<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1999
COMMISSION FILE NUMBER 33 ACT FILE NO.-33-90524
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VALRICO BANCORP, INC.
---------------------
(Exact name of registrant as specified in its Charter)
(FLORIDA) 65-0553757
--------- ----------
State of other jurisdiction of (I.R.S. Employee
incorporation of organization) Identification No.)
1815 EAST STATE ROAD 60, VALRICO, FLORIDA 33594
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(Address of principal executive offices and Zip Code)
(813) 689-1231
--------------
(Registrant's telephone number, including area code)
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.
(1) Yes [X] (2) No [ ]
AS OF September 30, 1999, THERE WERE 309,707 SHARES OF COMMON STOCK OUTSTANDING
<PAGE> 2
VALRICO BANCORP, INC.
INDEX
PAGE NUMBER
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheets - September 30, 1999 and
December 31, 1998 3
Consolidated statements of income - Three and nine months
ended September 30, 1999 and 1998 4
Consolidated statement of shareholders' equity - Nine months
ended September 30, 1999 and 1998 5
Consolidated statements of cash flows - Nine months ended
September 30, 1999 and 1998 6
Notes to consolidated financial statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION 10
SIGNATURES 11
2
<PAGE> 3
VALRICO BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------ -----------
<S> <C> <C>
Assets
Cash and Non Interest Bearing Deposits $ 4,585,287 $ 4,454,308
Federal Funds Sold 8,888,000 6,356,000
Securities Available for Sale 7,533,827 6,782,714
Securities Held to Maturity 1,874,979 2,049,431
Loans 56,921,654 55,694,340
Facilities 3,538,036 3,404,642
Other Real Estate 101,574 101,574
Accrued Interest Receivable 462,666 478,788
Other Assets 1,446,845 1,362,786
------------ -----------
Total Assets 85,352,868 $80,684,583
============ ===========
Liabilities
Deposits:
Demand Deposits $ 12,537,916 $12,704,041
NOW Accounts 14,969,444 14,354,403
Money Market Accounts 5,544,690 6,206,633
Savings Accounts 9,848,689 8,128,151
Time, $100,000 and over 10,010,938 6,990,780
Other Time Deposits 21,998,317 22,121,392
------------ -----------
Total Deposits 74,909,994 70,505,400
Federal Funds Purchased 2,000,000 2,000,000
Securities Sold Under the Agreement to Repurchase 410,286 646,409
Accounts Payable and Accrued Liabilities 789,137 886,853
Mortgage Payable 1,181,734 1,222,196
Loan Payable 949,950 499,950
------------ -----------
Total Liabilities 80,241,101 75,760,808
------------ -----------
Commitments and Contingencies
Stockholders Equity
Common Stock, No Par Value, Authorized 1,000,000
shares, issued and outstanding 309,707 on September 30, 1999
Issued and outstanding 307,790 on Dec. 31, 1998 309,707 307,790
Capital Surplus 2,604,410 2,566,070
Treasury Stock Held (200,000) 0
Retained Earnings 2,503,387 2,041,125
Net Unrealized Holding Losses on Securities (105,737) 8,790
------------ -----------
Total Stockholders Equity 5,111,767 4,923,775
------------ -----------
Total Liabilities and Stockholders Equity $ 85,352,868 $80,684,583
============ ===========
</TABLE>
See accompanying notes to Consolidated Financial Statements
3
<PAGE> 4
VALRICO BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Income
Interest and Fees on Loans $1,295,841 $1,189,501 $3,860,299 $3,521,109
Interest on Investment Securities 122,839 106,838 359,513 342,946
Income on Federal Funds Sold 162,785 122,245 391,111 227,976
---------- ---------- ---------- ----------
Total Interest Income 1,581,465 1,418,584 4,610,923 4,092,031
Interest Expense
Interest on Deposits 579,408 507,684 1,670,432 1,421,493
Interest on Federal Funds Purchased
And Securities Sold under agreement
to Repurchase 61,820 53,691 206,123 177,613
---------- ---------- ---------- ----------
Total Interest Expense 641,228 561,375 1,876,555 1,599,106
---------- ---------- ---------- ----------
Net Interest Income 940,237 857,209 2,734,368 2,492,925
Provision for Loan Losses 24,000 54,000 77,000 156,000
---------- ---------- ---------- ----------
Net Interet Income after
Provision for loan losses 916,237 803,209 2,657,368 2,336,925
---------- ---------- ---------- ----------
Other Income:
Service Charge on Deposit Accounts 196,541 140,000 528,656 416,984
Miscellaneous Income 24,256 20,960 76,645 68,257
