U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number: 333-00724
VALLEY RIDGE FINANCIAL CORP.
(Exact Name of Small Business Issuer as Specified in its Charter)
MICHIGAN 38-2888214
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6 NORTH MAIN STREET (616) 678-5911
KENT CITY, MICHIGAN 49330 (Issuer's Telephone Number,
(Address of Principal Executive Offices) Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by
Section 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 _____ No __X__.
There were 373,862 shares of Common Stock ($10 par value) outstanding as of
June 30, 1996.
Transitional Small Business Disclosure Format (check one): Yes _____
No __X__.
VALLEY RIDGE FINANCIAL CORP.
INDEX
___________________________________________________________________________
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets - June 30, 1996
(Unaudited) and December 31, 1995 . . . . . . . . . . . . 1
Consolidated Statements of Income - Three and Six
Months Ended June 30, 1996 and June 30, 1995
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1996 and June 30, 1995 (Unaudited) . . . . 3
Notes to Consolidated Financial Statements (Unaudited). . . 5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION. . . . . . . . . . . . . . . . . 10
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES. . . . . . . . . . . . . . . 12
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY-HOLDERS . . . . . . . . . . . . . . . . . 12
Item 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . 14
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
VALLEY RIDGE FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
___________________________________________________________________________
JUNE 30, DECEMBER 31,
1996 1995
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 4,470,146 $ 4,311,500
Federal funds sold 3,200,000 300,000
Total cash and cash equivalents 7,670,146 4,611,500
Securities available for sale 14,658,744 15,411,044
Other securities 623,096 513,496
Total loans 60,957,670 62,295,856
Allowance for loan losses (946,779) (883,597)
60,010,891 61,412,259
Premises and equipment - net 1,392,498 1,431,718
Accrued interest receivable 671,535 700,937
Other assets 1,489,849 1,514,762
Total assets $86,516,759 $85,595,716
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 9,561,673 $10,031,283
Interest-bearing 62,193,154 60,910,479
71,754,827 70,941,762
Accrued interest payable 145,491 136,174
Securities sold under agreement to repurchase 452,833 --
Other borrowings 5,000,000 4,000,000
Other liabilities 276,675 1,602,992
Total liabilities 77,629,826 76,680,928
-1-
Stockholders' equity
Common stock, $10 par value: 500,000
shares authorized 373,862 and 372,862
shares outstanding at June 30, 1996
and December 31, 1995, respectively 3,738,620 3,728,620
Surplus 1,750,804 1,738,254
Retained earnings 3,250,266 2,942,370
Net unrealized gain on securities available
for sale, net of tax of ($75,852) at
June 30, 1996 and ($260,432) at
December 31, 1995 147,243 505,544
Total stockholders' equity 8,886,933 8,914,788
Total liabilities and stockholders'
equity $86,516,759 $85,595,716
</TABLE>
___________________________________________________________________________
See accompanying notes to consolidated financial statements.
-2-
<TABLE>
VALLEY RIDGE FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
___________________________________________________________________________
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995
<S> <C> <C> <C> <C>
Interest income
Loans, including fees $1,414,876 $1,376,876 $2,842,114 $2,713,731
Federal funds sold 58,364 20,796 79,237 51,299
Investment securities
Taxable 76,929 100,109 160,856 190,391
Nontaxable 152,668 119,710 305,791 236,021
1,702,837 1,617,491 3,387,998 3,191,442
Interest expense
Deposits 614,513 662,648 1,221,301 1,282,119
Other 75,194 3,192 145,101 33,792
689,707 665,840 1,366,402 1,315,911
NET INTEREST INCOME 1,013,130 951,651 2,021,596 1,875,531
Provision for loan losses 30,000 30,000 60,000 55,000
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 983,130 921,651 1,961,596 1,820,531
Other income
Service charges 144,590 140,581 291,895 283,250
Gain (loss) on sale of investment
securities 4,998 206 15,474 (1,672)
Gain on sale of loans 5,370 1,512 21,206 2,076
Other 59,078 20,755 85,148 51,732
214,036 163,054 413,723 335,386
Other expense
Salaries and benefits 443,063 411,665 878,448 822,550
Director fees 21,000 23,500 42,000 45,100
Occupancy 56,182 53,142 108,111 105,891
Furniture and fixtures 55,105 50,575 102,851 103,261
FDIC insurance premium 500 38,251 1,000 76,502
Data processing 47,314 42,803 89,619 84,700
Postage and supplies 36,894 38,400 95,253 86,453
Legal and professional fees 53,519 7,382 123,623 17,997
Other 186,670 167,239 364,952 323,877
900,247 832,957 1,805,857 1,666,331
-3-
INCOME BEFORE FEDERAL INCOME TAX 296,919 251,748 569,462 489,586
Federal income tax expense 61,071 55,182 112,021 98,211
NET INCOME $ 235,848 $ 196,566 $ 457,441 $ 391,375
Net income per share $ .63 $ .53 $ 1.22 $ 1.05
Dividends per share $ .20 $ .20 $ .40 $ .40
</TABLE>
___________________________________________________________________________
See accompanying notes to consolidated financial statements.
