U.S. 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 September 30, 2000
Transition report under Section 13 or 15(d) of the Exchange Act
----
For the transition period from to
--------- ---------
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)
(904) 421-3040
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
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 shares
-------------------------------------- -------------------------------
(class) Outstanding at November 3, 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 September 30, 2000 (unaudited) and At December 31, 1999..............2
Condensed Consolidated Statements of Operations (Unaudited) -
Three and Nine Months ended September 30, 2000 and 1999.................3
Condensed Consolidated Statement of Changes in Stockholders'
Equity (Unaudited) - Nine Months ended September 30, 2000...............4
Condensed Consolidated Statements of Cash Flows (Unaudited) -
Nine Months ended September 30, 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.............................................10-11
Item 3. Quantitative and Qualitative Disclosure about Market Risk..........12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................................12
SIGNATURES....................................................................13
1
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<TABLE>
JACKSONVILLE BANCORP, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
September 30, December 31,
Assets 2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Cash and due from banks........................................................... $ 2,713,695 1,446,648
Federal funds sold .............................................................. - 32,000
---------- ----------
Cash and cash equivalents............................................. 2,713,695 1,478,648
Securities available for sale..................................................... 3,082,353 1,955,221
Securities held to maturity....................................................... 50,000 50,000
Loans, net of allowance for loan losses of $245,876 in 2000 and
$80,485 in 1999............................................................... 24,417,791 7,967,853
Accrued interest receivable....................................................... 184,142 104,288
Premises and equipment, net....................................................... 3,547,585 1,996,782
Federal Home Loan Bank stock, at cost............................................. 36,700 -
Deferred income taxes............................................................. 1,213,201 874,167
Other assets...................................................................... 206,295 141,308
---------- ----------
Total assets.......................................................... $ 35,451,762 14,568,267
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits........................................... 5,379,328 2,042,688
Savings and NOW deposits...................................................... 13,789,035 849,496
Money-market deposits......................................................... 1,478,748 2,689,388
Time deposits .............................................................. 5,931,366 430,758
---------- ----------
Total deposits........................................................ 26,578,477 6,012,330
Federal funds purchased....................................................... 74,000 -
Accrued interest payable and other liabilities................................ 1,130,624 316,904
---------- ----------
Total liabilities..................................................... 27,783,101 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........................................................... (2,025,892) (1,448,415)
Accumulated other comprehensive income (loss)................................. (20,824) (27,929)
---------- ----------
Total stockholders' equity............................................ 7,668,661 8,239,033
---------- ----------
Total liabilities and stockholders' equity............................ $ 35,451,762 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 Nine Months Ended
September 30, September 30,
------------------------------------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C>
Interest income:
Loans .............................................. $ 469,434 48,930 1,017,021 50,493
Securities............................................ 40,177 32,072 108,898 33,772
Other interest-earning assets......................... 41,068 54,487 111,497 128,595
--------- --------- --------- ----------
Total interest income......................... 550,679 135,489 1,237,416 212,860
--------- --------- --------- ----------
Interest expense:
Deposits.............................................. 236,537 16,252 484,329 17,954
Other borrowings...................................... 1,652 - 1,745 44,876
--------- --------- --------- ----------
Total interest expense........................ 238,189 16,252 486,074 62,830
--------- --------- --------- ----------
Net interest income........................... 312,490 119,237 751,342 150,030
Provision for loan losses................................. 76,793 38,718 165,391 38,718
--------- --------- --------- ----------
Net interest income after
provision for loan losses................... 235,697 80,519 585,951 111,312
--------- --------- --------- ----------
Noninterest income:
Fees and service charges on deposit
accounts.......................................... 53,086 5,126 121,161 4,448
Other .............................................. 31,984 - 57,181 23,482
--------- --------- --------- ----------
Total noninterest income...................... 85,070 5,126 178,342 27,930
--------- --------- --------- ----------
Noninterest expense:
Salaries and employee benefits........................ 273,314 296,417 829,615 672,371
Occupancy expense..................................... 122,380 71,704 322,381 120,452
Professional fees..................................... 24,510 163,733 67,472 323,543
Data processing....................................... 24,043 55,084 86,707 65,460
Printing and office supplies.......................... 23,454 15,878 60,578 22,331
Advertising........................................... 25,520 6,515 71,844 6,571
Other .............................................. 113,580 109,246 246,493 165,408
--------- --------- --------- ----------
Total noninterest expense..................... 606,801 718,577 1,685,090 1,376,136
--------- --------- --------- ----------
Loss before income tax benefit............................ (286,034) (632,932) (920,797) (1,236,894)
Income tax benefit............................ (104,536) (236,643) (343,320) (467,498)
--------- --------- --------- ----------
Net loss .............................................. $ (181,498) (396,289) (577,477) (769,396)
========= ========= ========= ==========
Loss per share, basic and diluted.........................$ (.18) (.40) (.57) (1.63)
========= ========= ========== ==========
Weighted-average number of shares outstanding
for basic and diluted................................. 1,017,066 978,812 1,017,066 473,308
========= ========= ========= =========
See Accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
3
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<TABLE>
JACKSONVILLE BANCORP, INC.
