U.S. Securities and Exchange Commission
Washington, D.C.
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period to
Commission file number 0-27474
American Bancshares, Inc.
(Exact name of small business issues as specified in its charter)
Florida 65-0624640
(State or other jurisdiction (IRS Emloyer Id. No.)
incorporation or organization
4702 Cortez Road West, Bradenton, Florida 34210
(941) 795-3050
(Former name, address or fiscal year, if changed since last report)
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 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 issuer's classes of common
equity, as of the last practicable date:
3,870,867 Common shares as of July 31, 1996
<PAGE>
TABLE OF CONTENTS
Part I Page
FINANCIAL INFORMATION
Item 1 Financial Statements
-Statement of Condition 1
-Statement of Operations (3 months ended June 30) 2
-Statement of Operations (6 months ended June 30) 3
-Statement of Cashflows 4
-Notes to Consolidated Condensed Financial Statements 5-6
Item 2 Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7-8
Part II
OTHER INFORMATION
Item 1 Legal Proceedings n/a
(Not applicable this report)
Item 2 Changes in Securities n/a
(Not applicable this report)
Item 3 Defaults Upon Senior Securities
(Not applicable this report) n/a
Item 4 Submission of Matters to a Vote
of Security Holders 9
Item 5 Other Information n/a
(Not applicable this report)
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
American Bancshares, Inc. and Subsidiary
Consolidated Condensed Statement of Condition
June 30, December 31,
1996 1995
Assets (unaudited) (audited)
----------- -----------
Cash and due from banks $ 6,398 $ 5,687
Federal funds sold 8,250 1,000
Interest-bearing deposits in banks 2,290 81
Mortgage loans held for sale 21,971 21,011
Investment securities, available for sale 22,502 23,128
Mortgage-backed securities available for sale 7,244 945
Loans (net of allowance for credit losses and
deferred loan fees of $476,524 as
of June 30, 1996, and $493,566 as of
December 31, 1995) 113,759 97,480
Premises and equipment, net 5,570 4,071
Other assets 2,702 1,545
---------- -----------
Total assets $ 190,686 $ 154,948
========== ===========
Liabilities and shareholders' equity
Liabilities
Deposits $ 162,117 $ 129,861
Securities sold under agreements to repurchase 9,794 9,567
Federal funds purchased and FHLB borrowings 0 5,000
Other liabilities 1,490 822
---------- -----------
Total liabilities $ 173,401 $ 145,250
Shareholders' equity
Common stock, $1.175 par value, 10,000,000
shares authorized, 3,854,063 shares
issued and outstanding as of June 30, 1996,
and 2,401,070 as of December 31, 1995 4,529 2,821
Additional paid-in capital 11,026 5,258
Unrealized gain(loss) on investment securities
available for sale, net (236) 47
Retained earnings 1,966 1,572
---------- -----------
Total shareholders' equity 17,285 9,698
---------- -----------
Total liabilities and shareholde$s' equity $ 190,686 $ 154,948
========== ===========
<PAGE>
American Bancshares, Inc. and Subsidiary
Consolidated Condensed Statement of Operations
(unaudited)
Three months ended June 30,
1996 1995
------- --------
Interest income
Interest on loans $ 2,999 $ 2,401
Interest on mortgage backed securities, taxable 90 0
Interest on investment securities, taxable 253 294
Interest on investment securities, nontaxable 5 5
Other interest income 78 82
-------- --------
Total interest income 3,425 2,782
Interest expense
Deposits 1,602 1,424
Securities sold under agreements to repurchase 87 58
Federal funds purchased and FHLB advances 1 0
-------- --------
Total interest expense 1,690 1,482
Net interest income 1,735 1,300
Provision for loan losses 48 91
-------- --------
Net interest income after provision for loan loss 1,687 1,209
Noninterest income
Service charges & fees 165 128
Gain on sale of loans 35 0
Fees on mortgage servicing 10 30
Gain on sale of servicing 4 0
Originated mortgage servicing rights 59 0
Merchant fees 93 29
Other income 61 128
-------- --------
Total noninterest income 427 315
Noninterest expense
Salaries & employee benefits 926 584
Net occupancy expense 193 136
Data processing expense 155 98
Other expenses 514 274
-------- --------
Total noninterest expense 1,788 1,092
Income before income taxes 326 432
Provision for income taxes 127 153
-------- --------
Net income $ 199 $ 279
========= ========
Earnings per share $ 0.05 $ 0.13
========= ========
Weighted average number of shares outstanding(1) 4,084,388 2,128,722
========= =========
(1) Includes the dilution effect of unexercised warrants.
