-----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, OhdmKlxZXbccv7Kf1/1K2d3cs6R+8R+Em2g/SEBRp3+ZJhg/3NOHp6ayxZw+hkte ZGfp3HYCMKQ+cUGCgFuhCQ== 0000950144-97-011723.txt : 19971111 0000950144-97-011723.hdr.sgml : 19971111 ACCESSION NUMBER: 0000950144-97-011723 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971110 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: SEC FILE NUMBER: 000-22473 FILM NUMBER: 97711134 BUSINESS ADDRESS: STREET 1: 161 W MAIN ST CITY: SNEEDVILLE STATE: TN ZIP: 37879 BUSINESS PHONE: 4239219900 MAIL ADDRESS: STREET 1: 161 W MAIN ST CITY: SNEEDVILLE STATE: TN ZIP: 37879 10QSB 1 VOLUNTEER BANCORP, INC. FORM 10QSB 9-30-97 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, 1997 [ ] 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.) 210 East Main Street, Rogersville, Tennessee 37879 (Address of principal executive offices) (423) 272-2200 (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: 529,737 as of September 30, 1997. Transitional Small Business Disclosure Format (check one); Yes No X ----- ----- 2 VOLUNTEER BANCORP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 OPERATING RESULTS The Company reported net income for the third quarter of $70,751, or $0.13 per weighted average common share, compared to net income of $53,366, or $0.11 for the same period a year ago. Our returns on average assets and average common equity were 0.10% and 2.00%, respectively, for the quarter compared to 0.10% and 1.83% for the same period last year. The net income for the first nine months of 1997 was $139,269, or $0.26 per weighted average common share. This compares to net income of $40,059, or $0.08 per weighted average common share, for the same period last year. Net interest income for the first nine months of 1997 increased $434,148 versus the first nine months of 1996 to $1,724,338. The increase is attributable to growth in interest earning assets of 24.15%. Average loans grew 45.64% over the third quarter of 1996. Total Bank assets were $71,544,181 at September 30, 1997 compared to $58,014,454 as of September 30, 1996. The net interest margin was 3.96% for the third quarter of 1997 compared to 4.06% for the third quarter of 1996. The net spread was 3.49% for the third quarter of 1997 compared to 3.50% for the third quarter of 1996. The yield on the investment portfolio was 6.52% for the third quarter of 1997 compared to 6.44% for the same quarter of 1996. The higher level of interest income from loans and securities was offset by an increase in the cost of interest-bearing deposits and securities sold under repurchase agreements. Non-interest income for the third quarter of 1997 increased $4,561 over the third quarter of 1996. The growth is attributable to service charges on deposit accounts and other fees. Non-interest expenses for the third quarter of 1997 increased $82,969 compared to the third quarter of 1996 primarily for costs (including salaries and employee compensation) associated with opening and staffing new branches in Rogersville and Church Hill, Tennessee and the opening of the new main office in Rogersville, Tennessee. ASSET QUALITY Non-performing assets at September 30, 1997 were $346,000 or 0.76% of loans and foreclosed properties, which is a decrease from $369,000, or 1.14% of loans and foreclosed properties at September 30, 1996. The provision for losses on loans was $60,000 for the third quarter of 1997 which is an increase of $10,000 over the second quarter of 1997 and an increase of $27,500 over the provision for the third quarter of 1996. The increase in the provision is primarily attributable to the increase in loan growth. At September 30, 1997, the allowance for losses on loans was 1.33% of loans and approximately 176% of non-performing assets. 3 INDEPENDENT AUDITOR'S REVIEW REPORT To the Board of Directors Volunteer Bancorp, Inc. Rogersville, Tennessee We have reviewed the accompanying condensed consolidated balance sheet of Volunteer Bancorp, Inc. and subsidiary as of September 30, 1997 and 1996, 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. October 27, 1997 4 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Condensed Consolidated Balance Sheets September 30, 1997 and 1996 (Unaudited- See Accountants' Review Report) - --------------------------------------------------------------------------------
