-----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, FTrOG6/2HcmDYsjiEnUMn1s+acqY2JBJ5b3Pf72GgUkhnxTL5RE7U/6Wjb1YsWi5 JzXNUmTaf3OKgIBsLPgg5g== 0000950144-96-002042.txt : 19960513 0000950144-96-002042.hdr.sgml : 19960513 ACCESSION NUMBER: 0000950144-96-002042 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 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: 96559072 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 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 MARCH 31, 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 37869 (Address of principal executive offices) (615) 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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court. Yes 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: 452,900 AS OF MARCH 31, 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. We have reviewed the accompanying condensed consolidated balance sheet of Volunteer Bancorp, Inc. and subsidiary as of March 31, 1996 and 1995, and the related condensed consolidated statement of operations and the condensed consolidated statement of cash flows for the three 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 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 auditing standards, the objective of which is the expression of an opinion regarding the 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 consolidated financial statements in order for them to be in conformity with generally accepted accounting principles. /s/ Welch & Associates, Ltd. April 12, 1996 Nashville, Tennessee 3 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Consolidated Balance Sheets March 31, 1996 and 1995 (Unaudited - See Accountants' Review Report) - --------------------------------------------------------------------------------
1996 1995 ------------ -------------- ASSETS ------ Cash and due from banks $ 1,934,984 $ 1,050,254 Federal funds sold 4,115,308 1,463,993 Investment securities available for sale (amortized cost of $12,849,747 and $500,000, respectively) 12,812,781 498,750 Investment securities held to maturity (estimated market value of $2,275,951 and $7,696,095, respectively) 2,318,857 7,862,893 Loans, less allowance for possible loan losses of $408,853 and $419,597, respectively 24,364,113 13,414,478 Accrued interest receivable 533,391 311,505 Premises and equipment, net 2,025,681 981,001 Other real estate 67,846 15,160 Goodwill 234,105 249,286 Other assets 106,228 129,146 ----------------------------- Total assets $48,513,294 $25,976,466 ============================= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Deposits: Non-interest bearing $ 5,918,266 $ 4,500,562 Interest bearing 36,104,241 18,795,966 ----------------------------- Total deposits 42,022,507 23,296,528 Accrued interest payable 310,955 89,804 Other accrued taxes, expenses and liabilities 74,826 6,790 Long-term debt 3,450,000 50,000 Deferred income taxes 82,748 111,604 ----------------------------- Total liabilities 45,941,036 23,554,726 ----------------------------- Minority interest - 10,071 ----------------------------- Stockholders' equity: Common stock, $0.01 par value, 1,000,000 shares authorized, 452,900 shares issued and outstanding at March 31, 1996; $1 par value, 10,000 shares authorized, 1,343 shares issued and outstanding, at March 31, 1995 4,529 1,343 Additional paid-in capital 1,033,631 695,330 Retained earnings 1,556,976 1,715,771 Unrealized loss on securities available for sale, net (22,878) (775) ----------------------------- Total stockholders' equity 2,572,258 2,411,669 ----------------------------- Total liabilities and stockholders' equity $48,513,294 $25,976,466 =============================
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Earnings Three Months Ended March 31, 1996 and 1995 (Unaudited - See Accountants' Review Report) - --------------------------------------------------------------------------------
1996 1995 ----------- ----------- Interest income: Interest and fees on loans $584,973 $312,751 Interest on federal funds 64,973 28,162 Interest on investment securities: Taxable 189,706 108,598 Exempt from Federal income tax - 4,347 --------------------------- Total interest income 839,652 453,858 --------------------------- Interest expense: Interest on deposits 400,386 168,659 Interest on other borrowed funds 71,899 690 --------------------------- Total interest expense 472,285 169,349 --------------------------- Net interest income 367,367 284,509 Provisions for possible loan losses 15,000 9,000 --------------------------- Net interest income after provision for possible loan losses 352,367 275,509 --------------------------- Non-interest income: Service charges on deposits 13,670 7,638 Other fees and commissions 12,797 7,474 Securities gains 8,908 - Other non-interest income 3,372 8,407 --------------------------- Total non-interest income 38,747 23,519 --------------------------- Non-interest expense: Salaries and employee benefits 253,091 165,329 Occupancy expenses, net 23,483 14,334 Furniture and equipment expense 35,549 20,534 Other non-interest expense 139,433 100,127 --------------------------- Total non-interest expense 451,556 300,324 --------------------------- Net (loss) before income taxes and minority interest (60,442) (1,296) Income tax (benefit) (21,978) (1,960) Minority interest - (131) Net (loss) income $(38,464) $533 =========================== (Loss) income per weighted average common share $ (0.09) $ 0.00 =========================== Weighted average common shares outstanding 448,565 344,700 ===========================
