<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): June 30, 1999
THE BANC CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-25033 63-1201350
(Commission File No.) (I.R.S. Employer Identification No.)
17 North 20th Street
Birmingham, Alabama 35203
(Address of Principal Executive Offices)
(205) 326-2265
(Registrant's Telephone Number, Including Area Code)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
On June 30, 1999, The Banc Corporation, a Delaware corporation (the
"Corporation"), completed its acquisitions of C&L Banking Corporation, a Florida
bank holding company ("C&L"), its subsidiary, C&L Bank of Bristol, a Florida
banking corporation ("Bank of Bristol"), and C&L Bank of Blountstown, a Florida
banking corporation ("Bank of Blountstown"), in a series of three transactions
which were accounted for as pooling of interests. First, pursuant to the Plan
and Agreement of Merger, dated February 25, 1999, between the Corporation and
C&L, the Corporation acquired C&L through a merger of C&L with and into the
Corporation. As a result, Bank of Bristol became a 98.1% owned subsidiary of the
Corporation. The former C&L stockholders received approximately 77.7285 shares
of Corporation common stock, par value $.001 per share, for each share of C&L
common stock, par value $10.00 per share, that they owned. The former C&L
stockholders received an approximate total of 1,264,954 shares of Corporation
common stock, valued at approximately $12.9 million.
Second, pursuant to the Share Exchange Agreement, dated February 25,
1999, by and among the Corporation, Bristol Acquisition Corporation, C&L and
Bank of Bristol, the shares of Bank of Bristol common stock not owned by the
Corporation as successor to C&L were exchanged for shares of Corporation common
stock held by Bristol Acquisition Corporation, wholly-owned subsidiary of the
Corporation. The former stockholders of Bank of Bristol received approximately
64.4737 shares of Corporation common stock, par value $.001 per share, for each
share of Bank of Bristol common stock, par value $10.00 per share, that they
owned. As a result of the share exchange, Bank of Bristol became a wholly-owned
subsidiary of the Corporation. The former Bank of Bristol stockholders received
an approximate total of 24,500 shares of Corporation common stock, valued at
approximately $249,205.
Third, pursuant to the Plan and Agreement of Merger, dated February
25, 1999, between the Corporation, C&L, Bank of Bristol and Bank of Blountstown,
the Corporation acquired Bank of Blountstown through a merger of Bank of
Blountstown with and into Bank of Bristol, a wholly-owned subsidiary of the
Corporation. The former stockholders of Bank of Blountstown received
approximately 8.3890 shares of Corporation common stock, par value $.001 per
share, for each share of Bank of Blountstown common stock, par value $12.00 per
share, that they owned. The former Bank of Blountstown stockholders received an
approximate total of 838,902 shares of Corporation common stock, valued at
approximately $8.5 million.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of the Businesses Acquired.
i. The required audited consolidated balance sheets of C&L at
December 31, 1998 and 1997 and consolidated statements of income and changes in
financial position for C&L for each of the three years for the period ended
December 31, 1998, were filed with the Corporation's Registration Statement on
Form S-4 (Registration No. 333-77513), effective as of May 13, 1999, and are
hereby incorporated by reference herein.
2
<PAGE> 3
ii. The required audited consolidated balance sheets of Bank of
Blountstown at December 31, 1998 and 1997 and consolidated statements of income
and changes in financial position for Bank of Blountstown for each of the three
years for the period ended December 31, 1998, were filed with the Corporation's
Registration Statement on Form S-4 (Registration No. 333-77513), effective as of
May 13, 1999, and are hereby incorporated by reference herein.
(b) Pro Forma Financial Information.
The required pro forma consolidated financial information for the
year ended December 31, 1998, was filed as set forth under the description "The
Banc Corporation and Subsidiaries - Condensed Pro Forma Statement of Condition
(Unaudited)" of the Corporation's Registration Statement on Form S-4
(Registration No. 333-77513), effective as of May 13, 1999, and is hereby
incorporated by reference herein.
(c) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
-- -----------
<S> <C>
(2)-1 Plan and Agreement of Merger, dated as of
February 25, 1999, by and between The Banc
Corporation and C&L Banking Corporation,
filed as Exhibit (2)-1 to the Corporation's
Registration Statement on Form S-4
(Registration No. 333-77513), is hereby
incorporated herein by reference.
(2)-2 Share Exchange Agreement, dated as of
February 25, 1999, by and among the
Corporation, Bristol Acquisition
Corporation, C&L and Bank of Bristol, files
as Exhibit (2)-2 to the Corporation's
Registration Statement on Form S-4
(Registration No. 333-77513), is hereby
incorporated herein by reference.
(2)-3 Plan and Agreement of merger, dated as of
February 25, 1999, by and among the
Corporation, Bank of Bristol and Bank of
Blountstown, filed as Exhibit (2)-3 to the
Corporation's Registration Statement on
Form S-4 (Registration No. 333-77513), is
hereby incorporated herein by reference.
(23)-1 Consent of Williams, Cox, Weidner and Cox.
(23)-2 Consent of Williams, Cox, Weidner and Cox.
(99)-1 Audited consolidated balance sheets of C&L
at December 31,1998 and 1997, and
consolidated statements of income and
changes in financial position for C&L for the
periods then ended, as filed with the
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
Corporation's Registration Statement on
Form S-4 (Registration No. 333-77513).
(99)-2 Audited consolidated balance sheets of Bank of
Blountstown at December 31, 1998 and 1997, and
consolidated statements of income and changes in
financial position for Bank of Blountstown for
the periods then ended, as filed with the
Corporation's Registration Statement on Form S-4
(Registration No. 333-77513).
(99)-3 Pro Forma Consolidated Financial Statements
of the Corporation for the fiscal year
ended December 31, 1998, filed as part of
Corporation's Registration Statement on
Form S-4 (Registration No. 333-77513).
</TABLE>
4
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
THE BANC CORPORATION
By /s/ JAMES A. TAYLOR, JR.
-------------------------------------
James A. Taylor, Jr.
Executive Vice President,
General Counsel and Secretary
Dated: July 15, 1999
5
<PAGE> 1
EXHIBIT (23)-1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Current Report of The Banc Corporation on Form
8-K of our reports relating to C&L Banking Corporation and Subsidiary dated
March 3, 1999 and March 31, 1999 included in The Banc Corporation's
Registration Statement on Form S-4 (Registration # 333-77513).
/s/ Williams, Cox, Weidner and Cox
Williams, Cox, Weidner and Cox
July 14, 1999
<PAGE> 1
EXHIBIT (23-2)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Current Report of The Banc Corporation on Form
8-K of our reports relating to C&L Bank of Blountstown and Subsidiary dated
March 3, 1999 and March 31, 1999 included in The Banc Corporation's
Registration Statement on Form S-4 (Registration # 333-77513).
/s/ Williams, Cox, Weidner and Cox
Williams, Cox, Weidner and Cox
July 14, 1999
<PAGE> 1
EXHIBIT (99)-1
INDEPENDENT AUDITORS' REPORT
Board of Directors
C & L Banking Corporation and Subsidiary
Bristol, Florida
We have audited the accompanying balance sheets of C & L Banking
Corporation and Subsidiary as of December 31, 1998, 1997 and 1996 and the
related statements of income and comprehensive income, changes in stockholders'
equity, and cash flows for the years then ended. These financial statements are
the responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of C & L Banking Corporation
and Subsidiary as of December 31, 1998, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Williams, Cox, Weidner and Cox
March 3, 1999
1
<PAGE> 2
C & L BANKING CORPORATION AND SUBSIDIARY
BALANCE SHEETS
DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks................................. $ 2,694,689 $ 1,618,358 $ 2,072,183
Interest-bearing Deposits with Banks.................... 889,963 889,963 790,000
Federal Funds Sold...................................... 2,582,000 3,001,000 1,853,000
Investment Securities................................... 7,446,376 3,531,060 3,881,417
Loans Receivable -- Net................................. 34,044,724 30,964,805 26,708,775
Bank Premises and Equipment -- Net...................... 351,678 373,360 379,473
Accrued Interest Receivable............................. 564,180 451,854 363,259
Deferred Income Taxes................................... 265,448 136,076 101,694
Other Real Estate Owned................................. 54,669 36,846 14,000
Other Assets............................................ 42,555 55,210 49,656
----------- ----------- -----------
Total Assets.................................. $48,936,282 $41,058,532 $36,213,457
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand................................................ $ 5,272,733 $ 5,078,719 $ 4,408,816
Savings and NOW Accounts.............................. 7,840,042 6,634,699 7,145,671
Time Deposits Over $100,000........................... 14,421,192 8,877,705 6,801,721
Time Deposits - Other................................. 15,890,614 15,317,805 13,558,273
----------- ----------- -----------
Total Deposits................................ 43,424,581 35,908,928 31,914,481
Accrued Interest and Other Liabilities.................. 504,721 665,699 488,145
Deferred Income Taxes................................... 27,521 28,788 25,400
----------- ----------- -----------
Total Liabilities............................. 43,956,823 36,603,415 32,428,026
----------- ----------- -----------
MINORITY INTERESTS...................................... 94,401 84,494 77,781
----------- ----------- -----------
STOCKHOLDERS' EQUITY
Common Stock -- $10 Par Value, 20,000
Shares Authorized, 16,274 Issued and Outstanding........ 162,740 162,740 162,740
Capital Surplus......................................... 492,276 492,276 492,276
Accumulated Other Comprehensive Income.................. (3,405) 8,108 (5,424)
Undivided Profits....................................... 4,233,447 3,707,499 3,058,058
----------- ----------- -----------
Total Stockholders' Equity.................... 4,885,058 4,370,623 3,707,650
----------- ----------- -----------
Total Liabilities and Stockholders' Equity.... $48,936,282 $41,058,532 $36,213,457
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
C & L BANKING CORPORATION AND SUBSIDIARY
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans................................. $3,587,846 $3,231,895 $2,750,921
Interest on Investment Securities:
Taxable.................................................. 152,396 140,371 163,420
Exempt from Federal Income Tax........................... 71,580 69,599 73,352
Interest on Federal Funds Sold............................. 235,564 117,440 93,965
Interest on Deposits with Banks............................ 54,312 50,011 52,374
---------- ---------- ----------
Total Interest Income............................ 4,101,698 3,609,316 3,134,032
INTEREST EXPENSE ON DEPOSITS............................... 1,947,821 1,579,690 1,353,829
---------- ---------- ----------
Net Interest Income.............................. 2,153,877 2,029,626 1,780,203
PROVISION FOR LOAN LOSSES.................................. 440,000 112,500 77,500
---------- ---------- ----------
Net Interest Income after Provision For Loan Losses...... 1,713,877 1,917,126 1,702,703
---------- ---------- ----------
OTHER INCOME
Service Charges............................................ 473,692 342,783 306,749
Gain on Sale of Securities................................. -- 2,972 21,885
Other...................................................... 27,228 33,565 26,486
---------- ---------- ----------
Total Other Income............................... 500,920 379,320 355,120
---------- ---------- ----------
OTHER EXPENSE
Salaries and Employee Benefits............................. 650,665 586,955 527,698
Occupancy Expense.......................................... 218,865 209,861 193,598
Other...................................................... 436,577 414,045 414,178
---------- ---------- ----------
Total Other Expense.............................. 1,306,107 1,210,861 1,135,474
---------- ---------- ----------
MINORITY INTEREST.......................................... (9,908) (13,436) (12,593)
---------- ---------- ----------
INCOME BEFORE INCOME TAXES................................. 898,782 1,072,149 909,756
INCOME TAX EXPENSE......................................... 322,872 372,709 315,599
---------- ---------- ----------
NET INCOME................................................. 575,910 699,440 594,157
---------- ---------- ----------
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Change in Unrealized Gains (Losses) on Available-for-Sale
Securities............................................ $ (11,513) $ 13,532 $ 14,607
---------- ---------- ----------
COMPREHENSIVE INCOME....................................... $ 564,397 $ 712,972 $ 608,764
========== ========== ==========
NET INCOME PER SHARE OF COMMON STOCK....................... $ 35.39 $ 42.98 $ 36.51