---------- ---------- ---------- ----------
Total Other Income 220,797 160,960 605,301 485,241
---------- ---------- ---------- ----------
Other Expenses:
Salaries and Employee Benefits 452,994 359,717 1,306,349 1,075,762
Occupancy Expense 89,972 71,666 268,598 201,915
Equipment Expense 75,343 79,928 239,505 222,249
Stationary, Printing, and Supplies 33,767 24,731 107,971 78,818
Miscellaneous Expenses 200,726 176,469 594,680 546,941
---------- ---------- ---------- ----------
Total Other Expenses 852,802 712,511 2,517,103 2,125,685
---------- ---------- ---------- ----------
Income Before Income Taxes 284,232 251,658 745,566 696,481
Income Taxes 107,000 90,000 282,700 257,000
---------- ---------- ---------- ----------
Net Income $177,232 $161,658 $462,866 $439,481
========== ========== ========== ==========
Per share Information:
Average Shares Outstanding 308,749 297,815 308,749 298,465
========== ========== ========== ==========
Net Income Per Share $ 0.57 $ 0.54 $ 1.50 $ 1.47
========== ========== ========== ==========
</TABLE>
See accompanying notes to Consolidated Financial Statements
4
<PAGE> 5
VALRICO BANCORP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
NET
UNREALIZED TOTAL
HOLDING STOCK
COMMON CAPITAL RETAINED LOSSES ON HOLDERS'
STOCK SURPLUS EARNINGS SECURITIES EQUITY
-------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 $307,790 $2,566,070 $2,040,521 $ 8,790 $4,923,171
Net Income 462,866 462,866
Stock Redemption 1,917 38,340 40,257
Treasury Stock Held (200,000) (200,000)
Net Change in Net Unrealized
holding losses on securities (114,527) (114,527)
-------- ---------- ---------- --------- ----------
Balance, September 30, 1999 $309,707 $2,604,410 $2,303,387 $(105,737) $5,111,767
======== ========== ========== ========= ==========
Balance, December 31, 1997 $299,115 $2,431,145 $1,563,242 $ (8,907) $4,284,595
Net Income 439,481 439,481
Stock Redemption (1,300) (62,142) (63,442)
Net Change in Net Unrealized
holding losses on securities (3,868) (3,868)
-------- ---------- ---------- --------- ----------
Balance, September 30, 1998 $296,845 $2,354,193 $1,499,854 $12,985 $4,137,907
======== ========== ========== ========= ==========
</TABLE>
See accompanying notes to Consolidated Financial Statements
5
<PAGE> 6
VALRICO BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1999 1998
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 462,866 $ 438,866
Adjustments to Reconcile net income to net
Cash provided by (used in) operating activities:
Provision for Loan Losses 77,000 156,000
Depreciation and amortization 218,390 215,930
Net amortization (accretion) of investments
Security premiums and discounts 6,603 3,423
(Increase) Decrease in assets:
Accrued Interest Receivable 16,122 32,922
Other Assets (84,059) (97,170)
Increase (Decrease) in liabilities
Accounts payable and Accrued Liabilities (97,716) 167,156
----------- -----------
Net Cash provided by (used in) operating
Activities 599,206 917,127
----------- -----------
Cash flows from investing activities
Securities available for sale:
Purchase of investment securities (2,057,903) (3,387,020)
Proceeds from maturities of investment securities 1,139,013 1,836,075
Securities to be Held to Maturity:
Proceeds from maturities of investment securities 174,452 310,260
(Increase) Decrease in Deferred income tax -- --
(Increase) Decrease in Federal Funds Sold (2,532,000) (3,234,000)
Net (Increase) Decrease in Loans (1,265,764) (3,386,487)
Purchase of facilities (344,291) (117,158)
Proceeds from the sale of Other Real Estate -- --
----------- -----------
Net Cash provided by (used in) Investing Activities (4,886,493) (7,978,330)
----------- -----------
Cash flows form financing activities:
Increase (Decrease) in deposits 4,404,594 6,875,477
Increase (Decrease) in Federal funds purchased -- 128,000
Net increase (Decrease) in securities sold under agreement
to repurchase (236,123) (80,553)
Net increase (Decrease)in notes payable 409,538 (36,975)
Sale (redemption) of Common Stock 40,257 (16,000)
Sale (purchase) of Treasury Stock (200,000) --
----------- -----------
Net Cash Provided by (used by) financing activities 4,418,266 6,869,949
----------- -----------
Net increase (decrease) in cash 130,979 (191,254)
Cash, beginning of period 4,454,308 3,516,862
----------- -----------
