<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 333-6581
ST. JOSEPH CAPITAL CORPORATION
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 35-1977746
- --------------------------------- ---------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
3820 EDISON LAKES PARKWAY, MISHAWAKA, IN 46545
----------------------------------------------
(Address of principal executive offices)
(219) 273-9700
---------------------------
(Issuer's telephone number)
N/A
---------------------------
(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 preceding 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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the Issuer's classes
of common equity, as of the latest practicable date:
1,267,513 shares of common stock, $0.01 par value per share, were outstanding
as of July 31, 1997.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
<PAGE> 2
TABLE OF CONTENTS
PAGE
NUMBER
PART I ------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Condensed Balance Sheets,
June 30, 1997 and December 31, 1996 3
Consolidated Condensed Statements of Income,
Three Months Ended June 30, 1997 and 1996,
Six Months Ended June 30, 1997 and 1996. 4
Consolidated Statements of Changes in Stockholders' Equity,
Six Months Ended June 30, 1997. 5
Consolidated Condensed Statements of Cash Flow,
Six Months Ended June 30, 1997 and 1996. 6
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8-9
PART II
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES S-1
2
<PAGE> 3
ST. JOSEPH CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,659,456 $ 3,103
Interest bearing deposits in banks 537,178 1,307,009
Federal funds sold 5,500,000 100,000
----------- -----------
Total Cash and Cash Equivalents 7,696,634 1,410,112
Securities available for sale 13,046,787 10,127,902
Loans, net 11,249,046 --
Bank premises and equipment, net 826,426 274,720
Other assets 307,235 28,671
----------- -----------
Total Assets $33,126,128 $11,841,405
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $19,550,326 $ --
Repurchase agreements 2,041,914 --
Other liabilities 76,980 48,519
----------- -----------
Total Liabilities 21,669,220 48,519
STOCKHOLDERS' EQUITY
Common stock 12,664 12,652
Additional paid in capital 12,115,987 12,103,000
Retained deficit (698,124) (290,219)
Unrealized gains/losses on
securities available for sale, net 26,381 (32,547)
----------- -----------
Total Stockholders' Equity 11,456,908 11,792,886
----------- -----------
Total Liabilities and Stockholders' Equity $33,126,128 $11,841,405
=========== ===========
</TABLE>
3
<PAGE> 4
See accompanying notes to consolidated financial statements.
ST. JOSEPH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 29, 1996
THREE MONTHS THREE MONTHS SIX MONTHS (DATE OF INCEPTION)
ENDED ENDED ENDED THROUGH
JUNE 30, 1997 JUNE 30, 1996 JUNE 30, 1997 JUNE 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans, including fees $ 161,895 $ -- $ 187,848 $ --
Securities and other 270,787 -- 416,017 --
--------- --------- --------- ---------
Total Interest Income 432,682 -- 603,865 --
INTEREST EXPENSE:
Deposits 161,888 -- 194,559 --
Repurchase agreements 12,095 -- 12,657 --
--------- --------- --------- ---------
Total Interest Expense 173,983 -- 207,216 --
Net Interest Income 258,699 -- 396,649 --
LESS: PROVISION FOR LOAN LOSSES 137,300 -- 179,200 --
--------- --------- --------- ---------
Net Int Inc after provision for loan losses 121,399 -- 217,449 --
OTHER INCOME: 1,167 2,067 15,578 2,145
OTHER EXPENSE:
Salaries and employee benefits 174,686 43,452 318,369 48,057
Occupancy 74,280 649 123,393 1,458
Other 116,327 73,338 199,170 74,077
--------- --------- --------- ---------
Total Other Expense 365,293 117,439 640,932 123,592
--------- --------- --------- ---------
Loss before Income Tax (242,727) (115,372) (407,905) (121,447)
Income Tax Expense -- -- -- --
--------- --------- --------- ---------
Net Loss (242,727) (115,372) (407,905) (121,447)
========= ========= ========= =========
Net Loss Per Share (.19) N/A (.32) N/A
</TABLE>
S-1
<PAGE> 5
See accompanying notes to consolidated financial statements.
ST. JOSEPH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1997
-------------
<S> <C>
Balance, January 1 $11,792,886
Proceeds from issuance of common stock
for Employee 401(k) Plan 12,999
Change in unrealized appreciation on
securities available for sale, net of tax 58,928
Net loss (407,905)
-----------
Balance at end of period $11,456,908
===========
</TABLE>
5
<PAGE> 6
See accompanying notes to consolidated financial statements.
