UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
COMMISSION FILE NO. 0-11786
VILLAGE BANCORP, INC.
(Exact name of Registrant as specified in its charter)
Connecticut 06-1076844
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
25 Prospect Street Ridgefield, Connecticut 06877
Registrant's telephone number, including area code (203) 438-9551
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES _ X__ NO ____
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 1998
Common Stock, $3.33 Par Value 1,920,790
<PAGE>
VILLAGE BANCORP, INC.
TABLE OF CONTENTS
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1998 and December 31, 1997 (unaudited).................... 1
Condensed Consolidated Statements of Income For The
Three Months Ended March 31, 1998 and 1997 (unaudited)............. 2
Condensed Consolidated Statements of Cash Flows For The
Three Months Ended March 31, 1998 and 1997 (unaudited)............. 3
Notes to Condensed Consolidated Financial Statements(unaudited)...... 4
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ......................... 9
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings.............................................. 12
ITEM 2. Changes in Securities ......................................... 12
ITEM 3. Defaults Upon Senior Securities................................ 12
ITEM 4. Results of Votes of Security Holders........................... 12
ITEM 5. Other Information.............................................. 12
ITEM 6. (a) Exhibits................................................... 12
(b) Reports on Form 8-K........................................ 12
SIGNATURES ................................................................. 13
<PAGE>
VILLAGE BANCORP, INC.
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PART I. - FINANCIAL INFORMATION
<PAGE>
VILLAGE BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS - (UNAUDITED)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS Mar. 31, 1998 Dec. 31, 1997
- ------ ------------- -------------
(in thousands)
<S> <C> <C>
Cash and due from banks $ 10,926 $ 11,153
Federal funds sold 12,650 --
- -------------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 23,576 11,153
Securities:
Available-for-sale (at estimated fair value) 16,292 19,427
Held-to-maturity (market value of $32,445 at
March 31, 1998, and $34,554 at Dec. 31, 1997 32,284 34,382
Federal Home Loan Bank stock, at cost 901 782
Loans, net of deferred loan fees 148,014 147,659
Allowance for credit losses (1,330) (1,309)
- -------------------------------------------------------------------------------------------------------------------
Loans, net 146,684 146,350
Loans held for sale 250 1,686
Bank premises and equipment - net 5,323 5,256
Accrued income and other assets 3,114 3,513
- -------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 228,424 $ 222,549
===================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits:
Non-interest bearing $ 24,278 $ 20,764
Interest bearing 185,880 183,044
- -------------------------------------------------------------------------------------------------------------------
Total deposits 210,158 203,808
Accrued interest payable 1,377 1,610
Other liabilities 663 1,258
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 2,040 2,868
Stockholders' Equity:
Common stock, par value $3.33 per share;
authorized - 10,000,000 shares, issued and
outstanding, 1,918,634 at March 31, 1998
and 1,908,634 at December 31, 1997 6,389 6,356
Additional paid-in capital 4,873 4,851
Retained earnings 4,945 4,635
Net unrealized gains on available-for-sale
securities, net of tax 19 31
- -------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 16,226 15,873
- -------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 228,424 $ 222,549
===================================================================================================================
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
-1-
<PAGE>
VILLAGE BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
(in thousands, except share data)
1998 1997
---- ----
<S> <C> <C>
Loans, including fees $ 3,184 $ 2,713
Securities:
Taxable 551 457
Tax-exempt 123 35
Federal funds sold 69 107
- -------------------------------------------------------------------------------------------------------------------
Total interest income 3,927 3,312
INTEREST EXPENSE 1,585 1,343
- -------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 2,342 1,969
PROVISION FOR CREDIT LOSSES 30 15
- -------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 2,312 1,954
- -------------------------------------------------------------------------------------------------------------------
OTHER INCOME:
Other operating income 145 133
Security gains, net 43 --
- -------------------------------------------------------------------------------------------------------------------
Total other income 188 133
OTHER EXPENSES:
Salaries and employee benefits 1,003 813
Net occupancy 251 141
Furniture and equipment 100 58
Data processing services 195 140
Regulatory assessments 6 3
Printing, stationery and supplies 65 40
Other operating expenses 336 318
- -------------------------------------------------------------------------------------------------------------------
Total other expense 1,956 1,513
INCOME BEFORE PROVISION FOR INCOME TAXES 544 574
PROVISION FOR INCOME TAXES 62 165
- -------------------------------------------------------------------------------------------------------------------
NET INCOME $ 482 $ 409
===================================================================================================================
PER SHARE DATA(1)
Cash dividends paid $ .09 $ .09
Net income - basic earnings .25 .21
Net income - diluted earnings .24 .21
</TABLE>
(1) Adjusted for 100% stock dividend issued in 1997.
