##### 



SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For quarterly period ending September 30, 2004
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 (Title of Class) As
of September 30, 2004, there were 325,150 shares of common stock
outstanding. Transitional small business disclosure format (check one):
Yes [  ] No [x]




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##### 



Valrico Bancorp, Inc.
And Subsidiary
Consolidated Balance Sheets September 30,
    
    December 31,2004
    
    2003(in thousands)AssetsCash and Non-Interest Bearing Deposits
    
    $
    5,792
    
    
    $
    5,788Federal Funds Sold
    
    
    3,712
    
    
    
    Securities Available for Sale
    
    
    23,393
    
    
    
    25,708Securities Held to Maturity
    
    
    876
    
    
    
    887Loans, Net
    
    
    91,331
    
    
    
    84,892Facilities, Net
    
    
    3,161
    
    
    
    3,089Other Real Estate
    
    
    303
    
    
    
    303Accrued Interest Receivable
    
    
    537
    
    
    
    558Other Assets
    
    
    2,525
    
    
    
    1,657Total Assets
    
    
    131,630
    
    
    
    122,882LiabilitiesDepositsDemand Deposits
    
    $
    23,618
    
    
    $
    9,758NOW Accounts
    
    
    24,882
    
    
    
    22,570Money Market Accounts
    
    
    8,289
    
    
    
    8,645Savings Accounts
    
    
    21,260
    
    
    
    20,551Time Deposits, $100,000 and Over
    
    
    10,075
    
    
    
    9,736Other Time Deposits
    
    
    23,178
    
    
    
    25,580Total Deposits
    
    
    11,302
    
    
    
    106,840Federal
Funds Purchased
    
    
    _
    
    
    
    1,500Securities Sold Under the Agreement to Repurchase
    
    
    841
    
    
    
    120Accounts Payable and Accrued Liabilites
    
    
    1,209
    
    
    
    772Advances Under Line Of Credit
    
    
    2,500
    
    
    
    695Notes Payable
    
    
    4,500
    
    
    
    2,887Total Liabilities
    
    
    120,352
    
    
    
    112,814Stockholders EquityCommon Stock, No Par Value, Authorized 1,000,000 Shares,
Issued and Outstanding 325,150 for June 2004 and 323,990
for December 2003
    
    
    325
    
    
    
    324Capital Surplus
    
    
    3,052
    
    
    
    3,004Retained Earnings
    
    
    7,655
    
    
    
    6,466Accumulated Other comprehensive Income
    
    
    246
    
    
    
    274Total Stockholders Equity
    
    
    11,278
    
    
    
    10,068Total Liabilities and Stockholders Equity
    
    
    131,630
    
    
    
    122,882




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##### 



Valrico Bancorp, Inc.
And Subsidiary
Consolidated Statements Of Income 9 Months EndedSeptember 30,2004
    
    2003(in thousandsexcept per share data)Interest IncomeInterest and Fees on Loans
    
    
    4,667
    
    
    
    4,304Interest on Investment Securities
    
    
    758
    
    
    
    728Income on Federal Funds Sold
    
    
    9
    
    
    
    44Total Interest Income
    
    
    5,434
    
    
    
    5,076Interest ExpenseInterest on Deposits
    
    
    781
    
    
    
    1,083Interest on Long Term Debt
    
    
    178
    
    
    
    162Total Interest Expense
    
    
    959
    
    
    
    1,245Net Interest Income
    
    
    4,475
    
    
    
    3,831Provision for Loan Losses
    
    
    90
    
    
    
    90Net Interest Income After Provision for
Loan Losses
    
    
    4,385
    
    
    
    3,741Other IncomeService Charges on Deposit Accounts
    
    
    666
    
    
    
    688Miscellaneous Income
    
    
    124
    
    
    
    183Total Other Income
    
    
    790
    
    
    
    871Other ExpensesSalaries and Employee Benefits
    
    
    1,914
    
    
    
    1,771Occupancy Expense
    
    
    273
    
    
    
    276Equipment Expense
    
    
    207
    
    
    
    189Stationary, Printing and Supplies
    
    
    201
    
    
    
    228Miscellaneous Expenses
    
    
    675
    
    
    
    572Total Other Expenses
    
    
    3,270
    
    
    
    3,036Income Before Taxes
    
    
    1,905
    
    
    
    1,576Income Taxes
    
    
    716
    
    
    
    577Net Income
    
    
    1,189
    
    
    
    999Other Comprehensive IncomeUnrealized Gains(Losses) on Securities
    
    
    (28
    )
    
