##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-KSB
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For Annual period ending
December 31, 2003
Commission File Number 000-26562 VALRICO BANCORP, INC. 
  Florida 
  65-0553757 
  1815 East State Road 60, Valrico, Florida 33594 
  (813) 689-1231 
  Securities registered under Section 12(b) of the Act: Title of each Class
    
    Name of each exchange
on which registeredNone
    
    None
 Securities registered under Section 12(g) of the Act:
Common Stock, no par value 
  Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months
(or for such shorter period that the Issuer was required to file such reports),
and (2) has been subject to such filing requirements for past 90 days.
Yes [ x ] No [  ] Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Issuers knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ x ] The Issuers gross revenues for its most recent fiscal year were $8,029,000. The aggregate market value of the voting stock held by non-affiliates of the
Issuer as of March 15, 2004 was approximately $5,875,380 (which excludes
128,144 shares held by directors and executive officers). As of said date, the
Issuer had 323,990 shares of Common Stock issued and outstanding. Transitional small business disclosure format (check one):
Yes [  ] No [ x ]




---



TABLE OF CONTENTS  Item 1. BusinessITEM 2. PropertiesITEM 3. Legal ProceedingsITEM 4. Submission Of Matters To A Vote Of Security HoldersITEM 5. Market For The Companys Common Stock And Related Security Holder MattersITEM 6. Selected Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7. Financial StatementsINDEPENDENT AUDITORS REPORTCONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITYCONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTSITEM 8. Changes in and Disagreements With Accountants on Accounting and Financial DisclosureItem 8A. - Controls and ProceduresITEM 9. Directors And Principal Officers Of The CompanyITEM 10. Management Compensation And TransactionsITEM 11. Security Ownership Of Certain Beneficial Owners And ManagementITEM 12. Certain Relationships And Related TransactionsITEM 14. Principal Accountant Fees and ServicesSIGNATURESEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO    Table of Contents  
 Item 1. Business General Valrico Bancorp, Inc (the Company) is a one-bank holding company, which was a
newly-formed corporation on May 31, 1995 with its principal place of business
in Valrico, Florida. The Company subsequently acquired all of the outstanding
common stock of Valrico State Bank (the Bank), a wholly-owned subsidiary.
All shares held by the Banks shareholders were exchanged on a one-to-one basis
for Company shares. The Companys common stock, no par value, authorized
1,000,000 shares, had 323,990 shares outstanding as of December 31, 2003. The Company derives substantially all of its income from dividends and a lease
from the bank. The Bank and Company share the same board of directors, which
is comprised of nine individuals. Those individuals are LeVaughn Amerson,
Jerry L. Ball, C. Dennis Carlton, David A. Gee, Gregory L. Henderson, Douglas
A. Holmberg, Charles E. Jennings, Jr., J.E. McLean, III, Justo Noriega, Jr.. Subsidiary Bank Valrico State Bank (the Bank) was incorporated under the laws of the state of
Florida on August 29, 1988. The Bank was chartered as a Florida state bank
effective June 23, 1989 after receiving approval to organize from the Florida
Department of Banking and Finance (the Florida Department). The Bank
commenced operations on June 23, 1989. The Bank is supervised, regulated and
regularly examined by the Florida State Banking Department and the Federal
Deposit Insurance Corporation. The Bank is not currently a member of the
Federal Reserve Bank. Description of Business The Company, through its subsidiary bank, conducts a general commercial banking
business from its main office located at 1815 East State Road 60, Valrico,
Florida 33594-3623 and its three branch facilities located at 102 West
Robertson Street, Brandon, Florida 33511, 305 South Wheeler Street, Plant
City, Florida 33566 and 10101 Bloomingdale Ave, Riverview, Florida 33569. The
Companys primary telephone number is (813) 689-1231. Valrico is a community
located in the eastern portion of Hillsborough County, Florida, and is
approximately 14 miles east of Tampa, Florida, which is located on the west
coast of the state of Florida. While the Banks overall market area extends
throughout Hillsborough County, it expects to draw most of its business from
eastern Hillsborough County (the Brandon/Valrico/Dover/Plant City/Riverview
area) and estimates that more than 75% of its business will come from customers
whose businesses or residences are located in an area within a radius of
approximately five miles of the Banks principle offices (the Banks
Assessment Area). The Company, through its subsidiary bank, intends for the
near future, to service (with few exceptions) only residents and businesses
located in Hillsborough County, but may choose to accept some business from
outside of Hillsborough County. The principal business of the Bank is to attract deposits from the general
public, and to invest those funds in various types of loans and other
interest-earning assets. Funds provide for the operations of the Bank through
proceeds from the sale of investments and loans, from amortization and
repayment of outstanding loans, from borrowings, and from working capital.
Earnings of the Bank depend primarily upon the difference between (1) the
interest and fees received by the Bank from loans, the securities held in its
investment portfolio, and other investments, and (2) expenses incurred by the
Bank in connection with obtaining funds for lending (including interest paid on
deposits and other borrowings) and expenses relating to day-to-day operations. As of , the Bank has been in operation for fourteen and one-half years.
Management believes that there is some seasonality in its deposit base due
primarily to its agricultural relationships. The seasonality in these
deposits, however, has not been substantial to impact the core base of
deposits, therefore, management does not believe its deposit relationship is
affected. In its lending portfolio, the Bank sees a greater affect on this
seasonal business during the period from September to May reflecting larger
outstandings in the agricultural portfolio. Branch Banking and Locations of Offices The Banks main office is located on East State Road 60, a primary east-west
artery in the Banks Assessment Area, and 800 feet west of Valrico Road, a
primary north-south artery in the Banks Assessment Area. The Brandon branch
facility is located in the center of Brandon, the Plant City branch facility is
located in the center of Plant City, and the Jim Redman Parkway branch is
located in the eastern section of Plant City. The North Riverview Branch is
located at the intersection of US 301 and Bloomingdale Ave in the Riverview
community. The Banks second branch was opened in 1995 in the Plant City market and the
Bank expanded in this market area with an in-store branch which opened on June
23, 1997 within a Walmart Supercenter on Jim Redman Parkway. This location is
in a growing area and a very active shopping center with an estimated 50,000
plus customers per week. This Wal-Mart is one of their largest supercenters in
Florida. The bank expanded its market area with the opening of its fourth
branch on January 22, 2000 in Riverview area. Brandon Office The Bank received approval in January 1994 from the Federal Deposit Insurance
Corporation and the Florida Department of Banking and Finance to open a branch
located at 102 West Robertson Street, Brandon, Florida 33511. Therefore, the
Bank successfully opened its first branch on April 29, 1994, which is located
approximately one and a half miles west of the main office and located in our
current community and assessment area. The location is in the center of
Brandon, extremely convenient to many businesses and professional offices. Plant City Office The Bank, after receiving regulatory approval, opened its second branch on
September 15, 1995, in Plant City located at 305 South Wheeler Street (corner
of Renfro and Wheeler). The Bank purchased, from Barnett Bank, a former
Glendale Federal Bank branch, a free standing building with approximately 2,400
square feet including the land and furniture. This positioned the Bank to
better service the Plant City market in which the Bank was already servicing a
small customer base. Jim Redman Office The Bank, after receiving regulatory approval, opened its third branch on June
23, 1997 as an in-store branch facility in the Wal-Mart Supercenter on Jim
Redman Parkway in Plant City, Florida. The Bank leased the facilities at this
site. We closed this office in late June of 2002.




---



##### Table of Contents



North Riverview Office The Bank, after receiving regulatory approval, opened its fourth branch on
January 22, 1999, in Riverview located at 10101 Bloomingdale Ave (corner of
Bloomingdale and US 301). The Bank purchased, from Nationsbank, a free standing
building with approximately 6,000 square feet, the purchased included the land
surrounding the building. Services The Company, through it subsidiary, conducts substantially the same business
operations as a typical independent commercial bank with special emphasis on
retail banking. The Bank offers a wide range of consumer and commercial
banking services traditionally offered by commercial banks, such as personal
and commercial checking accounts, regular negotiable order of withdrawal
(NOW) accounts, certificates of deposits, money market accounts, savings
accounts, IRA accounts, foreign currency exchanges, credit cards, debit cards,
money orders, travelers cheques, notary service, safe deposit boxes and wire
transfers. It also offers discounted brokerage services, profit sharing
programs, 401(k)s and other similar programs. The depository services are
further complemented by direct deposit programs, night depository services, and
bank by mail also provided by the Bank. The Bank offers a complete brokerage service through a third party which
permits its customers to buy and sell stocks and bonds and otherwise trade in
securities at a discount with full accountability of their transactions. The
Bank offers, through third parties, standard and self-directed IRA, the new
Roth and Educational IRA, qualified pension plans, SEPs, Keogh and
profit-sharing plans, including 401(k) plans, etc. Hours The Banks Main, Brandon and the new North Riverview offices lobby hours are
from 9:00 a.m. to 4:00 p.m., Mondays through Thursdays, 9:00 a.m. to 6:00 p.m.
on Fridays, and 9:00 a.m. to 12:00 p.m. on Saturdays. The Bank also offers
drive-up teller facilities which are open from 8:00 a.m. to 6:00 p.m., Mondays
through Fridays, and 9:00 a.m. to 12:00 p.m. on Saturdays. The Wheeler Street
branches have the same office hours, except they have no Saturday lobby hours.
The Bank does currently own four automatic teller machines (ATM) at the Plant
City, Valrico(Main), Brandon and North Riverview. It also offers ATM and
Mastermoney Debit cards to its customers, which can be used at ATM machines
which are members of the Southeast Switch, which includes HONOR Network
(Florida and other southeastern states) and CIRRUS (a worldwide network). Operations The Bank uses a computer system to handle all accounting and statement
processing. In addition, the Bank makes extensive use of personal computers in
its teller and lobby locations, which allows for efficient handling and
tracking of new accounts, loans and other paper intensive services, and
provides every employee of the Bank access to complete customer profiles at all
times. We have recently upgraded many of our desktop systems in order to
effectively utilize many of the newer programs available today. Philosophy Management of the Company believes that the emerging dominance of large
regional holding companies in the banking industry has created a need for more
locally-owned institutions with personalized banking services. The Bank was
organized as a locally-owned, locally-managed community financial institution,
owned and managed by people who are actively involved in the Banks market area
and committed to its economic growth and development. With local ownership,
management and directors, the Bank believes it can be more responsive to the
community it serves and tailor services to its customers needs rather than the
standardized services that large holding companies tend to offer. Local
ownership and operation will allow faster, more responsive and flexible
decision-making, which may not be available at the majority of financial
institutions in or near the Banks Assessment Area which are branch offices of
large regional holding company banks with headquarters located elsewhere in
Florida or in the United States. Loans The Bank originates a wide range of loans including, but not limited to,
commercial and consumer loans, as well as loans secured by deposit accounts and
other marketable collateral. As of , commercial and consumer loans accounted
for approximately 85.3%and 7.8%, respectively, of the Banks loan portfolio.
Loans are also made to enable borrowers to purchase, refinance, construct or
improve residential or other real estate and usually are secured by mortgages
on such real estate. As of , residential real estate mortgage loans accounted
for approximately 6.9% of the Banks loan portfolio. All loans are made in
compliance with applicable Federal and state regulations. Deposits The primary sources of the Banks funds for lending and for other general
business purposes are the Banks capital, deposits, loan repayments, borrowings
and funds provided from operations. The Bank expects that loan repayments and
funds provided from operations will be relatively stable sources of funds,
while deposit inflows and outflows will be significantly influenced by
prevailing interest rates, money market and general economic conditions.
Generally, short-term borrowings are used to compensate for reductions in
normal sources of funds while longer-term borrowings are used to support
expanded lending activities. The Banks customers are primarily individuals,
professionals, small and medium size businesses, and citrus and agricultural
enterprises located predominantly in eastern and southern Hillsborough County,
Florida. The Banks business is not dominated by a single customer or by a few
customers. The loss of any one or more would not have a materially adverse
effect on the business of the Bank. The Bank attempts to tailor its services
to the needs of its customers since there is a heavy emphasis on retail and
service-oriented businesses in the Companys market area. Moreover, the Banks
main office location is on a major east-west artery in one of eastern
Hillsborough Countys faster growing areas in terms of the number of new
residents. The exposure provided by the site and the population growth of the
area are expected to contribute to the growth of the Company. As of
December 31, 2003, total deposits of the Bank were distributed among demand deposits
(18.5%), savings and time deposits (52.3%) and NOW and money market deposits
(29.2%). The Banks deposits are attracted primarily from individuals,
professionals, small and medium size businesses and citrus and agricultural
enterprises located predominantly in eastern Hillsborough County, Florida. As
of December 31, 2003, approximately 28.9% of the Banks total deposits were from businesses and
71.1% were from individuals. Management of the Bank has no reason to believe
that the loss of any one or a few of its deposit accounts would have a material
adverse effect upon the operations of the Bank or erode its deposit base.




---



##### Table of Contents



New Business Development The Bank continually seeks to develop new business through an ongoing program
of personal calls on both present and potential customers. As a local
independent bank, the Bank utilizes traditional local advertising media, as
well as direct mailings, telephone contacts, and brochures to promote the Bank
and develop loans and deposits. In addition, the Companys directors all have
worked and/or lived in or near eastern Hillsborough County for a number of
years. The Bank believes that this factor, coupled with the past and continued
involvement of the directors in various local community activities, will
further promote its image as a locally-oriented independent institution, which
management believes is an important factor to its targeted customer base. Competition The banking business in Florida in general, and in Hillsborough County in
particular, is highly competitive with respect to both loans and deposits. The
Bank competes with other commercial banks in Hillsborough County and the
surrounding area for all services customarily provided by commercial banks. In
addition, the Bank competes with savings and loan associations, finance
companies, insurance companies, money market mutual funds, credit unions, other
financial institutions and various other non-bank competitors. Many of these
competitors are larger and have greater resources, including more personnel and
a larger asset base, than the Bank and provide certain services, such as trust
services, which the Bank does not currently provide. As of December 31, 2003,
there were 13 commercial banks (including the Companys subsidiary
bank) with 33 offices and 1 savings and loan association with 3 offices; at
least 10 credit unions; and various other financial entities as competitors in
the Banks Assessment Area. The Company expects to receive substantial
competition from most of these financial institutions. The Bank is one of only four financial institutions, which have their
headquarters in eastern Hillsborough County. The other financial institutions,
being Sunshine State Savings and Loan, Hillsboro Bank in Plant City, and
Platinum Bank in Brandon. All others are branches of institutions, which have
their headquarters in other parts of Hillsborough County or elsewhere in
Florida. Several of the institutions are actually owned by banks with
headquarters outside the state of Florida. In order to compete with major financial institutions and others in the Banks
Assessment Area, the Bank will continue to emphasize specialized services,
local promotional activity and personal contacts by the Banks officers,
directors and employees. The Bank believes that its local ownership and
community-oriented operating philosophy and personalized banking services are
competitive factors in which it has strength. Regulation The Company is regulated under both State and Federal law. The Company is
regulated by the Federal Reserve Bank of Atlanta and is subject to the rules
and regulations of the Securities and Exchange Commission. The Companys
subsidiary bank is not a member of the Federal Reserve System, but is subject
to the rules and regulations of the Federal Deposit Insurance Corporation
(FDIC) which agency also insures the Banks deposits up to applicable limits.
As a state-chartered bank, the Bank is subject to the regulations of the
Florida Department. The Bank will be subject to periodic examinations by both
the FDIC and the Florida Department focusing on fund reserves, loans and loan
policy, investments, management policy and practices, and various other aspects
of the Banks operations. Patents, Trademarks and other Intangible Assets Neither the Company nor its subsidiary hold any patents, registered trademarks,
licenses (other than licenses which have been obtained from appropriate banking
regulatory agencies), franchises or concessions. Business Development Prior to the organization of the Bank, the organizers of the Bank conducted
economic and other surveys to evaluate the banking needs for the community of
Valrico and its immediate environs. The results of those surveys were used to
support the application to the Florida Department for permission to organize
the Bank and the application to the FDIC for insurance of the Banks accounts.
Since it commenced operations, officers of the Bank have engaged continually in
marketing activities, including the evaluation of development of new services,
to enable the Bank to improve its competitive position in the Banks Assessment
Area. The cost to the Bank for these marketing activities cannot be calculated
with any degree of certainty. In the fourth quarter of 1993, the Bank gathered
and reviewed new economic data for the purpose of supporting an application to
the Florida Department for permission to open a full service branch facility in
Brandon, Florida, and performed similar research in the summer of 1995 to
support an application to the Florida Department for permission to open a full
service branch in Plant City, Florida. The cost of collecting and evaluating
this information likewise cannot be determined with any degree of certainty, as
most of the information was collected from public sources and other sources
already utilized by the Company for its day-to-day evaluations. In the fourth
quarter of 1996, the Bank reviewed data submitted by International Banking
Technologies for the purpose of supporting the application for the in-store
branch in Plant City. In the fourth quarter of 1998, the Bank gathered and
reviewed new economic data for the purpose of supporting an application to the
Florida Department for permission to open a full service branch facility in
Riverview, Florida. Employees As of December 31, 2003, the Bank employed 57 full-time employees, of which two were executive
officers, and 6 part-time employees, of which one is a bank officer. The
Banks employees are not represented by a collective bargaining group, and the
Bank considers its relations with its employees to be excellent. The Bank also
maintains training and educational programs designed to equip employees for
positions of increasing responsibility in both management and operating
positions. The Bank provides employees certain benefits customary in the
banking industry, which includes major medical insurance, group term life
insurance and normal vacation and sick leave. The Bank implemented a K-SOP
plan in 1997. 
 ITEM 2. Properties The Company, through its subsidiary, has a principal office located at 1815
East State Road 60 in Valrico, Florida, in a traditional, southern, Greek
neo-classical two-story building with 9,860 square feet. The Brandon office,
located at 102 West Robertson Street in Brandon, Florida, is in a leased




