SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED JUNE 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR TRANSITION PERIOD FROM __________ TO _________
Commission File # 333-77209
VILLAGE BANCORP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-4200931
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1845 EAST RAND ROAD
P.O. BOX 936
PROSPECT HEIGHTS, ILLINOIS 60070-0936
(Address of principal executive office)
60070-0936
(Zip Code)
(847)-870-8300
(Registrant's telephone number including area code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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|
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the last practicable date: August 11, 1999
================================================================================
Class Outstanding June 30, 1999
- --------------------------------------------------------------------------------
Common, par value $.01 888,000
================================================================================
Transitional Small Business Disclosure Format (check one)
Yes |_| No |X|
<PAGE>
VILLAGE BANCORP, INC.
FORM 10-QSB
TABLE OF CONTENTS
Page No.
PART I
FINANCIAL INFORMATION
Item 1 -- Financial Statements..............................................1
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations................................8
PART II
OTHER INFORMATION
Item 1. Legal Proceedings .................................................18
Item 2. Changes in Securities and Use of Proceeds..........................18
Item 3. Defaults Upon Senior Securities....................................19
Item 4. Submission of Matters to a Vote of Security Holders................19
Item 5. Other Information..................................................20
Item 6. Exhibits and Reports on Form 8-K...................................20
Form 10-QSB Signature Page...........................................21
i
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
The financial information of Village Bancorp, Inc. ("Village Bancorp")
included herein is unaudited; however, such information reflects all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation for the interim periods. The
financial statements have been prepared in accordance with generally acceptable
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Article 10 of Regulation S-X. This information
should be reviewed in conjunction with Village Bancorp's Registration Statement
on Form SB-2, as amended (Reg. No 333-77209), effective June 25, 1999, which
contains audited financial statements and accompanying footnotes.
The results of operations for the six months ended June 30, 1999 are not
necessarily indicative of the results expected for the full year ending December
31, 1999.
For the purpose of per share information, Village Bancorp had 888,000
shares of common stock outstanding at June 30, 1999 and December 31, 1998 and
400,000 shares outstanding at June 30, 1998.
1
<PAGE>
VILLAGE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998
------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents................................ $ 3,861 $ 3,124
Federal funds sold....................................... 11,177 23,906
Securities available-for-sale............................ 39,946 8,116
Loans.................................................... 45,886 35,655
Allowance for loan losses................................ (611) (459)
-------- -------
45,275 35,196
Premises, leasehold improvements and equipment, net...... 2,471 1,327
Goodwill and core deposit intangibles.................... 460 478
Accrued interest and other assets........................ 1,290 675
-------- -------
$104,480 $72,822
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing.................................. $ 11,270 $11,096
Interest-bearing..................................... 82,682 50,117
-------- -------
93,952 61,213
Mandatorily convertible subordinated debentures......... 1,800 1,800
Accrued interest and other liabilities.................. 783 417
-------- -------
96,535 63,430
Shareholders' equity
Preferred stock -- $0.01 par value; authorized 500,000
shares; none issued
Common stock............................................ 9 222
Additional paid-in capital.............................. 10,191 9,978
Accumulated deficit..................................... (1,710) (848)
Accumulated other comprehensive income.................. (545) 40
-------- -------
7,945 9,392
-------- -------
$104,480 $72,822
======== =======
</TABLE>
2
<PAGE>
VILLAGE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ------------------
1999 1998 1999 1998
-------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Interest income
Loans, including fees.......................... $ 894 $ 675 $ 1,718 $1,332
Securities..................................... 411 80 640 158
Federal funds sold............................. 189 75 376 131
------ ----- ------- ------
1,494 830 2,734 1,621
Interest expense
Deposits....................................... 919 411 1,577 793
Other.......................................... 28 26 56 47
------ ----- ------- ------
947 437 1,633 840
------ ----- ------- ------
Net interest income............................. 547 393 1,101 781
Provision for loan losses....................... 69 47 156 86
------ ----- ------- ------
Net interest income after provision for loan
losses......................................... 478 346 945 695
Other income
Securities gains (losses), net................. -- -- 6 --
Service charges on deposit accounts............ 80 69 163 108
Other income................................... 66 29 119 46
------ ----- ------- ------
146 98 288 154
Other expense
Salaries and employee benefits................. 579 216 1,052 433
Occupancy and equipment expense................ 129 65 234 130
Other expenses................................. 424 185 820 361
------ ----- ------- ------
1,132 466 2,106 924
------ ----- ------- ------
Loss before income taxes........................ (508) (22) (873) (75)
Income taxes (benefit).......................... -- (2) (11) (16)
------ ----- ------- ------
Net loss........................................ (508) (24) (862) (59)
Change in unrealized gain (loss) on securities
available-for-sale, net of income taxes........ (465) 1 (585) 6
------ ----- ------- ------
Total comprehensive income...................... $ (973) $ (23) $(1,447) $ (53)
====== ===== ======= ======
Basic loss per share of common stock............ $ (.57) $(.06) $ (.97) $ (.15)
====== ===== ======= ======
</TABLE>
3
<PAGE>
VILLAGE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
GAIN
(LOSS) ON
ADDITIONAL SECURITIES
COMMON PAID-IN ACCUMULATED AVAILABLE-
STOCK CAPITAL DEFICIT FOR-SALE TOTAL
----- ------- ------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1998...... 100 $ 4,000 $ (98) $ (3) $ 3,999
Comprehensive income............ -- -- (59) 6 (53)
---- ------- ------- ----- -------
Balance at June 30, 1998....... 100 $ 4,000 $ (157) $ 3 $ 3,946
==== ======= ======= ===== =======
Balance at January 1, 1999...... 222 9,978 (848) 40 9,392
Change in par value of
common stock from $0.25
to $0.01 per share............. (213) 213 -- -- --
