UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission File number:
0-11786
VILLAGE BANCORP, INC.
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-1076844
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25 Prospect Street, Ridgefield, Ct. 06877
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 203 438-9551
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class: Name of each exchange on which registered:
Common Stock ($3.33 Par Value) NASDAQ
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section13 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 report(s), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 20, 1996
Common Stock ($3.33 Par Value) 950,817 Shares
State the aggregate market value of the voting stock held by non-affiliates
of the registrant - $15,537,269.
Aggregrate market value Based upon reported closing price
of voting stock as supplied by NASDAQ
$18,065,523 March 20, 1996
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the year ended December 31,
1995 are incorporated by reference into parts I, II and IV. Portions of the
Proxy Statement for the Annual Meeting of Stockholders to be held on April 29,
1996 are incorporated by reference into Part III. Exhibit index is on page 6.
<PAGE>
VILLAGE BANCORP, INC.
FORM 10-K
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. Business..........................................................1
Item 2. Properties........................................................2
Item 3. Legal Proceedings.................................................2
Item 4. Submission Of Matters to Vote of Security Holders.................2
PART II
Item 5. Market for Registrant's Common Stock and
Related Stockholder Matters.....................................3
Item 6. Selected Financial Data...........................................3
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................3
Item 8. Financial Statements and Supplementary Data.......................3
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.............................3
PART III
Item 10. Directors and Executive Officers of the Registrant................3
Item 11. Executive Compensation............................................3
Item 12. Security Ownership of Certain Beneficial Owners
and Management..................................................3
Item 13. Certain Relationships and Related Transactions....................3
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.............................................4
SIGNATURES. ..................................................................5
EXHIBIT INDEX.................................................................6
<PAGE>
PART I
Item 1. Business
"Business" on pages 4 through 9 of the Annual Report to Stockholders for the
year ended December 31, 1995 is incorporated herein by reference.
Additional information required pursuant to this Item follows:
Village Bancorp, Inc.
The management of The Village Bank & Trust Company (Village) caused Village
Bancorp, Inc. (Company) to be formed in 1983 to enhance the opportunity for
diversification and expansion, and to allow for greater flexibility in both
banking and non-banking functions which banks are currently prohibited from
entering. On July 19, 1983, the Bank became a wholly owned subsidiary of the
Company. On November 18, 1994, Liberty National Bank (Liberty), Danbury,
Connecticut became a wholly owned subsidiary of the Company. On June 20, 1995,
the Company merged Liberty into Village and now operates Liberty's former office
as a branch office of Village. As a combination of entities under common control
the merger was accounted for in a manner similiar to a pooling of interests. As
such, all historical financial data presented in the annual report has been
restated to include both entities for all periods presented. As of December 31,
1995 the Company's only subsidiary was Village.
The Village Bank & Trust Company
The Village Bank & Trust Company was incorporated in 1973 and commenced
operations in 1974. The Bank maintains its headquarters in Ridgefield,
Connecticut where it conducts general banking business as a state chartered
commercial bank as allowed by Sec. 36-57 of the Connecticut General Statutes.
The Bank began offering trust and similiar services in the third quarter of
1993. Liberty was merged into Village in June 1995, with its former office now a
Village branch. The Bank intends to offer services in the future that will allow
the Bank to remain competitive with other financial institutions as regulations
permit.
Patents, Trademarks, Licenses and Concessions Held
There are no patents, trademarks, licenses or concessions held that have a
material importance to the Company.
Seasonal Variations In Business
The Bank experiences little or no seasonal variation in its business due to the
retail composition of its customer base.
Dependence Upon Limited Number Of Customers
The Bank is not materially dependent on any single person, group of persons or
organization. The loss of any customer or customers would not have a materially
adverse effect on the continued operation of the Bank.
Competition
The Bank encounters substantial competition for deposits and loans from other
financial institutions. Vigorous competition exists between the Bank and other
branch offices of financial institutions in Danbury, New Milford, Wilton and
Ridgefield, including commercial banks, savings banks and savings and loan
associations. No one financial institution is dominant in any particular
function of the banking market place.
Number of Employees
At December 31, 1995, Village had seventy-five (75) full time equivalent
employees. Of these employees two officers of Village provide services to the
Company.
Supervision and Regulation
Village is insured by the Federal Deposit Insurance Corporation (FDIC) and is
subject to extensive regulation by the FDIC. Village, as a Connecticut state
chartered bank, is also subject to regulation by the Connecticut State Banking
Commissioner, who is responsible for administering Connecticut banking laws. (
Bancorp, as a bank holding company, is also subject to regulation by the Federal
Reserve Board.
-1-
<PAGE>
The FDIC has adopted regulations which require FDIC-insured banks to meet
certain minimum capital requirements. Banks that have less than the minimum
required capital are considered to be operating in an unsafe and unsound
condition, and are subject to a number of possible regulatory enforcement
actions, ranging from being required to acquire additional capital up to
termination of the Bank's FDIC deposit insurance.
Most recent legislation has been aimed at increasing capital levels in the
banking industry and restricting business for those who fail to meet adequate
capital levels. As the Company is well capitalized the majority of this
legislation has had little effect on the operation of the Company. Other
regulatory actions focus on risk management (i.e. interest rate risk, credit
risk) and the proper use of internal controls. Proposed legislation runs a wide
gamut of proposals. It is not possible at this time to predict whether or not
any such proposals will have a material adverse effect on the Company.
Item 2. Properties
Village owns in fee simple a self contained facility at 25 Prospect Steet,
Ridgefield, Connecticut. The site contains 0.929 acres. The building has two
floors, the first floor which approximates 5,500 square feet is the location of
the general banking area, board room and President's office. The second floor,
which approximates 5,000 square feet, is the location of the administrative
offices, loan operations department, sanitary and employee facilities.
Village entered into a lease agreement on April 5, 1985 for a branch banking
facility at 219 Town Green, Wilton, Connecticut. The leasehold contains two
thousand six hundred forty five (2,645) square feet, of which the Bank uses
approximately one thousand nine hundred forty five (1,945) square feet for its
branch banking office. The remaining area is sublet as retail space. The lease
arrangement is for ten years with two five year extensions options that can be
exercised by the Bank. The lease has provisions for consumer price index
increases, and the current rental expense is $73,220 not including property tax
and maintenance charges. This facility was opened November 16, 1985 and is a
full service branch banking office.
Village extended a lease agreement on March 31, 1993, for a non-branch
operations (back-office) facility at 96 Danbury Road, Ridgefield, Connecticut.
The leasehold contains approximately six thousand (6,000) square feet of office
space and one thousand (1,000) square feet of storage space. The original lease
arrangement was for five years with provisions for two five year extensions, at
an annual rental of approximately $86,540, not including property tax and
maintenance charges. This lease originally commenced November, 1988, with five
percent annual increases. Four stockholders, two of whom are Directors, are
affiliated with the partnership which is leasing the facility to the Bank.
Village owns in fee simple a self contained facility at 54 Bridge Street, New
Milford, Connecticut. The site contains 0.16 acres. The building has two floors.
The first floor, which approximates 1,700 square feet, is the location of the
general banking office. The second floor, which approximates 1,524 square feet,
will be used for offices and loan originations and closings.
Village has a lease agreement for a branch banking facility at 28 Shelter Rock
Road, Danbury, Connecticut, that extends through November 30, 1996. The lease
agreement provides for two renewal options which extend for five years each. The
leasehold contains approximately two thousand four hundred sixty (2,460) square
feet. The annual rental is approximately $48,150, not including property and
maintenance charges.
Item 3. Legal Proceedings
There are no material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's security holders during the
fourth quarter of 1994.
-2-
<PAGE>
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
"Capital Stock" on page 33 of the Annual Report to Stockholders for the year
ended December 31, 1995 is incorporated herin by reference.
Item 6. Selected Financial Data
"Selected Financial Data" on page 9 of the Annual Report to Stockholders for the
year ended December 31, 1995 is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 10 to 13 of the Annual Report to Stockholders for the year
ended December 31, 1995 is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements and notes thereto on pages 15 to 30 of the
Annual Report to Stockholders for the year ended December 31, 1995 and the
Independent Auditors' Report on page 14 are incorporated herein by reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information relating to directors and executive officers of the Registrant and
Bank and the information required by this item are included in the proxy
statement for the annual meeting of stockholders to be held on April 29, 1996,
on pages 9 through 15 and the information required by this item is herein
incorporated by reference.
Item 11. Executive Compensation
Compensation of directors and officers and the information required by this item
are included in the proxy statement for the annual meeting of stockholders to be
held on April 29, 1996, on pages 16 through 20 and the information required by
this item is herein incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information relating to security ownership of certain beneficial owners and
management as required by this item is included in the proxy statement for the
annual meeting of stockholders to be held on April 24, 1995, on pages 4 through
7 and is herein incorporated by reference.
Item 13. Certain Relationships and Related Transactions
Information of certain relationships and related transactions is included in the
proxy statement for the annual meeting of stockholders to be held on April 29,
1996, on pages 13 through 16 and is herein incorporated by reference.
-3-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statements
(a) (1) The following consolidated financial statements and the Independent
Auditors' Report included in the Annual Report to Stockholders of Village
Bancorp, Inc. and Subsidiaries for the year ended December 31, 1995, are
incorporated by reference in Item 8:
Consolidated Balance Sheets - December 31, 1995 and 1994.
Consolidated Statements of Income - Years Ended December 31, 1995,
1994 and 1993.
Consolidated Statements of Changes in Stockholders' Equity - Years
Ended December 31, 1995,1994 and 1993.
Consolidated Statements of Cash Flows - Years Ended December 31, 1995,
1994 and 1993.
Notes to Consolidated Financial Statements.
(a)(2) Schedules to the Consolidated Financial Statements required by
Article 9 of Regulation S-X are not required under the related instructions or
the information is included in the Consolidated Financial Statements or Notes
thereto and has therefore been ommitted.
(a)(3) Exhibits.
The exhibits which are filed with this Form 10-K or which are incorporated
herein by reference are set forth in the Exhibit Index on Page 6.
(b) There were no reports on Form 8-K filed for the three months ended
December 31, 1995.
(c) Exhibits.
The exhibits which are filed with this Form 10-K or which are incorporated
herein by reference are set forth in the Exhibit Index on Page 6.
(d) Financial Statement Schedules - None.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, therunto duly authorized.
Village Bancorp, Inc.
<TABLE>
<CAPTION>
<S> <C>
By James R. Umbarger March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
James R. Umbarger - Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
<CAPTION>
DATE
<S> <C>
Edward J. Hannafin March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Edward J. Hannafin - Chairman of the Board & Director
Nicholas R. DiNapoli March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Nicholas R. DiNapoli - Vice Chairman of the Board & Director
Robert V. Macklin March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Robert V. Macklin - President, Chief Executive Officer & Director
Enrico J. Addessi March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Enrico J. Addessi - Secretary of the Board & Director
Robert Scala March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Robert Scala - Assistant Secretary of the Board & Director
Jose P. Boa March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Jose P. Boa - Director
Richard O. Carey March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Richard O. Carey - Director
Madeline F. Contegni March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Madeline F. Contegni - Director
Jeanne M. Cook March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Jeanne M. Cook - Director
Carl Lecher March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Carl Lecher - Director
Joseph L. Knapp March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Joseph L. Knapp - Director
Antonio M. Resendes March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Antonio M. Resendes - Director
Thomas F. Reynolds March 14, 1996
- -------------------------------------------------------------------------------------------------------------------
Thomas F. Reynolds - Director
</TABLE>
-5-
<PAGE>
VILLAGE BANCORP, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION REFERENCE NUMBERED PAGE
<S> <C> <C> <C>
3(i) Articles of Incorporation Exhibit 3(a) to Registration
Statement No. 2-81879
June 1, 1983
3(ii) By-Laws Exhibit 3(b) to Registration
Statement No. 2-81879
June 1, 1983
4 Specimen Common Exhibit 4 to Form 10-K
Stock Certificate December 31, 1986
10(a) Lease Dated April 18, 1985 Exhibit 10(a) to Form 10-K
December 31, 1986
10(b) Lease Dated March 31, 1988 Exhibit 10(b) to Form 10-K
December 31, 1988
13 Annual Report to Stockholders Filed Herewith 7
for the year ended
December 31, 1995
21 Subsidiaries of the Registrant Filed Herewith 41
</TABLE>
-6-
<PAGE>
VILLAGE
BANCORP
TABLE OF CONTENTS
LETTER TO STOCKHOLDERS --- 2
BUSINESS --- 4
BUSINESS/SELECTED FINANCIAL DATA --- 9
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS ---
10 INDEPENDENT AUDITORS' REPORT --- 14
CONSOLIDATED BALANCE SHEETS --- 15
CONSOLIDATED STATEMENTS OF INCOME --- 16
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY --- 17
CONSOLIDATED STATEMENTS OF CASH FLOWS --- 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --- 19
OFFICERS, BOARD OF DIRECTORS & ADVISORY BOARD OF DIRECTORS --- 31
CAPITAL STOCK, ANNUAL MEETING, REQUEST FOR
FINANCIAL INFORMATION--- 33
OFFICE INFORMATION -- 34
1995 ANNUAL REPORT
[GRAPHIC]---------------------------------
PAGE 7
<PAGE>
LETTER TO OUR STOCKHOLDERS
[GRAPHIC]-----------------------------------------------------------------------
With the completion of 1995, we find ourselves halfway through the decade
of the 90's. As a result, it seemed appropriate to adopt our theme for this
year's annual report - "Chart the Past, Navigate the Present, Explore the
Future."
