<PAGE> 1
UNITEDS STATES
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 March 31, 1999
[0] 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:
1,280,686 shares of common stock, $0.01 par value per share, were
outstanding as of May 10, 1999.
Transitional Small Business Disclosure Format (check one): Yes No X
---- ----
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TABLE OF CONTENTS
PAGE
NUMBER
------
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Condensed Balance Sheets,
March 31, 1999 (Unaudited) and December 31, 1998 (Audited) 3
Consolidated Condensed Statements of Income,
Three Months Ended March 31, 1999 and 1998. 4
Consolidated Condensed Statements of Cash Flow,
Three Months Ended March 31, 1999 and 1998. 5
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 6
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 2. CHANGES IN SECURITIES 11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
ITEM 5. OTHER INFORMATION 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
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CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1999 1998
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
Cash and due from banks $ 5,306,922 $ 6,113,583
Interest-bearing deposits in other financial institutions-
short-term 154,809 5,531
Federal funds sold 7,050,000 9,600,000
------------- -------------
Total cash and cash equivalents 12,511,731 15,719,114
Securities available for sale, net 29,742,349 31,066,346
Federal Home Loan Bank (FHLB) stock 388,800 222,200
Loans receivable, net of allowance for loan losses 58,285,020 48,011,296
Accrued interest receivable 630,108 739,024
Premises and equipment, net 710,613 742,495
Other assets 106,027 103,565
------------- -------------
Total Assets $ 102,374,648 $ 96,604,040
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits
Noninterest-bearing demand $ 12,402,037 $ 11,442,145
Savings, NOW and money market 43,318,486 46,414,185
Certificates of deposit 19,275,975 18,534,135
------------- -------------
Total deposits 74,996,498 76,390,465
Securities sold under agreements to repurchase
& other borrowings 12,337,475 6,388,971
FHLB advances 3,500,000 2,000,000
Accrued interest payable 107,374 100,707
Other liabilities 86,386 113,052
------------- -------------
Total Liabilities 91,027,733 84,993,195
SHAREHOLDERS' EQUITY
Common stock 12,807 12,786
Additional paid in capital 12,358,861 12,323,967
Accumulated deficit (1,212,106) (1,280,858)
Net unrealized appreciation on securities available for
sale, net of tax 187,353 554,950
------------- -------------
Total Shareholders' Equity 11,346,915 11,610,845
------------- -------------
Total Liabilities and Shareholders' Equity $ 102,374,648 $ 96,604,040
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
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ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1999 MARCH 31, 1998
-------------- --------------
<S> <C> <C>
INTEREST AND DIVIDEND INCOME:
Loans receivable, including fees $ 1,055,630 $ 528,420
Securities available for sale - taxable 511,096 379,987
----------- -----------
Total Interest and Dividend Income 1,566,726 908,407
INTEREST EXPENSE:
Deposits 687,262 427,593
Securities sold under agreements to repurchase
and other borrowings 121,977 62,230
----------- -----------
Total Interest Expense 809,239 489,823
Net Interest Income 757,487 418,584
LESS: PROVISION FOR LOAN LOSSES 98,000 100,005
----------- -----------
Net Interest Income after Provision for Loan Losses 659,487 318,579
NON-INTEREST INCOME:
Other income 19,148 13,531
OTHER EXPENSES:
Salaries and employee benefits 330,181 236,941
Occupancy and equipment 117,581 109,566
Other expense 162,122 105,595
----------- -----------
Total Other Expense 609,884 452,102
----------- -----------
Net Income (Loss) before Income Tax $ 68,751 $ (119,992)
Income Tax Expense -- --
----------- -----------
Net Income (Loss) $ 68,751 $ (119,992)
----------- -----------
Other comprehensive income, net of tax:
Change in unrealized gains
on securities (367,597) 11,152
Comprehensive Income (Loss) $ (298,846) $ (108,840)
=========== ===========
Basic and diluted income (loss) per common share .05 (.09)
</TABLE>
See accompanying notes to consolidated financial statements.