Comprehensive income............ -- -- (862) (585) (1,447)
---- ------- ------- ----- -------
Balance at June 30, 1999........ 9 $10,191 $(1,710) $(545) $ 7,945
==== ======= ======= ===== =======
</TABLE>
4
<PAGE>
VILLAGE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------
1999 1998
-------- --------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities
Net loss............................................................... $ (862) $ (59)
Adjustments to reconcile net loss to net cash used in operating
activities
Amortization of intangibles...................................... 18 18
Depreciation..................................................... 80 45
Securities (gains) losses, net................................... (6) --
Gain on sale of equipment........................................ -- --
Loss on sale of other real estate owned.......................... -- --
Net premium amortization on securities........................... 38 9
Provision for loan losses........................................ 156 86
Decrease (increase) in accrued interest and other assets......... (598) (647)
Increase in accrued interest and other liabilities............... 386 14
-------- -------
Net cash used in operating activities.......................... (788) (534)
Cash flows from investing activities
Decrease (increase) in federal funds sold.............................. 12,729 (300)
Proceeds from sales and maturities of securities available-for-sale.... 2,037 --
Purchase of securities available-for-sale.............................. (34,533) --
Net increase in loans.................................................. (10,231) (1,784)
Cash received as the result of acquisition of subsidiary bank.......... -- --
Proceeds from sale of other real estate owned.......................... -- --
Proceeds from sale of equipment........................................ -- --
Bank premises and equipment expenditures............................... (1,216) (15)
-------- -------
Net cash used in investing activities (31,214) (2,099)
Cash flows from financing activities
Net increase in deposits............................................... 32,739 3,717
Proceeds from issuance of common stock................................. -- --
Proceeds from issuance of convertible debentures....................... -- 1,029
-------- -------
Net cash provided by financing activities........................... 32,739 4,746
-------- -------
Increase in cash and cash equivalents 737 2,113
Cash and cash equivalents at beginning of period........................ 3,124 1,079
-------- -------
Cash and cash equivalents at end of period.............................. $ 3,861 $ 3,192
======== =======
Supplemental schedule of non-cash investing activities
Loans transferred to other real estate owned........................... $ 223 $ --
======== =======
</TABLE>
5
<PAGE>
VILLAGE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
NOTE 1 -- SECURITIES
JUNE 30, 1999 (UNAUDITED)
-----------------------------
AMORTIZED COST FAIR VALUE
-------------- ----------
Securities available-for-sale
U.S. Treasury securities..................... $ 4,045 $ 4,011
U.S. government agencies securities.......... 36,475 35,935
------- -------
$40,520 $39,946
======= =======
DECEMBER 31, 1998
-----------------------------
AMORTIZED COST FAIR VALUE
-------------- ----------
Securities available-for-sale
U.S. Treasury securities..................... $ 3,036 $ 3,058
U.S. government agencies securities.......... 5,020 5,058
------- -------
$ 8,056 $ 8,116
======= =======
NOTE 2 -- LOANS
The major classifications of loans are as follows:
JUNE 30, 1999 DECEMBER 31, 1998
------------- -----------------
Commercial.................................... $12,731 $ 8,564
Commercial real estate........................ 13,186 10,851
Consumer real estate.......................... 15,006 13,155
Consumer installment.......................... 4,963 3,085
------- -------
Total loans.................................. $45,886 $35,655
======= =======
NOTE 3 -- ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses was as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------- -----------------
<S> <C> <C>
Balance, beginning of period.................. $459 $276
Provision for loan losses..................... 156 242
Loans charged off............................. (31) (59)
Recoveries on loans previously charged off.... 27 --
---- ----
Balance, end of period........................ $611 $459
==== ====
</TABLE>
NOTE 4 -- STOCK OPTION PLAN
During 1998, Village Bancorp's shareholders approved the 1998 Omnibus Stock
Incentive Plan. The total number of shares subject to awards under the plan may
not exceed 225,000. As of June 30, 1999, options to purchase 106,000 shares of
common stock were outstanding under the plan, none of which were exercisable.
6
<PAGE>
VILLAGE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
NOTE 5 -- CONTINGENCIES
On June 11, 1999, Village Bancorp entered into a contract to purchase a
2.26-acre parcel of land for construction of a banking facility in Munster,
Indiana. The purchase price is approximately $700,000.
NOTE 6 -- STOCKHOLDERS EQUITY
A summary of common stock at June 30, 1999 and December 31, 1998 is as
follows:
JUNE 30, 1999 DECEMBER 31, 1998
------------- -----------------
Authorized shares.............................. 5,000,000 5,000,000
Par value per share............................ $.01 $.25
Shares issued and outstanding.................. 888,000 400,000
On April 6, 1999, the shareholders of Delta Bancorp, Inc. approved a plan
of merger by which Delta Bancorp, Inc. was merged into a newly formed Delaware
corporation. Concurrent with the merger, the corporation's name was changed to
Village Bancorp, Inc. In addition, the par value of the corporation's preferred
and common stock was changed from $1.00 and $.25, respectively, to $.01 per
share.
7
<PAGE>
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CONSOLIDATED RESULTS OF OPERATIONS
Village Bancorp recorded a net loss of $862,000 for the six months ended
June 30, 1999 as compared to a net loss of $59,000 for the same period in 1998
and a net loss of $508,000 for the three months ended June 30, 1999 as compared
to a net loss of $24,000 for the same period in 1998. The principle factors
contributing to the increased net loss for 1999 are the pre-opening expenses and
the initial operating loss of Village Bank North Barrington and pre-opening and
organizational expenses incurred in the formation of Village Bank Munster.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO JUNE 30, 1998
Net Interest Income. Net interest income increased $320,000 or 41% to
$1,101,000 for the six months ended June 30, 1999 from $781,000 for the same
period in 1998. Interest income on earning assets increased $1.1 million or
68.7% and interest expense on interest bearing liabilities increased $793,000 or
94.4% for the six months ended June 30, 1999 as compared to the same period in
1998. Interest income increased due to a $41 million increase in the average
volume outstanding, primarily in securities and loans which is offset by a 150
basis point decrease in the average rate on earning assets from 8.36% to 6.86%.