Condensed Consolidated Statement of Changes in Stockholders' Equity
Nine Months Ended September 30, 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>
Balance at December 31,
1999 ................... - $ - 1,017,066 $ 10,171 9,705,206 (1,448,415) (27,929) 8,239,033
Comprehensive income (loss):
Net loss (unaudited).. - - - - - (577,477) - (577,477)
Net change in unrealized
loss on securities available
for sale, net of income
taxes of $4,286
(unaudited)........... - - - - - - 7,105 7,105
---------
Comprehensive income
(loss) (unaudited).... (570,372)
-------- -------- ----------- -------- --------- ---------- -------- ---------
Balance at September 30, 2000
(unaudited).......... - $ - 1,017,066 $ 10,171 9,705,206 (2,025,892) (20,824) 7,668,661
======== ======== =========== ======== ========= ========== ======== =========
See Accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
4
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<TABLE>
JACKSONVILLE BANCORP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss...................................................................... $ (577,477) (769,396)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation.............................................................. 152,217 42,292
Provision for loan losses................................................. 165,391 38,718
Credit for deferred income taxes.......................................... (343,320) (467,498)
Increase in accrued interest receivable and
other assets.......................................................... (144,841) (21,477)
Increase (decrease) in accrued interest payable and other
liabilities........................................................... 813,720 (208,658)
------------ ----------
Net cash provided by (used in) operating activities............... 65,690 (1,386,019)
------------ ----------
Cash flows from investing activities:
Purchases of securities available for sale................................... (1,115,741) (2,000,000)
Purchase of Federal Home Loan Bank stock...................................... (36,700) -
Net increase in loans......................................................... (16,615,329) (3,847,451)
Net purchases of premises and equipment....................................... (1,703,020) (373,454)
------------ ----------
Net cash used in investing activities............................. (19,470,790) (6,220,905)
------------ ----------
Cash flows from financing activities:
Net increase in deposits...................................................... 20,566,147 3,901,992
Net increase (decrease) in federal funds purchased............................ 74,000 (1,615,000)
Net proceeds from issuance of common stock.................................... - 9,715,377
------------ ----------
Net cash provided by financing activities......................... 20,640,147 12,002,369
------------ ----------
Net increase in cash and cash equivalents......................................... 1,235,047 4,395,445
Cash and cash equivalents at beginning of period.................................. 1,478,648 29,186
------------ ----------
Cash and cash equivalents at end of period........................................ $ 2,713,695 4,424,631
============ ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest.................................................................. $ 472,181 114,618
============ ==========
Income taxes..............................................................$ - -
============ ==========
Noncash transaction-
Change in accumulated other comprehensive
income, net of tax.................................................... $ 7,105 (13,980)
============ ==========
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 Summary of Significant Accounting Policies
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. 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 a variety of 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 September 30, 2000, the results of operations
for the three- and nine-month periods ended September 30, 2000 and 1999
and cash flows for the nine-month periods ended September 30, 2000 and
1999. The results of operations for the three and nine months ended
September 30, 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
during the three months or nine months ended September 30, 2000 or 1999.
An analysis of the change in the allowance for loan losses follows:
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- ------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C>
Balance at beginning of period............. $ 169,083 - 80,485 -
Provision for loan losses.................. 76,793 38,718 165,391 38,718
-------- ------ ------- -------
Balance at end of period................... $ 245,876 38,718 245,876 38,718
======= ====== ======= =======
(continued)
</TABLE>
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 September
30, 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............. 20.26% 8.00%
Tier I capital to risk-weighted assets............. 19.37% 4.00%
Tier I capital to total assets - leverage ratio.......... 18.12% 4.00%
7
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JACKSONVILLE BANCORP, INC.
Review by Independent Certified Public Accountants
Hacker, Johnson & Smith PA, the Company's independent certified public
accountants, have made a limited review of the financial data as of September
30, 2000, and for the three- and nine-month periods ended September 30, 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. (the "Company") as of September 30, 2000, and the
related condensed consolidated statements of operations for the three-month and
nine-month periods ended September 30, 2000 and 1999, the condensed consolidated
statements of cash flows for the nine-month periods ended September 30, 2000 and
1999 and the condensed consolidated statement of stockholders' equity for the
nine-month period ended September 30, 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 & SMITH PA
Tampa, Florida
November 3, 2000
9
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JACKSONVILLE BANCORP, INC.
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operation
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 a variety of community banking services to businesses
and individuals through its three banking offices located in Jacksonville,
Florida.