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ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 68,751 $ (119,992)
Adjustments to reconcile net loss to net cash
from operating activities
Depreciation 57,737 53,266
Provision for loan loss 98,000 100,005
Net amortization (accretion) on securities
available for sale 19,369 14,023
Gains on sales and calls of securities
available for sale, net -- (10,919)
Net change in
Accrued interest receivable 108,916 17,070
Other assets (2,462) (14,167)
Accrued interest payable 6,667 39,275
Other liabilities (26,665) (7,405)
----------- -----------
Net cash from operating activities 330,313 71,156
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in interest bearing deposits in
other financial institutions -- 500,000
Purchase of securities available for sale (1,262,969) (3,988,281)
Proceeds from sales of securities available for sale -- 3,012,500
Proceeds from maturities and calls of securities
available for sale 2,200,000 --
Purchase of FHLB stock (166,600) --
Net change in loans receivable (10,371,724) (5,462,745)
Purchase of premises and equipment, net (25,855) (30,226)
----------- -----------
Net cash from investing activities (9,627,148) (5,968,752)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits (1,393,967) 7,403,668
Net change in securities sold under agreements
to repurchase & other borrowings 5,948,504 144,834
Proceeds from FHLB advances 1,500,000 --
Proceeds from issuance of common stock, net 34,915 116,487
----------- -----------
Net cash from financing activities 6,089,452 7,664,989
----------- -----------
Net change in cash and cash equivalents (3,207,383) 1,767,393
Cash and cash equivalents at beginning of period 15,719,114 4,535,464
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,511,731 $ 6,302,857
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include
the accounts of the Company and its wholly owned subsidiary, St. Joseph Capital
Bank (the "Bank").
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 for Form 10-QSB.
Accordingly, they do not include all information and footnotes required by
generally accepted accounting principles for complete presentation of financial
statements. In the opinion of management, the condensed consolidated financial
statements contain all adjustments (consisting only of normal recurring
accruals) considered necessary for a fair presentation have been included. All
significant inter-company accounts and transactions have been eliminated in
consolidation. The income reported for the periods presented is not necessarily
indicative of the results to be expected for the full year.
NOTE 2 - COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components; however, the adoption of
this Statement had no impact on the Company's net income or shareholders'
equity. Statement 130 requires unrealized gains or losses on the Company's
available-for-sale securities, which prior to adoption were reported separately
in shareholders' equity, to be included in other comprehensive income. Prior
year financial statements have been reclassified to conform to the requirements
of Statement 130.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
St. Joseph Capital Corporation (the "Company"), a Delaware corporation
incorporated in February, 1996, is a bank holding company which owns all of the
capital stock of the St. Joseph Capital Bank, an Indiana state bank located in
Mishawaka, Indiana (the "Bank"). The Bank 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. From
the date of the Company's inception through December 31, 1997, the Company and
the Bank conducted no business other than matters incidental to their
organization and opening for business. On September 10, 1996, the Company
consummated an initial public offering of 1,265,000 shares of its Common Stock
at $10.00 per share. The Company currently maintains its offices at 3820 Edison
Lakes Parkway, Mishawaka, Indiana, 46545. The Company's telephone number is
(219) 273-9700.
BUSINESS STRATEGY
The Company concentrates on the financial services needs of individuals
and local businesses. A cornerstone of its business strategy is to emphasize the
Bank's local management and its commitment to the Bank's market area. The
Company also expects to establish a high standard of quality in each service it
provides, and its employees are expected to emphasize service in their dealings
with clients. Management believes that the use of state-of-the-art technology
will permit each employee to devote more time and attention to personal service,
respond more quickly to a client's requests and deliver services in the
timeliest manner possible.
The Company's goal is to create a "client-driven" organization focused
on providing high value to clients by promptly delivering products and services
matched directly to their needs. The Company expects to gain market share by
developing strong ties to its community. In this regard, most of the Company's
directors currently hold, and have held in the past, leadership positions in a
number of community organizations, and intend to continue this active
involvement in future years. Other members of the
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management team will also be encouraged to volunteer for such positions.
Additionally, employees are expected to be active in the civic, charitable and
social organizations located in the Michiana area.
