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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, 1999
[ ] 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 March 14, 2000 as reported in The
Wall Street Journal, was $19,943,030. 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 March 3,
2000:2,555,579.
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 29, 2000, in connection with the Company's 2000
Annual Meeting of Shareholders.
TABLE OF CONTENTS
PART I ......................................................................... 3
Item 1. Business .......................................................3
Item 2. Properties ...................................................17
Item 3. Legal Proceedings .............................................17
Item 4. Submission of Matters to a Vote of Security Holders ...........18
PART II ........................................................................ 19
Item 5. Market for Registrants Common Stock and
Related Stockholder Matters........................ 19
Item 6. Selected Consolidated Financial Data ................... 20
Item 7. Management's Discussion and Analysis of
Financial Condition
and Results of Operations ......................... 22
Item 7a. Quantitative and Qualitative Disclosures
about Market Risk ................................ 26
Item 8. Financial Statements and Supplementary Data ................ 27
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure ............ 27
PART III....................................................................... 27
Item 10. Directors and Executive Officers of the Registrant ......... 27
Item 11. Executive Compensation ..................................... 27
Item 12. Security Ownership of Certain Beneficial Owners
and Management ................................... 28
Item 13. Certain Relationships and Related Transactions ............ 28
PART IV ....................................................................... 28
Item 14. Exhibits, Financial Statements, Schedules and
Reports of Form 8-K ............................... 28
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 increasing 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 a
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 five full service banking offices - one each in
Virginia Beach, Chesapeake, Newport News, Herndon and Reston, Virginia. The
Herndon and Reston branches were acquired in December 1997 when Eastern American
Bank, FSB (Eastern American) merged with the Bank. All bank branches now 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 south Hampton Roads
in southeast Virginia, and Fairfax County in northern Virginia. 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 four in loan volume (29 loans totaling $5.9 million) in the
Richmond district in fiscal year 1999.
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 1999, the Bank originated and sold mortgage loans in excess of
3
$286 million. The mortgage division originates loans from the four bank
locations as well as from its mortgage offices in Virginia Beach, Richmond,
Chesapeake, Reston, 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.
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
----------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
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 $ 21,791 1,468 6.74% $ 12,386 $ 712 5.75% $ 15,935 $ 1,009 6.33%
Loans(3) 217,598 18,072 8.31% 168,271 15,352 9.12% 93,839 8,316 8.86%
Interest bearing
deposits in
other banks 5,974 293 4.90% 11,870 623 5.25% 4,127 232 5.62%
Other earning assets (4) 16,118 1,548 9.60% 39,934 3,059 7.66% 13,153 1,380 10.49%
------ ----- ----- ------ ----- ----- ------ ----- ------
Total interest earning
assets 261,481 21,381 8.18% 232,471 19,746 8.49% 127,054 10,937 8.61%
Non-interest earning
assets:
Cash and due
from banks 4,280 3,027 1,700
Premises and
equipment 3,717 3,286 965
Other assets 5,644 4,669 1,480
Less: Allowance
for loan losses (2,606) (2,775) (1,252)
------- ------- -------
Total non-interest earning
assets 11,035 8,207 2,893
------- ------ -------
Total Assets $272,516 $240,668 $129,947
======== ======== ========
Liabilities and Stockholders'
Equity
Interest Bearing
Liabilities:
Interest bearing
deposits:
Demand/MMDA accounts $ 12,362 410 3.32% $11,437 384 3.36% 8,543 285 3.34%
Savings 22,943 1,034 4.51% 19,334 916 4.74% 2,289 93 4.06%
Certificates of deposit 180,764 9,593 5.31% 158,740 9,016 5.68% 6,370 5,318 5.52%
------- ----- ----- ------- ----- ----- ------ ----- -----
Total interest bearing
deposits 216,069 11,037 5.11% 189,511 10,316 5.44% 107,202 5,696 5.31%
FHLB advances and other
borrowings 12,506 697 5.57% 17,806 1,020 5.73% 4,959 287 5.79%
Capital debt securities 7,528 702 9.33% - - - - - -
Total interest bearing
liabilities 236,103 12,436 5.27% 207,317 11,336 5.47% 112,161 5,983 5.33%
Non-interest bearing liabilities:
Demand deposits 16,541 13,595 6,898
Other liabilities 2,139 3,037 1,090
------ ------- ------
18,680 16,602 7,988
Total liabilities
Stockholders' equity 17,733 16,749 9,798
Total liabilities and
stockholders' equity $272,516 $240,668 $129,947
======== ======== ========
Interest spread (5) 2.91% 3.02% 3.28%
Net interest income/net
interest margin (6) $8,945 3.42% $ 8,410 3.62% $4,954 3.90%
====== ====== ======
(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.
