-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CbLjqnrYEzfaqnned5ciqittTVReLu7rnlNUaTSds2gPL0qa4HO08hGIA6HT7Yln kd5TVqAT8SOZm8aJNGnFXw== 0000950144-96-007616.txt : 19961107 0000950144-96-007616.hdr.sgml : 19961107 ACCESSION NUMBER: 0000950144-96-007616 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961106 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOLUNTEER BANCORP INC CENTRAL INDEX KEY: 0000947440 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 621271025 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-94052 FILM NUMBER: 96654895 BUSINESS ADDRESS: STREET 1: P O BOX 550 CITY: ROGERSVILLE STATE: TN ZIP: 37857 BUSINESS PHONE: 4239219900 MAIL ADDRESS: STREET 1: 161 W MAIN ST CITY: SNEEDVILLE STATE: TN ZIP: 37879 10QSB 1 VOLUNTEER BANCORP, INC. FORM 10-QSB 1 U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 [ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to ___________________ Commission file number 33-94050 VOLUNTEER BANCORP, INC. (Exact name of small business issuer as specified in its charter) TENNESSEE 62-1271025 (State of other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 161 MAIN STREET, SNEEDVILLE, TENNESSEE 37879 (Address of principal executive offices) (423) 733-2213 (Issuer's telephone number) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act during the past 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 --- --- APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 525,717 AS OF SEPTEMBER 30, 1996. Transitional Small Business Disclosure Format (check one); Yes No X ----- ----- 2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS WELCH & ASSOCIATES, LTD. CERTIFIED PUBLIC ACCOUNTANTS 401 UNION STREET - NINTH FLOOR NASHVILLE, TENNESSEE 37219-1708 615-254-4834 INDEPENDENT AUDITOR'S REVIEW REPORT To the Board of Directors Volunteer Bancorp, Inc. Sneedville, Tennessee We have reviewed the accompanying condensed consolidated balance sheet of Volunteer Bancorp, Inc. and subsidiary as of September 30, 1996 and 1995, and the related condensed consolidated statement of earnings for the three and nine months then ended and the condensed consolidated statement of cash flows for the nine months then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these condensed consolidated financial statements is the representation of the management of Volunteer Bancorp, Inc. A review of interim financial statements consists primarily of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted accounting standards, the objective of which is the expression of an opinion regarding the condensed consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements in order for them to be in conformity with generally accepted accounting principles. /s/ Welch & Associates, Ltd. October 15, 1996 3 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Condensed Consolidated Balance Sheets September 30, 1996 and 1995 (Unaudited - See Accountants' Review Report) - --------------------------------------------------------------------------------
ASSETS 1996 1995 ----------- ---------- Cash and due from banks $ 1,960,748 1,478,414 Federal fund sold 5,231,946 2,252,371 Investment securities available for sale (amortized cost of $14,036,558 and $2,971,457, respectively) 13,713,851 3,012,213 Investment securities held to maturity (estimated market value of $1,565,668 and $6,856,479) 1,608,654 6,860,650 Loans, less allowances for loan losses of $443,803 and $418,756, respectively 31,808,615 18,573,524 Accrued interest receivable 592,963 464,675 Premises and equipment, net 2,707,775 1,914,139 Deferred income taxes 51,162 - Other real estate 67,846 15,160 Goodwill 225,199 243,010 Other assets 43,323 209,536 ------------------------------- Total assets $58,012,082 35,023,692 =============================== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $ 6,622,023 5,421,194 Interest bearing 43,730,752 23,402,515 ------------------------------- Total deposits 50,352,775 28,823,709 Note payable 3,450,000 3,450,000 Interest payable 421,511 196,021 Securities sold under repurchase agreements 465,000 - Other accrued taxes, expenses and liabilities 120,562 59,633 Deferred income taxes - 151,205 ------------------------------- Total liabilities 54,809,848 32,680,568 =============================== Stockholders' equity: Common stock, $0.01 par value, 1,000,000 shares authorized, 525,700 and 412,360 shares issued and outstanding at September 30, 1996 and 1995, respectively 5,257 4,124 Additional paid-in capital 1,761,553 692,549 Retained earnings 1,635,503 1,621,104 Net unrealized (loss) gain on securities available for sale (200,079) 25,347 ------------------------------- Total stockholders' equity 3,202,234 2,343,124 ------------------------------- Total liabilities and stockholders' equity $58,012,082 35,023,692 ===============================
The accompanying notes are an integral part of these condensed consolidated financial statements. 2 4 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Condensed Consolidated Statement of Earnings For The Three and Nine Months Ended September 30, 1996 and 1995 (Unaudited - See Accountants' Review Report) - --------------------------------------------------------------------------------
