U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO
_________
Commission file number 0-27984
Ridgestone Financial Services, Inc.
(Exact name of small business issuer as specified in its charter)
Wisconsin 39-1797151
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13925 West North Avenue
Brookfield, Wisconsin 53005
(Address of principal executive offices)
414-789-1011
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No______
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date.
Class Outstanding as of September 30, 1996
Common Stock, no par value 834,340
Transitional Small Business Disclosure Format: Yes______ No X
<PAGE>
RIDGESTONE FINANCIAL SERVICES, INC., AND SUBSIDIARY
INDEX
Page
PART I FINANCIAL INFORMATION Number
Item 1 Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets at
September 30, 1996 and December 31, 1995 2
Consolidated Statements of Income
For the Three and Nine Months Ended September 30, 1996 3
Consolidated Statement of Cash Flows
For the Nine Months Ended September 30, 1996 4
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 11
SIGNATURES 12
<PAGE>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
RIDGESTONE FINANCIAL SERVICES, INC., AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1996 1995
ASSETS
Cash and due from banks $ 980,793 $ 527,132
Federal funds sold 18,162,000 5,627,000
Interest-earning deposits 516,397 2,444,031
---------- ----------
Total cash and cash equivalents 19,659,190 8,598,163
---------- ----------
Investments-Held to Maturity 5,254,703 0
(fair value at Sept. 30, 1996,
$5,256,819)
Investments-Available for Sale 1,075,149 0
Loans receivable 8,334,653 729,770
Less: Allowance for estimated
loan losses (69,740) (9,000)
---------- ----------
Net loans receivable 8,264,913 720,770
---------- ----------
Office building and equipment,
net 1,149,332 1,056,738
Accrued interest & other assets 177,023 51,652
---------- ----------
Total assets $35,580,310 $10,427,323
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Deposits:
Noninterest-bearing $2,323,532 $1,492,249
Interest-bearing 26,719,359 1,816,282
---------- ----------
Total deposits 29,042,891 3,308,531
---------- ----------
Other liabilities 221,255 5,449
---------- ----------
Total liabilities 29,264,146 3,313,980
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, no par value:
shares authorized 1,000,000;
shares issued and outstanding
834,340 7,721,399 7,721,399
Retained earnings (deficit) (1,411,462) (608,056)
Unrealized gain (loss) on AFS
securities 6,227 0
---------- ----------
Total stockholders' equity 6,316,164 7,113,343
---------- ----------
Total liabilities and
stockholders' equity $35,580,310 $10,427,323
========== ==========
<PAGE>
RIDGESTONE FINANCIAL SERVICES, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, 1996 September 30, 1996
Interest Income:
Interest and fees on loans $ 148,730 $ 290,686
Interest on securities 84,519 115,325
Interest on federal funds
sold 216,677 468,485
Interest on deposits in
banks 3,885 26,342
------- -------
Total interest income 453,811 900,838
------- -------
Interest expense:
Interest on deposits 329,631 586,680
------- -------
Total interest
expense 329,631 586,680
------- -------
Net interest income 124,180 314,158
Provision for loan losses: 30,000 60,740
------ -------
Net interest income after
provision for loan losses 94,180 253,418
Non-interest income:
Loan fees 0 0
Service charges on deposit
accts. 2,621 6,004
Miscellaneous 18,036 56,026
------- -------
Total operating
income 20,657 62,030
------- -------
Non-interest expense:
Salaries and employee 165,349 504,541
benefits
Occupancy and equipment
exp. 56,610 211,264
Other expense 140,082 402,140
Pre-opening expense 0 0
------- ---------
Total operating
expense 362,041 1,117,945
------- ---------
Income before income taxes (247,204) (802,497)
------- --------
Income taxes 0 909
------- --------
Net income (loss) $(247,204) $(803,406)
======== ========
Income (loss) per share $(0.30) $(0.96)
===== =====
Average shares outstanding 834,340 834,340
<PAGE>
RIDGESTONE FINANCIAL SERVICES, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30, 1996
Cash Flows From Operating Activities:
Net income (loss) $ (803,406)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 134,751
Amortization of premiums (accretion of
discounts) on securities, net (245)
Provision for loan losses 60,740
Amortization of organizational costs 1,590
(Increase) decrease in assets:
Interest receivable (130,082)
Other assets 3,122