-4-
<TABLE>
VALLEY RIDGE FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
___________________________________________________________________________
SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 457,441 $ 391,375
Adjustments to reconcile net income to net
cash from operating activities
Depreciation 78,599 76,106
Amortization of:
Premiums and discounts on securities, net 43,598 55,841
Goodwill and core deposit intangibles 16,509 17,493
Provision for loan losses 60,000 55,000
(Gain) loss on sale of securities (15,474) 1,672
Gain on sale of loans (21,206) (2,076)
Loans originated for sale (2,489,434) (221,180)
Proceeds from loans sold 2,510,640 223,256
Net change in:
Accrued interest receivable 29,402 (3,356)
Other assets 192,984 (20,015)
Accrued expenses and other liabilities (1,317,000) (130,451)
Net cash provided by (used in)
operating activities (453,941) 443,665
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in loans 1,341,368 (970,531)
Proceeds from:
Sales of securities available for sale 3,821,257 2,842,714
Repayments and maturities of securities
available for sale 895,000 --
Principal paydowns on securities held to maturity 609,560 326,979
Maturities of securities held to maturity -- 137,000
Purchase of:
Securities available for sale (5,144,522) (4,391,826)
Federal Home Loan Bank stock (109,600) (28,600)
Premises and equipment, net (39,379) (44,676)
Net cash provided by (used in) investing activities 1,373,684 (2,128,940)
</TABLE>
___________________________________________________________________________
See accompanying notes to consolidated financial statements.
-5-
<TABLE>
VALLEY RIDGE FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS-CONTINUED
(Unaudited)
<CAPTION>
___________________________________________________________________________
SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock $ 22,550 $ 20,690
Net change in securities sold under agreement
to repurchase 452,833 --
Net increase in deposits 813,065 1,720,283
Advances from Federal Home Loan Bank 3,000,000 --
Payment on Federal Home Loan Bank advance (2,000,000) --
Dividends paid (149,545) (149,151)
Net cash provided by financing activities 2,138,903 1,591,822
Net change in cash and cash equivalents 3,058,646 (93,453)
Cash and cash equivalents at beginning of period 4,611,500 5,087,966
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,670,146 $4,994,513
Supplemental disclosures of cash flow information
Cash paid during the year for
Interest $ 1,357,085 $1,293,120
Income taxes 147,749 213,714
</TABLE>
___________________________________________________________________________
See accompanying notes to consolidated financial statements.
-6-
VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
___________________________________________________________________________
1. BASIS OF PRESENTATION:
The unaudited financial statements as of June 30, 1996, and for the
three and six months ended June 30, 1996 and 1995, include the
consolidated results of operations of Valley Ridge Financial Corp.
("Corporation") and its wholly owned subsidiary, Kent City State Bank
("Bank"). These consolidated financial statements have been prepared
in accordance with the Instructions for Form 10-QSB and Item 310(b) of
Regulation S-B and do not include all disclosures required by generally
accepted accounting principles for a complete presentation of the
Corporation's financial condition and results of operations. In the
opinion of management, the information reflects all adjustments
(consisting only of normal recurring adjustments) which are necessary
in order to make the financial statements not misleading and for a fair
presentation of the results of operations for such periods. The results
for the period ended June 30, 1996, should not be considered as
indicative of results for a full year.