<PAGE>
American Bancshares, Inc. and Subsidiary
Consolidated Condensed Statement of Operations
(unaudited)
Six months ended June 30,
1996 1995
-------- ---------
Interest income
Interest on loans $ 5,774 4,628
Interest on mortgage backed securities, taxable 170 0
Interest on investment securities, taxable 476 603
Interest on investment securities, nontaxable 10 10
Other interest income 150 98
-------- ---------
Total interest income 6,580 5,339
Interest expense
Deposits 3,066 2,741
Securities sold under agreements to repurchase 168 99
Federal funds purchased and FHLB advances 39 0
-------- ---------
Total interest expense 3,273 2,840
Net interest income 3,307 2,499
Provision for loan losses 77 180
-------- ---------
Net interest income after provision for loan loss 3,230 2,319
Noninterest income
Service charges & fees 319 238
Gain on sale of loans 135 111
Fees on mortgage servicing 18 30
Gain on sale of servicing 4 0
Originated mortgage servicing rights 180 0
Merchant fees 152 40
Other income 95 88
-------- ---------
Total noninterest income 903 507
Noninterest expense
Salaries & employee benefits 1,824 1,159
Net occupancy expense 380 292
Data processing expense 298 162
Other expenses 995 515
-------- ---------
Total noninterest expense 3,497 2,128
Income before income taxes 636 698
Provision for income taxes 242 259
-------- ---------
Net income $ 394 $ 439
======== =========
Earnings per share $ 0.11 $ 0.23
======== =========
Weighted average number of shares outstanding(1) 3,584,727 2,211,885
========== =========
(1) Includes the dilution effect of unexercised warrants.
<PAGE>
American Bancshares, Inc. and Subsidiary
Consolidated Statement of Cashflow
(unaudited)
Six months ended June 30,
1996 1995
-------- --------
Cash flows from operating activities:
Net income $ 394 $ 439
-------- --------
Adjustments to reconcile net income to net
cash provided by operatingactivities:
Provision for loan losses 78 180
Net gain on sale of investment securities (13) 42
Net gain on sale of loans (135) 0
Net gain on sale of mortgage servicing rights (5) 0
Net gain on originated mortgage servicing rights 0 0
Net gain on sale of assets 0 0
Deferred income taxes 252 (55)
Depreciation 189 127
Net amortization of premiums and accretion of discounts on
investment securities (57) (3)
Increase in other liabilities 675 411
Increase in other assets (197) (62)
-------- --------
Total adjustments 607 640
-------- --------
Net cash provided by operating activities 1,001 1,079
-------- --------
Loan originations, net of repayments (35,050) (6,831)
Purchase of loans held for sale 0 0
Proceeds from sales of loans held for sale 17,883 0
Purchases of bank premises and equipment (1,687) (1,123)
Proceeds on sales of assets 0 0
Proceeds from maturities of held to maturity
investment securities 0 101
Proceeds from sales and maturities of available
for sale investment securities 9,802 2,725
Purchases of held to maturity investment securities 0 0
Purchases of available for sale investment
securities (16,641) (1,043)
-------- --------
Net cash used in investing activities (25,693) (6,171)
-------- --------
Net increase (decrease) in demand deposits, NOW
and savings accounts 14,338 (200)
Net increase in time deposits 17,365 11,441
Net increase (decrease) in securities sold under
agreements to repurchase 227 1,196
Principal payments under capital lease obligations 0 0
Proceeds from advances from the Federal Home Loan Bank (5,000) 0
Proceeds from sale of stock 7,932 576
-------- --------
Net cash provided by financing activities 34,862 13,013
-------- --------
Net increase (decrease) in cash and cash equivalents 10,170 7,921
Cash and cash equivalents at beginning of the period 6,768 7,723
-------- --------
Cash and cash equivalents at end of period $ 16,938 $ 15,644
======== ========
Supplemental disclosures:
Interest paid $ 3,193 2,701
======== ========
Income taxes paid $ 309 88
======== ========
<PAGE>
AMERICAN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1. Holding Company and Subsidiary Background
Information
American Bancshares, Inc. (Company), is a one bank holding company,
operated under the laws of the state of Florida. Its wholly owned
banking subsidiary is American Bank of Bradenton (Bank), a state
chartered bank. The Holding Company, a Florida corporation organized
June 30, 1995, is a registered holding company under the Bank Holding
Company Act of 1956, as amended, and on December 31, 1995 became the
bank holding company for the Bank. The Bank was incorporated on
December 6, 1988 and opened for business on May 8, 1989. The Bank is a
general commercial bank with all the rights, powers, and privileges
granted and conferred by the Florida Banking Code. Although the Holding
Company was not formed until June 30, 1995 and did not acquire the Bank
until December 1, 1995, the financial statements have been presented as
if the Holding Company had been in existence since the Bank was formed
in 1988 and as if the Bank was its wholly owned subsidiary since that
time.
