Government Agencies $14,918 $ 4,662 $6,868
Federal Reserve Bank Stock 673 587 434
Federal Home Loan Bank Stock 1,560 915 1,162
Preferred Stock 1,043 351 -
Other 123 144 155
-------------------------------------
$18,317 $ 6,659 $8,619
=====================================
(1) Carried at fair value
Securities Held to Maturity (2)
2000 1999 1998
---- ---- ----
U. S. Government Agencies $28,664 $ 151 $ 478
State and Municipal 15,969 746 746
Corporate Bonds 7,201 7,208 -
Preferred Stock 11,970 8,431 -
-------------------------------------
$63,804 $16,536 $1,224
=====================================
(2) Carried at cost, adjusted for amortization of premium or accretion of
discount using the interest method.
Gross unrealized losses on securities available for sale were $339,100 at
December 31, 2000 and $114,500 at December 31, 1999 and gross unrealized gains
were $25,300 and $13,200 at December 31, 2000 and 1999, respectively. At
December 31, 1998 gross unrealized gains on securities available for sale were
$95,300 and gross unrealized losses on securities available for sale were
$1,600.
At December 31, 2000 and December 31, 1999 gross unrealized gains on
securities held to maturity were $1,517,000 and $4,100, respectively. At
December 31, 2000 and 1999, gross unrealized losses on securities held to
maturity were $1,296,800 and $2,154,800, respectively. At December 31, 1998
gross unrealized gains and losses on securities held to maturity were $29,600
and $1,500, respectively.
9
The following table presents information on the maturities and weighted
average yields of the Company's investment securities at December 31, 2000. The
weighted average yields are calculated on the basis of book value of the
investment securities and on the interest income of the investments adjusted for
amortization of premium and accretion of discount.
December 31, 2000
Held to Maturity Available for Sale
Amortized Weighted Amortized Weighted
Cost Fair Value Average Yield Cost Fair Value Average Yield
------------------------------------------------------------------------------------
(Dollars in thousands)
U. S. government agencies:
Within one year $ - $ - $ - $ -
After one year to five years - - - 500 499 6.20%
After five years through ten years 33 35 10.00% - -
After ten years 28,631 28,504 8.12% 14,397 14,419 7.87%
------------------- --------------------
Total 28,664 28,539 14,897 14,918
------------------- --------------------
State and municipals:
Within one year - - - -
After one year to five years - - - -
After five years through ten years 415 423 4.90% - -
After ten years 15,554 16,918 6.41% - -
------------------- --------------------
Total 15,969 17,341 - -
------------------- --------------------
Other securities:
Within one year - - - -
After one year to five years - - - -
After five years through ten years - - - -
After ten years 7,201 6,225 7.98% - -
------------------- --------------------
Total 7,201 6,225 - -
------------------- --------------------
Total debt securities $51,834 $52,105 $14,897 $14,918
Equity and others $11,970 $11,919 $ 3,735 $ 3,399
------------------- --------------------
Total securities $63,804 $64,024 $18,632 $18,317
=================== ====================
10
Loan Portfolio
The table below classifies loans, net of unearned income, by major category
and percentage distribution at the dates indicated:
December 31,
2000 1999 1998 1997 1996
Description Amount Percentage Amount Percentage Amount Percentage Amount Percentage Amount Percentage
(Dollars in thousands)
Commercial $ 68,274 23.66% $ 77,507 30.32% $ 68,569 36.37% $ 50,713 33.68% $34,021 41.50%
Real Estate 216,056 74.89 173,789 67.97 115,790 61.42 96,058 63.79 43,195 52.69
Consumer 4,183 1.45 4,375 1.71 4,163 2.21 3,819 2.53 4,759 5.81
-------- ------ -------- ------ -------- ------ -------- ------ -------- ------
Total $288,513 100.00% $255,671 100.00% $188,522 100.00% $150,590 100.00% $81,975 100.00%
======== ======= ======== ======= ======== ======= ======== ======= ======= =======
Commercial business loans totaled $68.3 million, or 24% of the Bank's loan
portfolio at December 31, 2000. These loans are typically made on the basis of
the borrower's ability to make repayment from cash flow from its business and
are secured by business assets, such as commercial real estate, accounts
receivable, equipment and inventory.
Commercial real estate loans amounted to $171.2 million, or 60% of the loan
portfolio at December 31, 2000. These loans typically involve larger loan
balances concentrated with single borrowers or groups of related borrowers and
payment experience is typically dependent on the successful operation of a
business or real estate project.
Consumer or installment loans totaled $4.1 million, and accounted for less
than 2% of the Bank's loan portfolio at December 31, 2000. Consumer loans
include home improvement loans, automobile loans and unsecured lines of credit.
Maturity Schedule of Loans
The table below presents information regarding the maturity of loans at
December 31, 2000:
December 31, 2000
Over one
One Year through Five Years
or less Five Years or more Total
(Dollars in thousands)
Commercial $23,900 $30,076 $14,298 $68,274
Real estate - construction 59,208 12,065 1,122 72,395
Commercial real estate 31,599 39,107 28,138 98,844
Residential real estate 3,305 25,333 16,179 44,817
Installment and consumer loans 1,568 2,326 289 4,183
---------------------------------------------
$119,580 $108,907 $60,026 $288,513
=============================================
11
Nonperforming Assets
Unless well secured and in the process of collection, the Company places
loans on non-accrual status after being delinquent greater than ninety days, or
earlier in situations in which the loans have developed inherent problems that
indicate payment of principal and interest may not be made in full. Whenever
the accrual of interest is stopped, previously accrued but uncollected income is
reversed. Thereafter, interest is recognized only as cash is received. The
loan is reinstated to an accrual basis after it has been brought current as to
principal and interest under the contractual terms of the loan. As of December
31, 2000, 1999, and 1998, non-accrual loans amounted to $1,015,000, $473,000,
and $533,000, respectively.
December 31,
-----------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(Dollars in thousands)
Non-accrual loans $1,015 $473 $533 $3,059 $50
Loans contractually past due 90 days or
more and still accruing 320 270 412 1,339 371
Troubled debt restructuring - - - - -
----- --- --- ----- ---
Total nonperforming loans 1,335 743 945 4,398 421
Other real estate owned - 31 647 684 50
------ ---- ------ ------ ----
Total nonperforming assets $1,335 $774 $1,592 $5,082 $471
====== ==== ====== ====== ====
Summary of Loan Loss Experience
The allowance for loan losses is increased by the provision for loan losses
and reduced by loans charged off, net of recoveries. The allowance for loan
losses is established and maintained at a level judged by management to be
adequate to cover any anticipated loan losses to be incurred in the collection
of outstanding loans. In determining the adequate level of the allowance for
loan losses, management considers the following factors: (a) loan loss
experience; (b) problem loans, including loans judged to exhibit potential
charge-off characteristics, loans on which interest is no longer being accrued,
loans which are past due and loans which have been classified in the most recent
regulatory examination; and (c) anticipated economic conditions and the
potential impact these conditions may have on individual classifications of
borrowers.
The provisions for loan loss taken by the Company for the years ended
December 31, 2000, 1999 and 1998 were $1,100,000, $4,667,000, and $150,000,
respectively. The significant increase in the provision for loan loss in 1999
was the result of the credit problems encountered within the Company's asset
based lending program, as discussed in Item 7 of this Form 10-K. Such credit
quality problems were exclusively related to this business unit, and the Company
has, as a result, exited this program.