5
(3) Non-accrual loans are included in the average loan balances, and
income on such loans is recognized on a cash basis.
(4) Consists of funds advanced in settlement of loans.
(5) Interest spread is the average yield earned on earning assets, less the
average rate incurred on interest bearing liabilities.
(6) 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, 1999, net interest income was $8.95
million, an increase of approximately $536 thousand, or 6.4% over $8.41 million
for the same period in 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.
Net interest income for the year-ended December 31, 1998 increased 69.8%,
or $3.46 million over 1997. Average interest earning assets increased $105.4
million from 1997 to 1998 while average interest bearing liabilities increased
$95.2 million. The yield on average interest earning assets for the year ended
December 31, 1998 was 8.49% compared with 8.61% for the comparable 1997 period.
The 1998 yield on loans was 9.12%, compared to 8.86% in 1997. The cost on
average interest bearing liabilities increased fourteen basis points during 1998
to 5.47%, compared to 5.33% during 1997.
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" increases. 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. 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 $16.1 million for the year ended December 31, 1999, compared
to $39.9 million in the year ended December 31, 1998 and compared to $13.2
million in the year ended December 31, 1997.
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.
Since June 1999, the Federal Reserve Bank has increased interest rates five
times, raising short term rates by 125 basis points during this period. These
increases in market rates have resulted in corresponding increases in the prime
lending rate, as well as the cost of interest bearing deposits including
certificates of deposit. Further increases in rates may continue to occur, which
could result in slowed economic growth and reduced borrowing activities.
6
Year Ended December 31
1999 compared to 1998 1998 compared to 1997 1997 compared to 1996
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
------ ---- --- ------ ---- --- ------ ---- ---
Inerest Income:
Securities $ 616 $ 140 $ 756 $ (211) $ (86) $ (297) $ (64) $(112) $ (176)
Loans (1) 2,069 (860) 1,209 8,721 (6) 8,715 2,792 (69) 2,723
Interest bearing deposit in
other banks (291) (39) (330) 405 (14) 391 (8) 103 95
--------------------------------------------------------------------------------------------------
Total $2,394 $(759) $1,635 $8,915 $(106) $8,809 $2,720 $(78) $2,642
--------------------------------------------------------------------------------------------------
Interest Expense:
Interest bearing deposits $1,271 $ (550) $721 $4,478 $142 $4,620 $1,152 $(57) $1,095
FHLB advances and other
borrowings 138 241 379 736 (3) 733 193 5 198
--------------------------------------------------------------------------------------------------
Total $1,409 $(309) $1,100 $5,214 $139 $5,353 $1,345 $(52) $1,293
--------------------------------------------------------------------------------------------------
Increase (decrease) in net
interest income $985 ($ 450) $535 $3,701 ($245) $3,456 $1,375 ($26) $1,349
==================================================================================================
(1) Loans included 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, 1999
Maturing or Repricing
--------------------------------------------------------------------------
Within 4-12 1-5 Over
3 Months Months Years 5 Years Total
-------- ------ ----- ------- -----
(Dollars in thousands)
Interest-Earning Assets:
Investment securities $4,173 $1,312 $1,126 $16,584 $23,195
Loans 147,389 16,069 57,594 34,619 255,671
Interest bearing deposits 3,583 - - - 3,583
Other interest-earning assets 11,774 - - - 11,774
------ ------ ------ ------ ------
Total interest-earning assets 166,919 17,381 58,720 51,203 294,223
------- ------ ------ ------ -------
Interest-Bearing Liabilities:
Deposits
Demand and savings (1) - - 35,457 - 35,457
Time deposits, $100,000 and over 4,218 5,237 2,006 - 11,461
Other time deposits 52,573 115,231 29,853 - 197,657
Other interest-bearing
liabilities 13,000 - 300 5,000 18,300
Capital debt securities - - - 9,200 9,200
------- -------- ------- ----- -----
Total interest-bearing liabilities 69,791 120,468 67,616 14,200 272,075
------- ------- ------ ------ -------
Period Gap $97,128 $(103,087) $(8,896) $37,003 $22,148
------- ---------- -------- ------- -------
Cumulative Gap $97,128 $(5,959) $(14,855) $22,148
------- ---------- --------- -------
Ratio cumulative gap to
total interest-earning
assets 33.01% (2.03)% (5.05)% 7.53%
------- -------- --------- -------
(1) Management has determined that interest checking, money market 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, 1999 results of the rate sensitivity analysis show that
the Company had $97.1 million more in assets than liabilities subject to
repricing within three months or less and was, therefore, in an asset sensitive
position.