2. ACQUISITIONS:
In September of 1995, the Corporation announced that it had signed a
definitive agreement to merge with Community Bank Corporation, parent
company of The Grant State Bank. Community Bank Corporation had total
assets of approximately $28,700,000 at December 31, 1995, and revenues,
net income, and earnings per share of $2,475,000, $364,000, and $4.76,
respectively, for the year ended December 31, 1995. Community Bank
Corporation reported net income of $157,157 for the six months ended
June 30, 1996. A Registration Statement on Form S-4 for this
transaction was filed with the Securities and Exchange Commission
(Registration Statement No. 333-00724) and was declared effective by
the Securities and Exchange Commission on May 13, 1996. The
shareholders of both the Corporation and Community Bank Corporation
voted to approve the transaction on June 25, 1996. The transaction
was consummated on July 1, 1996, structured as a tax-free exchange,
and is being accounted for under the pooling-of-interests method of
accounting. The agreement calls for issuance of 121,726 shares of
Valley Ridge Financial Corp. common stock for all outstanding shares
of Community Bank Corporation common stock.
___________________________________________________________________________
-7-
VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
___________________________________________________________________________
3. SECURITIES:
The Corporation classifies all securities into an available-for-sale
category. Available-for-sale securities are those the Corporation may
decide to sell if needed for liquidity, asset-liability management, or
other reasons. Available-for-sale securities are reported at fair
value, with unrealized gains and losses included in a separate
component of equity, net of tax.
The Corporation's portfolio of securities available-for-sale consists
of securities acquired to meet the Corporation's regulatory liquidity
requirement and anticipated near term cash funding requirements.
Investments in this portfolio are primarily obligations of states and
political subdivisions.
The amortized cost and fair values of securities at June 30, 1996,
were as follows:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUES
<S> <C> <C> <C> <C> <C>
Obligations of states and
political subdivisions $10,797,492 $360,233 $(168,587) $10,989,138
Mortgage-backed securities 3,638,157 35,911 (4,462) 3,669,606
$14,435,649 $396,144 $(173,049) $14,658,744
OTHER SECURITIES
Federal Reserve stock $ 132,000 $ 132,000
Federal Home Loan Bank stock 486,100 486,100
Farmer Mac stock 4,996 4,996
$ 623,096 $ 623,096
</TABLE>
___________________________________________________________________________
-8-
VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
___________________________________________________________________________
3. SECURITIES: (Continued)
The amortized cost and fair values of securities at June 30, 1996, by
contractual maturity, are shown below. Expected maturities may differ
from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUES
<S> <C> <C> <C>
Due in one year or less $ 757,090 $ 764,819
Due after one year through five years 1,615,908 1,697,698
Due after five years through ten years 2,698,252 2,903,789
Due after ten years 5,726,242 5,622,832
10,797,492 10,989,138
Mortgage-backed securities 3,638,157 3,669,606
$14,435,649 $14,658,744
</TABLE>
Because of their variable payments, mortgage-backed securities are not
reported by a specific maturity grouping.
4. LOANS:
Major loan classifications as of June 30, 1996, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Commercial $20,437,176
Real estate 28,638,456
Consumer 5,619,645
Agricultural 6,262,393
$60,957,670
</TABLE>
___________________________________________________________________________
-9-
VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
___________________________________________________________________________
5. ALLOWANCE FOR LOAN LOSSES:
The following is a summary of the activity in the allowance for loan
losses account for the six months ended June 30, 1996:
<TABLE>
<CAPTION>
<S> <C> <C>
Balance at January 1, 1996 $883,597
Provision for loan losses charged
to operating expense 60,000
Recoveries on loans previously charged
to the allowance 14,120
Losses charged off (10,938)
Balance at June 30, 1996 $946,779
</TABLE>
6. OTHER BORROWINGS:
At June 30, 1996, the Corporation had the following advances from the
Federal Home Loan Bank ("FHLB"):
<TABLE>
<CAPTION>
TYPE INTEREST RATE MATURITY DATE AMOUNT
<S> <C> <C> <C> <C>
Fixed 5.730% July 21, 1997 $2,000,000
Fixed 5.260 February 1, 1999 2,000,000
Fixed 5.230 February 1, 1999 1,000,000
$5,000,000
</TABLE>
Each advance requires monthly interest payments at fixed rates. These
borrowings are collateralized by nonspecific loans within the mortgage
portfolio up to the principal outstanding. The fixed rate notes carry
a minimum prepayment penalty of $5,000.