12
The following table presents the Bank's loan loss experience for the
periods indicated:
Year Ended December 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996
(Dollars in thousands)
Allowance for loan losses at
beginning of period $ 2,686 $ 2,500 $ 2,573 $ 1,040 $ 854
Loans charged off:
Commercial 228 4,436 126 2 5
Real Estate 156 84 141 56 109
Consumer 11 6 20 7 6
-------- -------- -------- -------- -------
Total 395 4,526 287 65 120
Recoveries of loans previously
charged off:
Commercial 124 35 1 34 6
Real Estate 5 7 40 - -
Consumer 1 3 23 9 10
-------- -------- -------- -------- -------
Total 130 45 64 43 16
-------- -------- -------- -------- -------
Net loans charged off 265 4,481 223 22 104
Provision for loan losses 1,100 4,667 150 155 290
-------- -------- -------- -------- -------
Allowance acquired through
business combination - - - 1,400 -
-------- -------- -------- -------- -------
Allowance for loan losses end of
period $ 3,521 $ 2,686 $ 2,500 $ 2,573 $ 1,040
======== ======== ======== ======== =======
Average total loans (net of
unearned income) $263,110 $217,598 $168,271 $ 93,839 $69,488
Total loans (net of unearned
income) at period-end $288,513 $255,671 $188,522 $150,590 $81,975
Ratio of net charge-offs to
average loans .10% 2.06% 0.13% 0.02% 0.15%
Ratio of provision for loan
losses to average loans .42% 2.14% 0.09% 0.17% 0.42%
Ratio of provision for loan
losses to net charge-offs 415.09% 104.15% 67.26% 704.55% 278.85%
Allowance for loan losses to
period-end loans 1.22% 1.05% 1.33% 1.71% 1.27%
Nonperforming assets to
period-end total loans and other
real estate 0.46% 0.30% 0.84% 3.36% 0.57%
In establishing the allowance for loan losses, in addition to the factors
described above, management considers the following risk elements in the loan
portfolio.
Construction lending often involves larger loan balances with single
borrowers. Construction loans involve risks attributable to the fact that loan
funds are advanced upon the security of the home under construction, which is of
uncertain value prior to the completion of construction. If there is a default,
the corporation may be required to complete and sell the home.
13
Commercial real estate loans typically involve larger loan balances
concentrated with single borrowers or groups of related borrowers. Additionally,
the payment experience on loans secured by income producing properties is
typically dependent on the successful operation of a business or a real estate
project and thus may be subject to a greater extent to adverse conditions in the
real estate market or in the economy generally. Many real estate loans have
personal endorsements as additional security.
Consumer loans entail risks, particularly in the case of consumer loans
which are unsecured, such as lines of credit, or secured by rapidly depreciable
assets such as automobiles. In such cases, any repossessed collateral for a
defaulted consumer loan may not provide an adequate source of repayment of the
outstanding loan balance as a result of the greater likelihood of damage, loss
or depreciation. The remaining deficiency often does not warrant further
substantial collection efforts against the borrower. In addition, consumer loan
collections are dependent on the borrower's continuing financial stability and
thus are more likely to be adversely affected by job loss, divorce, illness or
personal bankruptcy. Furthermore, the application of various federal and state
laws, including federal and state bankruptcy laws, may limit the amount which
can be recovered on such loans. Such loans may also give rise to claims and
defenses by a consumer loan borrower against an assignee of such loan such as
the Company, and a borrower may be able to assert against such assignee claims
and defenses which it has against the seller of the underlying collateral.
Commercial business loans typically are made on the basis of the borrower's
ability to make repayment from cash flow from its business and are secured by
business assets, such as commercial real estate, accounts receivable, equipment
and inventory. As a result, the availability of funds for the repayment of
commercial business loans may be substantially dependent on the success of the
business itself. Further, the collateral for commercial business loans may
depreciate over time and cannot be appraised with as much precision as
residential real estate.
Deposits
The table below presents average deposits and average rates paid, by major
category, at the dates indicated:
2000 1999 1998
Average Average Average Average Average Average
Balance Rate Balance Rate Balance Rate
------------------------------------------------------------------------------
(Dollars in thousands)
Interest-bearing deposits
Demand/MMDA accounts $ 67,844 5.97% $ 12,362 3.32% $ 11,437 3.36%
Savings $ 14,618 4.32% $ 22,943 4.51% 19,334 4.74%
Certificates of deposit 200,137 6.14% 180,764 5.31% 158,740 5.68%
-------- -------- --------
Total interest bearing deposits 282,599 6.01% 216,069 5.11% 189,511 5.44%
Non interest bearing deposits 16,407 - 16,541 - 13,565 -
Total average deposits $299,006 5.68% $232,610 4.74% $203,106 5.08%
======== ======== ========
14
The following table is a summary of time deposits of $100,000 or more by
remaining maturities at
December 31, 2000:
Amount Percent
------ -------
(Dollars in thousands)
Three months or less $3,157 47.22%
Three to twelve months 2,639 39.47%
Over twelve months 890 13.31%
------ -------
Total $6,686 100.00%
====== =======
Short Term Borrowings
The following table sets forth consolidated short term borrowings. These
borrowings represent advances to the Bank by the Federal Home Loan Bank of
Atlanta and are secured by Federal Home Loan Bank stock, investment securities
and first mortgage loans and federal funds purchased. During 2000, the Bank
purchased federal funds on an unsecured basis for up to thirty consecutive days
from a correspondent bank.
Years Ended December 31,
2000 1999 1998
---------------------------------------
(Dollars in thousands)
Balance at period end $ 7,546 $13,000 $ 2,000
Average balance during period $ 7,030 $ 7,289 $17,806
Average rate 6.37% 5.60% 5.65%
Maximum outstanding during period $23,246 $16,000 $46,420
Return on Equity and Assets
The following table sets forth ratios for the Company considered to be
significant indicators of the Company's profitability and financial condition
during the periods indicated:
Return in Equity and Assets
2000 1999 1998
---------------------------------------
Return on average assets 1.21% -0.25% 1.27%
Return on average equity 24.13% -3.90% 18.19%
Dividend payout ratio 26.92% -160.00% 21.24%
Average equity to average asset ratio 5.01% 6.51% 6.95%
Competition
The Bank operates in highly competitive environments, competing for
deposits and loans with major regional and national banks, as well as other
financial institutions, many of which have greater financial resources than the
15
Bank. Most maintain numerous banking locations and many perform services, such
as trust services, which the Bank does not offer. Many of these competitors have
higher lending limits than the Bank. The Bank emphasizes personal relationship
banking, service, and local management and decision making in its marketing
strategies. In addition, the Bank offers courier services and Internet banking
to its clients in an effort to overcome its limited number of physical
locations.
The Bank has contracted with a nationally recognized Internet Banking
software company to provide a secure, comprehensive Internet package to market
its products and service its clientele. This Internet branch
(www.resourcebankonline.com) provides customers with the ability to conduct
banking business via a personal computer or other secure browser-enabled device
24 hours per day. The Bank offers special deposit accounts through this Internet
branch, which features competitive interest rates and ready access to funds on
deposit. Online bill payment and a download capability for most personal
financial software packages are also included in this program.
Regulation and Supervision of Resource Bank
The Bank operates as a state chartered bank and is subject to supervision
and regulation by the Bureau of Financial Institutions ("BFI") of the Virginia
State Corporation Commission. As a member of the Federal Reserve System ("FRB"),
the Bank is also supervised and regularly examined by the FRB. The state and
federal banking laws and regulations govern virtually all areas of the Bank's
operations including maintenance of cash reserves, loans, mortgages, maintenance
of minimum capital, mergers, payment of dividends, establishment of branches and
other aspects of operations.
The deposits of the Bank are insured by the Federal Deposit Insurance
Corporation ("FDIC") which insures that member banks pay depositors to the
extent provided by law in the event an insured bank is closed without adequately
providing for the claims of depositors. The majority of the Bank's deposits are
subject to the deposit assessments of the Bank Insurance Fund ("BIF") of the
FDIC. A portion of the deposits of the Bank (those acquired as a result of the
merger with Eastern American) are subject to assessments imposed by the Savings
Association Insurance Funds ("SAIF") of the FDIC.
The earnings and growth of the banking industry are affected by the general
conditions of the economy and by the fiscal and monetary policies of the Federal
Government and its agencies, including the FRB. The Board of Governors regulates
money and credit conditions and, as a result, has a strong influence on interest
rates and on general economic conditions. The effect of such policies in the
future on the business and earnings of the Bank cannot be predicted with
certainty.
