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As filed with the Securities and Exchange Commission on March 9, 1999.
Registration No. 333-70231
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SUNCOAST BANCORP, INC.
(Name of Small Business Issuer as specified in its charter)
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FLORIDA 6712 65-0827141
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code) Identification Number)
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5922 CATTLEMEN ROAD, SUITE 202, SARASOTA, FLORIDA 34232 (941) 954-5315
(Address and telephone number of principal place of business)
8592 POTTER PARK DRIVE, SARASOTA, FLORIDA 34238 (941) 954-5315
(Address of principal place of business or intended principal place of business)
JOHN T. STAFFORD
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SUNCOAST BANCORP, INC.
5922 CATTLEMEN ROAD, SUITE 202, SARASOTA, FLORIDA 34232
(Name, address and telephone number of agent for service)
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Copy to:
JOHN P. GREELEY, ESQUIRE RICHARD A. DENMON, ESQUIRE
SMITH, MACKINNON, GREELEY, CARLTON, FIELDS, WARD, EMMANUEL
BOWDOIN & EDWARDS, P.A. SMITH & CUTLER, P.A.
255 SOUTH ORANGE AVENUE ONE HARBOUR PLACE
SUITE 800 777 SOUTH HARBOUR ISLAND BLVD.
ORLANDO, FLORIDA 32801 TAMPA, FLORIDA 33602-5799
(407) 843-7300 (813) 223-7000
FACSIMILE (407) 843-2448 FACSIMILE (813) 229-4133
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same offering. [ ] ______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ] _______
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED MARCH 9, 1999
PROSPECTUS
700,000
SUNCOAST BANCORP, INC.
(A PROPOSED HOLDING COMPANY FOR SUNCOAST NATIONAL BANK)
COMMON SHARES
This is an initial public offering by Suncoast Bancorp, Inc. of its common
shares. Suncoast Bancorp, Inc. is organizing to be the sole shareholder of
Suncoast National Bank. This is a firm commitment underwriting. We expect that
quotations for the common shares will be reported on the Nasdaq OTC Bulletin
Board under the symbol "SUNB."
AN INVESTMENT IN THE COMMON SHARES IS SPECULATIVE AND INVOLVES RISKS,
INCLUDING THOSE DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE 3 OF
THIS PROSPECTUS.
The common shares offered are not deposits, savings accounts, or other
obligations of a bank or savings association and are not insured by the Federal
Deposit Insurance Corporation or any other governmental agency.
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PER SHARE TOTAL
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Public Price................................................ $10.00 $7,000,000
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Underwriting Discounts...................................... $ .62 $ 430,000
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Proceeds to Suncoast Bancorp, Inc. before expenses.......... $ 9.38 $6,570,000
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Suncoast Bancorp will be charged an underwriting discount of $0.70 per
share. However, Ashtin Kelly & Co. has agreed to charge Suncoast Bancorp a
reduced underwriter discount of $0.30 per share for sales made to certain
investors identified by Suncoast Bancorp to Ashtin Kelly & Co. This reduced rate
is limited to a total of 150,000 shares sold in this offering. The underwriting
discounts set forth in the table above reflects the blended rate based on the
assumption that 150,000 shares are sold at the reduced underwriting discount.
Ashtin Kelly & Co. has the right to purchase up to an additional 105,000
shares at the public offering price, less the underwriting discount, within 30
days from the date of this prospectus to cover over-allotments.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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ASHTIN KELLY & CO.
THE DATE OF THIS PROSPECTUS IS , 1999
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[INSERT A MAP OF THE STATE OF FLORIDA, WITH AN EXCERPT HIGHLIGHTING SUNCOAST
NATIONAL BANK'S LOCATION IN SARASOTA COUNTY].
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TABLE OF CONTENTS
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Page
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Prospectus Summary ........................................... 1
Risk Factors ................................................. 3
Forward-Looking Statements ................................... 10
Recent Developments .......................................... 11
Use of Proceeds .............................................. 11
Dividend Policy .............................................. 12
Capitalization ............................................... 13
Management's Discussion and Analysis or Plan of Operation .... 14
Business ..................................................... 15
Management ................................................... 24
Certain Relationships and Related Transactions ............... 32
Security Ownership of Management and Certain Beneficial Owners 33
Supervision and Regulation ................................... 34
Description of Capital Stock ................................. 40
Shares Eligible for Future Sale .............................. 43
Underwriting ................................................. 44
Legal Opinions ............................................... 45
Experts ...................................................... 46
Additional Information ....................................... 46
Index to Financial Statements ................................ F-1
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SUMMARY
The following is a summary of information provided in this prospectus.
Because this is a summary, it does not contain all of the information that may
be important to you. You should read this entire document carefully. References
in this document to "we," "us," and "our" refer to Suncoast Bancorp, Inc.
SUNCOAST BANCORP AND SUNCOAST NATIONAL BANK
We are organizing as a bank holding company to own all of the capital
stock of Suncoast National Bank. Suncoast National Bank is organizing as a
national bank. Suncoast National Bank will offer a full range of commercial and
consumer banking services in Sarasota County. We are applying to the bank
regulatory agencies to become a bank holding company and to open Suncoast
National Bank. If these applications are approved, we intend to start business
in the second quarter of 1999. We are not an operating company and we have not
engaged in any significant business operations to date. We expect Suncoast
Bancorp and Suncoast National Bank to incur a substantial loss in the initial
years of operation. We currently maintain our office at 5922 Cattlemen Road,
Suite 202, Sarasota, Florida 34232. Our phone number is (941) 954-5315.
PURPOSE OF THE OFFERING
The purpose of the offering is to raise capital so that we can
commence operation as a bank holding company and Suncoast National Bank can
open for business. For additional information as to how we will use the
proceeds of the offering, see "Use of Proceeds" (page 11).
STRATEGY
We intend to operate a bank providing value to customers by delivering
products and services that meet their needs. We believe that Suncoast National
Bank can attract customers who prefer to conduct business with a bank that is
managed by local residents and has an active interest in their business. We
intend to have an experienced staff providing personal service and high-quality
products. We intend to have service providers affording customers with
convenient electronic access to their accounts. We also will offer other bank
products through debit cards, voice response and home banking. We believe that
this will allow Suncoast National Bank to use current technology while
minimizing the cost of delivery. We believe this business will appeal to
customers who have been receiving banking services in the depersonalized
environment of our larger banking competitors.
MARKET AREA
Our market area will be the southern part of Sarasota, Florida. Our
extended market area will encompass all of Sarasota County. The economy in this
area is represented by the construction, real estate, retail trade, personal
services, tourism, health care, government and agricultural industries.
BANK PREMISES
We have signed an agreement to lease a building located at 8592 Potter
Park Drive, Sarasota, Florida 34238. This site is located near the intersection
of U.S. 41 and Central Sarasota Parkway, a
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major intersection in Sarasota. Commercial and industrial properties and
residential communities are located around the proposed site. The Suncoast
National Bank building will consist of approximately 4,000 square feet of
office space. It has four inside teller stations, three customer service
platform stations, two drive-through lanes, and a walk-up and night depository
ATM lane. We anticipate occupying the building during the second quarter of
1999.
MANAGEMENT
We have assembled an experienced senior management team and board of
directors. These people have a shared vision and commitment to the success of
Suncoast National Bank. Several of our directors and officers have significant
banking experience, including banking experience in Sarasota County. John T.
Stafford, our President and Chief Executive Officer, has 27 years of banking
experience. Most recently, he was President and Chief Executive Officer of The
Commercial Bank in Douglasville, Georgia and Chairman, President and Chief
Executive Officer of C&S Bank, Sarasota, Florida. William F. Gnerre, our
Executive Vice President and Senior Loan Officer, has over 30 years of banking
experience. He recently served as Executive Vice President/Senior Credit
Officer of The Commercial Bank, Douglasville, Georgia. He also served in
various capacities with National Bank of Sarasota, including as Senior Vice
President and Regional Senior Credit Officer. We also intend to hire two
additional experienced officers to serve as Vice Presidents of Suncoast
National Bank, supervising the areas of accounting and lending.
All of our directors are business people who have lived in Sarasota
County for many years. They also have significant business interests in the
community. We believe their long-standing ties to the community, combined with
their business and banking experience, will provide Suncoast National Bank with
the unique ability to understand the needs of the market area.
MINIMUM AND MAXIMUM SHARE PURCHASE AMOUNTS AND OFFERING QUESTIONS
The minimum number of shares that you may purchase in this offering is
250 shares or $2,500. The maximum number of shares that may be purchased in this
offering by any person or persons ordering through a single account, or for any
group of persons buying together, is 35,000 shares or $350,000. We may decrease
or increase the maximum purchase limitation without notifying you.
Ashtin Kelly is the underwriter for this offering. If you have any
questions you should contact: Ashtin Kelly, 400 Fifth Avenue South, Naples,
Florida 34102, telephone: (941) 435-3888.
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RISK FACTORS
An investment in the common shares is speculative, involves a high
degree of risk and should be considered only by persons who can afford to lose
their entire investment. The following are some of the potential risks of
buying the common shares. They should be carefully considered before buying
shares. Also, these are not all of the risks of buying the common shares.
WE HAVE NO OPERATING HISTORY AND EXPECT TO INCUR SIGNIFICANT INITIAL LOSSES
We and Suncoast National Bank are subject to all the risks typically
encountered by new businesses and, specifically, to those of operating a new
bank. We and Suncoast National Bank are not yet conducting any business
operations. We only recently incorporated. Suncoast National Bank, which will
be our sole subsidiary, is organizing and will not receive final approval from
banking regulators to begin operations until after this offering is completed.
Accordingly, you do not have access to information that would be available to
purchasers of shares in financial institutions that are conducting business.
All of Suncoast National Bank's initial loans will be unseasoned new loans to
new borrowers. It will take several years to determine the borrowers' payment
histories. As a result, management will not be able to evaluate the quality of
Suncoast National Bank's loan portfolio until that time. Consequently, in
Suncoast National Bank's early years, both you and management will have
difficulties evaluating the adequacy of Suncoast National Bank's underwriting
procedures and its loan loss reserve policy. This may increase the risk of
potential loan losses by Suncoast National Bank and increase the possibility
that the money reserved for such losses may not be adequate. We expect to incur
operating losses in our first few years. We will not be profitable if Suncoast
National Bank is not profitable. And there is no assurance that Suncoast
National Bank will be profitable. If Suncoast National Bank is ultimately
unsuccessful, you may not recover all or any part of your investment in the
common shares.
YOU COULD LOSE A PORTION OF YOUR INVESTMENT IF WE FAIL TO COMMENCE OPERATIONS
We anticipate Suncoast National Bank will commence its operations in
the second quarter of 1999. There is no assurance that Suncoast National Bank
will open during that time. Our accumulated deficit was $71,006 at October 31,
1998, $85,821 at December 31, 1998 and approximately $95,800 at January 31,
1999. We will continue to incur pre-opening expenses until Suncoast National
Bank opens. If the opening of Suncoast National Bank is delayed, the
pre-opening expenses will increase and Suncoast National Bank's ability to
develop business and income will be delayed. Until Suncoast National Bank is
profitable, our accumulated deficit will continue to increase and the book
value per share will decrease. This is because Suncoast National Bank will be
incurring expenses such as rent, salaries, and operating expenses. After the
closing of this offering and before Suncoast National Bank starts business, the
offering proceeds will be available to pay general operating expenses and our
organizational and pre-opening expenses and those of Suncoast National Bank.
The offering proceeds may be subject to claims of our creditors and those of
Suncoast National Bank. We intend to use approximately $325,000 of the net
proceeds to repay the bank line of credit used to pay for organizational and
pre-opening expenses. We expect to incur $______________ for general operating
expenses through the second quarter of 1999, including payments on the lease
for Suncoast National Bank's main facility and for furniture, fixtures, and
equipment. If we liquidate, it is unlikely we will recover our full investment
in furniture, fixtures and equipment. Thus, if we liquidate before we start
business or become profitable, you would likely realize substantially less than
the $10.00 per share price that you paid for the common shares.
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WE WILL NEED TO DISSOLVE IF WE DO NOT GET REGULATORY APPROVALS
We and Suncoast National Bank are applying for all regulatory
approvals required to commence operations and anticipate receiving all
necessary regulatory approvals in the second quarter of 1999. On January 21,
1999, Suncoast National Bank received preliminary approval from the Office of
the Comptroller of the Currency to open Suncoast National Bank. The closing of
this offering is not conditioned on us or Suncoast National Bank receiving
final regulatory approvals to commence business. If received, the regulatory
approvals will be subject to several conditions, including:
o Suncoast National Bank must open with capital of at least $6
million. We propose to satisfy this requirement by using $6.0
million of the proceeds from this offering to invest in
Suncoast National Bank.
o Its capital divided by its total assets must be at least 8%
for the first 3 years.
o We may not incur debt during our first five years without
prior approval from the bank regulatory agencies.
o Suncoast National Bank must not deviate materially from its
operating plan submitted to the bank regulatory agencies.
o The bank regulatory agencies must approve our directors and
officers and those of Suncoast National Bank.
If we sell the common shares, but do not receive final approval to
open Suncoast National Bank within 18 months after January 21, 1999, the date
of the preliminary approval received from the banking agencies, we will seek
shareholder approval to dissolve. If we are dissolved and liquidated, we will
distribute to shareholders our net assets remaining after payment or provision
for payment of all our claims. Shareholders will receive only a portion of
their original investment because part of the proceeds of the offering will
have been used to pay all costs incurred by us, including the expenses of the
offering, our organizational and pre-opening expenses and those of Suncoast
National Bank and claims of creditors. These creditor claims include a bank
line of credit for organizational and pre-opening expenses. If we are dissolved
after the common shares are sold, it is possible that shareholders will receive
only a portion of their investment due to the payment of the foregoing
expenses.
OUR SUCCESS DEPENDS ON SUCCESSFULLY IMPLEMENTING OUR BUSINESS STRATEGIES
Our business plan sets forth the strategy that we intend to use in
order to make Suncoast National Bank profitable. This strategy includes hiring
and retaining qualified employees who are familiar with the Sarasota market,
community involvement, a community based marketing program, and providing
personalized quality banking services to customers. If we cannot hire or retain
qualified employees or do not otherwise successfully execute our business
strategy, our ability to develop business and serve our customers will be
hindered. As a startup bank, we may be at a disadvantage in initially
attracting employees and customers desiring to work with an established
enterprise. This could have an adverse effect on our financial performance.
Even if we successfully implement our business strategy, it may not have the
favorable impact on operations that we anticipate.
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WE FACE SIGNIFICANT COMPETITION IN SARASOTA COUNTY
Suncoast National Bank will face strong competition for deposits,
loans and other services. These competitors include many Florida and
out-of-state banks, thrifts, credit unions and other businesses that offer
financial services. Some of the businesses that compete with Suncoast National
Bank are not subject to the same amount of regulation as Suncoast National
Bank. As of October 1998, approximately 132 branch bank offices, 16 thrift
offices and five credit union offices were located in Sarasota County. Most of
these competitors have been in business for many years, have established
customer bases, are larger, and have substantially higher lending limits than
Suncoast National Bank. Many offer services, including trust services, multiple
branches and international banking services, that Suncoast National Bank can
offer only through correspondents, if at all. In addition, most of these
entities have greater capital resources than Suncoast National Bank. This may
allow them to price their services at levels more favorable to the customer and
to provide larger loans than Suncoast National Bank can provide. Our
profitability will depend on our ability to compete successfully. See "Business
- - Competition" (page 19).
WE WILL NEED MORE CAPITAL TO EXPAND SIGNIFICANTLY
Although we do not believe we will need additional capital during the
next 12 months to start and maintain our planned business activities, we will
need additional capital above that raised in this offering and generated by
Suncoast National Bank's income before we can significantly expand operations.
There is no assurance that funds necessary to finance such expansion will be
available. The bank regulatory agencies require us and Suncoast National Bank
to maintain minimum capital. This also has the effect of constraining future
growth, unless we and Suncoast National Bank increase capital. If we sell
additional shares in the future to increase capital, the sale could
significantly dilute your ownership interest.
EXTENSIVE REGULATIONS MAY LIMIT OUR OPERATIONS AND ABILITY TO COMPETE
We will be subject to extensive federal and state government
supervision and regulation. Federal and state banking laws limit Suncoast
National Bank's right to make loans, purchase securities, pay dividends, and
many other aspects of its banking business. These and other restrictions limit
the manner in which we may conduct our business and obtain financing. These
laws are intended primarily to protect Suncoast National Bank's depositors and
are not for the benefit of shareholders. In addition, the burdens and
restrictions imposed by federal and state banking regulations may place us at a
competitive disadvantage compared to competitors who are less regulated. We
will compete for business and deposits with securities companies and insurance
companies, who can offer more attractive returns and use customer funds for
purposes that are not permissible for banking institutions. Future legislation
or government policy could adversely affect the banking industry or the
operations of Suncoast National Bank. Federal economic and monetary policy may
affect Suncoast National Bank's ability to attract deposits, make loans, and
achieve satisfactory interest spreads. See "Business - General" (page 15) and
"Supervision and Regulation" (page 34).
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OUR SUCCESS DEPENDS ON KEY PERSONNEL
We will depend upon the services of John T. Stafford, the President
and Chief Executive Officer of Suncoast Bancorp and Suncoast National Bank, and
William F. Gnerre, Executive Vice President of Suncoast Bancorp and Suncoast
National Bank and Chief Operating Officer and Senior Loan Officer of Suncoast
National Bank. Mr. Stafford and Mr. Gnerre are instrumental in our organization
and will provide valuable services to Suncoast Bancorp and Suncoast National
Bank. Both of these individuals are important to our success and the loss of
either of these individuals could adversely affect our operations. When
Suncoast National Bank opens, we intend to enter into employment agreements
with Mr. Stafford and Mr. Gnerre to help secure their continued service to
Suncoast National Bank and Suncoast Bancorp. See "Management" (page 24).