ASSETS 1997 1996 ------ ---- ----- Cash and due from banks $ 1,927,689 1,960,748 Federal fund sold 2,846,249 5,231,946 ----------------------- Total cash and cash equivalents 4,773,938 7,192,694 Investment securities available for sale (amortized cost of $16,082,468 and $14,036,558, respectively) 16,105,774 13,713,851 Investment securities held to maturity (estimated market value of $1,083,563 and $1,565,668, respectively) 1,089,810 1,608,654 Loans, less allowances for loan losses of $608,290 and $443,803, respectively 44,966,009 31,808,615 Accrued interest receivable 729,564 592,963 Premises and equipment, net 3,672,589 2,707,775 Deferred income taxes -- 51,162 Other real estate 80,361 67,846 Goodwill 207,262 225,199 Other assets 40,138 43,323 ------------------------ Total assets $71,665,445 58,012,082 ======================== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $ 7,388,070 6,622,023 Interest bearing 55,778,446 43,730,752 ------------------------ Total deposits 63,166,516 50,352,775 Note payable 3,265,000 3,450,000 Interest payable 566,348 421,511 Securities sold under repurchase agreements 932,713 465,000 Other accrued taxes, expenses and liabilities 95,353 120,562 Deferred income taxes 14,560 -- ------------------------ Total liabilities 68,040,490 54,809,848 ------------------------ Stockholders' equity: Common stock, $0.01 par value, 1,000,000 shares authorized, 529,737 and 525,717 shares issued and outstanding at September 30, 1997 and 1996, respectively 5,297 5,257 Additional paid-in capital 1,786,599 1,761,553 Retained earnings 1,819,229 1,635,503 Net unrealized (loss) gain on securities available for sale 13,830 (200,079) ------------------------ Total stockholders' equity 3,624,955 3,202,234 ------------------------ Total liabilities and stockholders' equity $71,665,445 58,012,082 ========================
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Condensed Consolidated Statements of Earnings For The Three and Nine Months Ended September 30, 1997 and 1996 (Unaudited - See Accountants' Review Report) - -------------------------------------------------------------------------------
Three months ended Nine months ended September 30, September 30, ------------------------ ------------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Interest Income: Interest and fees on loans $1,103,954 785,899 2,970,033 2,029,497 Interest on federal funds 32,232 36,452 140,389 154,013 Interest on investment securities: Taxable 277,604 251,425 832,081 691,869 Exempt from Federal income taxes 1,250 1,250 3,750 1,875 --------------------------------------------------------------------- Total interest income 1,415,040 1,075,026 3,946,253 2,877,254 --------------------------------------------------------------------- Interest Expense: Interest on deposits 702,118 504,463 1,995,831 1,369,690 Other borrowed funds 80,795 73,528 226,084 217,374 --------------------------------------------------------------------- Total interest expense 782,913 577,991 2,221,915 1,587,064 --------------------------------------------------------------------- Net interest income 632,127 497,035 1,724,338 1,290,190 Provision for possible loan losses 60,000 32,500 155,000 62,500 --------------------------------------------------------------------- Net interest income after provision for possible loan losses 572,127 464,535 1,569,338 1,227,690 --------------------------------------------------------------------- Non-interest income: Service charges on deposits 30,481 18,716 76,497 47,991 Other service charges and fees 2,999 13,924 50,467 51,096 Securities (losses) gains 1,857 - 2,903 8,908 Other non-interest income 18,982 17,118 29,879 23,546 --------------------------------------------------------------------- Total non-interest income 54,319 49,758 159,746 131,541 --------------------------------------------------------------------- Non-interest expense: Salaries and employee benefits 304,592 249,267 832,588 742,377 Occupancy expense 60,686 43,207 150,541 98,669 Furniture and equipment expense 63,711 45,070 143,840 107,541 Other non-interest expense 81,952 90,428 374,700 343,724 --------------------------------------------------------------------- Total non-interest expense 510,941 427,972 1,501,669 1,292,311 --------------------------------------------------------------------- Earnings before income taxes 115,505 86,321 227,415 66,920 Income tax expense 44,754 32,955 88,146 26,861 --------------------------------------------------------------------- Net income $70,751 53,366 139,269 40,059 ===================================================================== Income per weighted average common $ 0.13 0.11 0.26 0.08 share ===================================================================== Weighted average common shares outstanding 527,651 494,619 526,373 505,217 =====================================================================
The accompanying notes are an integral part of these condensed consolidated financial statements. 6 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Condensed Consolidated Statements of Cash Flows For The Nine Months Ended September 30, 1997 and 1996 (Unaudited - See Accountants' Review Report) - --------------------------------------------------------------------------------
