UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1999
Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ___________ to ___________
Commission file number 001-14853
JACKSONVILLE BANCORP, INC.
-----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 59-3472981
- --------------------------------- -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
10325 San Jose Boulevard
Jacksonville, Florida 32257
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(904) 288-0793
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by Section
12, 13 or 15(d) of the Exchange Act 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
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common stock, par value $.01 per share 905,716
- -------------------------------------- ----------------------------
(class) Outstanding at June 30, 1999
Transitional Small Business Format (Check One): YES NO X
<PAGE>
JACKSONVILLE BANCORP, INC.
(A Development Stage Company)
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Balance Sheets -
At March 31, 1999 (unaudited) and At December 31, 1998 ................... 2
Statements of Loss (Unaudited) -
Three Months ended March 31, 1999 and 1998 ............................... 3
Statement of Changes in Deficit (Unaudited) -
Three Months ended March 31, 1999 ........................................ 4
Statements of Cash Flows (Unaudited) -
Three Months ended March 31, 1999 and 1998 ............................... 5
Notes to Financial Statements (Unaudited) .............................. 6-7
Item 2. Management's Discussion and Analysis
or Plan of Operations .................................................. 8-9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................... 10
SIGNATURES .............................................................. 11
1
<PAGE>
JACKSONVILLE BANCORP, INC.
(A Development Stage Company)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
--------- ------------
<S> <C> <C>
Assets 1999 1998
(unaudited)
Cash and due from banks .................................... $ 25,579 8,600
Interest bearing deposits .................................. 14,711 20,586
----------- ---------
Cash and cash equivalents ........................ 40,290 29,186
Premises and equipment, net ................................ 1,686,487 1,334,288
Deferred tax asset ......................................... 273,186 172,494
Accrued interest receivable and other assets ............... 202,938 95,293
----------- ---------
Total assets ..................................... $ 2,202,901 1,631,261
=========== =========
Liabilities and Deficit
Liabilities:
Borrowings ............................................... 2,334,950 1,615,000
Accrued interest payable and other liabilities ........... 360,854 341,343
----------- ---------
Total liabilities ................................ 2,695,804 1,956,343
----------- ---------
Deficit:
Preferred stock, $.01 value; 2,000,000 shares authorized,
none issued or outstanding ............................ -- --
Common stock, $.01 par value; 8,000,000 shares authorized,
none issued or outstanding ............................ -- --
Accumulated deficit ...................................... (492,903) (325,082)
----------- ---------
Total deficit .................................... (492,903) (325,082)
----------- ---------
Total liabilities and deficit .................... $ 2,202,901 1,631,261
=========== =========
</TABLE>
See Accompanying Notes to Financial Statements.
2
<PAGE>
JACKSONVILLE BANCORP, INC.
(A Development Stage Company)
Statements of Loss
(Unaudited)
Three Months Ended
March 31,
------------------
1999 1998
---- ----
Interest income ...................................... $ 171 880
Interest expense ..................................... 19,802 3,967
--------- -------
Net interest expense ................................. (19,631) (3,087)
--------- -------
Organizational and Preopening expenses:
Salaries and employee benefits .................. 159,296 45,478
Occupancy expense ............................... 11,920 2,625
Professional fees ............................... 54,802 3,500
Travel and entertainment ........................ 6,087 5,741
Printing and office supplies .................... 2,363 754
Telephone expense ............................... 3,451 577
Application fees ................................ -- 15,159
Other ........................................... 10,963 448
--------- -------
Total organizational and preopening expenses 248,882 74,282
--------- -------
Loss before income tax benefit ....................... (268,513) (77,369)
Income tax benefit .............................. (100,692) (29,013)
--------- -------
Net loss ............................................. $(167,821) (48,356)
========= =======
See Accompanying Notes to Financial Statements.
3
<PAGE>
JACKSONVILLE BANCORP, INC.
(A Development Stage Company)
Statement of Changes in Deficit
Three Months Ended March 31, 1999 (Unaudited)
Preferred Common Accumulated Total
Stock Stock Deficit Deficit
----- ----- ------- -------
Balance at December 31, 1998 ............ $ -- -- (325,082) (325,082)
Net loss for the three months ended March
31, 1999 (unaudited) ............ -- -- (167,821) (167,821)
---- ---- -------- --------
Balance at March 31, 1999 (unaudited) ... $ -- -- (492,903) (492,903)
==== ==== ======== ========
See Accompanying Notes to Financial Statements.