Additionally, our directors' community involvement, diverse backgrounds, and
extensive local business relationships are important to our success. If the
composition of our Board of Directors changes materially, our growth could be
adversely affected. Ultimately, our success will depend on our ability to
identify, attract, develop, and retain qualified directors, officers, and other
employees. We expect the competition for such individuals to be intense, and
there can be no assurance that we will be successful in identifying,
attracting, developing, or retaining qualified persons.
OUR LENDING TO SMALL BUSINESSES MAY RESULT IN GREATER RISKS
The risk of borrowers not paying their loans is inherent in commercial
banking. Loan defaults may have a material adverse effect on our earnings and
overall financial condition as well as the value of the common shares. The risk
of loss is affected by general economic conditions, the type of loan, the
borrower's overall ability to repay the loan, and the quality of the
collateral, if any, provided for the loan. Some types of loans carry a greater
risk of default than other loans. For example, historically commercial loans
tend to run a higher risk of default than residential real estate loans.
Although Suncoast National Bank intends to offer a full range of loans to its
customers, Suncoast National Bank expects to focus on small-to-medium sized
businesses. This may result in a larger concentration by Suncoast National Bank
of loans to such businesses, which also carries risk. As a result, Suncoast
National Bank may assume greater lending risks than banks which have a lesser
concentration of such loans and tend to make loans to larger businesses. Also,
because commercial loans usually involve larger loan balances to single
borrowers than other types of loans, Suncoast National Bank's loan portfolio is
more likely to have a higher concentration of these loans, the risk of which
will be spread over a smaller number of borrowers. We will attempt to minimize
Suncoast National Bank's credit risk by carefully monitoring the concentration
of its loans within specific industries. However, there is no assurance that
this will reduce these lending risks. A significant number of, or dollar amount
of, loan defaults and late payments would have an adverse impact on Suncoast
National Bank's profitability and the value of the common shares. See "Business
- - Products and Services" (page 20).
OUR LOW LENDING AMOUNTS MAY LIMIT OUR GROWTH
Suncoast National Bank's initial lending limit to any one borrower
will be approximately $767,000. The Board of Directors may establish an
"in-house" limit that will be lower than Suncoast National Bank's legal lending
limit. The Board may periodically raise or lower the "in-house" limit to comply
with sound banking practices and respond to overall economic conditions. Thus,
the size of the loans which Suncoast National Bank can offer to customers will
be less than the size of loans that most of Suncoast National Bank's
competitors are able to offer. Initially, this limit may adversely affect
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Suncoast National Bank's ability to seek relationships with the area's larger
businesses. Suncoast National Bank expects to accommodate loan volumes in
excess of its lending limit through the sale of participations in such loans to
other banks. There can be no assurance that Suncoast National Bank will be
successful in attracting or maintaining customers seeking larger loans. There
also is no assurance that Suncoast National Bank will be able to sell portions
of these loans on terms favorable to Suncoast National Bank. See "Business" -
"Business Strategy" (page 17).
CHANGES IN INTEREST RATES AND ECONOMIC CONDITIONS MAY AFFECT OUR PROFITABILITY
The profitability of financial institutions, including Suncoast
National Bank, may be adversely affected by changes in economic conditions,
real estate values, interest rates, and the policies of the federal government.
Suncoast National Bank's profitability also depends on the difference between
the amount of interest Suncoast National Bank earns on investments and loans,
and the interest it pays on deposits and other liabilities. This difference is
referred to as Suncoast National Bank's interest rate spread. Recently,
interest rate spreads have narrowed due to changing market conditions and
competitive pricing pressure. Substantially all Suncoast National Bank's loans
will be to businesses and individuals in the Southwest Florida area. Any
decline in the economy of this area could have an adverse impact on Suncoast
National Bank. Like most banking institutions, Suncoast National Bank's net
interest spread and margin will be affected by general economic conditions and
other factors which influence interest rates. Suncoast National Bank's assets
and liabilities will be affected differently by a given change in interest
rates. Thus, an increase or decrease in rates, the length of loan terms, or the
mix of adjustable and fixed rate loans in Suncoast National Bank's portfolio
could have a positive or negative effect on Suncoast National Bank's net
income, capital and liquidity. Changes in interest rates are not predictable or
controllable. Negative developments in the economy or Suncoast National Bank's
inability to respond to such changes, could adversely affect Suncoast National
Bank.
WE NEED TO STAY CURRENT ON TECHNOLOGICAL CHANGES TO COMPETE AND MEET CUSTOMER
NEEDS
The banking industry is undergoing rapid technology changes with
frequent introductions of new technology-driven products and services. In
addition to better serving customers, effective use of technology increases
efficiency and enables banks to reduce costs. Our future success will depend in
part on our ability to address the needs of our clients by using technology to
provide products and services that will satisfy client demands for convenience
as well as to create additional efficiencies in our operations. Many of our
competitors have substantially greater resources to invest in technology
improvements and highly skilled technical personnel. To be competitive, we may
need to spend significant amounts on computer hardware and software, and for
technical personnel. There can be no assurance that we will be able to
effectively implement new technology-driven products and services or be
successful in marketing these products and services to our clients.
YEAR 2000 PROBLEMS OF VENDORS AND CUSTOMERS COULD AFFECT US
A great deal of information has been disseminated about the widespread
computer problems that may arise in the year 2000. Computer programs that can
only distinguish the final two digits of the year entered are expected to read
entries for the year 2000 as the year 1900 and compute payment, interest and
delinquency, based on the wrong date or are expected to be unable to compute
payment, interest or delinquency. Rapid and accurate data processing is
essential in the operation of Suncoast National Bank.
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All our material data processing that could be affected by the year
2000 issue described above will be provided by a third party service bureau. We
intend to select a service bureau that will function properly on and after
January 1, 2000. Prior to selecting a service bureau, we intend to have that
service bureau certify to us that they will be year 2000 compliant. Any delays,
mistakes, or failures resulting from the failure of our data processing service
provider to be year 2000 compliant could have a significant adverse impact on
our financial condition and results of operations. We cannot verify
independently that such service bureau or equipment will in fact be year 2000
compliant. Additionally, Suncoast National Bank could be adversely affected by
year 2000 problems experienced by others over which it has no control - such as
customers, customers' vendors, correspondent banks, service providers, and
government agencies. If, for example, a significant borrower experiences a year
2000 problem which negatively affects its operations, such borrower may not be
able to maintain its cash flow and could default on its loan. This could lead
to loan losses for Suncoast National Bank.
WE DO NOT PLAN TO PAY CASH DIVIDENDS
We do not anticipate paying any cash dividends on the common shares
for the immediately foreseeable future. Our ability to pay dividends also will
be largely dependent upon dividends paid by Suncoast National Bank to Suncoast
Bancorp. We do not intend that Suncoast National Bank pay dividends during the
early years of its operations. No assurance can be given that future earnings
of Suncoast National Bank, and any resulting dividends to Suncoast Bancorp,
will be sufficient to permit the legal payment of dividends to shareholders at
any time in the future. Bank holding companies and national banks are both
subject to significant regulatory restrictions on the payment of cash
dividends. Even if we may legally declare dividends, the amount and timing of
such dividends will be at the discretion of our board of directors. The board
may in its sole discretion decide not to declare dividends. In light of the
regulatory restrictions and the need for Suncoast National Bank to retain and
build capital for growth and expansion, it will be the policy of the board of
directors to reinvest earnings for the foreseeable future. See "Dividend
Policy" (page 12) and "Supervision and Regulation - Dividends" (page 36).
THE OFFERING PRICE IS ARBITRARILY DETERMINED AND MAY NOT REFLECT THE VALUE OF
SHARES
The initial public offering price of $10.00 per share was determined
by negotiations between us and The underwriter, the underwriter of this
offering. This price is not based upon earnings or any history of operations
and does not bear any relationship to our net worth, book value, or other
established valuation measurements. Accordingly, the initial price should not
be construed as indicative of the present or anticipated future value of the
common shares. If a market for the common shares should develop, the offering
price may be greater than the market price.
OUR DIRECTOR CONTROL MAY AFFECT PREMIUM PAID FOR SHARES
After this offering, we anticipate that our directors and officers
collectively will beneficially own at least 140,000 common shares and options to
purchase an additional 56,000 common shares at the initial offering price. Each
non-employee director and Messrs. Stafford and Gnerre will receive options to
purchase 7,000 common shares. Without the exercise of the options, the directors
and officers will have control over 20% of the outstanding common shares or
17.4% if the over-allotment option is exercised in full. With the exercise of
all of the options, they would control 25.9% of the then-outstanding common
shares, or 22.8% if the over-allotment option is exercised in full. As a result,
these individuals will be able to exert a significant measure of control over
our affairs
8
<PAGE> 13
and policies. This control could be used, for example, to help prevent
an acquisition of Suncoast Bancorp. This could preclude shareholders from
possibly realizing any premium which may be offered for the common shares by a
potential acquirer.
OUR ABILITY TO CONTINUE AS A GOING CONCERN DEPENDS ON COMPTROLLER OF THE
CURRENCY APPROVAL AND A SUCCESSFUL OFFERING
The independent auditors' report on our October 31, 1998 financial
statements notes that the financial statements are prepared assuming we will
continue as a going concern. Our ability to continue as a going concern depends
on our receipt of final approval from the regulatory agencies to open Suncoast
National Bank and our successful completion of this offering. If we do not
satisfy these two conditions, then we will need to dissolve. See "Risk Factors
- - We Will Need to Dissolve if We Do Not Get Regulatory Approval" (page 4).
ANTI-TAKEOVER LAWS MAY AFFECT SHARE VALUE
Under Federal law, a person, entity or group must notify the Federal
banking agencies before acquiring 10% or more of the outstanding voting stock
of a bank holding company, including our shares. Banking agencies review the
acquisition to determine if it will result in a change of control. The banking
agencies have 60 days to act on the notice, and take into account several
factors, including the resources of the acquirer, the needs of the community,
and the antitrust effects of the acquisition. Florida law contains similar
provisions which require prior approval before a change of control can be
completed. These laws have the effect of deterring unsolicited attempts to
acquire control of Suncoast Bancorp. These provisions also could result in
Suncoast Bancorp being less attractive to a potential acquirer. Thus, these
laws could result in shareholders receiving less for their shares than
otherwise might be available in the event of a change in control of Suncoast
Bancorp. See "Description of Capital Stock - Anti-Takeover and Indemnification
Provisions" (page 41).
AN ACTIVE TRADING MARKET FOR THE COMMON SHARES MAY NOT DEVELOP
Prior to this offering, there has been no public trading market for
the common shares. We are applying to list the common shares for quotation on
the Nasdaq OTC Bulletin Board under the symbol "SUNB." The underwriter has told
us that it presently intends to assist in identifying firms to make a market in
the common shares after this offering, subject to applicable laws and
regulatory requirements. This activity is subject to various securities laws
and other regulatory requirements. Developing a public trading market depends
upon having willing buyers and sellers. This is not within our control or the
control of Suncoast National Bank or any market maker. Even with a market
maker, an active and liquid market for the common shares may not develop in the
foreseeable future, if at all. Even if a market develops, there can be no
assurance that a market will continue, or that you will be able to sell your
shares at or above the initial public offering price of $10.00 per share. Also,
the potential size of a secondary market for the common shares might, at least
initially, be limited by the $2,500 minimum investment required in this
offering. This requirement may restrict the number of shareholders and make
subsequent trading of small numbers of shares less likely. If no trading market
develops or is maintained, you may find it difficult to sell your shares. You
should carefully consider the potentially illiquid and long-term nature of your
investment in the shares.
9
<PAGE> 14
FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements", such as
statements relating to financial condition and prospects, lending risks, Year
2000 readiness, plans for future business development and marketing activities,
capital spending and financing sources, capital structure, the effects of
regulation and competition, and the prospective business of both Suncoast
Bancorp and Suncoast National Bank. Where used in this prospectus, the words
"anticipate", "believe", "estimate", "expect", "intend", and similar words and
expressions, as they relate to Suncoast Bancorp or Suncoast National Bank or
their respective managements, identify forward-looking statements. Such
forward-looking statements reflect the current views of Suncoast Bancorp and
are based on information currently available to the management of Suncoast
Bancorp and Suncoast National Bank and upon current expectations, estimates,
and projections about Suncoast Bancorp and its industry, management's beliefs
with respect thereto, and assumptions made by management. These forward-looking
statements are not guarantees of future performance and are subject to risks,
uncertainties, and other factors which could cause actual results to differ
materially from those expressed or implied by such forward-looking statements.
Potential risks and uncertainties include, but are not limited to:
o significant increases in competitive pressure in the banking
and financial services industries;
o changes in the interest rate environment which could reduce
anticipated or actual margins;
o changes in political conditions or the legislative or
regulatory environment;
o general economic conditions, either nationally or regionally
and especially in southwest Florida, becoming less favorable
than expected resulting in, among other things, a
deterioration in credit quality;
o changes occurring in business conditions and inflation;
o changes in technology;
o changes in monetary and tax policies;
o changes in the securities markets; and
o other risks and uncertainties detailed from time to time in
the filings of Suncoast Bancorp with the Securities and
Exchange Commission.
The most significant of these risks, uncertainties, and other factors are
discussed under the heading "Risk Factors," beginning on page 3 of this
prospectus, and prospective investors are urged to carefully consider such
factors.
10
<PAGE> 15
RECENT DEVELOPMENTS
As of October 31, 1998, the date of Suncoast Bancorp's most recent
audited financial statements, Suncoast Bancorp's accumulated deficit was
$71,006. Since October 31, 1998, Suncoast Bancorp has continued to incur
pre-opening expenses and, as of December 31, 1998, Suncoast Bancorp's
accumulated deficit was $85,821, and approximately $95,800 as of January 31,
1999. The additional expenses incurred related principally to legal and
professional fees incurred in the regulatory application process and in
connection with this offering, salaries, equipment rental and supplies.
USE OF PROCEEDS
The net proceeds to Suncoast Bancorp from the sale of the 700,000
common shares offered hereby are estimated to be $6,400,000, and $7,376,500 if
the underwriter's over-allotment option is exercised in full, after deduction
of the underwriting discounts and commissions and estimated offering expenses.
The net proceeds have not been reduced by the amount of Suncoast Bancorp's
organizational and other operating expenses which were $85,821 as of December
31, 1998.
Suncoast Bancorp will use $6.0 million of the net proceeds of this
offering to purchase all of the common stock of Suncoast National Bank,
providing Suncoast National Bank's initial capitalization. Of the amount
contributed to Suncoast National Bank, approximately $555,000 of these funds
are expected to be used to construct leasehold improvements and buy necessary
furniture, fixtures and equipment expense for Suncoast National Bank's office.
It is anticipated that the remaining amount will be used by Suncoast National
Bank to fund investments in loans and U.S. government and agency securities,
federal funds sold, and for payment of Suncoast National Bank's operating
expenses.
After capitalizing Suncoast National Bank as set forth above, the
balance of the net proceeds of this offering, that will be retained by Suncoast
Bancorp is estimated to be approximately $400,000. Of this amount,
approximately $325,000 will be used to repay a bank line of credit, the
proceeds of which were used to pay the expenses of organizing Suncoast Bancorp
and Suncoast National Bank. The line of credit is guaranteed by the directors
of Suncoast Bancorp and Suncoast National Bank , provides for interest only
payments at prime plus 1%, adjustable monthly, and matures on May 1, 1999. The
remaining proceeds will initially be invested by Suncoast Bancorp in an
overnight repurchase agreement with Suncoast National Bank secured by U.S.
Treasury and Agency securities and otherwise will be held by Suncoast Bancorp
as working capital for general corporate purposes as well as for possible
future capital contributions to Suncoast National Bank to support asset growth.
Such uses by Suncoast Bancorp, however, may be subject to change. Suncoast
Bancorp believes that the net proceeds of the offering will satisfy Suncoast
Bancorp's cash requirements for at least the first 12 month period following
the opening of Suncoast National Bank.
The following table illustrates the intended use by Suncoast Bancorp
of the net proceeds of this offering:
11
<PAGE> 16
<TABLE>
<CAPTION>
DOLLAR AMOUNT
-------------
<S> <C>
Repay amounts drawn on line of credit $ 325,000
Contribution to the capital of Suncoast National Bank 6,000,000
Working capital 75,000
----------
Total $6,400,000
==========
</TABLE>
After Suncoast National Bank receives the necessary regulatory
approvals, Suncoast Bancorp will capitalize Suncoast National Bank with a
minimum of $6 million. Suncoast National Bank intends to use these proceeds for
the following purposes:
<TABLE>
<CAPTION>
DOLLAR AMOUNT
-------------
<S> <C>
Construction of leasehold improvements $ 225,000
Furniture, fixtures and equipment for Suncoast National Bank's main office 330,000
Funds to be used for loans to customers, investments and other general purposes 5,445,000
----------
Total $6,000,000
==========
</TABLE>
At present, Suncoast National Bank anticipates that the portion of the
$5,445,000 of funds available for loans to customers will be allocated to
commercial and commercial real estate loans, residential lending, including
residential construction, and to consumer lending, including home equity loans.
Suncoast National Bank does not currently know the percentages that will be
allocated to each of these lending categories, since Suncoast National Bank has
not started operations and the allocation of loans will depend upon existing
market conditions and customer demands. In addition, the amounts allocated to
these general loan categories may vary from time to time.
DIVIDEND POLICY
Holders of Suncoast Bancorp's common shares are entitled to receive
cash dividends when and if declared by its Board of Directors out of funds
legally available therefor.
Suncoast Bancorp initially expects that all its and Suncoast National
Bank's earnings, if any, will be retained to finance the growth of Suncoast
Bancorp and Suncoast National Bank and that no cash dividends will be paid for
the foreseeable future. The primary source of dividends to Suncoast Bancorp's
shareholders, if any, in the future, will depend primarily on the earnings of
Suncoast National Bank and its ability to pay dividends to Suncoast Bancorp, as
to which there can be no assurance. Under Federal law, Suncoast National Bank
will be restricted as to the maximum amount of dividends it may pay on its
common stock. Also, the approval of the Comptroller of the Currency is required
for the payment of any dividend if the aggregate amount of all dividends paid by
Suncoast National Bank during such calendar year would exceed the sum of:
12
<PAGE> 17
o the total net profits of Suncoast National Bank for that
year, and
o the retained net profits of Suncoast National Bank for the
previous two years less any required transfer to surplus.
