-----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, Or9CI3761UMhs+4nlHweba/qWOwV1aX4BtEz67DIFsvH173SeVwriLcp1iAs/nFO Dp5lUNjHVIGUliCJUkHp1A== 0000950144-98-009311.txt : 19980812 0000950144-98-009311.hdr.sgml : 19980812 ACCESSION NUMBER: 0000950144-98-009311 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980810 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: 98681048 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 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 June 30, 1998 [ ] 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: 539,027 as of June 30, 1998. Transitional Small Business Disclosure Format (check one); Yes No X ----- ----- 2 Part I Item 1 Financial Statements VOLUNTEER BANCORP, INC. AND SUBSIDIARY Condensed Consolidated Balance Sheets June 30, 1998 and 1997 (Unaudited- See Accountants' Review Report) - --------------------------------------------------------------------------------
ASSETS 1998 1997 ------ ----------- ------------ Cash and due from banks $ 2,332,207 $ 2,258,184 Federal fund sold 3,921,513 2,647,763 --------------------------- Total cash and cash equivalents 6,253,720 4,905,947 Investment securities available for sale (amortized cost of $18,462,425 and $16,563,610, respectively) 18,540,124 16,464,168 Investment securities held to maturity (estimated market value of $3,075,455 and $1,354,083) 3,073,785 1,344,533 Loans, less allowances for loan losses of $737,027 and $549,213, respectively 54,653,612 42,111,329 Accrued interest receivable 883,778 684,948 Premises and equipment, net 3,608,810 3,716,014 Deferred income taxes 1,062 20,590 Other real estate 153,420 62,380 Goodwill 193,850 211,733 Other assets 97,794 55,462 --------------------------- Total assets $87,459,955 $ 69,577,104 =========================== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $ 8,611,284 $ 7,900,410 Interest bearing 69,169,503 53,423,920 --------------------------- Total deposits 77,780,787 61,324,330 Interest payable 819,598 585,834 Securities sold under repurchase agreements 1,733,089 850,000 Note payable 3,045,000 3,265,000 Other accrued taxes, expenses and liabilities 53,419 96,296 --------------------------- Total liabilities 83,431,893 66,121,460 --------------------------- Stockholders' equity: Common stock, $0.01 par value, 1,000,000 shares authorized, 539,027 and 525,851 shares issued and outstanding at June 30, 1998 and 1997, respectively 5,390 5,259 Additional paid-in capital 1,916,500 1,763,561 Retained earnings 2,057,999 1,748,478 Net unrealized gain (loss) on securities available for sale 48,173 (61,654) --------------------------- Total stockholders' equity 4,028,062 3,455,644 --------------------------- Total liabilities and stockholders' equity $87,459,955 $ 69,577,104 ===========================
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Condensed Consolidated Statements of Earnings For The Three and Six Months Ended June 30, 1998 and 1997 - -------------------------------------------------------------------------------- (Unaudited - See Accountants' Review Report)
Three months ended Six months ended June 30, June 30, ------------------- -------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Interest Income: Interest and fees on loans $ 1,321,390 $ 985,446 $ 2,509,403 $ 1,866,079 Interest on federal funds 72,789 51,553 171,888 108,157 Interest on investment securities: Taxable 317,946 287,964 613,435 554,477 Exempt from Federal income taxes 11,301 1,250 15,234 2,500 ----------------------------------------------------------- Total interest income 1,723,426 1,326,213 3,309,960 2,531,213 ----------------------------------------------------------- Interest Expense: Interest on deposits 897,716 680,974 1,730,001 1,306,032 Other borrowed funds 84,971 66,614 169,664 132,970 ----------------------------------------------------------- Total interest expense 982,687 747,588 1,899,665 1,439,002 ----------------------------------------------------------- Net interest income 740,739 578,625 1,410,295 1,092,211 Provision for possible loan losses 60,000 50,000 120,000 95,000 ----------------------------------------------------------- Net interest income after provision for possible loan losses 680,739 528,625 1,290,295 997,211 ----------------------------------------------------------- Non-interest income: Service charges on deposits 37,385 25,885 65,704 46,016 Other service charges and fees 27,183 21,887 45,138 47,468 Securities gains (losses) 3,138 (312) 15,173 1,046 Other non-interest income 6,765 5,636 12,918 10,897 ----------------------------------------------------------- Total non-interest income 74,471 53,096 138,933 105,427 ----------------------------------------------------------- Non-interest expense: Salaries and employee benefits 310,586 273,677 621,380 527,996 Occupancy expense 56,050 56,222 96,556 89,855 Furniture and equipment expense 57,889 42,913 115,948 80,129 Other non-interest expense 176,303 154,317 337,406 292,748 ----------------------------------------------------------- Total non-interest expense 600,828 527,129 1,171,290 990,728 ----------------------------------------------------------- Earnings before income taxes 154,382 54,592 257,938 111,910 Income tax expense 53,127 21,759 96,674 43,392 ----------------------------------------------------------- Net income $ 101,255 $ 32,833 $ 161,264 $ 68,518 =========================================================== Other comprehensive income: Unrealized gain (loss) on securities available for sale, before tax $ (10,576) $ 188,241 $ (6,299) $ (19,019) Income tax benefit (expense) related to other comprehensive income 4,019 (71,531) 2,393 7,227 ----------------------------------------------------------- Total comprehensive income $ 94,698 $ 149,543 $ 157,358 $ 56,726 =========================================================== Net income per weighted average common share $ 0.19 $ 0.06 $ 0.30 $ 0.13 =========================================================== Weighted average common shares outstanding 539,027 525,729 539,027 525,723 ===========================================================