The increase in interest expense was primarily due to a $34 million increase in
average deposits which was offset by a 43 basis point decrease in rates paid to
4.93%. The net interest spread decreased 107 basis points to 1.93% for the six
months ended June 30, 1999. The decrease was primarily due to a decline in
market rates on earning asset and premium rates paid on deposits at Village Bank
North Barrington.
Provision for Loan Losses. The provision for loan losses increased $70,000
or 81.3% to $156,000 for the six months ended June 30,1999 from $86,000 for the
same period in 1998. The increase is due to an overall growth in the loan
portfolio and the initial funding of the allowance for loan losses for Village
Bank North Barrington. As of June 30, 1999, the allowance for loan losses
totaled $611,000 or 1.3% of total loans. Net charge-offs were $4,000 for each of
the six months ended June 30, 1999 and 1998. The amounts of the provision and
the allowance for loan losses are influenced by current economic conditions,
actual loss experience, industry trends and management's assessment of current
collection risks within the loan portfolio.
Other Income. Village Bancorp's other income increased $134,000 to $288,000
for the six months ended June 30, 1999 from $154,000 for the same period in
1998. Other income as a percentage of average assets was 0.5% (annualized) for
the six months ended June 30, 1999 as compared to 0.7% (annualized) for the same
period in 1998. The increase in the first six months of 1999 was primarily due
to increased service charges on deposit accounts due to increased volume and
increased ATM and Visa/MasterCard fees. In addition the 1999 results include a
$6,000 gain from the sale of securities.
Other Expenses. Village Bancorp's total other expenses increased $1.2
million or 128% to $2.1 million for the six months ended June 30, 1999 from
$924,000 for the same period in 1998. As a percentage of average assets, other
expenses were 4.4% (annualized) for the six months ended June 30, 1999 as
compared to 4.4% (annualized) for the same period in 1998. Net occupancy
expenses were 0.5% and 0.6% as a percentage of average assets in 1999 and 1998,
respectively. Salary and employee benefit expense increased $619,000 or 143% to
$1.1 million, primarily due to additional staffing costs to support Village Bank
North Barrington and the formation of Village Bank Munster. The full-time
equivalent number of employees increased from 20 in 1998 to 35 as of June 30,
1999. Other factors contributing to the increase in total other expenses were
$80,000 in additional marketing and advertising costs to
8
<PAGE>
promote Village Bank North Barrington, $139,000 increase in data processing fees
due to volume growth, $127,000 in other operating costs of Village Bank North
Barrington, increased legal and professional fees related to revising Village
Bancorp's corporate structure, organizational expenses for the formation of
Village Bank Munster and general increases in other categories to support the
growth and expansion of Village Bancorp.
Federal and State Income Taxes. Village Bancorp recorded an income tax
benefit of $11,000 for the six months ended June 30, 1999 and $16,000 for the
same period in 1998 due to its operating losses.
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO JUNE 30, 1998
Net Interest Income. Net interest income increased $154,000 or 39.1% to
$547,000 for the three months ended June 30, 1999 from $393,000 for the same
period in 1998. Interest income on earning assets increased $664,000 or 80% and
interest expense on interest bearing liabilities increased $510,000 or 116.7%
for the three months ended June 30, 1999 as compared to the same period in 1998.
Interest income increased due to a $48.5 million increase in the average volume
outstanding, primarily in securities and loans which is offset by a 153 basis
point decrease in the average rate on earning assets from 8.26% to 6.73%. The
increase in interest expense was primarily due to a $42 million increase in
average deposits, which was offset by a 45 basis point decrease in rates paid to
4.98%. The net interest spread decreased 107 basis points to 1.72% for the three
months ended June 30, 1999. The decrease was primarily due to a decline in
market rates on earning asset and premium rates paid on deposits at Village Bank
North Barrington.
Provision for Loan Losses. The provision for loan losses increased $22,000
or 46.8% to $69,000 for the three months ended June 30, 1999 from $47,000 for
the same period in 1998. The increase is due to an overall growth in the loan
portfolio and the initial funding of the allowance for loan losses for Village
Bank North Barrington. As of June 30, 1999, the allowance for loan losses
totaled $611,000 or 1.3% of total loans. Net charge-offs were $4,000 for each of
the three months ended June 30, 1999 and 1998. The amounts of the provision and
the allowance for loan losses are influenced by current economic conditions,
actual loss experience, industry trends and management's assessment of current
collection risks within the portfolio.
Other Income. Village Bancorp's other income increased $48,000 to $146,000
for the three months ended June 30, 1999 from $98,000 for the same period in
1998. Other income as a percentage of average assets was 0.6% (annualized) for
the three months ended June 30, 1999 as compared to 0.9% (annualized) for the
same period in 1998. The increase in the comparable periods was primarily due to
increased service charges on deposit accounts due to increased volume and
increased ATM and Visa/MasterCard fees. The decrease in the percentage of other
income to average assets is due to the asset growth of Village Bank North
Barrington.
Other Expenses. Village Bancorp's total other expenses increased $666,000
or 143% to $1.1 million for the three months ended June 30, 1999 from $466,000
for the same period in 1998. As a percentage of average assets, other expenses
were 4.7% (annualized) for the three months ended June 30, 1999 as compared to
4.3% (annualized) for the same period in 1998. Net occupancy expenses were 0.5%
and 0.6% as a percentage of average assets in 1999 and 1998, respectively.
Salary and employee benefit expense increased $363,000 or 168% to $579,000,
primarily due to additional staffing costs to support Village Bank North
Barrington and the formation of Village Bank Munster. The full-time equivalent
number of employees increased from 20 in 1998 to 35 as of June 30, 1999. Other
factors contributing to the increase in total other expenses were $55,000 in
additional marketing and advertising costs to promote Village Bank North
Barrington, $61,000 increase in data processing fees due to volume growth,
$84,000 in other operating costs of Village Bank North Barrington, increased
legal and professional fees
9
<PAGE>
related to revising Village Bancorp's corporate structure, organizational
expenses for the formation of Village Bank Munster and general increases in
other categories to support the growth and expansion of Village Bancorp.
