UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
COMMISSION FILE NO. 0-11786
VILLAGE BANCORP, INC.
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(Exact name of Registrant as specified in its charter)
Connecticut 06-1076844
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
25 Prospect Street Ridgefield, Connecticut 06877
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(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code (203) 438-9551
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 1996
- ------------------------------ -----------------------------------------
Common Stock, $3.33 Par Value 950,817 shares
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VILLAGE BANCORP, INC.
TABLE OF CONTENTS
PAGE NO.
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PART I. FINANCIAL INFORMATION:
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1996 and December 31, 1995 (unaudited). . . . . . 1
Condensed Condolidated Statements of Income For The
Three Months Ended March 31, 1996 and 1995 (unaudited). . . 2
Condensed Consolidated Statements of Cash Flows For The
Three Months Ended March 31, 1996 and 1995 (unaudited). . . 3
Notes to Condensed Consolidated Financial Statements
(unaudited). . . . . . . . . . . . . . . . . . . . . . . . 4
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . .. . . . . . 7
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings . . . . . . . . . . . . . . . . . . 10
ITEM 2. Changes in Securities . . . . . . . . . . . . . . . . 10
ITEM 3. Defaults Upon Senior Securities . . . . . . . . . . . 10
ITEM 4. Results of votes of Security holders. . . . . . . . . 10
ITEM 5. Other Information . . . . . . . . . . . . . . . . . . 11
ITEM 6. (a). Exhibits. . . . . . . . . . . . . . . . . . . . 11
(b). Reports on Form 8-K . . . . . . . . . . . . . . 11
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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VILLAGE BANCORP, INC.
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PART I. - FINANCIAL INFORMATION
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VILLAGE BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS - (UNAUDITED)
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ASSETS March 31, 1996 Dec. 31, 1995
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(In thousands)
Cash and due from banks $ 8,538 $ 9,125
Federal funds sold 9,750 8,200
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Total cash and cash equivalents 18,288 17,325
Securities:
Available-for-sale, at fair value 16,482 20,482
Held-to-maturity, at amortized cost (fair
value of $22,758 at March 31, 1996 and
$14,294 at December 31, 1995) 22,827 14,080
Loans, net of deferred loan fees - Note C 118,280 119,591
Allowance for loan losses (1,328) (1,311)
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Loans - net 116,952 118,280
Loans held for sale 317 552
Bank premises and equipment - net 1,525 1,550
Accrued interest and other assets 2,338 2,008
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TOTAL ASSETS $178,729 $174,277
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing $ 15,402 $ 17,265
Interest bearing 146,938 141,274
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Total deposits 162,340 158,539
Accrued interest payable 1,396 1,161
Other liabilities 637 429
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Total liabilities 164,373 160,129
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Stockholders' Equity:
Common stock, par value $3.33 per share;
authorized - 2,000,000 shares, issued
and outstanding, 950,817 at March 31,
1996 and 950,317 at Dec. 31, 1995 3,167 3,165
Additional paid-in capital 7,986 7,982
Retained earnings 3,209 2,960
Net unrealized losses on available-
for-sale securities (6) 41
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Total stockholders' equity 14,356 14,148
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TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $178,729 $174,277
======== ========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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VILLAGE BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - (UNAUDITED)
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THREE MONTHS ENDED MARCH 31,
1996 1995
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(In thousands, except per share data)
INTEREST INCOME:
Loans, including fees $2,648 $2,296
Securities:
Taxable 483 473
Tax-exempt 29 29
Federal funds sold 133 40
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Total interest income 3,293 2,838
INTEREST EXPENSE ON DEPOSITS 1,328 934
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NET INTEREST INCOME 1,965 1,904
PROVISION FOR LOAN LOSSES 30 50
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,935 1,854
----- -----
OTHER INCOME:
Security gains/(losses) - net - (2)
Other operating income 121 136
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Total other income 121 134
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OTHER EXPENSES:
Salaries and employee benefits 781 733
Net occupancy 153 139
Furniture and equipment 70 73
Data processing services 129 118
Regulatory assessments 1 54
Printing, stationery and supplies 43 52
Other operating expenses 269 243
----- -----
Total other expenses 1,446 1,412
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INCOME BEFORE PROVISION FOR INCOME TAXES 610 576
PROVISION FOR INCOME TAXES 218 240
----- -----
NET INCOME $ 392 $ 336
====== ======
PER SHARE DATA - Note E:
Cash dividends declared $ .15 $ .11
Net income $ .41 $ .35
Number of shares outstanding 950,817 946,949