___________________________________________________________________________
-10-
VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
___________________________________________________________________________
7. EARNINGS PER COMMON SHARE:
Earnings per share are calculated on the basis of the weighted-average
number of shares outstanding. Earnings per share amounts are based on
373,224 and 373,543 shares for the three and six months ended June 30,
1996, respectively, and 372,584 and 372,724 shares for the three and
six months ended June 30, 1995, respectively. All share amounts have
been restated to reflect stock dividends and splits.
8. STOCK SPLITS:
On January 26, 1995, the Board of Directors approved a two-for-one
split of the Corporation's common stock effected in the form of a
stock dividend. The stated par value of each share was not changed
from $10. All share and per share amounts have been adjusted to
reflect this stock split.
9. LOAN SERVICING RIGHTS:
In May of 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 122, ACCOUNTING
FOR MORTGAGE SERVICING RIGHTS, to require that a mortgage-banking
enterprise recognize, as separate assets, acquired rights to service
mortgage loans for others. A mortgage banking enterprise that
acquires mortgage servicing rights through either the purchase or
origination of mortgage loans and sells or securitizes those loans
with servicing rights retained should allocate the total cost of the
mortgage loans to the mortgage servicing rights and the loans (without
the mortgage servicing rights) based on their relative fair values if
it is practicable to estimate those fair values. If it is not
practicable to estimate the fair values of the mortgage servicing
rights and the mortgage loans (without the mortgage servicing rights),
the entire cost of purchasing or originating the loans should be
allocated to the mortgage loans (without the mortgage servicing
rights) and no cost should be allocated to the mortgage servicing
rights.
___________________________________________________________________________
-11-
VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
___________________________________________________________________________
9. LOAN SERVICING RIGHTS: (Continued)
This Statement requires that a mortgage-banking enterprise assess its
capitalized mortgage servicing rights for impairment based on the fair
value of those rights. A mortgage-banking enterprise should stratify
its mortgage servicing rights that are capitalized after the adoption
of this Statement based on one or more of the predominant risk
characteristics of the underlying loans. Impairment should be
recognized through a valuation allowance for each impaired stratum.
The Corporation adopted SFAS No. 122 on January 1, 1996. The impact
of adopting SFAS No. 122 has not been material to the Corporation.
___________________________________________________________________________
-12-
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion is designed to provide a review of the
consolidated financial condition and results of operations of Valley Ridge
Financial Corp. ("Valley Ridge"). This discussion should be read in
conjunction with the consolidated financial statements and related notes.
RESULTS OF OPERATIONS: Valley Ridge reported net income of $235,848 or
$.63 per share for the second quarter of 1996. This was 20% higher than
the $196,566, or $.53 per share, earned in the second quarter of 1995.
For the first six months of 1996, Valley Ridge reported net income of
$457,441 or $1.22 per share, a 17% increase over the $391,375 or $1.05 per
share for the same period in 1995. The improvement in the second quarter
of 1996 as well as for the six months ended June 30, 1996 was a result of
improved net interest income and other income, partially offset by
increased other expenses. Net interest income, before the provision for
loan losses, of $1,013,130 for the second quarter of 1996 was approximately
6.5% higher than the $921,651 reported for the same period in 1995. Net
interest income, before the provision for loan losses, of $2,021,596 for
the first six months of 1996, was approximately 8% higher than the
$1,875,531 reported for the same period in 1995.