Increase (decrease) in liabilities:
Accrued interest 209,436
Other liabilities 6,369
--------
Total adjustments 285,681
--------
Net cash provided (used) by operating
activities (517,725)
--------
Cash Flows From Investing Activities:
Purchase of securities held to maturity (5,255,361)
Purchase of securities available for sale (2,310,936)
Proceeds from maturity of available for sale
securities 1,242,917
Net loans originated (7,604,883)
Purchases of premises and equipment (227,345)
----------
Net cash (used in) investing activities (14,155,608)
----------
Cash Flows From Financing Activities:
Net increase in deposits 25,734,360
Proceeds from notes payable 0
----------
Net cash provided by financing activities 25,734,360
----------
Net increase in cash and cash equivalents 11,061,027
Cash and cash equivalents, beginning of period 8,598,163
----------
Cash and cash equivalents, end of period $19,659,190
==========
<PAGE>
RIDGESTONE FINANCIAL SERVICES, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30, 1996
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest $ 377,534
--------
Income taxes $ 25
--------
Supplemental schedule of noncash investing
activities:
Net unrealized losses on securities available
for sale $ 6,227
-------
<PAGE>
RIDGESTONE FINANCIAL SERVICES, INC., AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-QSB. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the
three-month and nine-month periods ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended December 31,
1995.
NOTE 2 - PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Ridgestone Financial Services, Inc., (the "Company") and its wholly owned
subsidiary, Ridgestone Bank (the "Bank"). All significant intercompany
accounts and transactions have been eliminated in consolidation.
NOTE 3 - INITIAL PUBLIC OFFERING
On November 30, 1995, the Company completed its initial public offering.
The Company issued 834,340 shares of common stock in the offering.
NOTE 4 - COMPARATIVE DATA
The Company was incorporated in May of 1994, but its primary operating
subsidiary, the Bank, did not commence operations until December 7, 1995.
Comparable statements of income and cash flows for the three months and
nine months ended September 30, 1995 have not been presented since the
Company did not have operations during that period.
<PAGE>
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
Ridgestone Financial Services, Inc., (the "Company") was formed in
May 1994 under the laws of the State of Wisconsin for the purpose of
becoming the bank holding company of Ridgestone Bank (the "Bank").
The Bank was capitalized on December 6, 1995 and commenced operation
on December 7, 1995. The Bank was organized as a Wisconsin chartered
commercial bank with depository accounts insured by the Federal Deposit
Insurance Corporation. The Bank provides full service commercial and
consumer banking services in Brookfield, Wisconsin, and adjacent
communities.
FINANCIAL CONDITION
The Company has experienced significant growth since the Bank opened
December 7, 1995. Total assets of the Company increased by $25,152,987 or
241.2% to $35,580,310 at September 30, 1996 from $10,427,323 at December
31, 1995. The growth primarily resulted from an increase in deposits
received from customers.
Cash and cash equivalents increased $11,061,027 or 128.6% to
$19,659,190 at September 30, 1996 from $8,598,163 at December 31, 1995.
The increase was primarily attributable to excess funds invested in
overnight federal funds sold.
Loans receivable increased by $7,604,883 or 1,042.1% to $8,334,653 at
September 30, 1996 from $729,770 at December 31, 1995. In addition, the
Company, as of September 30, 1996, had $6.5 million in unused loan
commitments, and $5.4 million in approved loan commitments that are
expected to close within the next several months. The Company believes
that it has adequate capacity to fund those commitments.
The allowance for estimated loan losses at September 30, 1996 was
$69,740, representing 0.84% of gross loans outstanding. Similarly, the
allowance for loan losses at December 31, 1995 was $9,000 representing
1.23% of gross outstanding loans. Although management believes that the
allowance for estimated loan losses at September 30, 1996 is adequate to
absorb losses on existing loans, there can be no assurance that such
losses will not exceed the estimated amounts or that the Company will not
be required to make additional contributions to its loan loss reserve in
the future.