The Bank offers a broad range of deposit services, including checking
accounts, money market accounts, savings accounts and time deposits of various
types, as well as a full range of short to intermediate term personal and
commercial loans. The Bank makes personal loans directly to individuals for
various purposes, including purchases of automobiles, mobile homes, boats and
other recreational vehicles, home improvements, education and personal
investments. The Bank makes residential mortgage loans and substantially all of
such loans are retained by the Bank and consist of balloon payment, adjustable
and fixed rate mortgages. The Bank also offers other services, including credit
cards, cashiers checks, traveler's checks and automated teller access.
The Company's market area is competitive and contains numerous
commercial banks, savings and loans and credit unions. It also faces competition
from finance companies, insurance companies, mortgage companies, securities
brokerage firms, money market funds, loan production offices and other providers
of financial services. Most competitors have been in business for many years,
have established customer bases, are substantially larger, have substantially
larger lending limits than the Bank and can offer certain services, including
multiple branches and international banking services, that the Bank will be able
to offer only through correspondent banks, if at all. In addition, most of these
entities have greater capital resources than the Bank, which among other things
may allow them to price their services at levels more favorable to clients and
to provide larger credit facilities than could the Bank.
PLAN FOR OPERATION
The Company's plan of operation is centered on the growth of the Bank.
The primary operation of the Bank is to accept deposits and make loans. General
economic conditions, the monetary and fiscal policies of federal agencies and
the regulatory policies of agencies that regulate financial institutions affect
the operating results of the Company. Interest rates on competing investments
and general market rates of interest influence the Company's cost of funds.
Client and commercial demand influence lending activities, which in turn are
affected by the interest rates at which such loans are made general economic
conditions and the availability of funds for lending activities.
FORWARD-LOOKING STATEMENTS
When used in this Form 10-QSB, the words or phrases "will likely
result", "are expected to", "will continue", "is anticipated", "estimated",
"project", or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are subject to certain risks and uncertainties
including changes in economic conditions in the Company's market area, changes
in policies by regulatory agencies, fluctuations in interest rates, demand for
loans in the Company's market area and competition, that could cause actual
results to differ materially from historical earnings and those presently
anticipated or projected. The Company wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as to
the date made. The Company wishes to advise readers that the factors listed
above could affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from any
opinions or statements expressed with respect to future periods in any current
statements.
The Company does not undertake, and specifically disclaims any
obligation to subsequently update or revise any forward-looking statements
contained in the report after the date of the report.
RESULTS OF OPERATIONS
Consolidated income for the Company for the three months ended March
31, 1999 was $68,751, compared to a net loss of $(119,992) for the corresponding
period in 1998. Basic and diluted income per common share was $.05 for the first
quarter 1999, compared to basic and diluted loss of $(.09) for the corresponding
period in 1998.
Net interest income for the three months ended March 31, 1999 was
$757,487, an increase of $338,903 or 81.0% over the three months ended March 31,
1998. The increase was primarily due to the growth in the loan portfolio. The
net interest margin for March 31, 1999 was 3.47% compared to 3.29% for March 31,
1998.
Total non-interest income was $19,148 for the three months ended March
31, 1999 compared to $13,531 for the three months ended March 31, 1998.
Non-interest income was primarily comprised of service charge income on deposit
accounts.
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Total non-interest expense was $609,884 for the three months ended
March 31, 1999 compared to $452,102 for the three months ended March 31, 1998 or
a 34.9% increase. The increase was largely the result of salaries and employee
benefits increasing $93,240 or 39.3% to $330,181 in the three months ended March
31, 1999. This increase was due to hiring additional employees, as well as
regular annual increases for existing employees. Occupancy and equipment expense
increased by $8,015, primarily due to the increases in cost of maintenance
contracts to service existing equipment, miscellaneous minor equipment needed to
operate the Bank and property insurance. Other expense increased $56,527 due to
the increases in supplies needed to operate the Bank, audit and accounting fees,
telephone and communication cost and outside service providers. All of these
increases were attributable to the continuing growth of the Bank.
