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Previous: US WATS INC, SC 13D/A, 1998-10-23 |
Next: SANTA BARBARA RESTAURANT GROUP INC, SC 13D/A, 1998-10-23 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported):
October 8, 1998
Virginia Commonwealth Financial Corporation
(Exact Name of Registrant as specified in its Charter)
<TABLE>
<CAPTION>
<S> <C>
Virginia 000-22747 54-1542438
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)
</TABLE>
102 South Main Street
P. O. Box 71
Culpeper, Virginia 22701-0071
(540) 825-4800
(Address, including zip code, and telephone number,
including area code, or registrant's
principal executive offices)
JEFFREY W. FARRAR
Senior Vice President and Chief Financial Officer
Virginia Commonwealth Financial Corporation
102 South Main Street
P. O. Box 71
Culpeper, Virginia 22701-0071
(540) 825-8400
(Name, address, including zip code, and the telephone number,
including area code, of agent for service)
Second National Financial Corporation
(Former name or former, if changed since last report.)
<PAGE>
Item 2. Acquisition and Disposition of Assets
On October 8, 1998, Virginia Commonwealth Financial Corporation, formerly
Second National Financial Corporation (the "Company"), consummated its
affiliation with Virginia Heartland Bank, a Virginia corporation and
state-chartered bank ("VHB") pursuant to the April 18, 1998 Agreement and Plan
of Reorganization among the parties. VHB became a wholly owned subsidiary of the
Company through the merger with and into a wholly-owned interim banking
institution subsidiary (Virginia Heartland Interim Bank) formed solely for
purposes of effecting the affiliation. As a result of the merger, each share of
common stock of VHB outstanding at the effective time of the merger was
converted into and exchanged for 1.15 shares of the Company's common stock (the
"Exchange Ratio"). The transaction was accounted for as a pooling of interests.
The Exchange Ratio was established through arms length negotiation between
the parties. Based upon the Exchange Ratio, 533,716 shares of the Company's
authorized but unissued shares of common stock were issued upon the conversion
and exchange of the shares of VHB stock at the effective time of the merger.
Pursuant to the Agreement, the board of directors of the Company now
consists of eight persons, five of whom were designated by the Company and three
of who were designated by VHB.
The Company also changed its name to Virginia Commonwealth Financial
Corporation in connection with the transaction. The Company will act as the
holding company for VHB and its other bank subsidiary, Second Bank & Trust. The
assets of VHB include bank buildings and equipment at the VHB locations in
Spotsylvania County and Fredericksburg, Virginia from which VHB conducted its
banking operations prior to the affiliation and from which it will continue to
do so as a subsidiary of the Company.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Balance Sheet and Income Statement of Virginia Heartland Bank as of June
30, 1998 and for the six months ended June 30, 1998 are included with
this report.
Audited financial statements of Virginia Heartland Bank at December 31,
1997 and 1996 and for the two years ended December 31, 1997, including
the independent auditor's report thereon, are incorporated by reference
to the Company's Form S-4 filed with the Commission (333-57479)
(b) Pro Forma Financial Information.
Unaudited Pro Forma Combined Financial Information for the Registrant
and Virginia Heartland Bank are included with this report. The pro forma
financial information includes the Combined Balance Sheet at June 30,
1998, and Combined Income Statements for the six months ended June 30,
1998 and for the years ended December 31, 1997, 1996, and 1995. Such pro
forma financial information is not necessarily indicative of operations
of the registrant.
<PAGE>
(c) Exhibits.
2.1 Agreement and Plan of Reorganization dated April 18, 1998 by and
between Registrant and Virginia Heartland Bank incorporated by reference
to Appendix A of the Company's Form S-4 filed with the Commission
(333-57479).