Accrued interest receivable on loans and other assets increased by
$125,371 or 242.7% to $177,023 at September 30, 1996 from $51,652 at
December 31, 1995. The increase was primarily due to accrued interest
receivable resulting from greater outstanding balances in loans.
Deposits increased by $25,734,360 or 777.8% to $29,042,891 at
September 30, 1996 from $3,308,531 at December 31, 1995. The increase
resulted from a $13,032,543 increase in certificates of deposit and a
$12,701,817 increase in NOW, money market and other deposit accounts.
Other liabilities increased by $215,806 or 3,960% to $221,255 at
September 30, 1996 from $5,449 at December 31, 1995. Other liabilities is
comprised primarily of unpaid interest on deposits.
The Company has announced that, based on strong loan and deposit
growth, it has elected to accelerate plans to open a drive-through branch
banking facility in Brookfield, Wisconsin, subject to obtaining necessary
regulatory approvals. The new facility will offer drive-through customer
banking services and will house the Company's new telephone banking
center. The plans to accelerate opening of this facility are not expected
to increase the cost of such facility, but may result in such expenses
being realized earlier.
The accumulated deficit at December 31, 1995 of $608,056 was
comprised of pre-opening expenses and start-up expenses for the Bank,
consisting primarily of salaries, marketing and supplies and the net loss
incurred. Accumulated deficit increased by $803,406 during the nine
months ended September 30, 1996, which reflects the net loss for that
period.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,
1996
The net loss for the three-month and nine-month periods ended
September 30, 1996 was $247,203 and $803,406, respectively. The Company
expected losses during the pre-opening period and for the first several
periods of operation. The Company's goal is to be profitable for the year
ended December 31, 1997.
Interest income for the three-month and nine-month periods ended
September 30, 1996 was $453,811 and $900,838, respectively. The rise in
interest income was attributable to greater outstanding balances in
interest bearing deposits.
Interest expense for the three-month and nine-month periods ended
September 30, 1996 was $329,631 and $586,680, respectively. The increase
in interest expense was attributable to greater outstanding deposit
balances.
Other income for the three-month and nine-month periods ending
September 30, 1996 was $20,657 and $62,030, respectively. Other income
consisted of income from depository service fees, loan fees, credit card
fees and other miscellaneous fees.
The main components of other expenses were salaries and benefits,
occupancy, equipment, professional, data processing, insurance and other
miscellaneous expenses. Other expenses for the nine-month period ended
September 30, 1996 were $1,117,945.
NEW ACCOUNTING PRONOUNCEMENTS
ACCOUNTING FOR MORTGAGE SERVICING RIGHTS:
The Financial Accounting Standards Board ("FASB") has issued
Statement of Financial Accounting Standards ("SFAS") No. 122, Accounting
for Mortgage Servicing Rights. SFAS No. 122 amends certain provisions of
SFAS No. 65 to eliminate the accounting distinction between rights to
service mortgage loans for others that are acquired through loan
origination activities and those acquired through purchase transactions.
SFAS No. 122 provides that if the Company sells or securitizes mortgage
loans and retains the mortgage servicing rights, the Company should
allocate the total cost of mortgage loans to the mortgage servicing rights
and the loans (without the mortgage servicing rights) based on their
relative fair values. Any costs allocated to mortgage servicing rights
should be recognized as a separate asset. SFAS No. 122 is effective for
the Company's year ending December 31, 1996. The Company believes
adoption of SFAS No. 122 will not have a material effect on operations in
1996.
STOCK-BASED COMPENSATION:
The FASB has issued SFAS No. 123, Accounting for Stock-Based
Compensation. SFAS No. 123 encourages, but does not require, the Company
to account for stock-based compensation awards on the basis of fair value
at the date the awards are granted. The fair value of the award would be
shown as an expense on the income statement. However, the FASB also
allows the Company to continue to measure compensation cost using the
intrinsic value approach prescribed by APB No. 25. If the Company elects
to use the intrinsic value approach, it will not show an expense on the
income statement. However, it will be required to provide new footnote
disclosures about the stock-based compensation and the Company must make
pro forma disclosures of net income and earnings per share as if the fair
value method of accounting had been applied. SFAS No. 123 is effective
for the Company's year ending December 31, 1996.
ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND THE
EXTINGUISHMENTS OF LIABILITIES:
The FASB has issued SFAS No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, which
supersedes SFAS No. 76, SFAS No. 77 and SFAS No. 122. SFAS No. 125
provides accounting and reporting standards for transfer and servicing of
financial assets and extinguishments of liabilities, which are
based on consistent application of a financial-components approach that
focuses on control. SFAS No. 125 provides that, after a transfer of
financial assets, an entity must recognize the financial servicing assets
it controls and the liabilities it has incurred, derecognize financial
assets when control has been surrendered, and derecognize liabilities when
extinguished. SFAS No. 125 provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. SFAS No. 125 is to be applied prospectively
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996. Earlier or retroactive
application is not permitted.
Part II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
a. Exhibits
10 Ridgestone Financial Services, Inc. 1996 Stock
Option Plan
27 Financial Data Schedule
(EDGAR version only)
b. Reports on Form 8-K
The Company did not file a Current Report on Form 8-K during
the quarter ended September 30, 1996
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RIDGESTONE FINANCIAL SERVICES, INC.
Date November 13, 1996 /s/ Paul E. Menzel
Paul E. Menzel
President
Date November 13, 1996 /s/ William R. Hayes
William R. Hayes
Vice President and Treasurer
<PAGE>
EXHIBIT INDEX
Exhibit Number
10 Ridgestone Financial Services, Inc. 1996 Stock
Option Plan
27 Financial Data Schedule
(EDGAR version only)
RIDGESTONE FINANCIAL SERVICES, INC.
1996 Stock Option Plan
Section 1. Purpose
The purpose of the Ridgestone Financial Services, Inc. 1996 Stock
Option Plan (the "Plan") is to promote the best interests of Ridgestone
Financial Services, Inc. (together with any successor thereto, the
"Company") and its shareholders by providing key employees of the Company
and its Affiliates (as defined below) with an opportunity to acquire a
proprietary interest in the Company. It is intended that the Plan will
promote continuity of management and increased incentive and personal
interest in the welfare of the Company by those key employees who are
primarily responsible for shaping and carrying out the long-range plans of
the Company and securing the Company's continued growth and financial
success.
Section 2. Definitions
As used in the Plan, the following terms shall have the respective
meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through one
or more intermediaries, is controlled by, controls, or is under common
control with, the Company, including, without limitation, Ridgestone Bank.
(b) "Stock Option Agreement" shall mean any written agreement,
contract, or other instrument or document evidencing any Option granted
under the Plan.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(d) "Commission" shall mean the United States Securities and
Exchange Commission or any successor agency.
(e) "Committee" shall mean a committee of the Board of Directors of
the Company designated by such Board to administer the Plan and comprised
of not less than two directors, each of whom is eligible and qualified to
serve thereon as provided by Rule 16b-3 and each of whom is an "outside
director" within the meaning of Section 162(m)(4)(C) of the Code (or any
successor provision thereto).
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
(g) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee.
(h) "Incentive Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code (or any successor provision thereto).
(i) "Key Employee" shall mean any officer or other key employee of
the Company or of any Affiliate who is responsible for or contributes to
the management, growth or profitability of the business of the Company or
any Affiliate as determined by the Committee.
(j) "Non-Qualified Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option.
(k) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
(l) "Participating Key Employee" shall mean a Key Employee
designated to be granted an Option under the Plan.
(m) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
(n) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission under the Exchange Act, or any successor rule or regulation
thereto.
(o) "Shares" shall mean shares of common stock of the Company, no
par value, and such other securities or property as may become subject to
Options pursuant to an adjustment made under Section 4(b) of the Plan.