Federal and State Income Taxes. Village Bancorp recorded no income tax
provision or benefit for the three months ended June 30, 1999 and a tax benefit
of $2,000 for the same period in 1998 due to its operating losses.
FINANCIAL CONDITION
Total assets increased $31.7 million or 43.5% to $104.5 million as of June
30, 1999 from $72.8 million as of December 31, 1998. The increase during these
periods is primarily due to the organization and growth of Village Bank North
Barrington.
Loans. Total loans increased $10.2 million to $45.8 million as of June 30,
1999 from $35.6 million as of December 31, 1998. As of June 30, 1999, 90% of
Village Bancorp's loans mature within five years based upon contractual dates
and 52% mature or reprice within one year. The increase in all loan categories
is due to the initial market penetration of Village Bank North Barrington.
Village Bancorp's loan portfolio largely reflects the profile of the
communities in which it operates. The following table shows the composition of
the loan portfolio
JUNE 30, 1999 DECEMBER 31, 1998
------------- -----------------
Commercial............................... $12,731 $ 8,564
Commercial real estate................... 13,186 10,851
Consumer real estate..................... 15,006 13,155
Consumer installment..................... 4,963 3,085
------- -------
Total loans........................... $45,886 $35,655
======= =======
Allowance for Loan Losses. The allowance for loan losses is maintained at a
level considered by management to be adequate to provide for potential losses.
The allowance for loan losses is increased by provisions charged to earnings and
is reduced by charge-offs, net of recoveries. The adequacy of the allowance for
loan losses is determined based on the overall composition of the loan
portfolio, past loan loss experience, current non-performing loans, potential
substandard credits and current economic conditions. The allowance for loan
losses was $611,000 at June 30, 1999 and $459,000 at December 31, 1999 or 1.3%
of total loans for each period.
The following table shows an analysis of the allowance for loan losses:
JUNE 30, 1999 DECEMBER 31, 1998
------------- -----------------
Average total loans........................... $40,202 $30,329
Total loans at end of period.................. 45,886 35,655
Total non-performing and impaired loans....... 498 32
Balance, beginning of period.................. 459 276
Total charge-offs............................. (31) (59)
Total recoveries.............................. 27 0
------- -------
Net charge-offs (4) (59)
------- -------
Provision for loan losses..................... 156 242
------- -------
Balance, end of period........................ $ 611 $ 459
======= =======
10
<PAGE>
June 30, 1999 December 31, 1998
------------- -----------------
Net charge-offs to average total loans........ --% 0.19%
Allowance to total loans at end of period..... 1.33% 1.29%
Allowance to non-performing loans............. 2.39x 14.34x
Non-performing Assets. Non-performing assets include non-accrual loans,
loans 90 days or more delinquent and still accruing and other real estate owned.
Village Bancorp discontinues the accrual of interest income on any loan when, in
the opinion of management, there is reasonable doubt as to the timely collection
of interest or principal. On a case-by-case basis the accrual of interest is
discontinued on a loan once it becomes 90 days past due.
Non-performing assets increased $466,000 to $498,000 as of June 30, 1999
from $32,000 as of December 31, 1999. Non-performing assets as of June 30, 1999
included $135,000 of loans past due 90 days or more and still accruing and
$363,000 of loans on non-accrual as compared to $1,000 of loans past due 90 days
and still accruing and $31,000 of loans on non-accrual as of December 31, 1998.
Village Bancorp did not hold any other real estate owned during the comparable
periods. The increase in loans past due 90 days relates primarily to one loan,
which was brought current during July 1999. The increase in non-accrual loans
relates to two specific credits, one real estate loan in which the collateral
value is sufficient and the property is for sale and one commercial loan in
which the cash flow from the business operation is currently not sufficient to
meet the payment schedule however, the principals' personal guarantees
adequately cover the loan balance.
Non-performing assets were 0.05% of total assets as of June 30, 1999
compared to 0.04% as of December 31, 1998. Management does not believe that the
increase in non-performing assets represents a decline in the overall quality of
the loan portfolio at this time.
Securities. Village Bancorp's security portfolio increased $31.8 million to
$39.9 million as of June 30, 1999 from $8.1 million as of December 31, 1998. The
growth was due to the generation of new deposits at Village Bank North
Barrington in excess of loan funding. At June 30, 1999 all securities mature in
one-five years and have all been categorized as available-for-sale in accordance
with SFAS No. 115. Village Bancorp held no securities with a book value
exceeding 10% of stockholders equity of a single issuer other than U.S. Treasury
or U.S. Government agencies nor any off-balance sheet derivative financial
instruments such as futures, forwards or swaps as of June 30, 1999.
The following table shows the composition of the investment portfolio by
major categories as of the dates indicated.
<TABLE>
<CAPTION>
JUNE 30, 1999
---------------------------------------
AMORTIZED FAIR % OF
COST VALUE PORTFOLIO
--------- ----- ---------
(UNAUDITED)
<S> <C> <C> <C>
Securities available-for-sale
U.S. Treasury securities.................. $ 4,045 $ 4,011 10.0%
U.S. government agencies securities....... 36,475 35,935 90.0
------- ------- -----
$40,520 $39,946 100.0%
======= ======= =====
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998
---------------------------------------
AMORTIZED FAIR % OF
COST VALUE PORTFOLIO
--------- ----- ---------
<S> <C> <C> <C>
Securities available-for-sale
U.S. Treasury securities.................. $3,036 $3,058 37.7%
U.S. government agencies securities....... 5,020 5,058 62.3
------ ------ -----
$8,056 $8,116 100.0%
====== ====== =====
</TABLE>
Deposits. Village Bancorp has experienced significant growth in deposits.