99.1 Press release dated October 9, 1998 announcing consummation of the
merger.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VIRGINIA COMMONWEALTH FINANCIAL CORPORATION
Date: October 23, 1998 By: /s/ Jeffrey W. Farrar
Jeffrey W. Farrar
Senior Vice President and
Chief Financial Officer
<PAGE>
VIRGINIA HEARTLAND BANK
BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
<S> <C>
JUNE 30, DECEMBER 31,
1998 1997
-------------- ----------------
(unaudited)
Assets
Cash and due from banks $ 3,396 $ 3,916
Federal funds sold 6,448 4,036
Securities 21,962 21,041
Loans, net 66,068 60,025
Premises and equipment, net 2,896 2,824
Interest receivable 841 808
Other real estate owned 687 460
Other assets 799 630
-------------- ---------------
Total Assets $ 103,097 $ 93,740
============== ===============
Liabilities and Stockholders' Equity
Noninterest-bearing demand deposits $ 17,882 $ 14,141
Savings and interest-bearing deposits 18,913 16,759
Time deposits 56,153 53,082
-------------- ---------------
Total deposits 92,948 83,982
Federal funds purchased and securities sold
under agreement to repurchase - -
Short-term borrowings - -
Interest payable 433 350
Other liabilities 384 518
-------------- ---------------
Total Liabilities 93,765 84,850
-------------- ---------------
Stockholders' Equity
Preferred stock - -
Common stock 2,321 2,321
Capital surplus 5,173 5,173
Retained earnings 1,838 1,396
Accumulated other comprehensive income - -
-------------- ---------------
Total Stockholders' Equity 9,332 8,890
-------------- ---------------
Total Liabilities and Stockholders' Equity $ 103,097 $ 93,740
============== ===============
</TABLE>
<PAGE>
VIRGINIA HEARTLAND BANK
STATEMENTS OF INCOME
(In thousands, except per share data)
<TABLE>
<CAPTION>
<S> <C>
SIX MONTHS YEAR
ENDED ENDED
June 30, 1998 December 31, 1997
-------------- -----------------
(unaudited)
Interest Income
Interest and fees on loans $ 3,147 $ 6,223
Interest and dividends on securities 622 1,144
Interest on federal funds sold 187 257
---------------- -----------------
Total interest income 3,956 7,624
---------------- -----------------
Interest Expense
Interest on deposits 1,936 3,630
Interest on federal funds purchased - -
Interest on short-term borrowings - -
---------------- -----------------
Total interest expense 1,936 3,630
---------------- -----------------
Net interest income 2,020 3,994
Provision for loan losses 160 366
---------------- -----------------
Net interest income after provision for
loan losses 1,860 3,628
Noninterest Income
Service charges on deposit accounts 133 256
Fees for trust services - -
Mortgage banking and other loan fees - -
Investment services fee income - -
Other operating income 43 58
Gains (losses) on sales of securities
available for sale - -
---------------- -----------------
Total noninterest income 176 314
---------------- -----------------
Noninterest Expense
Salaries and employee benefits 766 1,450
Net occupancy expense 158 263
Supplies and equipment expense 91 399
Capital stock tax 27 70
Professional services 52 78
Marketing 25 66
Other operating expenses 261 274
---------------- -----------------
Total noninterest expense 1,380 2,600
---------------- -----------------
Income before income taxes 656 1,342
Income tax expense 214 436
---------------- -----------------
Net Income $ 442 $ 906
================ =================
Earnings per Share, basic and
assuming dilution $ .95 $ 1.96
================ =================
Average shares outstanding $ 464,101 $ 464,101
================ =================
</TABLE>
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1998
(In thousands)
<TABLE>
<CAPTION>
<S> <C>
Pro Forma Pro Forma
SFNC VHB Adjustments Combined
----------- ---------- ----------- ----------
Assets
Cash and due from banks $ 7,773 $ 3,396 $ $ 11,169
Federal funds sold 4,038 6,448 10,486