1995 is now the past. We are very pleased to report that net income for
the year was $1,316,000 or $1.38 per share, an 86% increase from the 1994 net
income of $707,000 or $.74 per share.
Total consolidated assets on December 31, 1995 were $174,277,000, an
increase of 10.8% over the $157,241,000 reported on December 31, 1994. Total
deposits had increased to $158,539,000 on December 31, 1995 from the
$143,421,000 reported the previous year end. The Corporation's equity totalled
$14,148,000 as of December 31, 1995. Very significantly, during 1995 The Village
Bank & Trust Company's loan portfolio increased $13,266,000 to a total of
$119,591,000 outstanding on December 31, 1995. All of our financial results can
be found in great detail later in this annual report.
Over the past few years, the Corporation has made conscious decisions to
undertake projects that would benefit the Corporation in the future. Some of
those projects are now generating returns to the Corporation as expected.
Early in 1995, the decision was made to merge Liberty National Bank into
The Village Bank & Trust Company. This was completed in June of 1995, and the
resulting cost savings benefitted the Corporation during the second half of the
year. Our office in New Milford is now solidly profitable and continues to grow
in deposits and loans. Our new Trust Department is gaining acceptance in the
area, and steadily growing. Each of these past projects contributed to the
excellent results for 1995.
The present is a time of rapid change for our industry. The numerous
mergers and consolidations of other banks have been well-publicized. The names
of many of our competitors have changed over the last five years, some more than
once. Village Bancorp continues to "navigate" through this evolution in banking.
Our focus in on carefully controlled growth which we believe will return the
maximum value to our shareholders. With this in mind, The Village Bank & Trust
Company is building a 17,000 square foot building in the middle of the Danbury
downtown redevelopment area. When complete sometime early in 1997, the building
will house the fifth office of The Village Bank on the ground floor, and most of
PAGE 8
<PAGE>
- --------------------------------------------------------------------------------
the Bank's back office check processing departments on the top two floors. By
moving our operations departments into our own building, the Bank will be able
to eliminate sizeable rental payments that are currently being paid for leased
office space. As a result, we expect that this branch office will quickly be
profitable.
More than at any time in the past, the future for our Corporation will
seem like exploring unknown territory. In particular, the technological changes
that already exist and are being developed will revolutionize the delivery of
many of our products. Management and the Board are spending considerable time
and effort studying the options available, in order to choose products and
services we believe our customers will want, in a form that will be profitable
to the Bank.
Today is an exciting time to be in our industry. Our Corporation has found
great success to date, and we fully intend to continue that success into the
future. We enjoy having you share in the growth of the Corporation as we explore
the future.
/s/ Edward J. Hannafin
Edward J. Hannafin
Chairman
[PHOTO]
/s/ Robert V. Macklin
Robert V. Macklin
President & Chief Executive Officer
PAGE 9
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
BUSINESS
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST RATES AND
INTEREST DIFFERENTIAL
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
1995 1994 1993
=======================================================================================================================
Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
=======================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Loans(1) $116,556 $10,177 8.73% $ 98,908 $ 7,808 7.89% $ 95,154 $7,805 8.20%
Taxable securities 26,912 1,680 6.24 32,839 1,777 5.41 30,063 1,644 5.47
Tax-exempt securities 2,284 112 4.90 1,979 100 5.05 1,554 83 5.34
Federal funds sold 6,329 371 5.86 6,289 266 4.23 6,586 192 2.92
- -----------------------------------------------------------------------------------------------------------------------
Total interest earning assets 152,081 $12,340 8.11% 140,015 $ 9,951 7.11% 133,357 $9,724 7.29%
- -----------------------------------------------------------------------------------------------------------------------
Noninterest earning assets:
- -----------------------------------------------------------------------------------------------------------------------
Cash and due from banks 7,722 7,561 7,599
Bank premises and equipment 1,608 1,441 1,607
Accrued income and other assets 1,951 2,070 2,506
Allowance for loan losses (1,464) (1,582) (1,704)
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $161,898 $ 149,505 $143,365
=======================================================================================================================
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest bearing liabilities:
NOW accounts $ 35,759 $ 622 1.74% $ 38,367 $ 592 1.54% $ 37,912 $ 705 1.86%
Savings deposits 44,334 1,230 2.77 52,645 1,233 2.34 50,230 1,248 2.48
Time deposits 50,413 2,761 5.48 30,339 1,124 3.70 28,638 1,027 3.59
Federal funds purchased 556 33 5.94 - - - - - -
- -----------------------------------------------------------------------------------------------------------------------
Total interest bearing liabilities $131,062 $ 4,646 3.54% 121,351 $ 2,949 2.43% 116,780 $2,980 2.55%
- -----------------------------------------------------------------------------------------------------------------------
Noninterest bearing liabilities:
Demand deposits 15,974 14,291 12,972
Other 1,317 768 789
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities 148,353 136,410 130,541
Stockholders' equity 13,545 13,095 12,824
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $161,898 $ 149,505 $143,365
=======================================================================================================================
NET INTEREST INCOME $ 7,694 $ 7,002 $6,744
=======================================================================================================================
NET YIELD ON INTEREST
EARNING ASSETS 5.06% 5.00% 5.06%
=======================================================================================================================
</TABLE>
(1) For the purposes of these computations, nonaccruing loans are included in
the daily average loan amounts outstanding. Interest income includes fees
on loans of $165,000, $123,000 and $161,000 in 1995, 1994 and 1993,
respectively.
PAGE 10
<PAGE>
- --------------------------------------------------------------------------------
VOLUME/RATE ANALYSIS
The following table sets forth for the periods indicated a summary of the
changes in interest income and interest expense resulting from changes in volume
and changes in rate.
<TABLE>
<CAPTION>
(In thousands)
1995 Compared to 1994 1994 Compared to 1993
Increase (Decrease) Due to: (1) Increase (Decrease) Due to: (1)
===================================================================================================================
Volume Rate Net Volume Rate Net
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Interest income on:
Loans $ 1,484 $ 885 $ 2,369 $ 72 $ (69) $ 3
Taxable securities (647) 550 (97) 151 (18) 133
Tax-exempt securities 15 (3) 12 21 (4) 17
Federal funds sold 2 103 105 (8) 82 74
- -------------------------------------------------------------------------------------------------------------------
Total $ 854 $ 1,535 $ 2,389 $ 236 $ (9) $ 227
===================================================================================================================
Interest expense on:
NOW accounts $ (33) $ 63 $ 30 $ 8 $ (121) $ (113)
Savings deposits 18 (21) (3) 86 (101) (15)
Time deposits 948 689 1,637 64 33 97
Federal funds purchased 33 - 33 - - -
- -------------------------------------------------------------------------------------------------------------------
Total $ 966 $ 731 $ 1,697 $ 158 $ (189) $ (31)
===================================================================================================================
</TABLE>
(1) The change in interest due to both rate and volume has been allocated to
the volume and rate changes in proportion to the relationship of the
absolute dollar amounts of the change in each.
SECURITIES PORTFOLIO
The following table sets forth the balance sheet carrying amount of securities
at the dates indicated:
(In thousands)
December 31,
1995 1994 1993
================================================================================
U.S. Treasury and other U.S.
Government agencies $32,060 $33,222 $38,931
States and political subdivisions 2,444 2,323 1,966
Corporate bonds -- 176 559
Other 58 96 118
- --------------------------------------------------------------------------------
TOTAL $34,562 $35,817 $41,574
================================================================================
VILLAGE BANCORP, INC.
PAGE 11 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
BUSINESS (continued)
The following table sets forth the maturities of securities at December 31, 1995
and the weighted average yields of such securities (calculated on the basis of
the amortized cost and effective yields weighted for the scheduled maturity of
each security). Tax equivalent adjustments have not been made in calculating
yields on obligations of states and political subdivisions.
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
Maturing
After One Year But After Five Years But After
Within One Year Within Five Years Within Ten Years Ten Years
Amount Yield Amount Yield Amount Yield Amount Yield
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and other U.S.
Government agencies $ 20,338 5.87% $ 9,245 5.93% $ 1,817 5.94% $ 660 6.30%
States and political
subdivisions 120 5.83 1,428 4.68 746 5.98 150 5.90
Other 12 5.17 46 6.50
- --------------------------------------------------------------------------------------------------------------------------
TOTALS $ 20,470 5.87% $10,719 5.76% $ 2,563 5.95% $ 810 6.22%
==========================================================================================================================
</TABLE>
LOAN PORTFOLIO
The following table shows the Bank's loan distribution (net of deferred loan
fees) at the end of each of the last three years:
<TABLE>
<CAPTION>
(In thousands)
December 31,
1995 1994 1993
===================================================================================================================
<S> <C> <C> <C>
Real estate - mortgage and home equity $ 88,400 $ 84,756 $75,992
Real estate - construction and land development 7,737 4,787 2,365
Installment and consumer credit 10,562 8,130 9,507
Commercial and financial 12,892 8,652 6,080
- -------------------------------------------------------------------------------------------------------------------
TOTALS $ 119,591 $106,325 $93,944
===================================================================================================================
</TABLE>
The following table shows the maturity of gross loans (excluding installment and
consumer credit loans) outstanding as of December 31, 1995. Also provided are
the amounts due after one year classified according to sensitivity to changes in
interest rates.
<TABLE>
<CAPTION>
(In thousands)
Maturing
After One Year
Within But Within After
One Year Five Years Five Years Total
============================================================================================================================
<S> <C> <C> <C> <C>
Commercial and financial $ 5,549 $ 6,060 $ 1,283 $ 12,892
Real estate - construction and land development 2,853 1,557 3,327 7,737
Real estate - mortgage and home equity 5,379 6,737 76,284 88,400
- -------------------------------------------------------------------------------------------------------------------
TOTAL $ 13,781 $ 14,354 $80,894 $ 109,029
===========================================================================================================================
Loans maturing after one year with:
Fixed interest rates $ 5,665 $11,020
Variable interest rates 8,689 69,874
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL $ 14,354 $80,894
===========================================================================================================================
</TABLE>
PAGE 12
<PAGE>
- --------------------------------------------------------------------------------
NONACCRUAL AND PAST DUE LOANS
The following table summarizes the Bank's nonaccrual loans and loans past due 90
days or more:
(In thousands)
December 31,
1995 1994 1993
================================================================================
Nonaccrual loans $ 606 $ 240 $ 1,093
================================================================================
Accruing loans past due
90 days or more 230 314 481
- --------------------------------------------------------------------------------
TOTAL $ 836 $ 554 $ 1,574
================================================================================
At December 31, 1995 $553,000 of nonaccrual loans were collateralized.