At June 30, 1999, total deposits were $94.0 million, which represents a $32.8
million increase compared to December 31, 1998. Total deposits averaged $75.5
million for the six-month period. The increase in average deposits was the
result of deposit growth at Village Bank North Barrington, which opened during
October 1998 and ended June 30, 1999 with $53.1 million in deposits. Noninterest
bearing deposits were $11.3 million as of June 30, 1999 compared to $11.1
million as of December 31, 1998. Interest Bearing deposits increased $32.6
million to $82.7 million compared to $50.1 million as of December 31, 1998. The
majority of the increase in interest bearing deposits was in time deposits.
Certificates of deposit under $100,000 increased $18.2 million to $46.2 million
and certificates of deposit over $100,000 increased $8.7 million to $17.9
million.
The following table shows the average balance of deposits by category.
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998
-------------------- ---------------------
AVERAGE % OF AVERAGE % OF
BALANCE DEPOSITS BALANCE DEPOSITS
------- -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Noninterest bearing demand deposits............ $10,613 14.1% $ 7,664 18.9%
Interest bearing demand deposits............... 3,149 4.2 1,821 4.5
Savings and money market deposits.............. 11,706 15.5 7,664 18.9
Time Deposits:
Certificates of deposit, under $100,000(1)..... 36,366 48.2 17,027 42.1
Certificates of deposit over $100,000.......... 11,585 15.3 5,250 13.0
Public funds................................... 2,046 2.7 1,064 2.6
------- ----- ------- -----
Total time deposits............................ 49,997 66.2 23,341 57.7
------- ----- ------- -----
Total deposits................................. $75,465 100.0% $40,490 100.0%
======= ===== ======= =====
</TABLE>
- ----------
(1) Certificates of deposit exclusive of public funds
Borrowed Funds. Village Bancorp has available overnight federal funds lines
of credit with correspondent banks. There were no outstanding borrowings at June
30, 1999 and December 31, 1998.
Capital Resources. Village Bancorp and its subsidiary banks are subject to
various capital requirements administered by the federal banking agencies. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, holding companies and banks must meet specific capital guidelines that
involve quantitative measures of assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices.
Quantitative measures established by regulation to ensure capital adequacy
require banks and holding companies to maintain minimum amounts and ratios of
total and Tier I capital to risk-weighted assets and Tier I capital to average
assets. If banks do not meet these minimum capital requirements, as defined,
bank regulators can initiate certain actions that could have a direct material
effect on a bank's financial statements. Management believes, as of June 30,
1999, that Village Bancorp and its subsidiary banks meet all capital adequacy
requirements to which they are subject.
12
<PAGE>
As of December 31, 1998, the most recent notification received from the
Federal Deposit Insurance Corporation categorized Village Bancorp's subsidiary
banks as well capitalized under the regulatory framework for prompt corrective
action. There are no conditions or events since this notification that
management believes have changed the institution's category. To be categorized
as well capitalized, banks must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table below.
The actual capital amounts and ratios as of June 30, 1999 and December 31,
1998 are presented in the following
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998
------------------ -------------------
AMOUNT RATIO AMOUNT RATIO
------- ------ ------- ------
<S> <C> <C> <C> <C>
Tier 1 capital to risk-weighted assets......... $ 7,885 13.52% $ 8,727 20.40%
Tier 1 capital minimum requirements............ 2,322 4.00 1,711 4.00
Total capital to risk-weighted assets.......... 10,231 17.61 10,969 25.65
Total capital minimum requirement 4,645 8.00 3,422 8.00
Total risk-weighted assets..................... $58,067 $42,775
</TABLE>
Liquidity. Village Bancorp manages its liquidity position with the
objective of maintaining sufficient funds to respond to the needs of depositors
and borrowers and to take advantage of earnings enhancement opportunities. In
addition to the normal inflow of funds from core deposit growth, together with
repayments and maturities of loans and investments, the banks have available
overnight federal funds lines of credit with correspondent banks providing up to
$3 million of available funding sources. Village Bancorp classifies all of its
investment securities as available-for-sale, thereby maintaining significant
liquidity.
Village Bancorp's cash flows are composed of three classifications: cash
flows from operating activities, cash flows from investing activities, and cash
flows from financing activities. Net cash used in operating activities,
consisting primarily of earnings or losses, was $788,000 and $534,000 for the
six months ended June 30, 1999 and 1998, respectively. Net cash used in
investing activities, consisting primarily of federal funds sold, securities
purchased, loan funding and premises and equipment expenditures was $31.2
million for the six months ended June 30, 1999 and $2.1 million for the six
months ended June 30, 1998. Net cash provided by financing activities,
consisting principally of deposit growth, was $32.7 million and $4.7 million for
the six-month periods ended June 30, 1999 and 1998, respectively. The increase
in deposit growth in 1999 was principally due to the initial market penetration
of Village Bank North Barrington. These funds were then used in investing
activities.
INFORMATION SYSTEMS AND YEAR 2000
The Year 2000 Problem. The year 2000 issue confronting Village Bancorp,
each of our banks and suppliers, customers' and competitors centers on the
inability of computer systems to recognize the year 2000 and other 2000
sensitive dates such as September 9, 1999, December 3, 1999 and February 29,
2000. Many existing computer programs and systems originally were programmed
with six-digit dates that provided only two digits to identify the calendar year
in the date field. With the impending new millennium, these programs and
computers will recognize "00" as the year 1900 rather than year 2000. Like most
financial service providers, Village Bancorp and its operations may be affected
significantly by the year 2000 issue because it depends on computer-generated
financial information. Software, hardware, and equipment, both within and
outside our direct control and third parties with whom we electronically or
operationally interface are likely to be affected. These third parties include
customers, and third party vendors providing data processing, information
systems management, computer systems
13
<PAGE>
maintenance and credit bureau information. If computer systems are not able to
identify the year 2000, many computer applications could fail or create
incorrect results. Consequently, many calculations that rely on date-related
functions could generate significantly misstated results, and we could lose our
ability to process transactions, prepare statements or engage in similar normal
business activities. In addition, under certain circumstances, the failure to
address adequately the year 2000 issue could adversely affect the viability of
our suppliers and creditors and the creditworthiness of our borrowers. If not
adequately addressed, the year 2000 issue could ultimately have a significant
and adverse impact on our products, services and competitive condition and in
turn, our financial condition and results of operations.