The cumulative gap at the end of one year was a negative $6.0 million, a
liability-sensitive position. Approximately $163.5 million, or 63.9% 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
interest rates, the Company's net interest margin will tend to decrease as the
8
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)
1999 1998 1997
---- ---- ----
U. S. Government Agencies $4,662 $6,868 $9,802
Federal Reserve Bank Stock 587 434 297
Federal Home Loan Bank Stock 915 1,162 2,233
Preferred Stock 351 - -
Other 144 155 100
-----------------------------------------
$6,659 $8,619 $12,432
=========================================
(1) Carried at fair value
Securities Held to Maturity (2)
1999 1998 1997
---- ---- ----
U. S. Government Agencies $151 $478 $1,996
State and Municipal 746 746 746
Corporate Bonds 7,208 - -
Preferred Stock 8,431 - -
-----------------------------------------
$16,536 $1,224 $2,742
=========================================
(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 $115,000 at
December 31, 1999 and $2,000 at December 31, 1998 and gross unrealized gains
were $13,000 and $95,000 at December 31, 1999 and 1998, respectively. At
December 31, 1997 gross unrealized gains on securities available for sale were
$449,000 and there were no gross unrealized losses on securities available for
sale.
At December 31, 1999 and December 31, 1998 gross unrealized gains on securities
held to maturity were $4,000 and $30,000, respectively. At December 31, 1999 and
1998, gross unrealized losses on securities held to maturity were $2,155,000 and
$1,000, respectively. At December 31, 1997 gross unrealized gains and losses on
securities held to maturity were $11,000 and $37,000, respectively.
9
The following table presents information on the maturities and weighted average
yields of the Company's investment securities at December 31, 1999. 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, 1999
Held to Maturity Available for Sale
---------------- ------------------
Amortized Weighted Amortized Weighted
Cost Fair Value Average Yield Cost Fair Value Average Yield
--------------------------------------------------------------------------------------
U. S. government agencies:
Within one year $ 65 $ 65 6.82% $ - $ -
After one year to five years - - - 772 760 6.24%
After five years through ten years 41 42 8.75% 304 302 6.22%
After ten years 45 43 6.80% 3,594 3,600 6.55%
------------------------- ---------------------------
Total 151 150 4,670 4,662
------------------------- ---------------------------
State and municipals:
Within one year 331 332 6.86% - - -
After one year to five years - - - - - -
After five years through ten years 415 412 7.42% - - -
After ten years - - - - - -
------------------------- ---------------------------
Total 746 744 - -
------------------------- ---------------------------
Other securties:
Within one year - - - - - -
After one year to five years - - - - - -
After five years through ten years - - - - - -
After ten years 7,208 6,529 7.98% - - -
------------------------- ---------------------------
Total 7,208 6,529 - -
------------------------- ---------------------------
Total debt securities $ 8,105 $ 7,423 $4,670 $4,662
Equity and others $ 8,431 $ 6,962 $2,090 $1,997
------------------------- ---------------------------
Total securities $16,536 $14,385 $6,760 $6,659
========================= ===========================
10
Loan Portfolio
The table below classifies loans, net of unearned income, by major category
and percentage distribution at the dates indicated:
December 31,
1999 1998 1997 1996 1995
Description Amount Percentage Amount Percentage Amount Percentage Amount Percentage Amount Percentage
------ ---------- ------ ---------- ------ ---------- ------ ---------- ------ ----------
(Dollars in thousands)
Commercial $ 77,507 30.32% $ 68,569 36.37% $ 50,713 33.68% $34,021 41.50% $25,005 42.77%
