-----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, QQYx9ckHKzPvutikdn2CR9znKxcDhsPQcFvl6rgGRfDqGHSmd898FExpZ6Urxr/t LlRorIBKBpkmHSTNnW+tLA== 0000950144-98-012573.txt : 19981116 0000950144-98-012573.hdr.sgml : 19981116 ACCESSION NUMBER: 0000950144-98-012573 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 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: 98747172 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 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, 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 September 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 September 30, 1998 and 1997 (Unaudited - See Accountants' Review Report) - --------------------------------------------------------------------------------
ASSETS 1998 1997 ---------------------------------- Cash and due from banks $ 2,087,064 $ 1,927,689 Federal fund sold 5,661,444 2,846,249 ---------------------------------- Total cash and cash equivalents 7,748,508 4,773,938 Investment securities available for sale (amortized cost of $21,385,402 and $16,082,468, respectively) 21,593,525 16,105,774 Investment securities held to maturity (estimated market value of $2,080,163 and $1,083,563, respectively) 2,068,241 1,089,810 Loans, less allowances for loan losses of $761,721 and $608,290, respectively 57,452,071 44,966,009 Accrued interest receivable 937,818 729,564 Premises and equipment, net 3,705,094 3,672,589 Other real estate 51,923 80,361 Goodwill 189,379 207,262 Other assets 89,008 40,138 ---------------------------------- Total assets $93,835,567 71,665,445 ================================== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $ 8,962,895 $ 7,388,070 Interest bearing 74,927,638 55,778,446 ---------------------------------- Total deposits 83,890,533 63,166,516 Note payable 3,045,000 3,265,000 Interest payable 880,927 566,348 Securities sold under repurchase agreements 1,615,953 932,713 Other accrued taxes, expenses and liabilities 97,618 95,353 Deferred income taxes 48,563 14,560 ---------------------------------- Total liabilities 89,578,594 68,040,490 ---------------------------------- Stockholders' equity: Common stock, $0.01 par value, 1,000,000 shares authorized, 539,027 and 529,737 shares issued and outstanding at September 30, 1998 and 1997, respectively 5,390 5,297 Additional paid-in capital 1,916,500 1,786,599 Retained earnings 2,206,047 1,819,229 Accumulated other comprehensive income 129,036 13,830 ---------------------------------- Total stockholders' equity 4,256,973 3,624,955 ---------------------------------- Total liabilities and stockholders' equity $93,835,567 71,665,445 ==================================
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 Nine Months Ended September 30, 1998 and 1997 (Unaudited - See Accountants' Review Report) - --------------------------------------------------------------------------------
Three months ended Nine months ended September 30, September 30, ------------- ------------- 1998 1997 1998 1997 ---- ---- ---- ---- Interest Income: Interest and fees on loans $1,417,560 1,103,954 3,926,963 2,970,033 Interest on federal funds 74,081 32,232 245,969 140,389 Interest on investment securities: Taxable 313,194 277,604 926,629 832,081 Exempt from Federal income taxes 25,875 1,250 41,109 3,750 ----------------------------------------------------------- Total interest income 1,830,710 1,415,040 5,140,670 3,946,253 ----------------------------------------------------------- Interest Expense: Interest on deposits 954,732 702,118 2,684,733 1,995,831 Other borrowed funds 87,158 80,795 256,822 226,084 ----------------------------------------------------------- Total interest expense 1,041,890 782,913 2,941,555 2,221,915 ----------------------------------------------------------- Net interest income 788,820 632,127 2,199,115 1,724,338 Provision for possible loan losses 60,000 60,000 180,000 155,000 ----------------------------------------------------------- Net interest income after provision for possible loan losses 728,820 572,127 2,019,115 1,569,338 ----------------------------------------------------------- Non-interest income: Service charges on deposits 43,724 30,481 109,428 76,497 Other service charges and fees 20,665 2,999 65,803 50,467 Securities (losses) gain 7,499 1,857 22,672 2,903 Other non-interest income 14,433 18,982 27,351 29,879 ----------------------------------------------------------- Total non-interest income 86,321 54,319 225,254 159,746 ----------------------------------------------------------- Non-interest expense: Salaries and employee benefits 312,506 304,592 933,886 832,588 Occupancy expense 41,084 60,686 137,640 150,541 Furniture and equipment expense 75,385 63,711 191,333 143,840 Other non-interest expense 158,197 81,952 495,603 374,700 ----------------------------------------------------------- Total non-interest expense 587,172 510,941 1,758,462 1,501,669 ----------------------------------------------------------- Earnings before income taxes 227,969 115,505 485,907 227,415 Income tax expense 79,921 44,754 176,595 88,146 ----------------------------------------------------------- Net income $ 148,048 70,751 309,312 139,269 =========================================================== Income per weighted average common share $ 0.27 0.13 0.57 0.26 =========================================================== Weighted average common shares outstanding 539,027 527,651 539,027 526,373 ===========================================================