---



##### Table of Contents



3,000
square foot end unit in a retail plaza at a major intersection in the center of
Brandon. The Plant City office is located at 305 South Wheeler Street in
facilities purchased in July 1995. The North Riverview Office, located at the
intersection of US 301 and Bloomingdale Avenue in Riverview was purchased in
October of 1998. Main Office In January, 1997, the premises, previously leased from Roy J. and Ann M.
Winter, were purchased by Valrico Bancorp, Inc. for approximately $1,683,000.
The annual lease payments from the Bank to the Company is $204,000. Brandon Office The Bank leases its Brandon branch office space pursuant to an agreement dated
March 31, 1994 (the Lease) with J. Bill Noriega, Jr. (the Lessor). Mr.
Noriega currently serves as a director of the Bank. This lease expired March
31, 2003 and was renewed with a new expiration date of March 31, 2006 at an
annual rental of $42,000. The Bank has the option to renew the lease for three
additional three-year terms at rentals to be negotiated at the time of the
renewal. Plant City Office The Company, through its subsidiary, purchased from Barnett Bank, a former
Glendale Federal Bank branch with approximately 2,400 square feet. The
purchase included building and land located at 305 South Wheeler Street (corner
of Renfro and Wheeler). On September 15, 1995, the Bank opened its second
branch at this location. North Riverview Office The Company, through its subsidiary, purchased from Nationsbank, a building
with approximately 6,000 square feet. The purchase included building and land
located at 10101 Bloomingdale Avenue (corner of US 301 and Bloomingdale). On
January 22, 2000 the bank opened its fourth branch at this location. Other Properties The Company, through its subsidiary, owns a parcel of land for future
expansion. The partially improved property, totaling approximately one acre,
is immediately adjacent to the Companys main office property on the west side.
The site is ideally located for the development of an Operations Center when
the growth of the Company will require additional space beyond that which is
available in the existing Company facility. During 2000, the Bank purchased three parcels of land adjacent to the main
office facility. Lease Expense The aggregate lease expense paid by the Bank under these leases, excluding the
Bank building lease, totaled $42,000 for the fiscal year ended . 
 ITEM 3. Legal Proceedings As of the date of this Annual Report, the management of the Company has no
knowledge of any material pending legal proceedings, including proceedings
contemplated by governmental authorities, to which the Company and its
subsidiary or any of its property is subject. 
 ITEM 4. Submission Of Matters To A Vote Of Security Holders There were no matters submitted to votes of the stockholders of the Company
during the last quarter of . 
 ITEM 5. Market For The Companys Common Stock And Related Security Holder Matters There is no trading market at the current time for the Common Stock of the
Company, and it is not expected that a trading market will develop for shares
of the Companys Common Stock in the near future. The Company is aware of 9
sale transactions that occurred during fiscal year at prices ranging from
$25.00 to $30.00 per share, exclusive of commissions. The Bank is also aware
of 11 sale transactions that occurred during fiscal year 2002 at prices ranging
from $23.00 to $25.00 per share, exclusive of commissions. As of , there were
473 holders of record of the Common Stock of the Company. Holders of Common Stock are entitled to share pro rata in the distribution of
dividends when and as declared by the Board of Directors from funds legally
available for such purpose. The Bank cannot pay dividends in any one year in
which its net income from the current year, combined with its
retained net income for the preceding two years, is a loss or which would cause
the capital accounts of the Bank to fall below the minimum amount required by
law. Additionally, under certain circumstances, approval of the FDIC and the
Florida Department may be required prior to the payment of a dividend. At the discretion of the Board of Directors of the Company and after careful
review of certain factors, such as results of operations, capital requirements,
regulatory restrictions, tax considerations and general economic conditions,
the Board declared its first dividend in September 1993 at ten cents per share
and paid said dividend on October 5, 1993. It likewise paid a similar dividend
in 1994, 1995, 1996 and 1997. In 1998 and 1999, the dividend paid increased to
twelve cents per share. In the years 2000 and forward, the company has paid a
dividend of fourteen cents a share. The dividends were based on respective
year earnings and paid on October 1 of each year. 
 ITEM 6. Selected Financial Data The following table sets forth, in summary form, certain comparative financial
data of the Company for a five year period encompassing the periods ended
December 31, 1999, December 31, 2000, December 31, 2001, December 31, 2002 and  December 31, 2003. This
information should be read in conjunction with the Managements Discussion and
Analysis of Financial Condition and Results of Operations, and Other
Statistical Disclosure and




---



##### Table of Contents



the audited financial statements of the Company for the years
ended December 31, 2001, 2002 and 2003, and related notes thereto included
elsewhere herein. As of and for the Year Ended December 31,2003
    
    2002
    
    2001
    
    2000
    
    1999(in Thousands, except Per Share Data)INCOME STATEMENT DATAInterest income
    
    $
    6,849
    
    
    $
    6,661
    
    
    $
    7,203
    
    
    $
    7,255
    
    
    $
    6,267Interest expense
    
    
    (1,598
    )
    
    
    (2,157
    )
    
    
    (3,208
    )
    
    
    (2,880
    )
    
    
    (2,522
    )Net interest income
    
    
    5,251
    
    
    
    4,504
    
    
    
    3,995
    
    
    
    4,375
    
    
    
    3,745Provision for loan losses
    
    
    (150
    )
    
    
    (120
    )
    
    
    (120
    )
    
    
    (250
    )
    
    
    (101
    )Net interest income after
provision for loan losses
    
    
    5,101
    
    
    
    4,384
    
    
    
    3,875
    
    
    
    4,125
    
    
    
    3,644Non-interest income
    
    
    1,180
    
    
    
    1,146
    
    
    
    1,008
    
    
    
    940
    
    
    
    838Non-interest expense
    
    
    (4,152
    )
    
    
    (4,266
    )
    
    
    (3,768
    )
    
    
    (3,693
    )
    
    
    (3,519
    )Income before income taxes
    
    
    2,129
    
    
    
    1,264
    
    
    
    1,115
    
    
    
    1,372
    
    
    
    963Income taxes
    
    
    (690
    )
    
    
    (387
    )
    
    
    (371
    )
    
    
    (438
    )
    
    
    (324
    )Net income
    
    $
    1,439
    
    
    $
    877
    
    
    $
    744
    
    
    $
    934
    
    
    $
    639PER SHARE DATANet income
    
    $
    4.55
    
    
    $
    2.86
    
    
    $
    2.44
    
    
    $
    3.09
    
    
    $
    2.09Cash dividends
    
    
    0.14
    
    
    
    0.14
    
    
    
    0.14
    
    
    
    0.14
    
    
    
    0.12Book value
    
    
    31.84
    
    
    
    27.12
    
    
    
    23.41
    
    
    
    20.71
    
    
    
    17.42Number of shares used in net
Income-per-share calculations (1)
    
    
    316,243
    
    
    
    306,780
    
    
    
    304,531
    
    
    
    302,138
    
    
    
    305,565BALANCE SHEET DATATotal assets
    
    $
    122,882
    
    
    $
    114,960
    
    
    $
    105,600
    
    
    $
    95,883
    
    
    $
    84,366Total investment securities
    
    
    26,595
    
    
    
    22,341
    
    
    
    21,946
    
    
    
    8,852
    
    
    
    9,134Total net loans (2)
    
    
    84,892
    
    
    
    74,402
    
    
    
    66,798
    
    
    
    66,826
    
    
    
    62,385Total deposits
    
    
    106,840
    
    
    
    101,754
    
    
    
    93,169
    
    
    
    83,925
    
    
    
    73,733Shareholders equity
    
    
    10,069
    
    
    
    8,373
    
    
    
    7,134
    
    
    
    6,312
    
    
    
    5,251
  (1)
    
    Based on average shares outstanding during the period.  (2)
    
    Net loans means total loans net of allowance for possible future loan
losses. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations Overview The purpose of this discussion is to focus on significant changes in the
financial condition and results of the operations of the Company and its
subsidiary during the past three years. This discussion and analysis is
intended to supplement and highlight information contained in the accompanying
financial statements and the selected financial data presented elsewhere in
this report, and is based on the fiscal years of 2003, 2002, and 2001. The
companys fiscal year runs from January 1st through December 31st of each
respective year. Results of Operations The company had a net income after taxes of $1,439,000, $877,000 and $744,000
during the years 2003, 2002, and 2001. This corresponds to per share amounts
of $4.55, $2.86 and $2.44 during those three years respectively. Net Interest Income The bank had an increase of net interest income between the years 2003 and 2002
of $647,000 or 14.37%. The bank had an increase of 12.74% and 16.82% during
the years 2002 and 2001 respectively. The net interest income for the three
years respectfully was $5,251,000, $4,504,000 and $3,995,000. The net interest margin is a major component of the Banks earning
capacity and is the difference or spread between interest income and interest
expense. The spread is considered positive when the Interest income exceeds
the Interest expense and negative when the expense exceeds




---



##### Table of Contents



the income, At the
year ending December 31, 2003, the Bank had a positive spread of 4.24% as
compared to 4.08% and 3.75% for 2002 and 2001 respectively. The Net Interest
yield is calculated by taking the net interest income and dividing it by the
average earning assets. During 2003, the Bank had a Net Interest Yield of
4.74% as compared to 2002 and 2001 yields of 4.51% and 4.22%. To the extent
possible, the bank follows a strategy to insulate the Banks interest rate
spread from adverse changes in interest rates by maintaining spreads through
the adjustability of its earning assets and interest-bearing liabilities. Net interest income is also affected by changes in interest rates earned and
interest rates paid and by changes in the volume of interest earning assets and
interest bearing liabilities. This relationship is expressed in Table I of
this report. In 2003, the net interest income was $5,251,000, which is an
increase of $647,000 from the previous year end of $4,504,000. The net
interest income increase $509,000 over the 2001 year end amount of $3,995,000. Interest Income Interest income is derived from certain interest earning assets, commonly
referred to as earning assets, and primarily consist of loans, federal funds
sold, and investment securities. Federal funds sold are overnight funds, lent
to other financial institutions through our correspondent bank, Independent
Bankers Bank. The following tables reference these earning assets and their
respective interest income for the year ending December 31, 2003 and 2002. Interest Income Break Down
For Year Ending 2003
(All Dollars in Thousands) Category (Average for Year)
    
    Amount
    
    Income
    
    Rate
    
    Pct. of Total Earning AssetsLoans (Before Reserve for Loan Losses)
    
    $
    79,813
    
    
    $
    5,822
    
    
    
    7.29
    %
    
    
    72.73
    %Federal Funds Sold
    
    
    3,888
    
    
    
    48
    
    
    
    1.23
    %
    
    
    3.54
    %Investment Securities
    
    
    26,045
    
    
    
    979
    
    
    
    3.76
    %
    
    
    23.73
    %Total Earning Assets
    
    $
    109,746
    
    
    $
    6,849
    
    
    
    6.24
    %
    
    
    100.00
    %
 Interest Income Break Down
For Year Ending 2002
(All Dollars in Thousands) Category (Average for Year)
    
    Amount
    
    Income
    
    Rate
    
    Pct. of Total Earning AssetsLoans (Before Reserve for Loan Losses)
    
    $
    69,705
    
    
    $
    5,473
    
    
    
    7.85
    %
    
    
    69.81
    %Federal Funds Sold
    
    
    7,589
    
    
    
    119
    
    
    
    1.57
    %
    
    
    7.60
    %Investment Securities
    
    
    22,557
    
    
    
    1,069
    
    
    
    4.74
    %
    
    
    22.59
    %Total Earning Assets
    
    $
    99,851
    
    
    $
    6,661
    
    
    
    6.67
    %
    
    
    100.00
    %
 As can be seen by the Tables, there was a marked change in both rate and volume
of Earning Assets between the years 2001 and 2002. Loan Interest increased from $5,822,000 in 2003, up $349,000 or 6.38% from the
$5,473,000 in 2002. That was a decrease of $459,000 or 7.74% from the
$5,932,000 at year end 2001. Federal Funds Sold decreased $71,000 or 60.68%
from the year end amount of $119,000 in 2002, the year ending 2002 saw a
decreased $332,000 or 73.02% from the $441,000 at year end 2001. Investment
securities realized a decrease of $90,000 with earnings of $979,000 at year end
2003. This decrease was 8.40% lower than the $1,069,000 earned at year end
2002. The $1,069,000 at year end 2002 was $239,000 or 28.80% higher than the
$830,000 earned for year end 2001. Interest Expense Interest expense is derived from the interest bearing liabilities, which
consists of Checking accounts, Now accounts, Savings Accounts, Money Market
accounts, and Certificates of Deposits (CDs), Federal Funds Sold, Repurchase
accounts and other borrowings. During the year 2003, Interest expense totaled
$1,598,000, a decrease of $579,000 or 26.84% from the 2002 year end total of
$2,157,000. This was a decrease of $1,051,000 or 32.71% from the 2001 year end
total of $3,208,000. The following tables provide a break out of the two years
ending 2003 and 2002 respectively.




---



##### Table of Contents



Interest Expense Break Down
For Year Ending 2003
(All Dollars in Thousands) Category (Avg for Year)
    
    Amount
    
    Expense
    
    Rate
    
    Pct. of Total Costing LiabilitiesTransaction Accounts
    
    $
    21,645
    
    
    $
    81
    
    
    
    0.37
    %
    
    
    24.14
    %Savings Accounts
    
    
    26,791
    
    
    
    236
    
    
    
    0.88
    %
    
    
    29.88
    %Certificates of Deposit
    
    
    37,068
    
    
    
    1,065
    
    
    
    2.87
    %
    
    
    41.35
    %Federal Funds Purchased
    
    
    2,390
    
    
    
    114
    
    
    
    4.77
    %
    
    
    2.67
    %Other Borrowings
    
    
    1,759
    
    
    
    102
    
    
    
    5.80
    %
    
    
    1.96
    %Total Costing Liabilities
    
    $
    89,653
    
    
    $
    1,598
    
    
    
    1.78
    %
    
    
    100.00
    %
 Interest Expense Break Down
For Year Ending 2002
(All Dollars in Thousands) Category (Avg for Year)
    
    Amount
    
    Expense
    
    Rate
    
    Pct. of Total Costing LiabilitiesTransaction Accounts
    
    $
    21,058
    
    
    $
    183
    
    
    
    0.87
    %
    
    
    24.62
    %Savings Accounts
    
    
    21,129
    
    
    
    313
    
    
    
    1.48
    %
    
    
    24.70
    %Certificates of Deposit
    
    
    39,018
    
    
    
    1,430
    
    
    
    3.66
    %
    
    
    45.62
    %Federal Funds Purchased
    
    
    352
    
    
    
    1
    
    
    
    0.28
    %
    
    
    0.41
    %Other Borrowings
    
    
    3,974
    
    
    
    230
    
    
    
    5.79
    %
    
    
    4.65
    %Total Costing Liabilities
    
    $
    85,531
    
    
    $
    2,157
    
    
    
    2.52
    %
    
    
    100.00
    %
 Non Interest Expense The Banks non-interest expenses for the fiscal year 2003 were $4,152,000 or
approximately $346,000 average per month as compared to $4,266,000 or
approximately $356,000 average per month for 2002. Non-interest expense for
2000 was $3,768,000 or approximately $314,000 average per month. The amount of
$4,152,000 for 2003 consisted primarily of $2,444,000 in salaries and benefits,
$362,000 of occupancy expense for all its offices, equipment expenses of
$276,000 and $1,070,000 of other operating expenses. Other operating expenses
primarily consisted of marketing expense, taxes (intangible and sales),
insurance (FDIC, blanket bond and property), state assessments, professional
fees (accounting, audit and legal), office supplies, postage and delivery,
service fees and amortization of capitalized expenses. Non Interest Income The Banks non-interest income for fiscal year 2003 was $1,180,000. The sources
reflected in non-interest income were from service charges on deposit accounts
of $936,000 and non-deposit income of $244,000. This is an increase of $34,000
compared to the $1,146,000 of non-interest income reported for the twelve month
period ended December 31, 2002. Income Taxes For 2003, net income before taxes was $2,129,000 and after taxes of $690,000,
the net income was $1,439,000. See Note N of Notes to Consolidated Financial
Statements. The Bank has adopted FAS109 for the accounting of Income Taxes. Deposits The bank experienced deposit growth during 2003, resulting in a net increase
for the fiscal year of 5.0%, as compared to the previous two years of growth of
9.2% in 2002 and 11.0% in 2001. Being the primary source for the funding of
investment and financing activities, thus the breakdown of deposits is of vital
importance to the Bank and Management. As of the end of 2003, the Banks total
deposits were $106,840,000, a $5,086,000 increase. Approximately 81.5% of the
Banks deposits are in interest-bearing accounts at the end of the current
fiscal year, which is typical in the Banks market area. Also note that
included in interest-bearing accounts are the Banks now accounts, which are
the only type of personal checking account offered by the Bank. Of this
$22,570,000, only a small percentage maintains a sufficient minimum balance to
earn interest. Non-Interest-bearing accounts made up 18.5% and NOW and Money
Market Accounts were 29.2% of total deposits compared to 30.3% and 29.9% in the
previous year respectively. In time deposits, the Bank held 52.3% in time
deposits, which comprise savings accounts and Certificates of Deposits. This
was an increase from the approximately 51.6% the year before. FHLB Effective August 15, 1995, the Federal Housing Finance Board approved Valrico
State Banks membership to the Federal Home Loan Bank of Atlanta. Being a
member offers alternative funding sources for the Bank.