The Comptroller of the Currency and the Federal Deposit Insurance
Corporation ("FDIC") also are authorized to prohibit the payment of dividends by
Suncoast National Bank.
Under federal law and the policy of the Board of Governors of the
Federal Reserve System (the "Federal Reserve"), a bank holding company is
required to serve as a source of financial strength to its subsidiary bank and
to commit resources to support the bank. Consistent with this requirement, the
Federal Reserve has stated that, as a matter of prudent banking, a bank holding
company generally should not pay cash dividends unless the available net income
of the bank holding company is sufficient to fully fund the dividends, and the
prospective rate of earnings retention is to be consistent with the company's
needs, asset quality and overall financial condition. For additional
information regarding restrictions on payment of dividends, see "Supervision
and Regulation - Dividends."
CAPITALIZATION
The following table sets forth the capitalization of Suncoast Bancorp
as of December 31, 1998, and as adjusted to reflect the sale of the common
shares offered hereby at the public offering price of $10.00 per share:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
---------------------------------
ACTUAL AS ADJUSTED (1) (2)
-------- -------------------
<S> <C> <C>
Long-term and short-term debt ................................ $156,540 $ -0-
======== ==========
Shareholders' equity:
Preferred shares; $.01 stated par; 3,000,000 shares
authorized; no shares issued or outstanding ............. -0- -0-
--------- ----------
Common shares; $.01 par value, 10,000,000 shares
authorized; one share issued and outstanding
700,000 shares as adjusted (3) .......................... -0- 7,000
Additional paid-in capital ................................... 1 6,393,000
Accumulated deficit (4) ...................................... (89,821) (85,821)
--------- ----------
Total shareholders' equity ................................... $ (89,820) $6,314,179
========= ==========
</TABLE>
- ----------------
(1) As adjusted to give effect to the offering and receipt of the net proceeds
therefrom.
(2) The amount reflected assumes that the over-allotment option granted to the
underwriter is not exercised.
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<PAGE> 18
(3) Does not include (a) 42,000 common shares issuable upon exercise of
options to be granted to non-employee directors of Suncoast Bancorp, on the
basis of 7,000 per non-employee director, upon opening of Suncoast National
Bank under the Suncoast Bancorp, Inc. Director Stock Option Plan, and
(b) 14,000 common shares issuable upon exercise of options to be granted to
Messrs. Stafford and Gnerre, on the basis of 7,000 each, upon opening of
Suncoast National Bank under the Suncoast Bancorp, Inc. Employee Stock
Option Plan. See "Management-Stock Option Plans."
(4) The accumulated deficit is comprised primarily of pre-opening expenses
incurred through December 31, 1998, related principally to legal and
professional fees incurred in the regulatory application process, creation
of the holding company, office occupancy costs and supplies. In addition,
William F. Gnerre has been receiving consulting fees since April 1998 and
John T. Stafford an automobile allowance from Suncoast Bancorp since July
1998. The accumulated deficit will continue to increase prior to Suncoast
National Bank's commencement of operations, and will then increase further
as expected initial operating losses are incurred. Additional employees
will be hired prior to the opening of Suncoast National Bank and further
salary expenses and training costs will be incurred at such time.
Additional professional fees will also be incurred in connection with this
offering and other corporate matters.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
Suncoast Bancorp is still in a development stage and will remain in
that stage until the offering of Suncoast Bancorp's common shares is completed
and Suncoast National Bank commences operations. Suncoast Bancorp has funded
its start-up and organization costs through a $325,000 bank line of credit,
which is guaranteed by the directors of Suncoast Bancorp and Suncoast National
Bank. This line of credit will be repaid from the net proceeds of the offering.
Suncoast Bancorp believes that the net proceeds of the offering will satisfy
Suncoast Bancorp's cash requirements for at least the first 12 month period
following the opening of Suncoast National Bank. Accordingly, Suncoast Bancorp
does not anticipate that it will be necessary to raise additional funds for the
operation of Suncoast Bancorp and Suncoast National Bank during such 12-month
period.
The operations of Suncoast Bancorp from April 1, 1998 through the date
of this prospectus have been funded by a line of credit received by the
organizers. Its operations will continue to be funded by the line of credit
until the offering closes. The total amount available on the line of credit is
$325,000, of which approximately $101,188 was outstanding at December 31, 1998.
This loan has been guaranteed by the organizers, bears interest at the prime
rate plus 1%, is adjustable monthly, and is due on May 1, 1999. From April 1 to
December 31, 1998, the net loss amounted to $85,821. The estimated net loss
from April 1, 1998 through June 15, 1999, the anticipated opening date of
Suncoast National Bank, is $318,249, which is attributable to the following
estimated noninterest expenses:
<TABLE>
<S> <C>
Salaries and benefits: $183,530
Occupancy expenses 48,090
Equipment rental, depreciation, office, and maintenance 22,332
Other pre-opening expenses 64,297
--------
Total $318,249
========
</TABLE>
14
<PAGE> 19
For additional information regarding material expenditures during such
period, see "Use of Proceeds." For information regarding the increase in
Company employees following the opening of Suncoast National Bank, see
"Business - Employees." For additional information regarding the plan of
operations for Suncoast Bancorp and Suncoast National Bank see "Business" and
"Management."
BUSINESS
GENERAL
Suncoast Bancorp was incorporated under the laws of the State of
Florida on April 1, 1998 under the name Community Holdings Corporation. It
changed its name to Suncoast Bancorp, Inc. on November 20, 1998. Suncoast
Bancorp was formed primarily to own all of the common stock of Suncoast
National Bank and to serve as a bank holding company under the Bank Holding
Company Act of 1956 (the "BHC Act"). Suncoast National Bank is organizing as a
national banking association with depository accounts to be insured by the FDIC
to the extent permitted by law. Suncoast National Bank intends to offer a full
range of commercial and consumer banking services primarily within its market
area. The market area includes the southern part of Sarasota County, including
the community of Osprey. Suncoast National Bank's extended market area
encompasses all of Sarasota County.
Suncoast Bancorp and Suncoast National Bank have applied for all
necessary regulatory approvals. Assuming such regulatory approvals are received
and the successful completion of this offering, Suncoast Bancorp and Suncoast
National Bank anticipate commencing business in the second quarter of 1999. On
January 21, 1999, Suncoast National Bank received Comptroller of the Currency
preliminary approval. Suncoast National Bank intends to commence business as
soon as reasonably possible upon completion of the offering and satisfaction of
the conditions of its regulatory approvals. See "Risk Factors - Extensive
Regulations May Limit Our Operations and Ability to Compete." Suncoast Bancorp
currently maintains its offices at 5922 Cattlemen Road, Suite 202, Sarasota,
Florida 34232. Upon completion of Suncoast National Bank's facility, the address
will be 8592 Potter Park Drive, Sarasota, Florida 34238. Suncoast Bancorp
anticipates that Suncoast National Bank's facility will be completed in the
second quarter of 1999. Suncoast Bancorp's telephone number is (941) 954-5315.
Suncoast National Bank is being formed by local business persons who
have identified the need for a consumer-oriented independent community bank in
Sarasota County, Florida to serve its growing population and expanding business
base. The liberalization of Federal and State of Florida interstate banking
laws in recent years has led to substantial consolidation of the banking
industry in Florida and, particularly, the southwest Florida area. Since the
early 1990s, several of the area's locally owned or locally managed financial
institutions have been acquired by large regional bank holding companies.
Members of Suncoast Bancorp's board, all of whom have been participants or
observers of the local banking scene for many years, have noticed the need for
a locally owned, highly service-oriented banking organization to fill a void
created by this consolidation in the banking industry. Specifically, the board
believes that the area could greatly benefit from a financial institution whose
focus would be to serve the business and personal banking needs of local
entrepreneurs and local business owners. The board also believes that this
niche is currently being under-served by other banks.
In the opinion of Suncoast Bancorp's management, this situation has
created a favorable opportunity for a new commercial bank with headquarters in
the Sarasota area. Management of Suncoast
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<PAGE> 20
Bancorp believes that such a bank can attract those clients who prefer to
conduct business with a locally-managed institution that demonstrates an active
interest in their businesses and personal financial affairs. Suncoast Bancorp
believes that a locally managed institution will be better able to deliver more
timely responses to client requests, provide customized financial products or
services addressing out-of-the-ordinary matters and offer the personal
attention of senior banking officers. Suncoast National Bank will seek to take
advantage of this opportunity by emphasizing in its marketing plan, its local
management and its ties and commitment to the local community.
Suncoast National Bank intends to be a full service commercial bank.
Its business will consist of attracting deposits from the general public in its
market area and using those deposits, together with funds derived from other
sources, to originate a variety of commercial, consumer, and residential real
estate loans. While Suncoast National Bank anticipates that its lending
activities will include residential real estate and consumer loans, it expects
to focus its efforts on lending relationships with small to medium-sized
businesses. Suncoast National Bank's focus will be on the smaller commercial
customer because management believes that this segment offers the greatest
concentration of potential business. Also, the small to mid-sized commercial
market segment has historically shown a willingness to borrow and carry larger
balances. Finally, Suncoast Bancorp believes that this market segment tends to
be more loyal in its banking relationships. Suncoast National Bank intends to
offer a full range of deposit services that are typically available at most
banking institutions, including personal and business checking accounts, senior
checking accounts, interest-bearing checking accounts, savings accounts, and
other time deposits of various types, ranging from daily money market accounts
to long-term certificates of deposit. The transaction accounts and time
certificates will be tailored to the market area at rates competitive to those
offered in the area. Suncoast National Bank's deposits will be insured up to
applicable limits by the FDIC. Suncoast National Bank also intends to offer
commercial loans, consumer installment loans, real estate loans, construction
loans, second mortgage loans, home equity loans, and lines of credit.
Commercial loans will include both secured and unsecured loans for working
capital, inventory and receivables, business expansion, acquisition of real
estate and improvements, and purchase of machinery and equipment. Consumer
loans will include secured and unsecured loans for financing automobiles,
boats, home improvements and personal investments. Other services Suncoast
National Bank is expected to offer will include official bank checks and money
orders, travelers checks, bank by mail, safe deposit boxes, wire transfers,
direct deposit of payroll and social security checks, automatic drafts for
various accounts, and U.S. Savings Bonds. Suncoast National Bank does not
anticipate initially providing fiduciary services. The need for such services,
however, will be reviewed periodically for possible future inclusion among
Suncoast National Bank's products and services.
The revenues of Suncoast National Bank will be primarily derived from
interest on and fees received in connection with, commercial, real estate, and
other loans, from the sales of loans and from interest on and dividends from
investment securities and short-term investments. The principal sources of
funds for Suncoast National Bank's lending activities will be its deposits,
amortization and repayment of loans, sales of loans, and the sale of investment
securities. The principal expenses of Suncoast National Bank will be the
interest paid on deposits and operating and general administrative expenses.
As is the case with banking institutions generally, Suncoast National
Bank's operations will be materially and significantly influenced by general
economic conditions and by related monetary and fiscal policies of financial
institution regulatory agencies, including the Federal Reserve and the FDIC.
Deposit flows and cost of funds are influenced by interest rates on competing
investments and general market rates of interest. Lending activities are
affected by the demand for financing of real estate and
16
<PAGE> 21
other types of loans, which in turn is affected by the interest rates at which
such financing may be offered and other factors affecting local demand and
availability of funds.
Suncoast Bancorp's primary initial focus will be the development of
Suncoast National Bank's business from a single office location. In this regard,
Suncoast National Bank has applied to establish a courier service for the
acceptance of deposits. As warranted, Suncoast Bancorp will consider
diversifying its activities over time to include additional services and banking
locations. Suncoast Bancorp has no present plans to acquire or establish any
operating subsidiaries other than Suncoast National Bank.
BUSINESS STRATEGY
Suncoast National Bank's strategy will be to operate as a community
bank emphasizing prompt, personalized customer service to the individuals and
businesses located in Sarasota, Florida and surrounding communities. The
community banking focus of Suncoast National Bank will provide customers with
locally-based decision makers who are familiar with their customers, their
business environment and competitive demands, who are able to quickly evaluate
and respond to loan applications, and who have the ability to craft
personalized banking solutions to the customers' needs without extensive
bureaucratic delays. Management believes that such a bank will appeal to
customers who prefer to conduct their banking business with a locally-managed
financial institution that demonstrates a genuine interest in their financial
affairs and an ability to cater to their financial needs.
Suncoast National Bank intends to concentrate on the financial
services needs of individuals and local businesses. A cornerstone of Suncoast
National Bank's business strategy will be to emphasize its local management and
its commitment to Suncoast National Bank's market area. John T. Stafford, the
President and Chief Executive Officer of Suncoast Bancorp and Suncoast National
Bank, has 27 years of experience serving the banking industry, including 17
years in Sarasota County. William F. Gnerre, Executive Vice President of
Suncoast Bancorp and Suncoast National Bank and Chief Operating and Senior Loan
Officer of Suncoast National Bank also has over 30 years of experience serving
the banking industry, including 17 years in Sarasota County. The directors
believe that the officers of Suncoast Bancorp represent a range of business,
banking and investment knowledge and expertise. Suncoast Bancorp directors
believe that the years of experience and existing contacts of the senior
officers offer Suncoast National Bank a substantial opportunity to attract new
relationships.
In addition, Suncoast Bancorp intends to hire two additional
experienced individuals to serve as Vice Presidents of Suncoast National Bank.
One such individual will serve as Suncoast National Bank's Chief Financial
Officer and will have experience in that capacity. The second such individual
will serve as Suncoast National Bank's Loan Officer and will have experience in
that capacity with community banks in the Sarasota Market.
Suncoast National Bank intends to encourage its employees to be active
in the civic, charitable and social organizations located in the local
communities. Most of Suncoast Bancorp's directors currently hold, and have held
in the past, leadership positions in a number of community organizations, and
intend to continue this active involvement in future years. Other members of
the management team will also be encouraged to volunteer for such positions.
The employees of Suncoast National Bank will be expected to emphasize service
in their dealings with clients. Because Suncoast National Bank intends to
commence operations with a staff of fewer than 15 full time employees, these
employees will need to be flexible in the duties they perform in an effort to
satisfy clients. In addition, management believes that the use of current
technology will permit each employee to devote more time and attention to
personal
17
<PAGE> 22
service, respond more quickly to a client's requests and deliver services in
the most timely manner possible. Management expects this "high touch-high tech"
manner of operations to be appealing to clients.
Upon its opening, Suncoast National Bank is planning to undertake a
marketing campaign utilizing an officer calling program. The purpose of this
call program will be to describe the products, services, and strategies of
Suncoast National Bank to both existing and new business prospects. Directors
are expected to market Suncoast National Bank actively through their business
and social contacts. All of the directors are active members of the Sarasota
community and their continued community involvement will provide an opportunity
to promote Suncoast National Bank, its products, and services. Suncoast
National Bank also will utilize community-based promotions. The campaign will
emphasize Suncoast National Bank's independence, local management and special
focus on client service. All employees will be expected to actively market
Suncoast National Bank's services.
Suncoast National Bank's initial legal lending limit will be
approximately $767,000. The board of directors may establish an "in-house"
limit that will be somewhat lower than Suncoast National Bank's legal lending
limit. The board may from time to time raise or lower the "in-house" limit as
it deems appropriate to comply with safe and sound banking practices and
respond to overall economic conditions. Initially, this limit will affect to a
degree the ability of Suncoast National Bank to seek relationships with the
area's larger businesses. However, in light of senior management's previous
experience and the relationships with a number of the region's other financial
institutions, Suncoast National Bank may originate loan volumes in excess of
its lending limit and sell participations in such loans to other banks.
Likewise, it is quite possible that Suncoast National Bank will purchase
participations from other area institutions. See "Risk Factors - Our Low
Lending Amounts May Limit Our Growth."
MARKET AREA
Overview
Suncoast National Bank anticipates that the market area for its
services will be the southern part of Sarasota, Florida. The community of
Sarasota is located in Sarasota County on the Southwest coast of Florida.
The market area encompasses an area of approximately 25 square miles.
The population of Sarasota County was approximately 295,000 in 1995
and approximately 305,000 in 1998. Suncoast National Bank's extended market
area encompasses all of Sarasota County.
Sarasota County offers recreational facilities, cultural events,
resorts, commercial office parks, residential developments, major
transportation routes, shopping centers, and entertainment areas. Access to the
area is by Interstate 75 and U.S. 41. Air service is through the
Sarasota/Bradenton International Airport and the Tampa International Airport,
both less than an hour's drive from the area. The area's annual average
temperature of 75 degrees provides comfortable year-round living.
According to the Sarasota County Chamber of Commerce, Inc. Statistical
Prospectus, the U.S. Department of Commerce rated the Metropolitan Statistical
Area, of which Sarasota is a part, fourth in the nation for job growth.
Seasonal population, which includes part-time residents who may live for
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several months in Sarasota County while maintaining another residence
elsewhere, increases from January through April, thereby increasing the
population of the county during that time.
Industry and Employment
Sarasota is part of one of the fastest growing areas in the country.
Business and entertainment service industries, retail trade, government,
construction, real estate, finance/insurance, health care and
transportation/communication/utility form the basis for the area's business
economy. Commercial construction of small shopping centers and small office
parks are in progress throughout Sarasota County. Until the late 1950s and
early 1960s, agriculture was a major economic basis for the area. Although not
as important as it once was, agriculture remains a part of the area's industry,
with citrus crops, nurseries, and vegetables making up the bulk of the
agriculture business.