A loan is put on nonaccrual basis when the loan becomes past due ninety days,
except for instances where there are factors known to management which reflect
favorably on the ability of the customer to fulfill the obligation. The Bank
would have recorded an additional $51,000, $55,000 and $87,000 of gross interest
income in 1995, 1994 and 1993, respectively, if nonaccrual loans had been
current.
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes the activity in the allowance for loan losses:
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
1995 1994 1993
====================================================================================
<S> <C> <C> <C>
Allowance at beginning of year $ 1,551 $1,713 $ 1,556
Charge-offs:
Commercial and financial 95 319 183
Installment and consumer credit 183 20 20
Real estate - mortgage 186 177 --
- ------------------------------------------------------------------------------------
Total charge-offs 464 516 203
====================================================================================
Recoveries:
Commercial and financial 8 42 308
Installment and consumer credit 6 1 7
- ------------------------------------------------------------------------------------
Total recoveries 14 43 315
====================================================================================
Net charge-offs (recoveries) 450 473 (112)
Provisions for loan losses (1) 210 311 45
- ------------------------------------------------------------------------------------
Allowance at end of year $ 1,311 $1,551 $ 1,713
====================================================================================
Ratio of net charge-offs (recoveries) during the
year to average loans outstanding .385% .478% (.118)%
====================================================================================
</TABLE>
(1) The amount charged to operations and the related balance in the allowance
for loan losses is based upon periodic evaluations of the loan portfolio by
management. These evaluations consider several factors including, but not
limited to, general economic conditions, loan portfolio composition, prior
loan loss experience and management's estimation of potential losses.
The allowance for loan losses is considered adequate by management to cover
known and unknown risk elements in the portfolios. This consideration is
affected by the Bank's real estate lending portfolio which represents the major
portion of the growth in the loan portfolios. Real estate loans are generally
well collateralized, and are therefore reflected as such in the allowance.
Management anticipates no material increase or decrease in charge-off activity
in 1996.
VILLAGE BANCORP, INC.
PAGE 13 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
BUSINESS (continued)
DEPOSITS
The average daily amount of deposits and rates paid on such deposits are
summarized for the periods indicated in the following table:
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
Year Ended December 31,
1995 1994 1993
==========================================================================================================
Amount Rate Amount Rate Amount Rate
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Noninterest bearing and
demand deposits $ 15,974 $ 14,291 $ 12,972
NOW accounts 35,759 1.74% 38,367 1.54% 37,912 1.86%
Savings deposits 44,334 2.77 52,645 2.34 50,230 2.48
Time deposits 50,413 5.48 30,339 3.70 28,638 3.59
- ----------------------------------------------------------------------------------------------------------
TOTAL $146,480 $ 135,642 $ 129,752
==========================================================================================================
</TABLE>
Maturities of time certificates of deposit of $100,000 or more outstanding at
December 31, 1995 are summarized as follows:
(In thousands)
Time Certificates of Deposit
================================================================================
Three months or less $ 1,452
Over three through six months 2,696
Over six through twelve months 1,389
Over twelve months 844
- --------------------------------------------------------------------------------
TOTAL $ 6,381
================================================================================
RETURN ON EQUITY AND ASSETS
The following table shows consolidated operating and capital ratios for each of
the last three years:
Year Ended December 31,
1995 1994 1993
================================================================================
Return on average assets .81% .47% .69%
Return on average stockholders' equity 9.72 5.40 7.75
Dividend payout ratio 34.78 85.14 49.52
Equity to assets ratio (1) 8.37 8.76 8.95
================================================================================
(1) Ratio is based upon average stockholders' equity and average asset balances.
PAGE 14
<PAGE>
- --------------------------------------------------------------------------------
BUSINESS/SELECTED FINANCIAL DATA
INTEREST RATE SENSITIVITY
The following table sets forth the dollar amount of rate sensitive assets and
liabilities that reprice within the stated time frames at December 31, 1995:
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
Rate Sensitive Assets:
1 Year or less 1 - 3 Years 3 - 5 Years Over 5 Years Total
===================================================================================================================
<S> <C> <C> <C> <C> <C>
Loans (net of deferred loan fees) $100,591 $ 3,493 $ 4,281 $ 11,226 $ 119,591
Federal funds 8,200 -- - -- 8,200
Securities 20,470 5,601 5,118 3,373 34,562
- -------------------------------------------------------------------------------------------------------------------
Total 129,261 9,094 9,399 14,599 162,353
===================================================================================================================
Rate Sensitive Liabilities:
Deposits 133,980 5,817 1,477 -- 141,274
- -------------------------------------------------------------------------------------------------------------------
Gap (Repricing difference) $ (4,719) $ 3,277 $ 7,922 $ 14,599 $ 21,079
===================================================================================================================
Cumulative gap $ (4,719) $ (1,442) $ 6,480 $ 21,079
===================================================================================================================
Cumulative ratio of rate
sensitive assets to liabilities .96 .99 1.05 1.15
===================================================================================================================
</TABLE>
SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the last five years:
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
Year Ended December 31,
1995 1994 1993 1992 1991
===================================================================================================================
<S> <C> <C> <C> <C> <C>
Net interest income $ 7,694 $ 7,002 $ 6,744 $ 6,075 $ 5,110
Provision for loan losses 210 311 45 154 626
Net income 1,316 707 994 861 99
- -------------------------------------------------------------------------------------------------------------------
Per share data: (1)
Net income $ 1.38 $ .74 $ 1.05 $ .91 $ .11
Cash dividends declared .48 .63 .52 .37 .35
- -------------------------------------------------------------------------------------------------------------------
Balance sheet totals:
Average assets $161,898 $ 149,505 $ 143,365 $ 131,898 $ 127,811
Average deposits 146,480 135,642 129,752 119,193 115,025
Average stockholders' equity 13,545 13,095 12,824 11,663 11,329
===================================================================================================================
</TABLE>
The following table sets forth selected quarterly financial data for 1995 and
1994:
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
1995 12-95 9-95 6-95 3-95 1994 12-94 9-94 6-94 3-94
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net interest income $7,694 $1,939 $1,937 $1,914 $1,904 $7,002 $1,955 $1,794 $1,649 $1,604
Provision for loan losses 210 30 75 55 50 311 174 34 61 42
Net income 1,316 397 318 265 336 707 178 196 140 193
- ------------------------------------------------------------------------------------------------------------------------------------
Per share data: (1)
Net income $ 1.38 $ .41 $ .34 $ .28 $ .35 $ .74 $ .18 $ .21 $ .15 $ .20
Cash dividends declared .48 .15 .11 .11 .11 .63 .11 .11 .11 .30
====================================================================================================================================
</TABLE>
(1) Adjusted to give effect to stock dividends.
VILLAGE BANCORP, INC.
PAGE 15 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
Management's Discussion & Analysis of
Financial Condition & Results of Operations
General
Village Bancorp, Inc. (Company) is a Connecticut incorporated bank holding
company and parent corporation of the Village Bank & Trust Company (Village),
which is the only subsidiary of the Company. In January 1994, Village Bancorp,
Inc. and Liberty National Bank (Liberty) jointly announced the signing of an
agreement by which Village Bancorp, Inc. would acquire all of the outstanding
common stock of Liberty. This acquisition took place in November of 1994. In
June of 1995, Liberty National Bank was merged into The Village Bank & Trust
Company. All historical financial data has been restated to include both
entities for all periods presented. The Bank functions as a financial
intermediary acting as depository and lender of funds to its customers, and
generates its income from the interest earned on invested assets less interest
paid on its deposits and interest bearing liabilities. The Bank is a member of
the Federal Deposit Insurance Corporation (FDIC) and the deposits of the Bank
are insured by the FDIC to the extent provided by law. The Bank offers all
general commercial banking services allowed by both State and Federal
regulations. The Company does not engage in any non-banking activities that are
permitted to bank holding companies under enacted regulations. The Bank is
subject to intense competition from various financial institutions and other
companies or firms that engage in similiar activities. Bank holding companies
and banks are extensively regulated under both federal and state law. As of
December 31, 1995, the Bank had 75 full-time equivalent employees. Most
full-time employees are eligible for group life, health and medical and
disability insurance. Village Bank & Trust employees are eligible for
participation in a 401(k) plan after one year of service. The Company is listed
on the National Association of Securities Dealers Automated Quotation System
("NASDAQ") SmallCap Stock Market price quotation service under the symbol
"VBNK". Village began operating a trust department and offering trust services
in the third quarter of 1993.
Financial Condition
The Company had total assets of $174,277,000 on December 31, 1995 as compared to
assets of $157,241,000 on December 31, 1994. The most significant area of
increase over the past year was in loans, which increased $13,266,000 (12.5%).
Loan growth was funded by an increase of $15,118,000 (10.5%) in the Banks
deposits. This increase in loans is primarily due to the fact that the majority
of the loans the Bank originated were variable rate loans which are generally
retained for its own portfolio, as opposed to fixed rate loans which are
generally sold in the secondary mortgage market.
The loan portfolio of the Bank includes $96,137,000 of real estate, home equity
and construction mortgages. This is 80.4% of the Banks total loan portfolio as
of December 31, 1995. This is in comparison to $89,543,000 (84.2%) in real
estate related loans outstanding on December 31, 1994. Due to this high
percentage of real estate loans the management of the Bank is continuously
monitoring real estate values and the general economic conditions in the Bank's
lending areas so that it may take appropriate action when necessary.
Capital Resources
The Company, aware that its capital position is a measure of its ongoing
viability and ability to compete effectively in the highly competitive financial
services industry, strives to maintain a strong capital position. With a strong
capital position, the Company has the ability to effectively compete now and in
the future and be better able to withstand economic instability or uncertainty.
The Company has a leverage ratio of 8.37% on December 31, 1995 as compared to
8.79% on December 31, 1994.
In 1989 the Federal Deposit Insurance Corporation approved a final Statement of
Policy on Risk-Based Capital to be implemented over a two-year transition period
beginning at December 31, 1990. Risk weights are assigned to balance sheet and
off-balance sheet items and are used to calculate the Bank's capital ratios. On
December 31, 1995 the required minimum capital was 8.0% of total capital to risk
weighted assets and 4.0% Tier 1 capital to risk weighted assets. The Company's
ratios on December 31, 1995 were 14.68% total capital ratio and 13.87% Tier 1
capital ratio, which exceed the minimum requirements. These ratios for December
31, 1994 were 15.44% and 14.33%, respectively. Management does not anticipate
any event that would cause the Company to fall below the minimum requirements at
December 31, 1996, and anticipates that the Company will continue to have excess
"risk -based" capital.
Results of Operations
Net income for 1995 was $1,316,000 as compared to $707,000 for 1994. Net
interest income for 1995 amounted to $7,694,000 as compared to $7,002,000 for
1994. Net interest income increased primarily as a result of the increase in
interest income on loans.
Income Taxes
The Company's provision for income taxes was $984,000 for 1995 as compared to
$719,000 for 1994.
In February 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) No. 109, "Accounting for Income Taxes",
PAGE 16
<PAGE>
- --------------------------------------------------------------------------------
which requires an asset and liability approach for financial accounting and
reporting for income taxes. The Company adopted SFAS No. 109 effective January
1, 1993. There was no effect of initially applying this new standard.
Assets and Related Income Analysis
Loans outstanding on December 31, 1995 totaled $119,591,000 as compared to
$106,325,000 outstanding on December 31, 1994. The increase in the loan
portfolio of $13,266,000 (12.5%) was primarily attributable to the majority of
real estate loans originated being variable rate, which the Bank primarily holds
for its own portfolio. The majority of loans at the Bank are and have been real
estate related. Loan income increased $2,369,000 from $7,808,000 for 1994 to
$10,177,000 for 1995. This increase is due to an increase in average outstanding
loans from $98,908,000 for 1994 to $116,921,000 for 1995, coupled with an
increase in the average rate earned from 7.81% in 1994 to 8.70% in 1995.