Regulatory Oversight. Financial institution regulators recently have
increased their focus on year 2000 compliance issues and have issued guidance
concerning the responsibilities of senior management and directors. The Federal
Financial Institutions Examination Council has issued several interagency
statements on year 2000. These statement require, among other things, that
financial institutions examine the year 2000 implications of relying on vendors
and the potential impact of the year 2000 issue on their customers, suppliers
and borrowers. These statements also require each federally regulated financial
institution to survey its exposure, measure its risk, and prepare a plan to
address the year 2000 issue. In addition, the federal and state bank regulators
have guidelines to be followed to ensure resolution of any 2000 problems. The
federal and state banking agencies have asserted that year 2000 testing and
certification is a key safety and soundness issue in regulatory examinations.
Consequently, an institution's failure to address appropriately the year 2000
issue could result in supervisory action, including the reduction of the
institution's supervisory ratings, disapproval of mergers or acquisitions and
the imposition of civil money penalties. Village Bank North Barrington recently
received a less than adequate regulatory review. All systems were compliant and
testing has been completed, however, improvement was required in the
documentation and organization of test results, vendor oversight, employee and
customer awareness programs, liquidity guidelines and reporting to the board.
The management of Village Bank North Barrington has responded to the regulatory
agency and developed and implemented a Compliance Plan to address these issues.
The Compliance Plan dictates that all issues cited will be satisfactorily
resolved by the end of the third quarter of 1999.
State of Readiness. Village Bancorp has formally established a year 2000
plan for Northwest Community Bank and Village Bank North Barrington and has
created a project team for management of the year 2000 project. The project team
has created a plan of action for each bank that includes milestones, budget
estimates, strategies, and methodologies to track and report the status of the
project. Members of the team also attend conferences and information sharing
sessions to gain insight into the year 2000 issue and potential strategies for
addressing it. This phase is substantially complete.
Because Northwest Community Bank and Village Bank North Barrington were
organized relatively recently, all vendor-supplied mission critical systems are
certified as year 2000 compliant. As a result, we do not have renovation or
upgrade issues as other institutions with longer operating histories might have.
Nonetheless, we have undertaken measures to validate and test the ability of our
hardware and software to accurately process date-sensitive data. We have
substantially completed the validation testing of our mission-critical systems.
During the validation testing process, no significant year 2000 problems have
been identified relating to any mission-critical systems.
As a start-up entity, Village Bank Munster does not have existing systems
or equipment requiring year 2000 testing and remediation. We will purchase all
of our office equipment hardware and software and obtain service commitments
only from vendors and service providers that can certify that their products and
services are year 2000 compliant. For example, we will purchase application
software, microcomputers, teller equipment and network file servers only from
vendors that can provide year 2000 compliance certification relating to those
products. We plan to obtain data processing services, automatic teller machine
applications voice response systems, documents imaging solutions and
14
<PAGE>
bond accounting systems from third party service provider that can certify that
the products and services they provide will be year 2000 compliant. We believe
that we will be able to obtain these products and services from vendors and
service providers that can supply the necessary certification. If we were unable
to do so, however, we will either forego acquiring the product or service until
we receive the required certification or if the product or service is essential
to our operations, arrange for independent testing and verification of year 2000
compliance.
Although our internal systems, equipment and operations require significant
oversight relating to year 2000 issues, we believe that our customers' year 2000
readiness could also have a significant effect on our operations. For example,
if a loan customer is unable to maintain its cash flow as a result of disruption
caused by its own or its customer's year 2000 problems, the customer could
default in the repayment of the loan, which would lead to increased loan losses.
Any such losses could exceed our allowance for loan losses. To address this
concern, we have communicated with customers on an ongoing basis regarding their
year 2000 readiness and have attempted to identify as the earliest opportunity
those customers that are likely to encounter year 2000 problems. We plan to work
with these customers to ensure, to the greatest extent possible, that their year
2000 compliance issues do not disrupt our operations. We do not anticipate any
significant problems will result from customer year 2000 readiness.
We believe that any year 2000 problems we might encounter would be
concentrated within our commercial loan portfolio. We feel that real estate
loans and consumer loan customers are generally not as sensitive to year 2000
problems as commercial borrowers. Our commercial loan customers are primarily
small-to-medium sized businesses, which are not reliant on high technology or
capital intensive manufacturing systems that pose year 2000 risk. At June 30,
1999, our commercial loan portfolio represented 27% of our total loan portfolio.
Our contact with the commercial loan customers included a year 2000 risk
assessment as to their dependency on computer systems and their level of year
2000 awareness and readiness. From the responses of our customers, we ranked our
customers potential exposure to year 2000 issues. Based on the results of our
customer responses and our internal review of those responses, we have not
identified any major exposure or problems from year 2000 issues that might
result in material losses in our loan portfolio.
Resources Invested. Our year 2000 project team has been assigned the task
of ensuring that all systems are identified, tested and have any changes into
service by June 30, 1999. The year 2000 project team members represent all
functional areas of Village Bancorp, including data processing, loan
administration, accounting, item processing and operations, compliance, human
resources and marketing. The board of directors of each bank oversees the year
2000 plan and provides guidance and resources to, and receives monthly updates
from the bank's year 2000 team.
Village Bancorp is expensing all year 2000 costs as those costs are
incurred, and such costs are being funded through operating cash flows. The
total cost of the year 2000 project since commencement has been less than
$10,000. We do not expect to expend more than minimal amounts for future data
processing and other costs related to year 2000.