Net recoveries were approximately $4,600 and $3,200 for the second quarter
and the first six months of 1996, respectively, compared to net charge-
offs of approximately $19,000 and $20,900 for the second quarter and the
first six months of 1995, respectively. The provision for loan losses
was $30,000 and $60,000 for the second quarter and the first six months
of 1996, respectively, compared to $25,000 and $55,000 for the same
periods in 1995. The provision for loan losses represents the
adjustment to the allowance for loan losses needed to maintain the
allowance at a level determined by management to cover inherent losses
within Valley Ridge's loan portfolio.
Non-interest income was approximately $214,000 and $414,000 for the second
quarter and the six months ended June 30, 1996, respectively, compared to
$163,000 and $335,000 for the same periods in 1995. The increase for
both the second quarter as well as the first six months of 1996 was
primarily a result of increased gains on sales of loans, an increase in
the service charges on deposit accounts and increased investment center
income during 1996 compared to 1995. However, the increase in non-
interest income was more than offset by an increase in non-interest
expense to approximately $900,000 and $1,806,000 for the second quarter
and six months ended June 30, 1996, compared to $833,000 and $1,666,000
for the same periods in 1995. This was primarily due to an increase in
legal and accounting fees related to the merger with Community Bank
Corporation. There was a significant drop in FDIC insurance premium
costs during 1996 compared to 1995.
___________________________________________________________________________
-13-
Management is not aware of any existing trends, events, uncertainties, or
current recommendations by regulatory authorities that are expected to have
a material impact on Valley Ridge's future operating results.
FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES: Total assets
increased by slightly more than 1% or by $921,043 to $86,516,759 at
June 30, 1996, compared to $85,595,716 at December 31, 1995. Total
liabilities increased by a comparable amount of $948,898 to $77,629,826 at
June 30, 1996, compared to $76,680,928 at December 31, 1995. Total
stockholders' equity decreased by approximately $28,000 to $8,886,933 at
June 30, 1996. The decrease in stockholders' equity is due to a decrease
in unrealized gain on securities available for sale of $358,301, which more
than offset retention of earnings and sales of stock to the employee stock
ownership plan.
Total loans declined by $1,338,186 or 2.1% to $60,957,670. Approximately
$500,000 of the decline was due to the sale of Valley Ridge's student loan
portfolio and most of the remaining decline was due to mortgage refinancing
activity. Deposits increased by approximately $813,065 or 1.1% to
$71,754,827. The overall impact of these two changes was a decline in the
net loan to deposit ratio to 83.6% at June 30, 1996, compared to 86.6% at
December 31, 1995. The allowance for loan losses increased by approximately
$63,182 while maintaining a reserve of 1.55% of outstanding loans.
Valley Ridge paid a dividend of $149,545 in the first six months of 1996,
virtually the same as the amount paid during 1995. Cash dividends per share
in 1996 have been adjusted for the 2-for-1 stock split paid in the first
quarter of 1995.
Stockholders' equity as a percent of total assets was 10.27% at June 30,
1996, compared to 10.41% at December 31, 1995. Valley Ridge's capital
ratios continue to exceed the minimum regulatory levels prescribed by the
Federal Reserve Board.
Total cash and cash equivalents and investment securities totaled $22.3
million at June 30, 1996, or about 26% of total assets. Management believes
that the current level of liquidity is sufficient to meet the normal
operating needs of Valley Ridge.
The principal source of funding for Valley Ridge continues to come from its
deposit customers, which has historically been a stable source of funds.
Deposits increased 1.1% during the first six months of 1996.
Other sources of funding include normal loan repayments, sales and
maturities of securities, federal funds available from correspondent banks,
and additional advances available from the Federal Home Loan Bank. As of
June 30, 1996, Valley Ridge could borrow an additional $9 million from the
Federal Home Loan Bank.
___________________________________________________________________________
-14-
Securities sold under agreements to repurchase generally mature within one
to three days from the transaction date. The Bank has pledged certain
investment securities, which are held in safekeeping, as collateral against
these borrowings. The Bank did not participate in repurchase agreements
during 1995.
