<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 June 30, 1999
COMMISSION FILE NUMBER 33 ACT FILE NO. -33-90524
-------------------------
VALRICO BANCORP, INC.
---------------------
(Exact name of registrant as specified in its Charter)
(FLORIDA) 65-0553757
---------- ------------
(State of other jurisdiction of (I.R.S. Employee Identification No.)
incorporation of organization)
1815 EAST STATE ROAD 60, VALRICO, FLORIDA 33594
-----------------------------------------------
(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 June 30, 1999, THERE WERE 308,707 SHARES OF COMMON STOCK OUTSTANDING
<PAGE> 2
VALRICO BANCORP, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheets - June 30, 1999 and December 31, 1998 3
Consolidated statements of income -Three and six months ended June 30, 1999 and 1998 4
Consolidated statement of shareholders' equity - Six months
ended June 30, 1999 and 1998 5
Consolidated statements of cash flows - Six months ended June
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
</TABLE>
2
<PAGE> 3
VALRICO BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------ -----------
<S> <C> <C>
Assets
Cash and Non Interest Bearing Deposits $ 4,922,649 $ 4,454,308
Federal Funds Sold 15,872,000 6,356,000
Securities Available for Sale 5,873,592 6,782,714
Securities Held to Maturity 1,920,580 2,049,431
Loans 53,341,851 55,694,340
Facilities 3,548,795 3,404,642
Other Real Estate 101,574 101,574
Accrued Interest Receivable 447,421 478,788
Other Assets 1,365,673 1,362,786
------------ -----------
Total Assets 87,394,134 $80,684,583
============ ===========
Liabilities
Deposits:
Demand Deposits $ 14,849,871 $12,704,041
NOW Accounts 15,038,058 14,354,403
Money Market Accounts 5,522,983 6,206,633
Savings Accounts 9,864,461 8,128,151
Time, $100,000 and over 9,881,640 6,990,780
Other Time Deposits 21,882,986 22,121,392
------------ -----------
Total Deposits 77,039,999 70,505,400
Federal Funds Purchased 2,000,000 2,000,000
Securities Sold Under the Agreement to Repurchase 475,843 646,409
Accounts Payable and Accrued Liabilities 734,884 886,853
Mortgage Payable 1,195,336 1,222,196
Loan Payable 799,950 499,950
------------ -----------
Total Liabilities 82,246,012 75,760,808
------------ -----------
Commitments and Contingencies
Stockholders Equity
Common Stock, No Par Value, Authorized 1,000,000
shares, issued and outstanding 308,707 on June 30, 1999
Issued and outstanding 307,790 on Dec. 31, 1998 308,707 307,790
Capital Surplus 2,584,410 2,566,070
Retained Earnings 2,326,155 2,041,125
Net Unrealized Holding Losses on Securities (71,150) 8,790
------------ -----------
Total Stockholders Equity 5,148,122 4,923,775
------------ -----------
Total Liabilities and Stockholders Equity $ 87,394,134 $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 JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Income
Interest and Fees on Loans $1,283,305 $1,187,537 $2,564,458 $2,331,608
Interest on Investment Securities 115,642 114,180 236,674 236,108
Income on Federal Funds Sold 139,708 86,768 228,326 105,731
---------- ---------- ---------- ----------
Total Interest Income 1,538,655 1,388,485 3,029,458 2,673,447
Interest Expense
Interest on Deposits 551,755 466,233 1,091,024 913,809
Interest on Federal Funds Purchased
And Securities Sold under agreement
to Repurchase 72,249 72,669 144,303 123,922
---------- ---------- ---------- ----------
Total Interest Expense 624,004 538,902 1,235,327 1,037,731
---------- ---------- ---------- ----------
Net Interest Income 914,651 849,583 1,794,131 1,635,716
Provision for Loan Losses 29,000 54,000 53,000 102,000
---------- ---------- ---------- ----------
Net Interest Income after
Provision for loan losses 885,651 795,583 1,741,131 1,533,716
---------- ---------- ---------- ----------
Other Income:
Service Charge on Deposit Accounts 179,322 141,383 332,115 276,984
Miscellaneous Income 26,512 26,206 52,389 47,297
---------- ---------- ---------- ----------
Total Other Income 205,834 167,589 384,504 324,281
---------- ---------- ---------- ----------
Other Expenses:
Salaries and Employee Benefits 442,921 354,302 853,355 716,045
Occupancy Expense 86,657 63,884 178,626 130,249
Equipment Expense 76,141 76,866 164,162 142,321
Stationary, Printing, and Supplies 32,806 26,218 74,204 54,087