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- 2 -
<PAGE>
VILLAGE BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
(in thousands)
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 482 $ 409
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Provision for credit losses 30 15
Provision for depreciation and amortization 107 59
Accretion of security discounts - net (95) (13)
Security gains - net (43) --
Decrease in deferred loan fees (23) (21)
(Decrease) increase in interest payable (233) 318
Decrease (increase) in accrued income and other assets 366 (1,172)
(Decrease) increase in other liabilities (595) 74
Origination of loans held for sale (3,192) (2,499)
Proceeds from sales of loans 4,628 2,549
- -------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities 1,432 (281)
INVESTING ACTIVITIES:
Proceeds from sales of available-for-sale securities 1,192 --
Proceeds from maturities of available-for-sale securities 3,020 2,018
Proceeds from maturities of held-to-maturity securities 6,028 3
Purchases of available-for-sale securities (988) --
Purchases of held-to-maturity securities (3,946) (9,453)
Purchase of Federal Home Loan Bank stock (119) --
Net increase in loans (341) (4,475)
Purchases of premises and equipment (174) (53)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities 4,672 (11,960)
FINANCING ACTIVITIES:
Net increase in deposits 6,350 11,033
Cash dividends (172) (171)
Net proceeds from issuance of common stock 55 2
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 6,233 10,864
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,423 (1,377)
- -------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 11,153 15,145
- -------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 23,576 $ 13,768
===================================================================================================================
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid on deposits $ 1,110 $ 1,025
Income tax payments 65 205
Change in net unrealized gain on available-
for-sale securities, net of tax (12) (53)
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- 3 -
<PAGE>
VILLAGE BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE A - BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments necessary, consisting
only of normal recurring accruals, to present fairly the financial position, the
results of operations, cash flows and the changes in financial position of
Village Bancorp, Inc. ("Company") for the periods presented. In preparing such
financial statements, management is required to make estimates and assumptions
that effect the reported amounts. Actual results could differ significantly from
those estimates.
The Company's consolidated financial statements include the accounts of
Village Bancorp, Inc. and its wholly owned subsidiary The Village Bank & Trust
Company ("Village") and have been prepared in accordance with generally accepted
accounting principles and conform with predominant practices used within the
banking industry.
Village is engaged in the business of commercial banking and operates six
branch banking offices in Fairfield and Litchfield counties in Connecticut, and
is principally engaged in lending and deposit gathering activities within these
counties. Village also operates a trust department and offers trust services.
While management believes that the disclosures presented are adequate so as
not to make the information misleading, it is suggested that these financial
statements be read in conjunction with the consolidated financial statements and
notes included in the Company's 1997 annual report.
The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," which
specifies accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities and for distinguishing
whether a transfer of financial assets in exchange for cash or other
consideration should be accounted for as a sale or as a pledge of collateral in
a secured borrowing. SFAS No. 125 is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after December 31,
1996, except for certain provisions (relating to the accounting for secured
borrowings and collateral and the accounting for transfers and servicing of
repurchase agreements, dollar rolls, securities lending and similiar
transactions) which have been deferred until January 1, 1998 in accordance with
SFAS No. 127, "Deferral of the Effective Date of Certain Provisions of FASB
Statement No. 125." Adoption of the effective provisions of SFAS No. 125 as of
January 1, 1997 and 1998 has not had any material effect on the Company's
consolidated financial statements.