Liquidity and Capital Resources
Comparison of September 30, 2000 and December 31, 1999
The Company's primary source of cash during the nine months ended September
30, 2000 was from the net increase in deposits of $20.6 million. Cash was
used primarily to originate loans, net of principal repayments, of $16.6
million, purchase securities available for sale of $1.1 million and purchase
premises and equipment of approximately $1.7 million. The Company had
unfunded commitments of $6.5 million and time deposits of $5.2 million
maturing in one year or less at September 30, 2000. The Company exceeded its
regulatory liquidity requirements at September 30, 2000.
Results of Operations
Comparison of the Three-Month Periods Ended September 30, 2000 and 1999
General. Net loss for the three months ended September 30, 2000 was $181,000
or $.18 per basic and diluted share compared to $396,000 or $.40 per
basic and diluted share for 1999. The Bank commenced operations on May
28, 1999. At September 30, 2000, the Company had not achieved the asset
size necessary to operate profitably.
Interest Income. Interest income increased in 2000 over the amounts reported
in 1999 because of growth in the portfolios of interest-earning assets in
2000. Interest income was $551,000 for the three months ended September
30, 2000. Interest income earned on loans was $469,000. The average loan
portfolio balance was $19.0 million for the three months ended September
30, 2000 and the average yield earned was 9.85%.
Interest Expense. Interest expense was $238,000 for the three months ended
September 30, 2000. The average balance of interest-bearing liabilities
was $17.9 million for the three months ended September 30, 2000 and the
average cost was 5.32%. Interest expense increased primarily because of
an increase in the amount of deposits in 2000.
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 September 30, 2000 of $77,000 and the
allowance for loan losses was $246,000 at September 30, 2000. Management
believes the allowance is adequate at September 30, 2000.
10
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JACKSONVILLE BANCORP, INC.
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operation, Continued
Noninterest Expense. Noninterest expense decreased to $607,000 for the three
months ended September 30, 2000 from $719,000 for the three months ended
September 30, 1999. Salaries and employee benefits, the largest
noninterest expense, decreased to $273,000 during the three months ended
September 30, 2000. The primary decrease in noninterest expense was a
decrease in professional fees from $164,000 for the three months ended
September 30, 1999 to $25,000 for the three months ended September 30,
2000.
Income Tax Benefit. The income tax benefit for the three months ended
September 30, 2000 was $105,000 (an effective rate of 36.7%) compared to
$237,000 for the three months ended September 30, 1999 (an effective tax
rate of 37.4%). A deferred tax asset has been recognized because
management expects to utilize it in the future.
Comparison of the Nine-Month Periods Ended September 30, 2000 and 1999
General. Net loss for the nine months ended September 30, 2000 was $577,000
or $.57 per basic and diluted share compared to $769,000 or $1.63 per
basic and diluted share for 1999. The Bank commenced operations on May
28, 1999 and, at September 30, 2000, the Company had not achieved the
asset size to operate profitably.
Interest Income. Interest income increased in 2000 over the amounts reported
in 1999 because of growth in the portfolios of interest-earning assets in
2000. Interest income was $1,237,000 for the nine months ended September
30, 2000. Interest income earned on loans was $1,017,000. The average
loan portfolio balance was $14.2 million for the nine months ended
September 30, 2000 and the average yield earned was 9.53%.
Interest Expense. Interest expense was $486,000 for the nine months ended
September 30, 2000. The average balance of interest-bearing liabilities
was $12.9 million for the nine months ended September 30, 2000 and the
average cost was 5.04%. Interest expense increased primarily because of
increases in the amount of deposits in 2000.
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 nine months ended September 30, 2000 of $165,000 and the
allowance for loan losses was $246,000 at September 30, 2000. Management
believes the allowance is adequate at September 30, 2000.
Noninterest Expense. Noninterest expense increased to $1,685,000 for the
nine months ended September 30, 2000 from $1,376,000 for the nine months
ended September 30, 1999. The largest noninterest expense was salaries
and employee benefits totaling $830,000 for the nine months ended
September 30, 2000 compared to $672,000 for the comparable 1999 period.
The increase in total noninterest expenses relates to the overall growth
of the Company during 2000.
Income Tax Benefit. The income tax benefit for the nine months ended
September 30, 2000 was $343,000 (an effective rate of 37.2%) compared to
$467,000 for the nine months ended September 30, 1999 (an effective rate
of 37.8%). A deferred tax asset has been recognized because management
expects to utilize it in the future.
11
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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. During the three months ended September 30, 2000 no
Form 8-K was filed by the Company.
12
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JACKSONVILLE BANCORP, INC.
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: November , 2000 By: /s/Gilbert J. Pomar III
------------------- --------------------------------
Gilbert J. Pomar III,
President and
Chief Executive Officer
Date: November , 2000 By: /s/Cheryl L. Whalen
------------------- --------------------------------
Cheryl L. Whalen, Executive
Vice President
and Chief Financial Officer