Regulation and Supervision of Resource Bankshares
General. As a bank holding company, Resource Bankshares is subject to state
and federal banking and bank holding company laws and regulations which impose
specific requirements or restrictions and provide for general regulatory
oversight with respect to virtually all aspects of its operations.
The Company is registered under the Bank Holding Company Act ("BHCA") and
is subject to regulation by the FRB. The FRB has jurisdiction under the BHCA to
approve any bank or non-bank acquisition, merger or consolidation proposed by a
bank holding company. The Company is required to file with the FRB periodic and
annual reports and other information concerning its own business operations and
those of its subsidiaries. In addition, the BHCA requires a bank holding company
to obtain FRB approval before it acquires, directly or indirectly, ownership or
control of any voting shares of a second or subsequent bank if, after such
acquisition, it would own or control more than 5% of such shares, unless it
already owns or controls a majority of such voting shares. FRB approval must
also be obtained before a bank holding company acquires all or substantially all
of the assets of another bank or merges or consolidates with another bank
holding company.
Unless it chooses to become a financial holding company, as further
described below, a bank holding company is prohibited under the BHCA, with
limited exceptions, from acquiring or obtaining direct or indirect ownership or
16
control of more than 5% of the voting shares of any company which is not a bank,
or from engaging in any activities other than those of banking or of managing
or controlling banks or furnishing services to or performing services for its
subsidiaries. One of the exceptions to these prohibitions permits a bank holding
company to engage in, or acquire an interest in a company which engages in
activities which, after due notice and opportunity for hearing, the FRB by
regulation or order has determined are so closely related to banking or of
managing or controlling banks as to be a proper incident thereto. In making such
a determination, the FRB is required to consider whether the performance of such
activities can reasonably be expected to produce benefits to the public, such as
convenience, increased competition or gains in efficiency, which outweigh
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interest or unsound banking practices. The FRB
is also empowered to differentiate between activities commenced de novo and
activities commenced by the acquisition, in whole or in part, of a going
concern. Some of the activities that the FRB has determined by regulation to be
closely related to banking include servicing loans, performing certain data
processing services, acting as a fiduciary, investment or financial advisor, and
making investments in corporations or projects designed primarily to promote
community welfare.
A bank holding company may not, without providing prior notice to the FRB,
purchase or redeem its own stock if the gross consideration to be paid, when
added to the net consideration paid by the company for all purchases or
redemptions by the Company of its equity securities within the preceding 12
months, will equal 10% or more of the Company's consolidated net worth unless it
meets the requirements of a well-capitalized and well-managed organization.
The Company is subject to various federal securities laws and is required
to make certain periodic filings with the Securities and Exchange Commission
("SEC") as well as file certain reports on the occurrence of certain material
events. The Company files quarterly, annual and current reports with the SEC. In
addition, directors, officers and certain shareholders and senior management are
subject to further reporting requirements including obligations to submit to the
SEC reports of beneficial ownership of the Company's securities.
Financial Holding Companies. Effective March 11, 2000, pursuant to
authority granted under the Gramm-Leach-Bliley Act, a bank holding company may
elect to become a financial holding company and thereby engage in a broader
range of financial and other activities than are permissible for traditional
bank holding companies. In order to qualify for the election, all of the
depository institution subsidiaries of the bank holding company must be well
capitalized and well managed, as defined by regulation, and all of its
depository institution subsidiaries must have achieved a rating of satisfactory
or better with respect to meeting community credit needs.
Pursuant to the Gramm-Leach-Bliley Act, financial holding companies will be
permitted to engage in activities that are "financial in nature" or incidental
or complementary thereto, as determined by the FRB. The Gramm-Leach-Bliley Act
identifies several activities as "financial in nature," including, among others,
insurance underwriting and agency, investment advisory services, merchant
banking and underwriting, and dealing or making a market in securities. Being
designated a financial holding company will allow insurance companies,
securities brokers and other types of financial companies to affiliate with
and/or acquire depository institutions. At this time, the Company does not
intend to become a "financial holding company".
Employees
At December 31, 2000 the Company had 198 full time and 8 part time
employees, in its banking and mortgage operations. None of its employees is
represented by any collective bargaining unit, and the Company believes
relations with its employees are good.
Executive Officers
Lawrence N. Smith, joined the Bank in December 1992 and served as its
President and Chief Executive Officer until December 1998. He currently serves
as Chief Executive Officer of the Bank, and President and Chief Executive
Officer of the Company. Mr. Smith has over 19 years of experience with United
17
Virginia Bank/Seaboard National and United Virginia Banks - Eastern Region,
predecessor of Crestar Bank - Eastern Region ("Crestar"). From 1973 until May
1983, Mr. Smith was President of Crestar and also served on major committees of
the holding company, United Virginia Bankshares, Inc., predecessor of Crestar
Bankshares, Inc. He retired from Crestar in May 1983. Mr. Smith formed Essex
Financial Group, Inc. a financial holding company in May 1983. Mr. Smith serves
on the board of directors of Heilig-Meyers Corporation, a national furniture
retailer and Empire Machinery and Supply corporation, a Norfolk based supplier
of industrial products, and has been active in civic affairs for the past 30
years.
T. A. Grell, Jr., has been President and Chief Operating Officer of the
Bank, Executive Vice President of the Company since December 1998, and a
director of the Company since October 2000. From 1984 until joining the Company,
he was a senior officer at Central Fidelity Bank, which was later acquired by
Wachovia Bank. He has 29 years experience in the banking industry and is active
in civic affairs.
Harvard R. Birdsong II, has been senior vice president of the Company since
December 1998 and senior vice president and chief credit officer of the Bank
since January 1997. Prior to joining the Bank, he was a senior credit officer at
Essex Savings Bank, where he was employed from 1984 through 1996. He has been
employed in the banking industry for 30 years and is active in civic affairs.
Debra C. Dyckman has been senior vice president of operations and secretary
of the Bank since 1992 and of the Company since its inception. She has been in
banking for 30 years and serves on the Board of Trustees of Cape Henry
Collegiate School.
Eleanor J. Whitehurst has been senior vice president and Chief Financial
Officer of the Bank since 1992 and of the Company since its inception. She has
more than 30 years experience in the banking industry in the Hampton Roads,
Virginia area.
Item 2. Properties
- ------- ----------
The Company leases its banking and mortgage origination offices. Leases
covering the banking operations are long term with renewal provisions designed
to assure the Bank that it will be able to operate in the facilities for the
foreseeable future. Details of the Bank's leases may be reviewed in Note 12 of
the Notes to Consolidated Financial Statements. The Bank purchased a four acre
lot in Herndon, Virginia in December 1997 for future construction of a Northern
Virginia regional office which will accommodate the Bank's administration and
branch offices that are currently located in Herndon. Construction began during
2000 with completion anticipated in 2001. During the third quarter 2000, the
Bank sold a portion of this property.
Item 3. Legal Proceedings
- ------- -----------------
On November 5, 1999, AGM Development Corporation ("AGM"), Michael Agnew and
Barbara M. Agnew (collectively the "Agnews") (AGM and the Agnews collectively
the "Plaintiffs") filed a lawsuit against Resource Bank, the Company's wholly
owned banking subsidiary ("Bank"), in the Circuit Court for the City of Virginia
Beach, Virginia ("Court"). AGM and the Agnews are the borrowers and guarantors
under certain loans which the Bank declared in default in August 1999
("Defaulted Loans"). For a detailed discussion of this loan default, see "Part
II. Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations."
The lawsuit alleged that the Bank did not act in a commercially reasonable
manner when it seized and liquidated certain collateral that secured the
Defaulted Loans. In connection with this allegation, the Plaintiffs sought a
declaratory judgment that all obligations of the Plaintiffs to the Bank were
satisfied and that the Bank is not entitled to seek deficiency judgments against
the Plaintiffs. Based on advice of counsel, management does not believe that
the relief sought by the Plaintiffs will be granted by the Court, and to date it
has not.