LOANS AND PROVISION FOR LOAN LOSSES
The provision for loan losses charged to operations was based partially
on management's estimation of potential losses and on an evaluation of portfolio
risk and economic factors. The provision for loan losses at March 31, 1999 was
$98,000 and the allowance for loan losses at March 31, 1999 was $849,675
compared to $751,675 at December 31, 1998. The allowance for loan losses as of
March 31, 1999 represented approximately 1.44% of gross loans outstanding.
At March 31, 1999, there were no loans where known information about
possible credit problems of borrowers caused management to have serious doubts
as to the ability of the borrowers to comply with present loan repayment terms
and which, in management's judgement, may result in disclosure of such loans.
Furthermore, management is not aware of any potential problem loans, which could
have a material effect on the Company's operating results, liquidity, or capital
resources.
Management allocated approximately 65.1% of the allowance for loan
losses to commercial loans, 11.2% to residential loans and 5.8% to installment
loans to individuals at March 31, 1999, leaving 17.9% unallocated. There were no
non-performing loans at March 31, 1999. Management believes the allowance for
loan loss balance at March 31, 1999 was adequate to absorb potential losses in
the loan portfolio.
FINANCIAL CONDITION
Total assets were $102.4 million at March 31, 1999 compared to $96.6
million at December 31, 1998, a 6.0% increase. Growth in the loan portfolio
funded by increased deposits has continued at a rapid pace.
At March 31, 1999, total loans receivable, net of deferred fees,
increased to $58.3 million compared to $48.0 million at December 31, 1998. The
21.4% increase in loans was funded by a combination of securities sold under
agreements to repurchase, Federal Home Loan Bank advances and federal funds
sold. The mix of the loan portfolio at March 31, 1999 was $39.4 million or 66.6%
in commercial loans, $15.7 million or 26.6% in residential mortgage loans and
$4.0 million or 6.8% in installment loans to individuals. In addition to the
outstanding loan balances, the Company had loan commitments of $30.0 million as
of March 31, 1999.
Securities available for sale totaled $29.7 million at March 31, 1999,
which represented a decrease of $1.3 million or 4.3% from $31.1 million at
December 31, 1998. The decrease was attributed to the maturity of commercial
paper purchased in the third quarter of 1998. All securities have been
classified as available for sale. Available for sale securities represent those
securities which the Bank may decide to sell if needed for liquidity,
asset/liability management or other reasons. Such securities are reported at
fair value with unrealized gains and losses included as a separate component of
shareholders' equity, net of tax. The unrealized gain on the securities
portfolio, net of taxes was $187,353 at March 31, 1999.
Total deposits and funds received from the short-term borrowings in the
form of repurchase agreements with local relationship-based commercial clients
at March 31, 1999 amounted to $85.3 million compared to $82.8 million at
December 31, 1998 a 3.0% increase. Though short-term in nature, repurchase
agreements have been and continue to be a stable source of funds. Repurchase
agreements grew to $10.3 million at March 31, 1999.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
Liquidity relates primarily to the Company's ability to fund loan
demand, meet deposit clients' withdrawal requirements and provide for operating
expenses. Assets used to satisfy these needs consist of cash and due from banks,
federal funds sold,
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interest-bearing deposits in other financial institutions and securities
available for sale. These assets are commonly referred to as liquid assets.
Liquid assets were $42.3 million at March 31, 1999 compared to $46.8 million at
December 31, 1998. Liquidity levels declined $4.5 million from December 31, 1998
to March 31, 1999 primarily due to the loan portfolio increasing at a faster
rate than the growth in deposits, resulting in the reduction of federal funds
sold to meet this loan demand. Management recognizes that securities may need to
be sold in the future to help fund loan demand and accordingly, as of March 31,
1999, the entire securities portfolio of $29.7 million was classified as
available for sale. Management believes its current liquidity level is
sufficient to meet anticipated future growth.
The Company has secured a line of credit with the Federal Home Loan
Bank of Indianapolis. As of March 31, 1999, the Company has $3.5 million in
Federal Home Loan Bank advances outstanding secured by Government Agencies,
which are part of the investment portfolio.