ST. JOSEPH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
- --------------------------------------------------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 29, 1996
SIX MONTHS (DATE OF INCEPTION)
ENDED THROUGH
JUNE 30, 1997 JUNE 30, 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (407,905) $(121,447)
Adjustments to reconcile net loss to net cash
from operating activities
Depreciation 45,511 244
Provision for loan loss 179,200 --
Discount accretion, net (52,196) --
Increase in other assets (278,564) (5,491)
Increase in other liabilities 28,460 42,449
------------ ---------
Net cash from operating activities (485,493) (84,245)
------------ ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Loans originated, net of repayments (11,428,246) --
Purchase of securities available for sale (18,092,761) --
Maturities of securities available for sale 15,285,000 --
Fixed asset expenditures ( 597,217) (4,127)
------------ ---------
Net cash from investing activities (14,833,224) (4,127)
------------ ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposit accounts 19,550,326 --
Net increase in repurchase agreements 2,041,914
Proceeds from loans -- 275,000
Proceeds from the issuance of common stock -- 1,000
Proceeds from issuance of common stock for
employee 401(k) Plan 12,999 --
------------ ---------
Net cash from financing activities 21,605,239 276,000
------------ ---------
Net increase in cash and cash equivalents 6,286,522 187,628
Cash and cash equivalents at beginning of period 1,410,112 --
------------ ---------
Cash and cash equivalents at end of period $ 7,696,634 $ 187,628
============ =========
</TABLE>
6
<PAGE> 7
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements were prepared in accordance
with instructions for Form 10-QSB and, therefore, do not include all
disclosures required by generally accepted accounting principles for complete
presentation of financial statements. In the opinion of management, the
consolidated financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the balance sheets of
St. Joseph Capital Corporation (the "Company") as of June 30, 1997 and
December 31, 1996 and the statements of income for the three months ended June
30, 1997 and June 30, 1996 and for the six months ended June 30, 1997 and
February 29, 1996 (date of inception) through June 30, 1996 and for the
changes in stockholders' equity and cash flows for the six months ended June
30, 1997 and February 29, 1996 (date of inception) through June 30, 1996. The
income reported for the periods presented is not necessarily indicative of the
results to be expected for the full year.
NOTE 2 - PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, St. Joseph Capital Bank (the "Bank").
All significant inter-company accounts and transactions have been eliminated in
consolidation.
NOTE 3 - INITIAL PUBLIC OFFERING
On September 10, 1996, the Company completed an initial common stock offering
during which 1,265,000 shares of the Company's common stock were sold at $10
per share, resulting in gross proceeds of $12.65 million. Expenses associated
with the initial public offering totaling $534,000 were netted against the
gross proceeds and not recorded as expenses in the Company's statement of
income. Thus, the net proceeds from the initial public offering were $12.1
million. The Company used approximately $10 million of the proceeds from the
stock offering to provide the initial capitalization of the Bank on February
13, 1997.
NOTE 4 - DEVELOPMENT STAGE
During 1996, the Company was a development stage company as its wholly owned
subsidiary, the Bank, had not yet commenced its planned principal operations of
banking.
The Bank received regulatory approval to operate as a bank from the Indiana
Department of Financial Institutions on August 8, 1996, and received its
certificate of insurance from the Federal Deposit Insurance Corporation on
February 11, 1997. The Bank commenced operations on February 13, 1997. The
Bank offers a full range of commercial and consumer banking services primarily
within a 12-mile radius of Mishawaka, Indiana.
NOTE 5 - COMPARATIVE DATA
The Company was incorporated in February 1996. Its operating subsidiary (the
Bank) commenced operations on February 13, 1997. As of June 30, 1996, no
significant activity had taken place, therefore comparative
7
<PAGE> 8
statements for the three months ended June 30, 1996 and for the period from
February 29, 1996 (date of inception) through June 30, 1996 are not necessarily
indicative of the results that may be expected for future years.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
St. Joseph Capital Corporation (the "Company") was formed under the laws
of the state of Delaware for the purpose of becoming the bank holding company
of St. Joseph Capital Bank (the "Bank").