4
<PAGE>
JACKSONVILLE BANCORP, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from administrative activities during the development stage:
Net loss .............................................................. $(167,821) (48,356)
Adjustments to reconcile net loss to net cash used in
administrative activities during the development stage:
Credit for deferred income taxes ...................................... (100,692) (29,013)
Increase in accrued interest receivable and
other assets .................................................. (107,645) --
Increase in accrued interest payable and other
liabilities ................................................... 19,511 3,967
--------- -------
Net cash used in administrative activities during the
development stage .................................................... (356,647) (73,402)
Cash flows from investing activities-
Net purchases of premises and equipment ............................... (352,199) (5,693)
Cash flows from financing activities-
Net increase in borrowings ............................................ 719,950 --
--------- -------
Net increase (decrease) in cash and cash equivalents .................. 11,104 (79,095)
Cash and cash equivalents at beginning of period ...................... 29,186 114,533
--------- -------
Cash and cash equivalents at end of period ............................ $ 40,290 35,438
========= =======
Supplemental disclosure of cash flow information-
Cash paid during the period for:
Interest .............................................................. $ 36,779 --
Income taxes .......................................................... $ -- --
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE>
JACKSONVILLE BANCORP, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
(1) Description of Business and Summary of Significant Accounting Policies
General and Subsequent Events. Jacksonville Bancorp, Inc. (the "Holding
Company") was incorporated on October 24, 1997 in the State of Florida. The
Holding Company applied to the Board of Governors of the Federal Reserve
System ("Board of Governors") to become a one-bank holding company and with
plans to acquire 100% of the outstanding shares of The Jacksonville Bank (the
"Bank"), a planned Florida chartered commercial bank to be located in
Jacksonville, Florida (collectively, the "Company"). At March 31, 1999, the
operations of the Company, had not commenced.
The Holding Company raised its minimum capital through a public offering and
broke escrow on May 18, 1999, and subsequently acquired 100% of the stock of
the Bank. The Company sold 905,716 shares during 1999 for an aggregate of
$8.7 million. The price per share was $10. The Company incurred offering
costs of $394,693 which were deducted from the proceeds received from the
sale of common stock The Bank opened for business on May 28, 1999 and
provides community banking services to businesses and individuals in
Jacksonville, Florida. As of August 23, 1999, the Holding Company's only
business is the ownership and operation of the Bank. The Company's fiscal
year ends December 31.
In the opinion of the management of the Company, the accompanying financial
statements contain all adjustments (consisting principally of normal
recurring accruals) necessary to present fairly the financial position at
March 31, 1999 and the results of development stage administrative activities
and cash flows for the three-month periods ended March 31, 1999 and 1998. The
results of development stage administrative activities for the three months
ended March 31, 1999 are not necessarily indicative of the results to be
expected for the year ending December 31, 1999.
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.
Premises and Equipment. Premises and equipment are stated at cost. Depreciation
has not been recorded because the assets were not put in service as of March
31, 1999. Depreciation expense will be computed on the straight-line basis
over the estimated useful life of each type of asset.
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 Preopening Costs. Net organizational and preopening costs
incurred from date of incorporation to March 31, 1999 totaled $492,903, net
of tax benefit of $273,186, and were charged to expense as incurred.
(continued)
6
<PAGE>
JACKSONVILLE BANCORP, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited), Continued
(1)Description of Business and Summary of Significant Accounting Policies,
Continued
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.
7
<PAGE>
JACKSONVILLE BANCORP, INC.
(A Development Stage Company)
Item 2. Management's Discussion and Analysis
or Plan of Operation
Comparison of March 31, 1999 (Unaudited) and December 31, 1998
General
Jacksonville Bancorp, Inc. (the "Holding Company") was incorporated on
October 24, 1997 in the State of Florida. The Holding Company applied to the
Board of Governors of the Federal Reserve System ("Board of Governors") to
become a one-bank holding company and with plans to acquire 100% of the
outstanding shares of The Jacksonville Bank (the "Bank"), a planned Florida
chartered commercial bank to be located in Jacksonville, Florida
(collectively, the "Company"). At December 31, 1998, the operations of the
Company had not commenced.
The Holding Company raised its minimum capital through a public offering and
broke escrow on May 18, 1999, and subsequently acquired 100% of the stock of
the Bank. The Company sold 905,716 shares during 1999 for an aggregate of
$8.7 million. The price per share was $10. The Company incurred offering
costs of $394,693 which were deducted from the proceeds received from the
sale of common stock. The Bank opened for business on May 28, 1999 and
provides community banking services to businesses and individuals in
Jacksonville, Florida. As of August 23, 1999, the Holding Company's only
business is the ownership and operation of the Bank. The Company's fiscal
year ends December 31.
Liquidity and Capital Resources
The Company's primary source of cash during the three months ended March 31,
1999 was from the net increase in borrowings of $719,950. Cash was used
primarily to purchase premises and equipment of $352,199 and to fund
preopening and organizational expenses.