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 Nine Months Ended September 30, 1998 and 1997 (Unaudited - See Accountants' Review Report) - --------------------------------------------------------------------------------
1998 1997 ------------ ------------ Cash Flows from Operating Activities: Net income $ 309,312 $ 139,269 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income taxes (20,156) (34,860) Provision for possible loan losses 180,000 155,000 Provision for depreciation and amortization 176,894 150,414 (Gain) loss on securities (22,672) (2,903) (Increase) in interest receivable (118,308) (118,910) Decrease in other assets 6,748 3,796 Increase (decrease) in other liabilities 193,485 (22,086) ------------------------------- Net cash provided by operating activities 705,303 269,720 ------------------------------- Cash Flows from Investing Activities: Purchase of investment securities held to maturity (2,981,450) -- Proceeds from calls and maturity of held to maturity securities 1,999,156 515,704 Purchase of investment securities available for sale (13,769,264) (5,987,057) Proceeds from calls and maturity of investments available for sale 7,498,582 550,000 Proceeds from sale of investments available for sale 1,931,767 2,954,141 Net (increase) in loans (9,822,201) (10,241,181) Capital expenditures (221,385) (592,526) ------------------------------- Net cash (used) in investing activities (15,364,795) (12,800,919) ------------------------------- Cash Flows from Financing Activities: Net increase in demand deposits, NOW accounts, IRA and savings accounts 437,639 667,368 Net increase in certificates of deposit 14,365,505 6,822,017 Net increase in securities sold under repurchase agreements 399,274 757,713 Repayment of long-term debt (220,000) (185,000) Proceeds from sale of common stock -- 60,300 Stock issuance costs -- (35,214) ------------------------------- Net cash provided by financing activities 14,982,418 8,087,184 ------------------------------- (Decrease) increase in cash and cash equivalents 322,926 (4,444,015) Cash and cash equivalents beginning of period 7,425,582 9,217,953 ------------------------------- Cash and cash equivalents end of period $ 7,748,508 4,773,938 =============================== Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest $ 2,781,470 $ 2,210,784 =============================== Income taxes $ 196,851 $ 224,826 ===============================
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Condensed Consolidated Statements of Comprehensive Income For The Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited - See Accountants' Review Report) - --------------------------------------------------------------------------------
Three months ended Nine months ended September 30, September 30, ------------- ------------- 1998 1997 1998 1997 ---- ---- ---- ---- Net income $ 148,048 70,751 309,312 139,269 ------------------------------------------------------------ Other comprehensive income, before tax: Unrealized gains on securities available for sale: Unrealized holding gains arising during the period 137,953 124,605 146,797 106,632 Less: reclassification adjustment for (gains) losses included in net income (7,499) (1,857) (22,672) (2,903) ------------------------------------------------------------ Other comprehensive income 130,454 122,748 124,125 103,729 Income taxes related to other comprehensive income (49,591) (47,264) (47,168) (40,037) ------------------------------------------------------------ Other comprehensive income, net of income taxes 80,863 75,484 76,957 63,692 ------------------------------------------------------------ Total comprehensive income $ 228,911 146,235 386,269 202,961 ============================================================
The accompanying notes are an integral part of these condensed consolidated financial statements. 6 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Condensed Consolidated Financial Statements Nine Months Ended September 30, 1998 and 1997 - -------------------------------------------------------------------------------- 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) 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. SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" is effective for fiscal quarters beginning after June 15, 1999 unless adopted earlier. This Statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, (collectively referred to as derivatives) and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-for-sale security, or a foreign-currency-denominated forecasted transaction. Adoption by the Company is not expected to have any material impact upon financial position or results of operations. 