    
    (138
    )Comprehensive Income
    
    
    1,161
    
    
    
    861Per Share Data:Basic
    
    
    324,570
    
    
    
    312,613Diluted
    
    
    384,480
    
    
    
    372,523Earnings Per Share:Basic
    
    
    3.66
    
    
    
    3.20Diluted
    
    
    3.09
    
    
    
    2.68




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##### 



Valrico Bancorp, Inc.
And Subsidiary
Consolidated Statements Of Income 3 Months EndedSeptember 30,2004
    
    2003(in thousands,except for per share data)Interest IncomeInterest and Fees on Loans
    
    
    1,593
    
    
    
    1,492Interest on Investment Securities
    
    
    246
    
    
    
    220Income on Federal Funds Sold
    
    
    7
    
    
    
    11Total Interest Income
    
    
    1,846
    
    
    
    1,723Interest ExpenseInterest on Deposits
    
    
    243
    
    
    
    322Interest on Term Debt
    
    
    72
    
    
    
    50Total Interest Expense
    
    
    315
    
    
    
    372Net Interest Income
    
    
    1,531
    
    
    
    1,351Provision for Loan Losses
    
    
    30
    
    
    
    30Net Interest Income After Provision for Loan Losses
    
    
    1,501
    
    
    
    1,321Other IncomeService Charges on Deposit Accounts
    
    
    234
    
    
    
    241Miscellaneous Income
    
    
    40
    
    
    
    110Total Other Income
    
    
    274
    
    
    
    351Other ExpensesSalaries and Employee Benefits
    
    
    644
    
    
    
    617Occupancy Expense
    
    
    92
    
    
    
    107Equipment Expense
    
    
    82
    
    
    
    64Stationary, Printing and Supplies
    
    
    152
    
    
    
    79Miscellaneous Expenses
    
    
    138
    
    
    
    222Total Other Expenses
    
    
    1,108
    
    
    
    1,089Income Before Taxes
    
    
    667
    
    
    
    583Income Taxes
    
    
    248
    
    
    
    217Net Income
    
    
    419
    
    
    
    366Other Comprehensive IncomeUnrealized Gains(Losses) on Securities
    
    
    (320
    )
    
    
    (138
    )Comprehensive Income
    
    
    391
    
    
    
    228Average Shares Outstanding:Basic
    
    
    324,570
    
    
    
    312,613Diluted
    
    
    384,480
    
    
    
    372,523Earnings Per Share:Basic
    
    
    1.29
    
    
    
    1.17Diluted
    
    
    1.09
    
    
    
    0.98




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VALRICO BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(in thousands) Compre-
    
    Total StockCommon
    
    Capital
    
    Retained
    
    hensive
    
    HoldersStock
    
    Surplus
    
    Earnings
    
    Income
    
    EquityBalance, December 31, 2003
    
    $
    324
    
    
    $
    3,004
    
    
    $
    6,466
    
    
    $
    274
    
    
    $
    10,068Net Income
    
    
    
    
    
    
    
    
    
    
    1,189
    
    
    
    
    
    
    
    1,189Stock Sales
    
    
    1
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    49Net Change In Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28
    )
    
    
    (28
    )Balance, September 30, 2004
    
    $
    325
    
    
    $
    3,052
    
    
    $
    7,655
    
    
    $
    246
    
    
    $
    11,278Balance, December 31, 2002
    
    $
    309
    
    
    $
    2,625
    
    
    $
    5,072
    
    
    $
    369
    
    
    $
    8,375Net Income
    
    
    
    
    
    
    
    
    
    
    999
    
    
    
    
    
    
    
    999Stock Sales
    
    
    15
    
    
    
    380
    
    
    
    
    
    
    
    
    
    
    
    395Net Change In Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (138
    )
    
    
    (138
    )Balance, September 30, 2003
    
    $
    324
    
    
    $
    3,005
    
    
    $
    6,071
    
    
    $
    231
    
    
    $
    9,631




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Valrico Bancorp, Inc.
And Subsidiary
Consolidated Statements Of Cash Flows 9 Months EndedSeptember 30,2004
    
    2003(in thousands)Cash Flows from Operating ActivitiesNet Income
    
    
    1,189
    
    
    
    $999Adjustments to Reconcile net income to net
Cash provided by (used in) operating activities:Provision for Loan Losses
    
    
    90
    
    
    
    90Depreciation and amortization
    
    
    156
    
    
    
    132Net amortization (accretion) of investments
Security premiums and discounts
    
    
    74
    
    
    