Securities, which consist of securities held-to-maturity and securities
available-for-sale, decreased $1,255,000 (3.5%) from $35,817,000 at December 31,
1994 to $34,562,000 at December 31, 1995. Income from securities decreased
$85,000 (4.5%) from $1,877,000 for the 1994 period to $1,792,000 for the 1995
period. This decrease resulted primarily from a decrease in average dollar
amount outstanding from $34,818,000 for 1994 to $29,196,000 for 1995, offset by
an increase in average rate earned from 5.39% for 1994 to 6.14% for 1995. Net
security gains were $70,000 in 1995; there were none in 1994. The Bank holds
securities held-to-maturity until maturity and does not trade them. Securities
available-for-sale are used to compensate for liquidity forecasting deviations.
Federal funds sold increased $4,950,000 (152.3%) from $3,250,000 at December 31,
1994 to $8,200,000 at December 31, 1995. Federal funds sold income increased
$105,000 (39.5%) from $266,000 for 1994 to $371,000 for 1995. This increase
resulted primarily from an increase in the average rate earned from 4.23% for
1994 to 5.86% in 1995, coupled with a slight increase in average dollar amount
outstanding from $6,289,000 in 1994 to $6,329,000 in 1995.
Liability and Related Expense Analysis
Deposits increased $15,118,000 (10.5%) from $143,421,000 at December 31, 1994 to
$158,539,000 at December 31, 1995. Interest on deposits increased $1,697,000
(57.5%) from $2,949,000 for 1994 to $4,646,000 for 1995. This increase is
attributable to an increase in the average rate paid from 2.43% for 1994 to
3.17% for 1995 period, coupled with an increase in the average dollar amount
outstanding from $135,642,000 for 1994 to $146,480,000 in 1995.
Data processing services increased $45,000 (10.6%) from $425,000 in 1994 to
$470,000 in 1995, as a result of increased use of services offered along with
increased volumes.
Printing, stationery and supplies expense increased $54,000 (32.5%) from
$166,000 in 1994 to $220,000 in 1995, mainly as a result of the merger of
Liberty National Bank into Village.
Provision for Loan Losses
The provision for loan losses decreased $101,000 (32.5%) from $311,000 for 1994
to $210,000 for 1995. The economy and the real estate market in the Banks market
areas are closely monitored by management to maintain an allowance for loan
losses that is considered adequate. The loan loss allowance was $1,311,000 to
support loan portfolios of $119,591,000, or a loan loss reserve ratio of 1.10%.
This is in comparison to a ratio of 1.46% for 1994. Management believes that the
allowance for loan losses is adequate.
Interest Rate Sensitivity
Financial institutions have become increasingly concerned about matching the
repricing ability of interest-earning assets to the repricing ability of
interest-bearing liabilities. Interest rate risk occurs when these repricings
occur in different time frames. An interest rate sensitivity "gap" is the
difference between the repricing assets and the repricing liabilities occuring
in a given time frame. A positve "gap" occurs when the asset amount exceeds the
liability amount. A negative "gap" occurs when the liability amount exceeds the
asset amount. In a falling interest rate environment a negative "gap" would tend
to increase the institution's net interest income, while a positive "gap" would
have an adverse effect. In a rising interest rate environment a positive "gap"
would tend to increase the institution's net interest income, while a negative
"gap" would have an adverse effect. Normally institutions attempt to match these
repricings while maintaining an adequate interest rate spread without
compromising the quality of assets. The Bank's interest rate sensitivity for the
one year or less time frame consists of $129,261,000 of repricing assets
compared to $133,980,000 of repricing liabilities. For more information please
see "Business".
VILLAGE BANCORP, INC.
PAGE 17 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
Management's Discussion & Analysis of
Financial Condition & Results of Operations
(continued)
Liquidity
Liquidity is the ability to provide funds for loan requests, unexpected deposit
outflows and meeting other recurring financial obligations. The Bank, as a
financial intermediary, monitors its liquidity position carefully, that it might
identify trends that could impact its liquidity/cash flow position. The Banks
experience little in seasonal liquidity fluctuation. Loan commitments are also
closely monitored to assure these commitments do not negatively affect the
Bank's planned liquidity position. Primary liquidity is comprised of cash and
due from banks, interbank overnight federal funds sold and securities maturing
in less than one year. These assets aggregated $37,745,000, or 21.7% of total
assets, as of December 31, 1995, as compared to $30,503,000 (19.4%) at December
31, 1994. Management closely monitors the Bank's liquidity/cash flow position
and does not anticipate any liquidity problems in the future.
Impact of Inflation
The quantitative impact of inflation is subjective in interpretation and
difficult and imprecise to measure in the financial services industry. Inflation
poses a financial risk as the Bank's assets consist mainly of financial assets
which are funded by deposit liabilities of varying maturities and deposit yields
as opposed to physical or real assets. With few fixed or physical assets, the
Bank has a low degree of operating leverage which mitigates the inflationary
impact. The financial leverage ratio of capital to total assets is the most
effective measure of a financial institution's viability and its ability to
withstand inflationary pressures.
COMPARISON OF 1994 TO 1993
Financial Condition
The Company had total assets of $157,241,000 on December 31, 1994 as compared to
assets of $152,890,000 on December 31, 1993. The most significant area of
increase over the year was in loans, which increased $12,381,000 (13.2%).
Loan growth was funded by an increase of $4,475,000 (3.2%) in deposits coupled
with a decrease in securities of $5,757,000 (13.9%). This increase in loans is
primarily due to the fact that the majority of the loans the Bank originated
were variable rate loans which are generally retained for its own portfolio, as
opposed to fixed rate loans which are generally sold in the secondary mortgage
market.
The loan portfolio of the Bank includes $89,543,000 of real estate, home equity
and construction mortgages.
This is 84.2% of the Bank's total loan portfolio as of December 31, 1994. This
is in comparison to $78,367,000 (83.4%) in real estate related loans outstanding
on December 31, 1993.
Capital Resources
The Company had a leverage ratio of 8.79% on December 31, 1994 as compared to
9.07% on December 31, 1993. At December 31, 1994, the Company's total capital to
risk weighted assets ratio was 15.44% and its Tier 1 capital to risk weighted
assets ratio was 14.33%. Each of these capital ratios was substantially in
excess of regulatory requirements.
Results of Operations
Net income for 1994 was $707,000 as compared to $994,000 for 1993. Net interest
income for 1994 amounted to $7,002,000 as compared to $6,744,000 for 1993. Net
interest income increased primarily as a result of the increase in interest
income on securities.
Income Taxes
The Company's provision for income taxes was $719,000 for 1994 as compared to
$652,000 for 1993.
Assets and Related Income Analysis
Loans outstanding on December 31, 1994 totaled $106,325,000 as compared to
$93,944,000 outstanding on December 31, 1993. The increase in the loan portfolio
of $12,381,000 (13.2%) was primarily attributable to the majority of loans
originated being variable rate, which the Bank primarily holds for its own
portfolio. The majority of loans are and have been real estate related. Loan
income increased $3,000 from $7,805,000 for 1993 to $7,808,000 for 1994. This
increase is due to an increase in average outstanding loans from $95,154,000 for
1993 to $98,908,000 for 1994, offset by a decrease in the average rate earned
from 8.20% in 1993 to 7.81% in 1994.
Securities, which consist of securities held-to-maturity and securities
available-for-sale, decreased $5,757,000 (13.9%) from $41,574,000 at December
31, 1993 to $35,817,000 at December 31, 1994. Income from securities increased
$150,000 (8.7%) from $1,727,000 for the 1993 period to $1,877,000 for the 1994
period. This increase resulted primarily from an increase in average dollar
amount outstanding from $31,617,000 for 1993 to $34,818,000 for 1994, offset by
a decrease in average rate earned from 5.46% for 1993 to 5.39% for 1994. Net
security gains were $10,000 in 1993; there were none in 1994. The Bank holds
securities held-to-maturity until maturity and do not trade them. Securities
PAGE 18
<PAGE>
- --------------------------------------------------------------------------------
available-for-sale are used to compensate for liquidity forecasting deviations.
Federal funds sold decreased $3,100,000 (48.8%) from $6,350,000 at December 31,
1993 to $3,250,000 at December 31, 1994. Federal funds sold income increased
$74,000 (38.5%) from $192,000 for 1993 to $266,000 for 1994. This increase
resulted primarily from an increase in the average rate earned from 2.92% for
1993 to 4.23% in 1994, offset by a decrease in average dollar amount outstanding
from $6,586,000 in 1993 to $6,289,000 in 1994.
Liability and Related Expense Analysis
Deposits increased $4,475,000 (3.2%) from $138,946,000 at December 31, 1993 to
$143,421,000 at December 31, 1994. Interest on deposits decreased $31,000 (1.0%)
from $2,980,000 for 1993 to $2,949,000 for 1994. This decrease is attributable
to a decrease in the average rate paid from 2.55% for 1993 to 2.43% for 1994,
offset by an increase in the average dollar amount outstanding from $129,752,000
for 1993 to $135,642,000 in 1994.
Other operating expenses increased $97,000 (11.1%) from $874,000 for 1993 to
$971,000 for 1994. The significant component of this increase are costs
associated with the merger of the Company and Liberty.
Provisions for Loan Losses
The provision for loan losses increased $266,000 (591.1%) from $45,000 for 1993
to $311,000 for 1994. The economy and the real estate market in the Bank's
market areas have been closely monitored by management to maintain an allowance
for loan losses that is considered adequate. The loan loss allowance was
$1,551,000 to support loan portfolios of $106,325,000, or a loan loss reserve
ratio of 1.46%. This is in comparison to a ratio of 1.82% for 1993. Management
believes that the allowance for loan losses is adequate.
Liquidity
Primary liquidity is comprised of cash and due from banks, interbank overnight
federal funds sold and securities maturing in less than one year. This figure
amounted to $30,503,000 or 19.4% of total assets, as of December 31, 1994, as
compared to $36,845,000; or 24.1% of total assets, as of December 31, 1993.
VILLAGE BANCORP, INC.
PAGE 19 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
Independent Auditors' Report
[Letterhead of Deloitte & Touche LLP]
To the Stockholders and Board of Directors of
Village Bancorp, Inc.
We have audited the consolidated balance sheets of village Bancorp, Inc. and
subsidiary (the "Company") as of December 31, 1995 and 1994 and the related
consolidated statements of income changes in stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the reponsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits. The consolidated financial statements give retroactive effect to the
1994 merger of Village Bancorp, Inc and Liberty National Bank, which has been
accounted for as a pooling of interests as described in Note 1 to the
consolidated financial statements, In 1995, Liberty National Bank was combined
with the Company's wholly-owned subsidiary, The Village Bank and Trust Company,
as a combination of entities under common control and accordingly, was accounted
for in a manner similar to a pooling of interests. We did not audit the
statements of income, changes in stockholders' equity and cash flows of Liberty
National Bank for the year ended December 31, 1993, such statements reflect net
interest income of $686,427. Those statements were audited by other auditors
whose report dated March 25, 1994 (April 22, 1994 as to Note 13) has been
furnished to us, and our opinion, insofar as it relates to the amounts included
for Liberty National Bank for 1993, is based solely on the report of such other
auditors.
We conducted our audits in accordance with generally accepted auditing
standards, Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the overall financial statement presentation. We believe that our
audits and the report of the other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Village Bancorp, Inc. and
subsidiary as of December 31, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995 in conformity with generally accepted accounting principles.
As described in Note 1, the Company changed its method of accounting for
securities in 1994.
