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, 2000
Transition report under Section 13 or 15(d) of the Exchange Act
- ----
For the transition period from to
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Commission file number 001-14853
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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.)
76 South Laura Street, Suite 104
Jacksonville, Florida 32202
- ---------------------- ---------
(Address of Principal Executive Offices) (Zip Code)
(904) 421-3040
--------------------------------------------------
(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 1,017,066
- -------------------------------------- ----------------------
(class) Outstanding at May 1, 2000
Transitional Small Business Format (Check One): YES NO X
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JACKSONVILLE BANCORP, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets -
At March 31, 2000 (unaudited) and At December 31, 1999...............2
Condensed Consolidated Statements of Operations (Unaudited) -
Three Months ended March 31, 2000 and 1999...........................3
Condensed Consolidated Statement of Changes in Stockholders'
Equity (Unaudited) -
Three Months ended March 31, 2000....................................4
Condensed Consolidated Statements of Cash Flows (Unaudited) -
Three Months ended March 31, 2000 and 1999...........................5
Notes to Condensed Consolidated Financial Statements (Unaudited).....6-7
Review by Independent Certified Public Accountants.....................8
Report on Review by Independent Certified Public Accountants...........9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations......................10
Item 3. Quantitative and Qualitative Disclosure about Market Risk.......11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...............................11
SIGNATURES.................................................................12
1
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<TABLE>
JACKSONVILLE BANCORP, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
At
March 31, December 31,
2000 1999
---- ----
Assets (Unaudited)
<S> <C> <C>
Cash and due from banks.............................................................. $ 1,173,521 1,446,648
Federal funds sold................................................................... 4,829,000 32,000
---------- ----------
Total cash and cash equivalents........................................ 6,002,521 1,478,648
Securities available for sale........................................................ 1,948,940 1,955,221
Securities held to maturity.......................................................... 50,000 50,000
Loans, net of allowance for loan losses of $116,143 in 2000 and $80,485 in 1999...... 11,498,297 7,967,853
Accrued interest receivable.......................................................... 95,125 104,288
Premises and equipment, net.......................................................... 2,830,434 1,996,782
Federal Home Loan Bank stock, at cost................................................ 36,700 -
Deferred income taxes................................................................ 1,031,196 874,167
Other assets......................................................................... 560,327 141,308
---------- ----------
Total assets........................................................... $ 24,053,540 14,568,267
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits.............................................. 3,240,627 2,042,688
Savings and NOW deposits......................................................... 9,334,239 849,496
Money-market deposits............................................................ 1,392,536 2,689,388
Time deposits.................................................................... 787,345 430,758
---------- ----------
Total deposits......................................................... 14,754,747 6,012,330
Accrued interest payable and other liabilities................................... 1,317,350 316,904
---------- ----------
Total liabilities...................................................... 16,072,097 6,329,234
---------- ----------
Stockholders' equity:
Preferred stock.................................................................. - -
Common stock..................................................................... 10,171 10,171
Additional paid-in capital....................................................... 9,705,206 9,705,206
Accumulated deficit.............................................................. (1,702,088) (1,448,415)
Accumulated other comprehensive income (loss).................................... (31,846) (27,929)
---------- ----------
Total stockholders' equity............................................. 7,981,443 8,239,033
---------- ----------
Total liabilities and stockholders' equity............................. $ 24,053,540 14,568,267
========== ==========
See Accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
2
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<TABLE>
JACKSONVILLE BANCORP, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
2000 1999
---- ----
Interest income:
<S> <C>
Loans receivable.................................................................... $ 208,975 -
Securities.......................................................................... 34,401 -
Other interest-earning assets....................................................... 29,851 171
---------- -------
Total interest income..................................................... 273,227 171
---------- -------
Interest expense:
Deposits .......................................................................... 97,972 -
Other borrowings.................................................................... 93 19,802
---------- -------
Total interest expense.................................................... 98,065 19,802
---------- -------
Net interest income (expense)............................................. 175,162 (19,631)
Provision for loan losses............................................................... 35,658 -
---------- -------
Net interest income (expense) after provision for loan losses............. 139,504 (19,631)
---------- -------
Noninterest income:
Service charges on deposit accounts................................................ 33,549 -
Other.............................................................................. 12,931 -
---------- -------
Total noninterest income.................................................. 46,480 -
---------- -------
Noninterest expense:
Salaries and employee benefits...................................................... 329,115 159,296
Occupancy expense................................................................... 96,127 11,920
Professional fees................................................................... 10,889 54,802
Data processing..................................................................... 40,521 -
Printing and office supplies........................................................ 20,871 2,363
Advertising......................................................................... 31,229 -
Other............................................................................... 65,570 20,501
---------- -------
Total noninterest expense................................................. 594,322 248,882
---------- -------
Loss before income tax benefit.......................................................... (408,338) (268,513)
Income tax benefit........................................................ (154,665) (100,692)
---------- -------
Net loss ............................................................................... $ (253,673) (167,821)
========== =======
Loss per share, basic and diluted....................................................... $ (.25) -
========== =======
Dividends per share..................................................................... $ - -
========== =======
Weighted-average number of common shares outstanding for basic and diluted.............. 1,017,066 -
========== =======
See Accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
3
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JACKSONVILLE BANCORP, INC.