Securities 83,964 21,962 105,926
Loans, net 131,871 66,068 197,939
Premises and equipment, net 5,398 2,896 8,294
Interest receivable 1,871 841 2,712
Other real estate owned 52 687 739
Other assets 1,140 799 1,939
----------- ---------- ---------- ----------
Total Assets $ 236,107 $ 103,097 - $ 339,204
=========== ========== ========== ==========
Liabilities and Stockholders' Equity
Noninterest-bearing demand deposits $ 32,455 $ 17,882 $ $ 50,337
Savings and interest-bearing deposits 73,915 18,913 92,828
Time deposits 92,866 56,153 149,019
----------- ---------- ---------- ----------
Total deposits 199,236 92,948 - 292,184
Federal funds purchased and securities sold
under agreement to repurchase 1,033 - 1,033
Short-term borrowings 4,331 - 4,331
Interest payable 822 433 1,255
Other liabilities 624 384 1,008
----------- ---------- ---------- ----------
Total Liabilities 206,046 93,765 - 299,811
----------- ---------- ---------- ----------
Stockholders' Equity
Preferred stock - - -
Common stock 3,762 2,321 (987) 5,096
Capital surplus 1,459 5,173 987 7,619
Retained earnings 24,751 1,838 26,589
Accumulated other comprehensive income 89 - 89
----------- ---------- ---------- ----------
Total Stockholders' Equity 30,061 9,332 - 39,393
----------- ---------- ---------- ----------
Total Liabilities and Stockholders' Equity $ 236,107 $ 103,097 $ - $ 339,204
=========== ========== ========== ==========
</TABLE>
See "Notes to Unaudited Pro Forma Combined Financial Information."
<PAGE>
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (1) (2)
(In thousands, except per share data)
<TABLE>
<CAPTION>
<S> <C>
Pro forma Pro forma
VCFC VHB Adjustments Combined
------ ----- ----------- ---------
Interest Income
Interest and fees on loans $ 5,848 $ 3,147 $ $ 8,995
Interest and dividends on securities 2,317 622 2,939
Interest on federal funds sold 133 187 320
------------- --------- ---------- ------------
Total interest income 8,298 3,956 - 12,254
------------- --------- ---------- ------------
Interest Expense
Interest on deposits 3,511 1,936 5,447
Interest on federal funds purchased 24 - 24
Interest on short-term borrowings 88 - 88
------------- --------- ---------- ------------
Total interest expense 3,623 1,936 - 5,559
------------- --------- ---------- ------------
Net interest income 4,675 2,020 - 6,695
Provision for loan losses 150 160 310
------------- --------- ---------- ------------
Net interest income after provision for
loan losses 4,525 1,860 - 6,385
Noninterest Income
Service charges on deposit accounts 390 133 523
Fees for trust services 242 - 242
Mortgage banking and other loan fees 275 - 275
Investment services fee income 98 - 98
Other operating income 90 43 133
Gains (losses) on sales of securities
available for sale - - -
------------- --------- ---------- ------------
Total noninterest income 1,095 176 - 1,271
------------- --------- ---------- ------------
Noninterest Expense
Salaries and employee benefits 1,738 766 2,504
Net occupancy expense 442 158 600
Supplies and equipment expense 138 91 229
Capital stock tax 87 27 114
Professional services 85 52 137
Marketing 69 25 94
Other operating expenses 604 261 865
------------- --------- ---------- ------------
Total noninterest expense 3,163 1,380 - 4,543
------------- --------- ---------- ------------
Income before income taxes 2,457 656 - 3,113
Income tax expense 715 214 929
------------- --------- ---------- ------------
Net Income $ 1,742 $ 442 $ - $ 2,184
============= ========== ========== =============
Earnings per Share, basic and
assuming dilution $ 1.16 $ .95 $ - $ 1.07
============= ========== ========== =============
Average shares outstanding $ 1,502,410 $ 464,101 $ - $ 2,036,126
============= ========== ========== =============
</TABLE>
See "Notes to Unaudited Pro Forma Combined Financial Information."