SFAS No. 128, "Earnings Per Share", became effective for the Company in the
fourth quarter of 1997, and requires restatement of all prior-period earnings
per share ("EPS"). SFAS No. 128 requires that "Basic EPS" exclude dilution and
be computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for the period; "Diluted
EPS" reflects the potential dilution
- 4 -
<PAGE>
VILLAGE BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that would then share in the earnings of the entity. Adoption of SFAS No.
128 had no significant effect on the Company's previously reported EPS.
In June 1997, the FASB issued a new accounting standard, SFAS No. 131
"Disclosures About Segments of an Enterprise and Related Information", which
requires that enterprises report certain financial and descriptive information
about operating segments in complete sets of financial statements and in
condensed financial statements of interim periods issued to stockholders. It
will require the Company to report certain information about its products and
services, geographic areas in which it operates and its major customers. SFAS
No. 131 is effective for fiscal year 1998. As the requirements of this standard
are disclosure-related, its implementation will have no impact on the Company's
financial condition or results of operations.
NOTE B - SECURITIES
The amortized cost and the estimated fair values of securities were as
follows (in thousands):
<TABLE>
<CAPTION>
(Unaudited)
March 31, 1998
--------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
SECURITIES HELD-TO-MATURITY
U.S. Treasury Securities $ 15,494 $ 35 $ (3) $ 15,526
Mortgage-backed securities
of U.S. Government agencies 5,920 24 (1) 5,943
Obligations of states and
political suddivisions 10,870 126 (20) 10,976
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 32,284 $ 185 $ (24) $ 32,445
=======================================================================================================================
SECURITIES AVAILABLE-FOR-SALE
U.S. Treasury securities $ 15,900 $ 32 $ (3) $ 15,929
Mortgage-backed securities
of U.S. Government agencies 336 4 -- 340
Other 23 -- -- 23
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 16,259 $ 36 $ (3) $ 16,292
=======================================================================================================================
</TABLE>
- 5 -
<PAGE>
VILLAGE BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1997
-----------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
SECURITIES HELD-TO-MATURITY
U.S. Treasury Securities $ 16,792 $ 23 $ (4) $ 16,811
Mortgage-backed securities
of U.S. Government agencies 6,704 24 (2) 6,726
Obligations of states and
political suddivisions 10,886 147 (16) 11,017
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 34,382 $ 194 $ (22) $ 34,554
=======================================================================================================================
SECURITIES AVAILABLE-FOR-SALE
U.S. Treasury securities $ 18,993 $ 54 $ (2) $ 19,045
Mortgage-backed securities
of U.S. Government agencies 346 3 -- 349
Other 33 -- -- 33
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 19,372 $ 57 $ (2) $ 19,427
=======================================================================================================================
</TABLE>
At March 31, 1998 and December 31, 1997 securities with a book value of
$1,133,000 and $1,134,000, respectively, were pledged to secure public deposits
and for other purposes as required by law and banking regulation.
NOTE C - LOANS
The composition of the loan portfolio is summarized as follows:
<TABLE>
<CAPTION>
March 31, 1998 Dec. 31, 1997
-------------- --------------
(in thousands)
<S> <C> <C>
Real estate $ 123,455 $ 122,837
Commercial and financial 16,842 17,138
Installment and consumer credit 7,898 7,888
Deferred loan fees (181) (204)
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL $ 148,014 $ 147,659
===========================================================================================================================
</TABLE>
The recorded investment in loans considered to be impaired at March 31, 1998 and
December 31, 1997 was $1,446,000 and $1,427,000, respectively. Specific
valuation allowances for these loans were $192,000 and $174,000 at March 31,
1998 and December 31, 1997, respectively. Generally the fair value of impaired
loans was determined using the fair value of the underlying collateral.