The largest employers in Sarasota County are Vinyl Tech/PGT, Sun
Hydraulics, Apac-Florida, the School Board of Sarasota County, Sarasota
Memorial Hospital, Columbia Doctors Hospital, and FCCI Insurance Group. The
Sarasota County Government and the City of Sarasota also employ a significant
number of people.
Management believes that this diverse and growing commercial base
provides potential for business banking services, together with personal
banking services for owners and employees of these enterprises.
COMPETITION
Suncoast National Bank's market area is competitive and market share
is fragmented among a number of financial institutions. As of December 31,
1998, there were nine banks and thrifts with 10 offices in Suncoast National
Bank's market area. As of June 30, 1998, there were 32 banks and thrifts
operating approximately 148 offices in Sarasota County. Suncoast National Bank
also will face competition from credit unions, finance companies, insurance
companies, mortgage companies, securities brokerage and investment firms, money
market and mutual funds, loan production offices, asset-based nonbank lenders,
governmental organizations that may offer subsidized financing at rates lower
than those offered by Suncoast National Bank, and other providers of financial
services. Most of Suncoast National Bank's competitors have been in business
for many years, have established customer bases, are substantially larger, have
substantially larger lending limits than Suncoast National Bank, and can offer
services, including multiple branches and international banking services, that
Suncoast National Bank will be able to offer only through correspondent banks,
if at all. In addition, most of these entities have greater capital resources
than Suncoast National Bank, which among other things, may allow them to price
their services at levels more favorable to clients and to provide larger credit
facilities than could Suncoast National Bank. Suncoast Bancorp anticipates that
Suncoast National Bank's legal lending limit of approximately $767,000 will be
adequate to satisfy the credit needs of most of its clients and that the needs
of its clients in excess of this amount will be met through loan participation
arrangements with correspondent banks and others, however, there can be no
assurance that Suncoast National Bank will be successful in arranging loan
participations that will be both competitive with products offered by
competitors of Suncoast National Bank and advantageous to Suncoast National
Bank.
Suncoast Bancorp believes that its personal service philosophy will
enhance Suncoast National Bank's ability to compete favorably in attracting
individuals and local businesses. Suncoast National
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Bank will delegate appropriate activity to its personnel to deal effectively
and in a timely fashion with customer service needs. Suncoast National Bank
will compete for loans principally through the range and quality of the
services it will provide, interest rates and loan fees. Suncoast National Bank
will actively solicit deposit related clients and will compete for deposits by
offering clients personal attention, professional service and competitive
interest rates.
PRODUCTS AND SERVICES
Suncoast National Bank will offer a range of short to intermediate
term personal and commercial loans.
Commercial Loans. Commercial lending will be directed toward small to
mid-sized businesses whose demands for funds either fall within the legal
limits of Suncoast National Bank or can be satisfied through loan
participations arranged by it. Suncoast National Bank intends to offer a full
range of commercial loan services including owner occupied construction and
permanent real estate loans, term loans, single pay loans and lines of credit,
most of which will be secured by the assets of the company and guaranteed by
the principals of the businesses. The purpose of a particular loan will
determine its structure.
Suncoast National Bank's commercial loans will be underwritten
primarily on the basis of the borrower's ability to service such debt from
reliable and stable sources of income. In all cases Suncoast National Bank will
establish a primary source and secondary source of repayment. As a general
practice, Suncoast National Bank expects to collateralize commercial loans with
various assets including real estate, equipment, inventory, accounts receivable
and, where applicable, other business and personal assets as may be deemed
appropriate. However, some commercial loans may be made on an unsecured basis.
Generally, short-term working capital loans are expected to be primarily
collateralized by short-term assets, whereas term loans and commercial real
estate loans are primarily expected to be collateralized by long-term fixed
assets. Commercial loans entail risks. These loans are particularly risky since
repayment is usually dependent upon the successful operation of the commercial
enterprise. These loans also are subject to adverse conditions in the economy.
Commercial loans are generally riskier than mortgage loans because they are
typically underwritten on the basis of the ability to repay from the cash flow
of a business rather than on the ability of the borrower or guarantor to repay.
Further, the collateral underlying a commercial loan may depreciate over time,
cannot be appraised with as much precision as real estate, and may fluctuate in
value based on the success of the business. Risks associated with these loans
can be significant and include fraud, bankruptcy, economic downturns,
deteriorated or non-existing collateral, customer financial problems, and
changes in interest rates.
Residential Real Estate Loans. Suncoast National Bank will originate
real estate loans for the purpose of purchasing or refinancing one to four
family residences. The loans, which will generally be long-term, will have
either fixed or variable interest rates. Suncoast National Bank expects that
any fixed rate residential mortgage loans it generates will be sold in the
secondary market. Suncoast National Bank may retain certain balloon payment and
variable rate mortgages in its loan portfolio. This policy will periodically be
subject to review by management and Suncoast National Bank's board of directors
as a result of changing market and economic conditions and other relevant
factors. Variable rate mortgages decrease the risks associated with changes in
interest rates, but involve other risks because as interest rates increase the
underlying payments by the borrower increase, thus increasing the potential for
default.
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At the same time, the marketability of the underlying collateral may be
adversely affected by higher interest rates.
Additionally, Suncoast National Bank will make residential
construction loans for one to four family structures. Suncoast National Bank
will require a first lien on the land associated with the construction project
and will offer these loans to qualified homeowners and builders. Loan
disbursements will require on-site inspections to assure the project is on
budget and that the loan proceeds are being properly applied to the specific
construction project. The loan-to-value ratio for such loans generally will be
80 percent of cost or appraised value, whichever is lower. To be eligible for a
residential construction loan, the borrower must be pre-approved for permanent
financing. The risk of loss on residential construction lending is dependent
upon the accuracy of the initial appraisal of the property's projected value at
completion of construction, delays and cost overruns, and the possibility that
Suncoast National Bank may be required to advance funds beyond the amount
originally committed to permit completion of the project, thereby possibly
reducing the home's eventual equity. The risk is also dependent upon the
performance of the builder in constructing the project to the plans and
specifications of the borrower, as well as Suncoast National Bank's ability to
administer and control all phases of the construction disbursements.
Consumer Loans. Suncoast National Bank plans to make consumer loans,
consisting primarily of installment loans to individuals for personal, family
and household purposes, including loans for automobiles, home improvements,
second mortgages, home equity lines of credit and investments. Consumer loans
typically have shorter terms and carry higher interest rates than that charged
on other types of loans such as residential mortgage loans. Consumer loans,
however, do pose additional risks of collectibility when compared to such other
loans. Suncoast National Bank will be required to rely on the borrower's
ability to repay, since the collateral may be of reduced value at the time of
collection. Accordingly, the initial underwriting must establish the borrower's
credit history and capacity to repay the loan as scheduled. Additional risks
associated with consumer loans include fraud, deteriorated or non-existent
collateral, general economic downturn, customer financial problems, and changes
in interest rates. Loss or decline of income by the borrower due to layoff,
divorce or other reasons, or unexpected medical or other personal expenses,
also represent unplanned occurrences that may increase the risk of default to
Suncoast National Bank.
Suncoast National Bank's loan approval policies will provide for
various levels of officer lending authority. When the amount of aggregate loans
to a single borrower exceeds that individual officer's lending authority, the
loan request will be considered and approved by an officer with a higher
lending limit or Suncoast National Bank's Loan Committee. Suncoast National
Bank will not make any loans to any of its directors or executive officers
unless the loan is approved by the board of directors of Suncoast National Bank
and is made on terms no more favorable to such person than would be available
to a person unaffiliated with Suncoast National Bank.
Suncoast National Bank's lending activities will be subject to a
variety of lending limits imposed by Federal law. Under the regulations of the
Comptroller of the Currency, a national bank's total outstanding loans and
extensions of credit, both secured and unsecured, to one borrower may not exceed
15% of the bank's capital and surplus, plus an additional 10% of the bank's
capital and surplus if the amount that exceeds the 15% general limit is fully
secured by readily marketable collateral, as defined in the regulations. Under
these regulations, Suncoast National Bank's initial general lending limit to one
borrower will be approximately $767,000, plus an additional $511,000 for loans
secured by readily marketable collateral.
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While Suncoast National Bank expects generally to employ more conservative
lending limits, the board of directors will have discretion to lend up to these
legal lending limits.
Deposit Services. Suncoast National Bank intends to offer a range of
deposit services, including checking accounts, NOW accounts, savings accounts
and time deposits of various types. The transaction accounts and time
certificates will be tailored to the principal market area at rates competitive
with those offered in the area. All deposit accounts will be insured by the
FDIC up to the maximum amount permitted by law. Suncoast National Bank intends
to solicit these accounts from individuals, businesses, associations,
organizations, financial institutions and government authorities. It does not
intend to accept brokered deposits. Suncoast National Bank may also use
alternative funding sources as needed, including advances from Federal Home
Loan Banks, conduit financing and the packaging of loans for securitization and
sale.
Other Bank Services. Suncoast National Bank currently plans to offer
other services, including a courier service, credit cards, money orders,
traveler's checks, automated teller services with access to one or more
regional or national automated teller networks and safe deposit services.
Although Suncoast National Bank has been involved in discussions with a number
of vendors regarding the provision of such services, Suncoast National Bank
does not expect to make final decisions with respect to the providers of such
services until approximately 60 days before its commencement of business.
Suncoast National Bank also intends to establish relationships with
correspondent banks and other financial institutions to provide other services
for its clients, including requesting correspondent banks to participate in
loans where the loan amount exceeds Suncoast National Bank's policies or legal
lending limit. Suncoast National Bank does not anticipate initially providing
fiduciary services. The need for such services, however, will be reviewed
periodically for possible future inclusion among Suncoast National Bank's
products and services.
It is anticipated that Suncoast National Bank's hours of operation
will initially be 8:00 a.m. to 6:00 p.m., Monday through Friday and from 8:00
a.m. to 12:00 p.m. on Saturday. In addition, Suncoast National Bank's employees
will be available to clients wishing to make appointments outside traditional
banking hours, either at Suncoast National Bank or at the clients' homes or
businesses. By providing "appointment banking," Suncoast National Bank intends
to demonstrate its high level of responsiveness and service to its clients.
Data Processing. Many of the data processing services, including
on-line teller service, will be purchased on a contract basis, reducing the
number of persons otherwise required to handle the operational functions of
Suncoast National Bank. Suncoast National Bank is in the process of discussing
arrangements with potential data processing companies.
ASSET/LIABILITY MANAGEMENT
In addition to loans, Suncoast National Bank will make other
investments primarily in obligations of the United States or obligations
guaranteed as to principal and interest by the United States and other taxable
securities. No investment in any of those instruments will exceed any
applicable limitation imposed by law or regulation. The investment portfolio
will be structured so as to provide for an ongoing source of funds for meeting
loan and deposit demands, and for reinvestment opportunities to take advantage
of changes in the interest rate environment.
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It will be the objective of Suncoast Bancorp and Suncoast National
Bank to manage assets and liabilities to provide a satisfactory, consistent
level of profitability within the framework of established cash, loan,
investment, borrowing and capital policies. Certain of the officers of Suncoast
National Bank will be responsible for monitoring policies and procedures that
are designed to insure acceptable composition of the asset/liability mix, and
stability and leverage of all sources of funds while adhering to prudent
banking practices. It also will be the overall philosophy of management to
support asset growth primarily through growth of deposits, which include
deposits of all categories made by individuals, partnerships and corporations.
Management of Suncoast National Bank will seek to invest the largest portion of
its assets in commercial, consumer and real estate loans. Bank management also
will view Suncoast National Bank's investment portfolio as a source of
liquidity and as a means to balance its asset/liability mix. Suncoast National
Bank will invest primarily in obligations of the United States or obligations
guaranteed as to principal and interest by the United States, or other taxable
securities and in certain obligations of states and municipalities. Suncoast
National Bank also will enter into Federal Funds transactions with its
principal correspondent banks, which represent a short-term, and generally
overnight, loan from one bank to another, to balance its liquidity needs.
Suncoast National Bank intends to monitor its asset/liability mix on a
daily basis and a quarterly report reflecting interest-sensitive assets and
interest-sensitive liabilities will be prepared and presented to Suncoast
National Bank's Asset and Liability Management Committee. The objective of this
policy will be to manage liquidity and control interest-sensitive assets and
liabilities so as to minimize the impact of substantial movements in interest
rates on Suncoast National Bank's earnings.
BANK PREMISES
Suncoast Bancorp has entered into a contract to lease a facility from
Palmer Medical Center, LTD, an unaffiliated third party, which will serve as
Suncoast National Bank's main office at 8592 Potter Park Drive, Sarasota,
Florida. The site is located at the intersection of U.S. 41 and Central
Sarasota Parkway, a major intersection in Sarasota County. The surrounding area
is mixed-use commercial and industrial properties. The intersection is within
two miles of the center of the area's residential development.
The term of the lease will be for a period of five years beginning on
the day the lessor thereunder receives a certificate of occupancy for the
building. Under the lease, Suncoast Bancorp has two options to renew the lease
term, each for a five-year period. Suncoast Bancorp expects that this facility
will be completed and available for Suncoast National Bank's use in the second
quarter of 1999.
The banking facility consists of approximately 4,000 square feet of
office space. The facility will have four inside teller stations, three
customer service platform stations, two drive-through lanes, and a walk-up and
depository ATM lane.
EMPLOYEES
Suncoast National Bank intends to commence operations with a staff of
approximately 13 full-time equivalent employees. John T. Stafford will serve as
the President and Chief Executive Officer of Suncoast Bancorp and Suncoast
National Bank. William F. Gnerre will serve as Executive Vice President of
Suncoast Bancorp and Suncoast National Bank and Chief Operating Officer and
Senior Loan Officer of Suncoast National Bank. At present, Messrs. Stafford and
Gnerre are the only
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employees actively involved in the organization of Suncoast Bancorp and
Suncoast National Bank. Since April 1998 Mr. Gnerre has been receiving a
monthly consulting fee of $4,000 as a part of his efforts in connection with
the organization of Suncoast National Bank. This fee will be continued until
such time as Suncoast National Bank opens and enters into employment agreements
with Messrs. Stafford and Gnerre. Mr. Stafford presently receives no monthly
fee but does receive a monthly automobile allowance of $900. See "Management -
Employment Agreements."
Suncoast Bancorp will hire additional officers and employees prior to
commencement of Suncoast National Bank's operations. Company management
anticipates that Suncoast Bancorp will increase its staff from 13 to 16
full-time equivalent employees during the second year of its operations in
order to provide for anticipated growth. Suncoast Bancorp plans to employ as
officers and employees of Suncoast National Bank primarily persons from
Suncoast National Bank's market areas who have experience in banking. Suncoast
Bancorp intends to pay competitive salaries to attract and retain such officers
and employees.
LEGAL PROCEEDINGS
Neither Suncoast Bancorp nor Suncoast National Bank is a party to any
pending legal proceeding. Management believes there is no litigation threatened
in which Suncoast Bancorp and Suncoast National Bank faces potential loss or
exposure or which will have a material adverse impact on shareholders' equity
or Suncoast Bancorp's business or financial condition upon completion of the
offering.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of Suncoast Bancorp and Suncoast
National Bank and their ages, and positions with Suncoast Bancorp and Suncoast
National Bank are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH SUNCOAST BANCORP AND SUNCOAST NATIONAL BANK (1)
- ---- --- ---------------------------------------------------------------
<S> <C> <C>
John T. Stafford 51 President and Chief Executive Officer; Director
Larry Berberich 60 Director
Henry E. Black, M.D 63 Director
H. R. Foxworthy 66 Chairman of the Board
William F. Gnerre 59 Executive Vice President, Secretary and Director
James C. Rutledge 51 Director
Stanley A. Williams 55 Director
</TABLE>
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<TABLE>
<S> <C> <C>
Roy A. Yahraus 51 Director
</TABLE>
- ---------------
(1) Each of these individuals serves Suncoast Bancorp and Suncoast
National Bank in the same capacities set forth herein, except that
William F. Gnerre also serves as the Chief Operating Officer and
Senior Loan Officer of Suncoast National Bank.
All of the directors of Suncoast Bancorp and Suncoast National Bank
hold office until the earlier of the next annual meeting of their respective
shareholders and until their successors have been duly elected and qualified,
or their death, resignation, or removal. Officers of Suncoast Bancorp and
Suncoast National Bank are elected annually by their respective boards of
directors to hold office until the earlier of their death, resignation, or
removal. There are no family relationships between any of the directors or
officers of Suncoast Bancorp or Suncoast National Bank.
Set forth below is a description of the business experience during the
past five years or more, and other biographical information, for the directors
and executive officers identified above.
John T. Stafford, a director of Suncoast Bancorp and Suncoast National
Bank, has been elected by the board of directors to serve as President and
Chief Executive Officer of Suncoast Bancorp and Suncoast National Bank. He
started his banking career in 1971 with First Trust Union Bank in Cuba, N.Y. He
moved to Florida in 1979 and joined Southwest Florida Banks, Ft. Myers,
Florida. He has held a number of senior executive level positions since that
time, including, Chairman, President, CEO and Director of C&S National Bank,
Sarasota, Florida, from September 1984 to February 1992, and President, CEO and
Director of The Commercial Bank, Douglasville, Georgia, from March 1994 to
April 1996. Since that time, Mr. Stafford has served as Vice Chairman of FCCI
Insurance Group in Sarasota, Florida.
Mr. Stafford is a founder of the Suncoast Foundation for Handicapped
Children, which has generated over three million in revenues and buildings
since 1983. He also has been active with the United Way, American Heart
Association, Shrine Crippled Children's hospitals, Chamber of Commerce, Florida
Bar Association Grievance Committee and the Florida Highway Patrol Advisory
Board. Mr. Stafford was born in Cuba, New York and received his high school
graduation certificate from Cuba Central School in 1965. He has attended the
University of Alaska, West Virginia University and Eckerd College, St.
Petersburg, Florida and also received an honorable discharge from the United
States Air Force in 1971.