The lawsuit also alleged that the Bank's proposed public auction of the
stock of a privately held company was not commercially reasonable. The stock
was owned by the Agnews individually, but was pledged by the Agnews to the Bank
as collateral for the Defaulted Loans. The lawsuit asked the Court to enjoin
18
the public auction that was scheduled on November 9, 1999. No injunction was
granted. The public auction occurred as scheduled on November 9, 1999 and the
Bank bid for and purchased the stock on that date. Based on advice of counsel,
management believes that the public auction was conducted in accordance with
applicable law.
Thereafter, AGM and the Agnews amended the lawsuit and generally sought a
declaration from the Court that certain actions taken by the Bank in pursuing
liquidation of its various collateral were done so contrary to the requirements
of the Uniform Commercial Code of Virginia such that they were released from any
liability on the various indebtednesses they owe the Bank. The amended pleading
also requested unspecified monetary damages. The Bank filed a Cross-Bill seeking
judgment against AGM and the Agnews in the amount of approximately $3,500,000
under the Notes and the Guaranty as well as for fraud. AGM and the Agnews have
denied liability thereunder. No trial date has been set.
The Company and the Bank intend to vigorously defend all allegations made
by the Plaintiffs in the lawsuit. The Company does not believe that the lawsuit
will have a material adverse effect on the Company's business, financial
condition or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
No matters were submitted to the Company's shareholders for a vote during
the fourth quarter of 2000.
19
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
- ------- --------------------------------------------------------------------
The Company's common stock is listed on the Nasdaq National Market
("Nasdaq/NM") under the symbol "RBKV". Prior to December 15, 2000, the Company's
common stock was listed on the American Stock Exchange ("Amex") under the symbol
"RBV". The high and low closing sales prices of the Company's common stock
during 2000 and 1999, and information concerning dividends paid on the Company's
common stock are set forth in the following table.
Cash Dividend
Nasdaq /NM 2000 High Low Paid
Fourth Quarter (December 15 - 31) $11.00 $10.13 -
Amex 2000
Fourth Quarter (October 1 - December 14) 10.94 9.63 $0.12
Third Quarter 10.00 7.88 .10
Second Quarter 10.63 8.63 .10
First Quarter 12.63 8.63 .10
Amex 1999
Fourth Quarter $15.25 $ 8.50 $0.10
Third Quarter 19.38 14.63 .10
Second Quarter 22.13 19.00 .10
First Quarter 22.50 17.25 .06
The Company's 2,615,214 common shares outstanding were held by approximately 800
shareholders of record at February 23, 2001.
On June 14, 2000, the Bank acquired all of the outstanding capital stock of
CW and Company of Virginia ("CW and Company") from two individuals. For purposes
of the transaction, CW and Company's outstanding stock was valued at $510,000.
As part of the transaction, the Company issued to CW and Company's shareholders
an aggregate of 56,792 shares of the Company's common stock (collectively the
"Shares"). The Shares were issued in a private placement exempt from
registration under the Securities Act of 1933 ("Securities Act") promulgated
under the Securities Act.
20
Item 6. Selected Consolidated Financial Data
- ------- ------------------------------------
The following consolidated summary sets forth selected financial data for
the Company and its subsidiaries for the periods and at the dates indicated.
The following summary is qualified in its entirety by the Company's financial
statements included as part of this Form 10-K.
Years Ended December 31
2000 1999 1998 1997 1996
Income Statement Data: (Dollars in thousands, except per share data)
Gross interest income................. $ 28,413 $ 21,381 $ 19,746 $ 10,937 $ 8,295
Gross interest expense................ 18,975 12,435 11,336 5,983 4,690
Net interest income................... 9,437 8,946 8,410 4,954 3,605
Provision for loan losses............. 1,100 4,667 150 155 290
Net interest income after provision
for loan losses..................... 8,337 4,279 8,260 4,799 3,315
Non-interest income................... 11,890 6,811 7,943 4,520 2.755
Non-interest expense.................. 14,109 12,168 11,565 6,533 4,451
Income before income taxes............ 6,118 (1,078) 4,638 2,786 1,619
Income taxes (benefit)................ 1,886 (387) 1,591 965 153
Net income (loss)..................... 4,233 (691) 3,047 1,821 1,466
Per Share Data (1):
Net income (2)........................ $ 1.63 $ (.27) $ 1.24 $ 0.92 $ 0.79
Cash dividends paid................... .42 .40 .24 0.125 0.05
Book value at period end.............. 7.50 6.25 7.18 6.36 4.47
Tangible book value at period end..... 7.47 6.25 7.18 6.36 4.47
Period-End Balance Sheet Data:
Total assets.......................... $404,494 $306,690 $233,460 $209,330 $115,836
Total loans (net of unearned income).. 288,513 255,671 188,522 150,590 81,975
Total deposits........................ 330,645 260,469 206,219 169,508 99,179
Long-term debt........................ 30,300 14,500 5,300 7,300 -
Stockholders' equity.................. 19,672 15,870 17,789 15,602 8,655
Performance Ratios
Return (loss) on average assets..... 1.21% (.25)% 1.27% 1.40% 1.45%
Return (loss) on average
stockholders' equity................ 24.13% (3.90)% 18.19% 18.59% 20.46%
Average stockholders' equity to
average total assets................ 5.01% 6.51% 6.96% 7.54% 7.10%
Net interest margin (3)............... 2.92% 3.42% 3.62% 3.90% 3.70%
Earnings to fixed charges
Excluding interest expense.......... 4.03x .24x 5.55x 10.32x 17.52x
Including interest expense.......... 1.32x .91x 1.41x 1.46x 1.34x
Asset Quality Ratios
Net charge-offs to average loans...... .10% 2.06% .13% 0.02% 0.15%
Allowance to period-end loans......... 1.22% 1.04% 1.33% 1.71% 1.27%
Allowance to nonperforming loans...... 263.75% 361.51% 264.55% 58.50% 247.03%
Non-accrual loans to loans............ 0.35% 0.19% 0.28% 2.03% 0.06%
Nonperforming assets to loans and
foreclosed properties............... 0.46% 0.30% 0.84% 3.36% 0.57%
Risk-based capital ratios
Tier 1 capital........................ 8.74% 8.20% 9.23% 9.69% 10.22%
Total capital......................... 10 .75% 9.24% 10 .48% 10.93% 11.45%
Leverage capital ratio.................. 6.69% 7.19% 7.52% 9.67% 7.04%
Total equity to total assets............ 4.86% 5.17% 7.62% 7.45% 7.47%
21
___________________
(1) All per share figures have been adjusted to reflect a two-for-one stock
split on July 1, 1998.
(2) Net income per share is computed using the weighted average outstanding
shares.
(3) Net interest margin is calculated as tax-equivalent net interest income
divided by average earning assets and represents the Company's
net yield on its earning assets.
22
Item 7. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations
----------------------
In addition to historical information, the following discussion contains
forward looking statements that are subject to risks and uncertainties that
could cause the Company's actual results to differ materially from those
anticipated. These forward looking statements include, but are not limited to,
the effect of interest rates on the Company's profitability, and the adequacy of
the Company's allowance for future loan losses. Several factors, including the
Virginia and national economies and the demand for residential mortgage loans
may adversely affect the Company's ability to achieve expected results. Readers
are cautioned not to place undue reliance on these forward looking statements,
which reflect management's analysis only as of the date of this Report.
The following discussion should be read in conjunction with the Financial
Statements and Notes thereto included as Exhibit 99.1 of this Form 10-K.
Results of Operations and Financial Condition
The Company had net income of $4,232,700 for 2000, a net loss of $690,800 for
1999 and net income of $3,046,800 for 1998. This constituted net basic earnings
(loss) per common share of $1.63 for 2000, $(.27) for 1999 and $1.24 for 1998.