Condensed Consolidated Statement of Changes in Stockholders' Equity
Three Months Ended March 31, 2000
Accumulated
Other
Compre-
Preferred Stock Common Stock Additional hensive Total
------------------ ---------------- Paid-In Accumulated Income Stockholders'
Shares Amount Shares Amount Capital Deficit (Loss) Equity
------ ------ ------ ------ ---------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1999.................. - $ - 1,017,066 $ 10,171 9,705,206 (1,448,415) (27,929) 8,239,033
---------
Comprehensive income:
Net loss (unaudited) - - - - - (253,673) - (253,673)
Net change in unrealized
loss on securities available
for sale, net of income
taxes of $2,364
(unaudited)............. - - - - - - (3,917) (3,917)
---------
Comprehensive income
(loss) (unaudited)...... (257,590)
------ ------- --------- ------ --------- --------- ------- ---------
Balance at March 31, 2000
(unaudited)........... - $ - 1,017,066 $ 10,171 9,705,206 (1,702,088) (31,846) 7,981,443
====== ======= ========= ====== ========= ========= ======= =========
See Accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
4
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JACKSONVILLE BANCORP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
2000 1999
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net loss......................................................................... $ (253,673) (167,821)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization............................................... 40,880 -
Provision for loan losses................................................... 35,658 -
Credit for deferred income taxes............................................ (154,665) (100,692)
Increase in accrued interest receivable and other assets.................... (409,856) (107,645)
Increase in accrued interest payable and other liabilities.................. 1,000,446 19,511
--------- --------
Net cash provided by (used in) operating activities................ 258,790 (356,647)
--------- --------
Cash flows from investing activities:
Net increase in loans............................................................ (3,566,102) -
Purchases of premises and equipment.............................................. (874,532) (352,199)
Purchase of Federal Home Loan Bank stock......................................... (36,700) -
--------- --------
Net cash used in investing activities.............................. (4,477,334) (352,199)
--------- --------
Cash flows from financing activities:
Net increase in deposits......................................................... 8,742,417 -
Net increase in other borrowings................................................. - 719,950
--------- --------
Net cash provided by financing activities.......................... 8,742,417 719,950
--------- --------
Net increase in cash and cash equivalents............................................ 4,523,873 11,104
Cash and cash equivalents at beginning of period..................................... 1,478,648 29,186
--------- --------
Cash and cash equivalents at end of period........................................... $ 6,002,521 40,290
========= ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ...................................................................$ 96,737 36,779
========= ========
Income taxes................................................................$ - -
========= ========
Noncash transaction -
Accumulated other comprehensive income (loss), change in unrealized
loss on securities available for sale, net of tax...........................$ (3,917) -
========= ========
See Accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
5
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JACKSONVILLE BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(1) Description of Business and Basis of Presentation
General. Jacksonville Bancorp, Inc. ("Jacksonville Bancorp") was
incorporated on October 24, 1997. Jacksonville Bancorp owns 100% of the
outstanding common stock of The Jacksonville Bank (the "Bank")
(collectively, the "Company"). Jacksonville Bancorp's only business is
the ownership and operation of the Bank, a Florida state-chartered
commercial bank. The Bank's deposits are insured by the Federal Deposit
Insurance Corporation. The Bank opened for business on May 28, 1999, and
provides community banking services to businesses and individuals
through three banking offices in Jacksonville, Florida.
In the opinion of the management, the accompanying condensed
consolidated financial statements contain all adjustments (consisting
principally of normal recurring accruals) necessary to present fairly
the financial position at March 31, 2000 and the results of operations
and cash flows for the three-month periods ended March 31, 2000 and
1999. The results of operations for the three months ended March 31,
2000, are not necessarily indicative of the results to be expected for
the year ending December 31, 2000.