Cash, ending of period $ 4,585,287 $ 3,325,608
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 1,675,947 $ 1,493,841
Income taxes $ 132,630 $ 148,436
</TABLE>
See accompanying notes to Consolidated Financial Statements
6
<PAGE> 7
VALRICO BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1999
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles. In the opinion of
management, all necessary adjustments (consisting of normal recurring entries)
have been made for a fair presentation of the accompanying unaudited
consolidated financial statements. These financial statements rely, in part, on
estimates. The results for the period are not necessarily indicative of the
results to be expected for the entire year.
Valrico Bancorp, Inc., a one-bank holding company, acquired 100% of the common
stock of Valrico State Bank as of May 31, 1995 in a transaction accounted for
similar to a pooling of interests. Therefore, the unaudited consolidated
financial statements include the accounts of Valrico Bancorp, Inc. (the
Company) and its wholly owned subsidiary, Valrico State Bank (the Bank).
Significant intercompany balances and transactions have been eliminated in
consolidation.
Net income per share has been computed by dividing net income by the average
number of common shares outstanding of 308,749 as of September 30, 1999, and
297,815 as of September 30, 1998.
7
<PAGE> 8
VALRICO BANCORP, INC.
MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company's primary asset is its subsidiary bank, which is in its tenth year
of operation. During the nine months ended September 30, 1999, the Bank
experienced a growth in deposits with an increase of $4,404,594 or 6.247%. Time
over $100,000 Accounts had the highest percentage of growth at 43.202%, or an
increase of $3,020,158 in the nine months ended September 30, 1999. This
increase is primarily due to one customer holding approximately $1,700,000 in
the institution for the purposes of a public park construction project.
Outstanding Loans increased $1,227,314 or 2.204% for the nine months ended
September 30, 1999. The allowance for credit losses at September 30, 1999 was
at $782,940 compared to $776,382 at December 31, 1998. The Bank had $73,023 in
charge-offs and had recoveries in the amount of $2,581 during the nine months
ended September 30, 1999, and has loan classified as troubled in the amount of
$416,776 as of September 30, 1999. A total of $77,000 was expensed for
provision for loan losses during the period. Management considers the allowance
to be adequate at this time.
Nonaccrual loans amounted to $0 and $283,668 at September 30, 1999 and 1998,
respectively. Loans 90 days or more past due amounted to $95,250 and $0 at
September 30, 1999 and 1998, respectively. There were restructured loans in the
amount of $365,930 and $54,181 at September 30, 1999 and 1998, respectively.
The following table sets forth a summary of loan loss experience:
Analysis of the Allowance for Loan Losses
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
--------- ---------
<S> <C> <C>
Balance at Beginning of Period $ 776,382 $ 576,347
--------- ---------
Charge-offs:
Commercial, Financial and Agricultural 50,146 --
Real Estate-Construction -- --
Real Estate-Mortgage -- --
Installment Loans to Individuals 22,876 23,672
Lease Financing -- --
--------- ---------
Total Charge-offs 73,023 23,672
--------- ---------
Recoveries:
Commercial, Financial and Agricultural 1,826 4,962
Real Estate-Construction -- --
Real Estate-Mortgage -- --
Installment Loans to Individuals 755 8,745
Lease Financing -- --
--------- ---------
Total Recoveries 2,581 13,707
--------- ---------
Net Charge-offs (70,442) (9,965)
Additions Charged to Operation 77,000 210,000
--------- ---------
Balance at end of Period $ 782,940 $ 776,382
========= =========
Ratio of Net Charge-offs during the period to average loans
Outstanding during the period -0.12% -.02%
========= =========
</TABLE>
8
<PAGE> 9
VALRICO BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Consolidated net income for the nine months ending September 30, 1999 was
$462,866 or $1.50 per share which compares to $439,481 or $1.48 per share for
the same period in 1998. This represents an increase over the comparable
quarter of $7,811, which is attributable mostly to an increase in Federal Funds
Sold.