William F. Gnerre, a director of Suncoast Bancorp and Suncoast
National Bank, has been elected by the board of directors to serve as Executive
Vice President of Suncoast Bancorp and Suncoast National Bank. He also has been
elected to serve as Chief Operating Officer and Senior Loan Officer of Suncoast
National Bank. He began his banking career in 1960 with the Hackensack Trust
Company. In 1965, he joined United Jersey Bank as a management trainee. He rose
to the position of Vice President/Branch Administration, with responsibility
for the 30 branches of United Jersey Bank in Northern New Jersey. He moved to
Sarasota, Florida in February 1978, when he joined Southeast Bank as Vice
President/Cashier. He joined the National Bank of Sarasota in April 1983 as
Vice President/Commercial Lender. He advanced to the Division Senior Credit
Officer in 1985 and Senior Vice President and Regional Senior Credit Officer in
September 1990. From April 1994 to February 1997, he served as Executive Vice
President of The Commercial Bank, Douglasville, Georgia as
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EVP/SCO, where he had responsibility for the day to day operations of this $150
million community bank. He has been involved in the Chamber of Commerce, the
Sarasota Committee of 100, the United Way and the Habitat for Humanity. Mr.
Gnerre was born in Hackensack, New Jersey on August 21, 1939 and graduated from
Hackensack High School in 1957. He attended Rutgers, New Brunswick, New Jersey,
and the University of Oklahoma, Norman, Oklahoma, and received an honorable
discharge from the United States Navy in 1960.
Larry Berberich, a director of Suncoast Bancorp and Suncoast National
Bank, graduated from Mt. Carmel High School, Mt. Carmel, Illinois in 1957. Mr.
Berberich's business background includes ownership of Cirtech Corp., Kansas
City, Kansas, a high tech aerospace company that designed, developed and
manufactured military and aerospace systems. Prior to that he owned Empire
Systems Corp. and Berberich Associates, both of which were located in Dayton,
Ohio. Empire Systems was a distributor of electronic equipment and Berberich
Associates functioned as a manufacturer's representative, handling the same
types of military and aerospace systems as Cirtech Corp. Mr. Berberich served
on the board of directors of the Mid American Bank, Roeland Park, Kansas, from
1980 until his retirement in 1990.
Mr. Berberich's civic and community activities include: Sarasota
School Board Capital Needs Committee, Chairman of the Sarasota County School
Board Tax Oversight Committee, Chairman of the Design Development Board for
Prestancia Community Association, President of the Prestancia Community
Association and a member of the Board of Governors of the Palmer Ranch Master
Association. He also served on the board of the Sarasota YMCA and the Lost
Child Network, Kansas City.
Henry E. Black, M.D, a director of Suncoast Bancorp and Suncoast
National Bank, graduated from Birmingham University Medical School in 1958,
with Bachelor of Medicine and Bachelor of Surgery degrees. From 1958 through
1959 he was involved in internships at the United Birmingham Hospital Group and
the Selly Oak Hospital, Birmingham, with emphasis on acute medical emergencies
and obstetrics and gynecology, leading to a post graduate diploma in OB/GYN. He
served in the Royal Navy as a medical officer from 1960 to 1967. In 1967, he
joined the medical staff of Jones Memorial Hospital, Wellsville, New York,
where he was appointed Chief of Medicine in June 1968. He was appointed to the
staff of Doctors Hospital and Sarasota Memorial Hospital in October 1983. In
1984, he opened the Cardiovascular Health Institute in Sarasota, a medical
practice specializing in non-invasive cardiology, where he continues to
practice.
Harvey Ronald Foxworthy, a director of Suncoast Bancorp and Suncoast
National Bank, is a resident of Sarasota, where he graduated from Sarasota High
School in 1950 and Sarasota Vo-Tech in 1957. He founded Rusty Plumbing, Inc., a
commercial plumbing contractor, in 1956 and has operated this company since
inception. He has been involved in a number of other business ventures
including the Development of Laural Oak Country Club. His involvement with
community activities in the Sarasota market includes: directorates with Ellis
Bank & Trust Company (1976-1988), NCNB Sarasota (1988-1989), C & S Bank,
Sarasota (1989-1992), and C & S National Bank of Florida, Ft. Lauderdale
(1991-1992).
Mr. Foxworthy is a founder and director of FCCI Group, a large workers
compensation insurance company in Florida, and is the audit committee chairman
for all of its subsidiaries. He is a founder and director of the Florida
Employees Exchange, a not-for-profit corporation, with its 8,000 members, and
is
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state chairman of its Political Action Committee. He is the past President
of the Plumbing and Heating Contractors of Florida. His community activities
include: founder and director of the Suncoast Chapter of the Foundation for
Handicapped Children and chairman of its building program. He is also a founder
of the Argus Foundation, a local government oversight organization, serving on
its board for 12 years.
James C. Rutledge, a director of Suncoast Bancorp and Suncoast
National Bank, received his high school diploma from the Culver Military
Academy, Culver, Indiana, in 1965 and received a Bachelor of Business Science
from the University of Mississippi, Oxford, Mississippi in 1969. He received
his Florida Real Estate License in 1972 and began his career in real estate
sales and investments in 1973. He has been a partner in the Real Estate
Marketing Group, Sarasota, Florida since October 1995. Mr. Rutledge has served
on the Board of Directors of United First Federal Savings and Loan Association,
Sarasota, Florida from 1984 to 1989, and on the Board of Directors of Barnett
Bank of SW Florida from 1989 to 1997. He served as chairman of the loan and
audit committees of both boards during his 13 years of service.
Mr. Rutledge is a member of the Covenant Life Presbyterian Church and
is involved with a non-profit development program for senior housing. His
community activities also include a directorship on the March of Dimes, and
five years on the Board of Directors of Bethesda Outreach Ministries.
Stanley A. Williams, a director of Suncoast Bancorp and Suncoast
National Bank, graduated from Hayesville High School, Hayesville, Ohio in 1961.
Mr. Williams attended Ohio State University where he earned a degree of Doctor
of Dental Surgery in 1968. He started a solo dental practice in Newton Falls,
Ohio in 1968, and built it into a large dental center, which he sold in 1984.
He earned an MBA with a concentration in finance from Ohio State University in
1979. From 1975 through 1987, he was involved in the development of several
townhouse and large single family homes projects in the Columbia, Maryland area
and developed residential property in Annapolis, Maryland. He has also been
involved in the development of a commercial property complex in Newton Falls,
Ohio. Mr. Williams is now retired.
Mr. Williams' community involvement includes serving on the school
board in Newton Falls, Ohio, including a term as its president. He also has
assisted in raising funds for the olympic rowers and served on the finance
committee of the Presbyterian Church. He has been a resident of Sarasota since
1990.
Roy A. Yahraus, a director of Suncoast Bancorp and Suncoast National
Bank, was a principal owner of Gulf Coast Building Materials, Sarasota, from
1972 until 1997, when the company was sold to a subsidiary of United States
Gypsum. He has remained with the company as its sales manager.
Mr. Yahraus serves on the Board of Directors of Sarasota Manatee
Roofing Association, which seeks out families needing new roofs for their
homes, but who are not financially capable of paying for them. The association
donates the materials and labor to install a new roof. The association also
donates funds to the Sarasota Boys and Girls Club and Hope House. Mr. Yahraus
has been a member of the Shriners for 23 years.
Executive Officers. In addition to Messrs. Stafford and Gnerre,
Suncoast Bancorp also anticipates that Suncoast National Bank will hire two
additional experienced individuals to serve as Vice Presidents of Suncoast
National Bank. One such individual will serve as Suncoast National Bank's Loan
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<PAGE> 32
Officer and have experience in that capacity within the Sarasota market area.
The second such individual will serve as Suncoast National Bank's Chief
Financial Officer and will have experience in that capacity with community
banks.
COMMITTEES OF SUNCOAST BANCORP AND SUNCOAST NATIONAL BANK
Presently Suncoast Bancorp's board of directors has an Audit Committee
and a Compensation Committee. The Audit Committee will review internal audit
procedures for Suncoast Bancorp and Suncoast National Bank and it will
coordinate and review Suncoast Bancorp's annual audit by its independent
auditors. The members of this committee consist of Messrs. Berberich, Black,
Foxworthy and Rutledge. The Compensation Committee will generally oversee the
employment practices and employee benefits of Suncoast Bancorp and Suncoast
National Bank. The members of this committee consist of Messrs. Black,
Foxworthy, Stafford, Williams and Yahraus.
The committees of Suncoast National Bank consist of an Asset -
Liability Committee, Audit and Insurance Committee, Executive Committee, and
Loan Committee. Set forth below is additional information regarding these
committees:
Asset - Liability Committee. - The members of this committee consist
of Messrs. Gnerre, Stafford, Williams and Yahraus. This committee is
responsible for:
o overall investment strategy, including liquidity and risk
management,
o monitoring deposit level trends and pricing,
o monitoring asset level trends and pricing,
o portfolio investment decisions, and
o establishing appropriate levels of insurance.
Audit and Insurance Committee. - The members of this committee
consist of Messrs. Berberich, Black, Foxworthy and Rutledge. This
committee is responsible for:
o insuring that the board of directors of Suncoast National Bank
receives objective information regarding policies, procedures
and controls of Suncoast National Bank including auditing,
accounting, internal accounting controls, and financial
reporting,
o recommending the appointment of an independent auditor on an
annual basis,
o reviewing independent auditor's report and management's
response,
o reviewing all reports from regulatory authorities and
management's response,
o establishing independent reviews and audits,
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o insuring Suncoast National Bank is in full compliance with
all pertinent regulations and laws,
o establishing an appropriate and independent testing program
for compliance, and
o establishing appropriate levels of insurance.
Executive Committee. - The members of this committee consist of Messrs.
Black, Foxworthy, Stafford, Williams and Yahraus. This committee is
responsible for:
o establishing appropriate levels of compensation throughout
Suncoast National Bank,
o analyzing compensation levels on an annual basis,
o recommending overall compensation increases and changes in
benefits to the board for approval,
o establishing policies with regard to compensation and benefits
at Suncoast National Bank,
o recommending all compensation increases, benefit changes and
bonuses for senior officers to the board for approval,
o developing a proactive CRA program, and
o developing programs to insure compliance with applicable laws.
Loan Committee. - The members of this committee consist of Messrs.
Berberich, Foxworthy, Gnerre, Rutledge and Stafford. This committee
is responsible for:
o establishing, in conjunction with management, and approving
all major policies and procedures pertaining to credit,
o establishing a loan approval system,
o reviewing all loans in excess of specific amounts determined
in policies and procedures,
o reviewing all past due reports, rated loan reports, real
estate owned, non-accrual reports, and other indicators of
overall loan portfolio quality,
o assuring adequate funding of the loan loss reserve exists, and
o handling other matters pertaining to the credit function,
such as yields and loan concentrations.
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COMPENSATION OF DIRECTORS
The directors of Suncoast Bancorp are not currently compensated for
their attendance at Suncoast Bancorp's regularly scheduled or special meetings
or for their services. After Suncoast National Bank opens, directors will
receive a fee of $300 for each board meeting attended and non-employee directors
also will receive a fee of $100 for each committee meeting attended. Suncoast
Bancorp also has approved and adopted the Suncoast Bancorp Director Stock Option
Plan. As of the date of this prospectus, no options have been granted under this
plan. See "Stock Option Plans - Suncoast Bancorp, Inc. Director Stock Option
Plan."
EMPLOYMENT AGREEMENTS
Suncoast National Bank intends to enter into employment agreements
with Messrs. Stafford and Gnerre. The agreements will be for a three-year
period and will automatically renew thereafter for successive one-year periods,
unless either party provides prior notice to the other in accordance with the
terms of the agreements. The employment agreements will provide for Messrs.
Stafford and Gnerre to receive an initial salary of $96,000 and $84,000
respectively, subject to annual adjustments and such bonuses and other
compensation as may be determined by the board of directors. The employment
agreements also will provide for receipt of employee benefits and reimbursement
for business related expenses. The employment agreements may be terminated by
Suncoast National Bank for cause or by the executive for good reason or as a
result of certain actions following any change in control of Suncoast Bancorp
or Suncoast National Bank. The employment agreements will provide that Messrs.
Stafford and Gnerre will not work for any financial institution located within
a radius of 50 miles of any office of Suncoast National Bank or solicit bank
employees and customers for a one-year period following termination of their
employment except when the employment is terminated as a result of good reason
or following a change in control of Suncoast Bancorp.
STOCK OPTION PLANS
Suncoast Bancorp, Inc. Employee Stock Option Plan
Suncoast Bancorp's board of directors and sole shareholder have
adopted the Suncoast Bancorp, Inc. Employee Stock Option Plan (the "Employee
Stock Option Plan") to promote equity ownership of Suncoast Bancorp by selected
officers and employees of Suncoast Bancorp and Suncoast National Bank, to
increase their proprietary interest in the success of Suncoast Bancorp and to
encourage them to remain in the employ of Suncoast Bancorp.
Administration. The Employee Stock Option Plan will be administered by
Suncoast Bancorp's Compensation Committee (the "Committee"), comprised of at
least two non-employee directors appointed by Suncoast Bancorp's board of
directors. The Committee will have the authority to select the officers and
employees to whom awards may be granted, to determine the terms of each award,
to interpret the provisions of the Employee Stock Option Plan and to make all
other determinations that it may deem necessary or advisable for the
administration of the Employee Stock Option Plan.
The Employee Stock Option Plan provides for the grant of "incentive
stock options," as defined under Section 422(b) of the Internal Revenue Code of
1986. The board of directors has reserved 28,000 common shares for issuance
under the Employee Stock Option Plan, including issuance of options for
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<PAGE> 35
7,000 shares each to Messrs. Stafford and Gnerre. In general, if any award
granted under the Employee Stock Option Plan expires, terminates, is forfeited
or is canceled for any reason, the common shares allocable to such award may
again be made subject to an award granted under the Employee Stock Option Plan.
Awards. Officers and policy-making employees of Suncoast Bancorp and
Suncoast National Bank are eligible to receive grants under the Employee Stock
Option Plan. Awards may be granted subject to a vesting requirement and in any
event will become fully vested upon a merger or change of control of Suncoast
Bancorp. The exercise price of incentive stock options must at least equal the
fair market value of the common shares subject to the option on the date the
option is granted.
Each officer and key employee eligible to participate in the Employee
Stock Option Plan will be notified by the Committee. To receive an award under
the Employee Stock Option Plan, an award agreement must be executed which
specifies the type of award to be granted, the number of common shares to which
the award relates, the terms and conditions of the award and the date granted.
In the case of an award of options, the award agreement will also specify the
price at which the common shares subject to the option may be purchased, and
the dates on which the option becomes exercisable.
The full exercise price for all common shares purchased upon the
exercise of options granted under the Employee Stock Option Plan must be paid
by cash, personal check, or common shares owned at the time of exercise. Stock
options granted to employees under the Employee Stock Option Plan may remain
outstanding and exercisable for 10 years from the date of grant or until the
expiration of 90 days or such lesser period as the Committee may determine,
from the date on which the person to whom they were granted ceases to be
employed by Suncoast Bancorp. Options granted under the Plan are exercisable in
increments of 20% per year commencing one year after the date of grant.
Income Tax. Employee stock options granted under the Employee Stock
Option Plan have several advantageous tax attributes to the recipient under the
income tax laws. No taxable income is recognized by the option holder for
income tax purposes at the time of the grant or exercise of an Employee stock
option, although neither is there any income tax deduction available to
Suncoast Bancorp as a result of such a grant or exercise. Any gain or loss
recognized by an option holder on the later disposition of common shares
acquired pursuant to the exercise of an incentive stock option generally will
be treated as capital gain or loss if such disposition does not occur prior to
one year after the date of exercise of the option.
Amendment and Termination. The Employee Stock Option Plan expires
October 15, 2008, unless sooner terminated by the board of directors. The board
of directors has authority to amend the plan in such manner as it deems
advisable. The Employee Stock Option Plan provides for appropriate adjustment,
as determined by the Committee, in the number and kind of shares subject to
unexercised options, in the event of any change in the outstanding common
shares by reason of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, merger or similar event.
Suncoast Bancorp, Inc. Director Stock Option Plan
Suncoast Bancorp's board of directors and sole shareholder also have
adopted Suncoast Bancorp, Inc. Director Stock Option Plan ("Director Stock
Option Plan") to compensate the non-employee directors in recognition of their
efforts in organizing Suncoast Bancorp and Suncoast National Bank, and
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<PAGE> 36
the risk incurred during the organizational process. The Director Stock Option
Plan does not preclude the grant of options to non-employee directors. However,
Suncoast Bancorp does not intend to issue options from the Director Stock
Option Plan to employee directors.
Administration. The Director Stock Option Plan will be administered by
the board of directors. The board of directors has reserved 42,000 common
shares for issuance under the Director Stock Option Plan, all of which will be
issued upon the opening of Suncoast National Bank to the current non-employee
directors based upon 7,000 options for each individual.
Option Terms. The exercise for each of the outstanding options will be
$10.00 per share, which must be paid by cash, personal check, or common shares
owned at the time of exercise. The options are exercisable for 10 years from
the date of grant or until the expiration of 90 days from the date on which the
person to whom they were granted ceases to be a director of Suncoast Bancorp or
Suncoast National Bank. Options granted under the Director Stock Option Plan
are exercisable in increments of 20% per year commencing on the date of grant.
Amendment and Termination. The Director Stock Option Plan expires
October 15, 2008, unless sooner terminated by the board of directors. The board
of directors has the authority to amend the plan in such manner as it deems
advisable. The Director Stock Option Plan provides for appropriate adjustment,
as determined by the board, in the number and kind of shares subject to
unexercised options, in the event of any change in the outstanding common
shares by reason of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, merger or similar event.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ORGANIZATIONAL ADVANCES
Suncoast Bancorp has obtained a $325,000 line of credit to pay for
expenses in connection with the organization of Suncoast National Bank. The
line of credit is guaranteed by the directors of Suncoast Bancorp and Suncoast
National Bank and will be repaid from the net proceeds of this offering.
