<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 JUNE 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)
Florida 65-0772718
------- -----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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 June 30, 1998
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<S> <C>
Common Stock, $.01 par value 1,182,151
</TABLE>
Transitional Small Business Disclosure Format: Yes No X
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<PAGE> 2
TARPON COAST BANCORP, INC.
INDEX
<TABLE>
<S> <C> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of June 30, 1998 and December 31, 1997 1
Statement of Operations for the Three Months
Ended June 30, 1998 and 1997 ................. 2
Statement of Operations for the Six Months
Ended June 30, 1998 and 1997 ................. 3
Statement of Cash Flows for the Six Months
Ended June 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 ... 7
Item 6. Exhibits and Reports on Form 8-K ...................... 7
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>
June 30, 1998 December 31, 1997
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(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,696,808 $ 74,580
Federal funds sold 4,533,000 --
------------ ------------
Total cash and cash equivalents 6,229,808 74,580
Securities available for sale 5,419,840 --
Loans 880,311 --
Less allowance for loan losses (17,000) --
------------ ------------
Net loans 863,311 --
Premises and equipment, net 1,312,049 96,040
Accrued interest & other assets 95,573 74,153
------------ ------------
Total assets $ 13,920,581 $ 244,773
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 1,732,579 $ --
Interest bearing 1,589,635 --
------------ ------------
Total deposits 3,322,214 --
Advances from organizers 365,835
Accrued interest & other liabilities 7,715 48,763
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Total liabilities 3,329,929 414,598
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 10,958,272 999
Deficit (375,113) (170,825)
Unrealized loss on securities available for sale (4,328) --
------------ ------------
Total shareholders' equity 10,590,652 (169,825)
------------ ------------
Total liabilities and shareholders' equity $ 13,920,581 $ 244,773
============ ============
</TABLE>
See accompanying notes to financial statements.
1
<PAGE> 4
TARPON COAST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30,
---------------------------
1998 1997
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<S> <C> <C>
Interest income:
Interest and fees on loans $ 4,718 $ --
Interest on securities 16,900 --
Interest on federal funds sold 25,447 --
Interest from escrowed funds 83,030 --
----------- ----------
Total interest income 130,095 --
Interest expense:
Interest on deposits 2,883 --
----------- ----------
Total interest expense 2,883 --
----------- ----------
Net interest income 127,212 --
Provision for loan losses 17,000 --
----------- ----------
Net interest income after
Provision for loan losses 110,212 --
Non-interest income 5,088 --
Non-interest expense:
Salaries and benefits 150,962 --
Occupancy and equipment expense 37,377 --
Other expense 54,043 21,653
----------- ----------
Total non-interest expense 242,382 21,653
----------- ----------
Net loss (127,082) (21,653)
----------- ----------
Other comprehensive income (loss) (4,328) --
----------- ----------
Comprehensive income (loss) $ (131,410) $ (21,653)
=========== ==========
Net loss per share $ (0.13) $ (216.53)
=========== ==========
Average shares outstanding 1,000,297 100
=========== ==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 5
TARPON COAST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
------------------------------
1998 1997
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<S> <C> <C>
Interest income:
Interest and fees on loans $ 4,718 $ --
Interest on securities 16,900 --
Interest on federal funds sold 25,447 --
Interest from escrowed funds 171,008
----------- -----------
Total interest income 218,073 --
Interest expense:
Interest on deposits 2,883 --
----------- -----------
Total interest expense 2,883 --
----------- -----------
Net interest income 215,190 --
Provision for loan losses 17,000 --
----------- -----------
Net interest income after
Provision for loan losses 198,190 --
Non-interest income 5,088 --
Non-interest expense:
Salaries and benefits 255,670 --
Occupancy and equipment expense 48,113 --
Other expense 103,783 21,653
----------- -----------
Total non-interest expense 407,566 21,653
----------- -----------
Net loss (204,288) (21,653)
----------- -----------
Other comprehensive income (loss) (4,328) --
----------- -----------
Comprehensive income (loss) $ (208,616) $ (21,653)
=========== ===========
Net loss per share $ (0.20) $ (216.53)
=========== ===========
Average shares outstanding 1,000,297 100
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 6
'
TARPON COAST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
-----------------------------------
1998 1997
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<S> <C> <C>
Cash flows from operating activities:
Net loss $ (204,288) $ (21,653)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 22,483 --
Provision for loan losses 17,000 --
(Increase) Decrease in accrued interest
and other assets (21,420) (7,078)
Increase (Decrease) in accrued interest
and other liabilities (41,048) --
----------- ----------
Total adjustments (22,985) (7,078)
----------- ----------
Net cash used in operating activities (227,273) (28,731)
----------- ----------
Cash flows from investing activities:
Net increase in loans (880,311) --
Purchases of securities available for sale (5,424,168) --
Purchases of premises and equipment (1,238,492) (8,789)
----------- ----------
Net cash used in investing activities (7,542,971) (8,789)
----------- ----------
Cash flows from financing activities:
Net proceeds from issuance of common stock 10,647,608 --
Increase in deposits 3,322,214 --
Proceeds from (Repayment) of organizers advances (44,350) 273,000
----------- ----------
Net cash provided by financing activities 13,925,472 273,000
----------- ----------
Increase (Decrease) in cash and cash equivalents 6,155,228 235,480
Cash and cash equivalents, beginning of period 74,580 --
----------- ----------
Cash and cash equivalents, end of period $ 6,229,808 $ 235,480
=========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 1,506 $ --
=========== ==========
Supplemental schedule of non-cash 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 SIX MONTHS ENDED JUNE 30, 1998
NOTE A - ORGANIZATION AND BASIS OF PRESENTATION
Organization:
Tarpon Coast Bancorp, Inc. formerly known as Gulf 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 1954, 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 $7.5 million of the proceeds of the Offering
were used by the Company to provide for the initial 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 six month periods ended June 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 June 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 were
used to fund the initial capitalization of the Bank at $7.5 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. Management
believes that the proceeds of the offering will satisfy the Company's cash
requirements for at least the first twelve (12) month period following the
opening of the Bank. Since the Bank commenced operations it has attracted
approximately $3.3 million in deposits in its first month to June 30, 1998.
