U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
[ ] TRANSMISSION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO ______________
Commission File No. 333-65101
FLORIDA BUSINESS BANCGROUP, INC.
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(Name of small business issuer in its charter)
Florida 59-3517595
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2202 North Westshore Boulevard, Tampa, Florida 33607
(Address of principal executive offices) Zip Code
Issuer's telephone number: (813) 281-0009
Securities registered under Section 12(b)
of the Securities Exchange Act of 1934: None.
Securities registered under Section 12(g) of
the Securities Exchange Act of 1934: Common Stock and
Warrants for Common Stock.
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [X]
Issuer's revenues for its most recent fiscal year: $ 0
No common stock was outstanding during the period of this report;
however, there were 900 shares of preferred stock issued to the
Organizers at $100 per share. The preferred stock has no quoted market
value.
There were 1,320,700 shares of common stock outstanding at September
30, 1999.
There were 1,320,700 warrants outstanding at September 30, 1999.
There were no shares of preferred stock outstanding at September 30,
1999.
Documents incorporated by reference: None.
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TABLE OF CONTENTS
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Description Page Number
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PART I
ITEM 1. BUSINESS............................................. 1
Forward-Looking Statements........................... 1
General.............................................. 1
Subsequent Events.................................... 2
Regulation and Supervision .......................... 2
Market Area and Competition ......................... 7
Deposits............................................. 7
Loan Portfolio....................................... 8
Investments.......................................... 9
ITEM 2. PROPERTIES........................................... 9
ITEM 3. LEGAL PROCEEDINGS.................................... 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS............................... 9
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS............................... 10
ITEM 6. MANAGEMENT'S PLAN OF OPERATION...................... 10
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.......... 11
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE............ 19
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.. 19
Initial Directors and Officers...................... 20
Subsequent Events................................... 20
ITEM 10. EXECUTIVE COMPENSATION.............................. 20
General............................................. 20
Stock Option Plans.................................. 21
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT............................. 21
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...... 22
Transactions with Affiliates........................ 22
Banking Transactions................................ 22
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.................... 23
SIGNATURES........................................................ 24
EXHIBITS
27.0 Financial Data Schedule
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PART I
ITEM 1. BUSINESS
Forward-Looking Statements
This report may contain certain "forward-looking" statements, as such
term is defined in the Private Securities Litigation Reform Act of 1995
or by the Securities and Exchange Commission in its rules, regulations
and releases, which represent Florida Business BancGroup, Inc.'s (the
"Company") expectations or beliefs, including but not limited to
statements concerning the Company's operations, economic performance,
financial condition, growth and acquisition strategies, investments,
and future operational plans. For this purpose, any statements
contained herein that are not statements of historical fact may be
deemed to be forward- looking statements. Without limiting the
generality of the foregoing, words such as "may", "will", "expect",
"relieve", "anticipate", "intent", "could", "estimate", "might", or
"continue" or the negative or other variations thereof or comparable
terminology are intended to identify forward-looking statements. These
statements by their nature involve substantial risks and uncertainties,
certain of which are beyond our control, and actual results may differ
materially depending on a variety of important factors, including
uncertainty related to our operations, mergers or acquisitions,
governmental regulation, the value of the assets and any other factors
discussed in this and other Company filings with the Securities and
Exchange Commission.
General
The Company was incorporated under the laws of the State of Florida on
May 18, 1998, for the purpose of operating as a bank holding company
pursuant to the Federal Bank Holding Company Act of 1956, as amended.
In order to fund the organizational and pre-opening expenses of the
proposed bank, Bay Cities Bank (the "Bank") (estimated to be
approximately $400,000), the Organizers initially advanced $90,000 to
the Company. The Company's obligation to repay these advances to the
Organizers was extinguished in exchange for the issuance of 900 shares
of the Company's preferred stock at $100 per share. The preferred stock
is redeemable within one year after the release of subscription funds
by the Escrow Agent. After the redemption period, the preferred stock
will pay a dividend at the sole discretion of the Company. Through
December 31, 1998, the Company expended $132,000 for organizational and
preopening expenses. We intend to use the net proceeds from the sale of
the shares of common stock and warrants for common stock (the
"Offering") to redeem the preferred stock, purchase 100% of the common
stock to be issued by the Bank, to repay organizational expenses and
for other general corporate purposes. Neither the Company nor the Bank
has commenced business operations, and neither will do so until the
Offering Period is completed and the requisite approvals of the Florida
Department of Banking and Finance ("Department"), the Federal Deposit
Insurance Corporation ("FDIC") and the Board of Governors of the
Federal Reserve System ("Federal Reserve") are obtained. The main
office of the Company and the Bank will be located in Tampa,
Hillsborough County, Florida.
It is anticipated that the Bank will commence business operations
sometime during the fourth quarter. The Bank will engage in a general
commercial and retail banking business with primary emphasis upon high
quality service to meet the financial needs of the individuals and
businesses residing and located in and around Tampa, Florida. As part
of its regular business operations, the Bank will offer a full
compliment of loans, including commercial, consumer/installment and
real estate loans. It is expected that commercial loans will account
for approximately one-half of the Bank's estimated total loan
portfolio. Commercial loans are loans made to individual, partnership
or corporate borrowers for a variety of business purposes. Commercial
loans have a higher risk of loss than consumer or real estate loans. To
the extent that borrowers fail to repay their loans, such failure may
have a material adverse effect on the Bank's and the Company's earnings
and overall financial condition, as well as, the value of the common
stock.
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Subsequent Events
The Company successfully completed its initial public offering
("Offering") on August 7, 1999, raising $13,207,000 through the sale of
1,320,700 units of stock and stock warrants at $10 per unit. Escrow for
the receipts from the Offering was broken on September 20, 1999. In
addition to the $13,207,000 raised in the Offering, the Company
received $187,000 in interest earned on the funds held in the escrow
account. The capital raised in the Offering and the escrow receipts
were used to redeem the 900 shares of preferred stock issued to the
Organizers, repay the Offering expenses of $45,000, repay the
organizational expenses of $150,000, and repay the preopening expenses
of $270,000. It is expected that in mid-October, 1999 the Company will
use a portion of the remaining proceeds from the Offering to purchase
100% of the Bank's stock, providing the requisite capital for the Bank
to be able to commence operations. Initially, the Bank will be the only
business owned by the Company. The Company's fiscal year ends December
31.
Regulation and Supervision
General. - The Company and the Bank will operate in a highly regulated
environment, and their business activities are governed by statute,
regulation and administrative policies. Our business activities will be
subject to supervision by the Federal Reserve Board, the Florida
Department of Banking and Finance ("Department") and the Federal
Deposit Insurance Corporation ("FDIC").
The Company is regulated by the Federal Reserve Board under the Federal
Bank Holding Company Act of 1956, as amended ("BHCA"). The BHCA
requires every bank holding company to obtain the prior approval of the
Federal Reserve Board before acquiring more than 5% of the voting
shares of any bank or all or substantially all of the assets of a bank,
and before merging or consolidating with another bank holding company.
The Federal Reserve Board (pursuant to regulation and published policy
statement) has maintained that a bank holding company must serve as a
source of financial strength to its subsidiary banks. In adhering to
the Federal Reserve Board Policy, the Company may be required to
provide financial support for a subsidiary bank at a time when, absent
such Federal Reserve Board policy, the Company may not deem it
advisable to provide such assistance.
A bank holding company is generally prohibited from acquiring control
of any company which is not a bank and from engaging in any business
other than the business of banking or managing and controlling banks.
