EX-99.2 4 exhibit992.htm UNAUDITED CONDENSED STATEMENTS OF FINANCIAL CONDITION OF LYNDONBANK exhibit992.htm
 

 

Exhibit 99.2

 
LYNDONBANK
 
CONDENSED BALANCE SHEETS


   
September 30
   
December 31
 
   
2007
   
2006
 
   
(Unaudited)
       
ASSETS
           
Cash and cash equivalents
  $ 8,791,349     $ 5,216,255  
Investments in available-for-sale securities (at fair value)
    24,330,330       33,941,908  
Federal Home Loan Bank stock, at cost
    1,006,700       870,200  
Loans, net
    111,979,578       109,461,794  
Premises and equipment, net
    5,298,846       5,306,888  
Bank-owned life insurance
    3,526,604       3,431,821  
Other assets
    1,695,543       1,644,095  
     Total assets
  $ 156,628,950     $ 159,872,961  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
Deposits:
               
  Noninterest-bearing
  $ 19,403,583     $ 19,816,688  
  Interest-bearing
    103,122,616       101,885,766  
     Total deposits
    122,526,199       121,702,454  
Securities sold under agreements to repurchase
    6,631,267       5,033,267  
Federal Home Loan Bank advances
    12,000,000       17,200,000  
Capital lease obligations
    950,287       970,643  
Other liabilities
    289,603       635,196  
    Total liabilities
    142,397,356       145,541,560  
                 
Shareholders' equity:
               
  Common stock
    653,400       653,400  
  Paid-in capital
    2,138,439       2,138,439  
  Retained earnings
    14,210,059       14,168,462  
  Treasury stock
    (2,259,270 )     (2,259,270 )
  Accumulated other comprehensive loss
    (511,034 )     (369,630 )
     Total shareholders' equity
    14,231,594       14,331,401  
     Total liabilities and shareholders' equity
  $ 156,628,950     $ 159,872,961  
 
The accompanying notes are an integral part of these financial statements.
 
 

 
 
LYNDONBANK
 
CONDENSED STATEMENTS OF INCOME
 
(UNAUDITED)

For the Nine Months Ended September 30,
 
2007
   
2006
 
             
Interest and dividend income
           
  Loans, including fees
  $ 6,242,869     $ 5,421,401  
  Investment income
    1,101,739       1,263,635  
     Total interest and dividend income
    7,344,608       6,685,036  
                 
Interest Expense:
               
  Deposits
    2,421,095       1,846,422  
  Other borrowings
    658,473       367,941  
     Total interest expense
    3,079,568       2,214,363  
Net interest and dividend income
    4,265,040       4,470,673  
Provision for loan losses
    30,000       0  
Net interest and dividend income after the provision for loan losses
    4,235,040       4,470,673  
                 
Noninterest income:
               
  Service charges on deposits accounts
    417,865       450,888  
  Securities gains, net
    51,449       0  
  Gain on sales of loans
    150       11,040  
  Increase in cash surrender value of bank owned life insurance
    94,783       87,715  
  Other income
    336,151       240,136  
     Total noninterest income
    900,398       789,779  
Noninterest expense:
               
  Salaries and employee benefits
    2,337,317       2,342,912  
  Occupancy and equipment expense
    1,054,513       795,916  
  Advertising expense
    78,504       85,523  
  Professional fees
    136,982       6,069  
  Other operating expenses
    1,049,866       1,078,993  
     Total noninterest expenses
    4,657,182       4,309,413  
Income before income taxes
    478,256       951,039  
Income tax expense
    55,721       129,200  
    Net income
  $ 422,535     $ 821,839  
Net income per share of common stock
 
 
$0.40     
 
$0.78   
Average shares outstanding
    1,058,132        1,058,132   
 
The accompanying notes are an integral part of these financial statements.
 