Note 2. Basis of Presentation
The interim financial data is unaudited; however, in the opinion of
management, the interim data includes all adjustments, consisting only
of normal recurring adjustments necessary for a fair presentation of
the results for the interim periods. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to SEC rules and regulations, although
the Company believes that the disclosures included herein are adequate
to make the information presented not misleading. The results of
operations for the six month period ended June 30, 1996 are not
necessarily indicative of the results expected for the full year.
The organization and business of the Company, accounting policies
followed by the Company and other information are contained in the
Company's December 31, 1995 Form 10KSB. This quarterly report should be
read in conjunction with such
annual report.
Note 3. Investments
The Company's investment and mortgage-backed securities are classified
as available for sale and recorded at fair value as required by the
provisions of Statement of Financial Accounting Standards (FAS115).
Unrealized gains and losses are reflected as a separate component of
shareholders' equity on the consolidated statement of condition. At
June 30, 1996, an unrealized loss, net of tax, of $236,000 was
reflected as a decrease of shareholders' equity.
Note 4. Earnings Per Share
Earnings per share have been computed by dividing net income by the
weighted average number of shares outstanding for the respective
period(s). The increase in the weighted average number of shares is a
result of the Company's public offering in February 1996. Common stock
equivalents in the form of stock warrants have been included to reflect
the dilution effect of such warrants.
<PAGE>
AMERICAN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 5. Capital
In December 1995, the Company filed a registration statement on Form
SB-2 with Securities and Exchange Commission to register for sale
1,250,000 shares of the Company's common stock (with an additional
187,500 shares subject to the underwriters' over allotment option) at
$6.00 per share pursuant to a firm commitment underwritten public
offering. The SB-2 became effective February 6, 1996, with the sale of
1,250,000 shares of common stock consummated on February 13, 1996. On
March 6, 1996, the underwriter's elected to exercise the over
allotment, consummating the transaction on March 13, 1996. Of the net
proceeds of approximately $7.5 million, $3.0 million has been
contributed as capital to the Bank and approximately $600,000 invested
in land to be used for the construction of an administrative facility.
The balance will be used for general corporate purposes including the
construction of a new administrative facility, possible acquisitions of
other financial institutions, and working capital.
Note 6. Impact of Recently Issued Accounting Standards
The Bank adopted Financial Accounting Standards Board rule No. 122
during the first quarter of 1996, as required. FAS122 amends FAS65 as
it relates, among other changes, to the treatment of originated
mortgage servicing rights. Originated Mortgage Servicing Rights are
created when an institution originates a mortgage loan, selling the
loan in the secondary market, but retaining the right to service the
loan. Due to the fees received for servicing the loan(s) and the
investability of cashflows, servicing rights have an inherent value.
FAS122 requires that such rights be capitalized at the time they are
created and amortized over the expected future cashflows of the
servicing. In addition, because servicing rights are effected by
changes in market rates, periodic valuations are required to determine
if any impairment exists. As of June 30, 1996, the Bank had recorded
approximately $160,000 of originated mortgage servicing rights.
Although management believes that such rights have been properly valued
and are being amortized in accordance with FAS122, there can be no
assurance that the Bank will continue to generate servicing rights, or
that recorded servicing rights will not become impaired and require an
adjustment which would negatively effect earnings.
<PAGE>
PART 1
ITEM 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
American Bancshares, Inc. and Subsidiary
Liquidity and Capital Resources
Total assets of the Company increased by 23% to
$190,686,000 as of June 30, 1996, from $154,948,000 as of
December 31, 1995. The increase in assets was primarily
the result of increases in interest earning assets with
total loans increasing by $17,239,000 to $135,730,000 and
investment securities increasing by $5,673,000 as liquid
funds were redeployed to higher yielding investments.