Basis of Presentation. The accompanying condensed consolidated financial
statements of the Company include the accounts of both Jacksonville
Bancorp and the Bank. All significant intercompany accounts and
transactions have been eliminated in consolidation.
(2) Loan Impairment and Loan Losses. No loans were identified as impaired
at or during the three months ended March 31, 2000. The Bank had not
commenced operations as of March 31, 1999.
An analysis of the change in the allowance for loan losses follows:
Three
Months
Ended
March 31,
2000
-------
Balance at beginning of period ................. $ 80,485
Provision for loan losses....................... 35,658
-------
Balance at end of period........................ $ 116,143
=======
(continued)
6
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JACKSONVILLE BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
(3) Loss Per Share. Basic loss per share has been computed on the basis of
the weighted-average number of shares of common stock outstanding.
The Company's common stock equivalents are not dilutive.
(4) Regulatory Matters. The Bank is required to maintain certain minimum
regulatory capital requirements. The following is a summary at March
31, 2000 of the regulatory capital requirements and the Bank's actual
capital on a percentage basis:
Regulatory
Actual Requirement
------ -----------
Total capital to risk-weighted assets ........ 35.35% 8.00%
Tier I capital to risk-weighted assets ........ 34.64% 4.00%
Tier I capital to total assets - leverage ratio..... 32.83% 4.00%
(5) Year 2000 Issues. The Company's operating and financial systems have
been found to be compliant; the "Y2K Problem" has not adversely
affected the Company's operations nor does management expect that it
will.
7
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JACKSONVILLE BANCORP, INC.
Review by Independent Certified Public Accountants
Hacker, Johnson, Cohen & Grieb PA, the Company's independent certified public
accountants, have made a limited review of the financial data as of March 31,
2000, and for the three-month periods ended March 31, 2000 and 1999 presented in
this document, in accordance with standards established by the American
Institute of Certified Public Accountants.
Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.
8
<PAGE>
Report on Review by Independent Certified Public Accountants
The Board of Directors
Jacksonville Bancorp, Inc.
Jacksonville, Florida:
We have reviewed the accompanying condensed consolidated balance sheet of
Jacksonville Bancorp, Inc. and Subsidiary (the "Company") as of March 31, 2000,
and the related condensed consolidated statements of operations and cash flows
for the three-month periods ended March 31, 2000 and 1999, and the condensed
consolidated statement of changes in stockholders' equity for the three-month
period ended March 31, 2000. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1999, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for the year then ended (not presented herein); and in our report
dated February 25, 2000 we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of December 31, 1999,
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
April 21, 2000
9
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JACKSONVILLE BANCORP, INC.
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operation
Comparison of March 31, 2000 and 1999 and December 31, 1999
General
Jacksonville Bancorp, Inc. ("Jacksonville Bancorp") which was incorporated
on October 24, 1997, owns 100% of the outstanding common stock of the
Jacksonville Bank ("Bank") (collectively, the "Company"). The Bank is a
Florida state-chartered commercial bank and its deposits are insured by the
Federal Deposit Insurance Corporation. The Bank opened for business on May
28, 1999, and provides community banking services to businesses and
individuals through its three banking offices located in Jacksonville,
Florida.
Liquidity and Capital Resources
The Company's primary source of cash during the three months ended March 31,
2000 was from the net increase in deposits of $8.7 million. Cash was used
primarily to originate loans, net of principal repayments, of $3.6 million
and purchase premises and equipment of approximately $875,000. The Company
had unfunded lines of credit of $3.2 million and time deposits of $780,000
maturing in one year or less at March 31, 2000. The Company exceeded its
regulatory liquidity requirements at March 31, 2000.
Comparison of the Three-Month Periods Ended March 31, 2000 and 1999
General. Net loss for the three months ended March 31, 2000 was $253,673
compared to $167,821 for 1999. The Bank commenced operations on May 28,
1999. At March 31, 2000, the Company had not achieved the asset size to
operate profitably.
Interest Income. Interest income was $273,227 for the three months ended
March 31, 2000. Interest income earned on loans was $208,975. The average
loan portfolio balance was $9.3 million for the three months ended March
31, 2000 and the average yield earned was 9.01%.
