<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C.
Form 10-Q
[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
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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
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(941) 795-3050
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----------------------------------------------------
(Former name, former address and former 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: 4,994,483 as of March 31, 1998
--------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Part I FINANCIAL INFORMATION
Item 1
-Financial Statements 1-3
-Notes to Consolidated Condensed Financial Statements 4-5
Item 2
-Management's Discussion and Analysis
of Financial Condition and Results of
Operations 6
Item 3
-Quantitative and Qualitative Disclosure 6
About Market Risk
Part II OTHER INFORMATION
Item 1 Legal Proceedings 7
Item 2 Changes in Securities 7
Item 3 Defaults Upon Senior Securities
(Not applicable this report) n/a
Item 4 Submission of Matters to a Vote
of Security Holders 7-8
Item 5 Other Information 8
Item 6 Exhibits and Reports on Form 8-K 9
</TABLE>
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
American Bancshares, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997 % $
Assets (unaudited) (audited) Change Change
--------- --------- ------ ---------
<S> <C> <C> <C> <C>
Cash and due from banks $ 14,532 $ 9,549 52.18 4,983
Federal funds sold 0 5,120 (100.00) (5,120)
Interest bearing deposits in banks 6,128 3,727 64.42 2,401
Mortgage loans held for sale 49,718 39,588 25.59 10,130
Investment securities, available for sale 61,098 62,898 (2.86) (1,800)
Mortgage-backed securities, available for sale 1,168 5,766 (79.74) (4,598)
Loans (net of allowance for credit losses and
deferred loan fees of $1,581,359 as of
March 31, 1998 and $1,704,529 as of
December 31, 1997) 230,535 213,404 8.03 17,131
Premises and equipment, net 9,990 9,161 9.05 829
Other real estate owned, net 363 363 0.00 0
Goodwill 79 80 (1.25) (1)
Other assets 5,568 4,245 31.17 1,323
--------- --------- ------- --------
Total assets $379,179 $353,901 7.14 25,278
========= ========= ======= ========
Liabilities and shareholders' equity
Liabilities
Deposits $316,595 $302,746 4.57 13,849
Securities sold under agreements to repurchase 26,265 17,528 49.85 8,737
Federal funds purchased and FHLB borrowings 5,000 5,000 0.00 0
Other Borrowed Money 1,450 500 190.00 950
Other liabilities 3,491 2,048 70.46 1,443
--------- --------- --------- --------
Total liabilities 352,801 327,822 7.62 24,979
Shareholders' equity
Common stock, $1.175 par value, 20,000,000
shares authorized, 4,994,484 shares issued
and outstanding as of March 31, 1998
and 4,994,484 as of December 31, 1997 5,869 5,869 0.00 0
Additional paid in capital 15,937 15,548 2.50 389
Unrealized gain (loss) on securities available for sale, net 34 140 (75.71) (106)
Retained earnings 4,538 4,522 0.35 16
--------- --------- --------- --------
Total shareholders' equity 26,378 26,079 1.15 299
--------- --------- --------- --------
Total liabilities and shareholders' equity $379,179 $353,901 7.14 25,278
========= ========= ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 1
<PAGE>
American Bancshares, Inc. and Subsidiaries
Consolidated Condensed Statements of Income
(unaudited, $ in thousands)
<TABLE>
<CAPTION>
Three Months ended March 31, % $
1998 1997 Change Change
-------- -------- ------ ------
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $5,810 $4,452 30.50 1,358
Interest on mortgage backed securities, taxable 98 221 (55.66) (123)
Interest on investment securities, taxable 1,033 713 44.88 320
Interest on investment securities, nontaxable 17 16 6.25 1
Other interest income 143 150 (4.67) (7)
--------- --------- --------- ---------
Total interest income 7,101 5,552 27.90 1,549
Interest expense
Deposits 3,240 2,680 20.90 560
Securities sold under agreements to repurchase 233 113 106.19 120
Federal funds purchased and FHLB advances 85 85 0.00 0
Other borrowed money 25 0 100.00 25
--------- --------- --------- ---------
Total interest expense 3,583 2,878 24.50 705
Net interest income 3,518 2,674 31.56 844
Provision for loan losses 124 171 (27.49) (47)
--------- --------- --------- ---------
Net interest income after loan loss 3,394 2,503 35.60 891
Noninterest income
Service charges & fees 421 322 30.75 99