Miscellaneous Expenses 199,929 186,498 393,955 370,472
---------- ---------- ---------- ----------
Total Other Expenses 838,454 707,768 1,664,302 1,413,174
---------- ---------- ---------- ----------
Income Before Income Taxes 253,031 255,404 461,333 444,823
Income Taxes 100,700 100,500 175,700 167,000
---------- ---------- ---------- ----------
Net Income $ 152,332 $ 154,904 $ 285,634 $ 277,823
========== ========== ========== ==========
Per share Information:
Average Shares Outstanding 307,762 298,465 307,762 298,465
========== ========== ========== ==========
Net Income Per Share $ 0.49 $ 0.52 $ 0.93 $ 0.93
========== ========== ========== ==========
</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 285,634 285,634
Stock Redemption 917 18,340 19,257
Net Change in Net Unrealized
holding losses on securities (79,940) (79,940)
--------- ----------- ----------- -------- ----------
Balance, June 30, 1999 $ 308,707 $ 2,584,410 $ 2,326,155 $(71,150) $5,148,122
========= =========== =========== ======== ==========
Balance, December 31, 1997 $ 299,115 $ 2,431,145 $ 1,563,242 $ (8,907) $4,284,595
Net Income 277,823 277,823
Stock Redemption (1,300) (62,142) (63,442)
Net Change in Net Unrealized
holding losses on securities (17,853) (17,853)
--------- ----------- ----------- -------- ----------
Balance, June 30, 1998 $ 297,815 $ 2,369,003 $ 1,841,065 $(26,760) $4,481,123
========= =========== =========== ======== ==========
</TABLE>
See accompanying notes to Consolidated Financial Statements
5
<PAGE> 6
VALRICO BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 285,634 $ 277,823
Adjustments to Reconcile net income to net
Cash provided by (used in) operating activities:
Provision for Loan Losses 53,000 102,000
Depreciation and amortization 151,470 134,987
Net amortization (accretion) of investments
Security premiums and discounts 4,552 4,546
(Increase) Decrease in assets:
Accrued Interest Receivable 31,368 54,661
Other Assets (2,887) (109,800)
Increase (Decrease) in liabilities
Accounts payable and Accrued Liabilities (151,699) 139,957
----------- -----------
Net Cash provided by (used in) operating
Activities 371,438 604,174
----------- -----------
Cash flows from investing activities Securities available for sale:
Purchase of investment securities -- --
Proceeds from maturities of investment securities 785,860 837,081
Securities to be Held to Maturity:
Proceeds from maturities of investment securities 131,187 235,068
(Increase) Decrease in Deferred income tax -- --
(Increase) Decrease in Federal Funds Sold (9,516,000) (7,419,000)
Net (Increase) Decrease in Loans 2,330,054 (961,037)
Purchase of facilities (290,628) (59,095)
Proceeds from the sale of Other Real Estate -- 22,738
----------- -----------
Net Cash provided by (used in) Investing Activities (6,559,527) (7,344,245)
----------- -----------
Cash flows from financing activities:
Increase (Decrease) in deposits 6,534,599 6,748,783
Increase (Decrease) in Federal funds purchased -- 128,000
Net increase (Decrease) in securities sold under agreement
to repurchase (170,566) 393,057
Net increase (Decrease) in notes payable 273,140 (24,498)
Sale (redemption) of Common Stock (19,257) (16,000)
----------- -----------
Net Cash Provided by (used by) financing activities 6,656,430 7,229,342
----------- -----------
Net increase (decrease) in cash 468,341 488,941
Cash, beginning of period 4,454,308 3,516,862
----------- -----------
Cash, ending of period $ 4,922,649 $ 4,005,803
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid
during the period for:
Interest $ 1,195,991 $ 1,068,328
Income taxes $ 527,499 $ 34,387
</TABLE>
See accompanying notes to Consolidated Financial Statements
6
<PAGE> 7
VALRICO BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 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 307,762 as of June 30, 1999, and 298,465
as of June 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 six months ended June 30, 1999, the Bank experienced a
growth in deposits with an increase of $6,534,599 or 9.27%. Time over $100,000
Accounts had the highest percentage of growth at 41.35%, or an increase of
$2,890,860 in the six months ended June 30, 1999. This increase is primarily due
to one customer holding approximately $2,000,000 in the institution for the
purposes of a public park construction project.