However, there are certain activities which have been identified by the
Federal Reserve Board to be so closely related to banking as to be a
proper incident thereto and thus permissible for bank holding
companies.
As a bank holding company, the Company will be required to file with
the Federal Reserve Board an annual report of its operations at the end
of each fiscal year and such additional information as the Federal
Reserve Board may require pursuant to the Act. The Federal Reserve
Board may also make examinations of the Bank and each of its
subsidiaries.
As a state bank, the Bank will be subject to the supervision of the
Department, the FDIC and the Federal Reserve Board. The Bank will also
be subject to the Florida banking and usury laws restricting the amount
of interest which it may charge in making loans or other extensions of
credit. In addition, the Bank, as a subsidiary of the Company, will be
subject to restrictions under federal law in dealing with the Company
and other affiliates, if any. These restrictions apply to extensions of
credit to an affiliate, investments in the securities of an affiliate
and the purchase of assets from an affiliate.
Limits on Loans to One-Borrower. - Loans and extensions of credit by
state banks are subject to legal lending limitations. Under Florida
law, a state bank may grant unsecured loans and extensions of credit in
an amount up to 15% of its unimpaired capital and surplus to any
person. In addition, a state bank may grant additional loans and
extensions of credit to the same person up to 10% of its unimpaired
capital and surplus, provided that the transactions are fully secured.
This 10% limitation is separate from, and in addition, to, the 15%
limitation for unsecured loans. Loans and extensions of credit may
exceed the general lending limit if they qualify under one of several
exceptions.
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Prompt and Corrective Action. - The Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") required the federal
banking regulatory agencies to set certain capital and other criteria
which would define the category under which a particular financial
institution would be classified. The FDICIA imposes progressively more
restrictive constraints on operations, management, and capital
distributions depending on the category in which an institution is
classified. As required by the FDICIA, undercapitalized institutions
must submit recapitalization plans to their respective federal banking
regulatory agencies, and a company controlling a failing institution
must guarantee that institution's compliance with its plan in order for
the plan to be accepted.
The FDIC's prompt and corrective action regulations define, among other
things, the relevant capital measures for the five capital categories.
For example, a bank is deemed to be:
o "well-capitalized" if it has a total risk-based capital ratio
(total capital to risk-weighted assets) of 10% or greater, a
Tier 1 risk-based capital ratio (Tier 1 capital to
risk-weighted assets) of 6% or greater, and a Tier 1 leverage
capital ratio (Tier 1 capital to adjusted total assets) of 5%
or greater, and is not operating under a regulatory order,
agreement or directive to meet and maintain a specific
capital level for any capital measure.
o "adequately capitalized" if it has a total risk-based capital
ratio of 8% or greater, and (generally) a Tier 1 leverage
capital ratio of 4% or greater, and the bank does not meet
the definition of a "well-capitalized" institution.
o "critically undercapitalized" if it has a ratio of tangible
equity to total assets that is equal to or less than 2%.
The FDIC is authorized effectively to downgrade a bank to a lower
capital category than the bank's capital ratios would otherwise
indicate. A decision to do so would be based upon safety and soundness
considerations, such as when the bank has received a less than
satisfactory examination rating for any of the CAMELS rating categories
other than Capital: i.e.
o Asset quality
o Management
o Earnings
o Liquidity
o Sensitivity to market risk
As a bank drops to lower capital levels, the extent of action to be
taken by the appropriate regulator increases, restricting the types of
transactions in which the bank may engage. The regulatory capital
standards are designed to bolster and protect the deposit insurance
fund.
Insurance on Deposit Accounts. -- In response to the requirements of
the FDICIA, the FDIC established a risk-based assessment system for
insured depository institutions that takes into account the risks
attributable to different categories and concentrations of assets and
liabilities. The FDIC assigns a financial institution to one of three
capital categories based on the institution's financial information, as
of the reporting period ending seven months before the assessment
period.
These categories consist of well-capitalized, adequately capitalized or
undercapitalized, and one of three supervisory subcategories within
each capital group. The supervisory subgroup to which an institution is
assigned is based on a supervisory evaluation provided to the FDIC by
the financial institution's primary regulator, in the Bank's case the
Department and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds. A financial institution's assessment rate depends on
the capital category and supervisory category to which it is assigned.
There are nine assessment risk classifications to which different
assessment rates are applied. BIF assessment rates range from 0 basis
points on deposits for a financial institution in the highest category,
i.e., well-capitalized and financially sound with only a few minor
weaknesses, to 31 basis points on deposits for an institution in the
lowest category, i.e., undercapitalized and posing a substantial
probability of loss to the BIF, unless effective corrective action is
taken.
3
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Standards for Safety and Soundness. - The FDICIA requires each federal
banking agency to prescribe for all insured depository institutions and
their holding companies standards relating to internal controls,
information systems and audit systems, loan documentation, credit
underwriting, interest rate risk exposure, asset growth, compensation,
fees and benefits and other operational and managerial standards as the
agency deems appropriate. In addition, the federal banking regulatory
agencies are required to prescribe by regulation standards specifying:
o maximum classified assets to capital ratios;
o minimum earnings sufficient to absorb losses without
impairing capital;
o to the extent feasible, a minimum ratio of market value to
book value for publicly traded shares of depository
institutions or depository institution holding companies;
and
o other standards relating to asset quality, earnings and
valuation as the agency deems appropriate.
[Intentionally left blank]
4
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Finally, each federal banking agency is required to prescribe standards
for employment contracts and other compensation arrangements with
executive officers, employees, directors and principal shareholders of
insured depository institutions that would prohibit compensation and
benefits and other arrangements that are excessive or that could lead
to a material financial loss for the institution. If an insured
depository institution or its holding company fails to meet any of the
standards described above, it will be required to submit to the
appropriate federal banking agency a plan specifying the steps that
will be taken to cure the deficiency. If an institution fails to submit
an acceptable plan or fails to implement the plan, the appropriate
federal banking agency will require the institution or holding company
to correct the deficiency and, until corrected may impose restrictions
on the institution or the holding company including any of the
restrictions applicable under the prompt corrective action provisions
of the FDICIA.
Capital Requirements Imposed by Federal Regulators. - The FDIC has
adopted capital regulations which establish a Tier 1 core capital
definition and a minimum 3% leverage capital ratio requirement for the
most highly-rated financial institutions (i.e., those financial
institutions with a composite CAMELS rating of 1 under the Uniform
Financial Institutions Rating System established by the Federal
Financial Institutions Examination Council) that are not anticipating
or experiencing significant growth. All other
state nonmember banks are required to meet a minimum leverage ratio
that is at least 100 to 200 basis points above 3%. A financial
institution that is not in the highest-rated category or that is
anticipating or experiencing significant growth will have to meet a
minimum leverage ratio of at least 4%. The minimum capital with which
the Bank will be permitted to open is $6.4 million.
Under the FDIC's risk-based regulations, a financial institution must
classify its assets and certain off-balance sheet activities into
categories and maintain specified levels of capital for each category.
The least capital is required for the category deemed by the FDIC to
have the least risk, and the most capital is required for the category
deemed by the FDIC to have the greatest risk. The regulations require a
financial institution to have a total risk based capital ratio of 8%
and a Tier 1 risk based capital ratio of 4%. Under the FDIC's statement
of policy, certain assets are required to be deducted from risk-based
capital. Such assets include intangible assets, unconsolidated banking
and finance subsidiaries, investments in securities subsidiaries,
ineligible equity investments and reciprocal holding of capital
instruments with other financial institutions. In addition, the FDIC
may consider deducting other assets on a case-by-case basis or any
investments in other subsidiaries on a case-by-case basis or based on
the general characteristics or functional nature of the subsidiaries.