---



##### Table of Contents



Loans Loans comprise the major asset of the Bank, as of December 31, 2003 the bank
had $86,260,000 in Total Loans, the Table below breaks out the categories the
bank tracks. December 31,2003
    
    2002(in Thousands)Amount
    
    Percent
    
    Amount
    
    PercentCommercial and Industrial
    
    $
    63,900
    
    
    
    74.08
    %
    
    $
    54,483
    
    
    
    72.11
    %Agricultural
    
    
    9,717
    
    
    
    11.26
    %
    
    
    9,199
    
    
    
    12.18
    %Real estate
    
    
    5,934
    
    
    
    6.88
    %
    
    
    8,107
    
    
    
    10.73
    %Installment and other loans
    
    
    6,709
    
    
    
    7.78
    %
    
    
    3,766
    
    
    
    4.98
    %Total loans
    
    $
    86,260
    
    
    
    100.00
    %
    
    $
    75,555
    
    
    
    100.00
    %
 Residential Real Estate At the conclusion of the fiscal year 2003, residential (1-4 family) real estate
loans totaled $5,934,000, an increase from the previous two years amounts of
$8,107,000 and $5,420,000. The $5,934,000 at year-end represents approximately
6.88% of the total loans outstanding, and are increases from the 10.7% and
8.0%for the years ending 2002 and 2001 respectively. These real estate loans
consist primarily of intermediate term loans secured by real estate and payable
in periodic installments. Consumer Consumer loans consist of loans made to individuals and business for consumer
purposes. These loans represented $6,709,000 or 7.8% of the total loan
portfolio. In 2002 and 2001, these loans represented $3,766,000 and $7,363,000
or 5.0% and 10.9% of the total loan portfolio respectively. Commercial and Industrial The commercial and industrial loans comprised $63,900,000, $54,483,000 and
$42,907,000 and as of December 31, 2003, 2002, and 2001 respectively. The
commercial and industrial purpose loans include commercial real estate loans
that are secured by anything other that farmland or farm equipment. The
$63,900,000 at year-end represents approximately 74.1% of the total loans
outstanding, an increase from the 72.1% and 63.2% for the years ending 2002 and
2001 respectively. Agricultural The commercial loans that have a purpose of agriculture or are secured by any
farmland or equipment are classified as Agricultural. The agricultural loans
for the same periods were $9,717,000, $9,199,000 and $12,170,000. The
$9,717,000 at year-end represents approximately 11.3% of the total loans
outstanding, a slight decrease from the 12.2 and 17.9% for the years ending
2002 and 2001 respectively. Allowance for Loan Losses The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for loan
losses when management of the Bank believes that the collectibility of the
principal on such loans is unlikely. The allowance is an amount that
management of the Bank believes will be adequate to absorb losses inherent in
existing loans and commitments to extend credit, based on evaluations of the
collectibility of outstanding loans and prior loan loss experience relating to
loans and commitments to extend credit. The evaluations take into consideration
such factors as changes in the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans, and current economic
conditions that may affect the borrowers ability to pay. Subsequent
recoveries, if any, on loans charged against the allowance will be credited to
the allowance. The Bank derives its loan loss reserve based on several methods. One is to
review the Banks historical loss percentages calculated by dividing
year-to-date charge-offs by the amount of reservable loans. Secondly, a review
of classified loans based on a specific reserve allocation method, a percentage
method, and a blended reserve based on specific and percentage methods. The
reserve allocation is based on the overall assessment of all the methods to
determine the appropriate amount to charge to the provision for loan losses. Additionally, the Banks loan portfolio is periodically reviewed by Federal and
State regulators as a normal part of their examination process. Governmental
examination procedures require individual judgments about a borrowers ability
to repay loans, sufficiency of collateral values and the effects of changing
economic circumstances. These procedures are similar to those employed by the
Bank in determining the adequacy of the allowance for loan losses and in
classifying loans. As a result of their examinations, regulators may propose adjustments to the
allowance for loan losses or in the loan classifications. As a practical
matter, management and Board of Directors of the Bank promptly consider and
implement those proposed adjustments. The Bank charged to operations $150,000 for provision for loan losses in 2003
and $120,000 and $120,000, respectively, for 2002 and 2001. The amount of
$150,000 was added to the beginning balance of $1,105,000 for the period ended
December 31, 2001 for a total accumulated provision before net charge-offs for
the period ended December 31, 2003 of $1,165,000. The Bank charged off loans
during the fiscal year 2003 in the amount
of $16,000 and reflected recoveries of $57,000 leaving a net balance in the
allowance for loan losses for the period ended December 31, 2003 of $1,206,000,
which was 1.40% of total loans outstanding of $86,260,000.




---



##### Table of Contents



Non Accrual Loans Loans on which the accrual of interest has been discontinued are designated as
non-accrual loans. Accrual of interest on loans is discontinued either when
reasonable doubt exists as to the full and timely collection of interest or
principal or both, or when a loan becomes contractually past due by 90 days or
more with respect to interest or principal. When a loan is placed on
non-accrual status, all interest previously accrued but not collected is
reversed against current period interest income. Income on such loans is then
recognized only to the extent that cash is received and where the future
collection of principal is probable. Interest accruals are resumed on such
loans only when they are brought fully current with respect to interest and
principal and when, in the judgement of management, the loans are estimated to
be fully collectible as to both principal and interest. At December 31, 2003
and December 31, 2002, the Banks loans designated as non-accrual totaled $0
and $535,000, respectively. The Bank has adopted FASB 114 for the accounting
of non accural loans. Impaired Loans At December 31, 2003 and December 31, 2002, loans totaling $0 and $472,000,
respectively, had been classified as impaired. The bank has adopted FAS114 for
its accounting procedures dealing with Impaired Loans. Investment Securities The Banks investment portfolio at December 31, 2003 of $26,595,000(based on
securities held available for sale marked to approximate fair market value)
comprised approximately 23.32% of the Banks total earning assets, as compared
to 22.59% at December 31, 2002. The investment securities are primarily
concentrated in U. S. Treasury securities, obligations of other U. S.
Government agencies, municipals and corporations. As of December 31, 2003, the
Banks investment portfolio had 8.9% adjustable rate securities. As of December 31, 2003, the Banks investment portfolio, consisted of
$25,708,000 in AFS and $887,000, in HTM. The net effect to stockholders
equity as of December 31, 2003 was a net gain in reserve for securities of
$274,000. The market value of securities fluctuates during the investment period and is
determined on the basis of market quotations. The Bank reprices its securities
on a monthly basis. The Bank invests in securities for interest income and
liquidity. The Bank adopted FASB 115 and FAS 130 for accounting of Investments. Earning Assets When calculating total earning assets, the amount of $1,184,000 and $1,104,000
as of December 31, 2003 and 2002 were added to total earning assets. This
amount represents the cash surrender value of whole life insurance policies
purchased primarily to fund a deferred benefit pension plan implemented in 1993
for officers of the Bank who qualified for the program. Non Earning Assets Non-interest earning assets accounted for approximately 8.3% of the Companys
total assets at December 31, 2003, a decrease from the approximately 12.2% at
December 31, 2002. The total non-interest earning assets primarily consisted
of cash and funds placed on deposit in accounts with other banks. Of the total
$10,211,000 of non-interest earning assets, cash and non-interest bearing
deposits totaled $5,788,000. Other significant non-interest earning assets
consisted of fixed assets and interest receivable. Capital A good capital position, which is vital to the continued profitability of the
Company, also promotes depositor and shareholder confidence and provides a
solid foundation for the future growth of the Bank. The Bank has provided for
its capital requirements through the retention of earnings. At December 31,
2003, the Banks Tier 1 capital position was 8.80% ($10,069,000 shareholders
equity divided by total assets of $121,502,000) and the Banks Tier 2 capital
was 9.28% determined by adding loan loss reserves of $1,206,000 to
shareholders equity of $10,069,000 and dividing by total assets of
$121,502,000). Total Tier 1 capital to total risk-weighted assets as of
December 31, 2003 was 11.4% and total capital (Tier 2) to total risk-weighted
assets was 10.1% compared to 9.6% and 10.8%, respectively, in 2002. Interest Rate Risk Interest rate sensitivity is a function of the re-pricing characteristics of
the Banks portfolio of assets and liabilities. These re-pricing
characteristics are the time frames within which the interest-bearing assets
and liabilities are subject to change in interest rates. The change in
interest rates can be either at replacement, re-pricing or maturity during the
life of the assets or liabilities. Interest rate sensitivity management is to
concentrate on the maturities of assets and liabilities as they re-price during
time periods of changes in market interest rates. Effective management is to
ensure that both assets and liabilities respond to changes in interest rates
within an acceptable time frame while minimizing the effect of interest rate
changes on net interest income. The major elements used to manage interest rate risk include the mix of fixed
and variable rate assets and liabilities and the maturity pattern of assets and
liabilities. The Bank performs a monthly review of assets and liabilities that
re-price and the time bands within which the re-pricing occurs. Through such
analysis, the Bank monitors and manages its interest sensitivity gap to
minimize the effects of changing interest rates. The interest rate sensitivity structure within the Banks balance sheet at
December 31, 2003, indicated an Asset~Liability gap ratio of 93% when
projecting out one year. In the near term, defined as 90 days, the Bank had an
Asset~Liability gap ratio of 214%. This information represents a
general indication of re-pricing characteristics over time; however, the
sensitivity of certain deposit products may vary during extreme swings in
interest rates. Since all interest rates and yields do not adjust at the same
velocity, the interest rate sensitivity gap is only a general indicator of the
potential effects of interest rate changes on net interest income.




---



##### Table of Contents



Liquidity Liquidity is the ability of the Bank to meet present and future financial
obligations either through the sale or maturity of existing assets or by the
acquisition of funds through asset and liability management. Management of the
Bank continually evaluates its liquidity position and seeks to achieve its
desired liquidity objectives from both assets and liabilities. Asset liquidity
is achieved through the continuous maturing of earning assets and by investing
in short-term marketable assets. Liability liquidity is available through
continued deposit growth, maturity structure and accessibility to market
sources of funds. As of December 31, 2003, the Banks liquidity ratio was 30.3% derived by
dividing net cash, short-term, and marketable assets of $32.4 million by net
deposits of $106.8 million. The Banks dependency ratio as of December 31, 2003
was 11.3%. This ratio is determined by taking the Banks volatile liabilities
(primarily Jumbo certificates) of $12.4 million less short-term investments of
$0 million divided by adjusted total earning assets of $110.2 million. In 2002
and 2001, the Bank had maintained a liquidity ratio on an average of 20% to
35%. As noted in Funding Sources above, management of the Bank believes that
the high concentration of time deposits is primarily due to customer
relationships and not the attraction of the higher than market rates typically
offered by certificates of deposits. Regulatory Matters On June 19, 2001, the Bank and the FDIC entered into a Memorandum of
Understanding under which the Bank would institute a corrective action program

to eliminate compliance problems at the Bank. Management believes that the
Bank is in substantial compliance with the Memorandum. Recently Adopted Financial Accounting Standards There have been no new Financial Accounting Standards adopted over the past
three years. Forward Looking Statements This filing contains forward-looking statements that involve risks and
uncertainties, and there are certain important factors that could cause actual
results to differ materially from those anticipated. These important factors
include, but are not limited to, economic conditions (both generally and more
specifically in the Banks market), competition for customers from other
providers of financial services, government legislation and regulation which
changes from time to time and over which the Company and the Bank have no
control, changes in interest rates, the impact of the Banks growth, and other
risks detailed in the Annual Report on Form 10-K and in the Companys other
filings with the Securities and Exchange Commission, all of which are difficult
to predict and many of which are beyond the control of the Company. (Remainder of this page intentionally left blank)




---



##### Table of Contents



TABLES TO ITEM 6. The following tables attached to this Form 10-K in response to Item 7 are
intended to be supplementary information to be read in conjunction with
managements discussion and analysis of financial condition and result of
operations. Table I-
    
    Distribution of Assets, Liabilities, and
stockholders Equity; Interest Rates and
Interest DifferentialsTable II-
    
    Investment PortfolioTable III-
    
    Loan PortfolioTable IV-
    
    Summary of Loan Loss ExperienceTable V-
    
    DepositsTable VI-
    
    Return on Equity and AssetsTable VII-
    
    Short-Term Borrowings
 (Remainder of this page intentionally left blank)




---



##### Table of Contents



Table I Average Balances, Interest, and Yield/Rate
(Dollars in Thousands) 2003
    
    2002
    
    2001Assets:Earning Assets:Loans, Net of unearned income
    
    
    79,651
    
    
    
    5,768
    
    
    
    7.24
    %
    
    
    69,705
    
    
    
    5,473
    
    
    
    7.85
    %
    
    
    67,511
    
    
    
    5,932
    
    
    
    8.79
    %Investment SecuritiesTaxable
    
    
    21,434
    
    
    
    799
    
    
    
    3.73
    %
    
    
    18,379
    
    
    
    877
    
    
    
    4.77
    %
    
    
    12,745
    
    
    
    671
    
    
    
    5.26
    %Tax exempt
    
    
    4,611
    
    
    
    180
    
    
    
    3.90
    %
    
    
    4,178
    
    
    
    192
    
    
    
    4.60
    %
    
    
    3,443
    
    
    
    159
    
    
    
    4.62
    %Total Investments
    
    
    26,045
    
    
    
    979
    
    
    
    3.76
    %
    
    
    22,557
    
    
    
    1,069
    
    
    
    4.74
    %
    
    
    16,188
    
    
    
    830
    
    
    
    5.13
    %Federal Funds Sold
    
    
    3,888
    
    
    
    48
    
    
    
    1.23
    %
    
    
    7,589
    
    
    
    119
    
    
    
    1.56
    %
    
    
    10,976
    
    
    
    441
    
    
    
    4.02
    %Total Earning Assets
    
    
    109,584
    
    
    
    6,795
    
    
    
    6.20
    %
    
    
    99,851
    
    
    
    6,661
    
    
    
    6.67
    %
    
    
    94,675
    
    
    
    7,203
    
    
    
    7.61
    %Allowance for loan losses
    
    
    -1,111
    
    
    
    
    
    
    
    
    
    
    
    -1,015
    
    
    
    
    
    
    
    
    
    
    
    (991
    )Cash and Due From
    
    
    7,744
    
    
    
    
    
    
    
    
    
    
    
    7,750
    
    
    
    
    
    
    
    
    
    
    
    6,636Other Assets
    
    
    6,344
    
    
    
    
    
    
    
    
    
    
    
    3,694
    
    
    
    
    
    
    
    
    
    
    
    6,277Total Assets
    
    
    122,561
    
    
    
    
    
    
    
    
    
    
    
    110,280
    
    
    
    
    
    
    
    
    
    
    
    106,597Liabilities ans Shareholders EquityInterest Bearing LiabilitiesDepositsNOW Accounts
    
    
    21,645
    
    
    
    81
    
    
    
    0.37
    %
    
    
    21,058
    
    
    
    183
    
    
    
    0.87
    %
    
    
    20,383
    
    
    
    306
    
    
    
    1.50
    %Money Market Accounts
    
    
    9,003
    
    
    
    72
    
    
    
    0.80
    %
    
    
    8,016
    
    
    
    116
    
    
    
    1.45
    %
    
    
    6,764
    
    
    
    167
    
    
    
    2.47
    %Savings Accounts
    
    
    17,685
    
    
    
    165
    
    
    
    0.93
    %
    
    
    13,113
    
    
    
    197
    
    
    
    1.50
    %
    
    
    10,881
    
    
    
    243
    
    
    
    2.23
    %Time $100,000 and over
    
    
    10,294
    
    
    
    340
    
    
    
    3.30
    %
    
    
    11,454
    
    
    
    447
    
    
    
    3.90
    %
    
    
    12,935
    
    
    
    751
    
    
    
    5.81
    %Other Time Deposits
    
    
    26,774
    
    
    
    726
    
    
    
    2.71
    %
    
    
    27,563
    
    
    
    984
    
    
    
    3.24
    %
    
    
    27,270
    
    
    
    1,470
    
    
    
    5.39
    %Total interest bearing deposits
    
    
    85,401
    
    
    
    1,384
    
    
    
    1.62
    %
    
    
    81,204
    
    
    
    1,927
    
    
    
    2.37
    %
    
    
    78,233
    
    
    
    2,937
    
    
    
    3.75
    %Securities sold under agreement
to repurchase, Federal funds
purchased and other borrowings
    
    
    4,149
    
    
    
    216
    
    
    
    5.21
    %
    
    
    4,159
    
    
    
    230
    
    
    
    5.53
    %
    
    
    4,524
    
    
    
    271
    
    
    
    5.99
    %Total interest bearing liabilities
    
    
    89,550
    
    
    
    1,600
    
    
    
    1.79
    %
    
    
    85,363
    
    
    
    2,157
    
    
    
    2.52
    %
    
    
    82,757
    
    
    
    3,208
    
    
    
    3.88
    %Demand Deposits (non interest-bearing)
    
    
    22,748
    
    
    
    
    
    
    
    
    
    
    
    16,217
    
    
    
    
    
    
    
    
    
    
    
    15,591Accrued expenses and other liabilities
    
    
    1076
    
    
    
    
    
    
    
    
    
    
    
    946
    
    
    
    
    
    
    
    
    
    
    
    1,355Shareholders equity
    
    
    9,187
    
    
    
    
    
    
    
    
    
    
    
    7,754
    
    
    
    
    
    
    
    
    
    
    
    6,894Total liabilities and shareholders equity
    
    
    122,561
    
    
    
    
    
    
    
    
    
    
    
    110,280
    
    
    
    
    
    
    
    
    
    
    
    106,597Net interest income/net interest spread
    
    
    
    
    
    
    5,195
    
    
    
    4.24
    %
    
    
    
    
    
    
    4,504
    
    
    
    4.08
    %
    
    
    
    
    
    
    3,995
    
    
    
    3.75
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    4.74
    %
    
    
    
    
    
    
    
    
    
    
    4.51
    %
    
    
    
    
    
    
    
    
    
    
    4.22
    %
 The following table sets forth the extent to which changes in volume and rates
of earning assets and interest-bearing liabilities affected the change in
interest income or interest expense in the indicated time periods. For each
major balance sheet category, information is provided relating to 1) changes
in volume (changes in average balance multiplied by the prior years average
interest rate), 2) changes in rate (changes in average interest rate multiplied
by the prior years average balance), and 3) the total change in interest
income/expenses. Changes attributable jointly to volume and rate have been
allocated proportionately.