The statements of cash flows for the periods presented provide an
indication of the Company's sources and uses of cash as well as an indication of
the ability of the Company to maintain an adequate level of liquidity. A
discussion of the statements of cash flows for 1999 and 1998 follows.
For the three months ended March 31, 1999, the Company experienced a
net increase in cash from operating activities. Net cash from operating
activities was $330,313, compared to a net increase in cash from operating
activities of $71,156 for the three months ended March 31, 1998. The increase in
net cash from operating activities of $259,157 during the period ended 1999 as
compared to 1998 was partially a result of the Company's ability to generate an
operating profit of $68,751 in 1999 compared to an operating loss of $(119,992)
in 1998.
For both periods presented, the Company experienced a net decrease in
net cash from investing activities. Net cash from investing activities was $(9.6
million) and $(6.0 million) for the three months ended March 31, 1999 and March
31, 1998. The changes in net cash from investing activities include growth in
loans receivable, as well as purchases and normal maturities of securities
available for sale. There were no sales of securities available for sale, for
the three months ended March 31, 1999.
Net cash flow from financing activities was $6.1 million and $7.7
million for the three months ended March 31, 1999 and March 31, 1998. In both
periods the increase was primarily attributable to growth in total deposits,
securities sold under agreements to repurchase and Federal Home Loan Bank
advances.
INTEREST RATE RISK
Managing rates on earning assets and interest-bearing liabilities
focuses on maintaining stability in the net interest margin, an important factor
in earnings growth and stability. Emphasis is placed on maintaining a controlled
rate sensitivity position, to avoid wide swings in margins and to manage risk
due to changes in interest rates.
The Bank currently uses a computer model to simulate the effects of
possible interest rate changes. As a guide, the Bank intends to limit estimated
negative exposure to changing interest rates within the ensuing year to 5% of
net interest income. The exposure estimate will be based on a variety of
assumptions built into the model, and assumed interest rate changes of plus or
minus 100 basis points.
CAPITAL RESOURCES
Total shareholders' equity was $11.3 million as of March 31, 1999. The
decrease from $11.6 million at December 31, 1998 was attributed to the change in
the unrealized appreciation on the securities portfolio.
Following are selected capital ratios for the Company as of the date
indicated, along with the minimum regulatory requirements for each item:
<TABLE>
<CAPTION>
REQUIRED FOR
WELL CAPITALIZED MARCH 31, 1999
---------------- --------------
<S> <C> <C>
Total Risk Based Ratio 10% or more 16.7%
Tier 1 Risk Based Capital 6% or more 15.5%
Tier 1 Leverage Ratio 5% or more 10.6%
</TABLE>
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The Company exceeded the applicable minimum regulatory capital
requirements at March 31, 1999.
As of March 31, 1999, management is not aware of any current
recommendations by the banking regulatory authorities which, if they were to be
implemented, would have, or are reasonably likely to have, a material adverse
effect on the Company's liquidity, capital resources or operations.
YEAR 2000 COMPLIANCE
The Company initiated a company-wide project in 1997 to prepare its
computer systems infrastructure for Year 2000 compliance. The following
discussion of the implications of the Year 2000 issue for the Company contains
numerous forward-looking statements based on inherently uncertain information.
The cost of the project and the date on which the Company plans to complete the
internal Year 2000 modifications are based on management's best estimates, which
management derived utilizing a number of assumptions of future events including
the continued availability of internal and external resources, including
employees, modifications to systems provided by third parties and other factors.
However, there can be no guarantee that these estimates will be achieved and
actual results could differ.
In 1997, the Company prepared a project plan, which identified its
mission critical applications. The Company has identified and tested critical
systems for readiness as part of this process. In addition, the Company
evaluated clients and vendors who have significant relationships with the
Company to determine whether they are preparing and will be ready for the Year
2000. The Company considers the potential failure of those clients to be
adequately prepared as part of the credit and loan review process. However,
there can be no guarantee that any needed remediation of the systems of the
Company's vendors or clients will be completed on a timely basis.
The Company has reviewed its systems, including desktop computers and
facilities related items for Year 2000 compliance. The Company has budgeted
$48,000 in 1999 to cover expenses associated with Year 2000 compliance issues.