Restriction on the Payment of Dividends. - A Florida commercial bank
may not pay cash dividends that would cause the bank's capital to fall
below the minimum amount required by federal or Florida law. Otherwise,
a Florida bank may pay a dividend out of the total of current net
profits, plus retained net profits of the preceding two years to the
extent it deems expedient, except as described below. Twenty percent of
the net profits in the preceding two-year period may not be paid in
dividends, but must be retained to increase capital surplus until such
surplus equals the amount of common and preferred stock issued and
outstanding. In addition, no bank may pay a dividend at any time when
its net income in the current year combined with its retained net
income from the preceding two years produces a loss. The Bank does not
intend to pay a cash dividend during the first three- years of its
operations. The ability of the Bank to pay dividends in the future will
depend in part on the FDIC capital requirements in effect at that time
and the ability of the Bank to comply with such requirements.
Limitations on Deposits Acquired From Brokers. - In accordance with the
FDICIA, the FDIC has implemented restrictions on the acceptance of
brokered deposits. In general, an "undercapitalized" institution may
not accept, renew or roll over any brokered deposits. "Adequately
capitalized" institutions may request a waiver from the FDIC to do so,
while "well-capitalized" institutions may accept, renew or roll over
such deposits without restriction. The FDICIA requires registration of
deposit brokers and imposes certain record keeping requirements.
Institutions that are not "well-capitalized" (even if meeting minimum
capital requirements) are subject to limits on rates of interest they
may pay on brokered and other deposits. The Bank does not expect to
acquire any brokered deposits.
5
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Reserves Required by the Department of Banking. - As a state-chartered
commercial bank, the Bank will be required by Florida law to maintain a
liquidity reserve of at least 15% of its total transaction accounts and
8% of its total nontransaction accounts subject to certain
restrictions. This reserve may consist of cash-on-hand, demand deposits
due from correspondent banks, and certain other investments and
short-term marketable securities.
Community Reinvestment Act Requirements. - Under the Community
Reinvestment Act ("CRA"), as implemented by FDIC regulations, state
nonmember banks have a continuing and affirmative obligation,
consistent with their safe and sound operation, to help meet the credit
needs of their entire community, including low- and moderate-income
neighborhoods. The CRA does not establish specific lending requirements
or programs for financial institutions nor does it limit a financial
institution's discretion to develop the types of products and services
that it believes are best suited to its particular community,
consistent with the CRA. The CRA requires the FDIC, in connection with
their examination of state nonmember banks, to assess the financial
institution's record of meeting the credit needs of their communities
and to take such record into account in its evaluation of certain
applications by such financial institution. The Bank will be subject to
the CRA and these regulations.
Assessments Required by The Deposit Insurance Funds Act of 1996. - On
September 30, 1996, the President signed in to law the Deposit
Insurance Funds Act of 1996 ("DIFA"). Among other things, the DIFA, and
rules promulgated thereunder by the FDIC, provide for banks and thrifts
to share the annual interest expense for the Finance Corp. Bonds which
were issued in the late 1980s to help pay the costs of the savings and
loan industry restructuring. The approximate annual interest expense is
$780 million of which BIF insured banks are expected to pay
approximately $322 million, or 41%, while SAIF insured thrifts will pay
approximately $458 million or 59% of that interest expense. It is
estimated that the annual assessment for BIF insured institutions will
be approximately 1.2(cent) per $100 of deposits, while SAIF insured
institutions will pay 6.5(cent) per $100 of deposits. These payments,
which began in 1997, are to run through December 31, 1999. Beginning in
the year 2000 and continuing through the year 2017, banks and thrifts
will each pay 2.43(cent) per $100 of deposits. These assessments will
be in addition to any regular deposit insurance assessments imposed by
the FDIC under the FDICIA.
Elimination of Most Restrictions on Interstate Banking. - Under the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
("Efficiency Act"), restrictions on interstate acquisitions of banks by
bank holding companies were repealed on September 29, 1995, so that any
out-of-state bank holding company is now able to acquire and
consolidate any Florida-based bank, but must comply with certain
deposit percentage and other restrictions on or after the effective
date of the Efficiency Act. The legislation also provides that an
individual state could elect beforehand either to:
o accelerate the effective date, or
o prohibit out-of-state banks from operating interstate
branches within their territory.
Adequately capitalized and managed bank holding companies are now able
to consolidate multiple interstate banks. Branching by an out-of-state
bank is permitted only if it is expressly permitted by the laws of the
host state. The authority of a bank to establish and operate branches
within a state will continue to be governed by applicable state
branching laws. Florida has adopted legislation which permits
interstate acquisitions and interstate branching effective June 1,
1997. Florida law prohibits branching by out of state banks not already
doing business in Florida.
State Assessment. - As a state-chartered commercial bank, the Bank will
be required to pay assessments to the Department to fund its
operations. The general assessment, to be paid semiannually, is
computed upon a bank's total assets, including consolidated
subsidiaries, as reported in the bank's most recent quarterly call
report.
Reserves Required by The Federal Reserve System. - Federal Reserve
regulations require banks to maintain noninterest-earning reserves
against their transaction accounts. These accounts are primarily NOW
and regular checking accounts. Federal Reserve regulations generally
require that reserves of 3.0% must be maintained against aggregate
transaction accounts of $46.5 million or less, plus 10% against that
portion of total transaction accounts in excess of $46.5 million. The
first $4.9 million of otherwise reservable balances are exempted from
the reserve requirements. The balances maintained to meet the reserve
requirements imposed by the Federal Reserve may be used to satisfy
liquidity requirements imposed by the Comptroller of the Currency.
Because required reserves must be maintained in the form of either
vault cash, a noninterest-bearing account at a Federal Reserve Bank or
a pass-through account, interest-earning assets of the Bank will be
reduced.
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Market Area and Competition
Our goal is to be the premier community-based financial institution in
its market area by providing exceptional personalized bank products and
traditional bank services to individuals, small to medium-sized
businesses, professionals and other local organizations in its market
area.
Emphasis will be placed on personal contacts by the officers, directors
and employees of the Bank. Loan participation will be arranged for
customers whose loan demands exceed our lending limits. Generally,
customers will have one account officer to serve all of their banking
needs and will have access to senior management when necessary. We
intend to provide a full range of competitive banking services;
however, the marketing emphasis will be more on the way services are
delivered, than on which services are provided. Our efforts will be
focused on filling the void caused by the dwindling service provided by
larger banks.
We intend to rely on our local directors, stockholders, management and
employees for business development, as other banks in this market
continue to merge, consolidate and grow outside the area. Policies and
procedures will be tailored to the local market rather than to the
regional and statewide markets of other financial institutions. Our
directors and management know the people in our market area and
understand their businesses. Management will actively promote the Bank
within the market due through their established reputations and banking
relationships in the local community. Our customer base will be derived
from our directors, stockholders, their friends, relatives and business
associates and others within the community who desire superior
personalized banking services unavailable from the regional and
statewide financial institutions. We are committed to being locally
owned and managed.
Profitable banking relationships are those with high deposit balances,
infrequent transactions and low distribution requirements. The Bank
will be well positioned to establish these relationships with
commercial and consumer customers through the active marketing efforts
of our directors, management, and employees, coupled with the
opportunities created by the growth of the market area and recent
mergers.
We will utilize newspaper and radio advertising to broadcast our
message of local ownership and management, as well as fiscal
responsibility, personal service and customer relations at the local
level. Direct mail will also be used on a selective basis.
