<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION REPORT FROM _____ TO _____
Commission file number 0-23619
Tarpon Coast Bancorp, Inc.
--------------------------
(Exact name of small business issuer as specified in its charter)
<TABLE>
<CAPTION>
Florida 65-0772718
------- ----------
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
1490 Tamiami Trail
Port Charlotte, FL 33948
------------------------
(Address of principal executive offices)
941-629-8111
------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant, as required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding as of September 30, 1998
----- ------------------------------------
<S> <C>
Common Stock, $.01 par value 1,182,151
</TABLE>
Transitional Small Business Disclosure Format: Yes No X
--- ---
<PAGE> 2
TARPON COAST BANCORP, INC.
INDEX
<TABLE>
PART I - FINANCIAL INFORMATION
<S> <C> <C> <C>
Item 1. Financial Statements
Balance Sheet as of September 30, 1998 and December 31, 1997.............. 1
Statement of Operations for the Three Months
Ended September 30, 1998 and 1997................................ 2
Statement of Operations for the Nine Months
Ended September 30, 1998 and 1997................................ 3
Statement of Cash Flows for the Nine Months
Ended September 30, 1998 and 1997................................ 4
Notes to Financial Statements............................................. 5
Item 2. Management's Discussion and Analysis...................................... 6
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders....................... 8
Item 6. Exhibits and Reports on Form 8-K.......................................... 8
SIGNATURES.................................................................................. 8
EXHIBIT INDEX............................................................................... 8
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TARPON COAST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1998 December 31, 1997
------------------ -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 748,094 $ 74,580
Federal funds sold 4,900,000 --
------------- -----------
Total cash and cash equivalents 5,648,094 74,580
Securities available for sale 6,973,127 --
Loans 3,052,654 --
Less allowance for loan losses
(74,000) --
------------- -----------
Net loans 2,978,654 --
Premises and equipment, net 1,409,816 96,040
Accrued interest & other assets 145,187 74,153
------------- -----------
Total assets $ 17,154,878 $ 244,773
============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 1,469,292 $ --
Interest bearing 4,964,336 --
------------- -----------
Total deposits 6,433,628 --
Advances from organizers 365,835
Customer repurchase agreements 310,606
Accrued interest & other liabilities 44,815 48,763
------------- -----------
Total liabilities 6,789,049 414,598
Shareholders' equity:
Common stock, par value $.01 per share,
10,000,000 shares authorized; 1,182,151 shares
issued and outstanding 11,821 1
Additional paid-in capital 10,940,915 999
Deficit (614,654) (170,825)
Unrealized loss on securities available for sale 27,747 --
------------- -----------
Total shareholders' equity 10,365,829 (169,825)
------------- -----------
Total liabilities and shareholders' equity $ 17,154,878 $ 244,773
============ ===========
</TABLE>
See accompanying notes to financial statements.
1
<PAGE> 4
TARPON COAST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended September 30,
1998 1997
------------ ----------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 45,766 $ --
Interest on securities 102,726 --
Interest on federal funds sold 57,296 --
Interest on reverse repurchase agreement -- --
------------ ----------
Total interest income 205,788 --
Interest expense:
Interest on deposits 36,729 --
Interest on repurchase agreements 24,725 --
------------ ----------
Total interest expense 61,454 --
------------ ----------
Net interest income 144,334 --
Provision for loan losses 57,000 --
------------ ----------
Net interest income after
Provision for loan losses 87,334 --
Non-interest income 2,388 --
Non-interest expense:
Salaries and benefits 160,457 --
Occupancy and equipment expense 87,703 --
Other expense 81,103 92,703
------------ ----------
Total non-interest expense 329,263 92,703
------------ ----------
Net loss (239,541) (92,703)
------------ ----------
Other comprehensive income (loss) 32,075 --
------------ ----------
Comprehensive income (loss) $ (207,466) $ (92,703)
============ ==========
Net loss per share $ (0.20) $ (927.03)
============ ==========
Average shares outstanding 1,182,151 100
============ ==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 5
TARPON COAST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
1998 1997
------------ ----------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 50,484 $ --
Interest on securities 119,626 --
Interest on federal funds sold 82,743 --
Interest on reverse repurchase agreement 171,008 --
------------ ----------
Total interest income 423,861 --
Interest expense:
Interest on deposits 39,612 --
Interest on repurchase agreements 24,725 --
------------ ----------
Total interest expense 64,337 --
------------ ----------
Net interest income 359,524 --
Provision for loan losses 74,000 --
------------ ----------
Net interest income after
provision for loan losses 285,524 --
Non-interest income
7,476 --
Non-interest expense:
Salaries and benefits 416,127 --
Occupancy and equipment expense 135,816 --
Other expense 184,886 114,356
------------ ----------
Total non-interest expense 736,829 114,356
------------ ----------
Net loss (443,829) (114,356)
------------ ----------
Other comprehensive income (loss) 27,747 --
------------ ----------