/s/ DELOITTE & TOUCHE LLP
January 26, 1996
[LOGO]
PAGE 20
<PAGE>
- --------------------------------------------------------------------------------
Consoliodated Balance Sheets
<TABLE>
<CAPTION>
(In thousands,
except share amounts)
December 31,
1995 1994
==================================================================================================
<S> <C> <C>
ASSETS
Cash and due from banks $9,125 $9,643
Federal funds sold 8,200 3,250
- --------------------------------------------------------------------------------------------------
Cash and cash equivalents 17,325 12,893
Securities:
Available-for-sale, at fair value 20,482 11,509
Held-to-maturity, at amortized cost (fair value of $14,294
and $23,645 in 1995 and 1994) 14,080 24,308
Loans, net of deferred loan fees 119,591 106,325
Allowance for loan losses (1,311) (1,551)
- --------------------------------------------------------------------------------------------------
Loans - net 118,280 104,774
Loans held for sale 552 --
Bank premises and equipment - net 1,550 1,636
Accrued income and other assets 2,008 2,121
- --------------------------------------------------------------------------------------------------
Total Assets $174,277 $157,241
==================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest bearing $17,265 $16,023
Interest bearing 141,274 127,398
- --------------------------------------------------------------------------------------------------
Total deposits 158,539 143,421
Income taxes 78 167
Other liabilities 1,512 599
- --------------------------------------------------------------------------------------------------
Total liabilities 160,129 144,187
- --------------------------------------------------------------------------------------------------
Commitments and contingent liabilities (Note 12)
STOCKHOLDERS' EQUITY
Common stock, $3.33 par value; authorized, 2,000,000 shares; issued and
outstanding, 950,317 shares in 1995 and 946,949 in 1994 3,165 3,153
Additional paid-in capital 7,982 7,959
Retained earnings 2,960 2,099
Unrealized gains (losses) on securities available-for-sale, net of tax 41 (157)
- --------------------------------------------------------------------------------------------------
Total stockholders' equity 14,148 13,054
- --------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $174,277 $157,241
==================================================================================================
</TABLE>
See notes to consolidated financial statements.
VILLAGE BANCORP, INC.
PAGE 21 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
Consolidated Statements of Income
(In thousands, except per share data)
Year Ended December 31,
1995 1994 1993
================================================================================
INTEREST INCOME
Loans, including fees $10,177 $7,808 $7,805
Securities:
Taxable 1,680 1,777 1,644
Tax-exempt 112 100 83
Federal funds sold 371 266 192
- --------------------------------------------------------------------------------
Total interest income 12,340 9,951 9,724
INTEREST EXPENSE 4,646 2,949 2,980
- --------------------------------------------------------------------------------
NET INTEREST INCOME 7,694 7,002 6,744
PROVISION FOR LOAN LOSSES 210 311 45
- --------------------------------------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 7,484 6,691 6,699
- --------------------------------------------------------------------------------
OTHER INCOME
Service charges 359 406 476
Security gains - net 70 -- 10
Other operating income 138 194 384
- --------------------------------------------------------------------------------
Total other income 567 600 870
- --------------------------------------------------------------------------------
OTHER EXPENSES
Salaries and employee benefits 2,991 2,849 2,839
Net occupancy 547 514 498
Other real estate owned 37 32 113
Furniture and equipment 290 294 324
Data processing services 470 425 423
Regulatory assessments 148 341 324
Printing, stationery and supplies 220 166 149
Advertising 125 98 146
Appraisal fees 51 68 111
Postage 118 107 122
Other operating expenses 754 971 874
- --------------------------------------------------------------------------------
Total other expenses 5,751 5,865 5,923
- --------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 2,300 1,426 1,646
PROVISION FOR INCOME TAXES 984 719 652
- --------------------------------------------------------------------------------
NET INCOME $ 1,316 $ 707 $ 994
================================================================================
PER SHARE DATA
Net income $ 1.38 $ .74 $ 1.05
Cash dividends $ .48 $ .63 $ .52
================================================================================
See notes to consolidated financial statements.
PAGE 22
<PAGE>
- --------------------------------------------------------------------------------
Consolidated Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
(In thousands, except share data)
Unrealized Gains
Common Stock Additional (Losses) on
Number of Paid-In Securities Retained
Shares Amount Capital Available-For-Sale Earnings
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1993 942,609 $ 3,139 $ 7,931 $ 1,391
Net income 994
Cash dividends declared, $.52 per share (449)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 942,609 3,139 7,931 1,936
- --------------------------------------------------------------------------------------------------------------------------------
Effect of adoption of SFAS No. 115 $ 20
Net income 707
Cash dividends declared, $.63 per share (544)
Exercise of options 4,340 14 28
Change in unrealized gains (losses) on
securities available-for-sale (177)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 946,949 3,153 7,959 (157) 2,099
- -------------------------------------------------------------------------------------------------------------------------------
Net income 1,316
Cash dividends declared, $.48 per share (455)
Exercise of options 3,999 14 21
Retirement of stock (631) (2) 2
Change in unrealized gains (losses) on
securities available-for-sale, net of tax 198
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 950,317 $ 3,165 $ 7,982 $ 41 $ 2,960
================================================================================================================================
</TABLE>
See notes to consolidated financial statements.
VILLAGE BANCORP, INC.
PAGE 23 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(In thousands)
Year Ended December 31,
1995 1994 1993
================================================================================================================
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,316 $ 707 $ 994
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 210 311 45
Depreciation and amortization 262 242 257
(Accretion)/amortization of security discounts/premiums, net (194) (118) 162
Deferred income tax provision (benefit) -- 94 (2)
Security gains (net) (70) -- (10)
(Decrease) increase in deferred loan fees (134) 170 (92)
Write-down of real estate owned and in-substance foreclosures -- -- 50
Origination of loans held for sale (5,295) (7,431) (42,640)
Proceeds from sales of loans 4,790 8,772 42,889
Gains on sales of loans (47) (108) (615)
Decrease in accrued income and other assets 85 246 460
Increase (decrease) in accrued expenses and other liabilities 824 (172) (52)
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,747 2,713 1,446
- ----------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from sales of investment securities -- -- 1,831
Proceeds from maturities of investment secutities -- -- 17,276
Purchases of investment securities -- -- (31,352)
Proceeds from sales of securities available-for-sale 8,535 -- --
Proceeds from maturities of securities held-to-maturity 10,598 20,651 --
Proceeds from maturities of securities available-for-sale 4,600 8,317 --
Purchases of securities held-to-maturity (1,088) (12,570) --
Purchases of securities available-for-sale (20,900) (10,680) --
Net increase in loans (13,582) (13,024) (2,346)
Purchases of premises and equipment (176) (366) (97)
- ----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (12,013) (7,672) (14,688)
- ----------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in deposits 15,118 4,475 13,760
Cash dividends (455) (544) (449)
Net proceeds from issuance of common stock 35 42 --
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 14,698 3,973 13,311
- ----------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 4,432 (986) 69
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 12,893 13,879 13,810
- ----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 17,325 $ 12,893 $ 13,879
================================================================================================================
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid on deposits $ 3,787 $ 3,010 $ 3,228
Income tax payments 896 653 727
Net unrealized gains (losses) on securities available-for-sale, net of tax 198 (157) --
================================================================================================================
</TABLE>
See notes to consolidated financial statements.
PAGE 24
<PAGE>
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations - Village Bancorp, Inc. and its subsidiary, The Village
Bank & Trust Company (the "Bank"), collectively the "Company", are engaged in
the business of commercial banking. Headquartered in Ridgefield, the Company
operates four branch offices in Fairfield and Litchfield counties in
Connecticut. The Company principally is engaged in lending and deposit gathering
activities within these counties. The Company's future prospects are largely
dependent on its ability to compete with entities having greater resources and
on the performance of the local economy. A wide range of loan and deposit
products and trust services are offered to the customer. Customer convenience
and responsive service are emphasized. Over 80% of loans are collateralized by
real estate located in Fairfield, Litchfield and adjacent counties. Within this
area employment levels and related economic activity generally are not
materially dependent on any one employer.
Organization - In November of 1994, Village Bancorp, Inc. acquired Liberty
National Bank (Liberty). Each share of Liberty stock was converted into .1149
shares of Village Bancorp, Inc. common stock. This transaction was accounted for
using the pooling-of-interests method and, accordingly, all historical financial
data has been restated to include both entities for all periods presented. On
June 20, 1995, the Company merged Liberty into Village and now operates
Liberty's former office as a branch office of Village. In 1995, Liberty was
combined with the Company's wholly-owned subsidiary, The Village Bank and Trust
Company, as a combination of entities under common control and, accordingly, was
accounted for in a manner similiar to a pooling of interests.
Basis of Financial Statement Presentation - The Company's consolidated financial
statements include the Bank and have been prepared in accordance with generally
accepted accounting principles and conform with predominant practices used
within the banking industry. All significant intercompany accounts and
transactions are eliminated in consolidation. In preparing such financial
statements, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities as of the date of the
consolidated balance sheet and the revenues and expenses for the period. Actual
results could differ significantly from those estimates.
Estimates that are particularly susceptible to significant change relate to the
determination of the allowance for loan losses and the valuation of real estate
acquired in connection with foreclosures or in satisfaction of loans. In
connection with the determination of the allowance for loan losses and real
estate owned, management obtains independent appraisals for significant
properties.
Management believes that the allowance for loan losses is adequate. While
management uses available information to recognize possible loan losses, future
additions to the allowance may be necessary based on changes in economic
conditions, particularly in the Bank's service area, Fairfield and Litchfield
Counties, Connecticut. In addition, regulatory agencies, as an integral part of
their examination process, periodically review the Bank's allowance for loan
losses. Such agencies may recommend to the Bank that it recognize additions to
the allowance based on their judgements of information available to them at the
time of their examination.
Allowance for Loan Losses - The allowance for loan losses is sustained by
charges to operating expense. Loans are charged against the allowance for loan
losses when management believes that the collectibility of the principal is
unlikely; recoveries of previously charged off loans are restored to the
allowance. The allowance for loan losses is maintained at a level believed
adequate by management to absorb potential losses in the loan portfolio.
Management's determination of the adequacy of the allowance is based on an
evaluation of the loan portfolio and other pertinent factors, including, but not
limited to, past loan loss experience, composition of the loan portfolio and
current economic factors.
Consolidated Statements of Cash Flows - For purposes of presenting the
consolidated statements of cash flows, cash equivalents include amounts due from
banks and federal funds sold. Generally, federal funds sold have one day
availability.
Securities - Securities held-to-maturity are stated at cost, adjusted for
accumulated amortization of premium and accretion of discount, which is
calculated on a method that approximates the interest method. Securities
available-for-sale are stated at the lower of cost or at fair value. The
determination to include debt securities as securities held-to-maturity or
securities available-for-sale is made at the time of purchase and is based on
such factors as overall interest rate sensitivity of the Company, projected
liquidity needs, and the Company's long-term investment strategies. The Banks do
not acquire securities for the purpose of engaging in trading activities. When
sales occur, gains or losses on the sale of securities are recognized using the
specific identification method. The Company has the positive intent and ability
to hold its securities classified as held-to-maturity for their economic life.
Prior to the adoption of Statement of Financial Accounting Standards (SFAS) No.
115, "Accounting for Certain Investments in Debt and Equity Securities", on
January 1, 1994, the Company stated all securities at amortized cost.
VILLAGE BANCORP, INC.
PAGE 25 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
Notes to Consolidated Financial Statements
(continued)
Loans - Interest income on loans is recognized based on rates applied to
principal amounts outstanding. Loans are placed on nonaccrual status when
management believes that interest or principal on such loans may not be
collected in the normal course of business. Interest payments received on loans
in nonaccrual status are applied, based on management's judgement as to the
collectibility of loan principal, either as a reduction of principal or as
interest income. Such loans are restored to accrual status when there is no
longer doubt concerning collectibility and the borrower has performed in
accordance with the terms of the loan. Loans held for sale are stated at the
lower of fair value or cost.
Loan origination and commitment fees, net of certain loan origination costs, are
deferred and the net amount amortized as an adjustment of the related loan's
yield. Loan fees deferred in 1995 and 1994 aggregated $282,000 and $367,000,
respectively. Loan costs deferred in 1995 and 1994 aggregated $20,000 and
$27,000, respectively. Net amounts included in income aggregated $433,000,
$93,000 and $161,000 in 1995, 1994 and 1993, respectively.