Gain on sale of mortgage loans 62 4 1,450.00 58
Gain on sale of securities 122 2 6,000.00 120
Gain on sale of servicing 22 52 (57.69) (30)
Broker loan fees 54 48 12.50 6
Merchant fees 187 124 50.81 63
Other income 235 120 95.83 115
--------- --------- --------- ---------
Total noninterest income 1,103 672 64.14 431
Noninterest expense
Salaries & employee benefits 1,510 1,210 24.79 300
Net occupancy expense 195 154 26.62 41
Furniture and equipment expenses 239 214 11.68 25
Data processing fees 351 158 122.15 193
Other expense 1,581 894 76.85 687
--------- --------- --------- ---------
Total noninterest expense 3,876 2,630 47.38 1,246
Income before income taxes 621 545 13.94 76
Provision for income taxes 217 212 2.36 5
--------- --------- --------- ---------
Net income $404 $333 21.32 71
========== ========== ========= =========
Earnings per share (actual $'s)
Basic $0.08 $0.07
Diluted 0.08 0.07
Average Number of shares outstanding
Basic 4,994,484 4,970,030
Diluted 5,023,454 4,992,639
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE>
American Bancshares, Inc. and Subsidiaries
Consolidated Condensed Statement of Cashflows
(unaudited, $ in thousands)
<TABLE>
<CAPTION>
Three Month's Ended March 31,
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 404 $ 333
-------- --------
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan losses 124 171
Net gain on sale of investment securities (120) 1
Net gain on sale of loans (62) (4)
Net gain on sale of mortgage servicing rights (22) (52)
Net gain on originated mortgage servicing rights (96) (6)
Net gain on sale of assets 0 0
Deferred income taxes 0 0
Depreciation 205 167
Net amortization of premiums and accretion of discounts on
investment securities (15) (6)
Increase in other liabilities 1,443 856
Increase in other assets (1,204) (2,196)
--------- ---------
Total adjustments 253 (1,057)
--------- ---------
Net cash provided by operating activities 657 (724)
--------- ---------
Cash flows from investing activities:
Loan originations, net of repayments (36,881) (19,118)
Purchase of loans held for sale 0 0
Proceeds from sales of loans held for sale 9,559 4,221
Purchases of bank premises and equipment (1,034) (378)
Proceeds on sales of assets 0 0
Proceeds from maturities of held to maturity investment securities 0 0
Proceeds from sales and maturities of available for sale investment
securities 19,534 1,543
Purchases of held to maturity investment securities 0 0
Purchases of available for sale investment securities, net of repayments (13,107) (15,745)
-------- --------
Net cash used in investing activities (21,929) (29,487)
-------- --------
Cash flows from financing activities:
Net increase (decrease) in demand deposits, NOW and savings
accounts 18,656 21,057
Net increase in time deposits (4,807) 966
Net increase (decrease) in securities sold under agreements to repurchase 8,737 3,377
Principal payments under capital lease obligations 0 0
Proceeds from advances from the FHLB and Federal Funds purchased 950 (1,300)
Proceeds from sale of stock 0 425
-------- --------
Net cash provided by financing activities 23,536 24,525
-------- --------
Net increase (decrease) in cash and cash equivalents 2,264 (5,686)
Cash and cash equivalents at beginning of period 18,396 23,570
Cash and cash equivalents at end of period $ 20,660 $ 17,884
======== ========
Supplemental disclosures:
Interest paid $ 3,486 $ 2,862
======== ========
Income taxes paid $ 120 $ 0
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
Page 3
<PAGE>
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1. Holding Company and Subsidiaries 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 (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 1, 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.
The Company has organized a wholly-owned Florida subsidiary
corporation, Freedom Freedom Finance Corporation, (The
"Finance Company"), pursuant to which it engages in full
service consumer financing. The Finance Company offers
consumer-driven products and services ranging from mortgages
to automobile loans, home equity loans and education
financing. The Finance Company has the ability to extend
financing to individuals and entities which may not be able to
satisfy the Bank's underwriting requirements or loan
standards. During April 1998 the Bank extended a $2.4 million
line of credit to the Finance Company to support operations.