In September of 1995, the Corporation announced that it had signed a
definitive agreement to merge with Community Bank Corporation, the parent
company of The Grant State Bank. Community Bank Corporation had total
assets of approximately $28,700,000 at December 31, 1995, and revenues,
net income, and earnings per share of $2,475,000, $364,000, and $4.76,
respectively, for the year ended December 31, 1995. Community Bank
Corporation reported net income of $157,157 for the six months ended
June 30, 1996. A Registration Statement on Form S-4 for this transaction
was filed with the Securities and Exchange Commission (Registration
Statement No. 333-00724) and was declared effective by the Securities and
Exchange Commission on May 13, 1996. The shareholders of both Valley
Ridge and Community Bank Corporation voted to approve the transaction
on June 25, 1996. The transaction was consummated on July 1, 1996,
structured as a tax-free exchange and is being accounted for under the
pooling-of-interests method of accounting. The agreement calls for
issuance of 121,726 shares of Valley Ridge Financial Corp. common stock
for all outstanding shares of Community Bank Corporation common stock.
___________________________________________________________________________
-15-
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
The information required by this Item has been previously filed with the
Securities and Exchange Commission in Valley Ridge's Registration
Statement on Form S-4 (Registration Statement No. 333-00724) dated May 13,
1996 (the "Registration Statement"). The information included under the
captions "THE MERGER -- Description of Valley Ridge Capital Stock,
- --Provisions Affecting Control of Valley Ridge, -- Comparison of Rights of
Valley Ridge Shareholders and Community Shareholders to Rights of
Shareholders in Combined Organization, and -- Indemnification and
Limitation of Liability" on pages 19 through 25, inclusive, of the
Registration Statement are here incorporated by reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
(a) Annual Meeting. The annual meeting of shareholders of Valley
Ridge was held on May 21, 1996. The purpose of the meeting was to elect
directors and to transact any other business that may properly come before
the meeting.
The name of each director elected (along with the number of votes
cast for or authority withheld) and the name of each other director whose
term of office as a director continued after the meeting follows:
<TABLE>
<CAPTION>
VOTES CAST
AUTHORITY
FOR WITHHELD
<S> <C> <C>
ELECTED DIRECTORS
K. Timothy Bull 297,411 7,102
Richard L. Edgar 297,411 7,102
Donald Swanson 297,411 7,102
DIRECTORS WHO CONTINUED TO SERVE
Jerome B. Arends Gary Gust
Robert C. Humphreys Michael E. McHugh
John J. Niederer Paul K. Spoelman
</TABLE>
(b) Special Meeting. A special meeting of shareholders of Valley
Ridge was held on June 25, 1996. The purpose of the meeting was to
consider and vote upon a proposal to approve an Agreement and Plan of
___________________________________________________________________________
-16-
Merger between Valley Ridge and Community Bank Corporation and to
transact any other business that may properly come before the meeting.
For the resolution to approve the Agreement and Plan of Merger,
the numbers of votes were as follows:
<TABLE>
<CAPTION>
VOTES CAST
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C> <C>
308,648 9,902 526 0
</TABLE>
As provided in the Agreement and Plan of Merger, the following individuals
were elected as directors of Valley Ridge to terms expiring in the years
set forth opposite their respective names upon the effective time of the
merger of Community Bank Corporation with and into Valley Ridge (July 1,
1996):
<TABLE>
<CAPTION>
NAME OF DIRECTOR TERM EXPIRES IN
<S> <C> <C>
Jerome B. Arends 1997
K. Timothy Bull 1997
Elmo L. Campbell 1997
Richard L. Edgar 1997
Fred J. Finkbeiner 1997
Gary Gust 1998
Robert L. Hance 1998
Ronald L. Hansen 1998
Robert C. Humphreys 1998
Ben J. Landheer 1998
Michael E. McHugh 1999
Dennis C. Nelson 1999
John J. Niederer 1999
Paul K. Spoelman 1999
Donald Swanson 1999
Donald VanSingel 1999
</TABLE>
___________________________________________________________________________
-17-
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report:
EXHIBIT NO. DOCUMENT
3.1 Articles of Incorporation. Previously filed as an
exhibit to the Registrant's Registration Statement
on Form S-4 (Registration Statement No. 333-00724).