Comprehensive income (loss) $ (416,082) $ (114,356)
============ ==========
Net loss per share $ (0.42) $(1,143.56)
============ ==========
Average shares outstanding 1,061,357 100
============ ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 6
TARPON COAST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
1998 1997
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (443,829) $ (114,356)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 84,824 288
Provision for loan losses 74,000 --
(Increase) Decrease in accrued interest
and other assets (71,034) (4,370)
Increase (Decrease) in accrued interest
and other liabilities (3,948) 6,047
------------ ----------
Total adjustments 83,842 1,965
------------ ----------
Net cash used in operating activities (359,987) (112,391)
------------ ----------
Cash flows from investing activities:
Net increase in loans (3,052,654) --
Purchases of securities available for sale (7,791,977) --
Maturity of securities available for sale 846,597 --
Purchases of premises and equipment (1,398,600) (35,954)
------------ ----------
Net cash used in investing activities (11,396,634) (35,954)
------------ ----------
Cash flows from financing activities:
Net proceeds from issuance of common stock 10,630,251 --
Increase in deposits 6,433,628 --
Increase in customer repurchase agreements 310,606 --
Proceeds (Repayments) on organizers advances (44,350) 331,680
------------ ----------
Net cash provided by financing activities 17,330,135 331,680
------------ ----------
Increase (Decrease) in cash and cash equivalents 5,573,514 183,335
Cash and cash equivalents, beginning of period 74,580 --
------------ ----------
Cash and cash equivalents, end of period $ 5,648,094 $ 183,335
============ ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 47,119 $ --
============ ==========
Supplemental schedule of noncash financing activities:
Settlement of organizers advances in exchange
for issuance of common stock $ 321,485 $ --
============ ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 7
TARPON COAST BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998
NOTE A - ORGANIZATION AND BASIS OF PRESENTATION
Organization:
Tarpon Coast Bancorp, Inc. (the "Company") was incorporated under the laws
of the state of Florida on August 7, 1997. The Company is the successor entity
to Gulf Coast Community Partners, organized on May 1, 1997 as a general
partnership. Effective June 1, 1998, the Company's new wholly owned subsidiary,
Tarpon Coast National Bank (the "Bank") received federal regulatory approval to
commence its banking operations. Contemporaneously, the Company became a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended. Until June 1, 1998, the Company was in the development stage and its
activities were limited to the organization of the Bank, as well as the
offering of $11,500,000 in common stock (the "Offering"). Approximately $8
million of the proceeds of the Offering have been used by the Company to
provide for the capitalization of the Bank. Also effective June 1, 1998, the
Bank received approval from the Federal Deposit Insurance Corporation (the
"FDIC") for deposit insurance.
Basis of Presentation:
The accompanying unaudited consolidated financial statements include the
accounts of the Company and, since its organization on June 1, 1998, the
accounts of the Bank. All intercompany accounts and transactions have been
eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary have been made for the fair presentation of the
Company's consolidated financial position and results of operations. Operating
results for the three and nine month periods ended September 30, 1998 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1998.
NOTE B - INITIAL PUBLIC OFFERING
On January 23, 1998, the Company sold 1,150,000 shares of common stock in
a public offering providing net proceeds of approximately $10.7 million after
deducting underwriters discounts and offering costs. In addition, the Company
issued 32,151 shares in exchange for seed money advances from its organizers at
the public offering price of $10 per share. The net proceeds from the public
offering were held in an escrow account until the Bank obtained its charter on
June 1, 1998 and were invested in repurchase agreements secured by U.S.
Treasury and Agency securities.
5
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
Tarpon Coast Bancorp, Inc. was formed in August 1997, but its primary operating
subsidiary, the Bank, did not commence operations until June 1, 1998. Until
that time, its operations were limited to the organization of the Bank, and
raising its initial capital through the offering of its common stock (See Note
B to the financial statements).
The following is a discussion of the Company's financial condition and results
of operations for the period ended September 30, 1998:
FINANCIAL CONDITION
The Company raised approximately $10.7 million in capital as a result of its
initial public offering. This, together with seed money advances from its
organizers of approximately $321,000 comprised the sole source of the Company's
funding during its development stage period. Proceeds from the offering have
been used to fund the capitalization of the Bank at $8 million. The remaining
proceeds are invested by the Company in an overnight repurchase agreement with
the Bank secured by U.S. Treasury and Agency securities and are being held by
the Company as working capital for general corporate purposes as well as for
possible future capital contributions to the Bank. Since the Bank commenced
operations it has attracted approximately $6.4 million in deposits and $310,000
in customer repurchase agreements in its first four months to September 30,
1998.