The Finance Company commenced preliminary operations in late
March 1998.
Note 2. Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements, in the opinion of management, include all
adjustments, consisting only of normal recurring adjustments
necessary for a fair presentation of the results for the
interim periods. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted pursuant to SEC rules and
regulations, although the Company believes that the
disclosures included herein are adequate to make the
information presented not misleading. The results of
operations for the three month period ended June 30, 1997 are
not necessarily indicative of the results expected for the
full year.
The organization and business of the Company, accounting
policies followed by the Company and other information are
contained in the Company's December 31, 1997 Form 10-KSB. This
quarterly report should be read in conjunction with such
annual report.
Merger - On March 23,1998, the Company completed its merger
with Murdock Florida Bank (Murdock). The company issued
924,026 shares of it's common stock in exchange for all of the
outstanding Murdock shares. The transaction was accounted for
as a pooling of interests. Accordingly the Consolidated
Balance Sheet, Income Statement and Statement of Cash Flow are
presented on a pro-forma basis and include the results of
Murdock. The table below presents financial data for the two
institutions for the periods indicated. The Company's combined
continuing net income and net interest income for the periods
ending March 31, 1998 and 1997 are presented below ($ in
thousands, unaudited).
Net Interest Income Net Income
Quarter Ended March 31, Quarter Ended March 31,
1998 1997 1998 1997
American Bancshares, Inc. 1,229 2,056 45 207
Murdock Florida Bank 2,289 624 359 126
------- ------- ----- -----
Combined Total 3,518 2,680 404 333
Page 4
<PAGE>
AMERICAN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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 number 115. Unrealized gains and losses
are reflected as a separate component of shareholders' equity
on the consolidated statement of condition. At March 31, 1998,
an unrealized gain, net of tax, of $34,000 was reflected as an
increase of shareholders' equity.
Note 4. Earnings Per Share
Earnings per share are based on the weighted average number
common shares outstanding during the periods. Diluted earnings
per share includes the weighted average number of common
shares outstanding during the periods and the further
dilution from stock options using the treasury stock method.
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 elected to exercise
the over allotment, consummating the transaction on March 13,
1996. Of the net proceeds of approximately $7.5 million, $4.5
million has been contributed as capital to the Bank and
approximately $1,120,000 invested to date in land and building
in the construction of an administrative facility. The balance
was used for general corporate purposes including the
construction of a new administrative facility and working
capital.
Note 6. Impact of Recently Issued Accounting Standards
Effective January 1, 1998 the Company has adopted Financial
Accounting Standards No. 130 "Reporting Comprehensive Income,"
which requires that all items that are required to be
recognized under accounting standards as components of
comprehensive income be reported in the financial statements.
Prior periods will be reclassified as required. The Company's
total comprehensive earnings are as follows:
<TABLE>
<CAPTION>
Comprehensive Earnings
(unaudited, actual $)
Three months ended
March 30, 1998 March 30, 1997
<S> <C> <C>
Net income (loss) 403,943 332,598
Other comprehensive earnings (losses): 0 0
Unrealized gains (losses) on
securities 105,882 457,441
--------- ---------
Comprehensive income 509,825 790,039
</TABLE>
FAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits" which is effective for periods
beginning after December 15, 1997. This statement revises
employers' disclosures about pension and other postretirement
benefit plans. Because this statement addresses disclosures
only, the adoption will have no material impact on the
financial statements.
Page 5
<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 7.14% to $379,179,000 as of March 31,
1998, from $353,901,000 as of December 31, 1997 and 27.2% from $298,006,000 as
of March 31, 1997. The increase in assets from December 31, 1997, was primarily
the result of increases in Cash and Due From Banks of $4,983,000 to $14,532,000,
increases in Interest Bearing Deposits in Banks of $2,401,000 to $6,128,000 and
increases in Net Loans of $27,261,000 to $280,253,000. The increases in assets
were funded through increases in deposits of $13,849,000 and increases in
Securities Sold Under Agreements to Repurchase of $8,737,000 to $26,265,000.