With the diluted effect of common stock equivalents, earnings (loss) per common
share were $1.56 for 2000, $(.27) for 1999 and $1.13 for 1998. The loss for the
year ended December 31, 1999 was directly attributable to the $4,667,000
provision for loan losses taken in the third quarter. This provision for loan
loss occurred as a result of credit problems with a significant borrower within
the Company's asset based lending portfolio, as announced by the Company in
August 1999. The Company has exited the asset based lending business, which
represented only 5% of the Company's total loan portfolio.
In regard to business segment reporting, the Company's mortgage banking
operations resulted in a net gain before taxes of $673,990 for the year ended
December 31, 2000 and a net loss before income taxes of $418,897 for the year
ended December 31, 1999, as compared to net income before income taxes of
$661,187 for the year ended December 31, 1998. The operating loss in 1999 was
the result of the reorganization of the mortgage division and decreased loan
origination volume, caused by a general increase in interest rates and the
reorganization of the mortgage operation in 1999.
At December 31, 2000, 41.5% of total loans were due in one year or less.
Floating rate loans with maturities of one year or less represented 37.4% of
total loans, and the remainder of loans had fixed rates.
Average loans, net of unearned income, to average deposits were 88.0%, 93.6%
and 82.8% in 2000, 1999 and 1998, respectively.
Net Interest Income
Net interest income, before provision for loan losses, increased by 5.5% in
2000 over 1999 to $9,437,497 and 6.4% in 1999 over 1998 to $8,945,660. The 2000
increase in net interest income was closely proportionate with the increase in
average earning assets and interest bearing liabilities during 2000. During
2000, due to the continued expansion of commercial lending activities, average
loans increased 20.9% to $263,110,093. Due to the competitive pricing of the
Company's deposit products, average total deposits increased 28.5% to
$299,006,008. Average funds borrowed from the Federal Home Loan Bank and
correspondent banks increased by 56.9% to $19,624,634 in 2000. As part of its
mortgage banking operations, funds were advanced on behalf of investor banks in
settlement of mortgage loans. Average funds advanced in settlement of such
loans increased less than 1% to $16,227,150 in 2000. Average securities
increased 120.3% to $48,012,392 and average interest bearing deposits in other
banks increased 42.1% to $8,487,089 in 2000.
For a historical analysis of net interest income, see the table entitled
"Average Balances, Interest Income and Expenses, and Average Yields and Rates"
in Part I - Item 1. of this Form 10-K. For an analysis of the potential for a
change in interest rates to impact the ability of the Bank to generate future
23
net interest income, see the table entitled "Maturing or Repricing" in Part I -
Item 1. of this Form 10-K. This is frequently referred to as the GAP analysis,
which analyzes the difference between interest-sensitive assets and liabilities
for the repricing/maturity periods indicated. Refer to Item 7a for additional
information.
As can be seen from the historical analysis and the GAP analysis, the Company
is in a liability-sensitive position. In a period of rising interest rates,
the Company is positioned to increase future net interest income. Conversely,
in a period of declining interest rates the Company will be in a position to
have a decrease in future interest income. This managed GAP does not include
the impact of mortgage banking loan volume which provides a natural hedge
against this GAP position. Mortgage banking income tends to increase in times of
lower or declining interest rates, as refinancing effectively leads to an
increase in mortgage loan originations. In a climate of higher or rising
interest rates, mortgage loan originations, particularly refinancing, decrease
and mortgage banking income therefore decreases.
Allowance for Loan Losses
The ratio of net loans charged off to average loans outstanding was .10% in
2000, 2.06% in 1999 and 0.13% in 1998. The allowance for loan losses as a
percentage of loans at year end was 1.22%, 1.05% and 1.33% at December 31,
2000, 1999 and 1998, respectively. The level of non-performing loans at year
end was $1,335,000, $743,000 and 945,000 at December 31, 2000, 1999 and 1998, or
0.46%, 0.29% and 0.50% of total loans, respectively.
Management made a provision for loan loss of $1,100,000 in 2000, $4,667,000 in
1999 and $150,000 in 1998. The significant increase in the provision for
loan loss in 1999 over previous years was the result of the previously noted
credit problems encountered within the Company's asset based lending program.
Such credit quality problems were exclusively related to this business unit, and
the Company exited this program.
In establishing the allowance for loan losses, management considers a number
of factors, including loan asset quality, related collateral and economic
conditions prevailing during the loan's repayment. In its loan policies,
management has emphasized the borrower's ability to service the debt, the
borrower's general creditworthiness and the quality of collateral.
While management believes that the allowance is sufficient for the existing
loan portfolio, there can be no assurances that an additional allowance for
losses on existing loans may not be necessary in the future, particularly if
economic conditions within the Company's market areas were to deteriorate.
Potential Problem Loans
At December 31, 2000, the Company had $1,015,000 in non-accrual loans, an
increase of 114.6% from December 31, 1999. Non-accrual loans consist of eleven
individual credits and the total is less than one half of one percent of total
loans. The Company had $320,000 in loans past due 90 days or more that were
still accruing at December 31, 2000. Loans past due 90 days or more and still
accruing are well secured and in the process of collection. In addition to
loans on either non-accrual status or loans past due 90 days or more and still
accruing, management had identified $2,350,000 of loans that have been
internally classified. These loans require more than normal attention and are
potentially problem loans.
For the historical analysis of the Bank's loan loss experience, see the table
entitled "Loan Loss Experience" in Part I - Item 1. of this Form 10-K.
Non-interest Income and Non-interest Expenses
Non-interest income in 2000 was $11,890,068 up 74.6% from $6,811,342 in 1999.
During the third quarter of 2000, the Company sold a banking branch in Reston,
Virginia, for a gain of $2,532,260, as well as the furniture and equipment
associated with the branch, for a gain of $529,938. Also during the same
quarter, the Company sold a parcel of real estate acquired with the property on
24
which the Bank is building its Northern Virginia headquarters, for a gain of
$619,755. Excluding nonrecurring transactions, non-interest income in 2000
would have been $8,208,015, up 20.5% over 1999. Non-interest income decreased
in 1999 by 14.3% over 1998, due to the lower income derived from mortgage
banking operations. Increases in market interest rates in 1999 caused a decline
in the residential mortgage market volume and a resultant decrease of the
Company's mortgage banking income of 19.2% to $5,709,225. Because of the
uncertainty of future loan origination volume and the future level of interest
rates, the Company may experience reductions in mortgage banking income in
future periods. Service charge income decreased (3.8%) to $731,473 and (0.2%)
to $759,289 in 2000 and 1999, respectively and increased 85.8% to $760,581 in
1998, stemming from the increased volume of deposit activity after the merger
transaction with Eastern American Bank in late 1997.
Total non-interest expense was $14,109,146 in 2000, an increase of 16.0% from
$12,167,768 in 1999 and an increase of 5.2% from $11,565,616 in 1998. Non-
interest expense increased in 2000 over 1999 as a result of adding a full
service banking operation in Newport News during the first quarter of 2000 and
establishing loan production offices in Newport News and Richmond, as well as
absorbing expenses associated with the offering of online banking services.
Non-interest expense increased in 1999 over 1998 as the result of adding a
full service banking operation in Chesapeake and a loan office in Newport News,
Virginia, as well as incurring expenses specifically related to the previously
noted disposition of the credit problems encountered in the asset based lending
program. Non-interest expense increased in 1998 by 77.0% over 1997, as the
result of the merger with Eastern American Bank. The largest component of non-
interest expense, salaries and employee benefits, increased 19.8% in 2000 to
$8,071,927, and increased slightly (0.7%) in 1999 to $6,735,896, and by 65.7%
in 1998 over 1997 to $6,686,381. This category comprised 57.2% of the Company's
total non-interest expense in 2000, 55.4% in 1999 and 57.8% in 1998. Occupancy
expense increased to $1,211,649 in 2000 (up 2.2%), increased to $1,185,861 in
1999 (up 8.9%) over 1998 and by 90.7% in 1998 over 1997. Depreciation and
equipment maintenance expense increased by 5.4% in 2000 to $976,982, increased
by 22.0% in 1999 to $926,702, and 65.7% in 1998 over 1997. The 2000
depreciation and equipment maintenance expense increased as a result of the
opening of the Newport News banking branch and establishing loan production
offices in Newport News and Richmond. The 1998 increase resulted from the
merger with Eastern American Bank and a one-time data processing systems
conversion. Outside computer service expense increased by 6.9% in 2000 to
$518,982. In 1999 outside computer service expense decreased 11.3% to $485,458
and in 1998 outside computer service expense increased 125.3% to $547,160 as a
result of the merger and the previously mentioned systems conversion.