Real Estate 173,789 67.97 115,790 61.42 96,058 63.79 43,195 52.69 28,214 48.26
Consumer 4,375 1.71 4,163 2.21 3,819 2.53 4,759 5.81 5,245 8.97
-------- -------- -------- ------- -------- ------ ------ ------- ------- -------
Total $255,671 100.00% $188,522 100.00% $150,590 100.00% $81,975 100.00% $58,464 100.00%
======== ======= ======== ======= ======== ======= ======= ======= ======= =======
Commercial business loans totaled $77.5 million, or 30% of the Bank's loan
portfolio at December 31, 1999. 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 $132.2 million, or 52% of the loan
portfolio at December 31, 1999. 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 $4.4 million, and accounted for less
than 2% of the Bank's loan portfolio at December 31, 1999. 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, 1999:
December 31, 1999
One Year Over one through Five Years
or less Five Years or more Total
Commercial $ 32,611 $30,275 $14,621 $ 77,507
Real estate - construction 48,224 17,452 2,400 68,076
Commercial real estate 25,969 21,511 16,679 64,159
Residential real estate 3,066 10,910 27,578 41,554
Installment and consumer loans 1,271 2,835 269 4,375
-----------------------------------------------------------------
$111,141 $82,983 $61,547 $255,671
=================================================================
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, 1999, 1998, and 1997, non-accrual loans amounted to $473,000, $533,000 and
$3,059,000, respectively.
December 31,
-------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in thousands)
Non-accrual loans $473 $ 533 $3,059 $ 50 $ 57
Loans contractually past due 90 days or
more and still accruing 270 412 1,339 371 13
Troubled debt restructuring - - - - -
----- ------ ------ ---- ----
Total nonperforming loans 743 945 4,398 421 70
Other real estate owned 31 647 684 50 71
----- ------ ------ ---- ----
Total nonperforming assets $774 $1,592 $5,082 $471 $141
==== ====== ====== ==== ====
Nonperforming assets to period-end total
loans and other real estate .30% .84% 3.36% 0.57% 0.24%
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, 1999, 1998 and 1997 were $4,667,000, $150,000 and $155,000,
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
is, as a result, exiting this market segment.
12
The following table presents the Bank's loan loss experience for the
periods indicated:
Year Ended December 31,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in thousands)
Allowance for loan losses at
beginning of period $ 2,500 $ 2,573 $ 1,040 $ 854 $ 492
Loans charged off:
Commercial 4,436 126 2 5 21
Real Estate 84 141 56 109 148
Consumer 6 20 7 6 17
- -- - - --
Total 4,526 287 65 120 186
Recoveries of loans previously charged off:
Commercial 35 1 34 6 23
Real Estate 7 40 - - -
Consumer 3 23 9 10 13
-------- ------- -------- -------- --------
Total 45 64 43 16 36
-------- ------- -------- -------- --------
Net loans charged off 4,481 223 22 104 150
Provision for loan losses 4,667 150 155 290 512
-------- ------- -------- -------- --------
Allowance acquired through business
combination - - 1,400 - -
-------- ------- -------- -------- --------
Allowance for loan losses end of period $ 2,686 $ 2,500 $ 2,573 $ 1,040 $ 854
======== ======= ======== ======= =======
Average total loans (net of unearned
income) $217,598 $168,271 $ 93,839 $69,488 $48,465
Total loans (net of unearned income) at
period-end $255,671 $188,522 $150,590 $81,975 $58,464
Ratio of net charge-offs to average loans
2.06% 0.13% 0.02% 0.15% 0.31%
Ratio of provision for loan losses to
average loans 2.14% 0.09% 0.17% 0.42% 1.06%
Ratio of provision for loan losses to net
charge-offs 104.15% 67.26% 704.55% 278.85% 341.33%
Allowance for loan losses to period-end
loans 1.05% 1.33% 1.71% 1.27% 1.46%
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.