---



##### Table of Contents



Table I Continued Volume and Rate Analysis
(Dollars in Thousands) 2003
    
    2002Volume
    
    Rate
    
    Total
    
    Volume
    
    Rate
    
    TotalInterest IncomeLoans
    
    
    781
    
    
    
    (486
    )
    
    
    295
    
    
    
    190
    
    
    
    (655
    )
    
    
    (459
    )Investment Securities
    
    
    165
    
    
    
    (255
    )
    
    
    (90
    )
    
    
    327
    
    
    
    (88
    )
    
    
    239Other Earning Assets
    
    
    (58
    )
    
    
    (13
    )
    
    
    (71
    )
    
    
    (136
    )
    
    
    (187
    )
    
    
    (322
    )Total
    
    
    888
    
    
    
    (754
    )
    
    
    134
    
    
    
    381
    
    
    
    (930
    )
    
    
    (542
    )Interest ExpenseDeposits
    
    
    99
    
    
    
    (641
    )
    
    
    (543
    )
    
    
    111
    
    
    
    (1,121
    )
    
    
    (1,010
    )Borrowings
    
    
    (1
    )
    
    
    (13
    )
    
    
    (14
    )
    
    
    (22
    )
    
    
    (19
    )
    
    
    (41
    )Total
    
    
    98
    
    
    
    (654
    )
    
    
    (557
    )
    
    
    89
    
    
    
    (1,140
    )
    
    
    (1,051
    )Net Change
    
    
    790
    
    
    
    (100
    )
    
    
    691
    
    
    
    292
    
    
    
    210
    
    
    
    509
 Interest Rate Sensitivity
(Dollars in Thousands) After Three
    
    After One
    
    After ThreeWithin
    
    Months but
    
    Year but
    
    Years but
    
    AfterThree
    
    Within One
    
    Within Three
    
    Within Five
    
    FiveDecember 31, 2003
    
    Months
    
    Year
    
    Years
    
    Years but
    
    YearsAssetsLoans
    

    
    37,378
    
    
    
    4991
    
    
    
    21966
    
    
    
    19215
    
    
    
    2539Short term investments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Securities
    
    
    1633
    
    
    
    3546
    
    
    
    9138
    
    
    
    4257
    
    
    
    7590Total interest sensitive assets (ISA)
    
    
    39011
    
    
    
    8537
    
    
    
    31104
    
    
    
    23472
    
    
    
    10129LiabilitiesInterest bearing deposits
    
    
    19,359
    
    
    
    37769
    
    
    
    24787
    
    
    
    25013
    
    
    
    0Federal funds purchased
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Long term borrowings
    
    
    887
    
    
    
    0
    
    
    
    0
    
    
    
    2000
    
    
    
    0Short term borrowings
    
    
    2,315
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Total interest sensitive liabilities (ISL)
    
    
    22561
    
    
    
    37769
    
    
    
    24787
    
    
    
    27013
    
    
    
    0Net position os ISA minus ISL
    
    
    16450
    
    
    
    -29232
    
    
    
    6317
    
    
    
    -3541
    
    
    
    10129Cumulative net position of ISA minus ISL
    
    
    16450
    
    
    
    -12782
    
    
    
    -6465
    
    
    
    -10006
    
    
    
    123Cumulative net position as a percent
of total assets
    
    
    13.39
    %
    
    
    -10.40
    %
    
    
    -5.26
    %
    
    
    -8.14
    %
    
    
    0.10
    %




---



##### Table of Contents



Investment Portfolio
(amortized cost, in thousands) December 31,
    
    2003
    
    2002
    
    2001Securities to be held-to-maturity1. U.S. Treasury Securities
    
    
    0
    
    
    
    0
    
    
    
    02. U.S. Government Agencies
    
    
    0
    
    
    
    0
    
    
    
    03. Mortgage-backed securities
    
    
    121
    
    
    
    193
    
    
    
    2944. Municipal
    
    
    766
    
    
    
    1,015
    
    
    
    1,2885. Other
    
    
    0
    
    
    
    0
    
    
    
    0Subtotal
    
    
    887
    
    
    
    1,208
    
    
    
    1,582Securities available-for-sale1. U.S. Treasury Securities
    
    
    0
    
    
    
    0
    
    
    
    02. U.S. Government Agencies
    
    
    535
    
    
    
    1,503
    
    
    
    6,0023. Mortgage-backed securities
    
    
    18,502
    
    
    
    10,291
    
    
    
    7,8554. Municipal
    
    
    3,876
    
    
    
    3,027
    
    
    
    3,0275. Other
    
    
    2,795
    
    
    
    5,744
    
    
    
    3,369Subtotal
    
    
    25,708
    
    
    
    20,565
    
    
    
    20,253Total investment securities
    
    
    26,595
    
    
    
    21,773
    
    
    
    21,835




---



##### Table of Contents



Investment Securities Maturity Schedule
(Dollars in Thousands)
Maturity Schedule In 2003
    
    In 2002
    
    In 2001Amount
    
    Yield
    
    Amount
    
    Yield
    
    Amount
    
    YieldSecurity Type
    
    Within One Year1.
    
    
    U.S. Treasury Securities
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %2.
    
    
    U.S. Government Agencies
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %
    
    
    500
    
    
    
    6.05
    %3.
    
    
    Mortgage-backed securities
    
    
    0
    
    
    
    5.33
    %
    
    
    36
    
    
    
    5.33
    %
    
    
    0
    
    
    
    5.51
    %4.
    
    
    Municipal
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %
    
    
    275
    
    
    
    4.60
    %5.
    
    
    Other
    
    
    0
    
    
    
    5.50
    %
    
    
    501
    
    
    
    5.50
    %
    
    
    455
    
    
    
    6.47
    %Totals
    
    
    0
    
    
    
    
    
    
    
    537
    
    
    
    
    
    
    
    1,230
 In 2003
    
    In 2002
    
    In 2001Amount
    
    Yield
    
    Amount
    
    Yield
    
    Amount
    
    YieldSecurity Type
    
    After One Year but Within Five Years1.
    
    
    U.S. Treasury Securities
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %2.
    
    
    U.S. Government Agencies
    
    
    535
    
    
    
    5.54
    %
    
    
    1,503
    
    
    
    5.54
    %
    
    
    5,000
    
    
    
    5.40
    %3.
    
    
    Mortgage-backed securities
    
    
    371
    
    
    
    3.81
    %
    
    
    3,158
    
    
    
    3.81
    %
    
    
    127
    
    
    
    6.19
    %4.
    
    
    Municipal
    
    
    879
    
    

    
    4.54
    %
    
    
    608
    
    
    
    4.54
    %
    
    
    270
    
    
    
    5.51
    %5.
    
    
    Other
    
    
    1,371
    
    
    
    5.80
    %
    
    
    1,766
    
    
    
    5.80
    %
    
    
    1,538
    
    
    
    6.03
    %Totals
    
    
    3,156
    
    
    
    
    
    
    
    7,035
    
    
    
    
    
    
    
    6,935
 In 2003
    
    In 2002
    
    In 2001Amount
    
    Yield
    
    Amount
    
    Yield
    
    Amount
    
    YieldSecurity Type
    
    After Five Years but Within Ten Years1.
    
    
    U.S. Treasury Securities
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %2.
    
    
    U.S. Government Agencies
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %
    
    
    502
    
    
    
    4.00
    %3.
    
    
    Mortgage-backed securities
    
    
    7,546
    
    
    
    3.93
    %
    
    
    4,774
    
    
    
    3.93
    %
    
    
    3,300
    
    
    
    4.40
    %4.
    
    
    Municipal
    
    
    3,519
    
    
    
    4.56
    %
    
    
    3,189
    
    
    
    4.56
    %
    
    
    3,526
    
    
    
    4.75
    %5.
    
    
    Other
    
    
    1,407
    
    
    
    6.52
    %
    
    
    1,010
    
    
    
    6.52
    %
    
    
    1,010
    
    
    
    6.52
    %Totals
    
    
    12,472
    
    
    
    
    
    
    
    8,973
    
    
    
    
    
    
    
    8,338
 In 2003
    
    In 2002
    
    In 2001Amount
    
    Yield
    
    Amount
    
    Yield
    
    Amount
    
    YieldSecurity Type
    
    After 10 Years1.
    
    
    U.S. Treasury Securities
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %2.
    
    
    U.S. Government Agencies
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %
    
    
    0
    
    
    
    0.00
    %3.
    
    
    Mortgage-backed securities
    
    
    10,706
    
    
    
    4.80
    %
    
    
    4,580
    
    
    
    4.80
    %
    
    
    4,722
    
    
    
    4.96
    %4.
    
    
    Municipal
    
    
    244
    
    
    
    5.50
    %
    
    
    244
    
    
    
    5.50
    %
    
    
    244
    
    
    
    5.50
    %5.
    
    
    Other
    
    
    17
    
    
    
    3.18
    %
    
    
    25
    
    
    
    3.18
    %
    
    
    366
    
    
    
    0.00
    %Totals
    
    
    10,967
    
    
    
    
    
    
    
    4,849
    
    
    
    
    
    
    
    5,332




---



##### Table of Contents



Table III Loan Portfolio
(Dollars in Thousands) 2003
    
    2002
    
    2001Percent
    
    
    
    
    
    Percent
    
    
    
    
    
    PercentDecember 31,
    
    Amount
    
    of Total
    
    Amount
    
    of Total
    
    Amount
    
    of TotalLoan Type1. Commercial
    
    
    73,617
    
    
    
    85.34
    %
    
    
    63,682
    
    
    
    84.29
    %
    
    
    55,077
    
    
    
    81.16
    %2. Real Estate (1.4 family)
    
    
    5,934
    
    
    
    6.88
    %
    
    
    8,107
    
    
    
    10.73
    %
    
    
    5,420
    
    
    
    7.99
    %3. Installment and other
    
    
    6,709
    
    
    
    7.78
    %
    
    
    3,766
    
    
    
    4.98
    %
    
    
    7,363
    
    
    
    10.85
    %Total Loans
    
    
    86,260
    
    
    
    100.00
    %
    
    
    75,555
    
    
    
    100.00
    %
    
    
    67,860
    
    
    
    100.00
    %Less: Unearned Income
    
    
    (162
    )
    
    
    
    
    
    
    (138
    )
    
    
    
    
    
    
    (84
    )Less: Allowance for loan losses
    
    
    (1,206
    )
    
    
    
    
    
    
    (1,015
    )
    
    
    
    
    
    
    (978
    )Total loans less allowance
and unearned income
    
    
    84,892
    
    
    
    
    
    
    
    74,402
    
    
    
    
    
    
    
    66,798
 Selected Loan Maturity and Interest Rate Sensitivity Schedules
(Dollars in Thousands) 2003
    
    2002
    
    2001December 31,
    
    Within One Year1.
    
    
    Commercial
    
    
    26,200
    
    
    
    22,691
    
    
    
    15,0162.
    
    
    Real Estate (1.4 family)
    
    
    1,071
    
    
    
    1,790
    
    
    
    9073.
    
    
    Installment and other
    
    
    1,604
    
    
    
    848
    
    
    
    1,615Total
    
    
    28,875
    
    
    
    25,329
    
    
    
    17,538
 After One Year but Within Five Years1.
    
    
    Commercial
    
    
    44,055
    
    
    
    37,806
    
    
    
    35,9652.
    
    
    Real Estate (1.4 family)
    
    
    4,568
    
    
    
    5,674
    
    
    
    4,0453.
    
    
    Installment and other
    
    
    4,486
    
    
    
    2,709
    
    
    
    5,082Total
    
    
    53,109
    
    
    
    46,189
    
    
    
    45,092
 After Five Years1.
    
    
    Commercial
    
    
    3,362
    
    
    
    3,185
    
    
    
    4,0982.
    
    
    Real Estate (1.4 family)
    
    
    295
    
    
    
    643
    
    
    
    4683.
    
    
    Installment and other
    
    
    619
    
    
    
    209
    
    
    
    664Total
    
    
    4,276
    
    
    
    4,037
    
    
    
    5,23086,260
    
    
    
    75,555
    
    
    
    67,860




---



##### Table of Contents



Table III Continued Rate Structure for Loans Maturing Over One Year
(Dollars in thousands) 2003
    
    With
    
    2002
    
    With
    
    2001
    
    WithWith Pre-
    
    Floating
    
    With Pre-
    
    Floating
    
    With Pre-
    
    Floatingdetermined
    
    or
    
    determined
    
    or
    
    determined
    
    orInterest
    
    Adjustable
    
    Interest
    
    Adjustable
    
    Interest
    
    AdjustableRate
    
    Rate
    
    Rate
    
    Rate
    
    Rate
    
    RateAmount
    
    Amount

    
    Amount

    
    Amount

    
    Amount

    
    Amount1.
    
    
    Commercial
    
    
    34,962
    
    
    
    12,455
    
    
    
    28,945
    
    
    
    12,046
    
    
    
    31,437
    
    
    
    8,6252.
    
    
    Real Estate (1.4 family)
    
    
    4,863
    
    
    
    0
    
    
    
    6,317
    
    
    
    0
    
    
    
    4,513
    
    
    
    03.
    
    
    Installment and other
    
    
    5,105
    
    
    
    0
    
    
    
    2,918
    
    
    
    0
    
    
    
    5,747
    
    
    
    0Total
    
    
    44,930
    
    
    
    12,455
    
    
    
    38,180
    
    
    
    12,046
    
    
    
    41,697
    
    
    
    8,625
 (Remainder of this page intentionally left blank)




---



##### Table of Contents



Table IV Summary of Loan Loss Experience Year Ended December 31,
    
    2003
    
    2002
    
    2001Balance at beginning of Period
    
    
    1,014,935
    
    
    
    978,075
    
    
    
    942,884Charge-offs:Commercial Loans
    
    
    1,148
    
    
    
    6,211
    
    
    
    0Commercial Mortgages Loans
    
    
    0
    
    
    
    39,828
    
    
    
    0Construction Loans
    
    
    0
    
    
    
    0
    
    
    
    0Residential Mortgage Loans
    
    
    0
    
    
    
    0
    
    
    
    0Consumer Loans
    
    
    15,013
    
    
    
    59,592
    
    
    
    115,515Total Charge-offs
    
    
    16,161
    
    
    
    105,631
    
    
    
    115,515RecoveriesCommercial Loans
    
    
    40735
    
    
    
    805
    
    
    
    19,171Commercial Mortgages Loans
    
    
    0
    
    
    
    0
    
    
    
    0Construction Loans
    
    
    0
    
    
    
    0
    
    
    
    0Residential Mortgage Loans
    
    
    0
    
    
    
    21,686
    
    
    
    11,535Consumer Loans
    
    
    16446
    
    
    
    0
    
    
    
    0Total Recoveries
    
    
    57,181
    
    
    
    22,491
    
    
    
    30,706Net Charge-offs less recoveries
    
    
    -41,020
    
    
    
    83,140
    
    
    
    84,809Additions charged to operations
    
    
    150,000
    
    
    
    120,000
    
    
    
    120,000Balance at end of period
    
    
    1,205,955
    
    
    
    1,014,935
    
    
    
    978,075
 Allocation of the allowance for loan losses 2003
    
    2002
    
    2001Percent of Loans in
    
    
    
    
    
    Percent of Loans in
    
    
    
    
    
    Percent of Loans inEach Category to
    
    
    
    
    
    Each Category to
    
    
    
    
    
    Each Category toAmount
    
    Total Loans
    
    Amount
    
    Total Loans
    
    Amount
    
    Total LoansBalance at end of period applicable to:Commercial and agricultural
    
    
    1,029,162
    
    
    
    85.34
    %
    
    
    855,488
    
    
    
    84.29
    %
    
    
    793,806
    
    
    
    81.16
    %Real estate
    
    
    82,970
    
    
    
    6.88
    %
    
    
    108,903
    
    
    
    10.73
    %
    
    
    78,148
    
    
    
    7.99
    %Installment and Others
    
    
    93,823
    
    
    
    7.78
    %
    
    
    50,544
    
    
    
    4.98
    %
    
    
    106,121
    
    
    
    10.85
    %1,205,955
    
    
    
    100.00
    %
    
    
    1,014,935
    
    
    