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
C & L BANKING CORPORATION AND SUBSIDIARY PAGE 1 OF 2
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE COMMON CAPITAL UNDIVIDED
INCOME STOCK SURPLUS PROFITS
------------- -------- -------- ----------
<S> <C> <C> <C> <C>
BALANCE -- DECEMBER 31, 1995..................... $(20,031) $162,740 $492,276 $2,497,340
Net Income..................................... -- -- -- 594,157
Cash Dividends Declared, $2.25 per share....... -- -- -- (33,439)
Other Comprehensive Income:
Net Change in Unrealized Gains (Losses) on
Available-for-Sale Securities............. 14,607 -- -- --
-------- -------- -------- ----------
BALANCE -- DECEMBER 31, 1996..................... (5,424) 162,740 492,276 3,058,058
Net Income..................................... -- -- -- 699,440
Cash Dividends Declared, $3.00 per share....... -- -- -- (49,999)
Other Comprehensive Income:
Net Change in Unrealized Gains (Losses) on
Available-for-Sale Securities............. 13,532 -- -- --
-------- -------- -------- ----------
BALANCE -- DECEMBER 31, 1997..................... 8,108 162,740 492,276 3,707,499
Net Income..................................... -- -- -- 575,910
Cash Dividends Declared, $3.00 per share....... -- -- -- (49,962)
Other Comprehensive Income:
Net Change in Unrealized Gains (Losses) on
Available-for-Sale Securities............. (11,513) -- --
-------- -------- -------- ----------
BALANCE -- DECEMBER 31, 1998..................... $ (3,405) $162,740 $492,276 $4,233,447
======== ======== ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
C & L BANKING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income.............................................. $ 575,910 $ 699,440 $ 594,157
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Depreciation.......................................... 58,671 64,888 55,437
Accretion/Amortization of Discounts/Premium........... 6,332 2,507 21,261
Gain on Sale of Securities............................ -- (2,972) (21,885)
Provision for Loan Losses............................. 440,000 112,500 77,500
Minority Interests.................................... 9,908 13,436 12,593
(Increase) Decrease in:
Accrued Interest Receivable........................ (112,327) (88,589) (14,934)
Deferred Income Taxes.............................. (130,885) (34,382) 5,461
Other Assets....................................... 12,575 (5,554) (17,065)
Increase (Decrease) in:
Accrued Interest and Other Liabilities............. (160,978) 177,553 (161,551)
Deferred Income Taxes.............................. (1,267) 3,388 2,362
----------- ----------- -----------
Net Cash Provided by Operating Activities..... 697,939 942,215 553,336
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of Interest-bearing Deposits with Banks....... -- (593,963) (391,000)
Proceeds from Maturities of Interest-bearing Deposits
with Banks............................................ 95,000 494,000 294,794
Net Decrease (Increase) in Federal Funds Sold........... 419,000 (1,148,000) (584,000)
Purchases of Held to Maturity Investment Securities..... -- (99,797) (136,375)
Proceeds from Sales/Maturities of Held to Maturity
Investment Securities................................. 75,337 58,017 394,309
Purchases of Available-for-Sale Investment Securities... (5,381,359) (493,281) (585,172)
Proceeds from Sales/Maturities of Available-for-Sale
Investment Securities................................. 1,289,454 899,415 1,380,707
Net Increase in Loans................................... (3,519,919) (4,368,536) (4,435,452)
Purchase of Bank Premises and Equipment................. (36,989) (58,775) (32,566)
Net (Increase) in Other Real Estate..................... (17,823) (22,846) 50,753
----------- ----------- -----------
Net Cash Used for Investing Activities........ (7,077,299) (5,333,766) (4,044,002)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Demand Deposits, NOW Accounts and
Savings Accounts...................................... 1,399,357 158,931 1,220,290
Net Increase in Time Deposits........................... 6,106,296 3,835,516 3,165,198
Dividends Paid.......................................... (49,962) (49,999) (33,439)
Purchase of C & L Bank Stock............................ -- (6,722) (4,633)
Principal Payment on Debt............................... -- -- (35,472)
----------- ----------- -----------
Net Cash Provided by Financing Activities............... 7,455,691 3,937,726 4,311,944
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND DUE FROM BANKS...... 1,076,331 (453,825) 821,278
BEGINNING CASH AND DUE FROM BANKS....................... 1,618,358 2,072,183 1,250,905
----------- ----------- -----------
ENDING CASH AND DUE FROM BANKS.......................... $ 2,694,689 $ 1,618,358 $ 2,072,183
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid during the year for:
Income Taxes....................................... $ 521,282 $ 449,527 $ 310,806
=========== =========== ===========
Interest........................................... $ 1,952,208 $ 1,582,601 $ 1,362,389
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
C & L BANKING CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
NOTE 1 -- ORGANIZATION
C & L Banking Corporation (the "Company") is a bank holding company
organized under the laws of the State of Florida. The Company owns 98.1% of C &
L Bank of Bristol, a state bank in Bristol, Florida offering a full range of
banking activities including loans. Note 2 contains a description of the
Company's significant accounting and reporting policies.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. The consolidated financial statements include
the accounts of the Company and its subsidiary, C & L Bank of Bristol (the
"Bank"). All material intercompany balances and transactions have been
eliminated in consolidation.
Investment Securities. The Bank's investments in securities are classified
in two categories and accounted for as follows:
- Securities to be Held to Maturity: Bonds, notes and debentures for which
the Bank has a positive intent and ability to hold to maturity are
reported at cost, adjusted for amortization of premiums and accretion of
discounts, which are recognized in interest income using the interest
method over the period to maturity.
- Securities Available-for-Sale: Securities available-for-sale consist of
bonds, notes, and debentures not classified as securities to be held to
maturity. These securities are reported at market value, with unrealized
holding gains or losses reported as a separate component of stockholders'
equity until realized.
Gains and losses on sale of securities available-for-sale are determined
using specific-identification method.
Loans Receivable. Loans receivable that management has the intent and
ability to hold for the foreseeable future or until maturity or pay-off are
reported at their outstanding principal adjusted for any charge-offs, the
allowance for loan losses, and any deferred fees or costs on originated loans
and unamortized premiums or discounts on purchased loans.
Loan Origination Fees and Costs. Loan origination fees and certain direct
origination costs are capitalized and recognized as an adjustment of the yield
on the related loan.
Impaired Loans. The accrual of interest on impaired loans is discontinued
when, in management's opinion, the borrower may be unable to meet payments as
they become due. When interest accrual is discontinued, all unpaid accrued
interest is reversed. Interest income is subsequently recognized only to the
extent cash payments are received.
Loans and Allowance for Loan Losses. Loans are stated at the amount of
unpaid principal, reduced by unearned discount and an allowance for loan losses.
Unearned discount on installment loans is recognized as income over the terms of
the loans by the interest method. Interest on other loans is calculated by using
the simple interest method on daily balances of the principal amount
outstanding. The allowance for loan losses is established through a provision
for loan losses charged to expense. Loans are charged against the allowance for
loan losses when management believes that the collectibility of the principal is
unlikely. The allowance is an amount that management believes will be adequate
to absorb possible losses on existing loans that may become uncollectible, based
on evaluations of the collectibility of loans and prior loan loss experience.
The evaluations take into consideration such factors as changes in the nature
and volume of the loan portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may affect the
6
<PAGE> 7
C & L BANKING CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
borrowers' ability to pay. Accrual of interest is generally discontinued when a
loan becomes 90 days past due as to either interest or principal.
Bank Premises and Equipment. Bank premises and equipment are stated at
cost less accumulated depreciation. Depreciation expense is computed on the
declining balance and straight-line methods over the estimated useful lives of
the assets.
Maintenance and repairs are charged to expense as incurred. Improvements
which materially prolong the useful lives of assets are capitalized. Upon sale
or retirement, the cost and accumulated depreciation are removed from the
accounts, and any resulting gain or loss is reflected in operations.
Income Taxes. The Company and its subsidiary file consolidated income tax
returns. Provisions for income taxes are based on taxes payable or refundable
for the current year (after exclusion of non-taxable income such as interest on
state and municipal securities) and deferred taxes on temporary differences
between the amount of taxable income and pretax financial income and between the
tax bases of assets and liabilities and their reported amounts in the financial
statements. Deferred tax assets and liabilities are included in the financial
statements at currently enacted income tax rates applicable to the period in
which the deferred tax assets and liabilities are expected to be realized or
settled as prescribed in Financial Accounting Standards Board Statement No. 109,
Accounting for Income Taxes. As changes in tax laws or rates are enacted,
deferred tax assets and liabilities are adjusted through the provision for
income taxes.
Net Income Per Share of Common Stock. Net income per share of common stock
is computed by dividing net income by the weighted average number of shares of
common stock outstanding during the year.
Foreclosed Real Estate. Real estate properties acquired through, or in
lieu of, loan foreclosure are to be sold and are initially recorded at fair
value at the date of foreclosure establishing a new cost basis. After
foreclosure, valuations are periodically performed by management and the real
estate is carried at the lower of carrying amount or fair value less cost to
sell. Revenue and expenses from operations and changes in the valuation
allowance are included in loss on foreclosed real estate.
Off-Balance-Sheet Financial Instruments. In the ordinary course of
business, the Bank has entered into off-balance-sheet financial instruments
consisting of commitments to extend credit. Such financial instruments are
recorded in the financial statements when they become payable.
Cash and Cash Equivalents. For the purpose of presentation in the
Statement of Cash Flows, cash and cash equivalents are defined as those amounts
included in the balance sheet caption "Cash and Due From Banks".
Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Advertising. Advertising costs are expensed as incurred. Advertising
expense for the years ended December 31, 1998, 1997 and 1996 was $30,621,
$29,049 and $37,220, respectively.
7
<PAGE> 8
C & L BANKING CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3 -- INVESTMENT SECURITIES
Par value, carrying value, and market value of investment securities are as
follows:
<TABLE>
<CAPTION>
PAR CARRYING MARKET
VALUE VALUE VALUE
---------- ---------- ----------
<S> <C> <C> <C>
DECEMBER 31, 1998
U. S. Government Agencies.................................. $6,034,318 $6,030,168 $6,034,163
Obligations of State and Political Subdivisions............ 1,410,000 1,416,208 1,457,993
---------- ---------- ----------
Total............................................ $7,444,318 $7,446,376 $7,492,156
========== ========== ==========
DECEMBER 31, 1997
U. S. Government Agencies.................................. $2,018,531 $2,017,298 $2,025,188
Obligations of State and Political Subdivisions............ 1,410,000 1,418,762 1,449,252
---------- ---------- ----------
Total............................................ $3,428,531 $3,436,060 $3,474,440
========== ========== ==========
DECEMBER 31, 1996
U. S. Government Agencies.................................. $2,464,154 $2,464,995 $2,472,601
Obligations of State and Political Subdivisions............ 1,310,000 1,321,422 1,326,328
---------- ---------- ----------
Total............................................ $3,774,154 $3,786,417 $3,798,929
========== ========== ==========
</TABLE>
Investment securities with a carrying value of $1,116,207, $1,384,728 and
$1,420,386 at December 31, 1998, 1997 and 1996, respectively, were pledged to
secure public and trust deposits and for other purposes as required or permitted
by law. Market values for these securities were $1,152,868, $1,407,802 and
$1,424,104 at December 31, 1998, 1997 and 1996, respectively.