Our primary market will be Tampa Bay Metropolitan Statistical Area
("Tampa Bay MSA") with a population of 2,240,000. The Tampa Bay MSA is
comprised of four counties; Hillsborough, Pinellas, Pasco and Hernando
Counties.
According to the Tampa Tribune Market Guide - 1998, the Tampa Bay MSA
is a growth market, where year after year the population size is among
the top 25 MSAs nationally. The Tampa Bay MSA ranks second in
population size and total number of households among Southeastern
metropolitan areas. Only Atlanta has a larger population. The Tampa Bay
MSA has the largest population and the most households in Florida,
ahead of Miami, Ft. Lauderdale and Orlando. Tampa Bay also ranks high
in other vital statistics such as effective buying income and retail
activity, not only in Florida, but in the Southeast and the United
States.
Competition among financial institutions for deposits and loans in our
primary market is intense. Competitors include existing area financial
institutions, including insurance companies, consumer finance
companies, brokerage houses, credit unions and other business entities
which target traditional banking markets. Due to the growth of the
Tampa area, it can be anticipated that additional competition will
continue from existing, as well, new entrants to the market.
Deposits
The Bank will offer a wide range of interest-bearing and
noninterest-bearing deposit accounts, including commercial and retail
checking accounts, money market accounts, individual retirement
accounts, regular interest-bearing statement savings accounts and
certificates of deposit with fixed and variable rates and a range of
maturity date options. The sources of deposits will be residents,
businesses and employees of businesses within our market area, obtained
through the personal solicitation of our officers and directors, direct
mail solicitation and advertisements published in the local media. We
intend to pay competitive interest rates on time and savings deposits
up to the maximum permitted by law or regulation. Our service charge
fee schedule will be competitive with other financial institutions in
our market area covering such matters as maintenance fees on checking
accounts, per item processing fees on checking accounts and returned
check charges.
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Loan Portfolio
General. - We intend to provide for the financing needs of our
community by offering a variety of loans. Commercial loans will include
both collateralized and uncollateralized loans for working capital
(including inventory and receivables), business expansion (including
real estate acquisitions and improvements), and purchase of equipment
and machinery. A variety of residential real estate loans will be
generated, including conventional mortgages collateralized by first
mortgages liens to enable borrowers to purchase, refinance, construct
upon or improve real property. Consumer loans will include
collateralized and uncollateralized loans for financing automobiles,
boats, home improvements, and personal investments. We will primarily
enter into lending arrangements for our portfolio loans with
individuals who are familiar to us and are residents of our PSA and
surrounding area. It is anticipated that 20-25% of the loans will come
from outside our market area.
We recognize that credit losses will be experienced and the risk of
loss will vary with, among other things, the type of loan being made,
the creditworthiness of the borrower over the term of the loan and, in
the case of a collateralized loan, the quality of the collateral for
the loan as well as the general economic conditions. The Bank will
maintain an adequate allowance for loan losses based on, among other
things, industry standards, management's experience, our historical
loan loss experience, evaluation of economic conditions and regular
reviews of delinquencies and loan portfolio quality.
We intend to follow a conservative lending policy, but one which
permits prudent risks to assist businesses and consumers in the market
area. Our lending area is expected to be generally the immediate
Hillsborough County and the counties contiguous to Hillsborough County.
It is not expected that loan participations will be purchased from
correspondent banks. However, participations will likely be sold,
particularly with regard to real estate lending. Interest rates will
vary depending on our cost of funds, the loan maturity, and the degree
of risk. Whenever possible, interest rates will be adjustable with
fluctuations in the "prime" rate. The long-term target loan-to-deposit
ratio will be approximately 75%. This ratio is expected to meet the
credit needs of customers while allowing prudent liquidity through the
investment portfolio. Our Directors believe that this positive,
community-oriented lending philosophy will be translated into a
sustainable volume of quality loans into the foreseeable future.
Commercial Loans - will primarily be underwritten in our market area on
the basis of the borrowers' ability to service such debt from income.
As a general practice, the Bank will take as collateral a security
interest in any available real estate, equipment, or other chattel.
Such loans, however, may also be made on an uncollateralized basis.
Collateralized working capital loans will be primarily collateralized
by short term assets whereas term loans will be primarily
collateralized by long term assets. Unlike residential mortgage loans,
which generally are made on the basis of the borrowers' ability to make
repayment from his employment and other income, and which are
collateralized by real property whose value tends to be easily
ascertainable, commercial loans typically will be underwritten on the
basis of the borrower's ability to make repayment from the cash flow of
the business and generally will be collateralized by business assets,
such as accounts receivable, equipment and inventory.
Residential Mortgage Loans - will be a part of our lending activities
which will consist of the origination of single family residential
mortgage loans collateralized by owner-occupied property located in our
market area and surrounding areas. We will also offer adjustable rate
mortgages (ARMs) and will maintain these ARMs in our portfolio or we
may sell the ARMs in the secondary market. The ability to retain ARMs
in our portfolio will allow the Bank the opportunity to originate loans
to borrowers who may not meet the underwriting criteria of strict
secondary market standards but are still quality credit risks.
8
<PAGE>
Fixed and adjustable rate mortgage loans collateralized by single
family residential real estate generally will be generated in amounts
of no more than 85% of appraised value. The Bank may, however, lend up
to 95% of the value of the property collateralizing the loan, but if
such loans are required to be made in excess of 85% of the value of the
property, they must be insured by private or federally guaranteed
mortgage insurance. In the case of mortgage loans, mortgagees title
insurance will be required to protect against defects in its lien on
the property which may collateralize the loan. In most cases, the
borrower will be responsible for obtaining title, fire and extended
casualty insurance. Where required by applicable regulations, flood
insurance will also be required. We will maintain our own errors and
omissions insurance policy to protect against loss in the event of
failure of a mortgagor to pay premiums on fire and other hazard
insurance policies.
Mortgage Construction Loans - will be offered to finance the
construction of single family dwellings. Most of the residential
construction loans, however, will be made to individuals who intend to
erect owner-occupied housing on a purchased parcel of real estate. The
size of the construction loans to individuals will typically range from
$50,000 to $200,000. Construction loans to contractors will be
generally offered on the same basis as other residential real estate
loans, except that a larger percentage down payment will typically be
required. Construction loans will be structured either to be converted
to permanent loans with the Bank at the end of the construction phase
or to be paid off upon receiving financing from another financial
institution. Construction loans on residential properties will be
generally made in amounts up to 95% (along with mortgage insurance) of
appraised value. Construction loans to contractors will generally have
terms of up to 12 months. The maximum loan amounts for construction
loans will be based on the lessor of the current appraised value or the
purchase price.
Consumer Loans - will include the financing of automobiles, recreation
vehicles, boats, second mortgages, home improvement loans, home equity
lines of credit, personal (collateralized and uncollateralized) and
deposit account collateralized loans. Consumer loans will be made at
fixed and variable interest rates and may be made based on up to a
10-year amortization schedule, but which become due and payable in full
and are generally refinanced in 36 to 60 months. Consumer loans will be
attractive to the Bank because they typically have a shorter term and
carry higher interest rates than that charged on other types of loans.
Investments
Our primary objective will be to construct an investment portfolio
comprised of a mixture of investments which will earn an acceptable
rate of return while meeting the Bank's liquidity requirements. This
will be accomplished by matching the maturity of assets with
liabilities to the greatest extent possible.
The Bank intends to invest primarily in U.S. obligations guaranteed as
to principal and interest. The Bank will also enter into federal funds
transactions with our principal correspondent banks and anticipate that
we will be a net seller of funds. All investments with a maturity in
excess of one year will be readily salable on the open market.