TRANSACTIONS WITH AFFILIATES
Suncoast Bancorp and Suncoast National Bank expect to have banking and
other business transactions in the ordinary course of business with directors
and officers of Suncoast Bancorp and Suncoast National Bank, including members
of their families or corporations, partnerships, or other organizations in
which such directors and officers have a controlling interest. If such
transactions occur, they:
o will be made in the ordinary course of business,
o will be made on substantially the same terms, including
price, or interest rate, and collateral, as those prevailing
at the time for comparable transactions with unrelated
parties, and
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o in the opinion of management, will not involve more than the
normal risk of collectibility or present other unfavorable
features to Suncoast Bancorp or Suncoast National Bank.
Additionally, federal banking laws restrict transactions between a national
bank and an "affiliate", as defined in those laws, and the amount and types of
loans that a national bank may make to an executive officer of a national bank.
The laws of the State of Florida also restrict "affiliated transactions"
between Suncoast Bancorp and an "interested shareholder" or any "affiliate" or
"associate" of an interested shareholder, as those terms are defined in Florida
law. See "Supervision and Regulation."
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Except for one common share issued and sold to H. R. Foxworthy,
Chairman of the board of Suncoast Bancorp, for the sole purpose of its initial
organization, Suncoast Bancorp currently has no common shares outstanding. This
organizational share will be repurchased at its original issue price of $1.00
concurrently with the closing of the offering.
The following table sets forth certain information regarding the
anticipated beneficial ownership of Suncoast Bancorp's common shares by:
o each director and each executive officer of Suncoast Bancorp,
and
o all directors and executive officers of Suncoast Bancorp as
a group.
No person is expected to be the beneficial owner of more than 5% of the
outstanding common shares following the offering. Except as otherwise
indicated, the persons named in the table will have sole voting and investment
power with respect to all of the common shares owned by them.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
------------------------------
NUMBER PERCENT
NAME OF BENEFICIAL OWNER OF SHARES (1) OF CLASS(2)(6)
- ------------------------ ------------- --------------
<S> <C> <C>
Directors and Executive Officers
Larry Berberich................................................................... 20,000 (3) 2.86%
Henry E. Black, M.D............................................................... 20,000 (3) 2.86%
H. R. Foxworthy................................................................... 20,000 (3) 2.86%
William F. Gnerre................................................................. 10,000 (4) 1.43%
James C. Rutledge................................................................. 20,000 (3) 2.86%
John T. Stafford.................................................................. 10,000 (4) 1.43%
Stanley A. Williams............................................................... 20,000 (3) 2.86%
Roy A. Yahraus.................................................................... 20,000 (3) 2.86%
All directors and executive officers as a group (8 persons)....................... 140,000 (5) 20.00%
</TABLE>
- --------------
(1) In accordance with Rule 13d-3 promulgated pursuant to the Securities
Exchange Act of 1934, a person is deemed to be the beneficial owner of
a security for purposes of the rule if he or she has or shares voting
power or dispositive power with respect to such security or has the
right to acquire such ownership within sixty days. As used herein,
"voting power" is the power to vote or
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<PAGE> 38
direct the voting of shares, and "dispositive power" is the power to
dispose or direct the disposition of shares, irrespective of any
economic interest therein.
(2) In calculating the percentage ownership for a given individual or
group, the number of common shares outstanding includes unissued
shares subject to options, warrants, rights or conversion privileges
exercisable within sixty days held by such individual or group, but
are not deemed outstanding by any other person or group. This
information assumes no exercise of the over-allotment option granted
to the underwriter.
(3) Excludes options which are not currently exercisable held by such
person to purchase 7,000 common shares granted pursuant to the
Director Stock Option Plan. See "Management - Stock Option Plans -
Suncoast Bancorp, Inc. Director Stock Option Plan."
(4) Excludes options which are not currently exercisable held by such
person to purchase 7,000 common shares granted pursuant to the
Employee Stock Option Plan. See "Management - Stock Option Plans -
Suncoast Bancorp, Inc. Employee Stock Option Plan."
(5) Excludes options which are not currently exercisable to purchase
56,000 common shares. Each such individual will be granted options to
purchase 7,000 common shares as indicated in footnotes 3 and 4
above.
SUPERVISION AND REGULATION
Banks and their holding companies, and many of their affiliates, are
extensively regulated under both federal and state law. The following is a
brief summary of several statutes, rules, and regulations affecting Suncoast
Bancorp and Suncoast National Bank. This summary is qualified in its entirety
by reference to the particular statutory and regulatory provisions referred to
below and is not intended to be an exhaustive description of the statutes or
regulations applicable to the business of Suncoast Bancorp and Suncoast
National Bank. Any change in the applicable law or regulation may have a
material effect on the business and prospects of Suncoast Bancorp and Suncoast
National Bank. See "Risk Factors -- Extensive Regulations May Limit Our
Operations and Ability to Compete." Supervision, regulation, and examination of
banks by regulatory agencies are intended primarily for the protection of
depositors, rather than shareholders.
Bank Holding Company Regulation. Suncoast Bancorp will be a bank
holding company registered with the Federal Reserve under the BHC Act. As such,
Suncoast Bancorp will be subject to the supervision, examination and reporting
requirements of the BHC Act and the regulations of the Federal Reserve.
Suncoast Bancorp is required to furnish to the Federal Reserve an annual report
of its operations at the end of each fiscal year, and such additional
information as the Federal Reserve may require pursuant to the BHC Act. The BHC
Act requires that a bank holding company obtain the prior approval of the
Federal Reserve before (1) acquiring direct or indirect ownership or control of
more than 5% of the voting shares of any bank, (2) taking any action that
causes a bank to become a subsidiary of the bank holding company, or (3)
merging or consolidating with any other bank holding company.
The BHC Act further provides that the Federal Reserve may not approve
any transaction that would result in a monopoly of banking in any section of
the United States, or substantially lessen competition, unless the
anticompetitive effects are clearly outweighed by the public interest in
meeting the convenience and needs of the community to be served. The Federal
Reserve is also required to consider the financial and managerial resources and
future prospects of the bank holding companies and banks concerned and the
convenience and needs of the community to be served. Consideration of
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<PAGE> 39
financial resources generally focuses on capital adequacy and consideration of
convenience and needs issues includes the parties' performance under the
Community Reinvestment Act of 1977 (the "CRA"), both of which are discussed
below.
The BHC Act generally prohibits a bank holding company from engaging
in activities other than banking, or managing or controlling banks or other
permissible subsidiaries, and from acquiring or retaining control of any
company engaged in any activities other than those activities determined by the
Federal Reserve to be closely related to banking or managing or controlling
banks. In determining whether a particular activity is permissible, the Federal
Reserve must consider whether the performance of such an activity can
reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency that outweigh
possible adverse effects, such as undue concentration of resources, decreased
or unfair competition, conflicts of interest, or unsound banking practices. For
example, factoring accounts receivable, acquiring or servicing loans, leasing
personal property, conducting securities brokerage activities, performing data
processing services, acting as agent or broker in selling credit life insurance
and other types of insurance in connection with credit transactions, and
certain insurance underwriting activities have all been determined by
regulations of the Federal Reserve to be permissible activities of bank holding
companies. Despite prior approval, the Federal Reserve has the power to order a
holding company or its subsidiaries to terminate any activity or terminate its
ownership or control of any subsidiary, when it has reasonable cause to believe
that continuation of such activity or such ownership or control constitutes a
serious risk to the financial safety, soundness, or stability of any bank
subsidiary of that bank holding company.
Banks are subject to the provisions of the CRA. Under the terms of the
CRA, the appropriate federal bank regulatory agency is required, in connection
with its examination of a bank, to assess such bank's record in meeting the
credit needs of the community served by that bank, including low- and
moderate-income neighborhoods. The CRA does not establish specific lending
requirements or programs for financial institutions, nor does it limit an
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 regulatory agency's assessment of the bank's record is made available to
the public. Further, such assessment is required of any bank which has applied
to:
o charter a national bank,
o obtain deposit insurance coverage for a newly chartered
institution,
o establish a new branch office that will accept deposits,
o relocate an office, or
o merge or consolidate with, or acquire the assets or assume the
liabilities of, a federally regulated financial institution.
In the case of a bank holding company applying for approval to acquire
a bank or other bank holding company, the Federal Reserve will assess the
record of each subsidiary bank of the applicant bank holding company, and such
records may be the basis for denying the application.
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Bank Regulation. Suncoast National Bank will be chartered by the
Comptroller of the Currency under the National Banking Act. Suncoast National
Bank's deposits will be insured by the FDIC to the extent provided by law.
Suncoast National Bank will be subject to comprehensive regulation, examination
and supervision by the Comptroller of the Currency. Suncoast National Bank also
will be subject to other laws and regulations applicable to banks. Such
regulations include limitations on loans to a single borrower and to its
directors, officers and employees; restrictions on the opening and closing of
branch offices; the maintenance of required capital and liquidity ratios; the
granting of credit under equal and fair conditions; and the disclosure of the
costs and terms of such credit. Suncoast National Bank will be examined
periodically by the Comptroller of the Currency, to whom Suncoast National Bank
will submit periodic reports regarding its financial condition and other
matters. The Comptroller of the Currency has a broad range of powers to enforce
regulations and to take discretionary actions determined to be for the
protection and safety and soundness of banks, including the institution of cease
and desist orders and the removal of directors and officers. The Comptroller of
the Currency also has the authority to approve or disapprove mergers,
consolidations, and similar corporate actions.
Under federal law, federally insured banks are subject to restrictions
on any extension of credit to their parent holding companies or other
affiliates, on investment in the stock or other securities of affiliates, and
on the taking of such stock or securities as collateral from any borrower. In
addition, banks are prohibited from engaging in tie-in arrangements in
connection with any extension of credit or the providing of any property or
service.
Federal law also contains capital standards and civil and criminal
enforcement provisions. Annual full-scope, on-site examinations are required of
all insured depository institutions. The cost for conducting an examination of
an institution may be assessed to that institution, with special consideration
given to affiliates and any penalties imposed for failure to provide
information requested.
Transactions with Affiliates. There are various legal restrictions on
the extent to which Suncoast Bancorp and any future nonbank subsidiaries can
borrow or otherwise obtain credit from Suncoast National Bank. There also are
legal restrictions on Suncoast National Bank's purchase of or investments in
the securities of and purchases of assets from Suncoast Bancorp. Suncoast
National Bank also is restricted in loaning to third parties collateralized by
the securities or obligations of Suncoast Bancorp, issuing guarantees,
acceptances, and letters of credit on behalf of Suncoast Bancorp and certain
bank transactions with Suncoast Bancorp. Subject to certain limited exceptions,
Suncoast National Bank may not extend credit to Suncoast Bancorp or to any
other affiliate in an amount which exceeds 10% of Suncoast National Bank's
capital stock and surplus and may not extend credit in the aggregate to such
affiliates in an amount which exceeds 20% of its capital stock and surplus.
Further, there are legal requirements as to the type, amount and quality of
collateral which must secure such extensions of credit transactions between
Suncoast National Bank and Suncoast Bancorp or such other affiliates. Such
transactions also must be on terms and under circumstances, including credit
standards, that are substantially the same or at least as favorable to Suncoast
National Bank as those prevailing at the time for comparable transactions with
non-affiliated companies. Also, Suncoast Bancorp and its subsidiaries are
prohibited from engaging in tie-in arrangements in connection with any
extension of credit, lease or sale of property or furnishing of services.
Dividends. Dividends from Suncoast National Bank constitute the
primary source of funds for dividends to be paid by Suncoast Bancorp. For
additional information, see " Risk Factors - We Do Not Plan to Pay Cash
Dividends" and "Dividend Policy." There also are various statutory and
contractual limitations on the ability of Suncoast National Bank to pay
dividends, extend credit, or otherwise supply
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<PAGE> 41
funds to Suncoast Bancorp. As a national bank, Suncoast National Bank may not
pay dividends from its paid-in surplus. All dividends must be paid out of
undivided profits then on hand, after deducting expenses, including reserves for
losses and bad debts. In addition, a national bank is prohibited from declaring
a dividend on its shares of common stock until its surplus equals its stated
capital, unless there has been transferred to surplus no less than one-tenth of
the bank's net profits of the preceding two consecutive half-year periods in the
case of an annual dividend. The approval of the Comptroller of the Currency is
required if the total of all dividends declared by a national bank in any
calendar year exceeds the total of its net profits for that year combined with
its retained net profits for the preceding two years, less any required
transfers to surplus. Florida law applicable to companies including Suncoast
Bancorp provides that dividends may be declared and paid only if, after giving
it effect, (1) the company is able to pay its debts as they become due in the
usual course of business, and (2) the company's total assets would be greater
than the sum of its total liabilities plus the amount that would be needed if
the company were to be dissolved at the time of the dividend to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those receiving the dividend.
Capital Requirements. The federal bank regulatory authorities have
adopted risk-based capital guidelines for banks and bank holding companies that
are designed to make regulatory capital requirements more sensitive to
differences in risk profile among banks and bank holding companies. The
resulting capital ratios represent qualifying capital as a percentage of total
risk-weighted assets and off-balance sheet items. The guidelines are minimums,
and the federal regulators have noted that banks and bank holding companies
contemplating significant expansion programs should not allow expansion to
diminish their capital ratios and should maintain all ratios well in excess of
the minimums. The current guidelines require all bank holding companies and
federally-regulated banks to maintain a minimum risk-based total capital ratio
equal to 8%, of which at least 4% must be Tier 1 capital. Tier 1 capital
includes common shareholders' equity, qualifying perpetual preferred shares,
and minority interests in equity accounts of consolidated subsidiaries, but
excludes goodwill and most other intangibles and excludes the allowance for
loan and lease losses. Tier 2 capital includes the excess of any preferred
shares not included in Tier 1 capital, mandatory convertible securities, hybrid
capital instruments, subordinated debt and intermediate term-preferred shares,
and general reserves for loan and lease losses up to 1.25% of risk-weighted
assets.
Federal law contains "prompt corrective action" provisions pursuant to
which banks are to be classified into one of five categories based upon capital
adequacy, ranging from "well capitalized" to "critically undercapitalized" and
which require the appropriate federal banking agency to take prompt corrective
action with respect to an institution which becomes "significantly
undercapitalized" or "critically undercapitalized".
The Comptroller of the Currency has issued final regulations to
implement the "prompt corrective action" provisions. In general, the regulations
define the five capital categories as follows:
o an institution is "well capitalized" if it has a total
risk-based capital ratio of 10% or greater, has a Tier 1
risk-based capital ratio of 6% or greater, has a leverage
ratio of 5% or greater and is not subject to any written
capital order or directive to meet and maintain a specific
capital level for any capital measures;
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<PAGE> 42
o an institution is "adequately capitalized" if it has a total
risk-based capital ratio of 8% or greater, has a Tier 1
risk-based capital ratio of 4% or greater, and has a leverage
ratio of 4% or greater;
o an institution is "undercapitalized" if it has a total
risk-based capital ratio of less than 8%, has a Tier 1
risk-based capital ratio that is less than 4% or has a
leverage ratio that is less than 4%;
o an institution is "significantly undercapitalized" if it has
a total risk-based capital ratio that is less than 6%, a Tier
1 risk-based capital ratio that is less than 3% or a leverage
ratio that is less than 3%; and
o an institution is "critically undercapitalized" if its
"tangible equity" is equal to or less than 2% of its total
assets.
The capital levels of Suncoast Bancorp and Suncoast National Bank will
be in excess of those required to be maintained by a "well capitalized"
financial institution when Suncoast National Bank commences operations.
The Comptroller of the Currency also, after an opportunity for a
hearing, has authority to downgrade an institution from "well capitalized" to
"adequately capitalized" or to subject an "adequately capitalized" or
"undercapitalized" institution to the supervisory actions applicable to the next
lower category, for supervisory concerns. The degree of regulatory scrutiny of a
financial institution will increase, and the permissible activities of the
institution will decrease, as it moves downward through the capital categories.
Institutions that fall into one of the three undercapitalized categories may be
required to
o submit a capital restoration plan;
o raise additional capital;
o restrict their growth, deposit interest rates, and other
activities;
o improve their management;
o eliminate management fees; or
o divest themselves of all or part of their operations.
Bank holding companies controlling financial institutions can be called upon to
boost the institutions' capital and to partially guarantee the institutions'
performance under their capital restoration plans. These capital guidelines can
affect Suncoast Bancorp in several ways. However, rapid growth, poor loan
portfolio performance, or poor earnings performance, or a combination of these
factors, could change Suncoast Bancorp's capital position in a relatively short
period of time, making an additional capital infusion necessary.
Federal law also requires that (1) only a "well capitalized"
depository institution may accept brokered deposits without prior regulatory
approval and (2) the appropriate federal banking agency
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annually examine all insured depository institutions, with some exceptions for
small, "well capitalized" institutions and state-chartered institutions
examined by state regulators. Federal law also contains a number of consumer
banking provisions, including disclosure requirements and substantiative
contractual limitations with respect to deposit accounts.
Enforcement Powers. Congress has provided the federal bank regulatory
agencies with an array of powers to enforce laws, rules, regulations and
orders. Among other things, the agencies may require that institutions cease
and desist from several activities, may preclude persons from participating in
the affairs of insured depository institutions, may suspend or remove deposit
insurance, and may impose civil money penalties against institution-affiliated
parties for certain violations.
Maximum Legal Interest Rates. Like the laws of many states, Florida
law contains provisions on interest rates that may be charged by banks and
other lenders on various types of loans. Numerous exceptions exist to the
general interest limitations imposed by Florida law. The relative importance of
these interest limitation laws to the financial operations of Suncoast National
Bank will vary from time to time, depending on a number of factors, including
conditions in the money markets, the costs and availability of funds, and
prevailing interest rates.
Bank Branching. Banks in Florida are permitted to branch state wide.