    100.00
    %
    
    
    978,075
    
    
    
    100.00
    %




---



##### Table of Contents



Table V Deposits
(Dollars in Thousands) 2003
    
    2002
    
    2001Average
    
    Average
    
    Average
    
    Average
    
    Average
    
    AverageYear Ended December 31,
    
    Balance
    
    Rate
    
    Balance
    
    Rate
    
    Balance
    
    RateDeposits:Non-interest demand deposits
    
    
    22,748
    
    
    
    0.00
    %
    
    
    16,217
    
    
    
    0.00
    %
    
    
    15,591
    
    
    
    0.00
    %Interest Bearing DepositsNOW accounts
    
    
    21,645
    
    
    
    0.37
    %
    
    
    21,058
    
    
    
    0.87
    %
    
    
    20,383
    
    
    
    1.50
    %Money market accounts
    
    
    9,003
    
    
    
    0.80
    %
    
    
    8,016
    
    
    
    1.45
    %
    
    
    6,764
    
    
    
    2.47
    %Savings accounts
    
    
    17,685
    
    
    
    0.93
    %
    
    
    13,113
    
    
    
    1.50
    %
    
    
    10,881
    
    
    
    2.23
    %Time, $100,000 and over
    
    
    10,294
    
    
    
    3.30
    %
    
    
    11,454
    
    
    
    3.90
    %
    
    
    12,935
    
    
    
    5.81
    %Other time Deposits
    
    
    26,774
    
    
    
    2.71
    %
    
    
    27,563
    
    
    
    3.24
    %
    
    
    27,270
    
    
    
    5.39
    %Total Interest bearing deposits
    
    
    85,401
    
    
    
    1.62
    %
    
    
    81,204
    
    
    
    2.37
    %
    
    
    78,233
    
    
    
    3.75
    %Total Deposits
    
    
    108,149
    
    
    
    
    
    
    
    97,421
    
    
    
    
    
    
    
    93,824
 Maturities of Time Deposits over $100,000
(Dollars in Thousands) 2003
    
    2002
    
    2001Other
    
    
    
    
    
    Other
    
    
    
    
    
    OtherCertificates
    
    Time
    
    Certificates
    
    Time
    
    Certificates
    
    TimeDecember 31,
    
    of Deposits
    
    Deposits
    
    of Deposits
    
    Deposits
    
    of Deposits
    
    DepositsThree months or less
    
    
    2,278
    
    
    
    0
    
    
    
    3,791
    
    
    
    0
    
    
    
    3,396
    
    
    
    0Three through six months
    
    
    1,934
    
    
    
    0
    
    
    
    2,403
    
    
    
    0
    
    
    
    1,224
    
    
    
    0Six through twelve months
    
    
    2,201
    
    
    
    0
    
    
    
    2,634
    
    
    
    0
    
    
    
    1,574
    
    
    
    0Over twelve Months
    
    
    4,481
    
    
    
    0
    
    
    
    3,329
    
    
    
    0
    
    
    
    936
    
    
    
    0Total
    
    
    10,894
    
    
    
    0
    
    
    
    11,337
    
    
    
    0
    
    
    
    7,130
    
    
    
    0




---



##### Table of Contents



Table VI Return on Equity and Assets December 31,
    
    2003
    
    2001
    
    2000Return on average assets
    
    
    1.17
    %
    
    
    0.80
    %
    
    
    0.70
    %Return on average common Equity
    
    
    15.66
    %
    
    
    11.31
    %
    
    
    10.79
    %Common dividend payout ratio
    
    
    3.08
    %
    
    
    5.42
    %
    
    
    6.03
    %Average equity to average assets ratio
    
    
    7.50
    %
    
    
    7.03
    %
    
    
    6.47
    %
 Leverage Ratio Calculations December 31,
    
    2003
    
    2002
    
    2001Total average assets
    
    
    122,561
    
    
    
    110,280
    
    
    
    106,597Less intangibles
    
    
    0
    
    
    
    0
    
    
    
    0Total tangible average assets
    
    
    122,561
    
    
    
    110,280
    
    
    
    106,597Total common shareholders equity
    
    
    10,069
    
    
    
    8,373
    
    
    
    7,134Less intangibles
    
    
    0
    
    
    
    0
    
    
    
    0Total tangible period-end common
shareholders equity
    
    
    10,069
    
    
    
    8,373
    
    
    
    7,134Leverage ratio
    
    
    8.22
    %
    
    
    7.59
    %
    
    
    6.69
    %
 Risk-based capital ratio
(Bank Only) Tier I capital ratio
    
    
    7.91
    
    
    
    7.29
    
    
    
    6.98Total risk-based capital ratio
    
    
    11.38
    
    
    
    10.78
    
    
    
    10.57




---



##### Table of Contents



Item 7. Financial Statements CONTENTS PageIndependent Auditors Report
    
    
    1Financial StatementsConsolidated Balance Sheets
    
    
    2Consolidated Statements of Income
    
    
    3Consolidated Statements of Changes in Stockholders Equity
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Notes to Consolidated Financial Statements
    
    
    6-20




---



##### Table of Contents



INDEPENDENT AUDITORS REPORT To The Board of Directors and Stockholders
Valrico Bancorp, Inc. and Subsidiary
Valrico, Florida We have audited the accompanying consolidated balance sheets of Valrico
Bancorp, Inc. and Subsidiary as of December 31, 2003 and 2002, 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, 2003. These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Valrico Bancorp,
Inc. and Subsidiary at December 31, 2003 and 2002, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2003, in conformity with accounting principles
generally accepted in the United States of America. Rex Meighen & Company, LLP
Certified Public Accountants Tampa, Florida
January 23, 2004 1




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME December 31,2003
    
    2002(in thousands)ASSETSCash and non-interest
bearing accounts
    
    $
    5,788
    
    
    $
    9,083Federal funds sold
    
    
    
    
    
    
    4,157Securities available-for-sale
    
    
    25,708
    
    
    
    21,133Securities to be
held-to-maturity
    
    
    887
    
    
    
    1,208Loans, net
    
    
    84,892
    
    
    
    74,402Facilities, net
    
    
    3,089
    
    
    
    2,906Other real estate
    
    
    303
    
    
    
    Accrued interest receivable
    
    
    558
    
    
    
    540Other assets
    
    
    1,657
    
    
    
    1,531Total assets
    
    $
    122,882
    
    
    $
    114,960LIABILITIESDeposits:Demand deposits
    
    $
    19,758
    
    
    $
    18,444NOW accounts
    
    
    22,570
    
    
    
    23,047Money market accounts
    
    
    8,645
    
    
    
    7,833Savings accounts
    
    
    20,551
    
    
    
    14,358Time deposits, $100,000
and over
    
    
    9,736
    
    
    
    10,778Other time deposits
    
    
    25,580
    
    
    
    27,294Total deposits
    
    
    106,840
    
    
    
    101,754Federal funds purchased
    
    
    1,500
    
    
    
    Securities sold under
agreement to repurchase
    
    
    120
    
    
    
    222Accounts payable and accrued
liabilities
    
    
    771
    
    
    
    674Advances under line-of-credit
    
    
    695
    
    
    
    970Notes payable
    
    
    2,887
    
    
    
    2,967Total liabilities
    
    
    112,813
    
    
    
    106,587Commitments and
contingencies (Notes P and Q)STOCKHOLDERS EQUITYCommon stock no par value,
authorized 1,000,000 shares, issued and outstanding 323,990 shares for 2003; 308,737 for 2002
    
    
    324
    
    
    
    309Capital surplus
    
    
    3,004
    
    
    
    2,625Retained earnings
    
    
    6,467
    
    
    
    5,070Accumulated other
comprehensive income
    
    
    274
    
    
    
    369Total
stockholders
equity
    
    
    10,069
    
    
    
    8,373Total liabilities
and stockholders
equity
    
    $
    122,882
    
    
    $
    114,960
 See Accompanying Notes to Consolidated Financial Statements 2




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME Year Ended December 312003
    
    2002
    
    2001(in thousands, except per share data)Interest IncomeInterest and fees on loans
    
    $
    5,822
    
    
    $
    5,473
    
    
    $
    5,932Interest on investment securities:U.S. Government agencies
    
    
    606
    
    
    
    662
    
    
    
    483State and municipal securities
    
    
    180
    
    
    
    193
    
    
    
    159Other
    
    
    195
    
    
    
    214
    
    
    
    188Income on federal funds sold
    
    
    46
    
    
    
    119
    
    
    
    441Total interest income
    
    
    6,849
    
    
    
    6,661
    
    
    
    7,203Interest ExpenseInterest on deposits
    
    
    1,383
    
    
    
    1,926
    
    
    
    2,937Interest on short-term borrowings
    
    
    27
    
    
    
    36
    
    
    
    72Interest on long-term debt
    
    
    188
    
    
    
    195
    
    
    
    199Total interest expense
    
    
    1,598
    
    
    
    2,157
    
    
    
    3,208Net interest income
    
    
    5,251
    
    
    
    4,504
    
    
    
    3,995Provision for Loan Losses
    
    
    150
    
    
    
    120
    
    
    
    120Net interest income after provision
for loan losses
    
    
    5,101
    
    
    
    4,384
    
    
    
    3,875Other IncomeService charges on deposit accounts
    
    
    936
    
    
    
    945
    
    
    
    896Miscellaneous income
    
    
    244
    
    
    
    201
    
    
    
    112Total other income
    
    
    1,180
    
    
    
    1,146
    
    
    
    1,008Other ExpensesSalaries and employee benefits
    
    
    2,444
    
    
    
    2,248
    
    
    
    2,102Occupancy expense
    
    
    362
    
    
    
    377
    
    
    
    361Equipment expenses
    
    
    276
    
    
    
    351
    
    
    
    316Stationery, printing and supplies
    
    
    135
    
    
    
    154
    
    
    
    131Miscellaneous expenses
    
    
    935
    
    
    
    1,136
    
    
    
    858Total other expenses
    
    
    4,152
    
    
    
    4,266
    
    
    
    3,768Income Before Income Taxes
    
    
    2,129
    
    
    
    1,264
    
    
    
    1,115Income Taxes
    
    
    690
    
    
    
    387
    
    
    
    371Net Income
    
    
    1,439
    
    
    
    877
    
    
    
    744Other Comprehensive IncomeUnrealized gains (losses) on securities
    
    
    (95
    )
    
    
    302
    
    
    
    109Comprehensive Income
    
    $
    1,344
    
    
    $
    1,179
    
    
    $
    853Average Shares OutstandingBasic
    
    
    316,243
    
    
    
    306,780
    
    
    
    304,531Diluted
    
    
    380,856
    
    
    
    366,909
    
    
    
    364,441Net Income Per Common ShareBasic
    
    $
    4.55
    
    
    $
    2.86
    
    
    $
    2.44Diluted
    
    $
    3.78
    
    
    $
    2.39
    
    
    $
    2.04
 See Accompanying Notes to Consolidated Financial Statements 3




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AccumulatedOther
    
    TotalCommon
    
    Capital
    
    Retained
    
    Comprehensive
    
    StockholdersStock
    
    Surplus
    
    Earnings
    
    Income
    
    Equity(in thousands)Balance, December
31, 2000
    
    $
    304
    
    
    $
    2,515
    
    
    $
    3,535
    
    
    $
    (42
    )
    
    $
    6,312Net income for 2001
    
    
    
    
    
    
    
    
    
    
    744
    
    
    
    
    
    
    
    744Other comprehensive
income, net of tax:Net change in net
unrealized holding
gains on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109
    
    
    
    109Stock issuance
    
    
    1
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    12Cash dividends
    
    
    
    
    
    
    
    
    
    
    (43
    )
    
    
    
    
    
    
    (43
    )Balance, December
31, 2001
    
    
    305
    
    
    
    2,526
    
    
    
    4,236
    
    
    
    67
    
    
    
    7,134Net income for 2002
    
    
    
    
    
    
    
    
    
    
    877
    
    
    
    
    
    
    
    877Other comprehensive
income, net of tax:Net change in net
unrealized holding
gains on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    302
    
    
    
    302Stock issuance
    
    
    4
    
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    103Cash dividends
    
    
    
    
    
    
    
    
    
    
    (43
    )
    
    
    
    
    
    
    (43
    )Balance, December
31, 2002
    
    
    309
    
    
    
    2,625
    
    
    
    5,070
    
    
    
    369
    
    
    
    8,373Net income for 2003
    
    
    
    
    
    
    
    
    
    
    1,439
    
    
    
    
    
    
    
    1,439Other comprehensive
income, net of tax:Net change in net
unrealized holding
gains on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95
    )
    
    
    (95
    )Stock issuance
    
    
    15
    
    
    
    379
    
    
    
    
    
    
    
    
    
    
    
    394Cash dividends
    
    
    
    
    
    
    
    
    
    
    (42
    )
    
    
    
    
    
    
    (42
    )Balance, December
31, 2003
    
    $
    324
    
    
    $
    3,004
    
    
    $
    6,467
    
    
    $
    274
    
    
    $
    10,069
 See Accompanying Notes to Consolidated Financial Statements 4




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31,2003
    
    2002
    
    2001(in thousands)Cash Flows from Operating ActivitiesNet income
    
    $
    1,439
    
    
    $
    877
    
    
    $
    744Adjustments to reconcile net income to cash
provided by operating activitiesProvision for loan loss
    
    
    150
    
    
    
    120
    
    
    
    120Depreciation and amortization
    
    
    199
    
    
    
    218
    
    
    
    258Net amortization (accretion) of investments
security premiums and discounts
    
    
    223
    
    
    
    108
    
    
    
    28Deferred income tax
    
    
    (57
    )
    
    
    2
    
    
    
    (25
    )Loss on disposal of facilities
    
    
    
    
    
    
    
    
    
    
    181(Increase) decrease in current assetsAccrued interest receivable
    
    
    (18
    )
    
    
    92
    
    
    
    (28
    )Other assets
    
    
    (26
    )
    
    
    164
    
    
    
    (182
    )Increase (decrease) in current liabilitiesAccounts payable and accrued liabilities
    
    
    97
    
    
    
    (305
    )
    
    
    9Net cash provided by operating activities
    
    
    2,007
    
    
    
    1,457
    
    
    
    924Cash Flows from Investing ActivitiesSecurities available-for-sale:Purchase of securities
    
    
    (18,138
    )
    
    
    (17,388
    )
    
    
    (15,999
    )Proceeds from maturities of securities
    
    
    925
    
    
    
    10,581
    
    
    
    339Proceeds from sale of securities
    
    
    12,277
    
    
    
    6,384
    
    
    
    2,505Held-to-maturity securities:Proceeds from maturities of securities
    
    
    321
    
    
    
    377
    
    
    
    142Decrease (increase) in Federal funds sold
    
    
    4,157
    
    
    
    (512
    )
    
    
    5,163Net increase in loans
    
    
    (10,943
    )
    
    
    (7,724
    )
    
    
    (1,171
    )Purchase of facilities
    
    
    (382
    )
    
    
    (74
    )
    
    
    (105
    )Proceeds from sale of other real estate
    
    
    
    
    
    
    1,079
    
    
    
    Net cash used in investing activities
    
    
    (11,783
    )
    
    
    (7,277
    )
    
    
    (9,126
    )Cash Flows from Financing ActivitiesNet increase in deposits
    
    
    5,086
    
    
    
    8,585
    
    
    
    9,244Net decrease in securities sold under
agreements to repurchase
    
    
    (102
    )
    
    
    (86
    )
    
    
    (290
    )Increase from Federal funds purchased
    
    
    1,500
    
    
    
    
    
    
    
    Principal payments on long-term debt
    
    
    (355
    )
    
    
    (73
    )
    
    
    (68
    )Proceeds from issuance of common stock
    
    
    394
    
    
    
    103
    
    
    
    12Cash dividends paid
    
    
    (42
    )
    
    
    (43
    )
    
    
    (43
    )Net cash provided by financing activities
    
    
    6,481
    
    
    
    8,486
    
    
    
    8,855Net Increase (Decrease) in Cash
    
    
    (3,295
    )
    
    
    2,666
    
    
    
    653Cash, Beginning of Year
    
    
    9,083
    
    
    
    6,417
    
    
    
    5,764Cash, End of Year
    
    $
    5,788
    
    
    $
    9,083
    
    
    $
    6,417Supplemental Disclosures of Cash Flow InformationCash paid during the year for interest
    
    $
    1,512
    
    
    $
    2,497
    
    
    $
    3,111Cash paid during the year for income taxes
    
    $
    244
    
    
    $
    354
    
    
    $
    381Non-cash TransactionsTransfers from loans to other real estate
    
    $
    303
    
    
    $
    
    
    
    $
    1,079
 See Accompanying Notes to Consolidated Financial Statements 5




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note
A - Summary of Significant Accounting and Reporting Policies General:  The consolidated financial statements include the accounts and transactions of
Valrico Bancorp, Inc. (the Company) and its wholly-owned subsidiary, Valrico
State Bank (the Bank). All significant intercompany accounts and
transactions have been eliminated in consolidation.  The Bank provides a wide range of banking services to individual and corporate
customers primarily in Hillsborough County, Florida. The Company and the Bank are subject to regulations issued by certain
regulatory agencies and undergo periodic examinations by those agencies. Basis of Financial Statement Presentation: The accounting and reporting policies of the Company conform with
accounting principles generally accepted in the United States of America, and
with general practices within the banking industry. In preparing the
consolidated financial statements, management is required to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ significantly from those
estimates.  Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for loan losses and the valuation
of foreclosed assets (other real estate). Additionally, management has made
estimates in determining fair values of financial instruments.Management believes that the allowance for losses on loans is adequate. While
management uses available information to recognize losses on loans, including
independent appraisals for significant properties, future additions to the
allowance may be necessary based on changes in economic conditions. In
addition, various regulatory agencies, as an integral part of their
examination process, periodically review the allowance for losses on loans.
Such agencies may require the Company to recognize additions to the allowance
based on their judgments about information available to them at the time of
their examination. Investments:  Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for
Certain Investments in Debt and Equity Securities, sets the standard for
classification of and accounting for investments in equity securities that
have readily determinable fair values, and all investments in debt securities
which are to be classified as held-to-maturity securities, available-for-sale
securities, or trading securities.Debt securities that an enterprise has the positive intent and ability to
hold-to-maturity are classified as held-to-maturity securities and reported at
amortized cost. Debt and equity securities that are bought and held
principally for the purpose of selling them in the near term are classified as
trading securities and reported at fair value, with unrealized gains and
losses included in net income. Debt and equity securities not classified as
either held-to-maturity securities or trading securities are classified as
available-for-sale securities and reported at fair value, with unrealized
gains and losses included as accumulated other comprehensive income in a
separate component of stockholders equity.The Bank classifies its investments at the purchase date in accordance with
the above-described guidelines. Premiums or discounts on securities at the
date of purchase are being amortized or accreted, respectively, over the
estimated life of the security using a method which approximates the level
yield method. Gains and losses realized on the disposition of securities are
based on the specific identification method and are reflected in other income.