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, 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:
1999 1998 1997
Average Average Average Average Average Average
Balance Rate Balance Rate Balance Rate
---------------------------------------------------------------------------------
Interest-bearing deposits
Demand/MMDA accounts $ 12,362 3.32% $ 11,437 3.36% $ 8,543 3.34%
Savings $ 22,943 4.51% 19,334 4.74% 2,289 4.06%
Certificates of deposit 180,764 5.31% 158,740 5.68% 96,370 5.52%
--------- ---------- ---------
Total interest bearing deposits 216,069 5.11% 189,511 5.44% 107,202 5.31%
Non interest bearing deposits 16,541 - 13,595 - 6,898 -
Total average deposits $232,610 4.74% $203,106 5.08% $114,100 4.99%
========= ========== =========
14
The following table is a summary of time deposits of $100,000 or more by
remaining maturities at December 31, 1999:
Amount Percent
--------- ---------
Three months or less $4,218 36.80%
Three to twelve months 5,237 45.69%
Over twelve months 2,006 17.50%
--------- ---------
Total $11,461 100.00%
--------- ---------
Short Term Borrowing
The following table sets forth consolidated short term borrowings. 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. During 1999, the Bank purchased federal funds on an unsecured
basis for up to thirty consecutive days from a correspondent bank.
Years Ended December 31,
1999 1998 1997
----------------------------------------
Balance at period end $13,000 $ 2,000 $13,650
Average balance during period $ 7,289 $17,806 $ 4,959
Average rate 5.60% 5.65% 5.79%
Maximum outstanding during period $16,000 $46,420 $13,650
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
1999 1998 1997
--------------------------------------
Return on average assets -0.25% 1.27% 1.40%
Return on average equity -3.90% 18.19% 18.59%
Dividend payout ratio -160.00% 21.24% 15.06%
Average equity to average asset ratio 6.51% 6.95% 7.54%
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
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
15
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.resource
bankonline.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 Bank. 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
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 Federal Reserve. The Federal Reserve 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 subsidiary. 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.
16
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.
Employees
At December 31, 1999 the Company had 175 full time and 16 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
T. A. Grell, Jr., has been President and Chief Operating Officer of the
Bank, and Executive Vice President of the Company since December 1998. From 1984
until joining the Company, he was a senior officer at Central Fidelity Bank,
which was later acquired by Wachovia Bank. He has 28 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 29 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 29 years and serves on the Board of Trustees of Cape Henry
Collegiate School.
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 is expected
to begin during 2000 with completion in 2001.
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
17
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 alleges that the Bank did not act in a commercially reasonable
manner when it seized and attempted to liquidate certain collateral that secured
the Defaulted Loans. In connection with this allegation, the Plaintiffs are
seeking a declaratory judgment that all obligations of the Plaintiffs to the
Bank have been 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.
The lawsuit also alleges 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 the
public auction that was scheduled on November 9, 1999. No injunction has been
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 requests unspecified monetary damages. The Bank has 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. The lawsuit is still in the pre-trial
discovery phase. 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 1999.
18
Part II
Item 5. Market for Registrants Common Stock and Related Stockholder Matters
The Company's common stock is listed on the American Stock Exchange
("Amex") under the symbol "RBV". Prior to July 23, 1998, the Company's Common
Stock was listed on the Nasdaq National Market System ("Nasdaq/NM") under the
symbol "RBKV". The high and low closing sales prices of the Company's common
stock during 1999 and 1998, and information concerning dividends paid on the
Company's common stock are set forth in the following table.
Cash Dividend
Amex 1999 High Low Paid
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
Amex 1998
Fourth Quarter $21.00 $16.50 $0.06
Third Quarter (July 23-September 30) 24.50 16.88 $0.06
Nasdaq/NM 1998
Third Quarter (July 1-July 22) 24.00 22.50
Second Quarter 25.00 20.00 $0.06
First Quarter 23.00 18.00 $0.06
The Company's 2,555,579 common shares outstanding were held by approximately 797
shareholders of record at March 6, 2000.