Such branch banking by national banks, however, is subject to prior approval by
the Comptroller of the Currency. Any such approval would take into consideration
several factors, including the bank's level of capital, the prospects and
economics of the proposed branch office, and other conditions deemed relevant by
the Comptroller of the Currency for purposes of determining whether approval
should be granted to open a branch office. For information regarding legislation
on interstate branching in Florida, see "-Interstate Banking" below.
Change of Control. Federal law restricts the amount of voting stock of
a bank holding company and a bank that a person may acquire without the prior
approval of banking regulators. The overall effect of such laws is to make it
more difficult to acquire a bank holding company and a bank by tender offer or
similar means than it might be to acquire control of another type of
corporation. Consequently, shareholders of Suncoast Bancorp may be less likely
to benefit from the rapid increases in stock prices that may result from tender
offers or similar efforts to acquire control of other companies. Federal law
also imposes restrictions on acquisitions of stock in a bank holding company and
a state bank. Under the federal Change in Bank Control Act and the regulations
thereunder, a person or group must give advance notice to the Federal Reserve
before acquiring control of any bank holding company and the Comptroller of the
Currency before acquiring control of any national banks such as Suncoast
National Bank. Upon receipt of such notice, the Federal Reserve or the
Comptroller of the Currency, as the case may be, may approve or disapprove the
acquisition. The Change in Bank Control Act creates a rebuttable presumption of
control if a member or group acquires a certain percentage or more of a bank
holding company's or state bank's voting stock, or if one or more other control
factors set forth in the Change in Bank Control Act are present.
Interstate Banking. Federal law provides for nationwide interstate
banking and branching. Under the law, interstate acquisitions of banks or bank
holding companies in any state by bank holding companies in any other state are
permissible subject to limitations. Florida also has a law that allows
out-of-state bank holding companies located in states that allow Florida bank
holding companies to acquire banks and bank holding companies in that state, to
acquire Florida banks and Florida bank holding companies. The law essentially
provides for out-of-state entry by acquisition only and not by interstate
branching, and requires the acquired Florida bank to have been in existence for
at least three
39
<PAGE> 44
years. Interstate branching and consolidation of existing bank subsidiaries in
different states is permissible. A Florida bank also may establish, maintain,
and operate one or more branches in a state other than Florida pursuant to an
interstate merger transaction in which the Florida bank is the resulting bank.
An interstate merger transaction resulting in the acquisition by an
out-of-state bank of a Florida bank is not permitted unless the Florida bank
has been in existence and continuously operating, on the date of the
acquisition, for more than three years.
Effect of Governmental Policies. The earnings and businesses of
Suncoast Bancorp and Suncoast National Bank are affected by the policies of
various regulatory authorities of the United States, especially the Federal
Reserve. The Federal Reserve, among other things, regulates the supply of
credit and deals with general economic conditions within the United States. The
instruments of monetary policy employed by the Federal Reserve for those
purposes influence in various ways the overall level of investments, loans,
other extensions of credit, and deposits, and the interest rates paid on
liabilities and received on assets.
INDUSTRY RESTRUCTURING
For well over a decade, the banking industry has been undergoing a
restructuring process which is anticipated to continue. The restructuring has
been caused by product and technological innovations in the financial services
industry, deregulation of interest rates, and increased competition from
foreign and nontraditional banking competitors, and has been characterized
principally by the gradual erosion of geographic barriers to intrastate and
interstate banking and the gradual expansion of investment and lending
authorities for bank institutions.
Members of Congress and the administration have indicated their
intention to consider additional legislation designed to institute reforms to
promote the viability of the industry. Certain of the proposals would revise
the federal regulatory structure for insured depository institutions; others
would affect the nature of products, services, and activities that bank holding
companies and their subsidiaries may offer or engage in, and the types of
entities that may control depository institutions. There can be no assurance as
to whether or in what form any such proposed legislation might be enacted, or
what impact such legislation might have upon Suncoast Bancorp.
DESCRIPTION OF CAPITAL STOCK
GENERAL
Suncoast Bancorp's Articles of Incorporation authorize it to issue:
(1) up to 10,000,000 common shares, par value $0.01 per share, of which 700,000
shares will be issued pursuant to this offering and 805,000 shares if the
over-allotment option granted to the underwriter is exercised in full, and (2)
up to 3,000,000 preferred shares, stated par value of $0.01 per share, the
rights and preferences of which shall be determined by the board of directors
at the time it authorizes the issuance thereof. No other classes of capital
stock are authorized.
As of the date of this prospectus, other than one common share issued
to H. R. Foxworthy for the sole purpose of organizing Suncoast Bancorp, no
shares of capital stock are issued and outstanding. This share was issued at
$1.00 and will be repurchased at cost and cancelled concurrently with the
closing of
40
<PAGE> 45
the offering. Other than options to purchase 56,000 common shares to be granted
under the Director Stock Option Plan and the Employee Stock Option Plan
described elsewhere herein, there are no outstanding options to purchase,
warrants for, or securities convertible into, common shares. See "Management -
Stock Option Plans."
COMMON SHARES
All outstanding common shares offered hereby will be validly issued,
fully paid and nonassessable. The holders of common shares are entitled to one
vote for each share held of record on all matters voted upon by shareholders.
Subject to preferences that may be applicable to any outstanding preferred
shares, each outstanding common share is entitled to participate equally in any
distribution of net assets made to the stockholders in liquidation,
dissolution, or winding up Suncoast Bancorp and is entitled to participate
equally in dividends as and when declared by Suncoast Bancorp's board of
directors. There are no redemption, sinking fund, conversion, or preemptive
rights with respect to the shares of common shares. All common shares have
equal rights and preferences.
PREFERRED SHARES
As of the date of this prospectus, no preferred shares were issued or
outstanding. The board of directors is authorized to fix or alter the rights,
preferences, privileges and restrictions of any wholly unissued series of
preferred shares, including the dividend rights, original issue price,
conversion rights, voting rights, terms of redemption, liquidation preferences
and sinking fund terms thereof, and the number of shares constituting any such
series and the designation thereof and to increase or decrease the number of
shares of such series subsequent to the issuance of shares of such series but
not below the number of shares then outstanding. The board of directors,
without shareholder approval, can issue preferred shares with the voting and
conversion rights described above, which could adversely affect the voting
power of the shareholders of common shares. Suncoast Bancorp has no plans at
this time to issue any preferred shares. Any such issuance of preferred shares
could have the effect of delaying or preventing a change of control.
ANTI-TAKEOVER AND INDEMNIFICATION PROVISIONS
Suncoast Bancorp's board of directors may authorize the issuance of
additional common shares or preferred shares without further action by Suncoast
Bancorp's shareholders, unless such action is required in a particular case by
applicable laws or regulation. The authority to issue additional common shares
or preferred shares provides Suncoast Bancorp with the flexibility necessary to
meet its future needs without the delay resulting from seeking shareholder
approval. The unissued common shares or preferred shares may be issued from
time to time for any corporate purposes, including share splits, share
dividends, employee benefit and compensation plans, acquisitions and public and
private sales for cash as a means of raising capital. Such shares could be used
to dilute the share ownership of persons seeking to obtain control of Suncoast
Bancorp. In addition, the sale of a substantial number of shares of common
shares or preferred shares to persons who have an understanding with Suncoast
Bancorp concerning the voting of such shares, or the distribution or dividend
of common shares or preferred shares to Suncoast Bancorp's shareholders, may
have the effect of discouraging or otherwise increasing the cost of unsolicited
attempts to acquire control of Suncoast Bancorp. Further, because Suncoast
Bancorp's board of directors has the power to determine the voting, conversion
or other rights of the preferred shares, the issuance of a series of preferred
shares to persons friendly to management could effectively discourage or
41
<PAGE> 46
preclude consummation of a change in control transaction or have the effect of
maintaining the position of Suncoast Bancorp's incumbent management. Suncoast
Bancorp does not currently have any plans or commitments to use its authority
to effect any such issuance, but reserves the right to take any action that the
board of directors deems to be in the best interests of Suncoast Bancorp and
its shareholders.
Suncoast Bancorp is subject to several provisions under Florida law
which may deter or frustrate unsolicited attempts to acquire certain Florida
corporations. These statutes, commonly referred to as the "Control Share Act"
and the "Fair Price Act," apply to most public corporations organized in Florida
unless the corporation has specifically elected to opt out of such provisions.
Suncoast Bancorp has not elected to opt out of these provisions. The Fair Price
Act generally requires that certain transactions between a public corporation
and an affiliate must be approved by two-thirds of the disinterested directors
or shareholders, not including those shares beneficially owned by an "interested
shareholder". The Control Share Act generally provides that shares of a public
corporation acquired in excess of certain specified thresholds will not posses
any voting rights unless such voting rights are approved by a majority vote of
the corporation's disinterested shareholders. These anti-takeover provisions of
Florida law could result in Suncoast Bancorp being less attractive to a
potential acquiror and/or result in shareholders receiving less for their shares
than otherwise might be available in the event of an unsolicited takeover
attempt.
The Florida Business Corporation Act authorizes a company to indemnify
its directors and officers in certain instances against certain liabilities
which they may incur by virtue of their relationship with the company. Further,
a Florida company is authorized to provide further indemnification or
advancement of expenses to any of its directors, officers, employees, or agents,
except for acts or omissions which constitute:
o a violation of the criminal law unless the individual had
reasonable cause to believe it was lawful,
o a transaction in which the individual derived an improper
personal benefit,
o in the case of a director, a circumstance under which certain
liability provisions of the Florida Business Corporation Act
are applicable related to payment of dividends or other
distributions or repurchases of shares in violation of such
Act, or
o willful misconduct or a conscious disregard for the best
interest of the company in a proceeding by the company, or
a company shareholder.
A Florida company also is authorized to purchase and maintain
liability insurance for its directors, officers, employees and agents.
Suncoast Bancorp's Bylaws provide that Suncoast Bancorp shall
indemnify each of its directors and officers to the fullest extent permitted by
law, and that the indemnity will include advances for expenses and costs
incurred by such director or officer related to any action in regard to which
indemnity is permitted. Suncoast Bancorp maintains directors' and officers'
liability insurance covering its directors and officers against expenses and
liabilities arising from certain actions to which they may become
42
<PAGE> 47
subject by reason of having served in such role. Such insurance is subject to
the coverage amounts, exceptions, deductibles and other conditions set forth in
the policy. There is no assurance that Suncoast Bancorp will maintain liability
insurance for its directors and officers.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Securities Act") may be permitted to directors,
officers, or persons controlling Suncoast Bancorp pursuant to the foregoing
provisions, Suncoast Bancorp has been informed that in the opinion of the
Securities and Exchange Commission (the "Commission") such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common shares will be
Continental Stock Transfer & Trust Co., New York, New York.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, Suncoast Bancorp expects to have
700,000 common shares outstanding and 805,000 if the over-allotment option
granted to the underwriter is exercised in full. The 700,000 shares of Suncoast
Bancorp's common shares purchased in this offering plus any additional shares
sold upon the underwriter's exercise of its over-allotment option have been
registered with the Commission under the Securities Act, and may generally be
resold without registration under the Securities Act unless they were acquired
by directors or executive officers of Suncoast Bancorp or Suncoast National
Bank, or holders of large amounts of outstanding common shares (collectively,
"affiliates"). Affiliates of Suncoast Bancorp may generally only sell common
shares pursuant to the Commission's Rule 144 or another exemption under the
Securities Act.
In general, under Rule 144 as currently in effect, an affiliate of
Suncoast Bancorp may sell common shares within any three-month period in an
amount limited to the greater of 1% of the outstanding Company's common shares
or the average weekly trading volume in Suncoast Bancorp's common shares during
the four calendar weeks preceding such sale. Sales under Rule 144 are also
subject to certain manner-of-sale provisions, notice requirements and the
availability of current public information about Suncoast Bancorp.
Suncoast Bancorp and the directors and officers of Suncoast Bancorp
and Suncoast National Bank, who are expected to hold an aggregate of
approximately 140,000 shares after this offering, have agreed, or will agree,
that they will not issue, offer for sale, sell, grant any options for the sale
of or otherwise dispose of any shares of common shares held by them or any
rights to purchase common shares, without the prior written consent of the
underwriter for a period of 180 days from the date of this prospectus. Prior to
this offering, there has been no public trading market for the common shares,
and no predictions can be made as to the effect, if any, that sales of shares
or the availability of shares for sale will have on the prevailing market price
of the common shares after completion of this offering. Nevertheless, sales of
substantial amounts of common shares in the public market could have an adverse
effect on prevailing market prices.
43
<PAGE> 48
UNDERWRITING
Under the terms and subject to the conditions set forth in the
underwriting agreement by and between the underwriter and Suncoast Bancorp (the
"Underwriting Agreement"), the underwriter has agreed to purchase from Suncoast
Bancorp, and Suncoast Bancorp has agreed to sell to the underwriter 700,000
common shares to be sold in the offering.
The Underwriting Agreement provides that the obligation of the
underwriter to pay for and accept delivery of the common shares is subject to
approval of certain matters by its counsel and to various other conditions
precedent. The underwriter is obligated to purchase and pay for all common
shares offered hereby other than those covered by the over-allotment option
described below, if any common shares are purchased.
The underwriter has advised Suncoast Bancorp that the underwriter
proposes to offer the common shares directly to the public initially at the
public offering price set forth on the cover page of this prospectus and to
certain selected dealers at such price, less a concession not to exceed $0.70
per share. This amount will be reduced to $0.30 per share with respect to sales
of up to 150,000 common shares to certain investors identified by Suncoast
Bancorp to the underwriter, in writing, prior to effectiveness of the
Registration Statement for the offering. The underwriter may allow, and such
selected dealers may reallow, a concession not in excess of $0.38 per share to
certain other dealers. After the initial public offering of the common shares,
the public offering price, concession, and reallowance to dealers may be changed
by the underwriter. The common shares are offered subject to receipt and
acceptance by the underwriter and to certain other conditions, including the
right of the underwriter to reject orders in whole or in part, and withdraw,
cancel, or modify the offer without notice. Suncoast Bancorp expects that the
common shares will be ready for delivery on or about _____________, 1999.
The underwriter has advised Suncoast Bancorp that it does not intend
to confirm sales of the common shares offered hereby to any account over which
it may exercise discretionary authority.
Suncoast Bancorp has granted to the underwriter an option, exercisable
during the 30-day period beginning on the date of this prospectus, to purchase
up to 105,000 additional common shares solely to cover over-allotments, if any,
at the public offering price less the underwriting discounts and commissions set
forth on the cover page of this prospectus.
Subject to limitations, Suncoast Bancorp and the underwriter have
agreed to indemnify each other against certain civil liabilities, including
civil liabilities under the Securities Act, or to contribute to payments that
Suncoast Bancorp or the underwriter may be required to make in respect thereof.
At Suncoast Bancorp's request, the underwriter has agreed to reserve up
to 150,000 common shares for sale at the public offering price to directors,
employees, and other persons having certain business relationships with Suncoast
Bancorp or Suncoast National Bank. The number of shares available for sale to
the general public will be reduced to the extent that these persons purchase
such reserved shares. Any reserved shares not purchased will be offered by the
underwriter to the general public on the same basis as the other shares offered
hereby.
44
<PAGE> 49
The foregoing is a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to a copy of
the Underwriting Agreement which is on file as an exhibit to the Registration
Statement.
In connection with the offering of the common shares, the underwriter
and selling group members and their respective affiliates may engage in
over-allotment transactions, stabilizing transactions, syndicate covering
transactions, and penalty bids effected in accordance with Rule 104 of the
Commission's Regulation M. Over-allotment transactions are those transactions
in which the underwriter creates a short position for its own account by
selling more common shares than it is committed to purchase from Suncoast
Bancorp. In such case, to cover all or part of a short position, the
underwriter may exercise the over-allotment option described above or may
purchase common shares in the open market following completion of the offering.
In stabilizing transactions, the underwriter may bid for, and purchase, common
shares at a level above that which might otherwise prevail on the open market
for the purpose of preventing or retarding a decline in the market price of the
common shares. Syndicate covering transactions involve purchases of common
shares in the open market after a distribution has been completed in order to
cover syndicate short positions. Penalty bids permit the underwriter to reclaim
selling concessions from a syndicate member when the common shares originally
sold by such syndicate member is purchased in a syndicate covering transaction
to cover syndicate short positions Any of the foregoing transactions may cause
the price of the common shares to be higher than it would otherwise be in the
absence of such transactions. The underwriter is not required to engage in any
of the foregoing transactions, and if commenced, such transactions may be
discontinued at any time.
Each of Suncoast Bancorp, and the directors, executive officers, and
existing shareholders of Suncoast Bancorp and Suncoast National Bank has agreed
that, without the prior written consent of the underwriter, they will not, for a
period of 180 days from the date of this prospectus, subject to limited
exceptions, directly or indirectly offer, sell, announce an intention to sell,
contract to sell, or otherwise dispose of, any common shares held by them or any
securities convertible into or exercisable or exchangeable for the common
shares.
There has been no public trading market for the common shares prior to
this offering. Consequently, the initial public offering price for the common
shares was determined by negotiations between Suncoast Bancorp and the
underwriter. This price is not based upon earnings or any history of operations
and should not be construed as indicative of the present or anticipated future
value of the common shares. In determining such price, consideration was given
to several factors, including among them the size of the offering, the market
conditions for initial public offerings, the desire that the security being
offered be attractive to individuals, the underwriter's experience in dealing
with initial public offerings for financial institutions, and other relevant
factors. No assurances can be made as to the liquidity of the common shares or
that an active and liquid trading market will develop or, if developed, that it
will be sustained.
LEGAL OPINIONS
The legality of the common shares being offered hereby will be passed
upon for Suncoast Bancorp by Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A.,
Orlando, Florida. Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Tampa,
Florida is acting as counsel for the underwriter in connection with certain
legal matters relating to the offering of the common shares.