Three months ended Nine months ended September 30, September 30, --------------------- -------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Interest Income: Interest and fees on loans $ 785,899 436,543 2,029,497 1,125,483 Interest on federal funds 36,452 30,223 154,013 75,991 Interest on investment securities: Taxable 251,425 163,417 691,869 426,746 Exempt from Federal income taxes 1,250 1,168 1,875 10,547 ---------------------------------------------------------- Total interest income 1,075,026 631,351 2,877,254 1,638,767 ---------------------------------------------------------- Interest Expense: Interest on deposits 504,463 262,911 1,369,690 650,482 Other borrowed funds 73,528 76,451 217,374 134,364 ---------------------------------------------------------- Total interest expense 577,991 339,362 1,587,064 784,846 ---------------------------------------------------------- Net interest income 497,035 291,989 1,290,190 853,921 Provision for possible loan losses 32,500 9,000 62,500 27,000 ---------------------------------------------------------- Net interest income after provision for possible loan losses 464,535 282,989 1,227,690 826,921 ---------------------------------------------------------- Non-interest income: Service charges on deposits 18,716 11,406 47,991 29,663 Other service charges and fees 13,924 12,437 51,096 32,273 Securities (losses) gains - (4,810) 8,908 (4,810) Other non-interest income 17,118 3,260 23,546 11,896 ---------------------------------------------------------- Total non-interest income 49,758 22,293 131,541 69,022 ---------------------------------------------------------- Non-interest expense: Salaries and employee benefits 249,267 224,888 742,377 597,543 Occupancy expense 43,207 25,538 98,669 54,583 Furniture and equipment expense 45,070 27,232 107,541 68,030 Other non-interest expense 90,428 114,344 343,724 321,893 ---------------------------------------------------------- Total non-interest expense 427,972 392,002 1,292,311 1,042,049 ---------------------------------------------------------- Earnings (loss) before income taxes, and minority interest 86,321 (86,720) 66,920 (146,106) Income tax expense (benefit) 32,955 (27,358) 26,861 (51,972) Minority interest - (83) ---------------------------------------------------------- Net income (loss) $ 53,366 (59,279) 40,059 (94,134) ========================================================== Income (loss) per weighted average common share $ 0.11 (0.15) 0.08 (0.23) ========================================================== Weighted average common shares outstanding 494,619 402,978 505,217 403,125 ==========================================================
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 5 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Condensed Consolidated Statement of Cash Flows For The Nine Months Ended September 30, 1996 and 1995 (Unaudited - See Accountants' Review Report) - --------------------------------------------------------------------------------
1996 1995 ------------ ----------- Cash Flows from Operating Activities: Net income (loss) $ 40,059 (94,134) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Deferred income taxes (48,007) 54,399 Provision for possible loan losses 62,500 27,000 Provision for depreciation and amortization 95,605 41,129 (Gain) loss on securities (8,908) 4,810 (Increase) in interest receivable (158,408) (199,318) Decrease (increase) in other assets 144,670 (198,664) Increase in other liabilities 210,229 173,741 ------------------------------- Net cash provided (used) by operating activities 337,740 (191,037) ------------------------------- Cash Flows from Investing Activities: Purchase of investment securities held to maturity (9,847,592) (250,000) Proceeds from calls and maturity of held to maturity securities 11,761,736 1,257,751 Purchase of investment securities available for sale (15,377,979) (3,963,571) Proceeds from calls and maturity of investments available for sale 7,950,000 1,000,000 Net (increase) in loans (10,296,512) (5,952,254) Acquisition of minority interest - (98,524) Capital expenditures (802,918) (1,166,522) ------------------------------- Net cash (used) in investing activities (16,613,265) (9,173,120) ------------------------------- Cash Flows from Financing Activities: Net increase in demand deposits, NOW accounts and savings accounts 1,981,131 44,121 Net increase in certificates of deposit 13,859,470 6,774,473 Net increase in securities sold under repurchase agreements 465,000 - Increase in long-term borrowing - 3,450,000 Proceeds from sale of common stock 794,650 93,820 Stock issuance costs - (93,820) ------------------------------- Net cash provided by financing activities 17,100,251 10,268,594 ------------------------------- Increase in cash and cash equivalents 824,726 904,437 Cash and cash equivalents beginning of period 6,367,968 2,826,348 ------------------------------- Cash and cash equivalents end of period $ 7,192,694 3,730,785 =============================== Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest $ 1,495,601 657,745 =============================== Income taxes $ - - ===============================