Section 3. Administration
The Plan shall be administered by the Committee; provided, however,
that if at any time the Committee shall not be in existence, the functions
of the Committee as specified in the Plan shall be exercised by a
committee consisting of those members of the Board of Directors of the
Company who qualify as persons eligible to serve thereon pursuant to Rule
16b-3 and as "outside directors" under Section 162(m)(4)(C) of the Code
(or any successor provision thereto). Subject to the terms of the Plan
and without limitation by reason of enumeration, the Committee shall have
full power and authority to: (i) designate Participating Key Employees;
(ii) determine the type or types of Options to be granted to each
Participating Key Employee under the Plan; (iii) determine the number of
Shares to be covered by Options granted to Participating Key Employees;
(iv) determine the terms and conditions of any Option granted to a
Participating Key Employee; (v) interpret and administer the Plan and any
instrument or agreement relating to, or Option granted under, the Plan
(including, without limitation, any Stock Option Agreement); (vi)
establish, amend, suspend, or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of
the Plan; and (vii) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of
the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under
or with respect to the Plan or any Option shall be within the sole
discretion of the Committee, may be made at any time, and shall be final,
conclusive, and binding upon all Persons, including the Company, any
Affiliate, any Participating Key Employee, any holder or beneficiary of
any Option, any shareholder, and any employee of the Company or of any
Affiliate.
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in Section
4(b):
(i) Number of Shares Available. The number of Shares with
respect to which Options may be granted under the Plan shall be 100,000.
If, after the effective date of the Plan, an Option is forfeited or if an
Option otherwise terminates, expires or is cancelled prior to the delivery
of all of the Shares or of other consideration issuable or payable
pursuant to such Option, then the number of Shares counted against the
number of Shares available under the Plan in connection with the grant of
such Option, to the extent of any such forfeiture, termination, expiration
or cancellation, shall again be available for granting of additional
Options under the Plan.
(ii) Limitations on Option Grants to Individual Participants.
During any one calendar year, no Participating Key Employee shall be
granted Options under the Plan for more than 25,000 Shares. Such number
of Shares as specified in the preceding sentence shall be subject to
adjustment in accordance with the terms of Section 4(b) hereof. In all
cases, determinations under this Section 4(a)(ii) shall be made in a
manner that is consistent with the exemption for performance-based
compensation provided by Section 162(m) of the Code (or any successor
provision thereto) and any regulations promulgated thereunder.
(iii) Accounting for Options. The number of Shares covered by
an Option under the Plan shall be counted on the date of grant of such
Option against the number of Shares available for granting of Options
under the Plan.
(iv) Sources of Shares Deliverable Under Options. Any Shares
delivered pursuant to an Option may consist, in whole or in part, of
authorized and unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of cash,
Shares, other securities, or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-
up, spin-off, combination, repurchase, or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an adjustment
is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to
be made available under the Plan, then the Committee may, in such manner
as it may deem equitable, adjust any or all of (i) the number and type of
Shares subject to the Plan and which thereafter may be made the subject of
Options under the Plan, (ii) the number and type of Shares subject to
outstanding Options, and (iii) the exercise price with respect to any
Options, or, if deemed appropriate, make provision for a cash payment to
the holder of an outstanding Option; provided, however, in each case, that
with respect to Incentive Stock Options no such adjustment shall be
authorized to the extent that such authority would cause the Plan to
violate Section 422(b) of the Code (or any successor provision thereto);
and provided further that the number of Shares subject to an Option shall
always be a whole number.
Section 5. Eligibility
Any Key Employee, including any executive officer or employee-
director of the Company or of any Affiliate, who is not a member of the
Committee shall be eligible to be designated a Participating Key Employee.
Section 6. Awards
(a) Option Awards to Key Employees. The Committee is hereby
authorized to grant Options to Key Employees with the terms and conditions
as set forth below and with such additional terms and conditions, in
either case not inconsistent with the provisions of the Plan, as the
Committee shall determine.
(i) Exercise Price. The exercise price per Share of an
Option granted pursuant to this Section 6(a) shall be determined by the
Committee; provided, however, that such exercise price shall not be less
than 100% of the Fair Market Value of a Share on the date of grant of such
Option.
(ii) Option Term. The term of each Option shall be fixed by
the Committee; provided, however, that in no event shall the term of any
Option exceed a period of ten years from the date of its grant.
(iii) Exercisability and Method of Exercise. An Option shall
become exercisable in such manner and within such period or periods and in
such installments or otherwise as shall be determined by the Committee.
The Committee also shall determine the method or methods by which, and the
form or forms, including, without limitation, cash, Shares, other
securities, other Options, or other property, or any combination thereof,
having a Fair Market Value on the exercise date equal to the relevant
exercise price, in which payment of the exercise price with respect to any
Option may be made or deemed to have been made.