    201(Increase) Decrease in assets:Accrued Interest Receivable
    
    
    21
    
    
    
    (21
    )Other Assets
    
    
    (868
    )
    
    
    (532
    )Increase (Decrease) in liabilities:Accounts payable and Accrued Liabilities
    
    
    437
    
    
    
    504Net Cash provided by (used in ) operating Activities
    
    
    1,099
    
    
    
    1,373Cash flows from investing activitiesSecurities available for sale:Purchase of investment securities
    
    
    (9,764
    )
    
    
    (17,697
    )Proceeds from maturities of investment securities
    
    
    11,977
    
    
    
    13,278Securities to be Held to Maturity:Proceeds from maturities of investment securities
    
    
    11
    
    
    
    307(Increase) Decrease in Federal Funds Sold
    
    
    (3,712
    )
    
    
    249Net (Increase) Decrease in Loans
    
    
    (6,529
    )
    
    
    (8,128
    )Purchase of facilities
    
    
    (228
    )
    
    
    (322
    )Proceeds from the sale of Other Real Estate
    
    
    
    
    
    
    Net Cash provided by (used in) Investing Activities
    
    
    (8,245
    )
    
    
    (12,313
    )Cash flows from financing activities:Increase (Decrease) in deposits
    
    
    4,462
    
    
    
    8,621Increase
(Decrease) in FedFunds Purchase
    
    
    (1,500
    )
    
    
    Net increase (Decrease) in securities sold under
agreement to Repurchase
    
    
    721
    
    
    
    108Net increase (Decrease)in notes payable
    
    
    3,418
    
    
    
    (409
    )Sale (redemption) of Common Stock
    
    
    49
    
    
    
    395Net Cash Provided by (used by) financing activities
    
    
    7,150
    
    
    
    8,715Net increase (decrease) in cash
    
    
    4
    
    
    
    (2,225
    )Cash, beginning of period
    
    
    5,788
    
    
    
    9,083Cash, ending of period
    
    
    5,792
    
    
    
    $6,858




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Valrico Bancorp, Inc.
And Subsidiary
Consolidated Statements Of Cash Flows (Cont) 9 Months EndedSeptember 30,SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
    
    2004
    
    2003Cash paid during the period for:Interest
    
    
    974
    
    
    
    1,396Income taxes
    
    
    613
    
    
    
    298




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Valrico Bancorp, Inc.
And Subsidiary Notes to
Consolidated Finacial Statements Basis Of Presentation The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States of America. In the opinion of management, all necessary adjustments
(consisting of normal recurring entries) have been made for a fair presentation
of the accompanying unaudited consolidated financial statements. These
financial statements rely, in part, on estimates. The results for the period
are not necessarily indicative of the results to be expected for the entire
year. Valrico Bancorp, Inc., a one-bank holding company, acquired 100% of the common
stock of Valrico State Bank as of May 31, 1995 in a transaction accounted for
similar to a pooling of interests. Therefore, the unaudited consolidated
financial statements include the accounts of Valrico Bancorp, Inc. (the
Company) and its wholly owned subsidiary, Valrico State Bank (the Bank).
Significant intercompany balances and transactions have been eliminated in
consolidation. Basic net income per share has been computed by dividing net income by the
average number of common shares outstanding of 324,570 as of September 30,
2004, and 312,613 as of September 30, 2003. Diluted net income per share has
been computed by dividing net income by the average number of common shares and
common share equalivent outstanding of 384,480 as of September 30, 2004 and
372,523 as of September 30, 2003.




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Managements Discussion and Analysis of Financial Condition and Results of Operations Results Of Operations The Companys primary asset is its subsidiary bank, which is in its fifteenth
year of operation. During the nine months ended September 30,
2004, the Bank
experienced a growth in deposits with an increase of $4,462,000 or 4.2%.
Demand Deposits had the highest percentage of growth at 19.5%, or an increase
of $3,860,000 in the nine months ended September 30, 2004. Loan growth increased $6,439,000 or 7.58% for the nine months ended September
30, 2004. The allowance for credit losses at September 30, 2004 was at
$1,311,000 compared to 1,206,000 at December 31, 2004. The Bank had $2,000 in
charge-offs and had recoveries in the amount of $17,000 during the nine months
ended September 30, 2004, and has loan classified as troubled in the amount of
$0 as of September 30, 2004. A total of $90,000 was expensed for provision for
loan losses during the period. Management considers the allowance to be
adequate at this time. Nonaccrual loans amounted to $0 and $54,000 at September 30, 2004 and 2003,
respectively. Loans 90 days or more past due amounted to $0 and $0 at
September 30, 2004 and 2003, respectively. There were restructured loans in
the amount of $53,000 and $16,000 at September 30, 2004 and 2003, respectively.
The table on the following page sets forth a summary of loan loss experience:




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Managements Discussion and Analysis of Financial Condition and Results of Operations (Cont.) Analysis of the Allowance for Loan Losses September 30,2004
    
    2003(in thousands)Beginning Reserves
    
    
    1,206
    
    
    $
    1,015Charge offs:Commercial
    
    
    
    
    
    
    1Commercial Real Estate
    
    
    
    
    
    
    Consumer
    
    
    2
    
    
    
    8Residential
    
    
    
    
    
    
    Total Charge Offs
    
    
    2
    
    
    
    9RecoveriesCommercial
    
    
    10
    
    
    
    41Commercial Real Estate
    
    
    
    
    
    
    Consumer
    
    
    7
    
    
    
    16Residential
    
    
    
    
    
    
    Total Recoveries
    
    
    17
    
    
    
    57Net Charge offs
    
    
    (15
    )
    
    
    (48
    )Provision for Loan Losses
    
    
    90
    
    
    
    90Ending Reserves
    
    
    1,311
    
    
    $
    1,153
 Consolidated net income for the nine months ending September 30, 2004 was
$1,189,000 or $3.66 and $3.09 per share, basic and diluted respectively, which
compares to $999,000 or $3.20 and $2.68 per share, basic and diluted
respectively, for the same period in 2003. This represents an increase over
the comparable period of $190,000. Salaries and benefits represent 58.5% of non-interest expenses for the nine
months ended September 30, 2004, compared to 58.3% for the nine months ended
September 30, 2004. Salary expense for the nine months ended September 30,
2003 increased 8.07% over the same period for 2003. The Tier I capital ratio was 8.41% and Total Capital ratio was 9.38% at
September 30, 2004. The tier I capital to total risk-weighted assets ratio was
10.88% and total risk based capital ratio was 12.14% at September 30, 2004. Subsequent
Event On
November 9th, 2004, the shareholders voted to allow a merger to
occur, with a newly created entity, at the annual shareholders
meeting. This transaction, for which we borrowed 2.5 million in trust
preferred securities, will allow the bank holding company to go
private.




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Disclosure Of Evaluation Of Disclosure Controls And Procedures Controls and Procedures. The Company carried out an evaluation, under the supervision and with the
participation of the Companys management, including the Companys Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Companys disclosure controls and procedures as of
September 30, 2004, pursuant to Exchange Act Rule 13a-15. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Companys disclosure controls and procedures were effective as of
September 30, 2004, in timely alerting them to material information relating to
the Company (including its consolidated subsidiaries) required to be included
in the Companys periodic SEC filings. There was no change in the Companys internal control over financial reporting
that occurred during the Companys fiscal quarter ended September 30, 2004,
that has materially affected, or is reasonably likely to materially affect, the
Companys internal control over financial reporting.




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Part II Item 6. Exhibits and Reports on Form 8-K All applicable exhibits required by item 601 of Regulation SB are furnished
herewith. No reports on Form 8-K were filed during the quarter ended September 30, 2003. Item 703. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.  (a)
    
    In the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the issuer or any affiliated purchaser, as defined in §
240.10b-18(a)(3) of this chapter, of shares or other units of any class of
the issuers equity securities that is registered by the issuer pursuant
to section 12 of the Exchange Act. ISSUER PURCHASES OF EQUITY SECURITIES (d) MaximumNumber (or(c) Total Number
    
    Approximate Dollar(a) Total
    
    (b)
    
    of Shares (or Units)
    
    Value) of Shares (orNumber of
    
    Average
    
    Purchased as Part
    
    Units) that May YetShares (or
    
    Price Paid
    
    of Publicly
    
    Be Purchased UnderUnits)
    
    per Share
    
    Announced Plans
    
    the Plans orPeriod
    
    Purchased
    
    (or Unit)
    
    or Programs
    
    ProgramsJuly 2004
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0August 2004
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0September 2004
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Total
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0




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##### 



Signatures In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on it behalf by the undersigned, thereunto duly
authorized. VALRICO BANCORP, INC.November 15th 2004
    
    
    
    /s/ Bob McleanBob McleanPresident and Chief Executive OfficerNovember 15th 2004
    
    
    
    /s/ Jerry L. BallJerry L. BallExecutive Vice President