<TABLE>
<CAPTION>
MARKET AMORTIZED UNREALIZED UNREALIZED
VALUE COST (LOSS) GAIN
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
SECURITIES HELD TO MATURITY
U.S. Government Securities......................... $ 120,107 $ 116,112 $ -- $ 3,995
Obligations of State and Political Subdivisions.... 1,457,993 1,416,208 -- 41,785
---------- ---------- -------- -------
Total.................................... 1,578,100 1,532,320 -- 45,780
---------- ---------- -------- -------
SECURITIES AVAILABLE-FOR-SALE
U.S. Government Securities......................... 5,914,056 5,919,215 (5,159) --
---------- ---------- -------- -------
Total.................................... 5,914,056 5,919,215 (5,159) --
---------- ---------- -------- -------
Total Securities......................... $7,492,156 $7,451,535 $ (5,159) $45,780
========== ========== ======== =======
DECEMBER 31, 1997
SECURITIES HELD TO MATURITY
U.S. Government Securities......................... $ 199,330 $ 191,440 $ -- $ 7,890
Obligations of State and Political Subdivisions.... 1,449,252 1,418,762 -- 30,490
---------- ---------- -------- -------
Total.................................... 1,648,582 1,610,202 -- 38,380
---------- ---------- -------- -------
SECURITIES AVAILABLE-FOR-SALE
U.S. Government Securities......................... 1,825,858 1,813,573 (7,485) 19,770
---------- ---------- -------- -------
Total.................................... 1,825,858 1,813,573 (7,485) 19,770
---------- ---------- -------- -------
Total Securities......................... $3,474,440 $3,423,775 $ (7,485) $58,150
========== ========== ======== =======
</TABLE>
8
<PAGE> 9
C & L BANKING CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET AMORTIZED UNREALIZED UNREALIZED
VALUE COST (LOSS) GAIN
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1996
SECURITIES HELD TO MATURITY
U.S. Government Securities......................... $ 257,056 $ 249,450 $ -- $ 7,606
Obligations of State and Political Subdivisions.... 1,326,328 1,321,422 (2,354) 7,260
---------- ---------- -------- -------
Total.................................... 1,583,384 1,570,872 (2,354) 14,866
---------- ---------- -------- -------
SECURITIES AVAILABLE-FOR-SALE
U.S. Government Securities......................... 2,215,545 2,223,763 (16,832) 8,614
---------- ---------- -------- -------
Total.................................... 2,215,545 2,223,763 (16,832) 8,614
---------- ---------- -------- -------
Total Securities......................... $3,798,929 $3,794,635 $(19,186) $23,480
========== ========== ======== =======
</TABLE>
Change in net unrealized holding gains (losses) on non-current marketable
debt securities included in total stockholders' equity at December 31, 1998 were
as follows:
<TABLE>
<S> <C>
Balance, December 31, 1997.................................. $ 12,285
Balance, December 31, 1998.................................. (5,159)
--------
Current Period Change....................................... (17,444)
Less: Tax Effect............................................ 5,913
--------
Net Change, Current Period.................................. $(11,531)
========
</TABLE>
Realized gains and losses on securities sold during the year were as
follows:
<TABLE>
<CAPTION>
SALES BOOK REALIZED REALIZED
PRICE VALUE GAINS LOSSES
-------- -------- -------- --------
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
U.S. Government Securities.............................. $ -- $ -- $ -- $ --
-------- -------- ------- ----
Totals........................................ $ -- $ -- $ -- $ --
======== ======== ======= ====
DECEMBER 31, 1997
U.S. Government Securities.............................. $503,992 $501,020 $ 2,972 $ --
-------- -------- ------- ----
Totals........................................ $503,992 $501,020 $ 2,972 $ --
======== ======== ======= ====
DECEMBER 31, 1996
U.S. Government Securities.............................. $566,604 $566,955 $ -- $351
Obligations of State and Political Subdivisions......... 180,423 158,187 22,236 --
-------- -------- ------- ----
Totals........................................ $747,027 $725,142 $22,236 $351
======== ======== ======= ====
</TABLE>
The maturities of investment securities were as follows:
<TABLE>
<CAPTION>
AMORTIZED MARKET
COST BASIS VALUE
---------- ----------
<S> <C> <C>
DECEMBER 31, 1998
Due in one year or less..................................... $ 919,699 $ 933,589
Due from one to five years.................................. 4,179,799 4,187,595
Due from five to ten years.................................. 1,165,000 1,172,725
Due after ten years......................................... 1,187,037 1,198,247
---------- ----------
$7,451,535 $7,492,156
========== ==========
</TABLE>
9
<PAGE> 10
C & L BANKING CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
AMORTIZED MARKET
COST BASIS VALUE
---------- ----------
<S> <C> <C>
DECEMBER 31, 1997
Due in one year or less..................................... $ -- $ --
Due from one to five years.................................. 1,797,820 1,818,415
Due from five to ten years.................................. 1,136,343 1,151,918
Due after ten years......................................... 489,612 504,107
---------- ----------
$3,423,775 $3,474,440
========== ==========
DECEMBER 31, 1996
Due in one year or less..................................... $ 146,723 $ 146,880
Due from one to five years.................................. 1,566,686 1,572,102
Due from five to ten years.................................. 1,497,574 1,493,494
Due after ten years......................................... 583,652 586,453
---------- ----------
$3,794,635 $3,798,929
========== ==========
</TABLE>
NOTE 4 -- LOANS
Loans outstanding, by classification, at December 31 are summarized as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Commercial.............................................. $15,414,382 $13,013,179 $17,143,037
Real Estate............................................. 18,035,076 16,667,808 8,206,635
Installment............................................. 1,725,333 2,094,821 2,083,994
----------- ----------- -----------
35,174,791 31,775,808 27,433,666
Unearned Discount....................................... (197,708) (263,967) (259,780)
Unamortized Loan Fees................................... (82,648) (77,185) (74,097)
Allowance for Loan Losses............................... (849,711) (469,851) (391,020)
----------- ----------- -----------
Loans, net.................................... $34,044,724 $30,964,805 $26,708,769
=========== =========== ===========
</TABLE>
No loans were held for sale at December 31, 1998 or 1997. Loans held for
sale are reported at the lower of cost or market value. The method used to
determine these amounts is the individual loan method.
The amount of loans being serviced by the Bank for the benefit of others
was $6,022,870 and $8,750,888 for December 31, 1998 and 1997, respectively.
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Balance, beginning of year............................. $469,851 $391,020 $365,184
Provision charged to operations........................ 440,000 112,500 77,500
Loans charged off...................................... (70,102) (41,657) (58,835)
Recoveries on loans charged off........................ 9,962 7,988 7,171
-------- -------- --------
Balance, end of year................................... $849,711 $469,851 $391,020
======== ======== ========
</TABLE>
10
<PAGE> 11
C & L BANKING CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The following are maturities of loans receivable as of December 31, 1998:
<TABLE>
<CAPTION>
FIXED RATE ADJUSTABLE RATE
- -------------------------------------------- --------------------------------------------
TERM TO MATURITY BOOK VALUE TERM TO MATURITY BOOK VALUE
- ---------------- ----------- ---------------- -----------
<S> <C> <C> <C>
Less Than 1 Year............... $ 9,232,088 Less Than 1 Year............... $ 3,192,731
1 Year - 3 Years............... 4,857,919 1 Year - 3 Years............... 948,454
3 Years - Five Years........... 3,488,574 3 Years - Five Years........... 2,296,920
Greater Than Five Years........ 104,845 Greater Than Five Years........ 11,053,260
----------- -----------
$17,683,426 $17,491,365
=========== ===========
</TABLE>
The following are maturities of loans receivable as of December 31, 1997:
<TABLE>
<CAPTION>
FIXED RATE ADJUSTABLE RATE
- -------------------------------------------- --------------------------------------------
TERM TO MATURITY BOOK VALUE TERM TO MATURITY BOOK VALUE
- ---------------- ----------- ---------------- -----------
<S> <C> <C> <C>
Less Than 1 Year............... $ 7,533,390 Less Than 1 Year............... $ 1,769,052
1 Year - 3 Years............... 5,478,628 1 Year - 3 Years............... 1,275,018
3 Years - Five Years........... 4,456,926 3 Years - Five Years........... 2,055,614
Greater Than Five Years........ 324,485 Greater Than Five Years........ 8,882,695
----------- -----------
$17,793,429 $13,982,379
=========== ===========
</TABLE>
The following are maturities of loans receivable as of December 31, 1996:
<TABLE>
<CAPTION>
FIXED RATE ADJUSTABLE RATE
- -------------------------------------------- --------------------------------------------
TERM TO MATURITY BOOK VALUE TERM TO MATURITY BOOK VALUE
- ---------------- ----------- ---------------- -----------
<S> <C> <C> <C>
Less Than 1 Year............... $ 7,151,440 Less Than 1 Year............... $ 2,652,557
1 Year - 3 Years............... 3,476,788 1 Year - 3 Years............... 474,689
3 Years - Five Years........... 3,480,342 3 Years - Five Years........... 1,437,765
Greater Than Five Years........ 465,858 Greater Than Five Years........ 8,294,227
----------- -----------
$14,574,428 $12,859,238
=========== ===========
</TABLE>
The adjustable rate loans have interest rate adjustment limitations and are
generally indexed to the New York prime rate.
NOTE 5 -- BANK PREMISES AND EQUIPMENT -- NET
A summary of bank premises and equipment at December 31:
<TABLE>
<CAPTION>
ESTIMATED
LIFE YEARS 1998 1997 1996
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Land....................................... -- $ 45,148 $ 45,148 $ 45,148
Building................................... 5-40 342,346 342,346 342,346
Furniture, fixtures and equipment.......... 5-40 429,059 405,852 450,430
Land improvements.......................... 5-7 35,465 35,465 43,947
--------- --------- ---------
852,018 828,811 881,871
Accumulated depreciation................... (500,340) (455,451) (502,398)
--------- --------- ---------
Bank Premises and Equipment -- Net......... $ 351,678 $ 373,360 $ 379,473
========= ========= =========
</TABLE>
Depreciation and amortization expense amounted to $58,671, $64,888 and
$55,437 for the period ended December 31, 1998, 1997 and 1996, respectively.
11
<PAGE> 12
C & L BANKING CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6 -- DEPOSITS
The aggregate amount of certificates of deposit with amounts of $100,000
and above at December 31, 1998 was approximately $15,619,291.
At December 31, 1998, the scheduled maturities of certificate of deposits
are as follows:
<TABLE>
<S> <C>
1999........................................................ $26,805,157
2000........................................................ 1,705,331
2001........................................................ 481,226
2002........................................................ 340,449
2003 and thereafter......................................... 979,643
</TABLE>
NOTE 7 -- OPERATING LEASE
C & L Bank of Bristol has an agreement with AT&T Credit Corporation for
data processing equipment used to process its day to day transactions. The lease
is treated as an operating lease under generally accepted accounting principles.
The rental expense was $45,120, $43,801 and $48,930 for December 31, 1998, 1997
and 1996, respectively.
Minimum future rental payments under the non-cancelable operating lease
having a remaining term in excess of 1 year as of December 31, 1998 for each of
the next 5 years and in the aggregate are:
<TABLE>
<S> <C>
1999........................................................ $ 49,068
2000........................................................ 49,068
2001........................................................ 49,068
2002........................................................ 49,068
2003 and thereafter......................................... 20,445
--------
Total Minimum future rental payments........................ $216,717
========
</TABLE>
NOTE 8 -- INCOME TAXES
The Company's tax year ends on December 31, and state and federal income
tax expense in these financial statements are based on results of operations for
the year ended December 31. The Company files a consolidated return with C & L
Bank (See Note 10). All income tax expense for the consolidated entity is
allocated to the Bank.