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 6 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Condensed Consolidated Financial Statements Nine Months Ended September 30, 1996 and 1995 - -------------------------------------------------------------------------------- 1. Management Opinion In the opinion of management, the accompanying unaudited condensed consolidated financial statements of Volunteer Bancorp, Inc. and subsidiary contain all adjustments, consisting of only normal, recurring adjustments, necessary to fairly present the financial results for the interim periods presented. The results of operations for any interim period is not necessarily indicative of the results to be expected for an entire year. These interim condensed consolidated financial statements should be read in conjunction with the annual financial statements and notes thereto. 2. Weighted average common shares outstanding Weighted average common shares outstanding for the three and nine months ended September 30, 1995 are calculated after the effect of a 300 for 1 stock split effective June 14, 1995. 3. Adoption of Statements of Financial Accounting Standards (SFAS) on Impaired Loans On January 1, 1995 the Company adopted SFAS No. 114, "Accounting by Creditors for Impairment of a Loan" as amended by SFAS No. 118. "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures. SFAS No 114 prescribes a valuation methodology for impaired loans as defined by the standard. Generally, a loan is considered impaired if management believes that it is probable that all amounts due will not be collected according to the contractual terms as stipulated in the loan agreement. An impaired loan must be valued using the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or fair value of the loan's underlying collateral. At September 30, 1995, the Company had not identified any loans which would be considered impaired under the above provisions and at September 30, 1996 the amount of impaired loans under these provisions were not considered material. 4. Premises and Equipment, net The significant increase in premises and equipment, net at September 30, 1996 is primarily related to completion and equipping of branches in Church Hill and Rogersville, Tennessee and construction-in- progress relating to the construction of permanent banking facilities in Rogersville. 5 7 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Condensed Consolidated Financial Statements Nine Months Ended September 30, 1996 and 1995 - -------------------------------------------------------------------------------- 5. Non-interest Expense Other non-interest expense increased by $250,262 from September 30, 1995 to September 30, 1996. Salaries and employee benefits for the period ended September 30, 1996 have increased due to the addition of personnel associated with opening of branches in Church Hill and Rogersville, Tennessee. The increase in occupancy and furniture and equipment expense is also a result of the opening of the new branches. The increase in other non-interest expense is attributable to costs associated with changing the name of the Bank, promoting the new branches and overall growth. 6. Long-term debt The Company's long-term debt consists of a single note payable in the amount of $3,450,000 due an unaffiliated national bank. The interest rate on the note adjusts quarterly and is equal to the three-months London Interbank Offered Rate (Three Month LIBOR) plus 2.25% per annum or at the option of the Company the rate on the note is equal to the lender's index rate as such rate changes from time to time. The Company may change interest rate options at any time with prior notice to the lender. Interest is payable quarterly. At September 30 , 1996 the rate on the note was 8.25% per annum. Principal is payable annually commencing January 31, 1997 and each January 1 thereafter as follows:
January 31, Principal Due ----------- ------------- 1997 $185,000 1998 220,000 1999 255,000 2000 295,000 2001 325,000 2002 360,000 2003 395,000 2004 435,000 2005 470,000 2006 (Final Maturity) 510,000
The loan is secured by all of the stock of Citizens Bank of East Tennessee owned by the Company. 6 8 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Condensed Consolidated Financial Statements Nine Months Ended September 30, 1996 and 1995 - -------------------------------------------------------------------------------- 7. Contingencies During the course of business, the Company makes various commitments and incurs certain contingent liabilities that are not presented in the accompanying balance sheet. The commitments and contingent liabilities may include various guarantees, commitments to extend credit, standby letters of credit, and litigation. In the opinion of management, no material adverse effect on the financial position, liquidity or operating results of the Company and its subsidiary is anticipated as a result of these items. 8. Profit-Sharing Plan The Company's subsidiary, The Citizens Bank of East Tennessee, adopted a profit-sharing retirement plan on July 1, 1995. All employees who meet certain age and length of service requirements are eligible to participate on a voluntary basis. Benefits, which become 20% vested after two years, 40% after three years, 60% after four years, 80% after five years, and 100% after nine years, are paid on death, disability or retirement. The Board of Directors has discretion in establishing the amount of the Bank's contributions. Participants may make voluntary, after-tax contributions up to 20% of their compensation up to $9,240 per year. The participants are fully vested in any voluntary contributions they make. The Bank had not made any contributions to the plan for the nine-months ended September 30, 1996 and 1995. 9. Stock Offering At September 30, 1996 the Company had sold 122,739 shares of its $0.01 par value common stock for an aggregate consideration of $1,227,390 pursuant to the Company's offering which became effective September 11, 1995. Proceeds of the offering have been used to offset expenses of the offering, increase the capital of the subsidiary Bank and pay interest on the Company debt. 7 9 VOLUNTEER BANCORP, INC. AND SUBSIDIARY FINANCIAL HIGHLIGHTS AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