- 6 -
<PAGE>
VILLAGE BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
- --------------------------------------------------------------------------------
NOTE D - COMMITMENTS
On March 31, 1998, standby letters of credit approximated $1,859,000.
NOTE E - STOCKHOLDERS' EQUITY
A $.09 per share cash dividend was distributed February 7, 1997 to
stockholders of record on January 30, 1997.
A $.09 per share cash dividend was distributed February 6, 1998 to
stockholders of record on January 30, 1998.
A 100% stock dividend (the functional equivalent of a 2 for 1 stock split)
was distributed in December, 1997 to stockholders of record on November 28,
1997.
NOTE F - EARNINGS PER SHARE
SFAS No. 128, "Earnings Per Share", became effective for the Company in the
fourth quarter of 1997, and requires restatement of all prior-period earnings
per share ("EPS"). SFAS No. 128 requires that "Basic EPS" exclude dilution and
be computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for that period; "Diluted
EPS" reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that would then share in the earnings
of the entity. A summary of the basic and diluted earnings per share
calculations for March 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Income Shares Per Share
------ ------ ---------
<S> <C> <C> <C>
1998
----
Basic EPS $482,000 1,915,027 $.25
Effect of Dilutive Securities - Stock Options 60,785
Diluted EPS $482,000 1,975,812 $.24
1997
----
Basic EPS $409,000 1,904,483 $.21
Effect of Dilutive Securities - Stock Options 63,083
Diluted EPS $409,000 1,967,566 $.21
</TABLE>
- 7 -
<PAGE>
VILLAGE BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
- --------------------------------------------------------------------------------
NOTE G - REPORTING COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income", which establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. This statement requires that all items that are required
to be recognized under accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as are the financial statements. Comprehensive income is defined as
"the change in equity (net assets) of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources. It
includes all changes in equity during a period, except those resulting from
investments by owners and distributions to owners."
The Company's comprehensive income for the three months ended March 31,
1998 was as follows:
Description Amount
- ----------- ------
Net income $ 482,000
Other comprehensive income, net of tax:
Unrealized holding gains on securities available-for-sale
arising during the period 14,000
Reclassification adjustment, net of tax, for net gains realized
on available-for-sale securities in the quarter ended March
31, 1998 that were held as of December 31, 1997 (26,000)
-------
Net loss recognized in other comprehensive income, net of tax (12,000)
-------
Comprehensive income $ 470,000
===========
The net loss recognized in other comprehensive income, net of tax,
represents a decrease in the net unrealized appreciation of available-for-sale
securities, net of tax, during the three months ended March 31, 1998. The
cumulative balance of this unrealized gain, net of tax, at March 31, 1998 was
$19,000.
- 8 -
<PAGE>
VILLAGE BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
GENERAL
Village Bancorp, Inc. (the "Company") through its only subsidiary, The
Village Bank & Trust Company ("Village" or the "Bank") had total assets of
$228,424,000 on March 31, 1998 in comparison to total assets of $222,549,000 on
December 31, 1997. This is an increase of $5,875,000 or 2.6%.
For the three month periods ended March 31, 1998 and 1997, the Company's
net income increased from $409,000 for the 1997 period to $482,000 for the 1998
period. Net interest income increased $373,000 (18.9%) from $1,969,000 for the
1997 period to $2,342,000 for the 1998 period.
ASSETS AND RELATED INCOME ANANLYSIS
Loans outstanding on March 31, 1998 totaled $148,014,000, which is an
increase of $355,000 (.2%) from the $147,659,000 outstanding at December 31,
1997. Loan income increased $471,000 (17.4%) from $2,713,000 for the 1997 period
to $3,184,000 for the 1998 period. This increase is due to an increase in
average outstanding loans, from $129,227,000 in the 1997 period to $148,455,000
for the 1998 period coupled with an increase in the average rate earned, from
8.40% for the 1997 period to 8.58% for the 1998 period.