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003   Note
A - Summary of Significant Accounting and Reporting Policies (Continued) Loans:  Loans receivable are stated at the unpaid principal balance, less the
allowance for loan losses and net deferred loan origination fees and costs.Interest on loans is accounted for on the accrual basis. Generally, the
Companys policy is to discontinue the accrual of interest on loans delinquent
over ninety days unless fully secured and in the process of collection. The
accrued and unpaid interest is reversed from current income and thereafter
interest is recognized only to the extent payments are received. A
non-accrual loan may be restored to accrual basis when interest and principal
payments are current and prospects for future recovery are no longer in doubt.SFAS 114, Accounting by Creditors for Impairment of a Loan,sets the standard
for recognition of loan impairment and the measurement methods for certain
impaired loans and loans whose terms are modified in troubled debt
restructurings.Under SFAS 114, a loan is impaired when it is probable that a creditor will be
unable to collect the full amount of principal and interest due according to
the contractual terms of the loan agreement. When a loan is impaired, a
creditor has a choice of ways to measure the impairment. The measurement of
impairment may be based on (1) the present value of the expected future cash
flows of the impaired loan discounted at the loans original effective
interest rate, (2) the observable market price of the impaired loan, or (3)
the fair value of the collateral of a collateral-dependent loan. Creditors
may select the measurement method on a loan-by-loan basis, except that
collateral-dependent loans for which foreclosure is probable must be measured
at the fair value of the collateral. A creditor in a troubled debt
restructuring involving a restructured loan should measure impairment by
discounting the total expected future cash flows at the loans original
effective rate of interest. Facilities:  Facilities are stated at cost, less accumulated depreciation and amortization.
Charges to income for depreciation and amortization are computed on the
straight-line method over the assets estimated useful lives.When properties are sold or otherwise disposed of, the gain or loss resulting
from the disposition is credited or charged to income. Expenditures for
maintenance and repairs are charged against income and renewals and
betterments are capitalized. Other Real Estate:  Other real estate acquired through, or in lieu of, loan foreclosure are to be
sold and are initially recorded at fair value at the date of foreclosure
establishing a new cost basis. After foreclosure, valuations are periodically
performed by management and the real estate is carried at the lower of
carrying amount or fair value less cost to sell. Revenue and expenses from
operations and changes in the valuation allowance are included in other
expenses. Allowance for Loan Losses: The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged-off against the allowance when
management believes that the collectibility of principal is unlikely.
Recoveries of amounts previously charged-off are credited to the allowance.
The allowance for loan losses is based on managements evaluation of various
factors including prevailing and anticipated economic conditions,
diversification and size of the loan portfolio, current financial status and
credit standing of the borrower, the status and level of non-performing assets,
past and expected loan loss experience, adequacy of collateral, specific
impaired loans and economic conditions. Allowances for impaired loans are
generally determined based on collateral values or the present value of
estimated cash flows. Off Balance Sheet Financial Instruments:  In the ordinary course of business, the Bank has entered into off
balance sheet financial instruments consisting of commitments to extend
credit and standby letters of credit. Such financial instruments are
recorded in the financial statements when they become payable. Stock Options:  Outstanding stock options may be valued using either the intrinsic value
method based on APB Opinion No. 25, Accounting for Stock Issued to Employees,
or the fair value method based on SFAS No. 123, Accounting for Stock-Based
Compensation, as amended. The Bank has elected to value its outstanding stock
options using the intrinsic value method. Management believes that this
method is predominately used in the banking industry.




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003   Note
A - Summary of Significant Accounting and Reporting Policies (Continued) Income Taxes:  The Bank accounts for income taxes under the asset and liability method as
prescribed in SFAS No. 109, Accounting for Income Taxes. Deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax basis and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the year in
which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. Advertising:  Advertising costs are charged to expense as incurred. Comprehensive Income:  The Company accounts for comprehensive income in accordance with SFAS 130,
Reporting Comprehensive Income. SFAS 130 establishes standards for reporting
and display of comprehensive income and its components in a full set of
general purpose financial statements. It requires an enterprise to classify
items of other comprehensive income by their nature and to display the
accumulated balance of other comprehensive income separately in the equity
section of the Balance Sheet. Earnings Per Share: Basic EPS is computed by dividing net income by the weighted average
shares of common stock outstanding during the year. Diluted EPS is computed by
dividing net income by the weighted average shares of common stock and common
stock equivalents outstanding during the year. Statement of Cash Flows:  For purposes of reporting cash flows, cash includes cash on hand and amounts
on deposit in non-interest bearing accounts with other commercial banks. Reclassification of Accounts: Certain items in the consolidated financial statements for prior years
have been reclassified to conform to classifications used in the current year. Note
B - Investment Securities  The amortized cost and estimated fair value of investment securities at December 31,2003, Gross
    
    Gross
    
    EstimateAmortize
    
    Unrealize
    
    Unrealize
    
    FairCost
    
    Gains
    
    Losses
    
    Value(in thousands)Securities available -for-U.S. Government
    
    $
    500
    
    
    $
    35
    
    
    $
    
    
    
    $
    535State and
    
    
    3,688
    
    
    
    190
    
    
    
    (2
    )
    
    
    3,876Mortgage-backed
    
    
    18,453
    
    
    
    112
    
    
    
    (63
    )
    
    
    18,502Other
    
    
    2,636
    
    
    
    164
    
    
    
    (5
    )
    
    
    2,795Total
    
    $
    25,277
    
    
    $
    501
    
    
    $
    (70
    )
    
    $
    25,708




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note
B - Investment Securities (Continued) Gross
    
    Gross
    
    EstimatedAmortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    Value(in thousands)Securities to be held-to-maturity:Mortgage-backed securities
    
    $
    121
    
    
    $
    2
    
    
    $
    
    
    
    $
    123State and municipal
    
    
    766
    
    
    
    62
    
    
    
    
    
    
    
    828Total
    
    $
    887
    
    
    $
    64
    
    
    $
    
    
    
    $
    951
 The amortized cost and estimated fair value of the investment securities at
December 31, 2002 are as follows: Gross
    
    Gross
    
    EstimatedAmortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    Value(in thousands)Securities available-for-sale:U.S. Government agencies
    
    $
    1,503
    
    
    $
    131
    
    
    $
    
    
    
    $
    1,634State and municipal
    
    
    3,027
    
    
    
    117
    
    
    
    
    
    
    
    3,144Mortgage-backed securities
    
    
    12,354
    
    
    
    149
    
    
    
    
    
    
    
    12,503Other
    
    
    3,681
    
    
    
    210
    
    
    
    (39
    )
    
    
    3,852$
    20,565
    
    
    $
    607
    
    
    $
    (39
    )
    
    $
    21,133Securities to be held-to-maturity:Mortgage-backed securities
    
    $
    193
    
    
    $
    6
    
    
    $
    
    
    
    $
    199State and municipal
    
    
    1,015
    
    
    
    61
    
    
    
    
    
    
    
    1,076$
    1,208
    
    
    $
    67
    
    
    $
    
    
    
    $
    1,275
 The fair value of securities fluctuates during the investment period. No
provision for loss has been made in connection with the decline of fair value
below book value, because the securities are purchased for investment purposes
and the decline is not deemed to be other than temporary. The estimated fair
value of securities is determined on the basis of market quotations.
Securities with amortized cost of approximately $571,700 and $619,000, and
market values of approximately $608,600 and $672,000 were pledged to secure
repurchase agreements and deposit accounts at December 31, 2003 and 2002,
respectively. The cost and estimated fair value of debt securities at December 31, 2003, by
contractual maturities, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note
B - Investment Securities (Continued) Securities
    
    SecuritiesAvailable-for-Sale
    
    Held-to-MaturityAmortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    Value(in thousands)Due in one year or less
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Due from one to five years
    
    
    2,503
    
    
    
    2,625
    
    
    
    521
    
    
    
    551Due from five to ten years
    
    
    11,893
    
    
    
    12,160
    
    
    
    
    
    
    
    Due after ten years
    
    
    10,881
    
    
    
    10,923
    
    
    
    366
    
    
    
    400$
    25,277
    
    
    $
    25,708
    
    
    $
    887
    
    
    $
    951
 Note
C - Loans The loan portfolio is classified as follows: December 31,2003
    
    2002(in thousands)Commercial and agricultural
    
    $
    73,617
    
    
    $
    63,682Real estate
    
    
    5,934
    
    
    
    8,107Installment and other loans
    
    
    6,709
    
    
    
    3,766Total loans
    
    
    86,260
    
    
    
    75,555Less, unearned income
    
    
    (162
    )
    
    
    (138
    )Less, allowance for loan losses
    
    
    (1,206
    )
    
    
    (1,015
    )$
    84,892
    
    
    $
    74,402
 Year Ended December 31,2003
    
    2002
    
    2001(in thousands)Balance, beginning of year
    
    $
    1,015
    
    
    $
    978
    
    
    $
    943Provision charged to operating expenses
    
    
    150
    
    
    
    120
    
    
    
    120Loans charged-off
    
    
    (16
    )
    
    
    (106
    )
    
    
    (116
    )Recoveries
    
    
    57
    
    
    
    23
    
    
    
    31$
    1,206
    
    
    $
    1,015
    
    
    $
    978




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note C  Loans (Continued) Loans on which interest was not being accrued totaled $0 at December 31, 2003,
and $535,000 at December 31, 2002. Had interest been accrued on these
non-accrual loans at originally contracted rates, interest income (before
income taxes) would have been increased by approximately $0 and $32,103 for
December 31, 2003 and 2002, respectively. A loan is considered impaired when it is probable that the Bank will be unable
to collect all amounts due according to the contractual terms of the agreement.
At December 31, 2003 and 2002, the Bank had classified loans in the amounts of
$0 and $472,000 as impaired loans, respectively. The allowance for loan losses
includes amounts applicable to impaired loans. These allowances are not
significant to the Banks financial statements. Note
D - Facilities Accumulated
    
    
    
    
    
    EstimatedDepreciation &
    
    Net Book
    
    UsefulCost
    
    Amortization
    
    Value
    
    Lives(in thousands)December 31, 2003Land
    
    $
    1,087
    
    
    $
    
    
    
    $
    1,087
    
    
    
    N/ABuilding
    
    
    2,130
    
    
    
    369
    
    
    
    1,761
    
    
    39 yearsLeasehold improvements
    
    
    406
    
    
    
    356
    
    
    
    50
    
    
    3-15 yearsFurniture, fixtures and equipment
    
    
    2,045
    
    
    
    1,854
    
    
    
    191
    
    
    2-15 years$
    5,668
    
    
    $
    2,579
    
    
    $
    3,089
 Accumulated
    
    
    
    
    
    EstimatedDepreciation &
    
    Net Book
    
    UsefulCost
    
    Amortization
    
    Value
    
    Lives(in thousands)December 31, 2002Land
    
    $
    1,087
    
    
    $
    
    
    
    $
    1,087
    
    
    
    N/ABuilding
    
    
    1,831
    
    
    
    300
    
    
    
    1,531
    
    
    39 yearsLeasehold improvements
    
    
    402
    
    
    
    329
    
    
    
    73
    
    
    3-15 yearsFurniture, fixtures and equipment
    
    
    1,966
    
    
    
    1,751
    
    
    
    215
    
    
    2-15 years$
    5,286
    
    
    $
    2,380
    
    
    $
    2,906
 Other expenses for the years ended December 31, 2003, 2002, and 2001, included
depreciation and amortization of facilities of $199,000, $218,000, and
$258,000, respectively.




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note E  Time Deposits At December 31, 2003, scheduled maturities (in thousands) of time deposits are
as follows: 2004
    
    $
    23,3202005
    
    
    4,1352006
    
    
    1,2582007
    
    
    2,8482008 and thereafter
    
    
    3,755$
    35,316
 Note
F - Advances Under Line-of-Credit The Company entered into an open end loan agreement with Independent Bankers
Bank of Florida which provides for maximum borrowings of $1,000,000 at the
prime interest rate, less one percent. The security for the loan agreement
consists of the Banks common stock and a security interest in other Company
assets. At December 31, 2003, the outstanding balance was $695,000. Interest expense
was $27,000, $36,000 and $72,000 for the years ended December 31, 2003, 2002
and 2001, respectively. Note
G - Notes Payable Long-term debt consists of the following: December 31,2003
    
    2002(in thousands)Note payable to Independent Bankers Bank of Florida, principal and
interest of $13,000 payable monthly at 8.5% for the first year and
adjustable each year based on the U.S. Treasury Note three-year
index; due on January 14, 2012. Secured by real estate.
    
    $
    887
    
    
    $
    967Note payable to the Federal Home Loan Bank of Atlanta, interest payable
quarterly at 5.51%, principal due March 26, 2008. Collateralized by
mortgage loans and Federal Home Loan Bank stock.
    
    
    2,000
    
    
    
    2,0002,887
    
    
    
    2,967Less current portion
    
    
    (86
    )
    
    
    (75
    )$
    2,801
    
    
    $
    2,892




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note
G - Notes Payable (Continued) Estimated maturities (in thousands) on long-term debt are as follows: 2005
    
    $
    932006
    
    
    1012007
    
    
    1102008
    
    
    119Thereafter
    
    
    2,378$
    2,801
 Interest expense was $188,000, $195,000 and $199,000 for the years ended
December 31, 2003, 2002 and 2001, respectively. Note
H - Stock Option Plan The Company adopted the 1998 Stock Option Plan on December 15, 1998. Under the
plan, 65,000 shares of the Companys common stock have been reserved to grant
to officers, directors and other key personnel of the Bank. Option prices per
share are set by a committee of the Board of Directors at the time of the
grant, but the price cannot be less than the fair market value of the stock at
the date of the grant. The options are generally non-transferable and expire
following termination of employment with the Bank, except in the event of death
or disability. At December 31, 1998
options for 59,910 shares had been granted with an
exercise price of $16 per share. On December 14, 2002, options for 4,703
shares were granted with an exercise price of $26 per share. All outstanding
options expire ten years after their grant date. In 2003, Mr. English exercised his 4,703 shares, no other options have been
exercised. At December 31, 2003, options on 387 shares remain available for
grant. The Company accounts for these options using the intrinsic value method based
on APB Opinion No 25. Under APB 25, no compensation expense is recognized in
the accompanying financial statements because the exercise price of the stock
options equals the market price of the underlying stock on the date of grant.
If the Company had accounted for these options using the fair value method
based on SFAS 123, the effect on these financial statements would not have been
significant.. Note
I - Employee Benefit Plans The Bank has an Employee Stock Ownership Plan containing Internal Revenue Code
Section 401(k) provisions. The Plan became effective January 1, 1997, and is
for the benefit of employees who have completed six months of service and
attained age 18. The Plan provides for three types of Company contributions:  (1)
    
    Basic contributions - discretionary contribution made for all
non-highly compensated participants in order to satisfy the
non-discrimination requirements of the Internal Revenue Code.(2)
    
    Matching contributions - the Bank matches 25% of salary reduction
contributions up to 6% of compensation.(3)
    
    Optional contributions - additional discretionary contribution made by
the Bank allocated to the accounts of participants on the basis of total
relative compensation. Bank contributions to the Plan were $17,824 in 2003, $16,807 in 2002, and
$15,284 in 2001.