19
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
1999 1998 1997 1996 1995
Income Statement data: (Dollars in thousands, except per share data)
Gross interest income $ 21,381 $ 19,746 $ 10,937 $ 8,295 $ 6,046
Gross interest expense 12,435 11,336 5,983 4,690 3,500
Net interest income 8,946 8,410 4,954 3,605 2,546
Provision for possible loan losses 4,667 150 155 290 512
Net interest income after provision for
loan losses 4,279 8,260 4,799 3,315 2,034
Non-interest income 6,811 7,943 4,520 2.755 2,012
Non-interest expense 12,168 11,565 6,533 4,451 3,285
Income before income taxes (1,078) 4,638 2,786 1,619 761
Income taxes (benefit) (387) 1,591 965 153 (144)
Net income (691) 3,047 1,821 1,466 905
Per Share Data (1):
Net income (2) $ (.27) $ 1.24 $ 0.92 $ 0.79 $ 0.54
Cash dividends .40 .24 0.125 0.05 -
Book value at period end 6.25 7.18 6.36 4.47 3.44
Tangible book value at period end 6.25 7.18 6.36 4.47 3.44
Period-End Balance Sheet Data:
Total assets $306,690 $233,460 $209,330 $115,836 $87,352
Total loans (net of unearned income) 255,671 188,522 150,590 81,975 58,464
Total deposits 260,469 206,219 169,508 99,179 80,905
Long-term debt 14,500 5,300 7,300 - -
Shareholders' equity 15,870 17,789 15,602 8,655 5,810
Performance Ratios
Return on average assets (.25)% 1.27% 1.40% 1.45% 1.24%
Return on average shareholders' equity (3.90)% 18.19% 18.59% 20.46% 17.93%
Average shareholders' equity to average
total assets 6.51% 6.96% 7.54% 7.10% 6.90%
Net interest margin (3) 3.42% 3.62% 3.90% 3.70% 3.62%
Earnings to fixed charges
Excluding interest expense .24x 5.55x 10.32x 17.52x 4.16x
Including interest expense .91x 1.41x 1.46x 1.34x 1.30x
Asset Quality Ratios
Net charge-offs to average loans 2.06% .13% 0.02% 0.15% 0.31%
Allowance to period-end loans 1.04% 1.33% 1.71% 1.27% 1.46%
Allowance to nonperforming loans 361.51% 264.55% 58.50% 247.03% 1220.00%
Non-accrual loans to loans 0.19% 0.28% 2.03% 0.06% .10%
Nonperforming assets to loans and
foreclosed properties 0.30% 0.84% 3.36% 0.57% 0.24%
Risk-based capital ratios
Tier 1 capital 8.20% 9.23% 9.69% 10.22% 9.61%
Total capital 10.24% 10 .48% 10.93% 11.45% 10.86%
20
Leverage capital ratio 7.19% 7.52% 9.67% 7.04% 6.25%
Total equity to total assets 5.17% 7.62% 7.45% 7.47% 6.65%
- -------------------
(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.
21
Item 7. Managements 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 affect of increasing 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.
On December 1, 1997, the Bank acquired Eastern American Bank, FSB,
("Eastern American Bank") in a business combination accounted for under the
purchase method of accounting, whereby the purchase price was allocated to the
underlying assets acquired and liabilities assumed based on their respective
fair values at the time of acquisition. In an exchange of common shares, the
Bank acquired $66,514,000 in assets (including cash of $12,539,000), $48,082,200
in net loans, and assumed $52,844,000 in deposit liabilities. Accordingly, these
acquired assets and liabilities contributed to the growth in total assets and
liabilities of the Bank for the year ended December 31, 1997. The Bank's 1997
results included results by operations from Eastern American Bank for the month
of December 1997.
In 1998, the former Eastern American Bank operations were integrated into
the Bank. The Northern Virginia unit, derived from Eastern American Bank, has
since contributed significantly to average asset growth and has been accretive
to the Company's earnings.
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 a net loss of $690,800 for 1999 and net income of
$3,046,800 and $1,821,200 for 1998 and 1997, respectively. This constituted net
basic earnings per common share of $(.27) for 1999, $1.24 for 1998, and $0.92
for 1997. With the diluted effect of common stock equivalents, earnings per
common share were $(.27) for 1999, $1.13 for 1998, and $0.83 in 1997. 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 is in the process of exiting 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 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 decreased loan origination volume, caused by a general increase
in interest rates and the reorganization of the mortgage operation in 1999.
At December 31, 1999, 43.5% of total loans were due in one year or less.
Floating rate loans with maturities of one year or less represented 37.2% of
total loans, and the remainder of loans had fixed rates.