Securities, which consists of securities held-to-maturity and securities
available-for-sale, decreased $5,233,000 (9.7%) from $53,809,000 at December 31,
1997 to $48,576,000 at March 31, 1998. Security income increased $182,000
(37.0%) from $492,000 in the period ending March 31, 1997 to $674,000 for the
1998 period. This increase was due to an increase in the average dollar amount
of securities held, from $33,829,000 for the 1997 period to $48,738,000 in the
1998 period, offset by a decrease in the average rate earned from 5.82% in the
1997 period to 5.53% in the 1998 period. The Bank has the positive intent and
ability to hold securities designated as held-to-maturity until maturity and
does not engage in trading activities. Securities classified as
available-for-sale are used to compensate for liquidity forecasting deviations.
Federal funds sold increased $12,650,000 from $0 at December 31, 1997 to
$12,650,000 at March 31, 1998. Federal funds sold income decreased $38,000
(35.5%) from $107,000 for the 1997 period to $69,000 for the 1998 period,
primarily due to a decrease in the average dollar amount outstanding from
$7,309,000 in the 1997 period to $5,211,000, along with a decrease in the
average rate earned from 5.33% in the 1997 period to 5.30% in the 1998 period.
LIABILITIES AND RELATED EXPENSE ANALYSIS
Deposits increased $6,350,000 (3.1%) from $203,808,000 at December 31, 1997
to $210,158,000 at March 31, 1998. Interest on deposits increased $242,000
(18.0%) from $1,343,000 for the 1997 period to $1,585,000 for the 1998 period.
This increase was primarily attributable to an increase in the average
outstandings, from $176,536,000 for the 1997 period to $201,878,000 in the 1998
period, offset by a decrease in the average rate paid from 3.33% in the 1997
period to 3.14% in the 1998 period.
- 9 -
<PAGE>
VILLAGE BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - (Continued)
- --------------------------------------------------------------------------------
Salary and employee benefit expense increased $190,000 (23.4%) from
$813,000 in the 1997 period to $1,003,000 in the 1997 period, primarily as a
result of the increase in the number of personnel due to the opening of the two
new branch office locations.
Net occupancy expenses increased $110,000 (78.0%) from $141,000 in the 1997
period to $251,000 in the 1998 period, primarily as a result of addtional
expenses incurred with the addition of a branch office in Westport, Connecticut
along with the completion and move into the Bank's new building in Danbury,
Connecticut.
Furniture and equipment expense increased $42,000 (72.4%) from $58,000 in
the 1997 period to $100,000 in the 1998 period, primarily as a result of the
opening of the two new offices.
Data processing services expense increased $55,000 (39.3%) from $140,000 in
the 1997 period to $195,000 in the 1998 period and printing, stationery and
supplies expense increased $25,000 (62.5%) from $40,000 in the 1997 period to
$65,000 in the 1998 period, primarily as a result of the growth of the Bank and
increased use of services.
LIQUIDITY
Liquidity is the ability to provide funds for loan requests, unexpected
deposit outflows and meeting other recurring financial obligations. Cash and
cash equivalents at March 31, 1998 were $23,576,000 or 10.3% of total assets as
compared to $11,153,000 or 5.0% of total assets at December 31, 1997. The Bank
also maintains excess stored liquidity reserves to compensate for liquidity
forecasting deviations. These reserves are comprised of investment grade
securities that are highly marketable and liquid. The primary source of
liquidity, cash and due from banks and federal funds sold, have historically
surpassed the liquidity needs of the Company. Management closely monitors the
Bank's liquidity/cash flow position and does not anticipate any liquidity
problems in the foreseeable future.