Professional fees decreased 16.1% in 2000 and increased significantly (110%) in
1999 to $340,821, as the result of the previously discussed credit problems in
the asset based lending program. Professional fees increased 34.6% in 1998 over
1997.
Federal Deposit Insurance Corporation ("FDIC") premiums increased 68.7% in
2000 to $98,062 and increased 10.6% to $58,125 in 1999, and by 322.3% to $52,580
in 1998 over 1997. As the result of the Eastern American Bank merger, FDIC
insurance premiums are assessed on the Bank's deposit base on a pro rata basis
whereby approximately 68 percent of the Bank's deposits are subject to Bank
Insurance Fund ("BIF") rates, and approximately 32 percent of deposits are
subject to Savings Association Insurance Fund ("SAIF") rates. This ratio of BIF
and SAIF assessment rates was established at the time of merger, based on the
relative sizes of the Bank and Eastern American Bank deposit bases at December
1, 1997.
Stationery and supplies expense decreased by 16.9% in 2000 to $412,683,
decreased 5.6% in 1999 to $496,814, after increasing by 78.0% in 1998, primarily
from the merger transaction. Marketing and business development increased by
18.7% to $475,778 in 2000, increased 16.8% in 1999 to $400,938, after increasing
by 67.3% in 1998.
Other non-interest expenses increased by 34.8% in 2000 to $2,009,363,
increased 5.3% in 1999 to $1,490,664 and increased 136.6% to $1,416,062 in
1998, primarily from the merger transaction. The increase in 2000 was due
primarily to a $500,000 write down in value of an other asset held by the
Company.
Income Taxes
Applicable income taxes on 2000 earnings amounted to $1,885,689, resulting in
an effective tax rate of 30.8%. This rate is lower as a result of the increase
25
in tax free municipals in the Bank's security portfolio. The income tax benefit
from the Company's 1999 loss was $386,958, resulting in an effective tax rate of
35.9%. Applicable income taxes on 1998 earnings amounted to $1,590,933,
resulting in an effective tax rate of 34.3% compared to 34.6% in 1997.
Liquidity
The Company's funding requirements are supplied from a range of traditional
sources, including various types of demand deposits, money market accounts,
certificates of deposit and short-term borrowings. Large certificates of
deposit accounted for 2.0% and 4.4% of total deposits at December 31, 2000 and
1999, respectively. Federal Home Loan Bank of Atlanta ("FHLB") advances were
also utilized as funding sources, with $30,300,000 and $18,300,000 in such
advances outstanding at December 31, 2000 and December 31, 1999, respectively.
Pursuant to the terms of a variable rate line of credit with the FHLB, the Bank
may borrow up to 18% of the Bank's assets. This FHLB credit facility has no
expiration date, but is re-evaluated periodically to determine the Bank's credit
worthiness. Additionally, the Bank has a warehouse line of credit
collateralized by first mortgage loans, amounting to $50,000,000 and is
renewable annually. As of December 31, 2000, there was no balance drawn from
this line of credit. Management has no reason to believe these arrangements
will not be renewed.
Management seeks to ensure adequate liquidity to fund loans and meet the
Company's financial requirements and opportunities. To provide liquidity for
current, ongoing and unanticipated needs, the Company maintains federal funds
sold, money market accounts and a portfolio of debt securities. The Company
also structures and monitors the flow of funds from debt securities and from
maturing loans. Securities are generally purchased to provide a source of
liquidity. At December 31, 2000, the Company had $18,317,479, fair market
value, in securities available-for-sale and $63,804,083, amortized cost, in
securities held-to-maturity. Unrealized holding gains and losses for available-
for-sale securities are excluded from earnings and reported as a net amount in a
separate component of stockholders' equity until realized. Securities are
composed of governmental or quasi-governmental agencies, and preferred stocks
and bonds of corporations with a credit rating no less than Bb . Net unrealized
depreciation, net of tax effect, on securities available-for-sale was (258,222)
and ($126,036) at December 31, 2000 and 1999, respectively. Federal funds
sold to correspondent institutions were $ 0 and $1,445,000 at year end 2000 and
1999, respectively.
The Company raised approximately $9,200,000 of additional capital in the first
quarter of 1999 by offering 368,000 Trust Preferred Securities at a price of
$25.00 per Security. The Securities feature a 9.25% coupon. The Company, in
turn, purchased $7,350,000 of non-cumulative 9.25% Preferred Stock issued by the
Bank during the course of 1999. This Preferred Stock will qualify as Tier 1
capital for the Bank for regulatory purposes. This additional Tier 1 capital
provided the Bank with an increased loans to one borrower limitation, and the
ability to continue to grow its balance sheet while maintaining its well
capitalized status. The Preferred Stock 9.25% coupon matches the coupon of the
Trust Preferred Securities. The remainder of funds generated by the Trust
Preferred Securities offering, estimated at $1,550,000 after offering expenses,
was invested in marketable securities and used by the Company in its stock
repurchase program. These marketable securities are held as available-for-sale
to meet liquidity needs. The Company's stock repurchase program was implemented
in part to help offset the potential dilutive effect of stock options granted to
the Company's management as employment recruitment and retention perquisites.
During 2000 and 1999, the Company repurchased 7,176 and 29,099 shares,
respectively.
Recent Accounting Pronouncements
In September 2000, the FASB issued Statement No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities."
Statement No. 140 replaces FASB Statement No. 125, and revises the standards for
accounting securitization and other transfers of financial assets and collateral
and requires certain additional disclosures. This Statement provides accounting
and reporting standards for transfers and servicing of financial assets and
extinguishment of liabilities. Those standards are based on consistent
application of financial-components approach that focuses on control. Under
that approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
distinguishes transfers of financial assets that are sales from transfers that
26
are secured borrowings. The disclosure requirement and collateral provisions of
FASB Statement No. 140 are effective for fiscal years ending after December 15,
2000, while the other provisions of the new standard apply prospectively to
transfers and servicing of financial assets and extinguishment of liabilities
occurring after March 31, 2001. The adoption of Statement No. 140 is not
expected to have a material effect on the Company's financial position or the
results of its operations.
Capital Resources and Adequacy
The Federal Reserve Board, the FDIC and the Office of Thrift Supervision have
issued substantially similar risk-based and leverage capital guidelines
applicable to banking organizations they supervise. Due to the Bank's
capitalization, it is classified as "well capitalized".
The Company's year-end capital-to-asset ratio was 4.86% at December 31, 2000
as compared to 5.17% at December 31, 1999.
The capital adequacy standards are based on an established minimum for Risk-
Based Capital, Tier 1 Risk-Based Capital and the Tier 1 Leverage Ratio.
The following table summarizes the Company's regulatory capital ratios at
December 31, 2000.
Resource Resource
Required Ratio Bankshares Bank
Tier 1 risk-based 4.00% 8.74% 8.87%
Total risk-based 8.00% 10.75% 10.04%
Tier 1 leverage 4.00 to 5.00% 6.69% 6.80%
The Company is in full compliance with all relevant regulatory capital
requirements.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
- -------- ----------------------------------------------------------
Management's methodology to measure interest rate sensitivity includes an
analysis of the potential gain or loss in future fair values of interest rate
sensitive instruments. The Company's analysis assumes a hypothetical 200 basis
point instantaneous and parallel shift in the yield curve in interest rates. A
present value computation is used in determining the effect of the hypothetical
interest rate changes on the fair value of its interest rate sensitive
instruments as of December 31, 2000. Computations of prospective effects of
hypothetical interest rate changes are based on many assumptions, including
relative levels of market interest rates, loan prepayments and deposit decay.