Contingency Plan. We have developed back-up or contingency plans for each
of our mission-critical systems. Virtually all of Village Bancorp's
mission-critical systems are dependent upon third party vendors or service
providers. Therefore, contingency plans include selecting a new vendor or
service provider and converting to their system. In the event a current vendor's
system fails during the validation phase and it is determined that the vendor is
unable or unwilling to correct the failure, we will convert to a new system from
a pre-selected list of prospective vendors. In each case, realistic trigger
dates have been established in compliance with regulatory guidelines to allow
for orderly and successful conversions. For some systems, contingency plans
consist of using spreadsheet software or reverting to
15
<PAGE>
manual systems until the computer system problems can be corrected. Unlike
larger financial institutions, Northwest Community Bank and Village Bank North
Barrington were organized relatively recently, and therefore the volume of
transactions does not prohibit utilizing a temporary manual operation for most
systems.
IMPACT OF NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 133 on derivatives will, in
2000, require all derivatives to be recorded at fair value in the balance sheet,
with changes in fair value charged or credited to income. If derivatives are
documented and effective as hedges, the change in the derivative's fair value
will be offset by an equal change in the fair value of the hedged item. Under
the new standard, securities held-to-maturity can no longer be hedged, except
for changes in the issuer's creditworthiness. Therefore, upon adoption of
Statement No. 133, companies will have another one-time window of opportunity to
reclassify held-to-maturity securities to either trading or available-for-sale,
provided certain criteria are met. This Statement may be adopted early at the
start of a calendar quarter. Since Village Bancorp has no significant derivative
instruments or hedging activities, nor any securities held-to-maturity, adoption
of Statement No. 133 is not expected to have a material impact on Village
Bancorp's financial statements.
ASSET/LIABILITY MANAGEMENT
Village Bancorp's asset/liability strategy is to maximize net interest
income while limiting exposure to risk associated with a volatile interest rate
environment. Village Bancorp's exposure to interest rate risk is managed
primarily through Village Bancorp's strategy of selecting the types and terms of
interest-earning assets and interest-bearing liabilities, which generate
favorable earnings, while limiting the potential negative effect of changes in
market rates. The strategy is implemented through an ongoing analysis and
management of interest rate risk. A principal function of asset/liability
management is to coordinate the levels of interest-sensitive assets and
liabilities to minimize net interest income fluctuations in times of fluctuating
market interest rates.
The primary source of interest-bearing liabilities is customer deposits.
The ability to manage the types and terms of such deposits may be somewhat
limited by customer maturity preferences in the market areas served by Village
Bancorp. The rates, terms and interest rate indices of Village Bancorp's
interest-earning assets result primarily from its strategy of investing in loans
with fixed rate and adjustable rate terms and securities which limit its
exposure to interest rate risk and credit risk while achieving a positive
interest rate spread.
Management uses a duration model for each bank's internal asset/liability
management. The model uses cash flows, maturity and repricing data and repricing
assumptions to calculate the duration of each bank's assets and liabilities and
projects the effect on earnings for a change in interest rates. Each bank
maintains specific interest rate risk management policy limits. These guidelines
include (i) a+/-20% change in net income upon an immediate 200 basis point
change in interest rates and (ii) a+/-10% change in net income based upon a
gradual 200 basis point change in interest rates over a twelve-month period. The
bank's exposure to interest rates is reviewed on a quarterly basis by senior
management and the board of directors.
INTEREST RATE SENSITIVITY ANALYSIS
Village Bancorp's overall interest rate sensitivity is demonstrated by net
interest income analysis and "gap" analysis. Net interest income analysis
measures the change in net interest income in the event of hypothetical changes
in interest rates. This analysis assesses the risk of change in net interest
income
16
<PAGE>
in the event of sudden and sustained 1.0% and 2.0% increases and decreases in
market interest rates. The table below presents Village Bancorp's projected
changes in net interest income for the various rate shock levels at June 30,
1999.
NET INTEREST INCOME
--------------------------------
AMOUNT $ CHANGE % CHANGE
------ -------- --------
+200 basis points $ 510 $(394) (35.8)%
+100 basis points 904 (197) (17.9)
Base 1,101 -- --
-100 basis points 1,300 199 18.1
-200 basis points 1,705 405 36.8
As shown above, at June 30, 1999, the effect of an immediate 200 basis
point increase in interest rates would decrease Village Bancorp's net interest
income by 35.8% or approximately $394,000. The effect of an immediate 200 basis
point decrease in rates would increase Village Bancorp's net interest income by
36.8% or approximately $405,000. The impact of an immediate 200 basis point
change at June 30, 1999 is above Village Bancorp's policy guidelines of +/-20%.
The results are temporary and due to reallocating $18.6 million of earning
assets at Village Bank North Barrington from federal funds sold into higher
yielding U.S. government agency securities with 2-4 year maturity ranges, during
the second quarter of 1999. This reallocation of earning assets resulted in
approximately a 75 basis point increase in yield. The current rate shock impact
will be reduced as the additional funds generated from the deposit growth at
Village Bank North Barrington and held in federal funds sold are reinvested into
higher yielding fixed and floating rate loans. At June 30, 1999, the impact of a
gradual 200 basis point change in interest rates during a twelve-month period is
within Village Bancorp's policy guidelines of +/-10%.
Computations of the prospective effects of hypothetical interest rate
changes are based on numerous assumptions, including relative levels of market
interest rates, loan prepayments and deposit decay rates, and should not be
relied upon as indicative of actual results. Actual values may differ from those
projections set forth above, should market conditions vary from assumptions used
in preparing the analysis. Further, the computations do not contemplate any
actions Village Bancorp may undertake in response to changes in interest rates.
The "gap" analysis is based upon assumptions as to when assets and liabilities
will reprice in a changing interest rate environment. Since such assumptions can
be no more than estimates, certain assets and liabilities indicated as maturing
or otherwise repricing within a stated period may, in fact mature or reprice at
different times and at different volumes than those estimated. Therefore the
"gap" table included above does not and cannot necessarily indicate the actual
future impact of general interest rate movements on Village Bancorp's net
interest income.