1997 1996 ----- ---- Cash Flows from Operating Activities: Net income $ 139,269 40,059 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income taxes (34,860) (48,007) Provision for possible loan losses 155,000 62,500 Provision for depreciation and amortization 150,414 95,605 (Gain) loss on securities (2,903) (8,908) (Increase) in interest receivable (118,910) (158,408) Decrease in other assets 3,796 144,670 Increase (decrease) in other liabilities (22,086) 210,229 ----------------------------------- Net cash provided by operating activities 269,720 337,740 ----------------------------------- Cash Flows from Investing Activities: Purchase of investment securities held to maturity - (9,847,592) Proceeds from calls and maturity of held to maturity securities 515,704 11,761,736 Purchase of investment securities available for sale (5,987,057) (15,377,979) Proceeds from calls and maturity of investments available for sale 550,000 7,950,000 Proceeds from sale of investments available for sale 2,954,141 - Net (increase) in loans (10,241,181) (10,296,512) Capital expenditures (592,526) (802,918) ----------------------------------- Net cash (used) in investing activities (12,800,919) (16,613,265) ----------------------------------- Cash Flows from Financing Activities: Net increase in demand deposits, NOW accounts and savings accounts 667,368 1,981,131 Net increase in certificates of deposit 6,822,017 13,859,470 Net increase in securities sold under repurchase agreements 757,713 465,000 Repayment of long-term debt (185,000) - Proceeds from sale of common stock 60,300 794,650 Stock issuance costs (35,214) - ---------------------------------- Net cash provided by financing activities 8,087,184 17,100,251 ---------------------------------- (Decrease) increase in cash and cash equivalents (4,444,015) 824,726 Cash and cash equivalents beginning of period 9,217,953 6,367,968 ---------------------------------- Cash and cash equivalents end of period $ 4,773,938 7,192,694 ================================== Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest $ 2,210,784 1,600,108 ================================== Income taxes $ 224,826 4,500 ==================================
The accompanying notes are an integral part of these condensed consolidated financial statements. 7 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Condensed Consolidated Financial Statements Nine Months Ended September 30, 1997 and 1996 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. Adoption of Recently Issued Statements of Financial Accounting Standards (SFAS) The Financial Accounting Standards Board recently issued SFAS No. 123 entitled "Accounting for Stock Based Compensation." The statement is generally effective for financial statements issued for years beginning after December 15, 1995. The Statement establishes a fair-value based method of accounting for stock based compensation plans and similar arrangements and a fair-value basis for measuring transactions in which an entity acquires goods or services from non-employees utilizing entity stock or similar equity instruments. The Company does not currently employ stock based compensation plans or similar arrangements. The adoption of SFAS No. 123 did not have any impact upon the financial position or results of operations of the Company. The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing Rights, an amendment to Statement No. 65" ("SFAS No. 122"), on May 12, 1995. SFAS No. 122 provides guidance for recognition of mortgage servicing rights ("MSR") as an asset when a mortgage loan is sold or securitized and servicing rights retained, regardless of how those servicing rights were acquired. This eliminates the previously existing accounting distinction between rights to service mortgage loans for others that are acquired through loan origination activities and those acquired through purchase transactions. Impairment of the recorded MSR is to be measured periodically using a current fair value approach applied to each stratum of the disaggregated mortgage-servicing portfolio. Provisions of SFAS No. 122 are effective for fiscal years beginning after December 15, 1995. The adoption of SFAS No. 122 did not have a material impact upon the financial position or results of operations of the Company. The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS No. 121 addresses situations where information indicates that a company might be unable to recover, through future operations or sale, the carrying amount of long-lived assets, identified intangibles and goodwill related to those assets. Provisions of this Statement are effective for fiscal years beginning after December 15, 1995. The adoption of this Statement did not have a material impact upon the financial position or results of operations of the Company. 