Results of Operations
General. Net losses for the three months ended March 31, 1999 and 1998 were
$167,821 and $48,356, respectively. The Bank commenced operations on May 28,
1999. As of March 31, 1999, the Company was still in the organization phase.
A discussion of operating results at March 31, 1999 or for the three months
ended March 31, 1999 and 1998 would not be meaningful.
8
<PAGE>
JACKSONVILLE BANCORP, INC.
(A Development Stage Company)
Year 2000 Issues
The Company is acutely aware of the many areas affected by the Year 2000
computer issue and has given the Executive Committee of the Board of
Directors the responsibility for oversight of the Year 2000 issue. The
Company is actively involved in managing the Year 2000 computer challenges,
following the guidance provided by its regulatory bodies and documented in
the interagency statements issued by the Federal Financial Institutions
Examination Council ("FFIEC"). The Company has a Year 2000 Technology Plan,
approved by the Board of Directors, which includes multiple phases, tasks to
be completed and target dates for completion. Issues addressed therein
include awareness, assessment, renovation, validation, implementation,
testing and contingency planning.
The Company has received a certification from its main service provider that
they are Year 2000 compliant. The Company routinely upgrades and purchases
technology advanced software and hardware on a continual basis. All future
purchases and upgrades will be Year 2000 compliant. The Company has
determined that the cost of making modifications to correct any Year 2000
issues will not substantially affect reported operating results.
The Company also recognizes the importance of determining if its customers
are preparing for the Year 2000 problem. Questionnaires will be completed to
assess the inherent risks. Customers will receive statement stuffers and
informational material in this regard. The Company plans to work on a
one-on-one basis with significant borrowers who are identified as having high
Year 2000 risk exposure. The Company plans to continue in its efforts to be
active in informing its customers of the Year 2000 issue.
The Company has developed a Contingency Plan relative to the Year 2000 issue
which addresses a "worst case scenario." The plan covers various options for
handling interruptions of the internal and external mission critical systems
and services. The Company, for example, has developed plans for meeting
unusually high demands for cash generated by the publicity surrounding the
Year 2000 issue. The Contingency Plan will be continuously monitored to
incorporate and address various operational elements as needed. Furthermore,
the Company's Contingency Plan covers systems which can be handled manually
on an interim basis. Should outside service providers not be able to provide
compliant systems, the Company will terminate those relationships and
transfer to other vendors.
9
<PAGE>
JACKSONVILLE BANCORP, INC.
(A Development Stage Company)
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed with or incorporated by reference
into this report. The exhibits which are marked by a single asterisk (*) were
previously filed as a part, and are hereby incorporated by reference from the
Company's Registration Statement on Form SB-2, as effective with the
Securities and Exchange Commission on February 9, 1999, Registration No.
333-64815. The exhibit market by a double asterisk (**) were previously filed
as a part of the June 30, 1999 Form 10-QSB filed with the Securities and
Exchange Commission on August 13, 1999.
Exhibit No. Description of Exhibit
*3.1 Articles of Incorporation of the Company
*3.2 By-laws of the Company
*4.1 Specimen Common Stock Certificate
*10.4 Servicing Agreement with M&I Data Services
**10.5 Employment Contract Gilbert J. Pomar, III
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. There were no Form 8-K's filed during the three months
ended March 31, 1999.
10
<PAGE>
JACKSONVILLE BANCORP, INC.
(A Development Stage Company)
PART II. OTHER INFORMATION
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.
JACKSONVILLE BANCORP, INC.
(A Development Stage Company)
(Registrant)
Date: , 1999 By: /s/Price W. Schwenck
- ------------------------------ ---------------------------------------
Price W. Schwenck,
Chief Executive Officer
Date: , 1999 By: /s/Cheryl L. Whalen
- ------------------------------ ---------------------------------------
Cheryl L. Whalen,
Executive Vice President
and Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Form 10-QSB
for the period ended March 31, 1999 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 26
<INT-BEARING-DEPOSITS> 15
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 2,203
<DEPOSITS> 0
<SHORT-TERM> 2,335
<LIABILITIES-OTHER> 361
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> (493)
<TOTAL-LIABILITIES-AND-EQUITY> 2,203
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 20
<INTEREST-INCOME-NET> (20)
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 249<F1>
<INCOME-PRETAX> (269)
<INCOME-PRE-EXTRAORDINARY> (168)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (168)
<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
<FN>
<F1>Other expense includes: salaries and employee benefits of $159, occupancy of
$12, travel and entertainment of $6, professional fees of $55, telephone
expenses of $3, office supplies and expenses of $2 and other expenses which
totaled $11.
</FN>
</TABLE>