ITEM 2. PROPERTIES
The Bank's permanent headquarters will be located at 2202 North
Westshore Boulevard, Tampa, Florida, in a new 6-story office building
developed by Crescent Resources (a subsidiary of Duke Power). The
commercial office building is known as the International Plaza. The
Bank will occupy 8,056 square feet on the ground floor (including two
drive-up banking lanes, as well as ATM access). The Company entered
into a lease agreement for temporary facilities with NovaCare, in the
event the permanent quarters were not completed on time.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or
the Bank is a party or which any of their properties are subject. We
are not aware of any material proceedings being contemplated by any
governmental authority, nor are we aware of any material proceedings,
pending or contemplated, in which any director, officer, affiliate or
any principal security holder of the Company, or any associate of the
foregoing is a party or has an interest to the Company or the Bank.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
9
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
Prior to the Offering, there was no market for the common shares of the
Company. It is not anticipated that an active public market will
develop for the common shares of the Company because, at this time, the
Company does not intend to seek a listing for the common stock on a
national securities exchange or to qualify such common stock for
quotation on the National Association of Securities Dealers Automated
Quatoe System.
ITEM 6. MANAGEMENT'S PLAN OF OPERATION
The Company had no operations during the period of time covered by this
report. The strategy for the Bank will be to conduct traditional
community banking activities, including the gathering of deposits and
investing those proceeds into loans and investment securities. The
Company does not expect to undertake any product research and
development activities, purchase any additional branch sites or make
any significant equipment purchases during the next 12 months.
The initial activity of the Company will be to act as the sole
shareholder of the Bank. The profitability of the Company will be
dependent upon the successful operations of the Bank. New banks are
typically not profitable in the first year of operation and sometimes
are not profitable for several years.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
<TABLE>
<CAPTION>
FLORIDA BUSINESS BANCGROUP, INC.
(A Development Stage Company)
Index to Financial Statements
Page
----
<S> <C>
Independent Auditors' Report.......................................................................................10
Balance Sheet at December 31, 1998.................................................................................11
Statement of Loss for the Period from May 18, 1998
(Date of Incorporation) to December 31, 1998..............................................................12
Statement of Stockholders= Equity for the Period from May 18, 1998
(Date of Incorporation) to December 31, 1998..............................................................13
Statement of Cash Flows for the Period from May 18, 1998
(Date of Incorporation) to December 31, 1998..............................................................14
Notes to Financial Statements as of December 31, 1998 and for the Period from
May 18, 1998 (Date of Incorporation) to December
31, 1998...............................................................................................15-18
</TABLE>
All schedules have been omitted because of the absence of the conditions under
which they are required or because the required information is included in the
financial statements and related notes.
-10-
<PAGE>
Independent Auditors' Report
Board of Directors
Florida Business BancGroup, Inc.
Tampa, Florida:
We have audited the accompanying balance sheet of Florida Business BancGroup,
Inc. (a development stage company) (the "Company") at December 31, 1998, and the
related statements of loss, stockholders' equity and cash flows for the period
from May 18, 1998 (date of incorporation) to December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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 audit provides 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 the Company at December 31,
1998, and the results of its operations and its cash flows for the period from
May 18, 1998 to December 31, 1998, in conformity with generally accepted
accounting principles.
/s/ Hacker, Johnson, Cohen & Grieb, PA
- --- ----------------------------------
HACKER, JOHNSON, COHEN & GRIEB, PA
Tampa, Florida
September 30, 1999
-11-
<PAGE>
FLORIDA BUSINESS BANCGROUP, INC.
(A Development Stage Company)
Balance Sheet
December 31, 1998
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash...................................................................................... $ 16,272
Deferred tax asset........................................................................ 49,597
Other assets.............................................................................. 41,928
-------
Total............................................................................ $ 107,797
=======
Liabilities and Stockholders' Equity
Liabilities-
Advances from organizers............................................................. 100,000
-------
Commitments and contingencies (Notes 5 and 9)
Stockholders' equity:
Preferred stock:
Designated Series A, $0.01 par value, redeemable at $100 per
share, 10,000 shares so designated, 900 issued and outstanding 90,000
Nondesignated, no par value, 1,999,100 shares authorized,
none issued or outstanding..................................................... -
Common stock, $0.01 par value 10,000,000 shares authorized,
none issued or outstanding....................................................... -
Accumulated deficit.................................................................. (82,203)
-------
Total stockholders= equity....................................................... 7,797
--------
Total liabilities and stockholders' equity....................................... $ 107,797
=======
</TABLE>
See Accompanying Notes to Financial Statements.
-12-
<PAGE>
FLORIDA BUSINESS BANCGROUP, INC.
(A Development Stage Company)
Statement of Loss
Period From May 18, 1998 (date of incorporation) to December 31, 1998
<TABLE>
<CAPTION>
<S> <C>
Income............................................................................................. $ -
--------
Organizational and pre-opening expenses:
Salaries and employee benefits................................................................ 61,077
Occupancy expenses............................................................................ 10,116
Professional fees............................................................................. 40,307
Other expenses................................................................................ 20,300
--------
Total organizational and pre-opening expenses............................................. 131,800
-------
Loss before income tax benefit................................................................ (131,800)
Income tax benefit................................................................................. (49,597)
-------
Net loss.................................................................................. $ (82,203)
=======
</TABLE>
See Accompanying Notes to Financial Statements.
-13-
<PAGE>
FLORIDA BUSINESS BANCGROUP, INC.
(A Development Stage Company)
Statement of Stockholders' Equity
For the Period from May 18, 1998 (date of incorporation)
to December 31, 1998
<TABLE>
<CAPTION>
Designated Series A Total
Preferred Stock Common Accumulated Stockholders'
Shares Amount Stock Deficit Equity
------ ------ ------ ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at May 18, 1998 (date of
incorporation)......................... - $ - - $ - $ -
Conversion of advances from organizers
into 900 shares of preferred stock 900 90,000 - - 90,000
Net loss for the period ended
December 31, 1998...................... - - - (82,203) (82,203)
------ ---------- ------- ------ -------
Balance at December 31, 1998................ 900 $ 90,000 - $(82,203) $ 7,797
=== ====== ======= ====== =========
</TABLE>
See Accompanying Notes to Financial Statements.
-14-
<PAGE>
FLORIDA BUSINESS BANCGROUP, INC.
(A Development Stage Company)
Statement of Cash Flows
Period from May 18, 1998 (date of incorporation) to December 31, 1998
<TABLE>
<CAPTION>
<S> <C>
Cash flows used in administrative activities during the development stage:
Net loss...................................................................................... $ (82,203)
Adjustments to reconcile net loss to net cash used in administrative
activities during the development stage:
Credit for deferred income taxes..................................................... (49,597)
Increase in other assets............................................................. (41,928)
--------
Net cash used in administrative activities during the
development stage.............................................................. (173,728)
Cash flows from financing activities:
Advances from organizers...................................................................... 190,000
-------
Net increase in cash............................................................................... 16,272
Cash at beginning of period........................................................................ -
-------
Cash at end of period.............................................................................. $ 16,272
=======
Supplemental disclosures of noncash investing activities:
Conversion of advances from organizers
into 900 shares of designated Series A
preferred stock......................................................................... $ 90,000
=======
</TABLE>
See Accompanying Notes to Financial Statements.