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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VILLAGE BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
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Three Months
Ended March 31,
1996 1995
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(In thousands)
OPERATING ACTIVITIES:
Net income $ 392 $ 336
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Provision for loan losses 30 50
Provision for depreciation and amortization 61 60
(Accretion)/amortization of security
premiums/discounts - net (151) (73)
Net (decrease) increase in deferred loan fees (39) 44
Increase in interest payable 235 378
Increase in accrued income and other assets (297) (258)
Increase in other liabilities 208 220
Origination of loans for sale (3,367) (333)
Proceeds from sales of loans 3,602 333
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Net cash provided by operating activities 674 757
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INVESTING ACTIVITIES:
Proceeds from sales of available-for-sale securities - 1,998
Proceeds from maturities of available-for-sale securities 4,086 345
Proceeds from maturities of held-to-maturity securities 501 4,801
Purchases of held-to-maturity securities (9,263) (97)
Net decrease (increase) in loans 1,337 (7,125)
Purchases of premises and equipment (36) (19)
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Net cash used in investing activities (3,375) (97)
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FINANCING ACTIVITIES:
Net increase (decrease) in deposits 3,801 (2,013)
Cash dividends (143) (104)
Net proceeds from issuance of common stock 6 -
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Net cash provided (used) by financing activities 3,664 (2,117)
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INCREASE IN CASH AND CASH EQUIVALENTS 963 (1,457)
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CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 17,325 12,893
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CASH AND CASH EQUIVALENTS, END OF PERIOD $18,288 $11,436
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid on deposits $ 1,093 $ 556
Tax payments 118 86
Net unrealized (losses) gain on available-for-sale
securities, net of tax (47) 134
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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VILLAGE BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
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NOTE A - BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments necessary, consisting only of
normal recurring accruals, to present fairly the financial position, the results
of operations, cash flows and the changes in financial position of Village
Bancorp, Inc. ("Company") for the periods presented. In preparing such financial
statements, management is required to make estimates and assumptions that effect
the reported amounts. Actual results could differ significantly from those
estimates.
The Company's consolidated financial statements include The Village Bank & Trust
Company ("Village") and have been prepared in accordance with generally accepted
accounting principles and conform with predominant practices used within the
banking industry.
The consolidated financial statements include the accounts of Village Bancorp,
Inc. and its wholly owned sudsidiary, The Village Bank & Trust Company, which is
engaged in the business of commercial banking. The Company operates four branch
banking offices in Fairfield and Litchfield counties in Connecticut, and is
principally engaged in lending and deposit gathering activities within these
counties.
While management believes that the disclosures presented are adequate so as not
to make the information misleading, it is suggested that these financial
statements be read in conjunction with the consolidated financial statements and
notes included in the Company's 1995 annual report.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 establishes a fair value based method of accounting
for stock-based compensation plans and encourages, but does not require,
entities to adopt that method in place of the provisions of Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees," for all arrangements under which employees receive shares of stock
or other equity instuments of the employer or the employer incurs liabilities to
employees in amounts based on the price of the stock. SFAS No. 123 also
establishes fair value as the measurement basis for transactions in which an
entity acquires goods or services from non-employees in exchange for equity
instruments. The accounting provisions of SFAS No. 123 are effective for
transactions entered into after December 15, 1995. Effective January 1, 1996,
the Company adopted SFAS No. 123 and has decided that it will continue measuring
compensation cost for employee stock compensation plans in accordance with the
provisions of APB No. 25.
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VILLAGE BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
(Continued)
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(SFAS) No. 114, "Accounting for Impairment of a Loan," as amended by SFAS No.
118 "Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures," which was adopted by the Company as of January 1, 1995, requires
recognition of an impairment of a loan when it is probable that either the
principal and/or interest are not collectible in accordance with the terms of
the loan agreement. Adoption of these statements did not result in any
adjustment to the allowance for loan losses as of January 1, 1995.