<PAGE>
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997 (1) (2)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro forma Pro forma
VCFC VHB Adjustments Combined
---- --- ----------- --------
<S> <C>
Interest Income
Interest and fees on loans $ 10,802 $ 6,223 $ $ 17,025
Interest and dividends on securities 4,792 1,144 5,936
Interest on federal funds sold 139 257 396
----------- ---------- ----------- -----------
Total interest income 15,733 7,624 - 23,357
----------- ---------- ----------- -----------
Interest Expense
Interest on deposits 6,651 3,630 10,281
Interest on federal funds purchased 106 - 106
Interest on shortterm borrowings 127 - 127
Interest on note payable - - -
----------- ---------- ----------- -----------
Total interest expense 6,884 3,630 - 10,514
----------- ---------- ----------- -----------
Net interest income 8,849 3,994 - 12,843
Provision for loan losses 125 366 491
----------- ---------- ----------- -----------
Net interest income after provision for
loan losses 8,724 3,628 - 12,352
Noninterest Income
Service charges on deposit accounts 757 256 1,013
Fees for trust services 409 409
Investment services fee income 77 77
Other operating income 163 58 221
Gains (losses) on sales of securities
available for sale (4) (4)
----------- ---------- ----------- -----------
Total noninterest income 1,402 314 - 1,716
----------- ---------- ----------- -----------
Noninterest Expense
Salaries and employee benefits 3,045 1,450 4,495
Net occupancy expense 324 263 587
Supplies and equipment expense 799 399 1,198
Capital stock tax 189 70 259
Professional services 180 78 258
Marketing 125 66 191
Other operating expenses 895 274 1,169
----------- ---------- ----------- -----------
Total noninterest expense 5,557 2,600 - 8,157
----------- ---------- ----------- -----------
Income before income taxes 4,569 1,342 - 5,911
Income tax expense 1,324 436 1,760
----------- ---------- ----------- -----------
Net Income $ 3,245 $ 906 $ - $ 4,151
=========== =========== ========== ===========
Earnings per Share, basic and
assuming dilution $ 2.17 $ 1.96 $ - $ 2.05
=========== =========== ========== ===========
Average shares outstanding $ 1,493,477 $ 464,101 $ - $ 2,027,193
=========== =========== ========== ===========
</TABLE>
See "Notes to Unaudited Pro Forma Combined Financial Information."
<PAGE>
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1996 (1) (2)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro forma Pro forma
VCFC VHB Adjustments Combined
---- --- ----------- --------
<S> <C>
Interest Income
Interest and fees on loans $ 9,344 $ 5,950 $ $ 15,294
Interest and dividends on securities 4,820 997 5,817
Interest on federal funds sold 282 271 553
Interest on deposits in banks 55 55
-------- ------ ------------ --------
Total interest income 14,501 7,218 - 21,719
-------- ------ ------------ --------
Interest Expense
Interest on deposits 6,379 3,552 9,931
Interest on federal funds purchased 61 61
Interest on shortterm borrowings 108 108
Interest on note payable 122 122
-------- ------ ------------ --------
Total interest expense 6,670 3,552 - 10,222
-------- ------ ------------ --------
Net Interest income 7,831 3,666 - 11,497
Provision for loan losses - 490 490
-------- ------ ------------ --------
Net interest income after provision for
loan losses 7,831 3,176 - 11,007
-------- ------ ------------ --------
Noninterest Income
Service charges on deposit accounts 640 248 888
Fees for trust services 371 371
Other operating income 161 20 181
Gains (losses) on sales of securities
available for sale (32) (32)
-------- ------ ------------ --------
Total noninterest income 1,140 268 - 1,408
-------- ------ ------------ --------
Noninterest Expense
Salaries and employee benefits 2,869 1,245 4,114
Net occupancy expense 290 213 503
Supplies and equipment expense 714 174 888
Capital stock tax 163 57 220
Professional services 172 70 242
Marketing 90 45 135
Other operating expenses 779 375 1,154
-------- ------ ------------ --------
Total noninterest expense 5,077 2,179 - 7,256
-------- ------ ------------ --------
Income before income taxes 3,894 1,265 5,159
Income tax expense 1,035 414 1,449
-------- ------ ------------ --------
Net Income $ 2,859 $ 851 $ - $ 3,710
======== ====== ============ ========
Earnings per Share, basic and
assuming dilution $ 1.91 $ 1.84 $ - $ 1.82
======== ====== ============ ========
Average shares outstanding $1,500,867 $464,101 $ - $ 2,034,583
======== ====== ============ ========
</TABLE>
See "Notes to Unaudited Pro Forma Combined Financial Information."