Outstanding Loans decreased $2,428,593 or 4.49% for the six months ended June
30, 1999. The allowance for credit losses at June 30, 1999 was at $764,890
compared to $776,382 at December 31, 1998. The Bank had $66,711 in charge-offs
and had recoveries in the amount of $2,219 during the six months ended June 30,
1999, and has loan classified as troubled in the amount of $167,414 as of June
30, 1999. A total of $53,000 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 $100,874 at June 30, 1999 and 1998,
respectively. Loans 90 days or more past due amounted to $46,812 and $25,000 at
June 30, 1999 and 1998, respectively. There were restructured loans in the
amount of $52,340 and $55,224 at June 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>
June 30, December 31,
1999 1998
--------- ---------
<S> <C> <C>
Balance at Beginning of Period $ 776,382 $ 576,347
--------- ---------
Charge-offs:
Commercial, Financial and Agricultural 43,835 --
Real Estate-Construction -- --
Real Estate-Mortgage -- --
Installment Loans to Individuals 22,876 23,672
Lease Financing -- --
--------- ---------
Total Charge-offs 66,711 23,672
--------- ---------
Recoveries:
Commercial, Financial and Agricultural 1,826 4,962
Real Estate-Construction -- --
Real Estate-Mortgage -- --
Installment Loans to Individuals 393 8,745
Lease Financing -- --
--------- ---------
Total Recoveries 2,219 13,707
--------- ---------
Net Charge-offs (64,492) (9,965)
Additions Charged to Operation 53,000 210,000
--------- ---------
Balance at end of Period $ 764,890 $ 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 DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Consolidated net income for the six months ending June 30, 1999 was $285,634 or
$0.93 per share which compares to $277,823 or $0.93 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 51.3% of non-interest expenses for the six
months ended June 30, 1999, compared to 50.7% for the six months ended June 30,
1998. Salary expense for the six months ended June 30, 1999 increased 19.2% over
the same period for 1998. 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 6.58% and Total Capital ratio was 7.50% at June 30,
1999. The tier I capital to total risk-weighted assets ratio was 8.85% at June
30, 1999.
The bank has currently spent approximately $145,000 on system and
software upgrades, with the anticipation of spending an additional $20,000. 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 for Y2K. In an attempt to head off possible losses relating to Y2K,
we are setting aside $8,000 a 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 June 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 June 30th, 1999 on its
behalf by the undersigned thereunto duly authorized.
VALRICO BANCORP, INC.
By: \s\ Bob Mclean
---------------------------------------
Bob Mclean
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 4,711
<INT-BEARING-DEPOSITS> 212
<FED-FUNDS-SOLD> 15,872
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 5,874
<INVESTMENTS-CARRYING> 1,921
<INVESTMENTS-MARKET> 1,981
<LOANS> 54,107
<ALLOWANCE> 765
<TOTAL-ASSETS> 87,394
<DEPOSITS> 77,040
<SHORT-TERM> 1,276
<LIABILITIES-OTHER> 735
<LONG-TERM> 3,195
0
0
<COMMON> 309
<OTHER-SE> 2,584
<TOTAL-LIABILITIES-AND-EQUITY> 87,394
<INTEREST-LOAN> 2,564
<INTEREST-INVEST> 237
<INTEREST-OTHER> 228
<INTEREST-TOTAL> 3,029
<INTEREST-DEPOSIT> 1,091
<INTEREST-EXPENSE> 1,235
<INTEREST-INCOME-NET> 1,794
<LOAN-LOSSES> 53
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,664
<INCOME-PRETAX> 461
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 286
<EPS-BASIC> 0.93
<EPS-DILUTED> 0.93
<YIELD-ACTUAL> 4.49
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 167
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 776
<CHARGE-OFFS> 66
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 765
<ALLOWANCE-DOMESTIC> 765
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