-15-
<PAGE>
FLORIDA BUSINESS BANCGROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
As of December 31, 1998 and for the Period from
May 18, 1998 (date of incorporation) to December 31, 1998
(1) Summary of Significant Accounting Policies
General. - Florida Business BancGroup, Inc. ("Company") was incorporated on May
18, 1998 in the State of Florida for the purpose of operating as a bank holding
company. The Company and its intended subsidiary Bay Cities Bank ("Bank") will
be located in Tampa, Florida. As of December 31, 1998, neither the Company nor
the Bank had commenced business operations. The Company has received the
requisite approvals of the Florida Department of Banking and Finance, the
Federal Deposit Insurance Corporation and the Board of Governors of the Federal
Reserve System. With the exception of organizational costs and preopening
expenses, accounting policies have not been established. Management expects to
commence banking operations in November, 1999. The Company has adopted a fiscal
year end of December 31.
The Company completed its public offering of 1,320,700 units, consisting of one
common share and one warrant, at $10 per unit on August 7, 1999. The Offering
costs of $44,926 were deducted from the proceeds. The Company will acquire 100%
of the stock of the Bank upon issuance of its Charter by the State of Florida
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.
Income Taxes. - Deferred tax assets and liabilities are reflected at currently
enacted income tax rates applicable to the period in which the deferred tax
assets or liabilities are expected to be realized or settled. As changes in tax
laws or rates are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes.
Organizational and Pre-opening Costs. - Net organizational and pre-opening costs
incurred from date of incorporation to December 31, 1998 have been charged to
expense as incurred.
Future Accounting Requirements. - Financial Accounting Standards 133, Accounting
for Derivative Investments and Hedging Activities, requires companies to record
derivatives on the balance sheet as assets or liabilities, measured at fair
value. Gains or losses resulting from changes in the values of those derivatives
would be accounted for depending on the use of the derivatives and whether they
qualify for hedge accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving offsetting changes in
fair value or cash flows. The Company will be required to adopt this Statement
January 1, 2001. Management does not anticipate that this Statement will have a
material impact on the Company.
(2) Related Parties
The Company has appointed one of its Organizers as the President and Chief
Executive Officer of the Company.
(3) Warrants
The Company has adopted a warrant plan providing for warrants to be issued in
conjunction with the sale of the Company=s common stock. One warrant and one
share of common stock were sold as a unit in the Company's recently completed
initial public offering. At August 7, 1999, 1,320,700 warrants were outstanding.
Each warrant entitles the holder to purchase one share of common stock for $10
anytime during a thirty-six month period; however, the Company has the option to
accelerate the warrant exercise period.
-16-
<PAGE>
FLORIDA BUSINESS BANCGROUP, INC.
(A Development Stage Company)
Notes to Financial Statements, Continued
(4) Advances from Organizers
To provide an initial source of funds with which to pay organizational and
preopening expenses, the Organizers, as of December 31, 1998, contributed, in
the aggregate, $190,000. A portion of this amount ($90,000) was allocated for
the 900 shares of the Company's Series A Preferred Stock, which was issued to
the Organizers on September 29, 1998.
(5) Lease Commitment
On February 1, 1999, the Company entered into an agreement to lease its
permanent facility. The lease contains a renewal provision and provides for
additional charges based on various escalations. The future minimum rental
commitments as of December 31, 1998 are as follows:
Minimum
Year Ending Annual
December 31, Rental
------------ ------
1999 ........................... $ 181,851
2000 ........................... 185,489
2001 ........................... 189,571
2002 ........................... 193,545
Thereafter .................... 164,141
--------
$ 914,597
=========
(6) Preferred Stock
The Board of Directors has the authority to provide for the issuance of
preferred stock in series and to determine the number of shares of each series
and the designation, powers, preferences and rights of each series. The Board of
Directors authorized the issuance of Series A Preferred Stock for the purpose of
funding pre-opening expenses. Series A Preferred Stock is nonvoting stock which
pays no mandatory dividend. The Company has issued 900 shares of Series A
Preferred Stock to organizers at a price of $100 per share. The Series A
Preferred Stock is redeemable by the Company at any time after the initial
public offering is completed and will not mandate the payment of any dividend,
but will have a distribution preference above common stock in the event of a
dissolution of the Company. Dividends on the Series A Preferred Stock is at the
sole discretion of the Company. In the event of a dissolution, the Series A
Preferred Stock would have a distribution preference over common stock.
(7) Stock Option Plans
Incentive Stock Option Plan. - The Company's Board of Directors intends to adopt
an Incentive Stock OptionPlan ("Plan") for employees who are contributing
significantly to the management or operation of the business of the Company or
its subsidiaries as determined by the committee administering the Plan. The Plan
will be subject to shareholder approval and will provide for the grant of
options at the discretion of a committee designated by the Board of Directors to
administer the Plan. The option exercise price must be at least 100% (110% in
the case of a holder of 10% or more of the common stock) of the fair market
value of the stock on the date the option is granted, but in no case will the
exercise price be less than $10. The options are exercisable by the holder
thereof in full at any time following a vesting period and prior to their
expiration in accordance with the terms of the Plan. We intend to grant the
President/CEO, at no cost to him, an option to purchase a minimum of 34,444
shares of the Company's common stock.
-17-
<PAGE>
FLORIDA BUSINESS BANCGROUP, INC.
(A Development Stage Company)
Notes to Financial Statements, Continued
Directors Stock Option Plan. - The Company intends to adopt a nonqualified
Directors Stock Option Plan ("Directors' Plan"), subject to shareholder
approval. Each of the organizing directors will be granted options to purchase
12,000 shares of common stock under the Directors Plan. The stock options
granted the Directors' Plan, will bear an exercise price of $10 per share. The
Directors' Plan will be designed to provide incentive compensation to directors
in the event common stock increases in value during the term of such options.
The Directors' Plan will be submitted to the shareholders for approval at the
Company's first shareholders' meeting following the Bank's commencement of
operations.
(8) Income Taxes
<TABLE>
<CAPTION>
The income tax benefit consists of the following:
Period Ended
December 31,
------------
1998
----
Deferred:
<S> <C>
Federal....................................................... $ (42,347)
State......................................................... (7,250)
------
$ (49,597)
=========
</TABLE>
The reason for the differences between the statutory federal income tax rate and
the effective tax rate are summarized as follows:
<TABLE>
<CAPTION>
% of
Pretax
Amount Loss
------ ----
<S> <C> <C>
Income tax benefit at statutory rate $(44,812) (34.0)%
Increase resulting from:
State taxes, net of federal tax benef (4,785) (3.6)
------ ----
$(49,597) (37.6)%
======== =====
</TABLE>
A significant portion of the deferred tax asset is the tax effect of the
Company's organizational and pre-opening costs which are required to be
capitalized for income tax purposes and amortized over a 60-month period which
begins when active business commences.
(9) Year 2000 Issues
The Company is acutely aware of the many areas affected by the Year 2000
computer issue and is actively involved in managing these computer challenges,
following the guidance provided by its regulatory bodies and documented by the
Federal Financial Institutions Examination Council. We have adopted a plan to
address Year 2000 compliance. Issues addressed therein include awareness,
assessment, renovation, validation, implementation, testing and contingency
planning.
Vendors have informed us that their software is Year 2000 compliant or, if not,
that they have adopted plans to ensure compliance. Internal systems and software
will be adequately programmed to address the Year 2000 issue. These systems will
be tested to confirm that they will be Year 2000 compliant. We have received a
certification from our main service provider that they are Year 2000 compliant.
All technology-advanced software and hardware that we have purchased will be
Year 2000 compliant.
-18-
<PAGE>
FLORIDA BUSINESS BANCGROUP, INC.