At September 30, 1998, the Company generated $3,052,000 in net loan demand and
approximately $1.8 million in unfunded loan commitments in its first four
months of operations and has invested approximately $7 million in investment
securities available for sale. At September 30, 1998, the Company had $1.4
million in premises and equipment of which $886,000 is represented by the cost
of acquiring the site for the Bank. It is anticipated that the Company will
incur additional expenditures aggregating approximately $896,000 to complete
and equip the main banking facility. The Company's remaining liquidity less
current operating requirements has been invested in overnight federal funds of
$4.9 million.
RESULTS OF OPERATIONS
While the Company was formed in the second quarter of 1997, it commenced its
banking operations June 1, 1998. Accordingly, operating results for the three
and nine month periods ended September 30, 1998 are not comparable to those for
the three and nine month periods ended September 30, 1997.
For the three and nine month periods ended September 30, 1998, the Company
reported net losses of $204,466 and $443,829, respectively. The net loss for
the nine month period includes $130,624 of net losses incurred by the Company
in its development stage period to June 1,
6
<PAGE> 9
1998. Interest income for the three and nine month periods ended September 30,
1998 was $209,099 and $427,172, respectively, including $165,392 of interest
earned on escrowed Offering proceeds during the development stage period to
June 1, 1998. Net interest income for the three months ended September was
144,334 after deducting interest expense of $58,143. Net interest income for
the nine months ended September 30, 1998 was 359,524 after deducting interest
expense of $61,026 and included interest earned on escrowed Offering proceeds
to June 1, 1998 of $165,392. The provision for loan losses of $57,000 and
$74,000 for the three and nine month periods ended September 30, 1998 has been
established at a rate of 1.5% of outstanding loans and loan commitments.
Non-interest income was $2,388 and $7,476 for the three and nine months periods
ended September 30, 1998. Non-interest expenses for the three months ended
September 30, 1998 were $329,263 comprised principally of salaries and benefits
($160,457) and occupancy costs ($87,703). For the nine months ended September
30, 1998, non-interest expenses were $736,829, comprised principally of
salaries and benefits ($416,127) and occupancy costs ($135,816), and included
$296,016 in costs incurred in the Company's development stage period to June 1,
1998. The Company and the Bank currently have 11 full time employees and one
part time employee. The Bank is currently operating in a temporary modular
facility and anticipates completion of its permanent facility in the first
quarter of 1999. Management expects to add three full time employees upon
occupying its permanent facility.
The net losses of $92,703 and $114,356 for the three and nine month periods
ended September 30, 1997 are attributable solely to expenses incurred in the
organization of the Company and the Bank.
Management anticipates that the Company will continue to experience losses from
operations until such time as the operations of the Bank achieve profitable
levels.
YEAR 2000
The Company is currently evaluating its computer systems as well as those of
its data processing vendors to assess compliance with the Year 2000
requirements. Management believes that all mission critical systems are
currently or will be Year 2000 compliant by June 30, 1999 and does not believe
that material expenditures will be required on behalf of the Company to affect
compliance. However, there can be no assurance that all necessary modifications
will be identified and corrected or that unforeseen difficulties or costs will
not arise. Further, there can be no assurances that vendor systems on which the
Company relies will be modified on a timely basis or that the failure of others
to properly modify their mission critical systems will not negatively impact
the Company's operations.
7
<PAGE> 10
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
During the third quarter, there were no matters submitted to a vote of
security holders.
Item 6. Exhibits and Reports on Form 8-K
1. Exhibits
27.1 Financial Data Schedule
2. Reports on Form 8-K
The Company did not file a Current Report on Form 8-K during the quarter
ended September 30, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereto duly
authorized.
Date: November 2, 1998 /s/ George E. Cline, III
-------------------------------------
George E. Cline, III
Chief Financial Officer
Date: November 2, 1998 /s/ Lewis S. Albert
-------------------------------------
Lewis S. Albert
Chief Executive Officer
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
- ------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
8
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF TARPON COAST BANCORP FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 748,094
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,900,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,973,127
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 3,052,654
<ALLOWANCE> 74,000
<TOTAL-ASSETS> 17,154,878
<DEPOSITS> 6,433,628
<SHORT-TERM> 310,606
<LIABILITIES-OTHER> 44,815
<LONG-TERM> 0
0
0
<COMMON> 11,821
<OTHER-SE> 10,354,008
<TOTAL-LIABILITIES-AND-EQUITY> 17,154,878
<INTEREST-LOAN> 50,484
<INTEREST-INVEST> 119,626
<INTEREST-OTHER> 253,751
<INTEREST-TOTAL> 423,861
<INTEREST-DEPOSIT> 39,612
<INTEREST-EXPENSE> 64,337
<INTEREST-INCOME-NET> 359,524
<LOAN-LOSSES> 74,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 736,829
<INCOME-PRETAX> (443,829)
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (443,829)
<EPS-PRIMARY> (0.42)
<EPS-DILUTED> (0.42)
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