Federal funds sold also increased by $7,250,000 to
$8,250,000 as of June 30, 1996. The increases in assets
were funded through increases in deposits at existing
locations and the addition of a new branch location which
opened March 18, 1996. In addition, deposit growth
resulted in part from a deposit program released in late
May, 1996 which included five year certificates of deposit,
money market accounts, and a Visa/Mastercard promotion.
The program was used to generate additional customer
relationships with a focus on cross-selling opportunities.
The funds received during the program will be used to fund
strong loan demand which management expects to continue
through the remainder of the year.
As a result of the public offering and subsequent
$3,000,000 investment in the Bank by the Company, the
Bank's Tier 1 leverage ratio was 7.81%, Tier 1 to risk
weighted assets was 11.53% and total risk based capital was
12.35% as of June 30, 1996, resulting in a classification
of "Well Capitalized" under FDIC guidelines. The Bank,
through its Asset/Liability Committee, monitors, among
other things, the Bank's capital and liquidity position,
making adjustments to deposit, loan, and investment
strategies as necessary. The Bank continues to maintain
adequate liquidity levels with a liquidity ratio at June
30, 1996 of 30.10%. In addition, during 1994 the Bank
became a member of the Federal Home Loan Bank of Atlanta
(FHLB). FHLB has approved an advance totaling $11,500,000
collateralized by qualifying mortgages and all of the
Bank's FHLB stock. As of June 30, 1996 their were no
advances outstanding. The Bank also maintains Federal
Funds Purchased agreements with several correspondent banks
to provide sources of overnight funds. As of June 30, 1996
the Bank had no federal funds purchased.
The Company acquired approximately 2.0 acres of land during
the first quarter of 1996 for the purpose of constructing
an administrative facility. The Company expects to
commence construction of the facility in the near future.
It is expected that the facility will comprise
approximately 30,000 square feet and provide for the
consolidation of lending, accounting, and operational staff
in a central facility. In addition, approximately 8-10,000
square feet will be available for lease as general office
space in the near term and provide for Company expansion
over the long term. The total cost of the facility is as
yet undetermined; however, management intends to construct
a facility with maximum utilization at the lowest possible
cost.
<PAGE>
PART 1
ITEM 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
(continued)
American Bancshares, Inc. and Subsidiary
Results of Operations
The Company's net income for the quarter ended June 30,
1996 was $199,000 or $.05 per share, compared to net
income of $279,000 or $.13 per share for the same period
for 1995. Earnings per share were effected by the reduction
in net income and from the effect of additional shares
outstanding as a result of the public offering which was
completed in the first quarter of 1996. The reduction in
earnings is primarily attributable to start-up costs
associated with the opening of a new branch and additional
lending personnel and support staff necessary to support
the Bank's rapid growth. Net interest income increased
$435,000 to $1,735,000 as of June 30 1996 compared to
$1,300,000 as a result of the increase in interest earning
assets. Non-interest income increased from $315,000 for
the quarter ended June 30, 1995 to $427,000 for the same
period in 1996. The increase in non-interest income is
primarily attributable to increases in deposit fees of
$37,000 resulting from an increase in the deposit base,
gains on sale of loans of $36,000 and the effect of
capitalized originated mortgage servicing rights of $59,000
generated by the wholesale mortgage division, and increases
in credit card merchant fee income of $64,000. These
changes to net income were partially offset by reductions
in fees on mortgage servicing of $20,000 and other
non-interest income of $69,000.
Total general and administrative expense for the quarter
ended June 1996, increased $691,000 over the same period of
1995. The primary contributing factor resulted from
increased salary and benefit costs of $343,000 as a result
of increased staff in lending, operations, and accounting
which were added to support the significant growth
experienced during 1995 and 1996. Full time equivalent
employees increased from 67 at June 30, 1995 to 111.5 as of
June 30, 1996. In addition, loan officers were added in
the first quarter of 1996 to provide support for loan
demand and continue to increase the earning asset base of
the Bank. Management believes this to be a prudent step in
support of the loan demand and believes the benefits of
additional loan officers will be realized in the third and
fourth quarters of 1996.
For the six months ended June 30, 1996, net interest income
increased $808,000 to $3,307,000 compared to $2,499,000 for
the same period in 1995. This growth corresponds to the
increase in interest earning assets. The provision for
loan loss decreased from $180,000 for the six month period
ended June 30, 1995 to $77,000 for the same period in
1996. Management uses a procedure on a quarterly basis for
evaluating the adequacy of the allowance for loan loss.