<PAGE>
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1995 (1) (2)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro forma Pro forma
VCFC VHB Adjustments Combined
---- --- ----------- --------
<S> <C>
Interest Income
Interest and fees on loans $ 8,089 $ 5,742 $ $ 13,831
Interest and dividends on securities 4,621 656 5,277
Interest on federal funds sold 260 238 498
Interest on deposits in banks 245 245
---------- -------- ---------- ---------
Total interest income 13,215 6,636 - 19,851
---------- -------- ---------- ---------
Interest Expense
Interest on deposits 6,075 2,958 9,033
Interest on federal funds purchased 78 - 78
Interest on shortterm borrowings 114 - 114
Interest on note payable 169 - 169
---------- -------- ---------- ---------
Total interest expense 6,436 2,958 - 9,394
---------- -------- ---------- ---------
Net IntereNetIinterest income 6,779 3,678 - 10,457
Provision for loan losses 341 341
---------- -------- ---------- ---------
Net interest income after provision for
loan losses 6,779 3,337 - 10,116
---------- -------- ---------- ---------
Noninterest Income
Service charges on deposit accounts 539 312 851
Fees for trust services 352 352
Other operating income 180 (30) 150
Gains (losses) on sales of securities
available for sale - - -
---------- -------- ---------- ---------
Total noninterest income 1,071 282 - 1,353
--------- -------- ---------- ---------
Noninterest Expense
Salaries and employee benefits 2,561 1,201 3,762
Net occupancy expense 268 154 422
Supplies and equipment expense 672 162 834
Capital stock tax 128 54 182
Professional services 79 73 152
Marketing 93 78 171
Other operating expenses 773 372 1,145
--------- -------- ---------- ---------
Total noninterest expense 4,574 2,094 - 6,668
--------- -------- ---------- ---------
Income before income taxes 3,276 1,525 - 4,801
Income tax expense 894 521 1,415
--------- -------- ---------- ---------
Net Income $ 2,382 $ 1,004 $ - $ 3,386
========= ======== ========== =========
Earnings per Share, basic and
assuming dilution $ 1.59 $ 2.29 $ - $ 1.69
========= ======== ========== =========
Average shares outstanding 1,502,480 438,394 2,006,633
========= ======== ========== =========
</TABLE>
Notes to Unaudited Pro Forma Combined Financial Information
(1) It is assumed that the merger will be accounted for on a pooling of
interests accounting basis, and accordingly, the Unaudited
Pro Forma Combined Income Statements reflect the (i) Exchange
Ratio, where appropriate, and (ii) combining of the historical
information of VCFC and VHB.
(2) It is estimated that the merger related costs and restructuring
charges, net of tax, will approximate $300,000.
NEWS RELEASE
VIRGINIA COMMONWEALTH FINANCIAL
CORPORATION
October 9, 1998
Contact: Jeffrey W. Farrar, Chief Financial Officer
(540) 825-4800
VIRGINIA COMMONWEALTH FINANCIAL CORPORATION
ANNOUNCES FINALIZATION OF TRANSACTION WITH
VIRGINIA HEARTLAND BANK
Culpeper, VA - Virginia Commonwealth Financial Corporation (NASDAQ - VCFC)
completed on Thursday, October 8, 1998 its name change from Second National
Financial Corporation and affiliation with Virginia Heartland Bank in
Fredericksburg, Virginia. Virginia Commonwealth Financial now serves as the
holding company for two subsidiary banks, Second Bank & Trust in Culpeper,
Virginia and Virginia Heartland Bank in Fredericksburg, Virginia, with
consolidated assets of approximately $343 million.
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