CAPITAL RESOURCES
The table below lists the minimum capital requirements along with the
Company's capital position at March 31, 1998:
Capital Minimum Capital Company's Capital
Standard Requirement Position
-------- ----------- --------
Total Capital to risk
weighted assets 8.00% 13.47%
Stockholders' equity to
risk weighted assets 4.00% 12.45%
Leverage ratio 3.0 - 5.0% 7.36%
- 10 -
<PAGE>
VILLAGE BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - (Continued)
- --------------------------------------------------------------------------------
YEAR 2000
The Company and the Bank are aware of the significant impact that Year 2000
("Y2K") will have on financial service companies, as such, the Bank has
established a program to address Y2K issues. The Board of Directors monitors the
project and its ongoing implementation. The costs associated with the
implementation of changes to deal with Y2K issues is not expected to have a
material impact on the Company's consolidated financial statements, however
there can be no assurances that Y2K will not to some degree affect the
operations of the Bank.
FORWARD-LOOKING STATEMENTS
The Company has made, and may continue to make, various forward-looking
statements with respect to earnings, credit quality and other financial and
business matters for periods subsequent to March 31, 1998. The Company cautions
that these forward-looking statements are subject to numerous assumptions, risks
and uncertainties, and that statements relating to subsequent periods
increasingly are subject to greater uncertainty because of the increased
likelihood of changes in underlying factors and assumptions. Actual results
could differ materially from forward-looking statements. In addition to those
factors previously disclosed by the Company and those factors identified
elsewhere herein, the following factors could cause actual results to differ
materially from such forward-looking statements; competitive pressures on loan
and deposit product pricing; other actions of competitors; changes in economic
conditions; the extent and timing of actions of the Federal Reserve Board;
customer deposit disintermediation; changes in customers' acceptance of the
Company's products and services; and the extent and timing of legislative and
regulatory actions and reform. The Company's forward-looking statements speak
only as of the date on which such statements are made. By making any
forward-looking statements, the Company assumes no duty to update them to
reflect new, changing or unanticipated events or circumstances.
- 11 -
<PAGE>
VILLAGE BANCORP, INC.
- --------------------------------------------------------------------------------
PART II. - OTHER INFORMATION
<PAGE>
VILLAGE BANCORP, INC.
- --------------------------------------------------------------------------------
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings Not Applicable
Item 2. Changes in Securities Not Applicable
Item 3. Defaults Upon Senior Securities Not Applicable
Item 4. Results of Votes of Security Holders
(a) The Annual Meeting of Stockholders was held on April 27, 1998 at the
Ridgefield office of The Village Bank & Trust Company. There were no
solicitations in opposition to any of management's nominees for directors or
other motions acted on at the meeting.
(b) To elect four members of the Board of Directors to serve until the
Annual Meeting of Stockholders after their terms expire, or until their
successors are duly elected and qualified.
All nominees for Directors were elected to their terms:
Richard O. Carey 3 Year Term (2001)
Nicholas R. DiNapoli 3 Year Term (2001)
Carl Lecher 3 Year Term (2001)
Robert Scala 3 Year Term (2001)
Directors whose terms of office continued and the expiration date of their
terms are as follows:
Enrico J. Addessi 1999 Jose P. Boa 2000
Jeanne M. Cook 1999 Edward J. Hannafin 1999
Joseph L. Knapp 1999 Robert V. Macklin 2000
Antonio M. Resendes 2000 Thomas F. Reynolds 1999
James R. Umbarger 2000
(c) To ratify the appointment of an independent public accountant (Deloitte
& Touche, LLP, Stamford, Connecticut) as auditors for 1998.
Votes Cast: For 1,320,113
Against 194,228
Abstain 9,137
Item 5. Other Information Not Applicable
Item 6. Exhibits and Reports on Form 8-k
(a) Exhibits - None
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for the
three months ended March 31, 1998.
- 12 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Village Bancorp, Inc.
---------------------
(Registrant)
Date: May 11, 1998 /s/ Robert V. Macklin
------------ -----------------
Robert V. Macklin - President
and Chief Executive Officer
Date: May 11, 1998 /s/ James R. Umbarger
------------ -----------------
James R. Umbarger - Executive Vice
President and Chief Financial Officer
- 13 -
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