As of March 31, 1998, the Bank's Tier 1 leverage ratio was 6.77%, Tier 1 to risk
weighted assets was 9.60% and total risk based capital was 10.48%, 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 March 31, 1998 of 34.75%. The Bank is a member
of the Federal Home Loan Bank of Atlanta (FHLB). FHLB has approved an advance
totaling $25,000,000 collateralized by qualifying mortgages and all of the
Bank's FHLB stock. As of March 31, 1998, an advance in the amount of $5,000,000
was outstanding. The Bank also maintains Federal Funds Purchased agreements with
several correspondent banks to provide sources of overnight funds. As of March
31, 1998, the Bank had no federal funds purchased. In addition, the Company has
obtained a $5 million Commercial Revolving Line of Credit from Barnett Banks,
N.A., South Florida (now Nationsbank, N.A.). Although this credit facility has
been used in part to fund the construction of the Company's new administrative
offices, the Company also has utilized the credit facility for other general
corporate purposes. At March 31, 1998, $1.45 million was outstanding on the line
of credit. During April 1998, the new administrative office building was
completed and is now occupied. The cost of construction was approximately $2.5
million.
Additionally, the Company may seek to acquire additional branch sites that may
become available and require additional capital resources. There can be no
assurance that the Company will be able to acquire such sites.
Management believes that there are adequate funding sources to meet its future
liquidity needs for the foreseeable future. Primary among these funding sources
are the repayment of principal and interest on loans, the renewal of time
deposits, and the growth in the deposit base. Management does not believe that
the terms and conditions that will be present at the renewal of these funding
sources will significantly impact the Company's operations, due to its
management of the maturities of its assets and liabilities.
Results of Operations
The Company's net income for the quarter ended March 31, 1998 was $404,000 or
$.08 per share, compared to net income of $333,000 or $.07 per share for the
same period for 1997. Earnings per share were affected by the acquisition of
Murdock Florida Bank during this quarter. Net interest income increased $891,000
to $3,394,000 for the quarter ended March 31, 1998, over the same quarter in
1997, as a result of the increase in interest earning assets. Non-interest
income increased from $672,000 for the quarter ended March 31, 1997 to
$1,103,000 for the same period in 1998. The increase in non-interest income is
primarily attributable to increases in service charges on deposits and fees of
$99,000, an increase of $58,000 on of the sale of mortgage loans, an increase of
$120,000 on gain on sale of securities, an increase in credit card merchant
services of $63,000 and an increase of $115,000 in other income.
Total general and administrative expense for the quarter ended March 31, 1998,
increased $1,246,000 over the same period of 1997. This increase resulted
primarily from increases in other operating expenses related to the growth in
the Company's assets, the number of Bank branches, the acquisition of Murdock
Florida Bank, and the start up of the Finance Company. Specifically, salary
expense increased by $300,000, data processing increased by $193,000, mainly due
to the conversion of Murdock Florida Bank onto the same computer system as the
Bank. Other expenses increased by $687,000 due to continued asset growth, legal
and consulting fees associated with the Murdock Florida Bank acquisition and the
start up costs of the Finance Company.
For the three months ended March 31 1998, net interest income increased $844,000
to $3,518,000 compared to $2,674,000 for the same period in 1997 as a result of
the 27% asset growth. The provision for loan loss expense decreased from
$171,000 for the three month period ended March 31, 1997 to $124,000 for the
same period in 1998. Management uses a procedure on a monthly 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.
PART 1.
ITEM 3. Quantitative and Qualitative Disclosure About Market Risk
Not applicable.
Page 6
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On March 27,1997, James J. Bazata, a former employee of the
Bank, filed an claim in the United States District Court,
Tampa Division, alleging that such employee was discriminated
against. It is alleged that this conduct violated his rights
under the Americans with Disabilities Act of 1990. The company
believes that the Bank acted appropriately and that this
action is without merit. Pursuant to negotiations with Mr.
Bazata, the Company has agreed to settle this lawsuit by
entering into a consulting agreement with Mr. Bazata's
corporation through December 31, 2000, and has further agreed
to pay Mr. Bazata's legal fees and costs incurred in
connection with the lawsuit. The total payments due through
the end of 2000 under the consulting agreement, and legal fees
and costs, aggregate $525,000.