(A Development Stage Company)
Notes to Financial Statements, Continued
We are developing a Contingency Plan relative to the Year 2000 issue, which
addresses a "worst case scenario." The Contingency Plan will cover various
options for handling interruptions of the internal and external mission critical
systems and services. The Contingency Plan will be continuously monitored to
incorporate and address various operational elements as needed. Furthermore, our
Contingency Plan will cover systems which can be handled manually on an interim
basis. Should outside service providers not be able to provide compliant
systems, we will terminate those relationships and transfer to other vendors.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE MATTERS
None.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Initial Directors
The following is a brief description of the business, civic and
educational experience of the initial Directors and Officers during the
period covered by this report.
Monroe E. Berkman, Age 58: Mr. Berkman has been with The Associated
Group, Inc. and its predecessor, Associated Communications Corporation,
Inc., for nearly 20 years and currently holds the title of Vice
President. Additionally, he serves as President of W. SOL Tampa Bay,
Inc. and the Monroe E. & Suzette M. Berkman Foundation.. Mr. Berkman is
a graduate of the University of Pennsylvania and has resided in
Hillsborough County, Florida since 1973.
John C. Bierley, Age 61: Mr. Bierley has been practicing law for over
30 years. He is a founding partner in the firm of Smith, Clark,
Delesie, Bierley, Mueller & Kadyk, specializing in international law.
Mr. Bierley received his B.A. and J.D. degrees from the University of
Florida. Mr. Bierley was a former director of Gulf Bay Bank of Florida
and SouthTrust Bank of West Florida. He currently is a director of
Cayman National Bank, Ltd. Mr. Bierley has been a resident of
Hillsborough County, Florida since 1963.
Troy A. Brown, Jr., Age 64: Mr. Brown is President of RayBro/CED. Prior
to that position, Mr. Brown served as President and Director of RayBro
Electric Supplies, Inc. Mr. Brown is a graduate of Harvard College and
received his J.D. degree from the University of North Carolina Law
School. He has been a past director of First Florida Bank, First
Florida Banks, Inc., Exchange Bank of Tampa and Exchange Bank of Temple
Terrace. Mr. Brown is a lifetime resident of Hillsborough County,
Florida.
Frank G. Cisneros, Age 56: Mr. Cisneros is President and Chief
Executive Officer of Marman USA, Inc. He also currently serves as
President of Westshore Holdings, Inc. Mr. Cisneros attended the
University of Villanova, Havana, Cuba, and is a graduate of the
University of Tampa. He was a former director of the Gulf Bay Bank of
Tampa and SouthTrust Bank of West Florida. Mr. Cisneros has been a
resident of Hillsborough County, Florida since 1961.
Lawrence H. Dimmitt, III, Age 51: Mr. Dimmitt has been involved as
owner and operator of Dimmitt Chevrolet for over 25 years. He received
his undergraduate degree from The University of the South and has
attended graduate school at Emory University. Mr. Dimmitt serves on the
Chevrolet National Dealer Council. He is a past director of the Bank of
Clearwater and First Florida Bank of Clearwater. Mr. Dimmitt is a
lifetime resident of Pinellas County, Florida.
-19-
<PAGE>
Timothy A. McGuire, Age 49: Mr. McGuire has 25 years of broad-based
commercial banking and bank management experience. From 1973 through
1981, he held various positions with Indiana National Bank, including
Vice President and European Representative, London, England.
Subsequently, Mr. McGuire joined Barnett Bank where he held various
management positions throughout the Barnett system, including Vice
President-Commercial Lending (Tampa), Vice President-U.S. Banking
(Jacksonville), Senior Vice President & Manager-Commercial Lending
(Jacksonville), Senior Vice President & Credit Manager (Atlanta, GA),
Executive Vice President & Senior Loan Officer and Executive Vice
President & Senior Credit Officer (Atlanta, GA). Most recently, Mr.
McGuire participated in the successful establishment of First of
America Bank as a commercial bank in West Central Florida, and served
as the Senior Vice President and Senior Loan Officer, until this entity
was acquired by South Trust.
Mr. McGuire received his Bachelor of Arts degree from Purdue University
and his Masters of Science in Management from the Krammert Graduate
School, Purdue University. Mr. McGuire has been a resident of
Hillsborough County, Florida since 1994.
Eric M. Newman, Age 50: Mr. Newman is President of J.C. Newman Cigar
Company and has been with the company for over 25 years. Mr. Newman
actively serves in the community as President, Rotary Club of Tampa,
Board of Trustees, Merchants Association of Florida, Board of
Directors, University Club of Tampa and Board of Directors, Cigar
Association of America. Mr. Newman received his Bachelor of Arts degree
from the University of the South, and his M.B.A. degree from Emory
University. Mr. Newman has been a resident of Hillsborough County,
Florida since 1954.
Chris Peifer, Age 50: Mr. Peifer is President of Tice Financial
Services, Tampa, Florida and has held that position since 1987. Mr.
Peifer was also a director of the Commercial Bank of Georgia from 1987
until 1995. Mr. Peifer received his Bachelor of Arts degree from
Denison University in 1970 and his Masters in Business Administration
from Northwestern University in 1972. Mr. Peifer has been a resident of
Hillsborough County, Florida since 1987.
A. Bronson Thayer, Age 58: Mr. Thayer is Managing director of The
Investment Counsel Company. Prior to that position, Mr. Thayer was
Chairman and Chief Executive Officer of First Florida Banks, Inc. Mr.
Thayer is a graduate of Harvard College and received his MBA from New
York University. He currently serves as a director of Lykes Bros., Inc.
Mr. Thayer has also served on the board of the Jacksonville Branch of
the Federal Reserve Bank of Atlanta. Mr. Thayer has been a resident of
Hillsborough County, Florida since 1972.
Subsequent Events
The application of Mr. Frank G. Cisneros to serve as a director of the
Company is presently pending before the Federal Reserve Board in
Washington, D.C.
ITEM 10. EXECUTIVE COMPENSATION
General
The Organizers entered into an employment agreement with Timothy A.
McGuire in September of 1998, to assist the Organizers with the
formation of the Company and the Bank. Under the terms of the
Agreement, Timothy A. McGuire will serve as a Director, President of
the Company and is being paid a salary of $6,667 per month, plus a
mileage allowance of $0.315 per mile for business use during the Bank's
organizational phase. The understanding between the Organizers and Mr.
McGuire is that Mr. McGuire will be employed by the Company as its
President, and by the Bank as its President and Chief Executive Officer
at an initial annual base salary of $120,000. The Agreement which
initially is for a term of one year, also contains a commitment to
grant, at no cost to him, an option to purchase a minimum of 34,444
Shares of Company Common Stock at $10.00 per Share. Such option would
vest at the rate of 20% per year over five years, would expire 10 years
from the grant date and would be subject to the terms of a qualified
stock option plan adopted by the Company's Board of Directors and
approved by its shareholders. Mr. McGuire will participate in such
other benefit plans which the Bank makes available generally to all
employees. The Bank may terminate Mr. McGuire for any reason upon
majority vote of the Board of Directors. If, however, the termination
is without cause, Mr. McGuire will be entitled to severance pay in an
amount not to exceed the remainder due on his contract plus any
incentive compensation which he may have been entitled to. The Board of
Directors must review Mr.
-20-
<PAGE>
McGuire's performance annually, and determine whether to extend the
Agreement for a one-year period. In the event of Mr. McGuire's
termination for any reason, Mr. McGuire agrees not to become employed
with any business enterprise who competes or intends to compete,
directly or indirectly, with any office of the Company located in
Hillsborough County for a period of 12 months following such
termination.