They should not be relied upon as indicative of actual results. Further, the
computations do not contemplate certain actions management could undertake in
response to changes in interest rates. Certain shortcomings are inherent in this
method of analysis. If market conditions vary from assumptions used in the
calculation of present value, actual values may differ from amounts disclosed.
However, if a hypothetical, parallel and instantaneous 200 basis point increase
and decrease were experienced, net fair values of interest sensitive instruments
would be decreased by $1,400,000 and decreased by $636,000, respectively.
This fair value analysis, performed for the Company by a third party vendor,
tends to overstate interest rate risk within the Company's balance sheet. The
analysis assigns the contractual long term maturity to mortgage loans within the
funds advanced for settlement account. Such loans are generally held by the
Company for less than 60 days, being pre-sold to third party purchasers when the
individual borrowers lock in their interest rates. This extension of loan terms
within this category of the Company's balance sheet increases interest rate risk
sensitivity calculated by the analysis.
27
The analysis also does not include a forecast of loan and deposit volume
changes due to the hypothetical 200 basis point interest rate change. In
addition, anticipated increased volume in the Company's mortgage banking
operation from a 200 basis point decrease in rates is not included in the
analysis. This expected volume increase in mortgage lending as the result of a
decline in interest rates would positively impact the Company's earnings.
The standard algebraic formula for calculating present value is utilized. The
calculation discounts the future cash flows of the Company's portfolio of
interest rate sensitive instruments to present value utilizing techniques
designed to approximate current market rates for securities, current offering
rates for loans, and the cost of alternative funding for the given maturity of
deposits, and then assumes a 200 basis point instantaneous and parallel shift in
these rates. The difference between these numbers represents the resulting
hypothetical change in the fair value of interest rate sensitive instruments.
Other significant assumptions used in the calculation include: (1) no growth
in volume (i.e., replacement of maturities in like instruments, with no change
in balance sheet mix); (2) constant market interest rates reflecting the average
rate from the last month of the given quarter; and (3) pricing spreads to market
rates derived from an historical analysis, or from assumptions by instrument
type.
The Company is not engaged in investment strategies involving derivative
financial instruments. Asset and liability management is conducted without the
use of forward-based contracts, options, swap agreements, or other synthetic
financial instruments.
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
The following financial statements are included in Exhibit 99.1 of this
Form 10-K.
Consolidated Balance Sheets - December 31, 2000 and 1999
Consolidated Statements of Income - Years ended December 31, 2000, 1999 and 1998
Consolidated Statements of Stockholders' Equity - Years ended December 31, 2000,
1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 2000, 1999
and 1998
Notes to Financial Statements - December 31, 2000, 1999 and 1998
Quarterly unaudited financial information is contained in Note 21 of the Notes
to Financial Statements.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------- ---------------------------------------------------------------
Financial Disclosure
--------------------
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
- -------- --------------------------------------------------
Item 11. Executive Compensation
- -------- ----------------------
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
In accordance with General Instruction G(3), the information called for in
Part III is incorporated by reference from the Company's Proxy Statement to be
filed no later than April 30, 2001 in connection with the Company's 2001 Annual
Meeting of Shareholders.
28
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports of Form 8-K
- -------- -----------------------------------------------------------------
(a) The following documents are filed as part of this report:
1. The following consolidated financial statements of the Company as of
December 31, 2000, 1999 and 1998 and for the years then ended, and the auditors'
report thereon are included in this Form 10-K as Exhibit 99.1:
Consolidated Financial Statements
Consolidated Balance Sheets - December 31, 2000 and 1999
Consolidated Statements of Income - Years Ended December 31, 2000, 1999 and 1998
Consolidated Statements of Stockholders' Equity - Years Ended December 31, 2000,
1999 and 1998
Consolidated Statements of Cash Flows - Years Ended December 31, 2000, 1999
and 1998
Notes to Consolidated Financial Statements
Report of Independent Auditors
2. Financial Statement Schedules - None.
3. The exhibits listed on the accompanying Exhibit Index are filed or
incorporated by reference as part of this Form 10-K and such Exhibit
Index is incorporated herein by reference.
(b) Reports on Form 8-K in quarter ended December 31, 2000: None
(c) The exhibits on the accompanying Exhibit Index are filed or
incorporated by reference as part of this Form 10-K and such Exhibit
Index is incorporated herein by reference.
(d) Financial Statements excluded from Annual Report pursuant to Rule
14a-3(b)- Not applicable.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the under-signed, thereunto duly
authorized.
RESOURCE BANKSHARES CORPORATION
/s/ Lawrence N. Smith
President and Chief Executive Officer
Date: 3/22/2001
/s/ Eleanor J. Whitehurst
Senior Vice President and Chief Financial Officer
Date: 3/22/2001
29
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Lawrence N. Smith and Thomas W. Hunt and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place, and
stead, in any and all capacities, to sign any and all amendments to this report,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
In accordance with Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Thomas W. Hunt Chairman of the Board
Thomas W. Hunt Date: 3/22/2001
/s/ Lawrence N. Smith President
Lawrence N. Smith Chief Executive Officer Date: 3/22/2001
(Principal Executive Officer)
Director
/s/ Eleanor J. Whitehurst Senior Vice President
Eleanor J. Whitehurst, Chief Financial Officer Date: 3/22/2001
(Principal Financial and
Accounting Officer)
/s/ Alfred E. Abiouness Director
Alfred E. Abiouness Date: 3/22/2001
/s/ T. A. Grell, Jr. Director
T.A. Grell, Jr. Date: 3/22/2001
/s/ Louis Ray Jones Director
Louis Ray Jones Date: 3/22/2001
/s/ Arthur Russell Kirk Director
Arthur Russell Kirk Date: 3/22/2001
/s/ Elizabeth A. Twohy Director
Elizabeth A. Twohy Date: 3/22/2001
30
Exhibit Index
Resource Bankshares Corporation
Exhibit No. Description
2.1 Amended and Restated Agreement and Plan of Merger, dated as of *
April 8, 1997 between Resource Bank and Eastern American Bank
FSB. (Incorporated by reference to Resource Bank's Proxy
Statement previously filed with the Federal Reserve on June 24,
1997.)
3.1 Amended and Restated Articles of Incorporation of Resource *
Bankshares Corporation. (Incorporated by reference to
Registrant's Form 10-Q previously filed with the Commission on
August 11, 2000.)
3.2 Bylaws of Resource Bankshares Corporation. (Incorporated by *
reference to Registrant's Form 8-K previously filed with the
Commission on July 1, 1998.)
4.1 Certificate of Trust of Resource Capital Trust I. (Incorporated *
by reference to the Registrant's Registration Statement on Form
S-2, Commission File No. 333-70361, previously filed with the
Commission on January 8, 1999.)
4.2 Trust Agreement dated December 23, 1998 between Resource *
Bankshares Corporation and Wilmington Trust Company.
(Incorporated by reference to the Registrant's Registration
Statement on Form S-2, Commission File No. 333-70361, previously
filed with the Commission on January 8, 1999.)
4.3 Form of Amended and Restated Declaration of Trust for Resource *
Capital Trust I. (Incorporated by reference to the Registrant's
Registration Statement on Form S-2, Commission File No.
333-70361, previously filed with the Commission on January 8,
1999.)
4.4 Form of Junior Subordinated Indenture between Resource Bankshares *
Corporation and Wilmington Trust Company, as Trustee.
(Incorporated by reference to the Registrant's Registration
Statement on Form S-2, Commission File No. 333-70361, previously
filed with the Commission on January 8, 1999.)