The Company will fund the costs through normal operating cash flow. The project
is staffed with internal staff as well as a third party vendor.
The Company is reliant on vendors and has been addressing Year 2000
issues with them. As of December 31, 1998, the Company has identified critical
vendors and has completed formalized risk assessments of their Year 2000
readiness plans. The Company will continue to monitor and replace vendors or
make alternative arrangements as required.
The Company is reliant on its clients to make necessary preparations
for the Year 2000 so that their business operations will not be interrupted, as
an interruption could threaten their ability to honor financial commitments. The
Company has identified relationships, consisting of borrowers, capital
market/asset management counterparties, funding sources, and large depositors
with financial volumes sufficiently large to warrant inquiry as to Year 2000
preparation. Clients found to have a significant risk of not being ready for the
Year 2000 are encouraged to make the efforts to become compliant. The Company is
undertaking measures to minimize risk with those that appear to pose a
significant risk. Quarterly reviews and follow up assessments of clients will
continue in 1999.
The Company's Year 2000 program includes the active involvement of
senior executives as well as other employees of the Company. Senior management,
the board of directors and a Year 2000 Committee regularly review the overall
program. The federal and state agencies that regulate the banking industry also
monitor the program.
Computer failure of third-party vendors, should they occur, could have
a significant impact on the Company's operations. The most serious impact on the
Company's operations from vendors would result if services such as data
processing, telecommunications, electric power suppliers and services provided
by other financial institutions and governmental agencies were disrupted. It is
not possible at the time to quantify the estimated future costs due to possible
business disruption caused by vendors, suppliers, clients, and even the possible
loss of electric power or phone service, however, such costs could be
substantial.
Operational failures among the Company's sources of major funding and
larger borrowers could affect their ability to continue to provide funding or
meet obligations when due. It is not possible to accurately estimate the
likelihood, or potential impact, of significant disruptions among the Company's
funding sources and obligors at this time.
The Company has developed a remediation contingency plan and business
resumption contingency plan specific to the Year
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2000. The remediation contingency plan addresses the actions to be taken if the
current approach to remediating a system is falling behind schedule or otherwise
appears in jeopardy of failing to deliver a Year 2000 ready system when needed.
The business resumption contingency plan addresses the actions that would be
taken if critical business functions cannot be carried out in the normal manner
due to system or supplier failure.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As a depository of funds, the Bank may occasionally be named as a defendant in
lawsuits (such as garnishment proceedings) involving claims to the ownership of
funds in particular accounts. Such litigation is incidental to the Bank's
business.
The Company's management is not aware of any pending litigation.
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
Not applicable.
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
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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: May 10, 1999 /s/ John W. Rosenthal
---------------------------------
John W. Rosenthal
President
Date: May 10, 1999 /s/ Edward R. Pooley
---------------------------------
Edward R. Pooley
Principal Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 5,306,922
<INT-BEARING-DEPOSITS> 154,809
<FED-FUNDS-SOLD> 7,050,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 29,742,349
<INVESTMENTS-CARRYING> 388,800
<INVESTMENTS-MARKET> 388,800
<LOANS> 59,134,695
<ALLOWANCE> 849,675
<TOTAL-ASSETS> 102,374,648
<DEPOSITS> 74,996,498
<SHORT-TERM> 15,837,475
<LIABILITIES-OTHER> 193,760
<LONG-TERM> 0
0
0
<COMMON> 12,807
<OTHER-SE> 11,334,108
<TOTAL-LIABILITIES-AND-EQUITY> 102,374,648
<INTEREST-LOAN> 1,055,630
<INTEREST-INVEST> 511,096
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 1,566,726
<INTEREST-DEPOSIT> 687,262
<INTEREST-EXPENSE> 809,239
<INTEREST-INCOME-NET> 757,487
<LOAN-LOSSES> 98,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 609,884
<INCOME-PRETAX> 68,751
<INCOME-PRE-EXTRAORDINARY> 68,751
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,751
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
<YIELD-ACTUAL> 3.47
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 751,675
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 849,675
<ALLOWANCE-DOMESTIC> 697,144
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 152,531
</TABLE>