Interest rates are significantly affected by inflation, but it is difficult
to assess the impact, since neither the timing nor the magnitude of the changes
in the various inflation indices coincides with changes in interest rates.
Inflation does impact the economic value of longer-term interest-bearing assets
and liabilities, but Village Bancorp attempts to limit its long-term assets and
liabilities.
17
<PAGE>
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform Act of
1995, and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the Company, are
generally identifiable by use of the words, "believe," "expect," "intend,"
"anticipate," "estimate," "project," or similar expressions. The Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse affect on the
operations and future prospects of the Company and its subsidiaries include, but
are not limited to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policy of the United States
Government, including policies of the United States Treasury and the Federal
Reserve Board, the quality or composition of the loan or investment portfolios,
demand for loan products, deposit flows, competition, demand for financial
services in the Company's market area and accounting principles, policies and
guidelines. These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such
statements. Further information concerning the Company and its business,
including additional factors that could materially affect the Company's
financial results, is included in the Company's filing with the Securities and
Exchange Commission.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings to which Village
Bancorp or its subsidiaries are a party other than routine litigation
incidental to their respective businesses.
Item 2. Changes in Securities and Use of Proceeds
Village Bancorp filed a Registration Statement on Form SB-2, as
amended (Reg. No. 333-77209), with the Securities and Exchange
Commission, effective June 25, 1999, with respect to the sale of a
maximum of 554,000 shares of its common stock, or $7,340,000. The
offering commenced on June 25, 1999 and is scheduled to expire on
August 31, 1999, unless otherwise extended. No subscriptions will be
accepted, nor will any proceeds be received, by Village Bancorp until
subscriptions have been received for a minimum of 454,000 shares.
Village Bancorp estimates its expenses in connection with the offering
to be $110,000.
18
<PAGE>
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of Village Bancorp Inc. was held on
April 6, 1999. Six proposals were submitted to a vote of security
holders as described in the proxy statement dated March 9, 1999. The
following is a brief description of the proposals considered and the
outcome of the vote.
1. Elect seven directors of the Company.
The following seven nominees were considered for election to
serve until the next annual meeting or until their successors are
elected and qualified.
Kevin R. Hitzeman John A. Reck
Rosario Ippolito Thomas H. Roth
Richard P. Nevins Ronald L. Speikhout
Each nominee was approved with at least 80.3% of the total shares
outstanding and 99.6% of the votes cast.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C> <C>
2. Change the name of the Company to 715,777 400 0
"Village Bancorp, Inc."
3. Change the Company's state of 712,977 2,400 800
incorporation to Delaware from Illinois
by means of the merger of the Company
into a wholly-owned Delaware
subsidiary of the Company.
4. Subject to approval of Proposal 3, include certain
anti-takeover measures in the Certificate of
Incorporation and Bylaws of Village Bancorp to be
effective upon reincorporation as follows:
a) Provide the Board of Directors the 694,177 20,200 1,800
power to set the number of directors
on the board and fill vacancies on
the board;
b) Implement a classified board of 695,977 15,400 4,800
directors who are removable only
for cause;
c) Set limits on the ability to call a 694,377 16,800 5,000
special meeting;
d) Eliminate the right of stockholders 679,277 32,100 4,800
to take action by written consent;
19
<PAGE>
For Against Abstain
--- ------- -------
e) Adopt procedures to be followed 698,477 17,700 0
before matters can be brought
before a stockholder's meeting; and
f) Approve by separate vote supermajority vote
requirement for:
i. Certain extraordinary corporate 707,977 7,400 800
transactions;
ii. Amendments to Village 708,777 6,400 1,000
Bancorp's Certificate of
Incorporation; and
iii. Amendments to Village 700,777 14,400 1,000
Bancorp's By-laws.
5. Ratify the appointment of Crowe Chizek 714,577 0 1,600
and Company LLP as independent
auditors of the Company for the fiscal
year ending December 31, 1999.
6. Approve other matters as may properly 698,477 0 17,700
come before the Annual Meeting and at
any adjournments thereof, including
whether or nor to adjourn the meeting.
</TABLE>
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 -- Financial Data Schedule
(b) Reports on Form 8-K - None
20
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
VILLAGE BANCORP, INC.
(Registrant)
By: /s/ Gerald F. Hartley
--------------------------------
Gerald F. Hartley
President
By: /s/ Elizabeth A. Chartier
--------------------------------
Elizabeth A. Chartier
Senior Vice President and
Controller
Date: August 13, 1999
21
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Jun-30-1999
<CASH> 3,861
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 11,177
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 39,946
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 45,886
<ALLOWANCE> 611
<TOTAL-ASSETS> 104,480
<DEPOSITS> 93,952
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,583
<LONG-TERM> 0
0
0
<COMMON> 9
<OTHER-SE> 7,936
<TOTAL-LIABILITIES-AND-EQUITY> 104,480
<INTEREST-LOAN> 1,718
<INTEREST-INVEST> 640
<INTEREST-OTHER> 376
<INTEREST-TOTAL> 2,734
<INTEREST-DEPOSIT> 1,577
<INTEREST-EXPENSE> 1,633
<INTEREST-INCOME-NET> 1,101
<LOAN-LOSSES> 156
<SECURITIES-GAINS> 6
<EXPENSE-OTHER> 2,106
<INCOME-PRETAX> (873)
<INCOME-PRE-EXTRAORDINARY> (862)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (862)
<EPS-BASIC> (0.97)
<EPS-DILUTED> (0.97)
<YIELD-ACTUAL> 2.76
<LOANS-PAST> 135
<LOANS-NON> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 459
<CHARGE-OFFS> 31
<RECOVERIES> 27
<ALLOWANCE-CLOSE> 611
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 120
</TABLE>