(iv) Incentive Stock Options. The terms of any Incentive
Stock Option granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code (or any successor provision thereto)
and any regulations promulgated thereunder. Notwithstanding any provision
in the Plan to the contrary, no Incentive Stock Option may be granted
hereunder after the tenth anniversary of the adoption of the Plan by the
Board of Directors of the Company.
(b) General.
(i) No Consideration for Options. Options shall be granted
to Participating Key Employees without the requirement of cash
consideration unless otherwise determined by the Committee.
(ii) Stock Option Agreements. Each Option granted under the
Plan shall be evidenced by a Stock Option Agreement in such form
(consistent with the terms of the Plan) as shall have been approved by the
Committee.
(iii) Options May Be Granted Separately or Together. Options
granted to Participating Key Employees under the Plan may be granted
either alone or in addition to, in tandem with, or in substitution for any
other Option or any award granted under any other plan of the Company or
any Affiliate. Options granted in addition to or in tandem with other
Options, or in addition to or in tandem with awards granted under any
other plan of the Company or any Affiliate, may be granted either at the
same time as or at a different time from the grant of such other Options
or awards.
(iv) Limits on Transfer of Options. No Option shall be
assignable, alienable, salable or transferable by a Participating Key
Employee otherwise than by will or by the laws of descent and
distribution; provided, however, that a Participating Key Employee at the
discretion of the Committee may be entitled, in the manner established by
the Committee, to designate a beneficiary or beneficiaries to exercise his
or her rights, and to receive any property distributable, with respect to
any Option upon the death of the Participating Key Employee; and provided
further that a participating Key Employee at the discretion (as reflected
in the applicable Stock Option Agreement) of the Committee and subject to
the limitations of the Code in the case of an Incentive Stock Option may
be entitled to assign, alienate, sell or transfer an Option to the extent
permitted by Rule 16b-3. Unless otherwise provided by the Committee in
its sole discretion (as reflected in the applicable Stock Option
Agreement) and subject to the limitations of the Code in the case of an
Incentive Stock Option, (i) each Option shall be exercisable, during the
lifetime of the Participating Key Employee, only by such individual or, if
permissible under applicable law, by such individual's guardian or legal
representative and (ii) no Option may be pledged, attached, or otherwise
encumbered, and any purported pledge, attachment, or encumbrance thereof
shall be void and unenforceable against the Company or any Affiliate.
(v) Term of Options. The term of each Option shall be for
such period as may be determined by the Committee but the expiration date
of an Option shall be not later than ten years after the date such Option
is granted.
(vi) Share Certificates; Representation. All certificates for
Shares delivered under the Plan pursuant to the exercise of any Option
shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules, regulations,
and other requirements of the Commission, any stock exchange or other
market upon which such Shares are then listed or traded, and any
applicable federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions. The Committee may require each
Participating Key Employee or other Person who acquires Shares under the
Plan by means of an Option originally made to a Participating Key Employee
to represent to the Company in writing that such Participating Key
Employee or other Person is acquiring the Shares without a view to the
distribution thereof.
Section 7. Amendment and Termination of the Plan; Correction of Defects
and Omissions
(a) Amendments to and Termination of the Plan. The Board of
Directors of the Company may at any time amend, alter, suspend,
discontinue, or terminate the Plan; provided, however, that shareholder
approval of any amendment of the Plan shall also be obtained if otherwise
required by: (i) the Code or any rules promulgated thereunder (in order
to allow for Incentive Stock Options to be granted under the Plan), (ii)
any other applicable law, or (iii) the quotation or listing requirements
of any principal securities exchange or market on which the Shares are
then traded (in order to maintain the quotation or listing of the Shares
thereon). Amendment, alteration, suspension, discontinuance or
termination of the Plan shall not affect the rights of Participating Key
Employees without their consent with respect to Options previously granted
to them, and all unexpired Options shall continue in force and effect
after termination of the Plan except as they may lapse or be terminated by
their own terms and conditions.