NOTE B - SECURITIES
The amortized cost and the approximate fair values of securities were as follows
(in thousands):
March 31, 1996
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Amortized Unrealized Fair
Cost Gain (Loss) Value
---- ---- ------ -----
SECURITIES HELD-TO-MATURITY
U.S. Treasury Securities $ 14,827 $ 62 $ (111) $ 14,778
U.S. Government Agency 5,489 25 (63) 5,451
Mortgage-backed securities
of U.S. Government agencies 68 2 - 70
Obligations of states and
political subdivisions 2,443 38 (22) 2,459
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TOTAL $ 22,827 $ 127 $ (196) $ 22,758
======== ===== ======= ========
SECURITIES AVAILABLE FOR SALE
U.S. Treasury Securities $ 13,496 $ 7 $ (18) $ 13,485
U.S. Government Agency 2,002 11 - 2,013
Mortgage-backed securities
of U.S. Government agencies 939 3 (12) 930
Other 55 - (1) 54
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TOTAL $ 16,492 $ 21 $ (31) $ 16,482
======== ===== ======= ========
December 31, 1995
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Amortized Unrealized Fair
Cost Gain (Loss) Value
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SECURITIES HELD-TO-MATURITY
U.S. Treasury Securities $ 6,054 $ 124 $ (1) $ 6,177
Mortgage-backed securities
of U.S. Government agencies 5,582 59 (8) 5,633
Obligations of states and
political subdivisions 2,444 53 (13) 2,484
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TOTAL $ 14,080 $ 236 $ (22) $ 14,294
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VILLAGE BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
(Continued)
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SECURITIES AVAILABLE FOR SALE
U.S. Treasury Securities $ 16,325 $ 56 $ - $ 16,381
Mortgage-backed securities
of U.S. Government agencies 4,029 28 (14) 4,043
Other 59 - (1) 58
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TOTAL $ 20,413 $ 84 $ (15) $ 20,482
======== ===== ======= ========
At March 31, 1996 and December 31, 1995 securities with a book value of $895,000
and $614,000, respectively, were pledged to secure public deposits and for other
purposes as required by law and banking regulation.
NOTE C - LOANS
March 31, 1996 Dec. 31, 1995
(In thousands)
Real estate $ 94,182 $ 96,384
Commercial and financial 11,675 12,892
Installment and consumer credit 12,631 10,562
Deferred loan fees (208) (247)
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Total $ 118,280 $ 119,591
========= =========
NOTE D - STANDBY LETTERS OF CREDIT
On March 31, 1996, standby letters of credit totaled $1,955,000.
NOTE E - STOCKHOLDERS' EQUITY
An $.11 per share cash dividend was distributed February 3, 1995 to
stockholders of record on January 23, 1995. A $.15 per share cash dividend was
distributed February 2, 1996 to stockholders of record on January 19, 1996.
NOTE F - PENDING BUILDING
The Bank announced plans to build a three-story, 17,000 square foot building
on Parcel 3 of the Danbury Redevelopment Area on National Place, in Danbury,
Connecticut. All necessary approvals to build and open this office have been
received. Construction is expected to begin in the second quarter of 1996, with
completion in early 1997. The first floor will contain a branch banking office
with the back office deposit operations department occupying the second floor.
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VILLAGE BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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GENERAL
Village Bancorp, Inc. (Company) through its only subsidiary, The Village Bank
& Trust Company (Village) had total assets of $178,729,000 on March 31, 1996 in
comparison to total assets of $174,277,000 on December 31, 1995. This is an
increase of $4,452,000 or 2.55%.
For the three month periods ended March 31, 1995 and 1996, the Banks net
earnings increased from $336,000 for the 1995 period to $392,000 for the 1996
period. Net interest income increased $61,000 from $1,904,000 for the 1995
period to $1,965,000 for the 1996 period.
The increase in net interest income is primarily attributable to an increase of
$352,000 in loan interest income, along with an increase of $93,000 in federal
funds sold interest, offset by an increase of $394,000 in interest expense on
deposits.
ASSETS AND RELATED INCOME ANALYSIS
Loans outstanding on March 31, 1996 totaled $118,280,000 which is a decrease
of $1,311,000 (1.1%) from the $119,591,000 outstanding at December 31, 1995.
This decrease in loans is primarily due to the fact that a portion of the Bank's
adjustable rate portfolio loans have been refinanced as fixed rate loans. The
Bank generally sells fixed rate loans in the secondary market while retaining
adjustable rate loans for portfolio. Other factors that attributed to this
decrease are a softening of loan demand coupled with intense competition in the
Banks trade areas. Loan income increased $352,000 (15.3%) from $2,296,000 at
March 31, 1995 to $2,648,000 at March 31, 1996. This increase is due to an
increase in average outstanding loans, from $109,633,000 in the 1995 period to
$119,880,000 for the 1996 period coupled with an increase in the average rate
earned, from 8.38% for the 1995 period to 8.84% for the 1996 period.
Securities, which consists of securities held-to-maturity and securities
available-for-sale, increased $4,747,000 (13.7%) from $34,562,000 at December
31, 1995 to $39,309,000 at March 31, 1996. Security income increased $10,000
(2.0%) from $502,000 in the period ending March 31, 1995 to $512,000 in the 1996
period. This increase resulted primarily from an increase in the average dollar
amount
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VILLAGE BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
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outstanding from $32,598,000 for the 1995 period to $35,595,000 for the 1996
period, offset by a decrease in the average rate earned from 6.16% for the 1995
period to 5.75% for the 1996 period. The Company holds securities
held-to-maturity until maturity and does not trade them. Securities classified
as available-for-sale are used to compensate for liquidity forecasting
deviations.