8 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Condensed Consolidated Financial Statements Nine Months Ended September 30, 1997 and 1996 SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and the Extinguishment of Liabilities," establishes, among other things, new criteria for determining whether a transfer of financial assets for cash or other considerations should be accounted for as a sale or as a pledge of collateral in a secured borrowing. SFAS No. 125 also establishes new accounting requirements for pledged collateral. As issued, SFAS No. 125 is generally effective for transactions occurring after December 31, 1996 and should be applied on a prospective basis. SFAS No. 127 deferred the effective date of certain provisions of SFAS No. 125 to certain transactions occurring after December 31, 1997. SFAS No. 125 supersedes SFAS No. 122 and itself amends various previous pronouncements of the Financial Accounting Standards Board. Adoption by the Company on January 1, 1997 did not have a material impact upon the Company's financial position or results of operation. 3. Premises and Equipment, net The significant increase in premises and equipment, net at September 30, 1997 is primarily related to completion and equipping of branches in Church Hill and Rogersville, Tennessee including completion and occupancy of permanent main office banking facilities in Rogersville. 4. Non-interest Expense Other non-interest expense increased by $209,358 from September 30, 1996 to September 30, 1997. Salaries and employee benefits for the period ended September 30, 1997 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 and occupying new permanent main office facilities in Rogersville. 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. 9 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Condensed Consolidated Financial Statements Nine Months Ended September 30, 1997 and 1996 5. Long-term debt The Company's long-term debt consists of a single note payable 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, 1997 the rate on the note was 7.969% per annum. Principal is payable annually commencing January 31, 1996 and each January 1 thereafter as follows:
January 31, Principal Due ----------- ------------- 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 ---------- $3,265,000 ==========
The loan is secured by all of the stock of Citizens Bank of East Tennessee owned by the Company. 6. 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. 10 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Condensed Consolidated Financial Statements Nine Months Ended September 30, 1997 and 1996 7. Stock Offering At September 30, 1997 the Company had sold 4,020 shares of its $0.01 par value common stock for an aggregate consideration of $60,300 pursuant to the Company's offering which became effective September 11, 1996. Proceeds of the offering have been used to offset expenses of the offering and pay interest on the Company debt. 11 VOLUNTEER BANCORP, INC. AND SUBSIDIARY FINANCIAL HIGHLIGHTS AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Net income $70,751 $53,366 $139,269 $40,059 Per common share data: Net income per weighted average common share $ 0.13 $ 0.11 $ 0.26 $ 0.08 Book value $ 6.84 $ 6.69 $ 6.84 $ 6.69 Ratios: Return on average assets 0.10% 0.10% 0.21% 0.08% Return on average common equity 2.00% 1.83% 4.02% 1.37% Net spread (taxable equivalent basis) 3.49% 3.50% 3.35% 3.25% Net interest margin (taxable equivalent basis) 3.96% 4.06% 3.77% 3.81% Expense ratio 2.92% 3.14% 2.98% 3.48% Allowance for losses on loans / loans 1.33% 1.38% 1.33% 1.38% Non-performing loans / loans 0.58% 0.93% 0.58% 0.93% Non-performing assets / loans and foreclosed properties 0.76% 1.14% 0.76% 1.14% Shareholders' equity / total assets 5.06% 5.52% 5.06% 5.52% Leverage ratio (tangible capital / tangible average assets) 4.88% 5.84% 5.09% 6.43%
12 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, 1997. 13 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 10, 1997 Reed D. Matney, President (principal executive officer) Date: November 10, 1997 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 27, 1997 included in this Quarterly Report on Form 10-Q for the Quarter Ended September 30, 1997. Welch & Associates Nashville, Tennessee November 10, 1997 EX-27 3 FINANCIAL DATA SCHEDULE
9 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1,927,689 0 2,846,249 0 16,105,774 1,089,810 1,083,563 45,574,299 608,290 71,665,445 63,166,516 932,713 676,261 3,265,000 0 0 5,297 3,619,658 71,665,445 2,970,033 835,831 140,389 3,946,253 1,995,831 2,221,915 1,724,338 155,000 2,903 1,501,669 227,415 139,269 0 0 139,269 0.26 0 8.48 54,479 211,000 0 0 457,432 9,591 5,449 608,290 608,290 0 0
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