Impaired Loans - The Company adopted SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan", as amended by SFAS No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures", as of January 1,
1995. Adoption of these statements did not result in any adjustment to the
allowance for loan losses as of January 1, 1995.
A loan is recognized as impaired when it is probable that principal and/or
interest are not collectible in accordance with the contractual terms of the
loan. When a loan is considered impaired, it is placed on nonaccrual status.
Income is recorded using the income recognition principles outlined above.
Measurement of impairment is based on the present value of expected future cash
flows discounted at the loan's effective interest rate, or, at the loan's
observable market price or the fair value of the collateral, if the loan is
collateral dependent. Small homogeneous loans such as residential mortgages,
home equity loans, installment loans and consumer credit are not separately
reviewed for impaired status. These loans typically are for maturities less than
five years and require monthly payments. Separate allocations to the allowance
for loan losses are made based upon trends and prior loss experience and
composition of credit risk in these types of loans. This evaluation is
inherently subjective as it requires material estimates that may be susceptible
to significant change.
If the fair value of an impaired loan is less than the related recorded amount,
a specific valuation allowance is established or the write down is charged
against the allowance for loan losses if the impairment is considered to be
permanent.
Bank Premises and Equipment - Bank premises and equipment are stated at cost,
less accumulated depreciation and amortization. Depreciation and amortization
are computed using the straight-line method based upon estimated useful lives or
the lease term, if shorter, up to 39 years for premises and 15 years for
equipment.
Income Taxes - SFAS No. 109, "Accounting for Income Taxes", establishes
financial accounting and reporting standards for the effects of income taxes
that result from an enterprise's activities during the current and preceding
years, requires an asset and liability approach for financial accounting and
reporting for income taxes. The Company adopted SFAS No. 109 effective January
1, 1993. There was no effect of initially applying this standard.
Other Real Estate - Other real estate includes properties which are foreclosed
or received in settlement of a loan, and real property not used in trade or
business. The properties are recorded at the lower of cost or fair value (net of
estimated costs of disposition) at the date transferred. Losses arising at the
time of acquisition of such properties are charged against the allowance for
loan losses. Subsequent write-downs of the carrying value of these properties
may be required and would be charged to operations. There was no other real
estate at December 31, 1995 and 1994.
Net Income Per Share - Net income per share has been computed based on the
weighted average number of common and common equivalent shares outstanding;
956,937 shares in 1995, 950,190 shares in 1994, and 944,938 shares in 1993.
Common stock equivalents, which consist of common stock options, have only a
minor dilutive effect (less than 3%) in 1995, 1994 and 1993.
Pending Accounting Pronouncements - SFAS No. 122, "Accounting for Mortgage
Servicing Rights," requires separate capitalization of the costs of rights to
service mortgage loans for others regardless of whether these rights are
acquired through a purchase or loan origination activity. Adoption of this
Statement is required as of January 1, 1996. Given the current level of the
Company's mortgage banking activities, adoption of this Statement is not
expected to have a material effect upon the Company's financial condition or
results of operations.
SFAS No. 123, "Accounting for Stock Based Compensation", requires expanded
disclosures of stock based compensation arrangements and encourages, but does
not require, employers to adopt a fair value method of accounting for employee
stock based compensation. While the Company has not yet determined the effect of
this statement when it becomes effective in 1996, management does not expect
that adoption of this statement will have a material effect upon the Company's
financial condition or results of operations.
PAGE 26
<PAGE>
- --------------------------------------------------------------------------------
Reclassifications - Certain 1994 and 1993 amounts in the consolidated financial
statements have been reclassified to conform with the 1995 presentation.
2. Cash and Due from Banks
The Bank is required by Federal regulation to maintain average cash reserve
balances. Throughout 1995, daily cash reserves and compensating balances served
to satisfy this requirement and averaged approximately $2,068,000.
3. Securities
The aggregate amortized cost and fair values of securities held-to-maturity and
securities available-for-sale at December 31, are summarized as follows (in
thousands):
1995
Amortized Gross Unrealized Fair
Cost Gains (Losses) Value
================================================================================
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
- --------------------------------------------------------------------------------
Total $14,080 $236 $(22) $14,294
================================================================================
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
- --------------------------------------------------------------------------------
Total $20,413 $ 84 $(15) $20,482
================================================================================
VILLAGE BANCORP, INC.
PAGE 27 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
Notes to Consolidated Financial Statements
(continued)
1994
Amortized Gross Unrealized Fair
Cost Gains (Losses) Value
================================================================================
SECURITIES HELD-TO-MATURITY
U.S. Treasury securities $15,340 $(176) $-- $15,164
U.S. Agencies 249 -- -- 249
Mortgage-backed securities of
U.S. Government agencies 6,396 (391) -- 6,005
Obligations of states and
political subdivisions 2,323 (96) -- 2,227
- --------------------------------------------------------------------------------
Total $24,308 $(663) $-- $23,645
================================================================================
SECURITIES AVAILABLE-FOR-SALE
U.S. Treasury securities $ 6,749 $(17) $-- $ 6,732
Mortgage-backed securities of
U.S. Government agencies 4,641 (136) -- 4,505
Corporate securities 176 -- -- 176
Other 100 (4) -- 96
- --------------------------------------------------------------------------------
Total $11,666 $(157) $-- $11,509
================================================================================
At December 31, 1995, securities with an amortized cost of $614,000 and a fair
value of $628,000 were pledged to secure public funds and for other purposes as
required by law and banking regulation. Gross gains on sales of securities in
1995, 1994 and 1993 were $77,000, $0 and $10,000, respectively, and gross losses
were $7,000, $0 and $0.
The amortized cost and fair value of securities at December 31, 1995, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because issuers may have the right to call or prepay
obligations with or without call or prepayment penalties.
(In thousands)
December 31, 1995
================================================================================
Available-for-sale Held-to-maturity
Amortized Fair Amortized Fair
Maturity Cost Value Cost Value
================================================================================
Within 1 year $18,071 $18,121 $ 2,349 $ 2,372
After 1 but within 5 years 467 467 10,252 10,402
After 5 but within 10 years 1,273 1,304 1,259 1,284
After 10 years 602 590 220 236
- --------------------------------------------------------------------------------
Totals $20,413 $20,482 $14,080 $14,294
================================================================================
In December 1995, the Company transferred a security having a fair value of
$353,000 (carrying value of $336,000) from its "held-to-maturity" securities to
its portfolio of "available-for-sale" securities. This was done to respond to
changes in the interest rate environment and to align the Companys's interest
rate gap position.
This transfer was made in accordance with FASB's "A Guide to Implementation of
Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities" issued in November 1995. Concurrent with the adoption of this
guidance, corporations were permitted through December 31, 1995, to reclassify
their "available-for-sale" and "held-to-maturity" securities without calling
into question the past intent of an entity to hold securities to maturity.
As this security was sold before year-end the gain on the sale was reflected in
the Company's results of operations.
PAGE 28
<PAGE>
- --------------------------------------------------------------------------------
4. Loans
The composition of the loan portfolio is summarized as follows:
(In thousands)
December 31,
1995 1994
===============================================================================
Real estate - mortgage and home equity $ 88,647 $ 85,123
Real estate - construction and land development 7,737 4,787
Installment and consumer credit 10,562 8,139
Commercial and financial 12,892 8,657
---
- -------------------------------------------------------------------------------
Total loans 119,838 106,706
Deferred loan fees (247) (381)
Allowance for loan losses (1,311) (1,551)
---
- -------------------------------------------------------------------------------
Loans - net $ 118,280 $ 104,774
===============================================================================
In the normal course of business there are outstanding various commitments and
contingent liabilities, such as guarantees and commitments to extend credit,
which are not reflected in the financial statements. Such commitments involve
elements of credit and interest rate risk in excess of the amount recognized in
the consolidated balance sheet. The Bank controls these risks through credit
approvals, limits and monitoring procedures. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee.
Since a portion of these commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash
requirements. At December 31, 1995, existing commitments were as follows:
commitments to originate loans - $10,901,000, unused revolving lines of credit
on residential properties, including home equity - $10,564,000, unused revolving
lines of credit on commercial real estate and construction - $5,822,000, stand
by letters of credit - $2,081,000 and unused consumer lines of credit -
$2,055,000. At December 31, 1994, these commitments were as follows: commitments
to originate loans - $9,778,000, unused revolving lines of credit on residential
properties, including home equity - $10,676,000, unused revolving lines of
credit on commercial real estate and construction - $3,845,000, stand by letters
of credit - $2,254,000 and unused consumer lines of credit $1,777,000.
Substantially all of the Bank commercial and residential lending activities are
with customers located in Fairfield and Litchfield Counties, Connecticut.
Although lending activities are diversified, a substantial portion of many Bank
customers' net worth is dependent on local real estate values.
The Bank has established credit policies applicable to each type of lending
activity in which it engages, evaluates the credit-worthiness of each customer
and, in most cases, lend up to 80% of the fair value of the collateral,
depending on the Bank's evaluation of the borrowers' creditworthiness. The fair
value of collateral is monitored on an ongoing basis and additional collateral
is obtained when warranted. Real estate is the primary form of collateral. While
collateral provides assurance as a secondary source of repayment, the Bank
ordinarily requires the primary source of repayment to be based on the
borrower's ability to generate continuing cash flows.
Changes in the allowance for loan losses are summarized as follows:
(In thousands)
Year Ended December 31,
1995 1994 1993
===============================================================================
Balance, beginning of year $ 1,551 $ 1,713 $ 1,556
Provision for loan losses
charged to operating expense 210 311 45
Loans charged off (464) (516) (203)
Recoveries on loans
previously charged off 14 43 315
- -------------------------------------------------------------------------------
Balance, end of year $ 1,311 $ 1,551 $ 1,713
===============================================================================
VILLAGE BANCORP, INC.
PAGE 29 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
Notes to Consolidated Financial Statements
(continued)
For management purposes, portions of this allowance are allocated to segments of
the loan portfolio based on perceived credit risks. At December 31, 1995,
management allocated $491,000 of the balance in the allowance for loan losses to
specific credit risks and $820,000 is considered to be an unallocated or general
allowance. This unallocated allowance is considered to be capital for purposes
of determining compliance with certain regulatory capital standards (see Note
7).
The principal portion of loans delinquent as to principal or interest for ninety
days or more, including nonaccrual loans, is as follows:
(In thousands)
December 31,
1995 1994
================================================================================
Loans 90 days or more past due:
Real estate-mortgage and home equity $686 $293
Installment and consumer credit 150 11
Commercial and financial -- 250
- --------------------------------------------------------------------------------
Total $836 $554
================================================================================
At December 31, 1995 and 1994 there were $0 and $120,000, respectively, of
restructured loans. Loans on which interest is not being accrued aggregated
approximately $606,000 and $240,000 at December 31, 1995 and 1994, respectively.
The Bank would have recorded an additional $51,000, $55,000 and $87,000 of gross
interest income in 1995, 1994 and 1993, respectively, if nonaccrual loans had
been current. Furthermore, another $8,000 would have been recorded on
restructured loans in 1994. At December 31, 1995, there were no commitments to
lend additional funds to borrowers whose loans are classified as nonaccrual or
were restructured.
As described in Note 1, effective January 1, 1995, the Company adopted a new
accounting standard which defines when certain loans are considered to be
impaired and requires such loans to be measured at fair value. The recorded
investment in loans that are considered to be impaired at December 31, 1995 was
$636,000. Included in this amount is $636,000 of impaired loans for which
specific valuation allowances of $180,000 have been established. During 1995 the
average recorded investment in impaired loans was approximately $496,000. No
interest income was recognized on impaired loans, either on the accrual or on
the cash basis method of interest recognition. During 1995, one impaired loan
had a partial write-off totaling $51,000. Generally, the fair value of the above
loans was determined using the fair value of the underlying collateral.