The Bank was capitalized on February 7, 1997 and commenced operations on
February 13, 1997. The Bank is organized as an Indiana chartered commercial
bank with depository accounts insured by the Federal Deposit Insurance
Corporation. The Bank provides full-service commercial and consumer banking in
Mishawaka and the surrounding communities commonly referred to as the Michiana
area.
FINANCIAL CONDITION
The Company has experienced significant growth since the Bank opened on
February 13, 1997. Total assets of the Company increased by $21,284,723 or
179% to $33,126,128 at June 30, 1997 from $11,841,405 at December 31, 1996.
The growth resulted from an increase in loans, securities and federal funds
sold which were primarily funded by an increase in deposits received from
clients. As the Bank is in its initial year of operations, growth in the loan
portfolio funded by increased deposits is anticipated to continue at a rapid
pace.
Cash and cash equivalents increased by $6,286,522 to $7,696,634 at June
30, 1997 from $1,410,112 at December 31, 1996. The increase was primarily
attributable to excess funds invested in overnight federal funds sold in order
to maintain adequate liquidity to fund loan growth.
Securities increased by $2,918,885 or 28% to $13,046,787 at June 30, 1997
from $10,127,902 at December 31, 1996. The increase was a result of the
redeployment of excess funds into the investment portfolio to increase the
Company's total return.
Loans increased to $11,428,246 at June 30, 1997 from less than $3,000,000
at the end of the first quarter. The significant growth was attributable to
management's ability to establish credit relationships with targeted clients.
At June 30, 1997, the mix of the total loan portfolio included commercial
loans of $9,004,548 or 78% of total loans; residential real estate loans of
$2,127,563 or 19% of total loans; consumer loans of $296,135 or 3% of total
loans. In addition to the outstanding loan balances, the Company had unfunded
loan commitments of $6,826,038 as of June 30, 1997.
The allowance for loan losses as of June 30, 1997 was $179,200,
representing approximately 1.57% of gross loans outstanding. The Company has
not experienced any credit losses as of June 30, 1997.
Bank premises and equipment increased by $551,706 to $826,426 at June 30,
1997 from $274,720 at December 31, 1996. The increase was attributable to the
cost associated with renovating, moving and furnishing the Bank's new
headquarters at 3820 Edison Lakes Parkway, Mishawaka, Indiana at which
operations were commenced on June 13, 1997.
Deposits represent the primary source of funds for the Company. Total
deposits grew to $19,550,326 at June 30, 1997 as relationships with existing
clients expanded and new deposit relationships with targeted clients were
established.
8
<PAGE> 9
Short-term borrowings in the form of repurchase agreements with local
relationship-based commercial clients continued to grow during the quarter.
Many of the funds are from businesses with large cash balances. Though
short-term in nature, repurchase agreements have been and continue to be a
stable source of funds. Repurchase agreements grew to $2,041,914 at June 30,
1997.
The accumulated deficit at December 31, 1996 of $290,219 was comprised of
pre-opening expenses and start-up expenses for the Bank, consisting primarily
of salaries, supplies and professional fees. The accumulated deficit increased
by $407,905 during the six months ended June 30, 1997, which reflects the loss
for the period.
RESULTS OF OPERATIONS
Although the Company was incorporated in 1996, no significant activity
took place until the Bank commenced operations on February 13, 1997.
Therefore, comparisons between the second quarter and the first half of 1996
and the comparable periods of 1997 are not necessarily meaningful. The net
loss for the six month period ended June 30, 1997 was $407,905 as compared to
$121,447 for the same period in 1996. The net loss for the second quarter of
1997 was $242,727.
Interest income for the three month and six month periods ended June 30,
1997 was $432,682 and $603,865, respectively. The rise in interest income was
attributable to greater outstanding balances in earning assets. Interest
expense for the three month and six month periods ended June 30, 1997 was
$173,983 and $207,216, respectively. The rise in interest expense was
attributable to greater outstanding balances in deposits.
The Company's net interest margin, or margin on earning assets, was 4.44%
for the six months ended June 30, 1997. The net interest margin indicates
that the significant growth in the balance sheet was not achieved through lower
loan or higher deposit pricing.
The Company had an allowance for loan losses of approximately 1.57% of
total loans at June 30, 1997. The provision for loan losses for the six month
period ended June 30, 1997 was $179,200. This amount was provided as a result
of the increase in the total loan portfolio. Management believes the current
reserve would cover possible loan losses that may occur on the current loan
portfolio in the future. The Bank has not experienced any credit losses as of
June 30, 1997.