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Condensed Consolidated Statements of Cash Flows For The Six Months Ended June 30, 1998 and 1997 (Unaudited - See Accountants' Review Report) - --------------------------------------------------------------------------------
1998 1997 ------------ ------------ Cash Flows from Operating Activities: Net income (loss) $ 161,264 $ 68,518 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Deferred income taxes (20,220) (23,746) Provision for possible loan losses 120,000 95,000 Provision for depreciation and amortization 120,311 93,204 (Gain) on securities (15,173) (1,046) (Increase) in interest receivable (64,268) (74,294) (Increase) decrease in other assets (103,535) 6,453 Increase (decrease) in other liabilities 87,957 (1,657) ----------------------------- Net cash provided by operating activities 286,336 162,432 ----------------------------- Cash Flows from Investing Activities: Purchase of investment securities held to maturity (1,988,681) -- Proceeds from calls and maturity of held to maturity securities -- 259,314 Purchase of investment securities available for sale (6,911,801) (4,738,170) Proceeds from calls and maturity of securities available for sale 4,498,582 300,000 Proceeds from sale of securities available for sale 990,625 1,474,922 Net (increase) in loans (6,963,742) (7,326,501) Capital expenditures (72,989) (583,212) ----------------------------- Net cash (used) in investing activities (10,448,006) (10,613,647) ----------------------------- Cash Flows from Financing Activities: Net increase in demand deposits, NOW accounts and savings accounts 777,843 3,773,294 Net increase in certificates of deposit 7,915,555 1,873,905 Net increase in securities sold under repurchase agreements 516,410 675,000 Repayment of long-term borrowing (220,000) (185,000) Proceeds from sale of common stock -- 2,010 ----------------------------- Net cash provided by financing activities 8,989,808 6,139,209 ----------------------------- (Decrease) in cash and cash equivalents (1,171,862) (4,312,006) Cash and cash equivalents beginning of period 7,425,582 9,217,953 ----------------------------- Cash and cash equivalents end of period $ 6,253,720 $ 4,905,947 ============================= Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest $ 1,800,909 $ 1,408,385 ============================= Income taxes $ 149,351 $ 158,326 =============================
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Condensed Consolidated Financial Statements Six Months Ended June 30, 1998 and 1997 - -------------------------------------------------------------------------------- 1. Management Opinion In the opinion of management, the accompanying unaudited condensed consolidated financial statements of Volunteer Bancorp, Inc. 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 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) Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income." Statement No. 130 requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Prior periods have been restated to conform to the presentation for the current period. 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. This statement 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. 6 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Condensed Consolidated Financial Statements Six Months Ended June 30, 1998 and 1997 - -------------------------------------------------------------------------------- 3. Long-term debt The Company's long-term debt consists of a single note payable in the amount of $3,045,000 and $3,265,000 at June 30, 1998 and 1997, respectively, 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 1.95% 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 June 30, 1998 the rate on the note was 7.669% per annum. Principal is payable annually commencing January 31, 1998 and each January 31 thereafter as follows:
January 31, Principal Due ----------- ------------- 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 ------------ $ 3,045,000 ============
The loan is secured by all of the stock of Citizens Bank of East Tennessee owned by the Company. 4. 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. 7 INDEPENDENT AUDITOR'S REVIEW REPORT To the Board of Directors Volunteer Bancorp, Inc. Rogersville, Tennessee We have reviewed the accompanying condensed consolidated balance sheets of Volunteer Bancorp, Inc. and subsidiary as of June 30, 1998 and 1997, and the related condensed consolidated statements of earnings for the three and six months then ended and the condensed consolidated statements of cash flows for the six 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. July 20, 1998 Nashville, Tennessee 8 VOLUNTEER BANCORP, INC. AND SUBSIDIARY FINANCIAL HIGHLIGHTS AS OF AND FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 ---- ---- ---- ---- Net income $101,255 $32,833 $161,264 $68,518 Per common share data: Net income per weighted average common share $0.19 $0.06 $0.30 $0.13 Book value $7.47 $6.28 $7.47 $6.28 Ratios: Return on average assets 0.12% 0.05% 0.19% 0.10% Return on average common equity 2.57% 0.97% 4.08% 2.00% Net interest margin (taxable equivalent basis) 3.61% 3.76% 3.62% 3.66% Expense ratio 2.89% 3.12% 2.77% 3.02% Allowance for loan losses/loans 1.33% 1.29% 1.33% 1.29% Non-performing loans/loans 0.04% 0.17% 0.04% 0.17% Non-performing assets/loans and foreclosed properties 0.31% 0.32% 0.31% 0.32% Shareholder's equity/total assets 4.61% 4.97% 4.61% 4.97% Leverage ratio (tangible capital/ tangible average assets) 4.77% 4.91% 4.70% 5.05%