5. Bank Premises and Equipment
Bank premises and equipment, at cost, and accumulated depreciation and
amortization are summarized as follows:
(In thousands)
December 31,
1995 1994
===============================================================================
Land $ 175 $ 175
===============================================================================
Premises 1,577 1,548
Equipment 1,792 1,685
Leasehold improvements 359 346
- -------------------------------------------------------------------------------
Total 3,903 3,754
Accumulated depreciation and amortization (2,353) (2,118)
- -------------------------------------------------------------------------------
Bank premises and equipment - net $ 1,550 $ 1,636
===============================================================================
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 near the end of the first quarter of
1996, with completion in late 1996 or early 1997. The first floor will contain a
branch office with the back office deposit operations department occupying the
second floor.
PAGE 30
<PAGE>
6. Deposits
Included in interest bearing deposits are certificates of deposit in
denominations of $100,000 or more. These certificates and their remaining
maturities are as follows:
(In Thousands)
December 31,
1995 1994
================================================================================
Three months or less $1,452 $4,074
Over three through six months 2,696 1,412
Over six through twelve months 1,389 1,006
Over twelve months 844 429
- --------------------------------------------------------------------------------
Total $6,381 $6,921
================================================================================
NOW accounts, included in interest bearing deposit liabilities, were $36,928,000
and $38,089,000 at December 31, 1995 and 1994, respectively.
7. Stockholders' Equity
Under the Company's stock option plans, key personnel have been granted options
to purchase common stock. At December 31, 1995 and 1994, outstanding options,
giving effect to stock dividends, aggregated 14,600 and 21,663 shares,
respectively, at prices ranging from $8.67 to $15.00 per share. At December 31,
1995, options to purchase 14,600 shares were exercisable and 45,455 shares were
reserved for issuance in connection with the stock option plans. During 1995 and
1994, 3,999 and 4,340 shares, respectively, were issued through the exercise of
stock options. There were no exercises of options during 1993.
Federal bank agencies have established minimum capital standards for banking
institutions. Regulatory restrictions are imposed on institutions that fail to
meet or exceed these standards. The following summarizes the minimum capital
requirements and the Company's capital position at December 31, 1995:
Capital Company's Capital Minimum
Standard Position Capital Requirement
===============================================================================
Total capital to risk weighted assets 14.68% 8.0%
===============================================================================
Tier 1 capital to risk weighted assets 13.87 4.0
===============================================================================
The capital requirements described above were developed to be responsive to
credit risk. Banks are subject to various other risks, such as those associated
with interest rate fluctuations, operational risk and asset concentrations.
During 1990, the bank regulatory authorities adopted a Tier 1 capital-to-average
assets requirement (leverage ratio) that is intended to address these additional
risks and works in tandem with the other requirements. Banks evaluated by the
bank regulators as being strong banking organizations are required to have a
minimum leverage ratio of 3%, while the requirement for others ranges upward to
5%. At December 31, 1995, the Company's leverage ratio of 8.37% exceeded this
requirement.
8. Income Taxes
As described in Note 1, the Company adopted SFAS No. 109 as of January 1, 1993.
SFAS No. 109 establishes financial accounting and reporting standards for the
effects of income taxes that result from an enterprise's activities during the
current and preceding years. It requires an asset and liability approach for
financial accounting and reporting for income taxes.
VILLAGE BANCORP, INC.
PAGE 31 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
Notes to Consolidated Financial Statements
(continued)
A reconciliation of the income tax provision to the amount computed using the
statutory federal tax rate is as follows:
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
Year Ended December 31,
1995 1994 1993
=====================================================================================
<S> <C> <C> <C>
Income tax at 34% of pre-tax income $ 782 $ 484 $ 560
Connecticut corporation tax,net of federal tax benefit 171 133 134
Effect of tax-exempt income (38) (31) (26)
Merger expenses 5 69 12
Change in valuation allowance -- (59) --
Net difference in book and tax bases of banks' assets -- 67 --
Other items, net 64 56 (28)
- -------------------------------------------------------------------------------------
Provision for income taxes $ 984 $ 719 $ 652
=====================================================================================
Effective rate 42.7% 50.4% 39.6%
=====================================================================================
</TABLE>
The components of the provision for income taxes are as follows:
(In thousands)
Year Ended December 31,
1995 1994 1993
================================================================================
Current income taxes:
Federal $725 $ 494 $ 452
State 259 190 202
- --------------------------------------------------------------------------------
Total 984 684 654
Deferred federal income tax expense (benefit)
Federal -- 81 (2)
State -- 13 --
- --------------------------------------------------------------------------------
Total -- 94 (2)
Change in valuation allowance -- (59) --
- --------------------------------------------------------------------------------
Total provision for income taxes $984 $ 719 $ 652
================================================================================
PAGE 32
<PAGE>
- --------------------------------------------------------------------------------
In accordance with SFAS No. 109, deferred income tax assets and liabilities at
December 31, 1995 and 1994 reflect the impact of temporary differences between
values recorded as assets and liabilities for financial reporting purposes and
values utilized for remeasurement in accordance with the tax laws. The tax
effects of temporary differences giving rise to the Company's deferred tax
assets and liabilities are as follows:
(In thousands)
December 31,
1995 1994
===============================================================================
Deferred tax assets:
Allowance for loan losses $ 394 $ 376
Deferred loan fees 115 193
Deferred compensation 48 55
Net operating loss 730 797
Other 9 38
- -------------------------------------------------------------------------------
Total 1,296 1,459
- -------------------------------------------------------------------------------
Deferred tax liabilities:
Unrealized losses on securities 28 --
Treasury securities 148 159
Depreciation 177 118
- -------------------------------------------------------------------------------
Total 353 277
- -------------------------------------------------------------------------------
Valuation allowance (635) (846)
- -------------------------------------------------------------------------------
Net deferred tax assets $ 308 $ 336
===============================================================================
The Company has net operating loss carryforwards for federal income tax purposes
at December 31, 1995 of approximately $1,900,000 expiring in years 2003 through
2008.
9. Employee Benefit Plan
The Bank has an incentive savings plan under Section 401(k) of the Internal
Revenue Code. Employees are eligible to participate after one year of continuous
service. The plan allows participating employees to defer up to 14% of their
compensation on a pre-tax basis through contributions to the plan. In accordance
with the provisions of the plan, the Bank matches up to 6% of the employee
contributions with a percentage determined by the Board of directors. Matching
contributions of $38,600, $53,300 and $61,600 were charged to operating expenses
in 1995, 1994 and 1993, respectively.
10. Village Bancorp, Inc. (Parent Company Only) Condensed Financial Statements
Condensed balance sheets are as follows:
(In thousands)
December 31,
1995 1994
================================================================================
ASSETS
- --------------------------------------------------------------------------------
Investment in subsidiary $14,101 $12,979
Other assets 75 75
- --------------------------------------------------------------------------------
TOTAL ASSETS $14,176 $13,054
================================================================================
STOCKHOLDERS' EQUITY $14,176 $13,054
================================================================================
VILLAGE BANCORP, INC.
PAGE 33 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
Notes to Consolidated Financial Statements
(continued)
Condensed operating results are as follows:
(In thousands)
Year Ended December 31,
1995 1994 1993
================================================================================
Dividend income from Bank $ 455 $ 1,344 $449
Equity in undistributed income of subsidiary 861 (712) 545
Income tax benefit from NOL carryforwards -- 75 --
- --------------------------------------------------------------------------------
Net income $1,316 $ 707 $994
================================================================================
Condensed statements of cash flows are as follows:
(In thousands)
Year Ended December 31,
1995 1994 1993
================================================================================
OPERATING ACTIVITIES:
Net income $ 1,316 $ 707 $ 994
Equity in undistributed income of subsidiary (861) 712 (545)
Income tax benefit from NOL carryforwards -- (75) --
- --------------------------------------------------------------------------------
Net cash provided by operating activities $ 455 $ 1,344 $ 449
================================================================================
INVESTING ACTIVITIES:
Investment in subsidiaries $ (35) $ (842) $--
- --------------------------------------------------------------------------------
Net cash used in investing activities $ (35) $ (842) $--
================================================================================
FINANCING ACTIVITIES:
Cash dividends paid $ (455) $ (544) $(449)
Net proceeds from issuance of common
stock and capital contribution 35 42 --
- --------------------------------------------------------------------------------
Net cash used in financing activities $ (420) $ (502) $(449)
================================================================================
There are various restrictions which limit the ability of a bank subsidiary to
transfer funds in the form of cash dividends, loans or advances to the parent
company. Under Connecticut law, the approval of the primary regulator is
required if the dividend declared by the bank in any year exceeds the net
profits of that year combined with its retained net profits of the preceding two
years.
In addition, the Bank is subject to restrictions under the Federal Reserve Act.
These restrictions limit the transfer of funds to the parent company, in the
form of loans or extensions of credit, investments and purchases of assets. Such
transfers are limited in amount to 10% of the bank's capital and surplus. These
transfers are also subject to various collateral requirements.
11. Related Party Transactions
Certain directors and executive officers, including their immediate families and
companies in which they are principals, are loan customers of the Bank. Loans to
these persons aggregated approximately $5,044,000 and $5,386,000 at December 31,
1995 and 1994, respectively. During 1995 new loans to related parties aggregated
$13,291,000 and loan payments aggregated $13,633,000. The maximum amount of such
loans outstanding during 1995 and 1994 was $10,394,000 and $10,743,000,
respectively.
Two directors and four stockholders of the Company are partners in a joint
venture which is leasing certain real estate to Village. The terms of such lease
are described further in Note 12.
PAGE 34
<PAGE>
- --------------------------------------------------------------------------------
12. Commitments and Contingent Liabilities
In July 1985, the Bank entered into a five-year noncancelable, branch office
lease arrangement. The lease contains a provision which allows for an annual
adjustment to the minimum payment to reflect changes in the Consumer Price Index
and a provision for two five-year renewal options. In October 1989, the Bank
entered into a five year noncancelable, renewable sublease for a portion of this
space at an annual rental of approximately $19,000 with an increase after the
third year based on the Consumer Price Index.
In March 1993, the Bank entered into a five-year noncancelable, office lease
arrangement with related parties (see Note 11). Minimum payments under this
operating lease started at $82,400 a year. The lease contains a provision which
allows for a five percent annual increase and provides for two five-year renewal
options.
The Bank is leasing space for its Danbury office under a lease agreement that
extends through November 30, 1996. The lease agreement provides for two renewal
options which extend for five years each.
Total rent expense for 1995, 1994 and 1993 was $248,000, $221,000 and $198,000,
respectively, which amounts are net of $19,000, $20,000 and $19,000 of sublease
income.
Prior to considering sublease income, future minimum lease payments at December
31, 1995 are as follows:
Year Ending December 31, Amount
(in thousands)
================================================================================
1996 $ 190
1997 150
1998 137
1999 54
2000 54
- --------------------------------------------------------------------------------
Total $ 585
================================================================================
13. Estimated Fair Value of Financial Instruments
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", requires
disclosure of the estimated fair values of certain financial instruments.
Estimated fair values are as of December 31, 1995 and 1994 and have been
determined using available market information and various valuation estimation
methodologies. Considerable judgment is required to interpret the effects on
fair value of such items as future expected loss experience, current economic
conditions, risk characteristics of various financial instruments and other
factors. The estimates presented herein are not necessarily indicative of the
amounts that the Company would realize in a current market exchange. Also, the
use of different market assumptions and/or estimation methodologies may have a
material effect on the determination of the estimated fair values.
As of December 31,
1995 1994
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
================================================================================
Assets: (In Thousands)
Cash and cash equivalents $ 17,325 $ 17,325 $ 12,893 $ 12,893
Securities 34,562 34,776 35,817 35,154
Loans 117,674 118,660 104,534 105,704
Accrued income receivable 1,275 1,275 1,173 1,173
Liabilities:
Deposits without stated maturities 100,907 100,907 106,771 106,771
Time deposits 57,632 57,618 36,650 36,583
Accrued interest payable 1,160 1,160 334 334
================================================================================
VILLAGE BANCORP, INC.
PAGE 35 1995 ANNUAL REPORT
<PAGE>
- --------------------------------------------------------------------------------
The fair value estimates presented above are based on pertinent information
available to management as of December 31, 1995 and 1994. Although management is
not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued since
December 31, 1995 and, therefore, current estimates of fair value may differ
significantly from the amounts presented above.