Based on that review management considers the allowance
sufficient to cover expected loan losses. Non-interest
income increased by $396,000 to $903,000 for the six months
ended June 30, 1996 compared to $507,000 for the same
period in 1995 for the reasons discussed above.
Non-interest expense increased to $3,497,000 for the six
month period ended June 30, 1996 from $2,128,000 for the
same period in 1995 for the reasons discussed above.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders
The following matters were submitted to a vote of security
holders at the Company's annual meeting on May 28, 1996.
1. To fix the number of directors at thirteen and to
elect thirteen persons as Directors.
The following directors, which consisted of all of the
existing directors were nominated for reelection:
Percentage
For Against
Gerald L. Anthony 99.56 0.44
Samuel S. Aidlin 97.22 2.78
Ronald L. Larson 98.66 1.34
Timothy I. Miller 98.66 1.34
Dan E. Molter 98.57 1.43
Kirk D. Moudy 97.89 2.11
Lindell Orr 98.80 1.20
Lynn B. Powell 98.71 1.29
Walter L. Presha 98.38 1.62
J. Gary Russ 98.69 1.31
R. Jay Taylor 99.23 0.77
John A. Weichel 99.34 0.66
Edward D. Wyke 99.37 0.63
Of the total of 3,656,003 shares of common stock eligible
to vote, there were 2,174,678 shares present in person or
by proxy and the above named directors were reelected with
the results for each noted above.
2. To consider and vote on adoption of the proposed
"American Bancshares, Inc. and American Bank of
Bradenton Incentive Stock Option Plan of 1996", to be
effective May 28, 1996.
Of the total of 3,656,003 shares of common stock eligible
to vote, there were 2,174,678 shares present in person or
by proxy with 2,059,179 votes for, 79,594 votes against,
and 35,905 abstaining. The above named plan was adopted.
3. To consider and vote upon an amendment to the
Corporation's Articles of Incorporation to provide for
the staggered election of directors of the Corporation.
Of the total of 3,656,003 shares of common stock eligible
to vote, there were 2,174,678 shares present in person or
by proxy. The amendment received 1,418,852 votes for,
56,061 against, 27,470 abstain, and 672,565 broker non
votes. As an amendment to the articles of incorporation
would require a majority vote of the shares outstanding,
the amendment was not adopted.
4. To ratify the selection of Coopers & Lybrand
L.L.P. as independent accountants for the Corporation
for the year ending December 31, 1996.
Of the total of 3,656,003 shares of common stock eligible
to vote, there were 2,174,678 shares present in person or
by proxy with 2,147,571 votes for, 4,221 votes against, and
22,886 abstaining. Coopers and Lybrand were retained as
independent accountants for the Company.
<PAGE>
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.
/s/ Gerald L. Anthony
Gerald L. Anthony, President and
Chief Executive Officer
Date: August 12, 1996
/s/ Brian P. Peters
Senior Vice President and
Chief Financial Officer
Date: August 12, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of American Bancshares, Inc. for the six months ended
June 30, 1996, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<CURRENCY> U.S. Dollars
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Jun-30-1996
<EXCHANGE-RATE> 1.000
<CASH> 6,398,000
<INT-BEARING-DEPOSITS> 2,290,000
<FED-FUNDS-SOLD> 8,250,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 29,746,000
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 135,730,000
<ALLOWANCE> 920,000
<TOTAL-ASSETS> 190,686,000
<DEPOSITS> 162,117,000
<SHORT-TERM> 9,794,000
<LIABILITIES-OTHER> 1,490,000
<LONG-TERM> 0
0
0
<COMMON> 4,529,000
<OTHER-SE> 12,756,000
<TOTAL-LIABILITIES-AND-EQUITY> 190,686,000
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<INTEREST-OTHER> 0
<INTEREST-TOTAL> 6,580,000
<INTEREST-DEPOSIT> 3,066,000
<INTEREST-EXPENSE> 3,273,000
<INTEREST-INCOME-NET> 3,307,000
<LOAN-LOSSES> 77,000
<SECURITIES-GAINS> 15,000
<EXPENSE-OTHER> 3,497,000
<INCOME-PRETAX> 636,000
<INCOME-PRE-EXTRAORDINARY> 636,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 394,000
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
<YIELD-ACTUAL> 8.51
<LOANS-NON> 173,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 300,000
<ALLOWANCE-OPEN> 946,000
<CHARGE-OFFS> 111,000
<RECOVERIES> 8,000
<ALLOWANCE-CLOSE> 920,000
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</TABLE>