Salaries and benefits represent 51.9% of non-interest expenses for the nine
months ended September 30, 1999, compared to 43.3% for the nine months ended
September 30, 1998. Salary expense for the nine months ended September 30, 1999
increased 21.4% or $230,587 over the same period for 1998. $131,697 of this
increase is primarily due to the opening of a new office location on January
22, 1999 and the addition of new support staff to cover the work of the new
location.
The Tier I capital ratio was 6.63% and Total Capital ratio was 7.54% at
September 30, 1999. The tier I capital to total risk-weighted assets ratio was
8.94%, and the total capital to risk weighted assets was 10.18 at September 30,
1999.
The bank has currently spent approximately $155,000 on system testing
and software and hardware upgrades, with the anticipation of spending an
additional $10,000. Not included in this cost were a number of computers that
were replaced, not for Y2K reasons, but as a planned replacement of antiquated
machines. This move was more for improved efficiency than Y2K as most of the
machines replaced had already been tested and approved for Y2K use. In an
attempt to head off possible losses relating to Y2K, we are setting aside an
additional $8,000 over and above the costs mentioned above each month until the
year 2000. This reserve is for the potential loan losses as a direct result of
Y2K problems, and also litigation concerns arising for Y2K. We feel that with
our current loan portfolio and our current size that this provision will be
sufficient to cover those losses. A review will be conducted periodically to
modify this provision as needs are more recognized. Although not presently
anticipated, regulatory agencies require that management disclose of the worst
case scenario, or if the bank's systems fail to operate in the new year. This
worst case scenario would include the interruption of normal customer service
and the bank's funds management. We currently have contingency plans in effect
to help to minimize the potential of this scenario and its effects to both
customers and stockholders. Management will continue to review the issues
related to Y2K on an ongoing basis to ensure continued compliance. Management
feels that this issue is important and will prepare reviews with both internal
and external auditors to prepare the bank for the year 2000.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed for the quarter ended September 30, 1999.
Exhibit 27 - Financial Data Schedule (for SEC use only).
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on November 5th, 1999 on
its behalf by the undersigned thereunto duly authorized.
VALRICO BANCORP, INC.
By: \s\ John E. Mclean III
------------------------------------------
John E."Bob" McLean III
President and Chief Executive Officer
By: \s\ Jerry L. Ball
------------------------------------------
Jerry L. Ball
Executive Vice President
11
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 4,393
<INT-BEARING-DEPOSITS> 192
<FED-FUNDS-SOLD> 888
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 7,534
<INVESTMENTS-CARRYING> 1,875
<INVESTMENTS-MARKET> 1,883
<LOANS> 57,705
<ALLOWANCE> 783
<TOTAL-ASSETS> 85,353
<DEPOSITS> 74,910
<SHORT-TERM> 1,360
<LIABILITIES-OTHER> 789
<LONG-TERM> 3,182
0
0
<COMMON> 310
<OTHER-SE> 2,604
<TOTAL-LIABILITIES-AND-EQUITY> 85,353
<INTEREST-LOAN> 3,860
<INTEREST-INVEST> 360
<INTEREST-OTHER> 391
<INTEREST-TOTAL> 4,611
<INTEREST-DEPOSIT> 1,670
<INTEREST-EXPENSE> 1,877
<INTEREST-INCOME-NET> 2,734
<LOAN-LOSSES> 77
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,517
<INCOME-PRETAX> 746
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 463
<EPS-BASIC> 1.50
<EPS-DILUTED> 1.50
<YIELD-ACTUAL> 4.27
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 417
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 776
<CHARGE-OFFS> 73
<RECOVERIES> 3
<ALLOWANCE-CLOSE> 783
<ALLOWANCE-DOMESTIC> 783
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