Three Months Ended Nine Months Ended September 30, September 30, ----------------------------------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net income (loss) $ 53,366 ($ 59,279) $40,059 ($ 94,134) Per common share data: Net income (loss) per weighted average common share $ 0.11 ($ 0.15) $ 0.08 ($ 0.23) Book value $ 6.69 $ 5.68 $ 6.69 $ 5.68 Ratios: Return on average assets 0.10% (0.19%) 0.08% (0.32%) Return on average common equity 1.83% (2.80%) 1.37% (4.42%) Net spread (taxable equivalent basis) 3.50% 3.31% 3.25% 3.35% Net interest margin (taxable equivalent basis) 4.06% 4.52% 3.81% 4.31% Expense ratio 3.14% 5.29% 3.48% 4.69% Allowance for losses on loans / loans 1.38% 2.20% 1.38% 2.20% Non-performing loans / loans 0.93% 1.38% 0.93% 1.38% Non-performing assets / loans and foreclosed properties 1.14% 1.46% 1.14% 1.46% Shareholders' equity / total assets 5.52% 6.69% 5.52% 6.69% Leverage ratio (tangible capital / tangible average assets) 5.84% 6.66% 6.43% 7.02%
10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 OPERATING RESULTS The Company reported net income for the third quarter of $53,366, or $0.11 per weighted average common share, compared to a net loss of ($59,279), or ($0.15) for the same period a year ago. Our returns on average assets and average common equity were 0.10% and 1.83%, respectively, for the quarter compared to (0.19%) and (2.80%) for the same period last year. The net income for the first nine months of 1996 was $40,059, or $0.08 per weighted average common share. This compares to a net loss of ($94,134), or ($0.23) per weighted average common share, for the same period last year. Net interest income for the third quarter of 1996 increased $436,269 versus the third quarter of 1995 to $1,290,190. The increase is attributable to growth in interest earning assets of 64.62%. Average loans grew 78.18% over the third quarter of 1995 as a result of the opening of the new branches. The growth in loans from September 30, 1995 to September 30, 1996 is attributable to an increase of approximately $1,458,000 in commercial loans, approximately $8,420,000 in real estate loans ($5,794,000 secured by 1-4 single family residences), and approximately $2,585,000 in consumer loans. Total Bank assets were $58,014,454 at September 30, 1996 compared to $34,887,109 as of September 30, 1995. The net interest margin was 4.06% for the third quarter of 1996 compared to 4.52% for the third quarter of 1995. The net spread was 3.50% for the third quarter of 1996 compared to 3.31% for the third quarter of 1995. The yield on the investment portfolio was 6.44% for the third quarter of 1996 compared to 7.97% for the same quarter of 1995. The higher level of interest income from loans was offset by an increase in the cost of interest-bearing deposits and a decrease in the yield on the investment portfolio. Non-interest income for the third quarter of 1996 increased $27,645 over the third quarter of 1995. The growth is attributable to service charges on deposit accounts and other fees. Non-interest expenses for the third quarter of 1996 increased $35,970 compared to the third quarter of 1995 primarily for costs (including salaries and employee compensation) associated with opening and staffing new branches in Rogersville and Church Hill, Tennessee. ASSET QUALITY Non-performing assets at September 30, 1996 were $369,000 or 1.14% of loans and foreclosed properties, which is a decrease from $277,000, or 1.46% of loans and foreclosed properties at September 30, 1995. The provision for losses on loans was $32,500 for the third quarter of 1996 which is an increase of $17,500 over the second quarter of 1996 and an increase of $23,500 over the provision for the third quarter of 1995. The increase in the provision is primarily attributable to the increase in loan growth. At September 30, 1996, the allowance for losses on loans was 1.38% of loans and approximately 120% of non-performing assets. 11 PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 23.1 Consent of Welch & Associates Exhibit 27 Financial Data Schedule (for SEC use only) (b) There have been no Current Reports on Form 8-K filed during the quarter ended September 30, 1996. 12 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. VOLUNTEER BANCORP, INC. (Registrant) Date: November 6, 1996 /s/ Reed D. Matney --------------------------------------- Reed D. Matney, President (principal executive officer) Date: November 6, 1996 /s/ H. Lyons Price --------------------------------------- H. Lyons Price (principal financial and accounting officer) EX-23.1 2 CONSENT OF WELCH & ASSOCIATES 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report dated October 15, 1996 included in this Quarterly Report on Form 10-Q for the Quarter Ended September 30, 1996. Welch & Associates Nashville, Tennessee November 6, 1996 EX-27 3 FINANCIAL DATA SCHEDULE
9 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1,960,748 0 5,231,946 0 13,713,851 1,608,654 1,565,668 32,252,418 443,803 58,012,082 50,352,775 0 1,007,073 3,450,000 0 0 5,257 3,196,977 58,012,082 2,029,497 693,744 154,013 2,877,254 1,369,690 1,587,064 1,290,190 62,500 8,908 1,292,311 66,920 40,059 0 0 40,059 0.08 0 8.48 56,319 245,000 0 0 401,066 47,256 27,493 443,803 443,803 0 0
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