Item 2. Changes in Securities
On March 12, 1998, at the Company's Special Meeting of
Shareholders the following changes to the Articles of
Incorporation were voted upon and approved. To amend the
Articles of Incorporation to increase the Company's authorized
capital from 10,000,000 to 20,000,000 common shares, par value
$1.175 per share. To amend the Articles on Incorporation to
authorize the issuance of up to 5,000,000 preferred shares
with such designations, performance, rights, and limitations
as are approved from time to time, by the Company's board of
directors. To delete Article VII of the Articles of
Incorporation of the Company and replace it with a revised
Article VII which provides that the number of directors shall
be determined in accordance with the Company's bylaws and that
the Company's directors may be removed only for cause by the
Company's shareholders. To amend the Articles of Incorporation
of the Company to permit shareholders to call a special
meeting of shareholders only if requested in writing by at
least 50% of the outstanding common shares.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The following matters were submitted to a vote of security
holders a the Company's Special Meeting of Shareholders on
March 12, 1998.
1. Approval of Merger Agreement.
Of the total of 4,070,058 shares of common stock eligible to vote, there were
3,296,018 shares present in person or by proxy with 2,349,215 votes for, 24,036
votes against, 10,970 votes abstaining and 911,797 broker non-votes. The above
proposal was adopted.
2. Approval of Increased Number of Authorized Common Shares.
Of the total of 4,070,058 shares of common stock eligible to vote, there were
3,296,215 shares present in person or by proxy with 3,080,485 votes for, 203,763
votes against, 11,770 votes abstaining. The above proposal was adopted.
3. Approval of New Class of Securities.
Of the total of 4,070,058 shares of common stock eligible to vote, there were
3,296,018 shares present in person or by proxy with 2,125,046 votes for, 233,890
votes against, 25,285 votes abstaining and 911,797 broker non-votes. The above
proposal was approved.
4. Approval of Indemnification Amendments.
Of the total of 4,070,058 shares of common stock eligible to vote, there were
3,296,018 shares present in person or by proxy with 3,128,577 votes for, 145,385
votes against, and 27056 abstaining. The above proposal was approved.
Page 7
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(continued)
5. Approval of New Article VII.
Of the total of 4,070,058 shares of common stock eligible to vote, there were
3,296,018 present in person or by proxy with 2,152,302 votes for, 199,019 votes
against, 47,751 abstaining and 896,946 broker non-votes. The above proposal was
approved.
6. Approval of Bylaw Amendment Procedure.
Of the total of 4,070,058 shares of common stock eligible to vote, there were
3,296,018 present in person or by proxy with 2,084,403 votes for, 243,390 votes
against, 56,428 abstaining and 911,727 broker non-votes. The above proposal was
not approved.
7. Approval to Increase Number of Shareholders to Call a Special
Meeting.
Of the total of 4,070,058 shares of common stock eligible to vote, there were
3,296,018 present in person or by proxy with 2,116,600 votes for, 245,427 votes
against, 37,045 abstaining and 896,946 broker non-votes. The above proposal was
approved.
Item 5. Other Information
1. In February , 1998, the Company entered into an employment
agreement with Brian M. Watterson, Senior Vice President, Chief
Financial Officer and Chief Operations Officer. The agreement is
for a three year term , with automatic annual renewals thereafter.
The initial base salary is $90,000, subject to merit-based
increases, which are determined by the President and Chief
Executive Officer, as well as increases based on the amount of any
annual increase in the Consumer Price Index. Mr Watterson may also
earn a performance bonus based upon achievement of quantified
goals related to the Bank's profitability. The agreement also
provide that Mr. Watterson will be entitled to twelve months
salary as severance pay should he be involuntarily terminated
within 90 days prior to or after a change in control of the
Company.
2. The Company recently has organized a wholly-owned Florida
subsidiary corporation, Freedom Finance Corporation, (referred to
herein as the Finance Company), pursuant to which it has begun to
engage in full service consumer financing. The Finance Company
commenced preliminary operations at the end of March 1998.In order
to provide the Finance Company with the funds necessary to
commence operations, the Company made a small capital contribution
and the Bank extended a $2.4 million loan to the Finance Company
in April 1998. this loans was made on substantially the same terms
and conditions, including interest rates and collateral on loans,
as those prevailing for comparable transactions with unrelated
third parties. It is anticipated that the Finance Company will
offer consumer-driven products and services ranging from mortgages
to automobile loans, home equity loans and education financing.