The effective tax rate differs from the expected tax using the statutory
rate of 34%. Reconciliation between the expected tax and the actual provision
for income taxes follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Expected tax at 34% of income before taxes............. $311,374 $369,098 $315,152
Add (Deduct):
State income taxes, net of federal tax benefit......... 31,980 30,699 22,066
Effect of interest income exempt from federal income
taxes................................................ (25,915) (25,502) (26,663)
Unallowable interest deduction......................... 4,165 3,929 3,786
Other items -- Net..................................... 1,268 (5,515) 1,258
-------- -------- --------
Income Tax Expense..................................... $322,872 $372,709 $315,599
======== ======== ========
</TABLE>
12
<PAGE> 13
C & L BANKING CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Components of income tax expense are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
Current:
Federal............................................. $ 399,125 $364,160 $273,608
State............................................... 48,455 46,514 34,504
Deferred:
Federal............................................. (124,708) (37,965) 7,487
--------- -------- --------
Total Income Tax Expense............................ $ 322,872 $372,709 $315,599
========= ======== ========
</TABLE>
Deferred tax assets and liabilities included in the balance sheets at
December 31 consist of the following:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Deferred Tax Assets:
Allowance for Loan Losses............................ $261,994 $136,076 $ 98,900
Net Unrealized Loss on Available-For-Sale
Securities........................................ 1,754 -- 2,794
Reduction in Value of Repossessed Assets............. 1,700 -- --
-------- -------- --------
$265,448 $136,076 $101,694
======== ======== ========
Deferred Tax Liability:
Net Unrealized Gain on Available-for-Sale
Securities........................................ $ -- $ 4,177 $ --
Accumulated Depreciation............................. 27,521 24,611 25,400
-------- -------- --------
$ 27,521 $ 28,788 $ 25,400
======== ======== ========
</TABLE>
All deferred tax assets at December 31, 1998, 1997 and 1996 are considered
current assets. The deferred tax liabilities at December 31, 1998, 1997 and 1996
are considered long-term.
NOTE 9 -- COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
BEFORE-TAX TAX (EXPENSE) NET-OF-TAX
AMOUNT OR BENEFIT AMOUNT
---------- ------------- ----------
<S> <C> <C> <C>
Unrealized Losses on Securities At December 31, 1998........ $17,444 $5,931 $11,513
======= ====== =======
</TABLE>
NOTE 10 -- RELATED PARTIES
C & L Banking Corporation is a one-bank holding company which owns 98.1% of
the stock of C & L Bank of Bristol.
C & L Bank of Bristol is affiliated with C & L Bank of Blountstown by
virtue of common board of directors. Loan participations are purchased and sold
between the two institutions. See Note 11.
Loans to directors and officers of the Bank amounted to approximately
$1,340,959, $1,166,397 and $1,107,277 at December 31, 1998, 1997 and 1996. These
loans were made on substantially the same terms, including interest and
collateral, as those prevailing at the time for comparable transactions with
other customers.
Bank certificates of deposit held by related parties amounted to
approximately $2,437,209 and $424,000 at December 31, 1998 and 1997,
respectively.
13
<PAGE> 14
C & L BANKING CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 11 -- PARTICIPATION LOANS
The Bank has purchased participations in certain loans from various
financial institutions. At December 31, 1998, 1997 and 1996, $-0-, $729,374 and
$411,420, respectively, in participations had been purchased.
The Bank has originated certain loans and subsequently sold them to
participating financial institutions. At December 31, 1998, 1997 and 1996,
$6,022,870, $8,750,888 and $7,548,539, respectively, in loans had been
participated.
Participation loans totaling $2,669,361, $1,997,316, and $1,386,367 at
December 31, 1998, 1997 and 1996, respectively, had been sold to C & L Bank of
Blountstown, an affiliated bank under control of the same Board of Directors as
the Bank.
NOTE 12 -- PENSION PLAN
The Bank has a 401K plan covering all full-time employees who have
completed six months of service prior to the entry date of January 1. The
employees may contribute up to 10% of their salary. The Bank will match 50% of
the employees' contribution and funds this amount monthly. Pension expense was
$12,783, $12,423 and $14,938 for the years ended December 31, 1998, 1997 and
1996, respectively.
NOTE 13 -- COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Bank makes various commitments to
extend credit which involve elements of credit risk, interest rate risk, and
liquidity risk that are not presented in the financial statements. Commitments
to extend credit were approximately $265,330, $954,000 and $1,183,000 at
December 31, 1998, 1997 and 1996. There were no commercial letters of credit
outstanding at year end. The commitments are both unsecured and collateralized
by real estate, time deposits, and equipment. These commitments include exposure
to some credit loss in the event of nonperformance by the customer.
The Bank uses the same credit policies and procedures in making commitments
and conditional obligations as it does for extension of credit recorded on the
balance sheet. Because many of these instruments have fixed maturity dates, and
because many of them expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash and liquidity requirements to
the Bank. The Bank does not anticipate any material loss as a result of the
commitments.
The Bank is subject to various litigations and claims during the normal
course of banking procedures and foreclosures. Management, after consultation
with legal counsel, believes that any liabilities, if any, arising from such
litigation and claims will not be material to the Bank's financial position.
In order to qualify as a depository for public funds, the Bank entered into
an agreement pursuant to the Florida Security for Public Deposits Act. In
connection therewith, the Bank agreed to collectively share in any loss to
public depositors caused by default or insolvency of other qualified public
depositories.
NOTE 14 -- CONCENTRATIONS OF CREDIT RISK
Substantially all of the Bank's loans and commitments have been granted to
customers in the Bank's market area. The majority of the customers are
depositors of the Bank, approximately 40% are associated with the timber
industry. The concentrations of credit by type of loan are set forth in Note 4.
A large portion of loans are made to individuals and businesses in the logging
sector which has experienced difficulties which could affect their ability to
pay. The Bank, as a matter of policy and state statute, does not extend credit
to any single borrowers or group of related borrowers in excess of $1,108,883
unless a portion is participated or secured by certificates of deposits. Cash
and Due from Banks includes $1,043,571 in excess of federally insured limits at
December 31, 1998.
14
<PAGE> 15
C & L BANKING CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 15 -- REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory -- and possibly additional
discretionary -- actions by regulators that, if undertaken, could have a direct
material effect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance-sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1998, 1997 and 1996
that the Bank meets all capital adequacy requirements to which it is subject.
As of December 31, the most recent notification from the Federal Deposit
Insurance Corporation categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized the Bank must maintain minimum total risk-based, Tier I risk-based,
and Tier I leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the
institution's category. The Bank's actual capital amounts and ratios are also
presented in the table.
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS:
------------------ ------------------ -------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
---------- ----- ---------- ----- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1998
Total Capital (to Risk Weighted Assets).... $5,390,858 16.3% $2,645,120 >=8.0% $3,306,400 >=10.0%
Tier I Capital (to Risk Weighted Assets)... 4,971,858 15.0 1,322,560 >=4.0 1,983,840 >=6.0
Tier I Capital (to Average Assets)......... 4,971,858 10.2 1,467,810 >=3.0 2,446,350 >=5.0
As of December 31, 1997
Total Capital (to Risk Weighted Assets).... 4,808,924 16.2 2,368,000 >=8.0 2,960,000 >=10.0
Tier I Capital (to Risk Weighted Assets)... 4,438,924 15.0 1,184,000 >=4.0 1,776,000 >=6.0
Tier I Capital (to Average Assets)......... 4,438,924 11.0 1,211,430 >=3.0 2,019,500 >=5.0
As of December 31, 1996
Total Capital (to Risk Weighted Assets).... 4,104,048 16.2 2,030,320 >=8.0 2,537,900 >=10.0
Tier I Capital (to Risk Weighted Assets)... 3,786,048 14.9 1,015,160 >=4.0 1,522,740 >=6.0
Tier I Capital (to Average Assets)......... 3,786,048 10.7 1,054,830 >=3.0 1,758,050 >=5.0
</TABLE>
NOTE 16 -- YEAR 2000
The year 2000 issue is the result of shortcomings in many electronics
data-processing systems and other equipment that may affect operations in the
year 1999 and beyond. C & L Bank of Bristol has taken steps to ensure that
computer systems and other electronic equipment critical to conducting
operations are year 2000 compliant. The Bank has formed a task force composed of
employees from critical areas who have identified and assessed critical computer
and electronic equipment systems. According to management, the Bank has
completed their testing of critical systems and equipment.
15
<PAGE> 16
C & L BANKING CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 17 -- SUBSEQUENT EVENTS
C & L Banking Corporation and C & L Bank of Bristol signed a letter of
intent on January 25, 1999 to merge with The Banc Corporation in Birmingham,
Alabama. A definitive agreement was signed on February 23, 1999. According to
management, this merger should take place close to the end of May, pending State
and Federal approval. It is intended that the merger be accounted for as a
"pooling of interest," and to qualify as a tax-free reorganization. The
agreement will be void if the transaction has not been completed by September
30, 1999.