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Cash Flows Three Months Ended March 31, 1996 and 1995 (Unaudited - See Accountants' Review Report) - --------------------------------------------------------------------------------
1996 1995 ---------- ---------- Cash Flows from Operating Activities: Net (loss) income $ (38,464) $ 533 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Minority interest undistributed - (131) Deferred income taxes (22,731) 30,782 Provision for loan losses 15,000 9,000 Provision for depreciation and amortization 31,554 12,042 Securities (gains) (8,908) - (Increase) in interest receivable (98,836) (46,148) Decrease (increase) in other assets 81,765 (99,245) Increase in other liabilities 53,937 14,681 ----------------------------- Net cash provided (used) by operating activities 13,317 (78,486) ----------------------------- Cash Flows from Investing Activities: Purchase of investment securities held to maturity (2,204,385) - Proceeds from calls and maturity of held to maturity securities 3,408,326 9,326 Purchase of investment securities available for sale (7,241,078) (500,000) Proceeds from calls and maturities of available for sale securities 1,000,000 - Net (increase) in loans (2,804,510) (748,348) Acquisition of minority interest - (131,380) Capital expenditures (65,679) (204,626) ----------------------------- Net cash (used) in investing activities (7,907,326) (1,575,028) ----------------------------- Cash Flows from Financing Activities: Net increase (decrease) in demand deposits, NOW accounts and savings accounts 1,934,569 (563,594) Net increase in certificates of deposit 5,575,764 1,855,007 Proceeds from long-term debt - 50,000 Issue common stock 66,000 - ----------------------------- Net cash provided by financing activities 7,576,333 1,341,413 ----------------------------- (Decrease) in cash and cash equivalents (317,676) (312,101) Cash and cash equivalents beginning of period 6,367,968 2,826,348 ----------------------------- Cash and cash equivalents end of period $6,050,292 $2,514,247 ============================= Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest $ 491,378 $ 148,465 ============================= Income taxes $ - $ - =============================
The accompanying notes are an integral part of these condensed consolidated financial statements. 6 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Consolidated Financial Statements Three Months Ended March 31, 1996 and 1995 - -------------------------------------------------------------------------------- 1. Management Opinion In the opinion of management, the accompanying unaudited 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. Weighted average common shares outstanding Weighted average common shares outstanding for the three months ended March 31, 1995 are calculated after giving retroactive effect to 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 March 31, 1995 the Company had not identified any loans which would be considered impaired under the above provisions and at March 31, 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 March 31, 1996 is primarily related to completion and equipping of branches in Church Hill and Rogersville, Tennessee and construction-in-progress related to the construction of permanent banking facilities in Rogersville. 5. Non-interest Expense Other non-interest expense increased by $151,232 from March 31, 1996 compared to March 31, 1995. Salaries and employee benefits for the period ended September 30, 1995 have increased due to the addition of personnel associated with the opening of branches in Church Hill and Rogersville, Tennessee. The increase in occupancy and furniture and equipment expenses 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 and promoting the new branches. 7 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Consolidated Financial Statements Three Months Ended March 31, 1996 and 1995 - -------------------------------------------------------------------------------- 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 March 31, 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. 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 addition, the Company has entered into a construction contract for a permanent office in Rogersville, Tennessee. 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 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Consolidated Financial Statements Three Months Ended March 31, 1996 and 1995 - -------------------------------------------------------------------------------- 8. Stock Offering At March 31, 1996 the Company had sold 49,922 shares of its $0.01 par value common stock for an aggregate consideration of $449,220 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's long-term debt. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. VOLUNTEER BANCORP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 Operating Results The Company experienced a net loss for the first quarter of 1996 of ($38,464) or ($0.09) per common share compared to a net income for the first quarter of 1995 of $533. Our returns on average assets and average common equity for the first quarter of 1996 were (0.05%) and (1.48%), respectively, compared to 0.00% and 0.02%, respectively, or negligible returns for the first quarter of 1995. Net interest income for the first quarter of 1996 increased $82,858 versus the first quarter of 1995 to $367,367. The increase is attributable to loan growth and a higher investment portfolio yield. Average loans grew 76.77% over the first quarter of 1995. The growth in loans from March 31, 1995 to March 31, 1996 is attributable to an increase of approximately $415,000 in commercial loans, approximately $6,388,000 in real estate loans ($3,118,000 secured by 1-4 single family residences), and approximately $2,831,000 in consumer loans. Total Bank assets were $48,513,294 at March 31, 1996 compared to $25,976,466 as of March 31, 1995. The net interest margin was 2.95% for the first quarter of 1996 compared to 3.4% for the first quarter of 1995. The yield on the investment portfolio was 6.29% for the first quarter of 1996 compared to 5.73% for the same quarter of 1995. The higher level of interest income from loans and securities was offset by an increase in the cost of interest-bearing deposits and the Company's long-term debt which was utilized to increase the capital of the Company's subsidiary Bank. Non-interest income for the first quarter of 1996 increased $15,228 over the first quarter of 1995. The growth is attributable to service charges on deposit accounts and other fees. Non-interest expenses for the first quarter of 1996 increased $151,232 compared to the first 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 Asset quality measures continue to improve. Non-performing assets at March 31, 1996 were $263,000 or 1.07% of loans and foreclosed properties, which is a decrease from $288,000, or 2.15% of loans and foreclosed properties at March 31, 1995. The provision for losses on loans was $15,000 for the first quarter of 1996 which is an increase of $6,000 over the provision of $9,000 for the first quarter of 1995. The increase in the provision is primarily attributable to the increase in loan growth. At March 31, 1996, the allowance for losses on loans was 1.65% of loans and approximately 155% of non-performing assets. OUTLOOK While not pleased with the Company's results for the first quarter of 1996, we are essentially where we thought we would be after expanding into new markets in Rogersville and Church Hill, Tennessee and incurring the costs to staff these locations and capitalize the Bank at the levels required by regulators. Common stock sales, to date, are somewhat less than we originally anticipated. We believe that stock sales will increase during the third quarter of 1996 as the offering nears its expiration date. The growth in 10 banking assets continues and we see no reason why such growth trends should not continue. As banking assets increase, the Company's ability to absorb the negative impact of interest costs attributable to long-term debt used to capitalize the Company's subsidiary Bank and other noninterest expenses will be enhanced and should result in improved performance. 11 VOLUNTEER BANCORP, INC. FINANCIAL HIGHLIGHTS AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 and 1995 (UNAUDITED)
1996 1995 ---- ---- Net (loss) earnings ($38,464) $ 533 Per Common share data: Net loss (earnings) per weighted average common share ($0.09) $0.00 Book value $5.68 $5.99 Ratios: Return on average assets (0.05)% 0.00% Return on average common equity (1.48)% 0.02% Net interest margin (taxable equivalent basis) 2.95% 3.40% Expense ratio 4.04% 4.74% Allowance for losses on loans/loans 1.65% 3.03% Non-performing loans/loans 0.80% 2.03% Non-performing assets/loans and foreclosed properties 1.07% 2.15% Shareholders' equity/total assets 5.30% 9.28% Leverage ratio (tangible capital/tangible assets) 4.89% 8.41%
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 Independent Public Accountants 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 March 31, 1996. 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: May 10, 1996 /s/ Reed D. Matney ------------------------------------------- Reed D. Matney, President (principal executive officer) Date: May 10, 1996 /s/ H. Lyons Price ------------------------------------------- H. Lyons Price (principal financial and accounting officer) EX-23.1 2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our review report dated April 12, 1996 included in this Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1996. Welch & Associates Nashville, Tennessee May 10, 1996 EX-27 3 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF VOLUNTEER BANCORP FOR THE THREE MONTHS ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1,934,984 0 4,115,308 0 12,812,781 2,318,857 2,275,951 24,772,966 408,853 48,513,294 42,022,507 0 468,529 3,450,000 0 0 4,529 2,567,729 48,513,294 584,973 189,706 64,973 839,652 400,386 472,285 367,367 15,000 8,908 451,556 (60,442) (38,464) 0 0 (38,464) (0.09) 0 8.24 76,000 119,000 76,000 0 401,066 13,055 5,842 408,853 408,853 0 0
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