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note
J - Earnings per Share The following reconciliation details the numerators and denominators used to
calculate basic and diluted earnings per share for the respective years ended: Year Ended December 31,2003
    
    2002
    
    2001Net income (in thousands)
    
    $
    1,439
    
    
    $
    877
    
    
    $
    744Average shares outstanding:Basic
    
    
    316,243
    
    
    
    306,780
    
    
    
    304,531Add: common stock equivalents
    
    
    64,613
    
    
    
    60,129
    
    
    
    59,910Diluted
    
    
    380,856
    
    
    
    366,909
    
    
    
    364,441Earnings per shareBasic
    
    $
    4.55
    
    
    $
    2.86
    
    
    $
    2.44Diluted
    
    $
    3.78
    
    
    $
    2.39
    
    
    $
    2.04
 Note
K - Regulatory Capital Matters The Federal Reserve Board and other bank regulatory agencies have adopted
risk-based capital guidelines for banks and bank holding companies. The main
objectives of the risk-based capital framework are to provide a more consistent
system for comparing capital positions of banking organizations and to take
into account the different risks among banking organizations assets,
liabilities and off-balance sheet items. Bank regulatory agencies have
supplemented the risk-based capital standard with a leverage ratio for Tier I
capital to total reported assets. Failure to meet the capital adequacy guidelines and the framework for prompt
corrective actions could initiate actions by the regulatory agencies which
could have a material effect on the financial statements. As of December 31, 2003, the most recent notification from the FDIC, the Bank
was categorized as well-capitalized under the regulatory framework for prompt
corrective action. To remain categorized as well-capitalized, it will have to
maintain minimum total risk-based, Tier I risk-based, and Tier I leverage
ratios as disclosed in the table below. There are no conditions or events
since the most recent notification that management believes have changed the
prompt corrective action category.




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note K - Regulatory Capital Matters (Continued) To Be Well-CapitalizedUnder PromptFor Capital
    
    CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsAmount
    
    Ratio
    

3Amount
    
    3Ratio
    
    3Amount
    
    3Ratio(dollars in thousands)As of December 31, 2003:Total risk-based capital
(To risk-weighted assets)
    
    $
    10,982
    
    
    
    11.38
    %
    
    $
    7,724
    
    
    
    8.00
    %
    
    $
    9,654
    
    
    
    10.00
    %Tier I capital
(To risk-weighted assets)
    
    $
    9,776
    
    
    
    10.13
    %
    
    $
    3,862
    
    
    
    4.00
    %
    
    $
    5,793
    
    
    
    6.00
    %Tier I capital
(To adjusted total assets)
    
    $
    9,776
    
    
    
    7.91
    %
    
    $
    4,941
    
    
    
    4.00
    %
    
    $
    6,176
    
    
    
    5.00
    %As of December 31, 2002:Total risk-based capital
(To risk-weighted assets)
    
    $
    9,312
    
    
    
    10.78
    %
    
    $
    6,916
    
    
    
    8.00
    %
    
    $
    8,645
    
    
    
    10.00
    %Tier I capital
(To risk-weighted assets)
    
    $
    8,297
    
    
    
    9.60
    %
    
    $
    3,458
    
    
    
    4.00
    %
    
    $
    5,187
    
    
    
    6.00
    %Tier I capital
(To adjusted total assets)
    
    $
    8,297
    
    
    
    7.29
    %
    
    $
    4,552
    
    
    
    4.00
    %
    
    $
    5,690
    
    
    
    5.00
    %
 On June 19, 2001, the Bank and the FDIC entered into a Memorandum of
Understanding under which the Bank would institute a corrective action program
to eliminate compliance problems at the Bank. Management believes that the
Bank is in substantial compliance with the Memorandum. Note L - Operating Leases The Bank leases one of its branch locations from a director of the Bank. This
lease expires March 31,2006, and provides for annual rents of $42,000. Note M - Deferred Compensation Agreements The Bank entered into deferred compensation agreements with certain executive
officers. The agreements provide for a flat annual retirement benefit at the
time the employee participates in the agreement. The benefit may be increased
by a cost of living adjustment annually and is to be paid for 15 years.
Provisions under these agreements for 2003, 2002, and 2001 were $48,092,
$50,568, and $36,318, respectively.




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note N - Other Expenses Miscellaneous expenses were as follows: Year Ended December 31,2003
    
    2002
    
    2001(in thousands)Advertising and public relations
    
    $
    78
    
    
    $
    91
    
    
    $
    73Professional fees
    
    
    124
    
    
    
    124
    
    
    
    74Postage
    
    
    84
    
    
    
    83
    
    
    
    90Taxes
    
    
    19
    
    
    
    28
    
    
    
    49Insurance
    
    
    121
    
    
    
    97
    
    
    
    65Other
    
    
    509
    
    
    
    713
    
    
    
    507$
    935
    
    
    $
    1,136
    
    
    $
    858
 Note O - Income Taxes The provision for income taxes is summarized as follows: Year Ended December 31,2003
    
    2002
    
    2001(in thousands)Current income taxes:Federal
    
    $
    620
    
    
    $
    320
    
    
    $
    338State
    
    
    127
    
    
    
    65
    
    
    
    58Total current income taxes
    
    
    747
    
    
    
    385
    
    
    
    396Deferred income taxes (credit)
    
    
    (57
    )
    
    
    2
    
    
    
    (25
    )Income tax provision
    
    $
    690
    
    
    $
    387
    
    
    $
    371
 The following is a reconciliation of the income tax computed at the Federal
statutory rate of 34% and the income tax provision (benefit) shown on the
statement of income: Year Ended December 31,2003
    
    2002
    
    2001(in thousands)Tax computed at Federal statutory rate
    
    $
    724
    
    
    $
    430
    
    
    $
    379Increase (decrease) resulting from:Tax exempt income
    
    
    (57
    )
    
    
    (60
    )
    
    
    (18
    )State income tax, net of Federal tax benefit
    
    
    75
    
    
    
    45
    
    
    
    38Other
    
    
    (52
    )
    
    
    (28
    )
    
    
    (28
    )Income tax provision
    
    $
    690
    
    
    $
    387
    
    
    $
    371




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note O - Income Taxes (Continued) The components of the deferred income tax asset included in other assets are as
follows: December 31,2003
    
    2002(in thousands)Deferred tax liabilityFederal
    
    $
    (149
    )
    
    $
    (183
    )State
    
    
    (17
    )
    
    
    (31
    )(166
    )
    
    
    (214
    )Deferred tax assetFederal
    
    
    455
    
    
    
    382State
    
    
    51
    
    
    
    65506
    
    
    
    447Net deferred tax asset
    
    $
    340
    
    
    $
    233
 The tax effects of each type of significant item that gave rise to deferred
taxes are: December 31,2003
    
    2002(in thousands)Accumulated other comprehensive income
    
    $
    (149
    )
    
    $
    (198
    )Accretion income
    
    
    (17
    )
    
    
    (18
    )Depreciation
    
    
    28
    
    
    
    46Allowance for loan losses
    
    
    393
    
    
    
    336Deferred compensation
    
    
    85
    
    
    
    67$
    340
    
    
    $
    233
 Note P - Commitments and Contingencies The financial statements do not reflect various commitments and contingent
liabilities which arise in the normal course of business and which involve
elements of credit risk, interest rate risk and liquidity risk. These
commitments and contingent liabilities are commitments to extend credit and
standby letters-of-credit. A summary of these commitments and contingent
liabilities follows: December 31,2003
    
    2002(in thousands)Commitments to extend credit
    
    $
    16,359
    
    
    $
    12,865Standby letters-of-credit
    
    $
    1,232
    
    
    $
    426
 The Bank uses the same credit policies in making commitments to extend credit
and in issuing standby letters-of-credit as it does for extensions of credit
shown on the balance sheets.




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note P - Commitments and Contingencies (Continued) The Bank is party to litigation, outstanding commitments and other contingent
liabilities arising in the normal course of business. In the opinion of
management, the resolution of such matters will not have a material effect on
the financial statements. The Bank has a $7,000,000 unused line-of-credit with Federal Home Loan Bank,
and a $1,500,000 line-of-credit with Independent Bankers Bank of Florida for
the purchase of Federal funds. Note Q - Concentrations of Credit Substantially all of the Banks loans, commitments and standby
letters-of-credit have been granted to customers in Hillsborough County,
Florida. The concentrations of credit by type of loan are set forth in Note C.
The distribution of commitments to extend credit approximates the distribution
of loans outstanding. Standby letters-of-credit were granted primarily to
commercial borrowers. At December 31, 2003, the Bank had approximately $1,218,000 in excess of FDIC
deposit insurance in non-interest bearing accounts with other financial
institutions. Note R - Related Parties Certain officers, directors, employees of the Bank, and certain corporations
and individuals related to such persons have deposits and indebtedness, in the
form of loans, as customers. The total of such deposits at December 31, 2003,
was $2,975,000 . Total loans to such persons and their affiliates amounted to
$4,097,113 and $4,957,970 at December 31, 2003 and 2002, respectively. During
2003, originations of related party loans totaled $12,756,716 and payments on
related party loans totaled $13,617,573. Note S - Disclosures about Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:  Cash and Short-term Investments: For those short-term instruments, the carrying amount is a reasonable
estimate of fair value.  Investment Securities: For securities held as investments, fair value equals quoted market price,
if available. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities.  Loans Receivable: For loans subject to repricing and loans intended for sale within six
months, fair value is estimated at the carrying amount plus accrued
interest. The fair value of other types of loans is estimated by discounting the
future cash flows using the current rates at which similar loans would be
made to borrowers with similar credit ratings and for the same remaining
maturities.  Deposit Liabilities: The fair value of demand deposits, savings accounts, and certain money
market deposits is the amount payable on demand at the reporting date. The
fair value of long-term fixed maturity certificates of deposit is estimated
using the rates currently offered for deposits of similar remaining
maturities.




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note S - Disclosures about Fair Value of Financial Instruments (Continued)  Short-term Debt: For short-term debt, including accounts and demand notes payable, the
carrying amount is a reasonable estimate of fair value.  Long-term Debt: The fair value of long-term debt is estimated by discounting the future cash
flows using the current rates for similar debt. The estimated fair values of the Banks financial instruments at December 31,
2003, are as follows: Carrying
    
    FairAmount
    
    Value(in thousands)Financial AssetsCash and short-term investments
    
    $
    5,788
    
    
    $
    5,788Investment securities
    
    
    26,595
    
    
    
    26,659Loans
    
    
    84,892
    
    
    
    89,090Financial LiabilitiesDeposits
    
    $
    106,840
    
    
    $
    107,379Accounts payable and accrued liabilities
    
    
    771
    
    
    
    771Advances under line-of-credit
    
    
    695
    
    
    
    695Short-term borrowing
    
    
    1,620
    
    
    
    1,620Long-term debt
    
    
    2,887
    
    
    
    3,077
 Note T - Parent Company Financial Information Presented below are condensed financial statements for Valrico Bancorp, Inc.
(parent only): Condensed Balance Sheets as of December 31: 2003
    
    2002(in thousands)AssetsCash
    
    $
    89
    
    
    $
    53Investment in subsidiary bank, net
    
    
    10,052
    
    
    
    8,668Facilities, net
    
    
    1,526
    
    
    
    1,530Other assets
    
    
    94
    
    
    
    66Total assets
    
    $
    11,761
    
    
    $
    10,317




---



##### Table of Contents



VALRICO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 Note T - Parent Company Financial Information (Continued) 2003
    
    2002Liabilities and Stockholders Equity
Liabilities:Accrued liabilities
    
    $
    112
    
    
    $
    7Line-of-credit
    
    
    695
    
    
    
    970Note payable
    
    
    887
    
    
    
    967Total liabilities
    
    
    1,694
    
    
    
    1,944Stockholders equity
    
    
    10,067
    
    
    
    8,373Total liabilities and stockholders equity
    
    $
    11,761
    
    
    $
    10,317
  Condensed Statements of Operations and Stockholders Equity
Year Ended December 31: 2003
    
    2002(in thousands)Equity in net income of subsidiary bank:Undistributed
    
    $
    1,479
    
    
    $
    874Distributed
    
    
    
    
    
    
    Rent income
    
    
    204
    
    
    
    204Interest expense
    
    
    (101
    )
    
    
    (118
    )Other expense
    
    
    (143
    )
    
    
    (83
    )Net income
    
    
    1,439
    
    
    
    877Stockholders EquityBeginning of year
    
    
    8,373
    
    
    
    7,134Dividends paid
    
    
    (42
    )
    
    
    (43
    )Stock issuance
    
    
    394
    
    
    
    103Net change in unrealized holding losses
of securities in subsidiary bank
    
    
    (95
    )
    
    
    302End of year
    
    $
    10,069
    
    
    $
    8,373




---



##### Table of Contents



ITEM 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None. 
 Item 8A. - Controls and Procedures Within the 90-day period prior to the filing of this report, an evaluation was
carried out under the supervision and with the participation of Valrico
Bancorp, Inc.s management, including the Companys Chief Executive Officer and
Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-14(c)/15d-14(d) under the Securities
Exchange Act of 1934). Based on their evaluation, the Companys Chief
Executive Officer and Chief Financial Officer have concluded that the Companys
disclosure controls and procedures are, to the best of their knowledge,
effective to ensure that information required to be disclosed by Valrico
Bancorp, Inc. in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms. Subsequent to the date
of their evaluation, there were no significant changes in Valrico Bancorp,
Inc.s internal controls or in other factors that could significantly affect
these controls, including any corrective actions with regard to significant
deficiencies and material weaknesses. 
 ITEM 9. Directors And Principal Officers Of The Company Directors of the Company The Companys Board of Directors is presently composed of ten (9) members,
each of whom stands for election each year at the annual meeting. The Bylaws
of the Company provide that the Board of Directors shall consist of not less
than five (5) members, with the number of directors to be fixed by the Board of
Directors of the Company. The Board has fixed the number of Directors at nine.
There are no arrangements or understandings between the Company and any
director pursuant to which any such person will be elected. The Board of
Directors, serving as a nominating committee of the whole, has nominated the
persons set forth below, all of whom are current Directors, to stand for
reelection. It is intended that the persons named in the proxies solicited by
the Board of Directors will vote for the election of the nominees. The following table sets forth for each of the nominees for election as
directors and executive officers, their name, age (as of March 31, 2004),
positions and offices held with the Company, principal occupation(s) during the
past five years and the year they first became a director or executive officer: Principal Officers of the Company and its Subsidiary Bank All principal officers of the Company are elected by the Board of Directors and
serve at the pleasure of the Board. There are no arrangements or understanding
between the Company and any principal officer pursuant to which any such person
was elected as a principal officer of the Company. J. E. Bob McLean, III, 67,is Chairman of the Bank and Company and was
elected President and CEO in May 1997 of the Company. Mr. McLean is the owner
and President of J. E. McLean & Sons, a family business he took over in 1967.
He is a citrus grower who also harvests and ships fruit. Prior to that, Mr.
McLean was a banker at Marine Bank of Tampa and was employed with Tampa
Electric for three and a half years. He is a third generation of Valrico,
attending Brandon High School and the University of Florida for a couple of
years. Mr. McLean served in the Army. He has served as Chairman of the Board
of the Bank since its inception in 1989 and has served as Chairman of the Board
for the Company since May 1995. Jerry L. Ball, 51,The President and CEO of the Bank is also the Executive
Vice President of the Company. In May 1997, Mr. Ball was promoted to his
current position. In 1995, Mr. Ball was promoted to Executive Vice President.
From 1989 to May 1995, Mr. Ball served in the position of Senior Vice President
and Cashier. From 1980 to April 1989, Mr. Ball was an Assistant Vice President
and Branch Manager for First Union National Bank of Florida. Mr. Ball attended
King College and received a B.A. degree in Business and Economics. He is a
graduate of the School of Banking at the University of Florida. Mr. Ball has
over 23 years of banking experience. Donald Weaver, 61,joined the Company and Bank in November 1995. He was hired
as Senior Vice President of Commercial Loans of the Bank. In May 1997, he was
promoted to Executive Vice President and Director of Commercial Loans and was
elected to the position of Secretary to the Company. He has over 35 years in
commercial banking, all within the Hillsborough County area. He attended
Hillsborough Community College and has attended a number of banking schools.
He has been a resident of the Brandon area for over 25 years. Set forth below are the names and ages of the other principal officers of the
Companys subsidiary bank, giving their principal occupation and business
experience of each such principal officer during the past six years. All of
such information has been furnished by each such person. Glenn J. Chasteen, 52,is currently serving as Senior Vice President-Consumer
Loans. He has been the Banks installment lender since June 1989. From
January 1987 to October 1988, Mr. Chasteen served as Senior Vice President of
San Antonio Citizens Federal Credit Union. From February 1980 to January 1987,
Mr. Chasteen served as Vice President-Consumer Lending with Sun Bank of Tampa
Bay (formerly known as Brandon State Bank).