16
<PAGE> 1
EXHIBIT (99)-2
INDEPENDENT AUDITORS' REPORT
Board of Directors
C & L Bank of Blountstown
Blountstown, Florida
We have audited the accompanying balance sheets of C & L Bank of
Blountstown as of December 31, 1998, 1997 and 1996, and the related statements
of income, changes in stockholders' equity, and cash flows for the years then
ended. These financial statements are the responsibility of the Bank's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of C & L Bank of Blountstown as
of December 31, 1998, 1997 and 1996, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
Williams, Cox, Weidner and Cox
March 3, 1999
1
<PAGE> 2
C & L BANK OF BLOUNTSTOWN
BALANCE SHEETS
DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks................................. $ 3,016,748 $ 2,620,794 $ 2,890,715
Interest-bearing Deposits with Banks.................... -- 99,000 99,000
Federal Funds Sold...................................... 8,028,000 5,894,000 1,279,000
Investment Securities Available-for-Sale................ 8,126,148 6,889,393 5,702,431
Investment Securities Held to Maturity.................. 5,193,598 6,024,569 6,268,263
Loans Receivable -- Net................................. 30,573,921 33,881,611 32,988,080
Bank Premises and Equipment -- Net...................... 798,957 862,384 862,500
Accrued Interest Receivable............................. 456,994 476,755 560,154
Deferred Income Tax Asset............................... 266,776 148,317 94,516
Other Real Estate Owned................................. 217,792 215,645 112,368
Other Assets............................................ 109,126 104,326 87,677
----------- ----------- -----------
Total Assets.................................. $56,788,060 $57,216,794 $50,944,704
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand................................................ $ 6,753,757 $ 6,209,342 $ 5,454,135
Savings and NOW Accounts.............................. 13,561,565 14,675,924 11,550,877
Time Deposits Over $100,000........................... 9,356,984 9,332,372 9,119,204
Time Deposits -- Other................................ 22,606,208 22,310,569 20,591,420
----------- ----------- -----------
Total Deposits................................ 52,278,514 52,528,207 46,715,636
Accrued Interest and Other Liabilities................ 638,115 840,517 410,374
----------- ----------- -----------
Total Liabilities............................. 52,916,629 53,368,724 47,126,010
----------- ----------- -----------
STOCKHOLDERS' EQUITY
Common Stock -- $12 Par Value, 100,000
Shares Authorized, Issued and Outstanding............... 1,200,000 1,200,000 1,200,000
Capital Surplus......................................... 751,003 671,003 608,003
Accumulated Other Comprehensive Income.................. 23,986 16,489 (53,607)
Undivided Profits....................................... 1,896,442 1,960,578 2,064,298
----------- ----------- -----------
Total Stockholders' Equity.................... 3,871,431 3,848,070 3,818,694
----------- ----------- -----------
Total Liabilities and Stockholders' Equity.... $56,788,060 $57,216,794 $50,944,704
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
C & L BANK OF BLOUNTSTOWN
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans................................. $3,291,646 $3,479,102 $3,231,896
Interest on Investment Securities:
Taxable.................................................. 616,303 617,123 623,597
Exempt from Federal Income Tax........................... 138,018 132,632 117,672
Interest on Federal Funds Sold............................. 314,524 161,930 126,162
---------- ---------- ----------
Total Interest Income............................ 4,360,491 4,390,787 4,099,327
INTEREST EXPENSE ON DEPOSITS............................... 2,339,692 2,261,278 2,107,503
---------- ---------- ----------
Net Interest Income...................................... 2,020,799 2,129,509 1,991,824
PROVISION FOR LOAN LOSSES.................................. 784,000 723,000 192,000
---------- ---------- ----------
Net Interest Income after Provision for Loan Losses...... 1,236,799 1,406,509 1,799,824
---------- ---------- ----------
OTHER INCOME
Service Charges............................................ 281,595 258,043 250,656
Net Investment Securities Gains/(Losses)................... 6,589 (650) 26,088
Other...................................................... 70,780 61,115 48,289
---------- ---------- ----------
Total Other Income............................... 358,964 318,508 325,033
---------- ---------- ----------
OTHER EXPENSE
Salaries and Employee Benefits............................. 703,279 812,809 711,756
Occupancy Expense.......................................... 304,711 309,667 258,759
Other...................................................... 571,573 525,230 457,513
Loss on Foreclosed Real Estate............................. 9,134 53,600 --
---------- ---------- ----------
Total Other Expense.............................. 1,588,697 1,701,306 1,428,028
---------- ---------- ----------
INCOME BEFORE INCOME TAXES................................. 7,066 23,711 696,829
INCOME TAX (BENEFIT) EXPENSE............................... (68,798) 4,431 211,070
---------- ---------- ----------
NET INCOME................................................. 75,864 19,280 485,759
---------- ---------- ----------
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Change in Unrealized Gains (Losses) on Available-for-Sale
Securities............................................... 7,497 70,096 (53,054)
---------- ---------- ----------
COMPREHENSIVE INCOME....................................... $ 83,361 $ 89,376 $ 432,705
========== ========== ==========
NET INCOME PER SHARE....................................... $ .76 $ .19 $ 4.86
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
C & L BANK OF BLOUNTSTOWN
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE COMMON CAPITAL UNDIVIDED
INCOME STOCK SURPLUS PROFITS
------------- ---------- -------- ----------
<S> <C> <C> <C> <C>
BALANCE -- DECEMBER 31, 1995.................... $ (553) $1,200,000 $505,000 $1,741,542
Net Income.................................... -- -- -- 485,759
Transfers..................................... -- -- 103,003 (103,003)
Cash Dividends Declared, $.60 per share....... -- -- -- (60,000)
Other Comprehensive Income:
Net Change in Unrealized Gains (Losses) on
Available-for-Sale Securities............ (53,054) -- -- --
-------- ---------- -------- ----------
BALANCE -- DECEMBER 31, 1996.................... (53,607) 1,200,000 608,003 2,064,298
Net Income.................................... -- -- -- 19,280
Transfers..................................... -- -- 63,000 (63,000)
Cash Dividends Declared, $.60 per share....... -- -- -- (60,000)
Other Comprehensive Income:
Net Change in Unrealized Gains (Losses) on
Available-for-Sale Securities............ 70,096 -- -- --
-------- ---------- -------- ----------
BALANCE -- DECEMBER 31, 1997.................... 16,489 1,200,000 671,003 1,960,578
Net Income.................................... -- -- -- 75,864
Transfers..................................... -- -- 80,000 (80,000)
Cash Dividends Declared, $.60 per share....... -- -- -- (60,000)
Other Comprehensive Income:
Net Change in Unrealized Gains (Losses) on
Available-for-Sale Securities............ 7,497 -- -- --
-------- ---------- -------- ----------
BALANCE -- DECEMBER 31, 1998.................... $ 23,986 $1,200,000 $751,003 $1,896,442
======== ========== ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
C & L BANK OF BLOUNTSTOWN
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income.............................................. $ 75,864 $ 19,280 $ 485,759
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Depreciation.......................................... 92,499 90,920 78,775
Accretion/Amortization of Discount/Premium on
Investment Securities.............................. 1,625 21,302 42,995
Provision for Losses on Loans and Foreclosed Real
Estate................................................ 784,000 776,600 192,000
Loss on Disposition of Fixed Assets..................... 3,632 -- --
Net Realized (Gains) Losses on Available-for-Sale
Securities............................................ (6,589) 650 (26,088)
(Increase) Decrease in:
Accrued Interest Receivable........................... 19,761 83,399 (126,516)
Deferred Income Tax Asset............................. (118,459) (25,684) (20,248)
Other Real Estate..................................... (2,147) (103,277) (112,368)
Other Assets.......................................... (4,800) (16,649) (2,652)
Increase (Decrease) in:
Accrued Interest and Other Liabilities................ (175,117) 430,143 (62,883)
Deferred Income Tax Liability......................... (30,070) (64,877) 4,017
----------- ----------- -----------
Net Cash Provided by Operating Activities..... 640,199 1,211,807 452,791
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net Increase in Federal Funds Sold...................... (2,134,000) (4,615,000) 574,000
Purchases of Investment Securities Available-for-Sale... (3,984,345) (2,591,586) (3,923,658)
Proceeds from Sales/Maturities of Investment Securities
Available-for-Sale.................................... 2,770,617 1,508,264 3,894,495
Purchases of Investment Securities Held to Maturity..... -- (513,449) (959,646)
Proceeds from Maturities of Investment Securities Held
to Maturity........................................... 823,190 738,409 1,931,306
Net Decrease (Increase) in Loans........................ 2,523,690 (1,670,131) (5,170,343)
Purchase of Bank Premises and Equipment................. (32,704) (90,804) (223,717)
Proceeds from Maturities of Interest -- Bearing Deposits
with Banks............................................ 99,000 -- --
----------- ----------- -----------
Net Cash Provided by (Used in) Investing
Activities.................................. 65,448 (7,234,297) (3,877,563)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (Decrease) Increase in Demand Deposits, Savings and
NOW Accounts.......................................... (569,944) 3,880,253 1,482,204
Net Increase in Time Deposits........................... 320,251 1,932,316 2,501,418
Dividends Paid.......................................... (60,000) (60,000) (60,000)
----------- ----------- -----------
Net Cash (Used in) Provided by Financing Activities..... (309,693) 5,752,569 3,923,622
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS...... 395,954 (269,921) 498,850
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR............ 2,620,794 2,890,715 2,391,865
----------- ----------- -----------
CASH AND DUE FROM BANKS AT END OF YEAR.................. $ 3,016,748 $ 2,620,794 $ 2,890,715
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest........................................... $ 2,325,172 $ 2,260,869 $ 1,872,922
=========== =========== ===========
Income Taxes....................................... $ 65,600 $ 142,270 $ 376,597
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
C & L BANK OF BLOUNTSTOWN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
NOTE 1 -- ORGANIZATION
C & L Bank of Blountstown (the Bank) was incorporated in Florida on June 1,
1987, for the purpose of collecting deposits and making loans. The bank opened
for business on August 31, 1987. The bank offers a full range of banking
activities, including making loans and offering checking, savings, and time
deposit accounts. The following is a description of the Bank's significant
accounting and reporting policies.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment Securities. The Bank's investments in securities are classified
in two categories and accounted for as follows:
* Securities to be Held to Maturity: Bonds, notes and debentures for which
the Bank has a positive intent and ability to hold to maturity are
reported at cost, adjusted for amortization of premiums and accretion of
discounts which are recognized in interest income using the interest
method over the period to maturity.
* Securities Available-for-Sale: Securities available-for-sale consist of
bonds, notes, and debentures not classified as securities to be held to
maturity.
Unrealized holding gains and losses, net of tax, on securities
available-for-sale are reported as a net amount in a separate component of
stockholders' equity until realized.
Gains and losses on sale of securities available-for-sale are determined
using the specific-identification method.
Premiums and discounts are recognized in interest income using the interest
method over the period to maturity.
Declines in the fair value of individual held-to-maturity and
available-for-sale securities below their cost that are other than temporary
result in write-downs of the individual securities to their fair value. The
related write-downs are included in earnings as realized losses.
Loans and Allowance for Loan Losses. Loans are stated at the amount of
unpaid principal, reduced by unearned discount and an allowance for loan losses.
Unearned discount on installment loans is recognized as income over the terms of
the loans by the interest method. Interest on other loans is calculated by using
the simple interest method on daily balances of the principal amount
outstanding. The allowance for loan losses is established through a provision
for loan losses charged to expense. Loans are charged against the allowance for
loan losses when management believes that the collectibility of the principal is
unlikely. The allowance is an amount that management believes will be adequate
to absorb possible losses on existing loans that may become uncollectible, based
on evaluations of the collectibility of loans and prior loan loss experience.
The evaluations take into consideration such factors as changes in the nature
and volume of the loan portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may affect the borrowers'
ability to pay. Accrual of interest is generally discontinued when a loan
becomes 90 days past due as to either interest or principal. When interest
accrual is discontinued, all unpaid accrued interest is reversed. Interest
income is subsequently recognized only to the extent cash payments are received.
Loan Origination Fees and Costs. Loan origination fees and certain direct
origination costs are capitalized and recognized as an adjustment of the yield
on the related loan.
Bank Premises and Equipment. Bank premises and equipment are stated at
cost less accumulated depreciation. Depreciation expense is computed on the
straight-line and declining balance methods over the estimated useful lives of
the assets.
6
<PAGE> 7
C & L BANK OF BLOUNTSTOWN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Maintenance and repairs are charged to expense as incurred. Improvements
which materially prolong the useful lives of assets are capitalized. Upon sale
or retirement, the cost and accumulated depreciation are removed from the
accounts, and any resulting gain or loss is reflected in operations.
Income Taxes. Provisions for income taxes are based on taxes payable or
refundable for the current year, deferred taxes on temporary differences between
the amount of taxable income and pretax financial income, and between the tax
bases of assets and liabilities and their reported amounts in the financial
statements. Deferred tax assets and liabilities are included in the financial
statements at currently enacted income tax rates applicable to the period in
which the deferred tax assets and liabilities are expected to be realized or
settled as prescribed in Financial Accounting Standards Board Statement No. 109,
Accounting for Income Taxes. As changes in tax laws or rates are enacted,
deferred tax assets and liabilities are adjusted through the provision for
income taxes.
Net Income Per Share of Common Stock. Net income per share of common stock
is computed by dividing net income by the weighted average number of shares of
common stock outstanding during the year.
Other Real Estate. Other real estate, acquired through partial or total
satisfaction of loans, is carried at the lower of cost or fair market value. At
the date of acquisition, any losses are charged to the allowance for loan
losses. If it is later determined that the cost of the property cannot be
recovered through sale, additional loss is recognized immediately by a charge to
income with a corresponding writedown of the asset. Costs incurred to get
property in a condition for sale upon foreclosure are capitalized. Foreclosure
costs and subsequent holding costs are expensed as incurred.