Federal funds sold increased $1,550,000 (18.9%) from $8,200,000 at December
31, 1995 to $9,750,000 at March 31, 1996. Federal funds sold income increased
$93,000 (232.5%) from $40,000 for the 1995 period to $133,000 for the 1996
period, primarily due to an increase in the average dollar amount outstanding
from $2,662,000 in the 1995 period to $9,989,000 for the 1996 period, offset by
a decrease in the average rate earned from 6.01% in the 1995 period to 5.33% in
the 1996 period.
LIABILITIES AND RELATED EXPENSE ANALYSIS
Deposits increased $3,801,000 (2.4%) from $158,539,000 at December 31, 1995
to $162,340,000 at March 31, 1996. Interest on deposits increased $394,000
(42.2%) from $934,000 for the 1995 period to $1,328,000 for the 1996 period.
This increase is primarily attributable to an increase in the average rate paid
from 2.69% in the 1995 period to 3.33% in the 1996 period, coupled with an
increase in the average outstandings from $138,842,000 for the 1995 period to
$159,728,000 for the 1996 period.
LIQUIDITY
Liquidity is the ability to provide funds for loan requests, unexpected
deposit outflows and meeting other recurring financial obligations. Cash and
cash equivalents at March 31, 1996 were $18,288,000 or 10.2% of total assets as
compared to $17,325,000 or 9.9% of total assets at December 31, 1995. The Bank
also maintains excess stored liquidity reserves to compensate for liquidity
forecasting deviations. These reserves are comprised of investment grade
securities that are highly marketable and liquid. The primary sources of
liquidity, cash and due from banks and federal funds sold, have historically
surpassed the liquidity needs of the Company. Management closely monitors the
Bank's liquidity/cash flow position and does not anticipate any liquidity
problems in the future.
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VILLAGE BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
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CAPITAL RESOURCES
The table below lists the minimum capital requirements along with the Bank's
capital position at March 31, 1996:
Capital Minimum Capital Bank's Captial
Standard Requirement Position at
-------- ----------- -----------
Total capital to risk
weighted assets 8.0% 15.01%
Stockholders' equity to
risk weighted assets 4.0% 16.26%
Leverage ratio 3.0 - 5.0 % 8.14%
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VILLAGE BANCORP, INC.
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PART II. - OTHER INFORMATION
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VILLAGE BANCORP, INC.
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings Not Applicable
Item 2. Changes in Securities Not Applicable
Item 3. Defaults Upon Senior Securities Not Applicable
Item 4. Results of votes of security holders.
(a) The Annual Meeting of Stockholders was held on April 29, 1996 at the
offices of The Village Bank & Trust Company. There were no solicitations in
opposition to any of management's nominees for directors or other motions acted
on at the meeting.
(b) To elect five members of the Board of Directors to serve until the
Annual Meeting of Stockholders after their terms expire, or until their
successors are duly elected and qualified.
All nominees for Directors were elected to their terms:
Enrico J. Addessi 3 Year Term (1999)
Jeanne M. Cook 3 Year Term (1999)
Joseph L. Knapp 3 Year Term (1999)
Thomas F. Reynolds 3 Year Term (1999)
Jose P. Boa 1 Year Term (1997)
Directors whose terms of office continued and the expiration date of their
terms are as follows:
Richard O. Carey 1998
Madeline F. Contegni 1998
Nicholas R. DiNapoli 1997
Edward J. Hannafin 1997
Carl H. Lecher 1998
Robert V. Macklin 1997
Antonio M. Resendes 1998
Robert Scala 1998
(c) To ratify the appointment of an independent public accountant (Deloitte
& Touche LLP, Stamford, Connecticut) as auditors for 1996.
Votes Cast
----------
For 508,294
Against 1,391
Abstain 5,999
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VILLAGE BANCORP, INC.
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PART II. - OTHER INFORMATION - Continued
Item 5. Other Information Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for the
three months ended March 31, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Village Bancorp, Inc.
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(Registrant)
Date: May 14, 1996 /s/ Robert V. Macklin
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Robert V. Macklin, President and
Chief Executive Officer
Date: May 14, 1996 /s/ James R. Umbarger
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James R. Umbarger, Executive Vice Pres.
and Chief Financial Officer