Average loans, net of unearned income, to average deposits were 93.6%,
82.8% and 82.2% in 1999, 1998 and 1997, respectively.
22
Net Interest Income
Net interest income, before provision for loan losses, increased by 6.4% in
1999 over 1998 to $8,945,660 and 69.8% in 1998 over 1997 to $8,409,983. The 1999
increase in net interest income was closely proportionate with the increase in
average earning assets and interest bearing liabilities during 1999. During
1999, due to the continued expansion of commercial lending activities, average
loans increased 29.3% to $217,598,379. Due to the competitive pricing of the
Company's deposit products, average total deposits increased 14.5% to
$232,609,588. Average funds borrowed from the Federal Home Loan Bank and
correspondent banks decreased by 29.8% to $12,506,348 in 1999. 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
decreased 59.6% to $16,118,051 in 1999. Average securities increased 75.9% to
$21,791,325 and average interest bearing deposits in other banks decreased 49.7%
to $5,973,653 in 1999.
For a historical analysis of net interest income, see the table entitled
"Summary of Net Interest Income" 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 net interest income, see the table entitled
"Scheduled Maturity 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.
As can be seen from the historical analysis and the GAP analysis, the
Company is in an asset-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 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 refinancings, decrease and mortgage
banking income therefore decreases.
Allowance for Loan Losses
The ratio of net loans charged off to average loans outstanding was 2.06%
in 1999, 0.13% in 1998 and 0.02% in 1997. The allowance for loan losses as a
percentage of loans at year end was 1.04%, 1.33% and 1.71% at December 31, 1999,
1998 and 1997, respectively. The level of non-performing loans at year end was
$743,000, $945,000 and $4,398,000 in 1999, 1998 and 1997, or 0.29%, 0.50% and
2.92% of total loans, respectively.
Management made a provision for loan loss of $4,667,000 in 1999, $150,000
in 1998 and $155,000 in 1997. This 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 is, as a result, exiting this market segment.
The majority of non-accrual loans emanated from Eastern American Bank at
the time of the merger in December 1997. The Company has executed a plan to
substantially reduce the level of non-accruing loans in its Northern Virginia
portfolio since the merger. As the result of significant reductions in problem
assets and the addition of several experienced commercial lending officers,
asset quality within the Northern Virginia loan portfolio at December 31, 1999,
resembled that of the rest of the Bank.
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,
23
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, 1999, the Company had $473,000 in non-accrual loans, a
reduction of 11.3% from December 31, 1998. The Company had $270,000 in loans
past due 90 days or more that were still accruing at December 31, 1999. In
addition to loans on either non-accrual status or loans past due 90 days or more
and still accruing, management had identified $3,100,000 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 "Summary of Loan Loss Experience" in Part I - Item 1. of this
Form 10-K.
Non-interest Income and Non-interest Expenses
Non-interest income was $6,811,342 in 1999, down 14.3% from $7,943,413 in
1998. Non-interest income increased in 1998 by 75.7% over 1997, due to the
merger transaction with Eastern American Bank and income derived from mortgage
banking operations. However, 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 continue to experience reductions in mortgage banking
income in future periods. Service charge income decreased slightly (0.2%) to
$759,289 in 1999, and increased 85.8% to $760,581 in 1998, stemming from the
increased volume of deposit activity after the merger transaction in late 1997.
Total non-interest expense was $12,167,768 in 1999, an increase of 5.2%
from $11,565,616 in 1998. Non-interest expense increased in 1999 over 1998 as
the result of adding banking operations 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
slightly (0.7%) in 1999 to $6,735,896, and by 65.7% in 1998 over 1997 to
$6,686,381. This category comprised 55.4% of the Company's total non-interest
expense in 1999, 57.8% in 1998, and 61.8% in 1997. Occupancy expense increased
to $1,185,861 in 1999 (up 8.9%) and by 90.7% in 1998 over 1997. Depreciation and
equipment maintenance expense increased by 22.0% in 1999 to $926,702, and 65.7%
in 1998 over 1997. The 1999 depreciation and equipment maintenance expense
increased as a result of the re-organization of the mortgage division and the
opening of the Chesapeake and Newport News branches. The 1998 increase resulted
from the merger and a one-time data processing systems conversion. Outside
computer service expense decreased by 11.3% in 1999 to $485,458. 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
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 10.6% to
$58,125 in 1999, and by 322.3% to $52,580 in 1998 over 1997. As the result of
the 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
24
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 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 16.8% in 1999 to $400,938, after
increasing by 67.3% in 1998.