Off-Balance-Sheet Financial Instruments. In the ordinary course of
business, the Bank has entered into off-balance-sheet financial instruments
consisting of commitments to extend credit and commercial letters of credit.
Such financial instruments are recorded in the financial statements when they
become payable.
Cash and Cash Equivalents. For the purpose of presentation in the
Statement of Cash Flows, cash and cash equivalents are defined as those amounts
included in the balance sheet caption "Cash and Due From Banks".
Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Advertising. Advertising costs are expensed as incurred. Advertising
expense for the years ended December 31, 1998, 1997 and 1996 was $31,086,
$45,973 and $62,863, respectively.
NOTE 3 -- INVESTMENT SECURITIES
Par value, carrying value, and market value of investment securities are as
follows:
<TABLE>
<CAPTION>
PAR CARRYING MARKET
VALUE VALUE VALUE
----------- ----------- -----------
<S> <C> <C> <C>
DECEMBER 31, 1998
U. S. Government Agencies....................... $10,460,402 $10,508,311 $10,456,032
Obligations of State and Political
Subdivisions.................................. 2,805,000 2,811,435 2,866,697
----------- ----------- -----------
Total................................. $13,265,402 $13,319,746 $13,322,729
=========== =========== ===========
</TABLE>
7
<PAGE> 8
C & L BANK OF BLOUNTSTOWN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
PAR CARRYING MARKET
VALUE VALUE VALUE
----------- ----------- -----------
<S> <C> <C> <C>
DECEMBER 31, 1997
U. S. Government Agencies....................... $ 9,879,316 $ 9,941,738 $ 9,935,254
Obligations of State and Political
Subdivisions.................................. 2,970,000 2,972,224 3,037,735
----------- ----------- -----------
Total................................. $12,849,316 $12,913,962 $12,972,989
=========== =========== ===========
DECEMBER 31, 1996
U. S. Government Agencies....................... $ 9,524,922 $ 9,511,807 $ 9,452,211
Obligations of State and Political
Subdivisions.................................. 2,455,000 2,458,887 2,470,374
----------- ----------- -----------
Total................................. $11,979,922 $11,970,694 $11,922,585
=========== =========== ===========
</TABLE>
Investment securities with a book value of $3,417,168, $2,084,018 and
$1,750,985 at December 31, 1998, 1997 and 1996, respectively, were pledged to
secure public and trust deposits and for other purposes as required or permitted
by law. Market values for these securities were $3,384,476, $2,070,547 and
$1,728,877 at December 31, 1998, 1997 and 1996, respectively.
Realized gains and losses on securities sold during the years ended were as
follows:
<TABLE>
<CAPTION>
SALES BOOK REALIZED REALIZED
PRICE VALUE GAINS (LOSSES)
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
U.S. Government Securities................... $3,439,126 $3,432,537 $ 6,589 $ --
========== ========== ======= =======
DECEMBER 31, 1997
U.S. Government Securities................... $ 669,553 $ 670,203 $ 577 $(1,227)
========== ========== ======= =======
DECEMBER 31, 1996
U.S. Government Securities................... $2,613,429 $2,587,341 $29,732 $(3,644)
========== ========== ======= =======
</TABLE>
The scheduled maturities of investment securities were as follows:
<TABLE>
<CAPTION>
MARKET AMORTIZED
DECEMBER 31, 1998 VALUE COST
- ----------------- ---------- ----------
<S> <C> <C>
SECURITIES HELD TO MATURITY
Less than one year.......................................... $ 236,570 $ 234,957
One to five years........................................... 2,816,972 2,751,481
Five to ten years........................................... 601,419 578,051
Over ten years.............................................. 1,541,620 1,629,109
---------- ----------
Total............................................. $5,196,581 $5,193,598
========== ==========
SECURITIES AVAILABLE-FOR-SALE
Less than one year.......................................... $ -- $ --
One to five years........................................... 2,459,912 2,464,060
Five to ten years........................................... 3,892,506 3,884,923
Over ten years.............................................. 1,773,730 1,741,861
---------- ----------
Total............................................. $8,126,148 $8,090,844
========== ==========
</TABLE>
8
<PAGE> 9
C & L BANK OF BLOUNTSTOWN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET AMORTIZED
DECEMBER 31, 1997 VALUE COST
- ----------------- ---------- ----------
<S> <C> <C>
SECURITIES HELD TO MATURITY
Less than one year.......................................... $ 379,100 $ 381,423
One to five years........................................... 2,711,637 2,255,058
Five to ten years........................................... 928,256 898,216
Over ten years.............................................. 2,064,603 2,489,872
---------- ----------
Total............................................. $6,083,596 $6,024,569
========== ==========
SECURITIES AVAILABLE-FOR-SALE
Less than one year.......................................... $ -- $ --
One to five years........................................... 1,852,893 1,849,373
Five to ten years........................................... 2,792,426 2,790,141
Over ten years.............................................. 2,244,074 2,224,895
---------- ----------
Total............................................. $6,889,393 $6,864,409
========== ==========
</TABLE>
<TABLE>
<CAPTION>
MARKET AMORTIZED
DECEMBER 31, 1996 VALUE COST
- ----------------- ---------- ----------
<S> <C> <C>
SECURITIES HELD TO MATURITY
Less than one year.......................................... $ 25,359 $ 24,866
One to five years........................................... 2,315,500 2,336,085
Five to ten years........................................... 1,138,975 1,128,125
Over ten years.............................................. 2,740,320 2,779,187
---------- ----------
Total............................................. $6,220,154 $6,268,263
========== ==========
SECURITIES AVAILABLE-FOR-SALE
Less than one year.......................................... $ 305,220 $ 296,709
One to five years........................................... -- --
Five to ten years........................................... 1,911,040 1,953,956
Over ten years.............................................. 3,486,171 3,532,989
---------- ----------
Total............................................. $5,702,431 $5,783,654
========== ==========
</TABLE>
The carrying amount of investment securities and their approximate fair
values are as follows:
<TABLE>
<CAPTION>
MARKET AMORTIZED UNREALIZED UNREALIZED
DECEMBER 31, 1998 VALUE COST GAIN (LOSS)
- ----------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY
U.S. Government Agencies................ $ 2,433,679 $ 2,485,958 $ 43,311 $ (95,590)
Obligations of State and Political
Subdivisions.......................... 2,762,902 2,707,640 55,262 --
----------- ----------- -------- ---------
Total......................... 5,196,581 5,193,598 98,573 (95,590)
----------- ----------- -------- ---------
SECURITIES AVAILABLE-FOR-SALE
U.S. Government Agencies................ 8,022,353 7,991,283 60,576 (29,506)
Obligations of State and Political
Subdivisions.......................... 103,795 99,561 4,234 --
----------- ----------- -------- ---------
Total......................... 8,126,148 8,090,844 64,810 (29,506)
----------- ----------- -------- ---------
Total Securities.............. $13,322,729 $13,284,442 $163,383 $(125,096)
=========== =========== ======== =========
</TABLE>
9
<PAGE> 10
C & L BANK OF BLOUNTSTOWN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The carrying amount of investment securities and their approximate fair
values are as follows:
<TABLE>
<CAPTION>
MARKET AMORTIZED UNREALIZED UNREALIZED
DECEMBER 31, 1997 VALUE COST GAIN (LOSS)
- ----------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY
U.S. Government Agencies........................ $ 3,148,205 $ 3,151,831 $ 28,121 $ (31,747)
Obligations of State and Political
Subdivisions.................................. 2,935,391 2,872,738 62,653 --
----------- ----------- -------- ---------
Total................................. 6,083,596 6,024,569 90,774 (31,747)
----------- ----------- -------- ---------
SECURITIES AVAILABLE-FOR-SALE
U.S. Government Agencies........................ 6,787,049 6,764,924 51,919 (29,794)
Obligations of State and Political
Subdivisions.................................. 102,344 99,485 2,859 --
----------- ----------- -------- ---------
Total................................. 6,889,393 6,864,409 54,778 (29,794)
----------- ----------- -------- ---------
Total Securities...................... $12,972,989 $12,888,978 $145,552 $ (61,541)
=========== =========== ======== =========
DECEMBER 31, 1996
SECURITIES HELD TO MATURITY
U.S. Government Agencies........................ $ 3,849,307 $ 3,908,787 $ 5,513 $ (64,993)
Obligations of State and Political
Subdivisions............................... 2,370,847 2,359,476 18,083 (6,712)
----------- ----------- -------- ---------
Total................................. 6,220,154 6,268,263 23,596 (71,705)
----------- ----------- -------- ---------
SECURITIES AVAILABLE-FOR-SALE
U.S. Government Agencies........................ 5,602,904 5,684,242 20,712 (102,050)
Obligations of State and Political
Subdivisions............................... 99,527 99,412 115 --
----------- ----------- -------- ---------
Total................................. 5,702,431 5,783,654 20,827 (102,050)
----------- ----------- -------- ---------
Total Securities...................... $11,922,585 $12,051,917 $ 44,423 $(173,755)
=========== =========== ======== =========
</TABLE>
Change in net unrealized holding gains (losses) on non-current marketable
debt securities included in total stockholders' equity at December 31 were as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- -------- --------
<S> <C> <C> <C>
Balance, Beginning of Year.............................. $24,983 $(81,223) $ (838)
Balance, End of Year.................................... 35,244 24,983 (81,223)
------- -------- --------
Current Year Change..................................... 10,261 106,206 (80,385)
Less: Tax Effect........................................ (2,764) (36,110) 27,331
------- -------- --------
Net Change, Current Period.............................. $ 7,497 $ 70,096 $(53,054)
======= ======== ========
</TABLE>
NOTE 4 -- LOANS
Loans outstanding, by classification, are summarized as follows at December
31:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Commercial...................................... $10,242,213 $11,684,037 $11,446,255
Real Estate..................................... 20,417,265 21,051,086 19,458,980
Installment..................................... 1,173,941 2,189,043 2,886,140
----------- ----------- -----------
31,833,419 34,924,166 33,791,375
Unearned Discount............................... (113,069) (237,892) (372,970)
Unamortized Loan Fees........................... (63,232) (49,745) (59,602)
Allowance for Loan Losses....................... (1,083,197) (754,918) (370,723)
----------- ----------- -----------
Loans, net............................ $30,573,921 $33,881,611 $32,988,080
=========== =========== ===========
</TABLE>
10
<PAGE> 11
C & L BANK OF BLOUNTSTOWN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Loans on which the accrual of interest has been discontinued or reduced
amounted to $362,006, $172,401 and $71,139 at December 31, 1998, 1997 and 1996,
respectively. Forfeited interest on these loans totaled $43,956, $32,782 and
$7,018 as of December 31, 1998, 1997 and 1996, respectively.