The main components of other expense were primarily salaries and occupancy
expense. Other expenses for the three month and six month periods ended June
30, 1997 were $365,293 and $640,932, respectively.
Since the Company is a start-up venture, it is anticipated that the
Company's net losses will continue for some period in the future.
RECENT REGULATORY DEVELOPMENTS
The Committee on Banking and Financial Services of the U.S. House of
Representatives has approved legislation that would allow bank holding
companies to engage in a wider range of nonbanking activities, including
greater authority to engage in securities and insurance activities. The
expanded powers generally would be available to a bank holding company only if
the bank holding company and its bank subsidiaries remain well-capitalized and
well-managed, and if each of the depository institution subsidiaries of the
bank holding company had received at least a "satisfactory" rating under the
Community Reinvestment Act. The proposed legislation would also impose various
restrictions on transactions between the depository institution
9
<PAGE> 10
subsidiaries of bank holding companies and their nonbank affiliates. These
restrictions are intended to protect the depository institutions from the risks
of the new nonbanking activities permitted to such affiliates. At this time,
the Company is unable to predict whether the proposed legislation will be
enacted and, therefore, is unable to predict the impact such legislation may
have on the operations of the Company and its subsidiaries.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 29, 1997, the Company held its annual meeting of stockholders.
At the meeting, David A. Eckrich, Jerry Hammes, Arthur H. McElwee and John W.
Rosenthal were elected to serve as Class I directors with terms expiring in
2000. Continuing as Class II directors until 1998 are Arthur J. Decio, V.
Robert Hepler, Scott C. Malpass and Richard A. Rosenthal. Continuing as Class
III directors until 1999 are Helen L. Krizman, Jack Matthys and Robert A.
Sullivan. Stockholders also ratified the appointment of Crowe, Chizek and
Company as the Company's independent accountants for the 1997 fiscal year and
approved an amendment to the Company's Certificate of Incorporation to increase
the number of authorized shares of Common Stock from 1,500,000 to 2,500,000.
There were 1,265,676 issued and outstanding shares of Common Stock entitled to
vote at the annual meeting. The voting on each item presented at the annual
meeting was as follows:
<TABLE>
<CAPTION>
Election of Directors Votes For Votes Withheld Votes Against
--------------------- --------- -------------- -------------
<S> <C> <C> <C>
David A. Eckrich 1,009,775 2,500 0
Jerry Hammes 1,009,775 2,500 0
Arthur H. McElwee 1,009,775 2,500 0
John W. Rosenthal 1,009,775 2,500 0
Ratification of the appointment
of Crowe, Chizek and Company
as independent public
accountants for the Company 994,275 13,000 5,000
Amendment to the Certificate
of Incorporation to increase the
number of shares of Common
Stock authorized from
1,500,000 to 2,500,000 969,075 5,500 37,700
</TABLE>
10
<PAGE> 11
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
None
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.
ST. JOSEPH CAPITAL CORPORATION
(Registrant)
Date: August 8, 1997 __________________________________
John W. Rosenthal
President
Date: August 8, 1997 __________________________________
Edward R. Pooley
Principal Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,659,456
<INT-BEARING-DEPOSITS> 537,178
<FED-FUNDS-SOLD> 5,500,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 13,046,787
<LOANS> 11,428,246
<ALLOWANCE> (179,200)
<TOTAL-ASSETS> 33,126,128
<DEPOSITS> 19,550,326
<SHORT-TERM> 2,041,914
<LIABILITIES-OTHER> 76,980
<LONG-TERM> 0
0
0
<COMMON> 12,664
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 11,456,908
<INTEREST-LOAN> 187,848
<INTEREST-INVEST> 416,017
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 603,865
<INTEREST-DEPOSIT> 194,559
<INTEREST-EXPENSE> 207,216
<INTEREST-INCOME-NET> 396,649
<LOAN-LOSSES> 179,200
<SECURITIES-GAINS> 625
<EXPENSE-OTHER> 640,932
<INCOME-PRETAX> (407,905)
<INCOME-PRE-EXTRAORDINARY> (407,905)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (407,905)
<EPS-PRIMARY> (.32)
<EPS-DILUTED> 0
<YIELD-ACTUAL> 7.12
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> (179,200)
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> (179,200)
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> (179,200)
</TABLE>