Here incorporated by reference.
3.2 Bylaws. Previously filed as an exhibit to the
Registrant's Registration Statement on Form S-4
(Registration Statement No. 333-00724). Here
incorporated by reference.
4.1 Form of Stock Certificate. Previously filed as an
exhibit to the Registrant's Registration Statement
on Form S-4 (Registration Statement No. 333-00724).
Here incorporated by reference.
4.2 Excerpts from Articles of Incorporation. Previously
filed as an exhibit to the Registrant's Registration
Statement on Form S-4 (Registration Statement No.
333-00724). Here incorporated by reference.
4.3 Excerpts from Bylaws. Previously filed as an
exhibit to the Registrant's Registration Statement
on Form S-4 (Registration Statement No. 333-00724).
Here incorporated by reference.
4.4 Long-Term Debt. Valley Ridge is a party to several
long-term debt agreements which do not exceed 10% of
Valley Ridge's total consolidated assets. Valley
Ridge agrees to furnish copies of the agreements
defining the rights of the other parties thereto to
the Securities and Exchange Commission upon request.
27 Financial Data Schedule.
___________________________________________________________________________
-18-
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.
VALLEY RIDGE FINANCIAL CORP.
Registrant
Date: AUGUST 14, 1996 /S/ MICHAEL MCHUGH
Michael McHugh, Secretary/Treasurer
(Principal Financial and Accounting
Officer and Duly Authorized Signatory
for Registrant)
___________________________________________________________________________
-19-
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
3.1 Articles of Incorporation. Previously filed
as an exhibit to the Registrant's
Registration Statement on Form S-4
(Registration Statement No. 333-00724). Here
incorporated by reference.
3.2 Bylaws. Previously filed as an exhibit to
the Registrant's Registration Statement on
Form S-4 (Registration Statement No. 333-00724).
Here incorporated by reference.
4.1 Form of Stock Certificate. Previously filed
as an exhibit to the Registrant's
Registration Statement on Form S-4
(Registration Statement No. 333-00724). Here
incorporated by reference.
4.2 Excerpts from Articles of Incorporation.
Previously filed as an exhibit to the
Registrant's Registration Statement on Form
S-4 (Registration Statement No. 333-00724).
Here incorporated by reference.
4.3 Excerpts from Bylaws. Previously filed as an
exhibit to the Registrant's Registration
Statement on Form S-4 (Registration Statement
No. 333-00724). Here incorporated by
reference.
4.4 Long-Term Debt. Valley Ridge is a party to
several long-term debt agreements which do
not exceed 10% of Valley Ridge's total
consolidated assets. Valley Ridge agrees to
furnish copies of the agreements defining the
rights of the other parties thereto to the
Securities and Exchange Commission upon
request.
27 Financial Data Schedule.
___________________________________________________________________________
-20-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF VALLEY RIDGE
FINANCIAL CORP. FOR THE PERIOD ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,470
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 14,659
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 60,958
<ALLOWANCE> 947
<TOTAL-ASSETS> 86,517
<DEPOSITS> 71,755
<SHORT-TERM> 453
<LIABILITIES-OTHER> 277
<LONG-TERM> 5,000
<COMMON> 3,739
0
0
<OTHER-SE> 5,148
<TOTAL-LIABILITIES-AND-EQUITY> 86,517
<INTEREST-LOAN> 2,842
<INTEREST-INVEST> 467
<INTEREST-OTHER> 79
<INTEREST-TOTAL> 3,388
<INTEREST-DEPOSIT> 1,221
<INTEREST-EXPENSE> 1,366
<INTEREST-INCOME-NET> 2,022
<LOAN-LOSSES> 60
<SECURITIES-GAINS> 15
<EXPENSE-OTHER> 1,806
<INCOME-PRETAX> 569
<INCOME-PRE-EXTRAORDINARY> 569
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 457
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 92
<LOANS-PAST> 22
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 884
<CHARGE-OFFS> 11
<RECOVERIES> 14
<ALLOWANCE-CLOSE> 947
<ALLOWANCE-DOMESTIC> 400
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 547
</TABLE>