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---------- -------- --------
<S> <C> <C> <C>
Balance, beginning of year............................ $ 754,918 $370,723 $230,516
Provision charged to operations....................... 784,000 723,000 192,000
Loans charged off..................................... (482,208) (343,941) (56,292)
Recoveries on loans charged off....................... 26,487 5,136 4,499
---------- -------- --------
Balance, end of year.................................. $1,083,197 $754,918 $370,723
========== ======== ========
</TABLE>
The following are maturities of loans receivable as of December 31, 1998:
<TABLE>
<CAPTION>
FIXED RATE ADJUSTABLE RATE
- ---------------------------------------------- ----------------------------------------------
TERM TO MATURITY BOOK VALUE TERM TO MATURITY BOOK VALUE
---------------- ----------- ---------------- -----------
<S> <C> <C> <C>
Less Than 1 Year................. $ 3,817,629 Less Than 1 Year................. $ 3,739,870
1 Year - 3 Years................. 5,721,422 1 Year - 3 Years................. 2,658,550
3 Years - Five Years............. 2,540,047 3 Years - Five Years............. 1,685,924
Greater Than Five Years.......... 1,250,030 Greater Than Five Years.......... 10,419,947
----------- -----------
$13,329,128 $18,504,291
=========== ===========
</TABLE>
The following are maturities of loans receivable as of December 31, 1997:
<TABLE>
<CAPTION>
FIXED RATE ADJUSTABLE RATE
- ---------------------------------------------- ----------------------------------------------
TERM TO MATURITY BOOK VALUE TERM TO MATURITY BOOK VALUE
---------------- ----------- ---------------- -----------
<S> <C> <C> <C>
Less Than 1 Year................. $ 3,971,346 Less Than 1 Year................. $17,272,328
1 Year - 3 Years................. 6,662,424 1 Year - 3 Years................. 111,575
3 Years - Five Years............. 5,013,821 3 Years - Five Years............. --
Greater Than Five Years.......... 1,605,035 Greater Than Five Years.......... --
----------- -----------
$17,252,626 $17,383,903
=========== ===========
</TABLE>
The following are maturities of loans receivable as of December 31, 1996:
<TABLE>
<CAPTION>
FIXED RATE ADJUSTABLE RATE
- ---------------------------------------------- ----------------------------------------------
TERM TO MATURITY BOOK VALUE TERM TO MATURITY BOOK VALUE
---------------- ----------- ---------------- -----------
<S> <C> <C> <C>
Less Than 1 Year................. $ 5,991,109 Less Than 1 Year................. $17,237,994
1 Year - 3 Years................. 3,633,484 1 Year - 3 Years................. 77,502
3 Years - Five Years............. 5,327,658 3 Years - Five Years............. --
Greater Than Five Years.......... 1,523,628 Greater Than Five Years.......... --
----------- -----------
$16,475,879 $17,315,496
=========== ===========
</TABLE>
The adjustable rate loans have interest rate adjustment limitations and are
generally indexed to the New York prime rate.
11
<PAGE> 12
C & L BANK OF BLOUNTSTOWN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 5 -- BANK PREMISES AND EQUIPMENT -- NET
A summary of bank premises and equipment at December 31:
<TABLE>
<CAPTION>
ESTIMATED
LIFE YEARS 1998 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Land...................................... -- $ 206,663 $ 206,663 $ 206,663
Building.................................. 5 - 40 521,569 521,569 521,569
Furniture, fixtures and equipment......... 5 - 40 659,671 657,126 600,276
Land improvements......................... 5 - 7 101,144 101,144 67,190
------ ---------- ---------- ----------
1,489,047 1,486,502 1,395,698
Accumulated depreciation.................. (690,090) (624,118) (533,198)
---------- ---------- ----------
Bank Premises and Equipment -- Net...... $ 798,957 $ 862,384 $ 862,500
========== ========== ==========
</TABLE>
Depreciation expense amounted to $92,499, $90,920 and $78,775 for the years
ended December 31, 1998, 1997 and 1996, respectively.
NOTE 6 -- INCOME TAXES
Components of income tax expense are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
Current:
Federal............................................. $ 33,035 $ 53,103 $144,610
State............................................... 4,544 5,129 10,229
Deferred:
Federal............................................. (106,377) (53,801) 56,231
State............................................... -- -- --
--------- -------- --------
Total Income Tax (Benefit) Expense.......... $ (68,798) $ 4,431 $211,070
========= ======== ========
</TABLE>
The effective tax rate differs from the expected tax using the statutory
rates due to certain permanent differences between book and taxable income.
Reconciliation between the expected tax and the actual provision for income
taxes follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Expected tax at statutory rates applied to income
before taxes......................................... $ 1,060 $ 3,557 $236,921
Add (Deduct):
State income taxes, net of federal tax benefit......... 390 1,029 25,113
Effect of interest income exempt from federal income
taxes................................................ (57,569) (56,730) (55,776)
Unallowable interest deduction......................... 9,912 9,720 8,330
Other items -- Net..................................... (22,591) 46,855 (3,518)
-------- -------- --------
Income Tax (Benefit) Expense........................... $(68,798) $ 4,431 $211,070
======== ======== ========
</TABLE>
12
<PAGE> 13
C & L BANK OF BLOUNTSTOWN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Deferred Income Taxes included on the balance sheet at December 31, consist
of the following:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Deferred Tax Assets:
Allowance for Loan Losses............................ $266,776 $179,444 $ 95,017
Net Unrealized Loss on AFS Securities................ -- -- 27,616
-------- -------- --------
$266,776 $179,444 $122,633
======== ======== ========
Deferred Tax Liability:
Accumulated Depreciation............................. $ 27,392 $ 31,127 $ 28,117
Net Unrealized Gain of AFS Securities................ 11,278 8,494 --
-------- -------- --------
$ 38,670 $ 39,621 $ 28,117
======== ======== ========
</TABLE>
NOTE 7 -- DEPOSITS
The aggregate amount of certificates of deposit with amounts of $100,000
and above at December 31, 1998 was approximately $9,356,984.
At December 31, 1998, the scheduled maturities of certificate of deposits
are as follows:
<TABLE>
<S> <C>
1999 $25,108,624
2000 3,863,841
2001 981,999
2002 593,268
2003 and thereafter 1,415,460
</TABLE>
NOTE 8 -- RELATED PARTIES
C & L Bank of Blountstown is affiliated with C & L Bank of Bristol by
virtue of common Board of Directors. Loan participations are purchased and sold
between the two institutions. See Note 9.
Loans to directors and officers of the Bank amounted to approximately
$803,038, $953,230 and $783,585 at December 31, 1998, 1997 and 1996. These loans
were made on substantially the same terms, including interest and collateral, as
those prevailing at the time for comparable transactions with other customers.
The aggregate amount of time deposits held by the Bank from directors
totaled $161,228, $275,426 and $290,350 at December 31, 1998, 1997 and 1996,
respectively.
NOTE 9 -- PARTICIPATION LOANS
The Bank has originated certain loans and subsequently sold them to
participating financial institutions. At December 31, 1998, 1997 and 1996,
respectively, $963,365, $1,407,856 and $439,939 in loans had been participated.
Of this amount, $0, $423,687 and $19,605 were sold to C & L Bank of Bristol, an
affiliated bank, at December 31, 1998, 1997 and 1996, respectively.
The Bank has also purchased certain loans from participating financial
institutions, totaling $2,958,552, $2,303,004 and $1,708,804 at December 31,
1998, 1997 and 1996, respectively.
NOTE 10 -- PENSION PLAN
The Bank has a 401K plan covering all full-time employees who have
completed six months of service prior to the entry of date of January 1. The
employees may contribute up to 10% of their salary. The Bank will match 50% of
the employees' contribution and funds this amount monthly. Pension expense was
$7,458, $8,636 and $8,081 for the years ended December 31, 1998, 1997 and 1996,
respectively.
13
<PAGE> 14
C & L BANK OF BLOUNTSTOWN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 11 -- COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Bank makes various commitments to
extend credit which involve elements of credit risk, interest rate risk, and
liquidity risk that are not presented in the financial statements. These consist
of commitments to extend credit (lines of credit) and commercial letters of
credit. Commitments to extend credit amounted to $2,203,845, $2,066,881 and
$1,740,553 and commercial letters of credit amounted to $115,247, $120,000 and
$184,541 at December 31, 1998, 1997 and 1996, respectively. These commitments
and letters of credit are both unsecured and secured by real estate, time
deposits, and equipment. These commitments and letters of credit include
exposure to some credit loss in the event of nonperformance of the customer. The
Bank uses the same credit policies and procedures in making commitments and
conditional obligations as it does for extension of credit recorded on the
balance sheet. Because many of these instruments have fixed maturity dates, and
because many of them expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash and liquidity requirements to
the Bank. The Bank does not anticipate any material loss as a result of the
commitments.
The Bank is subject to various litigation and claims during the normal
course of banking procedures and foreclosures. Management believes that
liabilities, if any, arising from such litigation and claims will not be
material to the Bank's financial position.
In order to qualify as a depository for public funds, the Bank entered into
an agreement pursuant to the Florida Security for Public Deposits Act. In
connection therewith, the Bank agreed to collectively share in any loss to
public depositors caused by default or insolvency of other qualified public
depositories.
NOTE 12 -- CONCENTRATIONS OF CREDIT RISK
Substantially all of the Bank's loans and commitments have been granted to
customers in the Bank's market area. The majority of the customers are
depositors of the Bank, less than 10% are associated with any particular
industry. The concentrations of credit by type of loan are set forth in Note 4.
The Bank, as a matter of policy and state statute, does not extend credit to any
single borrowers or group of related borrowers in excess of $957,895 unless a
portion is participated or secured by certificates of deposits. Cash and due
from banks includes $1,120,419 in excess of federally insured limits at December
31, 1998.
NOTE 13 -- COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
BEFORE-TAX TAX (EXPENSE) NET-OF-TAX
AMOUNT OR BENEFIT AMOUNT
---------- ------------- ----------
<S> <C> <C> <C>
Unrealized Gains (Losses) on Securities at December 31,
1998...................................................... $10,260 $(2,763) $7,497
======= ======= ======
</TABLE>
NOTE 14 -- LEASES
The Bank leases data processing equipment used to process its day to day
transactions. The lease contains a purchase option at the end of the lease for
fair value of the equipment. Future minimum rental commitments under this lease
is as follows:
<TABLE>
<CAPTION>
YEAR ENDED AMOUNT
- ---------- --------
<S> <C>
1999........................................................ $ 36,041
2000........................................................ 36,041
2001........................................................ 36,041
2002........................................................ 36,041
2003 and thereafter......................................... 12,014
--------
$156,178
========
</TABLE>
14
<PAGE> 15
C & L BANK OF BLOUNTSTOWN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Rental expense was $52,710, $39,056 and $34,492 for the years ended
December 31, 1998, 1997 and 1996, respectively.
NOTE 15 -- REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory -- and possibly additional
discretionary -- actions by regulators that, if undertaken, could have a direct
material effect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance-sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1998, 1997 and
1996, that the Bank meets all capital adequacy requirements to which it is
subject.
As of December 31, the most recent notification from the Federal Deposit
Insurance Corporation categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized the Bank must maintain minimum total risk-based, Tier I risk-based,
and Tier I leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the
institution's category. The Bank's actual capital amounts and ratios are also
presented in the table.
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS:
------------------ ------------------- --------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
---------- ----- ---------- ------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1998
Total Capital (to Risk
Weighted Assets)........ $4,245,431 14.5% $2,336,240 >=8.0% $2,920,300 >=10.0%
Tier I Capital (to Risk
Weighted Assets)........ 3,871,431 13.3 1,168,120 4.0 1,752,180 6.0
Tier I Capital (to Average
Assets)................. 3,871,431 7.0 2,212,960 4.0 2,766,200 5.0
AS OF DECEMBER 31, 1997
Total Capital (to Risk
Weighted Assets)........ 4,587,000 14.1 2,611,000 8.0 3,263,000 10.0
Tier I Capital (to Risk
Weighted Assets)........ 3,832,000 11.7 1,305,000 4.0 1,958,000 6.0
Tier I Capital (to Average
Assets)................. 3,832,000 6.9 1,305,000 4.0 2,787,000 5.0
</TABLE>
15
<PAGE> 16
C & L BANK OF BLOUNTSTOWN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS:
------------------ ------------------- --------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
---------- ----- ---------- ------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1996
Total Capital (to Risk
Weighted Assets)........ $4,245,000 13.7% $2,484,000 >=8.0% $3,105,000 >=10.0%
Tier I Capital (to Risk
Weighted Assets)........ 3,907,000 12.6 1,242,000 4.0 1,863,000 6.0
Tier I Capital (to Average
Assets)................. 3,907,000 7.6 1,546,000 3.0 2,577,000 5.0
</TABLE>
NOTE 16 -- YEAR 2000
The year 2000 issue is the result of shortcomings in many electronic
data-processing systems and other equipment that may affect operations in the
year 1999 and beyond. C & L Bank of Blountstown has taken steps to ensure that
computer systems and other electronic equipment critical to conducting
operations are year 2000 compliant. The Bank has formed a task force composed of
employees from critical areas who have identified and assessed critical computer
and electronic equipment systems. According to the Bank's management, the Bank
has completed their testing of critical systems and equipment.