At June 30, 1998, the Company generated $880,000 in loan demand in its first
month of operations and has invested approximately $5.4 million in investment
securities available for sale. At June 30, 1998, the Company had $1.3 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 $960,000 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 $4.5 million. There
are no known trends, demands, commitments, events or uncertainties which
management believes are likely to adversely affect the Company's current
liquidity levels.
RESULTS OF OPERATIONS
While Company was formed in the second quarter of 1997, it commenced its banking
operations June 1, 1998. Accordingly, operating results for the three and six
month periods ended June 30, 1998 are not comparable to those for the three and
six month periods ended June 30, 1997.
For the three and six month periods ended June 30, 1998, net losses of $127,000
and $204,000, respectively, included $77,992 of net losses since the Company
commenced its banking operations on June 1, 1998. Interest income for the first
month of operations was $52,681 resulting in net interest income of $49,798
after deducting interest expense on deposits for the month of $2,883. The
provision for
6
<PAGE> 9
loan losses of $17,000 has been established at a rate of 1.5% of
outstanding loans and loan commitments. Non-interest income and expenses for the
first month of operations were $5,088 and $115,878, respectively. Included in
non-interest expenses was $55,801 in salaries and benefits and $33,873 in
occupancy and equipment expenses. 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 two full time
employees upon occupying its permanent facility.
Net pre-opening losses during the Company's development stage to June 1, 1998
were $49,090 and $126,296 for the three and six month periods ended June 30,
1998, respectively. Pre-opening expenses for the three and six month period
ended June 30, 1998 were $126,504 and $291,688, respectively and interest earned
on escrowed proceeds from the Offering were $82,362 and $165,392 for the
respective periods.
The net loss of $21,653 for the period from the Company's inception on May 1,
1997 to June 30, 1997 is 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.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
During the first quarter, there were no matters submitted to a vote of
security holders.
Item 6. Exhibits and Reports on Form 8-K
1. Exhibits
21 Subsidiaries of the Registrant
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 June 30, 1998.
7
<PAGE> 10
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: August 3, 1998 /s/ George E. Cline, III
------------------------
George E. Cline, III
Chief Financial Officer
Date: August 3, 1998 /s/ Lewis S. Albert
-------------------
Lewis S. Albert
Chief Executive Officer
EXHIBIT INDEX
Exhibit
Number
21 Subsidiaries of the Registrant
27.1 Financial Data Schedule
8
<PAGE> 1
Exhibit 21
Tarpon Coast Bancorp, Inc.
Subsidiaries of the Registrant
Subsidiary:
Tarpon Coast National Bank - Wholly owned
9
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF TARPON COAST BANCORP FOR THE SIX MONTHS ENDED JUNE 30,
1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,696,808
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,533,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 5,419,840
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 880,311
<ALLOWANCE> 17,000
<TOTAL-ASSETS> 13,920,581
<DEPOSITS> 3,322,214
<SHORT-TERM> 0
<LIABILITIES-OTHER> 7,715
<LONG-TERM> 0
0
0
<COMMON> 11,821
<OTHER-SE> 10,578,831
<TOTAL-LIABILITIES-AND-EQUITY> 13,920,581
<INTEREST-LOAN> 4,718
<INTEREST-INVEST> 16,900
<INTEREST-OTHER> 108,477
<INTEREST-TOTAL> 130,095
<INTEREST-DEPOSIT> 2,883
<INTEREST-EXPENSE> 2,883
<INTEREST-INCOME-NET> 127,212
<LOAN-LOSSES> 17,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 242,382
<INCOME-PRETAX> (127,082)
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (127,082)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
<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>