Income Taxes
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 4.4% and 4.7% of total deposits at December 31, 1999 and 1998,
respectively. Federal Home Loan Bank of Atlanta ("FHLB") advances were also
utilized as funding sources, with $18,300,000 and $7,300,000 in such advances
outstanding at December 31, 1999 and December 31, 1998, respectively. Pursuant
to the terms of a variable rate line of credit with the FHLB, the Bank may
borrow up to 12% 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, 1999, 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, 1999, the Company had $6,658,954, fair market value, in securities
available-for-sale and $16,536,027, 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 appreciation,
net of tax effect, on securities available-for-sale was ($126,036) and $60,929
at December 31, 1999 and 1998, respectively. Federal funds sold to correspondent
institutions were $1,445,000 and $800,000 at year end 1999 and 1998,
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
25
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 1999 and 1998, the Company repurchased 29,099 and 8,988 shares,
respectively.
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 5.17% at December 31,
1999 as compared to 7.62% at December 31, 1998.
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, 1999.
Required Ratio Resource Resource
Bankshares Bank
----------------------------------------------
Tier 1 risk-based 4.00% 8.20% 9.01%
Total risk-based 8.00% 9.24% 10.05%
Tier 1 leverage 4.00 to 5.00% 7.19% 7.90%
The Company is in full compliance with all relevant regulatory capital
requirements.
Year 2000
The Company's preparation for the Year 2000 changeover proved to be fully
adequate, as no technical difficulties were experienced. The cost associated
with Year 2000 readiness was $95 thousand, and is considered immaterial.
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, 1999. 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 $1,200,000 and decreased by $113,000, respectively.
26
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.
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, 1999 and 1998
Consolidated Statements of Income - Years ended December 31, 1999, 1998 and
1997
Consolidated Statements of Stockholders' Equity - Years ended December 31,
1999, 1998 and 1997
Consolidated Statements of Cash Flows - Years ended December 31, 1999, 1998
and 1997
Notes to Financial Statements - December 31, 1999, 1998 and 1997
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
27
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 29, 2000 in connection with the Company's 2000 Annual
Meeting of Shareholders.
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, 1999, 1998 and 1997 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, 1999 and 1998
Consolidated Statements of Income - Years Ended December 31, 1999, 1998 and
1997
Consolidated Statements of Stockholders' Equity - Years Ended December
31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows - Years Ended December 31, 1999, 1998
and 1997
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, 1999: 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.
28
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: 3/28/2000
/s/ Eleanor J. Whitehurst
Senior Vice President and Chief Financial Officer
Date:3/28/2000
29
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Lawrence N. Smith and John B. Bernhardt
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/ John B. Bernhardt
John B. Bernhardt Chairman of the Board Date:3/28/2000
/s/ Lawrence N. Smith President
Lawrence N. Smith Chief Executive Officer Date: 3/28/2000
(Principal Executive Officer)
Director
/s/ Eleanor J. Whitehurst Senior Vice President
Eleanor J. Whitehurst, Chief Financial Officer Date: 3/28/2000
(Principal Financial and
Accounting Officer)
/s/ Alfred E. Abiouness
Alfred E. Abiouness Director Date:3/28/2000
/s/ Thomas W. Hunt
Thomas W. Hunt Director Date:3/28/2000
/s/ Louis Ray Jones
Louis Ray Jones Director Date:3/28/2000
/s/ Arthur Russell Kirk
Arthur Russell Kirk Director Date:3/28/2000
/s/ Elizabeth A. Twohy
Elizabeth A. Twohy Director Date:3/28/2000
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 8-K previously
filed with the Commission on July 1, 1998.)
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. (Incorporated by reference to Registrant's Form *
10-K previously filed with the Securities & Exchange Commission on March 31,
1999)
34
**23.1 Consent of Goodman & Company, L.L.P.
**24.1 Powers of Attorney (included on signature page)
**27 Financial Data Schedule
**99.1 Consolidated Financial Statements
- --------------------
* Not filed herewith; incorporated by reference.
** Filed herewith.
35