Interest Expense. Interest expense was $98,065 for the three months ended
March 31, 2000. The average balance of interest-bearing deposits was $7.3
million for the three months ended March 31, 2000 and the average cost
was 5.35%.
Provision for Loan Losses. The provision for loan losses is charged to
earnings to increase the total allowance to a level deemed appropriate by
management and is based upon the volume and type of lending conducted by
the Company, industry standards, the amount of nonperforming loans and
general economic conditions, particularly as they relate to the Company's
market areas, and other factors related to the collectibility of the
Company's loan portfolio. The Company recorded a provision for loan
losses for the three months ended March 31, 2000 of $35,658 and the
allowance for loan losses was $116,143 at March 31, 2000. Management
believes the allowance is adequate at March 31, 2000.
Noninterest Expense. Noninterest expense was $594,322 for the three months
ended March 31, 2000 compared to $248,882 for the three months ended
March 31, 1999. This increase resulted from the commencement of banking
operations.
Income Tax Benefit. The income tax benefit for the three months ended March
31, 2000 was $154,665 (an effective rate of 37.9%).
10
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JACKSONVILLE BANCORP, INC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss from adverse changes in market prices and rates.
The Company's market risk arises primarily from interest rate risk inherent in
its lending and deposit taking activities. The Company has little or no risk
related to trading accounts, commodities or foreign exchange.
Management actively monitors and manages its interest rate risk exposure. The
primary objective in managing interest-rate risk is to limit, within established
guidelines, the adverse impact of changes in interest rates on the Company's net
interest income and capital, while adjusting the Company's asset-liability
structure to obtain the maximum yield-cost spread on that structure. Management
relies primarily on its asset-liability structure to control interest rate risk.
However, a sudden and substantial increase in interest rates could adversely
impact the Company's earnings, to the extent that the interest rates borne by
assets and liabilities do not change at the same speed, to the same extent, or
on the same basis. There have been no significant changes in the Company's
market risk exposure since December 31, 1999.
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 September 30,
1998, Registration No. 333-64815. The exhibit marked by a double asterisk
(**) was previously filed as a part of the June 30, 1999 Form 10-QSB filed
with the Securities and Exchange Commission on August 13, 1999. The
exhibit marked by a triple asterisk (***) was previously filed as part of
the Company's Registration Statement on Form S-8 filed with the Securities
and Exchange Commission on November 9, 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
* 10.1 Stock Option Plan
* 10.2 Servicing Agreement with M&I Data Services
** 10.3 Employment Contract Gilbert J. Pomar, III
27 Financial Data Schedule (for SEC use only)
*** 99.1 Stock Option Plan
(b) Reports on Form 8-K. There were no Form 8-K's filed during the three months
ended March 31, 2000.
11
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JACKSONVILLE BANCORP, INC.
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.
(Registrant)
Date: , 2000 By: /s/Gilbert J. Pomar III
--------------------------- ------------------------
Gilbert J. Pomar III, President and
Chief Executive Officer
Date: , 2000 By: /s/Cheryl L. Whalen
--------------------------- --------------------
Cheryl L. Whalen, Executive Vice
President and Chief Financial
Officer
12
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial
information extracted from Form 10-QSB for the
period ended March 31, 2000 and is qualified in
its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0001071264
<NAME> Jacksonville Bancorp, Inc.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-START> Jan-01-2000
<PERIOD-END> Mar-31-2000
<CASH> 1,174
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,829
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,949
<INVESTMENTS-CARRYING> 50
<INVESTMENTS-MARKET> 50
<LOANS> 11,614
<ALLOWANCE> 116
<TOTAL-ASSETS> 24,054
<DEPOSITS> 14,755
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,317
<LONG-TERM> 0
0
0
<COMMON> 10
<OTHER-SE> 7,971
<TOTAL-LIABILITIES-AND-EQUITY> 24,054
<INTEREST-LOAN> 209
<INTEREST-INVEST> 34
<INTEREST-OTHER> 30
<INTEREST-TOTAL> 273
<INTEREST-DEPOSIT> 98
<INTEREST-EXPENSE> 98
<INTEREST-INCOME-NET> 175
<LOAN-LOSSES> 36
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 594
<INCOME-PRETAX> (408)
<INCOME-PRE-EXTRAORDINARY> (254)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (254)
<EPS-BASIC> (.25)
<EPS-DILUTED> (.25)
<YIELD-ACTUAL> 5.26
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 80
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 116
<ALLOWANCE-DOMESTIC> 116
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