4.5 Form of Capital Security (included in Exhibit 4.3 above). *
(Incorporated by reference to the Registrant's Registration
Statement on Form S-2, Commission File No. 333-70361, previously
filed with the Commission on January 8, 1999.)
4.6 Form of Junior Subordinated Debt Security (included in Exhibit *
4.4 above). (Incorporated by reference to the Registrant's
Registration Statement on Form S-2, Commission File No.
333-70361, previously filed with the Commission on January 8,
1999.)
31
4.7 Form of Guarantee Agreement with respect to Trust Securities *
issued by Resource Capital Trust I. (Incorporated by reference to
the Registrant's Registration Statement on Form S-2, Commission
File No. 333-70361, previously filed with the Commission on
January 8, 1999.)
4.8 Form of Escrow Agreement among McKinnon & Company, Inc., Resource *
Capital Trust I, Resource Bankshares Corporation and Wilmington
Trust Company. (Incorporated by reference to the Registrant's
Registration Statement on Form S-2, Commission File No.
333-70361, previously filed with the Commission on January 8,
1999.)
10.1 Director's Stock Option Agreement dated June 15, 1989. *
(Incorporated by reference to Registrant's Form 10-KSB previously
filed with the Federal Reserve on April 28, 1993.)
10.2 Non-Employee Director Incentive Stock Option Plan dated June 15, *
1989. (Incorporated by reference to Registrant's Form 10-KSB
previously filed with the Federal Reserve on April 28, 1993.)
10.3 Lease Agreement dated November 1, 1990 by and between Birchwood *
Mall Associates and Resource Bank and letter dated November 12,
1992 from Resource Bank to Fleder, Caplan, Jaffee Associates to
amend the lease. (Incorporated by reference to Registrant's Form
10-KSB previously filed with the Federal Reserve on April 28,
1993.)
10.4 Resource Bank 1993 Long-Term Incentive Plan. (Incorporated by *
reference to Registrant's Form 10-KSB previously filed with the
Federal Reserve on March 22, 1994.)
10.5 Resource Bank 1993 Long-Term Incentive Plan, First Amendment. *
(Incorporated by reference to Registrant's Form 10-KSB previously
filed with the Federal Reserve on March 30, 1995.)
10.6 Lease Agreement dated September 22, 1994 by and between Resource *
Mortgage and A.R. Marketing, Inc. (Incorporated by reference to
Registrant's Form 10-KSB previously filed with the Federal
Reserve on March 30, 1995.)
10.7 Assignment of Lease dated February 28, 1994 with Resource *
Mortgage to Contract Publishing, Inc. (Incorporated by reference
to Registrant's Form 10-KSB previously filed with the Federal
Reserve on March 30, 1995.)
10.8 Resource Bank 1994 Long-Term Incentive Plan. (Incorporated by
reference to Registrant's Form 10-KSB previously filed with the
Federal Reserve on March 30, 1995.)
32
10.9 Lease Agreement and Addendum to Lease both dated April 20, 1995, *
and First Lease Amendment dated December 13, 1995 to Lease by and
between Glen Forst Professional Center Associates and Resource
Bank. (Incorporated by reference to Registrant's Form 10-KSB
previously filed with the Federal Reserve on March 20, 1996.)
10.10 Lease Agreement dated April 1, 1994 by and between Whooping Crane *
Limited Partnership and Southern Mortgage Financial Company.
(Incorporated by reference to Registrant's Form 10-KSB previously
filed with the Federal Reserve on March 20, 1996.)
10.11 Resource Bank Retirement Savings Plan. (Incorporated by *
reference to Registrant's Form 10-KSB previously filed with the
Federal Reserve on March 20, 1996.)
10.12 Resource Bank 1993 Long-Term Incentive Plan, Second Amendment. *
(Incorporated by reference to Registrant's Form 10-KSB previously
filed with the Federal Reserve on March 31, 1997.)
10.13 Lease Agreement and Addendum to Lease both dated May 1, 1996 by *
and between Birchwood Mall Associates and Resource Bank.
(Incorporated by reference to Registrant's Form 10-KSB previously
filed with the Federal Reserve on March 31, 1997.)
10.14 Resource Bank 1994 Long-Term Incentive Plan, First Amendment. *
(Incorporated by reference to Registrant's Form 10-KSB previously
filed with the Federal Reserve on March 31, 1997.)
10.15 Resource Bank 1996 Long-Term Incentive Plan, Amended and
Restated. (Incorporated by reference to Registrant's Form 10-KSB
previously filed with the Federal Reserve on March 31, 1998.)
10.16 Lease Agreement dated July 22, 1997 by and between Washington *
Real Estate Investment Trust and Resource Bank. (Incorporated by
reference to Registrant's Form 10-KSB previously filed with the
Federal Reserve on March 31, 1998.)
10.17 Lease Agreement dated July 19, 1993 by and between Reston North *
Point Village Limited Partnership and Eastern American Bank, FSB.
(Incorporated by reference to Registrant's Form 10-KSB previously
filed with the Federal Reserve on March 31, 1998.)
10.18 Lease Agreement dated July 18, 1995 by and between The Richmond *
Corporation and Eastern American Bank, FSB. (Incorporated by
reference to Registrant's Form 10-KSB previously filed with the
Federal Reserve on March 31, 1998.)
33
10.19 Lease Agreement dated October 31, 1995 by and between Elden *
Investments, L.L.C. and Eastern American Bank, FSB.
(Incorporated by reference to Registrant's Form 10-KSB previously
filed with the Federal Reserve on March 31, 1998)
10.20 Lease Agreement dated October 24, 1994 by and between Greenbrier *
Point Partners, L.P. and CitizensBanc Mortgage Company and
Assignment, Assumption and Release Agreement dated January 7,
1997 among Citizens Mortgage Company, Resource Bank and
Greenbrier Point Partners, L.P. (Incorporated by reference to
Registrant's Form 10-KSB previously filed with the Federal
Reserve on March 31, 1998.)
10.21 Lease Agreement dated December 5, 1996 and Amendment dated August *
5, 1997 by and between The Bon Air Green Company and Resource
Bank. (Incorporated by reference to Registrant's Form 10-KSB
previously filed with the Federal Reserve on March 31, 1998.)
10.22 Employment Agreement dated January 1 , 1999 by and between *
Resource Bank and T. A. Grell, Jr. (Incorporated by reference to
Registrant's Form 10-K previously filed with the Securities &
Exchange Commission on March 31, 1999)
10.23 Employment Agreement dated January 1, 1999, by and between *
Resource Bank and Harvard R. Birdsong, as amended. (Incorporated
by reference to Registrant's Form 10-Q previously filed with the
Securities & Exchange Commission on August 16, 1999)
10.24 Employment Agreement dated January 1, 1999, by and between *
Resource Bank and Debra C. Dyckman, as amended. (Incorporated by
reference to Registrant's Form 10-Q previously filed with the
Securities & Exchange Commission on August 16, 1999)
10.25 Employment Agreement dated January 1, 1999, by and between *
Resource Bank and Lawrence N. Smith, as amended. (Incorporated by
reference to Registrant's Form 10-Q previously filed with the
Securities & Exchange Commission on August 16, 1999)
10.26 Employment Agreement dated January 1, 1999, by and between *
Resource Bank and Eleanor J. Whitehurst, as amended.
(Incorporated by reference to Registrant's Form 10-Q previously
filed with the Securities & Exchange Commission on August 16,
1999)
10.27 First Amendment to Employment Agreement dated January 1, 1999, by *
and between Resource Bank and T.A. Grell, Jr. (Incorporated by
reference to Registrant's Form 10-Q previously filed with the
Securities & Exchange Commission on August 16, 1999)
**21.1 Subsidiaries of Registrant.
**23.1 Consent of Goodman & Company, L.L.P.
34
**24.1 Powers of Attorney (included on signature page)
**99.1 Consolidated Financial Statements
* Not filed herewith; incorporated by reference.
** Filed herewith.
35