(b) Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply any omission, or reconcile any
inconsistency in any Option or Stock Option Agreement in the manner and to
the extent it shall deem desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Options. No Key Employee, Participating Key
Employee or other Person shall have any claim to be granted an Option
under the Plan, and there is no obligation for uniformity of treatment of
Key Employees, Participating Key Employees, or holders or beneficiaries of
Options under the Plan. The terms and conditions of Options need not be
the same with respect to each Participating Key Employee.
(b) Withholding. No later than the date as to which an amount first
becomes includable in the gross income of a Participating Key Employee for
federal income tax purposes with respect to any Option granted under the
Plan, the Participating Key Employee shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any
federal, state, local or foreign taxes of any kind required or permitted
by law to be withheld with respect to such amount. Unless otherwise
determined by the Committee, withholding obligations arising with respect
to Options granted to Participating Key Employees under the Plan may be
settled with Shares, including Shares that are part of, or are received
upon exercise of, the Option that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and any
Affiliate shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due to the Participating Key
Employee. The Committee may establish such procedures as it deems
appropriate for the settling of withholding obligations with Shares,
including, without limitation, the establishment of such procedures as may
be necessary to satisfy the requirements of Rule 16b-3.
(c) No Limit on Other Compensation Arrangements. Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and
such arrangements may be either generally applicable or applicable only in
specific cases.
(d) Rights and Status of Recipients of Options. The grant of an
Option shall not be construed as giving a Participating Key Employee the
right to be retained in the employ of the Company or any Affiliate.
Further, the Company or any Affiliate may at any time dismiss a
Participating Key Employee from employment, free from any liability, or
any claim under the Plan, unless otherwise expressly provided in the Plan
or in any Stock Option Agreement. Participating Key Employees shall have
no rights as holders of Shares as a result of the granting of Options
hereunder.
(e) Governing Law. The validity, construction and effect of the
Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of Wisconsin and
applicable federal law.
(f) Severability. If any provision of the Plan or any Stock Option
Agreement or any Option is or becomes or is deemed to be invalid, illegal,
or unenforceable in any jurisdiction, or as to any Person or Option, or
would disqualify the Plan, any Stock Option Agreement or any Option under
any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws, or if it cannot
be so construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan, any Stock Option
Agreement or the Option, such provision shall be stricken as to such
jurisdiction, Person, or Option, and the remainder of the Plan, any such
Stock Option Agreement and any such Option shall remain in full force and
effect.
(g) No Fractional Shares. No fractional Shares or other securities
shall be issued or delivered pursuant to the Plan, any Stock Option
Agreement or any Option, and the Committee shall determine (except as
otherwise provided in the Plan) whether cash, other securities, or other
property shall be paid or transferred in lieu of any fractional Shares or
other securities, or whether such fractional Shares or other securities or
any rights thereto shall be canceled, terminated, or otherwise eliminated.
(h) Headings. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective on the date of adoption of the Plan by
the Board of Directors of the Company provided that the Plan is approved
by the shareholders of the Company within twelve months following the date
of adoption of the Plan by the Board of Directors. All Options granted
prior to shareholder approval of the Plan shall be contingent upon
shareholder approval and shall not be exercisable until after such
approval.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF RIDGESTONE FINANCIAL SERVICES INC. AS OF AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 981
<INT-BEARING-DEPOSITS> 516
<FED-FUNDS-SOLD> 18,162
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,075
<INVESTMENTS-CARRYING> 5,255
<INVESTMENTS-MARKET> 5,257
<LOANS> 8,335
<ALLOWANCE> 70
<TOTAL-ASSETS> 35,580
<DEPOSITS> 29,043
<SHORT-TERM> 0
<LIABILITIES-OTHER> 221
<LONG-TERM> 0
0
0
<COMMON> 7,721
<OTHER-SE> (1,405)
<TOTAL-LIABILITIES-AND-EQUITY> 6,316
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<INTEREST-INVEST> 584
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<INTEREST-TOTAL> 901
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<INTEREST-INCOME-NET> 314
<LOAN-LOSSES> 61
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<EXPENSE-OTHER> 1,055
<INCOME-PRETAX> 802
<INCOME-PRE-EXTRAORDINARY> 802
<EXTRAORDINARY> 1
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<NET-INCOME> 803
<EPS-PRIMARY> (0.96)
<EPS-DILUTED> (0.96)
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</TABLE>