 

 

LYNDONBANK

CONDENSED STATEMENTS OF CASH FLOWS
 
(UNAUDITED)
 
2007
   
2006
 
             
Cash flows from operating activities:
           
  Net income
  $ 422,535     $ 821,839  
  Adjustment to reconcile net income to net cash provided by
               
   operating activities:
               
     Securities gain, net
    (51,449 )     0  
     Amortization of securities, net of accretion
    5,348       37,305  
     Provision for loan losses
    30,000       0  
     Change in deferred loan origination fees, net
    (2,532 )     (2,074 )
     Amortization of premium/discount on purchased loans, net
    1,217       5,167  
     Decrease in loans held-for-sale
    0       320,000  
     Depreciation and amortization
    364,965       250,029  
     Gain on sales of loans
    (150 )     (11,040 )
     Increase in cash surrender value of bank owned life insurance
    (94,783 )     (87,715 )
     Changes in operating assets and liabilities
    (308,290 )     178,163  
          Net cash provided by operating activities
    336,861       1,511,674  
                 
Cash flows from investing activities:
               
     Decrease in available-for-sale securities
    9,822,979       2,152,151  
     Purchases of Federal Home Loan Bank stock
    (136,500 )     124,200  
     Net increase in loans, net
    (2,486,469 )     (10,610,177 )
     Purchases of premises and equipment, net
    (782,239 )     (528,013 )
         Net cash provided by (used in) investing activities
    6,417,771       (8,861,839 )
                 
Cash flows from financing activities:
               
     Net change in total deposits
    823,745       6,193,788  
     Net change in borrowings
    (3,602,000 )     856,386  
     (Payments on) increase in capital lease obligations
    (20,356 )     499,897  
     Sale of treasury stock
    0       9,090  
     Dividend paid
    (380,927 )     (602,887 )
         Net cash (used in) provided by financing activities
    (3,179,538 )     6,956,274  
                 
Net change in cash and cash equivalents
    3,575,094       (393,891 )
Cash and Cash equivalents, beginning of period
    5,216,255       8,395,084  
Cash and Cash equivalents, end of period
  $ 8,791,349     $ 8,001,193  
                 
Supplemental disclosures:
               
     Interest paid
    3,079,568       2,214,363  
     Income taxes paid
    55,721       129,200  
 
The accompanying notes are an integral part of these financial statements.

 

 

LyndonBank
 
Notes to the Condensed Unaudited Financial Statements
 
September 30, 2007
 
 
 
Note 1 - General
 
     The interim condensed financial statements in this report have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, including Regulation S-X and have not been audited. These condensed financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the financial statements fairly present the financial position and the results of operations for the interim periods.  However, the results of operations are not necessarily indicative of the results of operations which LyndonBank may achieve for future interim periods or the entire year. For further information, refer to the financial statements and footnotes accompanying this Current Report on Form 8-K/A.
 
 
Note 2 - Recent Accounting Pronouncements
 
     In June 2006 the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -an interpretation of FASB Statement 109" (FIN 48). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2007. The adoption of FIN 48 is not expected to have a material impact on the Bank's financial statements.
 
     In September 2006, the FASB ratified the consensus reached by the Emerging Issues Task Force ("EITF") on Issue No. 06-4 "Accounting for Deferred Compensation and Postretirement Benefit Aspects of  Endorsement Split-Dollar Life Insurance Arrangements," (EITF Issue 06-4). EITF 06-4 requires companies with an endorsement split-dollar life insurance arrangement to recognize a liability for future postretirement benefits. The effective date is for fiscal years beginning after December 15, 2007, with earlier application permitted. Companies should recognize the effects of applying this issue through either (a) a change in accounting principle through a cumulative effect adjustment to retained earnings or (b) a change in accounting principle through retrospective application to all periods. The Bank is currently evaluating and has not yet determined the impact the new issue is expected to have on its financial position, results of operations or cash flows.
 
     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities including an amendment of FASB Statement No. 115” (SFAS 159).  SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value.  The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.  This Statement also established presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities.  The new standard is effective at the beginning of the Bank’s fiscal year beginning January 1, 2008, and early application may be elected in certain circumstances.  The Bank is currently evaluating and has not yet determined the impact the new standard is expected to have on its financial position, results of operations or cash flows.
 
 
Note 3 - Pending Merger
 
     On August 1, 2007, LyndonBank entered into an Agreement and Plan of Merger with Community Bancorp., Derby, Vermont, and its wholly-owned subsidiary, Community National Bank, pursuant to which, among other things, the Company agreed to merge with and into Community National Bank, with Community National Bank surviving (the “Merger”).
 
     Subject to the terms and conditions of the Agreement, upon consummation of the Merger, LyndonBank shareholders will be entitled to receive $25.25, without interest, for each outstanding share of LyndonBank common stock that they own.  Completion of the transaction is subject to the prior approval of the Office of the Comptroller of the Currency and the shareholders of LyndonBank.  The parties expect the Merger to close on or about December 31, 2007.