Fair value methods and assumptions are as follows:
Cash and Cash Equivalents, Accrued Income Receivable and Accrued Interest
Payable - The carrying amount is a reasonable estimate of fair value.
Securities - The fair value of securities was estimated based on quoted market
prices or dealer quotes, if available. If a quote is not available, fair value
is estimated using quoted market prices for similar securities.
Loans - The fair value of fixed rate loans has been estimated by discounting
projected cash flows using current rates for similar loans. For loans which
reprice to market rates or mature within a one year time frame, the carrying
amount is a reasonable estimate of fair value. The fair value of nonaccrual
loans at December 31, 1994 was not estimated or included in the amounts shown
above. The value of approximately $636,000 of impaired loans at December 31,
1995, is estimated to have a fair value of approximately $456,000. This estimate
is very subjective and may not be indicative of what would be realized in a
liquidation situation.
Deposits Without Stated Maturities - Under the provisions of SFAS No. 107, the
estimated fair value of deposits with no stated maturity, such as non-interest
bearing demand deposits, savings accounts, NOW accounts, money market and
checking accounts, is equal to the amount payable on demand.
Time Deposits - The fair value of certificates of deposit is based on the
discounted value of contractual cash flows. The discount rate is estimated using
the rates currently offered for deposits of similar remaining maturities.
Off Balance Sheet Risk -As described in Note 4, the Company was a party to
financial instruments with off-balance sheet risk at December 31, 1995. Such
financial instruments consist of commitments to extend permanent financing and
letters of credit. If the options are exercised by the prospective borrowers,
these financial instruments will become interest-bearing assets of the Company.
If the options expire, the Company retains any fees paid by the counterparty in
order to obtain the commitment or guarantee. The fair value of commitments is
estimated based upon fees currently charged to enter into similiar agreements,
taking into account the remaining terms of the agreements and the present
creditworthiness of the counterparties. For fixed-rate commitments, the fair
value estimation takes into consideration an interest rate risk factor. The fair
value of guarantees and letters of credit is based on fees currently charged for
similiar agreements. The fair value of these off-balance sheet items at December
31, 1995 and 1994, respectively, approximates the recorded amounts of the
related fees, which are not material. The Company has not engaged in hedge
transactions such as interest rate futures contracts or interest rate swaps.
PAGE 36
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
Officers, Board of Directors &
Advisory Board of Directors
- --------------------------------------------------------------------------------
Village Bancorp, Inc.
OFFICERS
Edward J. Hannafin, Chairman of the Board
Nicholas R. DiNapoli, Vice Chairman of the Board
Enrico J. Addessi, Secretary of the Board
Robert V. Macklin, President & Chief Executive Officer
James R. Umbarger, Executive Vice President & Treasurer
BOARD OF DIRECTORS
Enrico J. Addessi, Treasurer - Addessi Jewelers, Inc.
Jose P. Boa, President - Diversified Maintenance Corporation
Richard O. Carey, Owner - Connecticut Land Company
Madeline F. Contegni, Partner - Prudential Prime Properties
Jeanne M. Cook, Owner - Jeanne Cook Travel Services
Nicholas R. DiNapoli, President - DiNapoli Development
Company, Inc.
Edward J. Hannafin, Attorney - (Principal) Cutsumpas,
Collins, Hannafin, Garmella, Jaber & Tuozzolo, P.C.
Joseph L. Knapp, President - Knapp Brothers, Inc.
Carl H. Lecher, President - Carl Lecher, Inc.
Robert V. Macklin, President - Village Bancorp, Inc.
Antonio M. Resendes, Department Head - Henry Abbot
Technical School
Thomas F. Reynolds, Partner - Reynolds & Rowella, CPA Robert Scala, Vice
President - The Elms Inn, Inc.
- --------------------------------------------------------------------------------
The Village Bank & Trust Company
OFFICERS
Edward J. Hannafin, Chairman of the Board
Nicholas R. DiNapoli, Vice Chairman of the Board
Robert V. Macklin, President & Chief Executive Officer
Enrico J. Addessi, Secretary of the Board
Robert Scala, Assistant Secretary of the Board
James R. Umbarger, Executive Vice President & Treasurer
Paul T. Budrow, Vice President
Dennis P. Clark, Vice President
George W. Hermann, Sr. Vice President
Deborah L. Roche, Vice President
Gerard P. Shpunt, Sr. Vice President & Controller
Elizabeth S. Arsenault, Assistant Vice President
Dolores F. Mezo, Assistant Vice President
Jane A. Port, Assistant Vice President
Jane Saunders, Assistant Vice President
Rita Sedor, Assistant Vice President
Richard Fink, Branch Office Administrator
Claudia K. St. John, Assistant Treasurer
Maura E. Saraceno, Assistant Treasurer
Paul M. Schmiedel, Assistant Treasurer
Laura S. Bornn, Banking Officer-Audit
BOARD OF DIRECTORS
Enrico J. Addessi, Treasurer - Addessi Jewelers, Inc.
Jose P. Boa, President - Diversified Maintenance Corporation
Richard O. Carey, Owner - Connecticut Land Company
Madeline F. Contegni, Partner - Prudential Prime Properties
Jeanne M. Cook, Owner - Jeanne Cook Travel Services
Nicholas R. DiNapoli, President - DiNapoli Development
Company, Inc.
Edward J. Hannafin, Attorney - (Principal) Cutsumpas,
Collins, Hannafin, Garamella, Jaber & Tuozzolo, P.C.
Joseph L. Knapp, President - Knapp Brothers, Inc.
Carl H. Lecher, President - Carl Lecher, Inc.
Robert V. Macklin, President - Village Bancorp, Inc.
Antonio M. Resendes, Dept. Head - Henry Abbot Technical School
Thomas F. Reynolds, Partner - Reynolds & Rowella, CPA
Robert Scala, Vice President - The Elms Inn, Inc.
VILLAGE BANCORP, INC.
PAGE 37 1995 ANNUAL REPORT
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Village Bank & Trust Company
(Continued)
ADVISORY BOARD OF DIRECTORS
Lewis J. Finch, Real Estate Investor - Chairman of the Board Emeritus
James Belote, Teacher- Ridgefield Public Schools
Ray P. Boa, Principal - A&J Construction
Joseph Brunetti, Retired
Joseph F. Buzaid, Jr., Owner - Powerhouse Appliances
George Catha, President - Data Set Cable Company
George M. Cohan, Attorney - (Partner) Cohan & Kulawitz
Elie S. Coury, Attorney
John F. Coyle, Realtor - John F. Coyle Associates
Paul Dewitt, Owner - Economy Printing
Delfina do Nascimento, Co-Owner - N&T Enterprises
Eric G. Erhardt, President - Ridgefield European Motors, Inc.
Barry Finch, Realtor - Finch Associates
Patrick Fortin, Owner - Pat's Sales & Service, Inc.
Dr. Joshua Friedman, President - Electro-Lite Corporation
Morley M. Goldberg, M.D. - Physician
Clark A. Heydon, Jr., D.D.S. - Orthodontist
Carmine Iapaluccio. Jr., Owner - C. Iapaluccio, Co.
George Kaufman, President - International Tire Warehouses, Inc.
Nicholas M. Lacava, Owner - Asco Supply Company, Inc.
Edward J. Manzi, President - Woodbury Insurance
Joseph F. Millett, Owner - The Winners Circle
Fred P. Montanari, Real Estate Investor
Abraham Morelli, Jr., President - Morelli's Inc.
Thomas B. Nash, Publisher - The Acorn Press
Louis Nazzaro, Partner - Nazzaro Contracting
Del Overby, Community Leader
R. David Piersall, Real Estate Investor
Gino B. Poverari, Retired
Gerald A. Rabin, Owner - Ridgefield Hardware Company
Octavio Rebelo, Owner - Rebelo's Realty
Henry A. Rost, Jr., President - Realty Seven, Inc.
Robert J. Sharp, President - Newman/Sharp Racing, Inc.
Jeffery Sienkiewicz, Attorney - (Partner) Sienkiewicz & McKenna
Thomas M. Sinchak, Attorney
Wayne Skelly, Zoning Enforcement Officer - City of Danbury
John Spatola, Self Employed
O.H. Stark, Marketing Consultant
Donald C. Sturges, Partner - Sturges Bros. Inc.
William W. Sullivan, Attorney - (Partner) Sullivan & Biraglia, P.C.
Luis A. Tomas, Owner - European's Furniture
Gino Torcellini, Retired
Valentine Ventura, Owner - Plante Brothers
Gerry Ward, President - Gerry Ward & Associates
PAGE 38
<PAGE>
- --------------------------------------------------------------------------------
Capital Stock, Annual Meeting &
Request for Financial Information
Capital Stock
Village Bancorp, Inc. is listed on the NASDAQ SmallCap Market. The prices of the
Company's common stock as quoted by NASDAQ and the fividends paid during 1995
and 1994 are as follows
1995 1994
Bid Ask Dividend Bid Ask Dividend
--- --- -------- --- --- --------
1st Quarter $12.00 $12.75 $.11/Shares $12.125 $12.50 $.30/Share
2nd Quarter $12.75 $13.50 $.11/Shares $11.625 $12.50 $.11/Share
3rd Quarter $13.375 $13.75 $.11/Shares $12.00 $12.75 $.11/Share
4th Quarter $19.25 $21.00 $.15/Shares $11.75 $12.75 $.11/Share
As of December 31, 1995 there were 1,256 stockholders of record.
Annual Meeting
The Company's annual meeting will be held on Monday April 29, 1996, 8:00 PM at
The Village Bank & Trust Company, 25 Prospect Street, Ridgefield, Connecticut.
Stockholders who cannot attend are urged to exercise their right to vote by
proxy.
Request for Financial Information
The Company will provide without charge to each stockholder, upon written
request, a copy of the Company's Annual Report on Form 10-K. Written requests
should be directed to Enrico J. Addessi, Secretary, c/o Village Bancorp, Inc.,
P.O. Box 366, Ridgefield, CT 06877.
This Statement has not been reviewed, nor confirmed for accuracy or relevance,
by the Federal Deposit Insurance Corporation.
VILLAGE BANCORP, INC.
PAGE 39 1995 ANNUAL REPORT
<PAGE>
[GRAPHIC] ----------------------------------------------------------------------
The Village Bank & Trust Company
Branch Locations
................................................................................
25 Prospect Street Office 9:00 am - 3:00 pm M-Th
Ridgefield, CT 06877 9:00 am - 6:00 pm F
Manager: Maura Saraceno 9:00 am - 12:00 pm S
(203)438-9551 Drive-up 8:00 am - 8:00 pm M-F
9:00 am - 12:00 pm S
- --------------------------------------------------------------------------------
219 Town Green Office 8:00 am - 4:00 pm M-Th
Wilton, CT 06897 8:00 am - 7:00 pm F
Manager: Rita Sedor 9:00 am - 12:00 pm S
(203)762-8409 Drive-up ATM 24 Hours
- --------------------------------------------------------------------------------
54 Bridge Street Office 9:00 am - 3:00 pm M-Th
New Milford, CT 06776 9:00 am - 6:00 pm F
Manager: Paul Schmiedel 9:00 am - 12:00 pm S
(203)350-3460 Drive-up 8:00 am - 8:00 pm M-F
9:00 am - 12:00 pm S
- --------------------------------------------------------------------------------
28 Shelter Rock Road Office 9:00 am - 3:00 pm M-Th
Danbury, CT 06810 9:00 am - 6:00 pm F
Manager: Dolores Mezo 9:00 am - 12:00 pm S
(203)798-9696 Drive-up 8:00 am - 8:00 pm M-F
9:00 am - 12:00 pm S
................................................................................
All offices have 24 hour Village Banker ATMs.
PAGE 40
Exhibit 21
Subsidiaries of the Registrant
The Registrant has one wholly owned subsidiary, The Village Bank &
Trust Company, a Connecticut chartered commercial bank.
-41-