The Finance Company will have the ability to extend financing to
individuals and entities which may not be able to satisfy the
Bank's underwriting requirements or loan standards. However, the
Finance Company is expected to provide such loans on a selective
basis to customers that the Company believes are quality credits.
Such customers will likely consist of individuals or entities
which have another banking or credit relationship with the Company
or the Bank.
Page 8
<PAGE>
Item 6. Exhibits and Report on Form 8-K
(a) Exhibits:
10.1-- Employment Agreement dated February 1, 1998 by and
between Brian M. Watterson and American Bank.
(b) Reports on Form 8-K
On April 6, 1998, the Company filed a report on Form 8-K
announcing the consummation of the merger by and between
American Bank and Murdock Florida Bank, which Form 8-K
provided for the extension under Item 7(a)(4) thereof for
furnishing certain financial statements.
Page 9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on itsbehalf by the
undersigned thereunto duly authorized.
/s/ Gerald L. Anthony
-----------------------------------
Gerald L. Anthony, President and
Chief Executive Officer
Date: May 15, 1998
-------------------
/s/ Brian M. Watterson
-----------------------------------
Brian M. Watterson
Senior Vice President and
Chief Financial Officer
Date: May 15, 1998
-------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA FROM THE COMPANY'S
GENERAL LEDGER AND BOARD OF DIRECTORS FINANCIAL REPORT PACKAGE AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Dec-31-1997
<PERIOD-END> Mar-31-1998
<CASH> 14,532
<INT-BEARING-DEPOSITS> 6,128
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 62,266
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 282,521
<ALLOWANCE> (2,268)
<TOTAL-ASSETS> 379,179
<DEPOSITS> 316,595
<SHORT-TERM> 6,450
<LIABILITIES-OTHER> 29,756
<LONG-TERM> 0
0
0
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EMPLOYEE AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of February, 1998, between
American Bank of Bradenton, Bradenton, Florida ( "the Bank" ) and Brian M.
Watterson, ("Employee").
WHEREAS, the Bank is a state bank, regulated by the Florida Comptroller's
Office, Division of Banking, insured by the Federal Deposit Insurance
Corporation, and located in Bradenton, Florida, and
WHEREAS, the Bank wants to employ the Employee as Senior Vice President/Chief
Financial Officer; and
Whereas, the parties desire to enter into this Agreement setting forth the terms
and conditions of the employment relationship of the Bank and the Employee;
NOW, THEREFORE, it is AGREED as follows:
I. RELATIONSHIP ESTABLISHED AND DUTIES
1. The Bank hereby will employ the Employee as Senior Vice President /
Chief Financial Officer to hold the title of Senior Vice President /
Chief Financial Officer, and to perform such services and duties as the
President and Chief Executive Officer may, from time to time, designate
during the term hereof. Subject to the terms and conditions hereof,
Employee will perform such duties and exercise such authority as are
customarily performed and exercised by persons holding such office
subject to the general direction of the President and Chief Executive
Officer, exercised in good faith in accordance with standards of
reasonable business judgment.
2. Employee accepts such employment and shall devote his full time,
attention, and efforts to the diligent performance of his duties herein
specified and as an officer of the Bank and will not accept employment
with any individual, corporation, partnership, governmental authority,
or any other entity, or engage in any other venture for profit which
the Bank may consider to be in conflict with his or its best interest
or to be in competition with the Bank's business, or which may
interfere in any way with the Employee's performance of his duties
hereunder. Any exception to this must be made by notification and
approval of the President and Chief Executive Officer.
II. TERMS OF EMPLOYMENT
1. The initial term of employment under this Agreement shall continue for
three ( 3 ) years unless such is terminated pursuant to the terms
hereof or by the first to occur of the conditions to be stated
hereinafter. This Agreement will be automatically extended each year
for a one-year period after the initial term unless either party gives
90 days contrary written notice to the other. The term previously
stated notwithstanding this contract shall be terminated by the earlier
to occur of any of the following:
a. the death of the Employee:
b. The complete disability of the Employee. "Complete disability"
as used herein shall mean the inability of the Employee, due
to illness, accident, or other physical or mental incapacity
to perform the services provided for hereunder for an
aggregate of ninety, (90) business days within any period of
one hundred eighty-one (181) consecutive days during the term
hereof; however disability shall not constitute a basis of
discharge for cause;
c. The discharge of Employee by the Bank for cause. "Cause" as used
herein shall mean:
(1) Such negligence or misconduct as shall constitute, as
a matter of law, a breach of convenants and
obligations of Employee hereunder;
(2) Failure or refusal of Employee to comply with the
provisions of this Agreement;
(3) Employee being convicted by any duly constituted
court with competent jurisdiction of a crime
involving moral turpitude;
(4) Employee violating standards outlined in employee
handbook;
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(5) The initiation of a proceeding against employee by
the Bank's primary federal or state regulator, the
result of which may by the Employee's suspension or
removal pursuant to 12 U.S.C. 1818(e) or like state
statute.