9 Item 2. VOLUNTEER BANCORP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AS OF AND FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997 OPERATING RESULTS The Company reported net income for the second quarter of $101,255, or $0.19 per weighted average common share, compared to income of $32,833, or $0.06 for the same period a year ago. Returns on average assets and average common equity were 0.12% and 2.57%, respectively, for the quarter compared to 0.05% and 0.97% for the same period last year. Net interest income for the first six months of 1998 increased $318,084 versus the first six months of 1997 to $1,410,295. The increase is attributable to growth in interest earning assets of 28.16%. Average loans grew 33.49% over the second quarter of 1997. Total Company assets were $87,459,955 at June 30, 1998 compared to $69,577,104 as of June 30, 1997. The net interest margin (taxable equivalent basis) was 3.61% for the second quarter of 1998 compared to 3.76% for the second quarter of 1997. The yield on the investment portfolio was 6.40% for the second quarter of 1998 compared to 6.62% for the same quarter of 1997. 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 second quarter of 1998 increased $21,375 over the second quarter of 1997. The growth is attributable to service charges on deposit accounts and other fees. Non-interest expenses for the second quarter of 1998 increased $73,699 compared to the second quarter of 1997 primarily for costs (including salaries and employee compensation) associated with opening and staffing of new branches in Rogersville and Church Hill, Tennessee and the opening of the new main office in Rogersville, Tennessee. The Company is rapidly outgrowing its present data processing system and software and expects to have new hardware and software operational sometime during the third quarter of 1998. The Company will lease its new hardware and software for a five year period at approximately $62,400 annually. The new system is certified by the suppliers as being year 2000 compliant. ASSET QUALITY Non-performing assets at June 30, 1998 were $174,000 or 0.31% of loans and foreclosed properties, compared to $135,000, or 0.32% of loans and foreclosed properties at June 30, 1997. The provision for losses on loans was $60,000 for the second quarter of 1998 which is an increase of $10,000 over the provision for the second quarter of 1997. The increase in the provision is primarily attributable to the increase in loan growth. At June 30, 1998, the allowance for losses on loans was 1.33% of loans and approximately 424% of non-performing assets. CAPITAL REQUIREMENTS The Company's equity capital was $4.028 million at June 30, 1998 compared to $3.46 million at June 30, 1997. No dividends were paid by the Company and the Company does not expect to pay dividends any time in the foreseeable future. 10 The Company is a "small one-bank holding company" within the meaning of regulations promulgated by the Board of Governors of the Federal Reserve System. Accordingly, the Company's capital compliance, for bank holding company purposes, will be measured solely with respect to the Bank and not on a consolidated basis. Management believes, as of June 30, 1998, that the Bank and Company meet all capital requirements to which they are subject. However, events beyond the control of the Company, such as a downturn in the local economy, could adversely affect future earnings and, consequently, the ability of the Company to meet its future minimum capital requirements. The Bank would be considered "well capitalized" within the applicable regulatory capital guidelines at June 30, 1998 having a leverage ratio of 8.02%, a Tier I risk ratio of 12.19% and a total risk ratio of 13.44%. 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 The annual meeting of shareholders was held on April 16, 1998 at which all of the current directors were elected for a one-year term, or until their successors are duly elected and qualified. 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 June 30, 1998. 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: August 10, 1998 Reed D. Matney, President (principal executive officer) Date: August 10, 1998 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 July 20, 1998 included in this Quarterly Report on Form 10-QSB for the Quarter Ended June 30, 1998. Welch & Associates Nashville, Tennessee August 10, 1998 EX-27 3 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF VOLUNTEER BANCORP, INC. FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 2,332,207 0 3,921,513 0 18,540,124 3,073,785 3,075,455 55,390,639 737,027 87,459,955 77,780,787 1,733,089 873,017 3,045,000 0 0 5,390 4,022,672 87,459,955 2,509,403 628,669 171,888 3,309,960 1,730,001 1,899,665 1,410,295 120,000 15,173 1,171,290 257,938 257,398 0 0 161,264 0.30 0 8.46 20,095 253,000 0 0 660,336 46,287 2,978 737,027 737,027 0 0
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