7 VOLUNTEER BANCORP, INC. AND SUBSIDIARY Notes to Unaudited Condensed Consolidated Financial Statements Nine Months Ended September 30, 1998 and 1997 - -------------------------------------------------------------------------------- 3. Long-term debt The Company's long-term debt consists of a single note payable in the amount of $3,050,000 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 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 September 30 , 1998 the rate on the note was 7.637% per annum. Principal is payable annually commencing January 31, 1996 and each January 1 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. 8 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 September 30, 1998 and 1997, and the related condensed consolidated statements of earnings and condensed consolidated statements of comprehensive income for the three and nine months then ended and the condensed consolidated statements 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. November 5, 1998 9 VOLUNTEER BANCORP, INC. AND SUBSIDIARY FINANCIAL HIGHLIGHTS AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
Three Months Ended Nine Months Ended September 30, September 30, -------------------------------------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Net income $ 148,048 $ 70,751 $ 309,312 $ 139,269 Per common share data: Net income per weighted average common share $ 0.27 $ 0.13 $ 0.57 $ 0.26 Book value $ 7.90 $ 6.84 $ 7.90 $ 6.84 Ratios: Return on average assets 0.16% 0.10% 0.36% 0.21% Return on average common equity 3.57% 2.00% 7.61% 4.02% Net interest margin (taxable equivalent basis) 3.80% 3.96% 3.75% 3.77% Expense ratio 2.57% 2.92% 2.70% 2.98% Allowance for losses on loans/loans 1.31% 1.33% 1.31% 1.33% Non-performing loans/loans 0.59% 0.58% 0.59% 0.58% Non-performing assets/loans and foreclosed properties 0.68% 0.76% 0.68% 0.76% Shareholders' equity/total assets 4.55% 5.06% 4.55% 5.06% Leverage ratio (tangible capital/ tangible average assets) 4.32% 4.88% 4.56% 5.09%
10 Item 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, 1998 AND 1997 OPERATING RESULTS The Company reported net income for the third quarter of $148,048, or $0.27 per weighted average common share, compared to net income of $70,751, or $0.13 for the same period a year ago. Returns on average assets and average common equity were 0.16% and 3.57%, respectively, for the quarter compared to 0.10% and 2.00% for the same period last year. The net income for the first nine months of 1998 was $309,312, or $0.57 per weighted average common share. This compares to net income of $139,269, or $0.26 per weighted average common share, for the same period last year. Net interest income for the first nine months of 1998 increased $474,777 versus the first nine months of 1996 to $2,199,115. The increase is attributable to growth in interest earning assets of 30.49%. Average loans grew 32.04% over the third quarter of 1997. Total Company assets were $93,835,567 at September 30, 1998 compared to $71,665,445 as of September 30, 1997. The net interest margin (taxable equivalent basis) was 3.80% for the third quarter of 1998 compared to 3.96% for the third quarter of 1997. The yield on the investment portfolio was 6.52% for the third quarter of 1998 and 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 third quarter of 1998 increased $32,002 over the third quarter of 1997. The growth is attributable to service charges on deposit accounts and other fees. Noninterest expenses for the third quarter of 1998 increased $76,231 compared to the third quarter of 1997 primarily as a result of the growth the Bank has experienced in the past year. ASSET QUALITY Non-performing assets at September 30, 1998 were $398,000 or 0.68% of loans and foreclosed properties, compared to $346,000, or 0.58% of loans and foreclosed properties at September 30, 1997. The provision for losses on loans was $60,000 for the third quarter of 1998 and 1997. At September 30, 1998, the allowance for losses on loans was 1.31% of loans and approximately 191% 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, 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: November 13, 1998 /s/ Reed D. Matney --------------------------------------- Reed D. Matney, President (principal executive officer) Date: November 13, 1998 /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 November 5, 1998 included in this Quarterly Report on Form 10-QSB for the Quarter Ended September 30, 1998. Welch & Associates Nashville, Tennessee November 13, 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 NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 2,087,064 0 5,661,525 0 21,593,525 2,068,241 2,080,163 58,213,792 761,721 93,835,567 83,890,533 1,615,953 1,027,108 3,045,000 0 0 5,390 4,251,583 93,835,567 3,926,963 967,738 245,969 5,140,670 2,684,733 2,941,555 2,199,115 180,000 22,672 1,758,462 485,907 309,312 0 0 309,312 0.57 0 8.53 20,095 326,000 0 0 660,336 81,971 3,356 761,721 761,721 0 0
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