Termination of employee's employment shall terminate his designation as
an officer of the bank. In the event of Employee's termination with
"cause", the Employee shall be entitled to payment of salary and
benefits through the date of termination. The Board of Directors, in
its sole and absolute discretion may pay the Employee severance pay
when the Employee is terminated for cause but such severance pay shall
in no circumstance exceed three (3) months of Employee's base salary
hereunder due and payable on the date of termination. In the event of
termination due to death or complete disability, the employee is
entitled to severance pay equal to one (1) months pay for each full
year employed by the Bank. In the event Employee is terminated without
cause under this Agreement, Employee shall be entitled to twelve (12)
months severance pay at his then current rate, due and payable on the
date of termination.
III. COMPENSATION
For all services which Employee may render the Bank during the term
hereof, the Bank shall pay the Employee, subject to such deductions as
may be required by law:
1. Base Salary. An annual salary of Ninety Thousand and No/100
Dollars ($90,000.00)payable in weekly installments and subject
to such deductions as, until January 1, 1999. Thereafter, the
Base Salary shall be adjusted each January 1, during the term
of employment, to reflect the increases, if any, in the
Consumer Price Index for Urban Wage Earners and Clerical
Workers, U.S. City Average ( 1982-1984 = 100 ) published by
the Bureau of Labor Statistics of the U.S.Department of Labor
(the "Price Index" ). Annual adjustments shall be made by
determining the percentage increase in the Price Index over
the previous twelve-month period ending August 31. Merit-based
increases to salary shall be determined by the President and
Chief Executive Officer. The Base Salary, so increased, shall
not thereafter be decreased during the term of employment.
2. Performance Bonus. If earned by Employee, the Bank shall pay
to the Employee, each fiscal year during the term of
employment, a performance bonus in accordance with Schedule A
attached hereto and by reference made a part hereof. Such
bonus shall be paid to and by reference made a part hereof.
Such bonus shall be paid to Employee within thirty (30) days
after the end of the fiscal year.
IV. OTHER BENEFITS
1. The Employee shall be entitled to participate in any plan of
the Bank relating to stock options, stock purchases, profit
sharing, group life insurance, medical coverage, education, or
other retirement or employee benefits that the Bank may adopt
for the benefit of its employees.
2. The Employee shall be eligible to participate in any other
benefits which may be or become applicable to the Bank's
executive employees, including but no limited to an expense
account to reimburse Employee for documented business
expenses, the payment of reasonable expenses for attending
annual and periodic meetings of trade associations as approved
by the President and Chief Executive Officer, and any other
benefits which are commensurate with the responsibilities and
functions to be performed by the Employee under this
Agreement.
3. At such reasonable times as the President and Chief Executive
Officer shall in his discretion permit, the Employee shall be
entitled, without loss of pay, to absent himself voluntarily
from the performance of his employment under this Agreement,
all such voluntary absences count as vacation time, provided
that:
a. The Employee shall be entitled to an annual vacation
of four (4) weeks per year.
b. The timing of vacations shall be scheduled in a
reasonable manner by the Employee. The Employee shall
not be entitled to receive any additional
compensation from the Bank on account of his failure
to take a vacation; nor shall he be entitled to
accumulate unused vacation time from one calendar
year to the next.
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c. In addition to the aforesaid paid vacations, the
Employee shall be entitled, without loss of pay, to
absent himself voluntarily from the performance of
his employment with the Bank for such additional
periods of time and for such valid and legitimate
reasons as the President and Chief Executive Officer
in his discretion determines. Further, the Board of
Directors shall be entitled to grant the Employee a
leave or leaves of absence with or without pay at
such time or times and upon such terms and conditions
as the Board, in its discretion, may determine.