NOTE 17 -- SUBSEQUENT EVENTS
C & L Bank of Blountstown signed a letter of intent on January 25, 1999 to
merge with The Banc Corporation in Birmingham, Alabama. A definitive agreement
was signed on February 23, 1999. According to management, this merger should
take place close to the end of May, pending State and Federal approval. It is
intended that the merger be accounted for as a "pooling of interest," and to
qualify as a tax-free reorganization. The agreement will be void if the
transaction has not been completed by September 30, 1999.
16
<PAGE> 1
EXHIBIT (99)-3
THE BANC CORPORATION AND SUBSIDIARIES
CONDENSED PRO FORMA STATEMENT OF CONDITION (UNAUDITED)
The following summary includes (i) the condensed supplemental consolidated
statement of financial condition of the Corporation as of December 31, 1998,
(ii) the condensed consolidated statement of financial condition of C&L as of
December 31, 1998, (iii) the condensed statement of financial condition of Bank
of Blountstown as of December 31, 1998, (vi) adjustments to give effect to the
proposed pooling of interest method business combinations with C&L and Bank of
Blountstown, and (vii) the pro forma combined condensed statements of financial
condition of the Corporation and subsidiaries as if such combinations had
occurred on December 31, 1998.
These pro forma statements should be read in conjunction with the
accompanying notes and the separate consolidated statements of financial
condition of the Corporation, C&L and Bank of Blountstown. The pro forma
information provided below may not be indicative of future results.
AS OF DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------------
THE C&L C&L
BANC BANKING BANK OF PRO FORMA PRO FORMA
CORPORATION CORPORATION BLOUNTSTOWN ADJUSTMENTS COMBINED
----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks................... $ 25,595 $ 2,695 $ 3,017 $ (477)(a) $ 30,830
Interest bearing deposits in other
banks................................... 158 890 -- -- 1,048
Federal funds sold........................ 14,435 2,582 8,028 -- 25,045
Investment securities available for
sale.................................... 77,442 7,446 8,126 -- 93,014
Investment securities held to maturity.... -- -- 5,194 -- 5,194
Loans held for resale..................... 4,899 -- -- -- 4,899
Loans, net of unearned.................... 365,379 34,894 31,657 -- 431,930
Less: Allowance for loan losses........... (4,533) (849) (1,083) -- (6,465)
-------- ------- ------- -------- --------
Net loans........................ 360,846 34,045 30,574 -- 425,465
-------- ------- ------- -------- --------
Premises and equipment, net............... 28,515 352 799 -- 29,666
Intangibles, net.......................... 867 -- -- -- 867
Other assets.............................. 11,637 927 1,050 -- 13,614
-------- ------- ------- -------- --------
Total assets..................... $524,394 $48,937 $56,788 $ (477) $629,642
======== ======= ======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing..................... $ 67,963 $ 5,273 $ 6,754 $ (477)(a) $ 79,513
Interest-bearing........................ 367,403 38,152 45,525 -- 451,080
-------- ------- ------- -------- --------
Total deposits................... 435,366 43,425 52,279 (477) 530,593
Advances from FHLB and other borrowed
funds................................... 26,860 -- -- -- 26,860
Accrued expenses and other liabilities.... 4,957 627 638 (94)(b) 6,128
-------- ------- ------- -------- --------
Total liabilities................ 467,183 44,052 52,917 (571) 563,581
Stockholders' Equity
Common stock............................ 12 163 1,200 2 (b) 14
(1,363)(b)
Surplus................................. 42,888 492 751 2,698 (b) 45,586
(1,243)(b)
Retained earnings....................... 14,233 4,233 1,896 -- 20,362
Accumulated other comprehensive
income(loss).......................... 78 (3) 24 -- 99
-------- ------- ------- -------- --------
Total stockholders' equity....... 57,211 4,885 3,871 94 66,061
-------- ------- ------- -------- --------
Total liabilities and
stockholders' equity........... $524,394 $48,937 $56,788 $ (477) $629,642
======== ======= ======= ======== ========
</TABLE>
1
<PAGE> 2
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL CONDITION
a -- To eliminate intercompany account.
b -- To record the exchange of 1,968,110 shares of the Corporation common stock
for all of the outstanding shares of the following accounted for as a
pooling of interests. The exchange ratio assumes a closing date price of
$11.00 per share.
<TABLE>
<CAPTION>
C&L C&L
BANKING BANK OF BANK OF
CORPORATION BRISTOL BLOUNTSTOWN TOTAL
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Outstanding shares of acquired corporation....... 16,274 380 100,000
Assumed exchange ratio........................... 71.8763 59.6185 7.7574
---------- --------- --------
Corporation shares to be issued.................. 1,169,715 22,655 775,740 1,968,110
Par value of shares to be issued at $.001 per
share.......................................... $ 1 $ -- $ 1 $ 2
Total common stock and surplus of acquired
corporation.................................... 655 94 1,951 2,700
---------- --------- -------- ----------
Excess recorded as an increase in contributed
capital..................................... 654 94 1,950 2,698
---------- --------- -------- ----------
To eliminate acquired corporations capital stock
Common stock at par value...................... (163) -- (1,200) (1,363)
Surplus........................................ (492) -- (751) (1,243)
---------- --------- -------- ----------
(655) -- (1,951) (2,606)
---------- --------- -------- ----------
Net change in equity................... $ -- $ 94 $ -- $ 94
========== ========= ======== ==========
</TABLE>
2
<PAGE> 3
THE BANC CORPORATION AND SUBSIDIARIES
CONDENSED PRO FORMA STATEMENTS OF OPERATIONS (UNAUDITED)
The following summaries include (i) the condensed supplemental consolidated
statements of operations of the Corporation for the years ended December 31,
1998, 1997, and 1996, (ii) the condensed consolidated statements of operations
of C&L on a historical basis for the years ended December 31, 1998, 1997, and
1996, (iii) the condensed statements of operations of the Bank of Blountstown on
a historical basis for the years ended December 31, 1998, 1997, and 1996, (iv)
adjustments to give affect to the proposed pooling of interests method
combination with C&L and Bank of Blountstown (vii) the pro forma combined
condensed consolidated statements of operations of the Corporation as if such
combinations had occurred on January 1, 1996.
These pro forma statements should be read in conjunction with the
accompanying notes, the supplemental consolidated statements of operations of
the Corporation, and the separate consolidated statements of operations for C&L
and the Bank of Blountstown. The pro forma information may not necessarily be
indicative of future results.
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------------
THE C&L C&L
BANC BANKING BANK OF PRO FORMA PRO FORMA
CORPORATION CORPORATION BLOUNTSTOWN ADJUSTMENTS COMBINED
----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Interest income.......................... $34,009 $ 4,102 $ 4,361 $ -- $42,472
Interest expense......................... 15,918 1,948 2,340 -- 20,206
------- ------- ------- ------- -------
Net interest income............ 18,091 2,154 2,021 -- 22,266
Provision for loan losses................ 3,433 440 784 -- 4,657
------- ------- ------- ------- -------
Net interest income after provision for
loan losses......................... 14,658 1,714 1,237 -- 17,609
Noninterest income....................... 2,949 501 352 -- 3,802
Securities gains......................... 272 -- 7 -- 279
Noninterest expenses..................... 19,224 1,316 1,589 -- 22,129
------- ------- ------- ------- -------
(Loss) income before income taxes...... (1,345) 899 7 -- (439)
Income tax expense(benefit).............. (978) 323 (69) -- (724)
------- ------- ------- ------- -------
Net (loss) income...................... $ (367) $ 576 $ 76 $ -- $ 285
======= ======= ======= ======= =======
Basic and diluted net (loss) income per
share.................................. $ (0.03) $ 35.39 $ 0.76 $ 0.02
======= ======= ======= =======
Average number of shares
outstanding -- basic and dilutive...... 11,011 16 100 12,979
======= ======= ======= =======
</TABLE>
3
<PAGE> 4
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------------
THE C&L C&L
BANC BANKING BANK OF PRO FORMA PRO FORMA
CORPORATION CORPORATION BLOUNTSTOWN ADJUSTMENTS COMBINED
----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Interest income.......................... $25,704 $3,609 $4,391 $ -- $33,704
Interest expense......................... 11,952 1,580 2,261 -- 15,793
------- ------ ------ ------- -------
Net interest income.................... 13,752 2,029 2,130 -- 17,911
Provision for loan losses................ 1,849 112 723 -- 2,684
------- ------ ------ ------- -------
Net interest income after provision for
loan losses......................... 11,903 1,917 1,407 -- 15,227
Noninterest income....................... 2,103 376 318 -- 2,797
Securities gains......................... 217 3 -- -- 220
Noninterest expenses..................... 11,849 1,224 1,702 -- 14,775
------- ------ ------ ------- -------
Income before income taxes............. 2,374 1,072 23 -- 3,469
Income tax expense....................... 696 373 4 -- 1,073
------- ------ ------ ------- -------
Net income............................. $ 1,678 $ 699 $ 19 $ -- $ 2,396
======= ====== ====== ======= =======
Basic and diluted net income per share... $ 0.20 $42.98 $ 0.19 $ 0.23
======= ====== ====== =======
Average number of shares outstanding
-- basic............................... 8,449 16 100 10,417
======= ====== ====== =======
-- diluted............................. 8,568 16 100 10,536
======= ====== ====== =======
</TABLE>
4
<PAGE> 5
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------
THE C&L C&L
BANC BANKING BANK OF PRO FORMA PRO FORMA
CORPORATION CORPORATION BLOUNTSTOWN ADJUSTMENTS COMBINED
----------- ----------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
Interest income........................ $17,974 $3,134 $4,099 $ -- $25,207
Interest expense....................... 8,025 1,354 2,108 -- 11,487
------- ------ ------ ------ -------
Net interest income.................. 9,949 1,780 1,991 -- 13,720
Provision for loan losses.............. 966 77 192 -- 1,235
------- ------ ------ ------ -------
Net interest income after provision
for loan losses................... 8,983 1,703 1,799 -- 12,485
Noninterest income..................... 1,914 333 299 -- 2,546
Securities gains....................... 52 22 26 100
Noninterest expenses................... 9,456 1,148 1,427 -- 12,031
------- ------ ------ ------ -------
Income before income taxes........... 1,493 910 697 -- 3,100
Income tax expense..................... 390 316 211 -- 917
------- ------ ------ ------ -------
Net income........................ $ 1,103 $ 594 $ 486 $ -- $ 2,183
======= ====== ====== ====== =======
Basic and diluted net income per
share................................ $ 0.15 $36.51 $ 4.86 $ 0.24
======= ====== ====== =======
Average number of shares outstanding
-- basic............................ 7,217 16 100 9,185
======= ====== ====== =======
-- diluted.......................... 7,314 16 100 9,282
======= ====== ====== =======
</TABLE>
5