Stock Option Plans
Incentive Stock Option Plan. - The Company's Board of Directors intends
to adopt an Incentive Stock Option Plan ("Plan"), subject to
shareholder approval, for employees who are contributing significantly
to the management or operation of the business of the Company or its
subsidiaries as determined by the committee administering the Plan. The
Plan will be contingent upon approval by the Company's shareholders.
The Plan will provide for the grant of options at the discretion of a
committee designated by the Board of Directors to administer the Plan.
No person may serve as a member of the committee who is then eligible
for a grant of options under the Plan or has been so eligible for a
period of one year prior to his service on the committee. The option
exercise price must be at least 100% (110% in the case of a holder of
10% or more of the Common Stock) of the fair market value of the stock
on the date the option is granted, but in no case will the exercise
price be less than the offering price contained herein. The options are
exercisable by the holder thereof in full at any time following a
vesting period and prior to their expiration in accordance with the
terms of the Plan. Stock options granted pursuant to the Plan will
expire on or before (i) the date which is the tenth anniversary of the
date the option is granted, or (ii) the date which is the fifth
anniversary of the date the option is granted in the event that the
option is granted to a key employee who owns more than 10% of the total
combined voting power of all classes of stock of the Company or any
subsidiary of the Company. The Company intends to grant to Mr. McGuire,
at no cost to him, an option to purchase a minimum of 34,444 shares of
the Company's common stock.
The Committee may grant a Limited Right simultaneously with respect to
the grant of any stock option, with respect to all or some of the
Shares covered under the stock option. A Limited Right may not be
exercised before six months from the date of the grant and may be
exercised only if: (i) there is a change in control of the Company;
(ii) the underlying option is eligible to be exercised; and (iii) the
fair market value of the underlying Shares on the day of the exercise
is greater than the exercise price of the related option. The Limited
Right may be for no more than 100% of the difference between the
exercise price and the fair market value of the common stock of the
Company.
Directors Stock Option Plan. - The Company intends to adopt a
non-qualified Directors Stock Option Plan ("Directors' Plan"), subject
to shareholder approval. The Company intends to grant to each of the
proposed Organizing directors options to purchase 12,000 shares of
common stock under the Directors Plan. The stock options, granted
pursuant to the Directors' Plan at no cost to the Directors, will bear
an exercise price of $10.00 per share. The Directors' Plan will be
designed to provide incentive compensation to directors in the event
that the Company's common stock increases in value during the term of
such options. The Directors' Plan is subject to shareholder approval
following the Bank's commencement of business.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
No stock was outstanding during the period covered by this report.
(b) Security Ownership of Management
No stock was outstanding during the period covered by this report.
(c) Changes in Control
No stock was outstanding during the period covered by this report.
-21-
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Affiliates
Mr. Timothy A. McGuire is the only Organizer or proposed director of
the Company that has received any cash compensation for services
rendered on behalf of the Company during the period covered by this
report. Once the Bank opens for business, it is anticipated that it
will extend loans to the Bank's and/or the Company's Directors, their
associates or members of the immediate families of the Directors of the
Bank or the Company. Such loans will be made on substantially the same
terms and conditions, including interest rates, collateral and credit
underwriting procedures as those prevailing at the time for comparable
transactions by the Bank with other similarly qualified persons.
The Organizers have been issued 900 shares of Series A Preferred Stock
at $100 per share for an aggregate of $90,000, which was advanced to
cover the initial organizational expenses. The preferred stock will be
redeemed prior to the Bank's commencement of operations. See Note (6)
to Notes to Financial Statements.
Banking Transactions
It is anticipated that the Directors and officers of the Company and
the Bank and the companies with which they are associated will have
banking transactions with the Bank in the ordinary course of business.
All transactions between the Bank and affiliated persons, including 5%
shareholders, will be on terms no less favorable to the Bank than could
be obtained from independent third parties. Any loans and commitments
to lend to such affiliated persons or entities included in such
transaction will be made in accordance with all applicable laws and
regulations and on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with unaffiliated persons of similar creditworthiness.
[Intentionally left blank]
-22-
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits were filed with or incorporated
by reference into this report. The exhibits which are marked by a
single asterisk (*) were previously filed as part of Registrant's
Form SB-2, as effective with the Securities and Exchange
Commission, Registration No. 333-62101. The exhibit numbers
correspond to the exhibit numbers in the referenced documents.
Exhibit No. Description of Exhibit
- --------------------------------------------------------------------------------
*3.1 Articles of Incorporation of Registrant filed as Exhibit
3.1 to the Form SB-2 Registration Statement is hereby
incorporated by reference.
*3.2 Bylaws of Registrant filed as Exhibit 3.2 to the Form SB-2
Registration Statement is hereby incorporated by
reference.
*4.1 Specimen Common Stock Certificate of Registrant filed as
Exhibit 4.0 to the Form SB-2 Registration Statement is
hereby incorporated by reference.
*4.2 Specimen Warrant Certificate of Registrant filed as
Exhibit 4.2 to the Form SB- 2 Registration Statement is
hereby incorporated by reference.
*4.4 Warrant Plan
*10.1 Employment Agreement between the Company and
Timothy A. McGuire
*10.2 Lease Agreement for Temporary Quarters
*10.3 Outsourcing Agreement between Bay Cities Bank and
M&I Data Services
*10.4 Lease Agreement for Permanent Office
27.0 Financial Data Schedule (SEC Use Only)
(b) Reports on Form 8-K. Registrant did not file a Form 8-K during the
last quarter of 1998.
[Intentionally left blank]
-23-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 15(d) 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.
Florida Business BancGroup, Inc.
Dated: November 3, 1999 By: /s/ A. Bronson Thayer
----------------- ----------------------
A. Bronson Thayer
Chairman of the Board
and Chief Executive
Officer
Dated: November 3, 1999 By: /s/ Marti J. Warren
----------------- --------------------
Marti J. Warren
Principal Accounting
Officer
Pursuant to the requirements of the Securities Act of 1934, this Form 10-KSB has
been signed by the following persons in the capacities and as of the dates
indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Director November 3, 1999
/s/ Monroe E. Berkman
- ------------------------------------------------------------
Monroe E. Berkman
Director November 3, 1999
/s/ John C. Bierley
- ------------------------------------------------------------
John C. Bierley
Director November 3, 1999
/s/ Troy A. Brown, Jr.
- ------------------------------------------------------------
Troy A. Brown, Jr.
Director November 3, 1999
/s/ Lawrence H. Dimmitt, III
- ------------------------------------------------------------
Lawrence H. Dimmitt, III
President and Director November 3, 1999
/s/ Timothy A. McGuire
- ------------------------------------------------------------
Timothy A. McGuire
Director November 3, 1999
/s/ Eric M. Newman
- ------------------------------------------------------------
Eric M. Newman
Director November 3, 1999
/s/ Chris A. Peifer
- ------------------------------------------------------------
Chris A. Peifer
Chairman of the Board of Directors November 3, 1999
/s/ A. Bronson Thayer
- ------------------------------------------------------------
A. Bronson Thayer
</TABLE>
-24-
<PAGE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
EXHIBIT 27.0
Financial Data Schedule
(Contained on Following Page)
-25-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Form 10-KSB
for the period ended December 31, 1998 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 16
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 108
<DEPOSITS> 0
<SHORT-TERM> 100
<LIABILITIES-OTHER> 0
<LONG-TERM> 0
0
90
<COMMON> 0
<OTHER-SE> (82)
<TOTAL-LIABILITIES-AND-EQUITY> 108
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 0
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> (132)
<INCOME-PRETAX> (132)
<INCOME-PRE-EXTRAORDINARY> (132)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (82)
<EPS-BASIC> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