---



##### Table of Contents



Carol Todd Johnson, 72,has served as Vice President and Business Development
Officer of the Bank since June 1991. Mrs. Johnson serves in this position on a
part-time basis and was promoted in 1995 to Vice President-Business
Development. From 1972 to May 1991, Mrs. Johnson was Vice President of
Business and Community Development Officer at the Brandon office of Barnett
Bank. Susan L. Radford, 46,is currently serving as a Vice President 
Cashier/Compliance Officer. She was promoted to this position in July 2000.
Ms. Radford has 24 years of banking experience, 15 years in bank operations. Glenda C. Peacock, 64,is currently serving as a Vice President  Loan
Officer/Branch Coordinator . She has been serving in this capacity since
August 1, 2000. Prior to this, she served as a branch manager of our Brandon
location since March 1994. Mrs. Peacock was hired by the Bank in August 1993
where she served as an AVP  Loan Officer. Directors and Executive Officers on Code of Ethics. In response to the requirements of the SEC regulations, the Companys Board of
Directors examined its corporate governance structure and made certain
revisions and improvements. The Board of Directors meet with outside counsel
to the Company and on March 2, 2004, adopted a revised charter for the Audit
Committee. The revised charter is designed to help the committee function more
efficiently and with greater independence from the Board of Directors, which
was one of the primary goals in the adoption of the Sarbanes-Oxley Act of 2002.
The members of the Audit Committees are currently and, under the terms of the
charter, will continue to be, independent pursuant to standards adopted by
NASDAQ. Further, the Board of Directors has determined that under the NASDAQ
independence standards, a majority of the members of the Board of Directors
is currently independent. The Board of Directors also adopted a Code of Business Conduct and Ethics (the
Code) on March 2, 2004. While Sarbanes-Oxley mandates the adoption of a code
of ethics for the most senior executive officers of all public companies, the
Code adopted by the Companys Board of Directors is broader in the activities
covered and applies to all officers, directors and employees of the Company and
the Bank. The administration of the Code has been delegated to the Audit
Committee of the Board of Directors, a committee comprised entirely of
independent directors. The Code addresses topics such as compliance with
laws and regulations, honest and ethical conduct, conflicts of interest,
confidentiality and protection of Company assets, fair dealing and accurate and
timely periodic reports, and also provides for enforcement mechanisms. 
 ITEM 10. Management Compensation And Transactions Summary of Cash and Certain Other Compensation The following table provides certain summary information concerning
compensation paid or accrued by the Company and/or it Subsidiaries, to or on
behalf of the Companys Chief Executive Officer for the fiscal year ended
December 31, 2003, and to each other executive officer whose salary and bonus
exceeded $100,000 in 2003. SUMMARY COMPENSATION TABLE Long TermAnnual Compensation
    
    CompensationSalary $Includes all
    
    
    
    
    
    Securities
    
    All OtherName and Position
    
    Year
    
    director fees
    
    Bonus $
    
    Underlying Options
    
    Compensation 2J.E. Bob McLean III 1
    
    
    2003
    
    
    
    21,150
    
    
    
    0
    
    
    
    0
    
    
    
    0Chairman, President
    
    
    2002
    
    
    
    10,350
    
    
    
    0
    
    
    
    0
    
    
    
    0and CEO of Company
    
    
    2001
    
    
    
    5,400
    
    
    
    0
    
    
    
    0
    
    
    
    0Jerry L. Ball
    
    
    2003
    
    
    
    122,938
    
    
    
    24,528
    
    
    
    0
    
    
    
    14,836President and CEO
    
    
    2002
    
    
    
    113,934
    
    
    
    11,484
    
    
    
    0
    
    
    
    14,719of Bank
    
    
    2001
    
    
    
    104,355
    
    
    
    10,440
    
    
    
    0
    
    
    
    12,161Donald M. Weaver
    
    
    2003
    
    
    
    98,251
    
    
    
    18,396
    
    
    
    0
    
    
    
    31,454Executive Vice
    
    
    2002
    
    
    
    92,813
    
    
    
    8,874
    
    
    
    0
    
    
    
    31,359President of Bank
    
    
    2001
    
    
    
    86,971
    
    
    
    7,830
    
    
    
    0
    
    
    
    25,397
 (1) Mr. McLean has served as President and CEO of the Company since 1997. He
receives no additional compensation for serving in that capacity other than
director fees comparable to all other directors.




---



##### Table of Contents



(2) The amounts shown in this column for the most recent fiscal year were
derived from the following figures: (1) contributions of the Company to its
401(k) Plan: Mr. Ball, $2,284 and Mr. Weaver, $1,719; and (2) accruals under
the Salary Plan Continuation Agreement: Mr. Ball, $12,552, and Mr. Weaver,
$29,735. The following table sets forth certain information with respect to stock
options exercised during 2003 and outstanding stock options held by the named
Executive Officers as of December 31, 2003: AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES Number of Unexercised
    
    Value of UnexercisedOptions
    
    In-The-Moneyat Fiscal
    
    OptionsShares
    
    
    
    
    
    Year-End
    
    at Fiscal Year-EndAcquired on
    
    Value
    
    Exercisable/
    
    Exercisable/Name
    
    Exercise
    
    Realized
    
    Unexercisable
    
    UnexercisableJ.E. Bob McLean III
    
    
    
    
    
    $
    -0-
    
    
    
    7,489/0
    
    
    
    104,846/0Jerry L. Ball
    
    
    
    
    
    $
    -0-
    
    
    
    7,500/0
    
    
    
    105,000/0Donald M. Weaver
    
    
    
    
    
    $
    -0-
    
    
    
    6,000/0
    
    
    
    84,000/0
 Directors Compensation Directors are paid $300.00 for each Company/Bank Board meeting and $150.00
for each Board Committee meeting attended. Stock Option Plan The Board of Directors of the Company adopted the Valrico Bancorp, Inc.
1998 Stock Option Plan (the Plan) effective December 15, 1998. A total of
65,000 shares of Common Stock of the Company have been reserved for issuance
upon the exercise of options granted under the Plan, which is administered by
the Board of Directors. All options are nonqualified stock options, meaning
stock options that do not qualify under Section 422 of the Internal Revenue
Code for the special tax treatment available for qualified, or incentive,
stock options. Options covering 59,910 shares were granted in 1998 under the
plan at an exercise price of $16.00 per share, the fair market value of the
Companys Common Stock on the date of the grant of the options. In 2002, 4,703
options were granted at $26.00 a share, which exceeds the fair value of said
shares at the time of option. Options granted to directors under the Plan in
1998, replaced earlier granted options, which were surrendered, all of which
had an exercise price of less than $16.00 per share. All options granted under
the Plan are immediately exercisable and may be exercised for a period of ten
(10) years from the date of grant. An option holder whose service terminates
generally has from 90 days to two years after termination within which he may
exercise options, depending on the reason for termination. An option holder
whose service is terminated for cause forfeits all unexercised options. In
2003, Mr. English exercised his options at $16.00 per share with 4,703 shares for $75,248.00. Officer Salary Continuation Plan The Officer Salary Continuation Plan was adopted on July 1, 1993. The
Plan currently covers officers of the bank with extended service, including
Jerry L. Ball. The Plan currently accrues $3,941.00 per month, paid for from
the earnings on life insurance policies held on the officers. The amounts of
the accruals have been actuarially determined. The vested award is paid upon
termination of employment or retirement over 15 years. Employee Benefit Plan The Company has a defined contribution plan called the Valrico Bancorp,
Inc. Employee Stock Ownership Plan with 401K provisions for employees of the
Company and its subsidiaries meeting certain length of employment requirements
including executive officers, which was adopted on January 1, 1997. The Plan
is an ESOP and 401K combination with the vested benefits varying by the amount
of contribution on the part of the employee. The Company matches the employee
contributions at $.25 per $1.00 of employee contributions with the employer
matching contributions restricted to investment in the stock of the Company.
The plan is administered in accordance with the Valrico Bancorp, Inc. Employee
Stock Ownership Trust. CERTAIN TRANSACTIONS There are no existing or proposed material transactions between the
Company and Bank and any of the Companys or Banks officers, directors, or the
immediate family or associates of any of the forgoing persons, except as
indicated below. Some of the directors of the Company and Bank, as well as the companies
with which such directors are associated, are customers of, and have had
banking transactions with the Bank in the ordinary course of the Banks
business, and the Bank expects to have such ordinary banking




---



##### Table of Contents



transactions with such persons in the future. In the opinion of management of
the Bank, all loans and commitments to lend included in such transactions were
made in compliance with applicable laws on substantially the same terms,
including interest rates and collateral, as those prevailing for comparable
transactions with other persons of similar creditworthiness and did not involve
more than a normal risk of collectability or present other unfavorable
features. The Bank expects to have in the future, banking transactions, in the
ordinary course of its business with directors, officers, principal
shareholders and their associates, on substantially the same terms, including
interest rates and collateral on loans, as those prevailing at the same time
for comparable transactions with others and which do not involve more than the
normal risk of collectability or present other unfavorable features. The Bank is party to a lease for its branch facility located at 102 West
Robertson Street, Brandon Florida 33511. The lease is dated April 1, 1994 and
is with Mr. Justo Noriega, Jr., who currently serves as a Director of the
Company and Bank. The lease term expired on March 31, 2006. The Bank has
exercised its option to renew the lease for another three years. The annual
rental amount agreed upon remained the same at $42,000. The Bank has the
option to renew the lease for two additional three-year terms at rental to be
negotiated at the time of such renewal. The Bank believes that the rent paid
on the property and other terms and conditions of such lease are comparable to
that for like kind properties of similar quality in the area. SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE Section 16(a) of the Securities
Exchange Act of 1934 requires that the Company's directors, executive
officers and persons who own more than 10 percent of a registered
class of the Company's equity securities file with the Securities and
Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than ten percent
shareholders are required by such regulations to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's
knowledge, based solely on a review of the copies of Section 16(a)
reports furnished to the Company and representations that one other
report was required to be filed, the Company believes that during
2002 all Section 16(a) filing requirements applicable to its
directors, executive officers and greater than 10% beneficial owners were complied with. 
 ITEM 11. Security Ownership Of Certain Beneficial Owners And Management Security Ownership of Certain Beneficial Owners The only class of voting securities of the Company is its Common Stock, 323,990
shares of which were outstanding as of December 31, 2003. To the best
knowledge of the Company, other than Messrs. Carlton, Henderson, Holmberg and
Amerson (whose shareholdings are listed in Security Ownership of Management
below), there are no other persons who own beneficially more than five percent
(5%) of the Companys Common Stock. Security Ownership of Management The information set forth below as to the beneficial ownership of shares of
Common Stock of the Company by each director of the Company, and by all
directors and principal officers of the Company as a group, as of December 31,
2003 has been furnished by the respective persons. Amount and Natureof BeneficialName of Beneficial Owner
    
    Ownership
    
    
    
    
    
    Percent of ClassLeVaughn Amerson
    
    
    33,703
    
    
    
    (1
    )
    
    
    10.40Jerry L. Ball
    
    
    8,000
    
    
    
    (8
    )
    
    
    2.47C. Dennis Carlton
    
    
    31,378
    
    
    
    (2
    )
    
    
    9.68David A. Gee
    
    
    4,803
    
    
    
    (1
    )
    
    
    1.48Gregory L. Henderson
    
    
    25,203
    
    
    
    (3
    )
    
    
    7.78Douglas A. Holmberg
    
    
    34,010
    
    
    
    (4
    )
    
    
    10.50Charles E. Jennings, Jr.
    
    
    12,469
    
    
    
    (5
    )
    
    
    3.85J. E. Bob McLean, III
    
    
    13,959
    
    
    
    (6
    )
    
    
    4.31J. Bill Noriega, Jr.
    
    
    12,229
    
    
    
    (7
    )
    
    
    3.77Donald M. Weaver
    
    
    6,300
    
    
    
    (9
    )
    
    
    1.94All directors and principal
officers as a group (10 persons)
    
    
    182,054
    
    
    
    
    
    
    
    56.19
  1.
    
    All of these shares are owned as joint tenant with this individuals
spouse. Includes 4703 shares subject to options which are presently
exercisable.2.
    
    Includes 26,525 shares which Mr. Carlton owns individually and 50
shares each owned in trust for Mr. Carltons three children ( a total of
150 shares) of which Mr. Carlton is sole trustee. Includes 4703 shares
subject to options which are presently exercisable.3.
    
    Includes 10,000 shares which Dr. Henderson owns individually, his wife, and 125 shares each owned by a trust set up
for Dr. Hendersons four (4) children (a total of 500 shares) of which Dr. Henderson is sole trustee and as to which Dr. Henderson disclaims
beneficial ownership. Includes 4703 shares subject to options which are
presently exercisable.4.
    
    Includes 29,207 shares which Mr. Holmberg owns individually. Also
includes 100 shares which are owned by Mr. Holmbergs wife, as to which
shares Mr. Holmberg disclaims beneficial ownership. Includes 4703 shares
subject to options which are presently exercisable.5.
    
    Includes 5,000 shares held in a Valrico State Bank Self-Directed Ira
for the sole benefit of Mr. Jennings; 2,466 shares of which Mr. Jennings
owns individually and 200 shares which Mr. Jennings owns as joint tenant
with his wife. Also, includes 100 shares which Mr. Jennings wife owns
as to which shares Mr. Jennings disclaims beneficial ownership. Includes
4703 shares subject to options which are presently exercisable.




---



##### Table of Contents



6.
    
    Includes 4,200 shares Mr. McLean owns as joint tenant with his wife
and daughter and 1,170 shares owned by Mr. McLean in trust for his
grandchildren for which Mr. McLean is sole trustee. Also includes 1,100 shares owned by Mr. McLeans daughter, son-in-law, and wife as to which
shares Mr. McLean disclaims beneficial ownership. Includes 7,489 shares
subject to options which are presently exercisable.7.
    
    Includes 7,226 shares which Mr. Noriega owns individually and 100 shares each owned joint with three of Mr. Noriegas children (a total of
300 shares). Includes 4703 shares subject to options which are presently
exercisable.8.
    
    Includes 450 shares which Mr. Ball owns jointly with his spouse.
Includes 7500 shares subject to options which are presently exercisable.9.
    
    Includes 100 shares which Mr. Weaver owns individually and 200 shares
owned in joint with Mr. Weavers spouse. Includes 6000 shares subject to
options which are presently exercisable. 
 ITEM 12. Certain Relationships And Related Transactions Certain officers, directors, security holders with more than five percent
ownership, and corporations and individuals related to such persons have
indebtedness in the form of loans. These loans to such persons are made in the
ordinary course of business. The loans are made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and do not involve more than
the normal risk of collectibility, nor do they present other unfavorable
features. 
 ITEM 14. Principal Accountant Fees and Services Information Concerning Independent Accountants Independent Auditors for the Year Ending December 31, 2003. The Companys
independent auditor for the fiscal year ended December 31, 2003 was Rex Meighen
& Company, LLP. Rex Meighen & Company, LLP also has been selected as auditors
for 2004 by the Audit Committee of the Board of Directors of the Company. Audit Fees.The aggregate fees billed or estimated to be billed for
professional services rendered by Rex Meighen & Company, LLP for the years
ended December 31, 2003 and 2002 were as follows: Year ended December 31,
    
    Year ended December 31,2003
    
    2002Audit Fees
    
    $
    31,960
    
    
    $
    32,389Tax Fees
    
    $
    3,910
    
    
    $
    7,067All Other Fees
    
    $
    30,737
    
    
    $
    0Total Fees
    
    $
    66,607
    
    
    $
    39,456
 Audit Fees include the fees paid to Rex Meighen & Company, LLP for the
audit of the Companys annual financial statements, and its review of financial
statements included in the Companys Forms 10-QSB and Form 10-KSB. Tax Fees
include the fees paid for the preparation of the Companys tax returns, as well
as tax planning and compliance services. All Other Fees were related to
board approved corporate planning expenses. Audit Committee Pre-Approval Policy.The Audit Committee pre-approves all
fees related to the audit and to tax services. Any additional fees for
services that were not preapproved are approved by the Audit Committee before
payment. In 2002 and 2003, such fees totaled $30,737 and $0, respectively and
were related to corporate planning advice provided to the Company. Auditor Independence. The Audit Committee of the Board believes that the
non-audit services provided by Rex Meighen & Company, LLP are compatible with
maintaining the auditors independence. None of the time devoted by Rex
Meighen & Company, LLP on its engagement to audit the Companys financial
statements for the year ended December 31, 2003 is attributable to work
performed by persons other than full-time, permanent employees of Rex Meighen &
Company, LLP.




---



##### Table of Contents



Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended December 31, 2003. Exhibits (3)(i)
    
    Articles of Incorporation of the Company (a)(3)(ii)
    
    Bylaws of the Company (a)(10)(a)
    
    Lease - Valrico State Bank - Jim Redman Parkway Office (c)(b)
    
    Lease - Valrico State Bank - Brandon Office (b) (c)(c)
    
    Valrico State Bank Stock Option Plan (b) (c)(d)
    
    Valrico Bancorp Inc, Stock Option Plan (d)(21)
    
    Valrico State Bank (b)(a)
    
    Incorporated by reference to the Companys Registration Statement
#33-90524 on Form S-4 for the registrant.(b)
    
    Incorporated by reference to the Companys December 31, 1995 Form
10-K.(c)
    
    Incorporated by reference to the Companys December 31, 1997 Form 10-K(d)
    
    Incorporated by reference to the Companys December 31, 1998 Form 10-K31.1
    
    Certifications31.2
    
    Certifications32.1
    
    Certification Pursuant To 18 U.S.C.
Section 1350, As Enacted Pursuant To Section 906 Of The
Sarbanes-Oxley Act Of 200232.2
    
    Certification Pursuant To 18 U.S.C.
Section 1350, As Enacted Pursuant To Section 906 Of The
Sarbanes-Oxley Act Of 2002




---



##### Table of Contents



SIGNATURES 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, thereunto duly authorized on March 29, 2002. By: /s/ Bob McLean
    
    By: /s/ Jerry L. BallBob McLean, President & CEO
    
    Jerry L. Ball, Executive Vice President
 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 on March 28, 2004. Signatures
    
    Titles/s/ J. E. Bob McLean, III
    
    President and Chief Executive OfficerJ. E. Bob McLean, III/s/ Jerry L. Ball
    
    Executive Vice President and DirectorJerry L. Ball/s/ C. Dennis Carlton
    
    DirectorC. Dennis Carlton/s/ H. Leroy English
    
    DirectorH. Leroy English/s/ Gregory L. Henderson
    
    DirectorGregory L. Henderson/s/ Douglas A. Holmberg
    
    DirectorDouglas A. Holmberg/s/ Charles E. Jennings, Jr.
    
    DirectorCharles E. Jennings, Jr./s/ J. Bill Noriega, Jr.
    
    DirectorJ. Bill Noriega, Jr./s/LeVaughn Amerson
    
    DirectorLeVaughn Amerson