V. CHANGE OF CONTROL
1. If during the term of this Agreement there is a change of
control ( COC ) of the bank, the Employee shall be entitled to
termination or severance pay in the event the Employee's
employment is terminated, except for just cause as defined in
Section II., paragraph 1c, within ninety ( 90 ) days prior to
or after a change in control. In the event the Employee is
involuntarily terminated as a result of the COC, the Employee
shall be entitled to receive his salary through the last day
of the calendar month of termination. In addition, the
terminated Employee shall receive an amount equal to twelve
(12) additional month's salary as severance pay, such payment
to be made one-half (1/2)at the time of termination and
one-half (1/2) in monthly installments over six months. If the
Employee voluntarily terminates his employment as a result of
or after the change in control, the Employee is entitled to no
severance payment.
2. The following items are automatically considered due and
payable in the event that a change of control occurs and the
Employee is involuntarily terminated:
a. Non-forfeitable deferred compensation shall be paid
out in full.
b. In the event that the Employee is a participant in a
restricted stock plan, or shared option plan or the
like, and such plan is terminated involuntarily as a
result of the COC, all stock and options shall be
treated as required by the plan.
3. For purposed of this Agreement, "control" shall refer to the
acquisition of twenty-five (25) percent or more of the voting
securities of the Bank by any person or persons acting as a
group within the meaning of Section 13 ( d ) of the Securities
Exchange Act of 1934,if such acquisition would be subject to
prior notice under the Change in Bank Control Act, or prior
notice to any federal or state regulator. The term "person"
refers to an individual, corporation, bank, bank holding
company or other entity.
VI. POST TERMINATION COVENANTS
1. If during the term hereof Employee shall cease employment
hereunder for any reason, following such termination Employee
agrees that he will not, without prior written consent of the
Bank:
a. Furnish anyone with the name of, or any list or lists
of customers of the Bank or utilize such list or
information himself for banking purposes; or
b. Furnish, use, or divulge to anyone any information
acquired by him from the Bank relating to the Bank's
methods of doing business; or
2. It is understood and agreed by the parties hereto that the
provisions of this section are independent of each other, and
the invalidity of any such provision or portion thereof shall
not affect the validity or enforceability of any other
provisions of this Agreement.
3. Bank and Employee agree that in the event Employee violates
the above restrictions, the Bank shall be entitled to
injunctive relief, as well as damages, and the Bank shall make
no further payments to Employee under this Agreement.
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<PAGE>
VII. WAIVER OF PROVISIONS
Failure of any of the parties to insist, in one or more instances, on
performance by the others in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or
relinquishment of any right granted hereunder of the future performance
of any such term or condition or of any other term or condition of this
Agreement, unless such waiver is contained in a writing signed by or on
behalf of all the parties.
VIII. GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Florida. If for any reason any
provision of this Agreement shall be held by a court of competent
jurisdiction to be void and unenforceable, the same shall not effect
the remaining provisions thereof.
IX. MODIFICATION AND AMENDMENT
This Agreement contains the sole and entire agreement among the parties
hereto, and supersedes all prior discussions and agreements among the
parties, and any such prior agreements shall, from and after the date
thereof, be null and void. This Agreement shall not be modified or
amended except by an instrument in writing signed by or on behalf of
the parties hereto.
X. COUNTERPARTS AND HEADINGS
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instruments. The headings set
out herein are for convenience of reference and shall not be deemed a
part of this Agreement.
XI. CONTRACT NONASSIGNABLE BY EMPLOYEE
This Agreement may not be assigned or transferred by Employee, in whole
or in part, without the prior written consent of the Bank.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the year and date first above written.
EMPLOYEE:
------------------------ --------------------------------------------
Witness EMPLOYEE Date
BANK:
------------------------ --------------------------------------------
Witness PRESIDENT Date
<PAGE>
SCHEDULE A
The Performance Bonus for Brian M. Watterson shall be based upon
achievement of the Return on Average Assets based on the annual budget
as approved by the Board of Directors. The Performance Bonus will apply
based upon the following formula:
ROA 1.00% but less than 1.25 % = 10%
ROA 1.25% but less than 1.50% = 15%
ROA Over 1.50% = 20%