45
<PAGE> 50
EXPERTS
The financial statements of Suncoast Bancorp included in this
prospectus have been audited by Hill, Barth & King, Inc., independent public
accountants, as indicated in their report with respect thereto. Such financial
statements have been included herein and in the Registration Statement in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
ADDITIONAL INFORMATION
Suncoast Bancorp has filed with the Commission a Registration
Statement under the Securities Act, with respect to the common shares offered
by the Registration Statement. This prospectus does not contain all of the
information set forth in the Registration Statement and in the exhibits
attached. Certain items were omitted in accordance with the rules and
regulations of the Commission. For further information with respect to Suncoast
Bancorp and the common shares, reference is made to the Registration Statement
and the exhibits filed with it. Anyone can inspect the Registration Statement
without charge at the Public Reference Section of the Commission Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Commission's
regional offices: Northeast Regional Office, 7 World Trade Center, Suite 1300,
New York, New York, 10048; and Midwest Regional Office, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies may be obtained upon
payment of the required fees. Information contained in this prospectus which
refer to a document filed as an exhibit to the Registration Statement are
qualified in their entirety by reference to a copy of that document. In
addition, Suncoast Bancorp is required to file electronic versions of these
documents with the Commission through the Commission's EDGAR system. The
Commission maintains a World Wide Web site at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
Suncoast Bancorp intends to furnish its shareholders with annual
reports containing financial statements audited by independent public
accountants and with quarterly reports containing unaudited financial
information for each of the first three quarters of each fiscal year. In
addition, as a result of this offering Suncoast Bancorp will be subject to the
informational and periodic reporting requirements of the Securities Exchange Act
of 1934, and will file annual and quarterly reports with the Commission. Copies
of such reports will be made available to Suncoast Bancorp's shareholders.
46
<PAGE> 51
FINANCIAL STATEMENTS
SUNCOAST BANCORP, INC.
(A Development Stage Company)
October 31, 1998
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report .................................. F-2
Balance Sheet ................................................. F-3
Statement of Operations ....................................... F-4
Statement of Shareholders' Deficit ............................ F-5
Statement of Cash Flows ....................................... F-6
Notes to Financial Statements ................................. F-7-9
</TABLE>
F-1
<PAGE> 52
Board of Directors
Suncoast Bancorp, Inc.
Sarasota, Florida
Independent Auditors' Report
We have audited the accompanying balance sheet of Suncoast Bancorp,
Inc., formerly known as Community Holdings Corporation (the Company) as of
October 31, 1998 and the related statements of operations, shareholders'
deficit and cash flows for the period from April 1, 1998 (date of inception) to
October 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 Suncoast Bancorp,
Inc. as of October 31, 1998 and the results of its operations and its cash
flows for the period from April 1, 1998 (date of inception) to October 31, 1998
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
company will continue as a going concern. As discussed in Note H to the
financial statements, the company's ability to continue as a going concern is
dependent on approval from the Office of the Comptroller of the Currency for a
National Banking Charter and a successful public offering of the Company's
common stock. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Hill, Barth & King, Inc.
------------------------------------
Hill, Barth & King, Inc.
Certified Public Accountants
Naples, Florida
November 20, 1998
F-2
<PAGE> 53
SUNCOAST BANCORP, INC.
(A Development Stage Company)
BALANCE SHEET
October 31, 1998
<TABLE>
<CAPTION>
December 31,
October 31, 1998
1998 (unaudited)
----------- ------------
<S> <C> <C>
ASSETS
Cash $ 1,951 $ 4,774
Prepaid expenses 7,118 6,955
Deferred offering costs 39,448 48,059
Equipment - NOTE B 1,460 1,410
Loan closing costs - NOTE C 594 396
Architect's fees 1,440 3,126
Deposits 6,000 6,000
----------- -----------
$ 58,011 $ 70,720
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Liabilities:
Accounts payable $ 46,430 $ 53,911
Loans payable - NOTE D 81,187 101,188
Accrued interest payable 1,399 1,441
----------- -----------
TOTAL LIABILITIES $ 129,016 $ 156,540
----------- -----------
Shareholders' Deficit:
Preferred stock, par value $.01 per share,
3,000,000 shares authorized; 0 shares
issued and outstanding 0 0
Common stock, par value $.01 per share,
10,000,000 shares authorized;
1 share issued and outstanding 0 0
Additional paid-in capital 1 1
Deficit accumulated during the
development stage (71,006) (85,821)
----------- -----------
TOTAL SHAREHOLDERS' DEFICIT (71,005) (85,820)
----------- -----------
$ 58,011 $ 70,720
=========== ===========
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE> 54
SUNCOAST BANCORP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from April 1, 1998 (date of inception) to October 31, 1998
<TABLE>
<CAPTION>
Period ended
Period ended December 31,
October 31, 1998
1998 (unaudited)
------------ ------------
<S> <C> <C>
INCOME $ 0 $ 0
EXPENSES
Automobile expense 9,032 12,265
Consulting fees 34,599 42,600
Interest expense and loan fees 1,927 3,367
License and permits 17,479 17,566
Other expenses 7,969 10,023
------------ ------------
TOTAL EXPENSES 71,006 85,821
------------ ------------
NET LOSS $ (71,006) $ (85,821)
============ ============
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE> 55
SUNCOAST BANCORP, INC.
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' DEFICIT
Period from April 1, 1998 (date of inception) to October 31, 1998
<TABLE>
<CAPTION>
Deficit
Accumulated Total
Additional During the Total December 31,
Common Paid-in Development October 31, 1998
Stock Capital Stage 1998 (unaudited)
--------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Balance
April 1, 1998 $ 0 $ 0 $ 0 $ 0 $ 0
Proceeds from
issuance of
common stock 0 1 0 1 1
Net loss 0 0 (71,006) (71,006) (85,821)
--------- ---------- ----------- ----------- -----------
Balance (deficit)
October 31, 1998 $ 0 $ 1 $ (71,006) $ (71,005) $ (85,820)
========= ========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE> 56
SUNCOAST BANCORP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period from April 1, 1998 (date of inception) to October 31, 1998
<TABLE>
<CAPTION>
Period ended
Period ended December 31,
October 31, 1998
1998 (unaudited)
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (71,006) $ (85,821)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and amortization 618 866
Increase in prepaid expenses (7,118) (6,955)
Increase in other assets (46,888) (57,185)
Increase in intangible assets (1,187) (1,187)
Increase in accounts payable 46,430 53,911
Increase in accrued interest
payable 1,399 1,441
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (77,752) (94,930)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (1,484) (1,484)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,484) (1,484)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on short-term notes 81,187 101,188
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 81,187 101,188
----------- -----------
NET INCREASE IN CASH 1,951 4,774
CASH
Beginning of period 0 0
----------- -----------
End of period $ 1,951 $ 4,774
=========== ===========
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE> 57
SUNCOAST BANCORP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization:
Suncoast Bancorp, Inc. formerly known as Community Holdings Corporation
(the Company) was incorporated under the laws of the State of Florida on April
1, 1998. The Company's activities to date have been limited to the organization
of Suncoast National Bank (the Bank), as well as preparation for a $7,000,000
common stock offering (the Offering). A substantial portion of the proceeds of
the Offering will be used by the Company to provide the initial capitalization
of the Bank. The start-up of the Bank is contingent upon receiving the approval
of various banking regulatory authorities and also a successful completion of
the Offering.
Nature of Business:
The Bank intends to offer a full range of commercial and consumer
banking services primarily within the Sarasota, Florida area.
Use of 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.
Deferred Offering Costs:
Deferred offering costs consist primarily of legal and accounting fees
related to the initial public stock offering and will be offset against the
offering proceeds when received.
NOTE B - EQUIPMENT
Equipment at October 31, 1998 consists of the following:
<TABLE>
<S> <C>
Computer Equipment ............................. $1,485
Less accumulated depreciation .................. 25
------
TOTAL ..................... $1,460
======
</TABLE>
Depreciation is computed on the straight-line method over the estimated
useful lives of the depreciable assets. Depreciation expense was $25 for the
period ended October 31, 1998.
F-7
<PAGE> 58
SUNCOAST BANCORP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1998
NOTE C - LOAN CLOSING COSTS
Loan closing costs as of October 31, 1998 consisted of the following:
<TABLE>
<S> <C>
Loan closing costs .......................... $1,187
Less accumulated amortization ............... 593
------
TOTAL $ 594
======
</TABLE>
Amortization is computed on the straight-line method over the life of
the loan. Amortization expense for the period ended October 31, 1998 was $594.
NOTE D - LOANS PAYABLE
The Company has obtained a $325,000 line of credit payable to a bank,
guaranteed by the organizers of the Company to pay organizational and
pre-opening expenses of the Bank and the Company. As of October 31, 1998, the
Company had borrowed $81,187 on the demand note under this agreement. The line
of credit bears interest at the prime rate plus 1% (9% as of 10/31/98) and
varies as prime varies and matures on May 1, 1999. The foregoing line of credit
and any unpaid accrued interest will be repaid from the offering proceeds.
NOTE E - INCOME TAXES
Deferred taxes are recognized for temporary differences between the
basis of assets and liabilities for financial statement and income tax
purposes. The tax effect of the differences that gave rise to a deferred tax
asset of $24,852 and corresponding valuation allowance of ($24,852) at October
31, 1998 relate primarily to the capitalization of preoperating start-up costs
which are amortized over a five year term from the date operations commence for
tax purposes.
NOTE F - COMMITMENTS AND CONTINGENCIES
The Company has committed to lease 4,000 square feet for its main
office location. The lease has a term of 5 years with the option for two 5-year
renewals; to begin on the earlier of the date of the certificate of occupancy
for the building or the date the bank opens for business. The base annual lease
payment is $72,000 plus applicable sales tax; increased annually by 4% on the
anniversary date of the lease during the initial term or any option period
agreed to under the lease. The Company has also entered into a 36-month closed
end lease for an automobile. Lease payments under this lease arrangement are
$463 per month.
F-8
<PAGE> 59
SUNCOAST BANCORP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1998
NOTE G - STOCK OPTIONS
The Board of Directors of the Company has adopted the Suncoast
Bancorp, Inc. Director Stock Option Plan and the Suncoast Bancorp, Inc.
Employee Stock Option Plan and has reserved 42,000 and 28,000 shares,
respectively, of its common stock for issuance under these plans. Under both
plans the option price will be no less than the fair market value of the stock
on the date of grant. The options may be exercised in whole or in part, with
respect to whole shares only, not to exceed 10 years from the date of grant.
NOTE H - GOING CONCERN
As shown in the accompanying financial statements, the Company
incurred a net loss of $71,006 during the development stage, April 1, 1998
(date of inception) to October 31, 1998, and as of that date, the Company's
liabilities exceeded its assets by $71,005. The ability of the Company to
continue as a going concern is dependent on approval from the Office of the
Comptroller of the Currency for a National Banking Charter and a successful
public offering of the Company's common stock. The financial statements do not
include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
F-9
<PAGE> 60
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY SUNCOAST BANCORP, SUNCOAST NATIONAL BANK OR THE UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE COMMON SHARES OFFERED BY THIS PROSPECTUS, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE COMMON
SHARES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS
PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 3
Forward-Looking Statements............ 10
Recent Developments................... 11
Use of Proceeds....................... 11
Dividend Policy....................... 12
Capitalization........................ 13
Management's Discussion and Analysis
or Plan of Operation................ 14
Business.............................. 15
Management............................ 24
Certain Relationship and Related
Transactions........................ 32
Security Ownership of Management and
Certain Beneficial Owners........... 33
Supervision and Regulation............ 34
Description of Capital Stock.......... 40
Shares Eligible for Future Sale....... 43
Underwriting.......................... 44
Legal Opinions........................ 45
Experts............................... 46
Additional Information................ 46
Index to Financial Statements......... F-1
</TABLE>
------------------------
UNTIL , 1999 (90 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON SHARES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
700,000
SUNCOAST BANCORP, INC.
COMMON SHARES
------------------------
PROSPECTUS
------------------------
ASHTIN KELLY & CO.
1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 61
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0850, Florida Statutes, grants a corporation the power to
indemnify its directors, officers, employees, and agents for various expenses
incurred resulting from various actions taken by its directors, officers,
employees, or agents on behalf of the corporation. In general, if an individual
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the action
was unlawful, then the corporation has the power to indemnify said individual
who was or is a party to any proceeding (including, in the absence of an
adjudication of liability (unless the court otherwise determines), any
proceeding by or in the right of the corporation) against liability expenses,
including counsel fees, incurred in connection with such proceeding, including
any appeal thereof (and, as to actions by or in the right of the corporation,
against expenses and amounts paid in settlement not exceeding, in the judgment
of the board of directors, the estimated expense of litigating the proceeding
to conclusion, actually and reasonably incurred in connection with the defense
or settlement of such proceeding, including any appeal thereof). To the extent
that a director, officer, employee, or agent has been successful on the merits
or otherwise in defense of any proceeding, he shall be indemnified against
expenses actually and reasonably incurred by him in connection therewith. The
term "proceeding" includes any threatened, pending, or completed action, suit,
or other type of proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
Any indemnification in connection with the foregoing, unless pursuant to
a determination by a court, shall be made by the corporation upon a
determination that indemnification is proper in the circumstances because the
individual has met the applicable standard of conduct. The determination shall
be made (i) by the board of directors by a majority vote of a quorum consisting
of directors who are not parties to such proceeding; (ii) by majority vote of a
committee duly designated by the board of directors consisting solely of two or
more directors not at the time parties to the proceeding; (iii) by independent
legal counsel selected by the board of directors or such committee; or (iv) by
the shareholders by a majority vote of a quorum consisting of shareholders who
are not parties to such proceeding. Evaluation of the reasonableness of
expenses and authorization of indemnification shall be made in the same manner
as the determination that indemnification is permissible. However, if the
determination of permissibility is made by independent legal counsel, then the
directors or the committee shall evaluate the reasonableness of expenses and
may authorize indemnification. Expenses incurred by an officer or director in
defending a civil or criminal proceeding may be paid by the corporation in
advance of the final disposition of the proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
he is ultimately found not to be entitled to indemnification by the
corporation. Expenses incurred by other employees and agents may be paid in
advance upon such terms or conditions that the board of directors deems
appropriate.
Section 607.0850 also provides that the indemnification and advancement
of expenses provided pursuant to that Section are not exclusive, and a
corporation may make any other or further indemnification or advancement of
expenses of any of its directors, officers, employees, or agents, under any
bylaw, agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office. However,
II-1
<PAGE> 62
indemnification or advancement of expenses may not be made if a judgment or
other final adjudication established that the individual's actions, or
omissions to act, were material to the cause of action so adjudicated and
constitute (i) a violation of the criminal law (unless the individual had
reasonable cause to believe his conduct was lawful or had no reasonable cause
to believe his conduct was unlawful); (ii) a transaction from which the
individual derived an improper personal benefit; (iii) in the case of a
director, a circumstance under which the liability provisions of Section
607.0834 are applicable; or (iv) willful misconduct or a conscious disregard
for the best interests of the corporation in a proceeding by or in the right of
the corporation to procure a judgment in its favor in a proceeding by or in the
right of a shareholder. Indemnification and advancement of expenses shall
continue as, unless otherwise provided when authorized or ratified, to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such person, unless
otherwise provided when authorized or ratified.
Section 607.0850 further provides that unless the corporation's articles
of incorporation provide otherwise, then notwithstanding the failure of a
corporation to provide indemnification, and despite any contrary determination
of the board or of the shareholders in the specific case, a director, officer,
employee, or agent of the corporation who is or was a party to a proceeding may
apply for indemnification or advancement of expenses, or both, to the court
conducting the proceeding, to the circuit court, or to another court of
competent jurisdiction. On receipt of an application, the court, after giving
any notice that it considers necessary, may order indemnification and
advancement of expenses, including expenses incurred in seeking court-ordered
indemnification or advancement of expenses, if it determines that (i) the
individual is entitled to mandatory indemnification under Section 607.0850 (in
which case the court shall also order the corporation to pay the director
reasonable expenses incurred in obtaining court-ordered indemnification or
advancement of expenses); (ii) the individual is entitled to indemnification or
advancement of expenses, or both, by virtue of the exercise by the corporation
of its power under Section 607.0850; or (iii) the individual is fairly and
reasonably entitled to indemnification or advancement of expenses, or both, in
view of all the relevant circumstances, regardless of whether the person met
the standard of conduct set forth in Section 607.0850. Further, a corporation
is granted the power to purchase and maintain indemnification insurance.
Article VI of the Bylaws of Suncoast Bancorp, Inc. (the "Company")
provide for indemnification of the Company's officers and directors and
advancement of expenses. The text of the indemnification provisions contained
in the Company's Bylaws is set forth in Exhibit 3.2, to this Registration
Statement. Among other things, indemnification is granted to each person who is
or was a director, officer or employee of the Company and each person who is or
was serving at the request of the Company as a director, officer or employee of
another corporation to the full extent authorized by law. Article VI of the
Company's Bylaws also sets forth certain conditions in connection with any
advancement of expenses and provision by the Company of any other
indemnification rights and remedies. The Company also is authorized to purchase
insurance on behalf of any person against liability asserted whether or not the
Company would have the power to indemnify such person under the Bylaws.
Pursuant to such authority, the Company has purchased directors and officers
liability insurance although there is no assurance that the Company will
maintain such insurance or, if so, the amount of insurance that it will so
maintain.
Pursuant to the Underwriting Agreement, the Company and the underwriters
have agreed to indemnify each other under certain circumstances and conditions
against and from certain liabilities, including liabilities under the
Securities Act of 1933, as amended. Reference is made to Section 8 of the
Underwriting Agreement filed as Exhibit 1.1 hereto.
II-2
<PAGE> 63
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC Registration Fee......................................................... $ 2,238
NASD Filing Fee.............................................................. 1,305
Transfer Agent and Registration Fees......................................... 3,500 *
Printing and Engraving Expenses.............................................. 40,000 *
Accounting Fees and Expenses................................................. 26,000 *
Legal Fees and Expenses...................................................... 75,000 *
Blue Sky Fees and Expenses................................................... 16,815
Miscellaneous................................................................ 5,142 *
----------
Total.................................................................... $ 170,000
==========
</TABLE>
- ------------------------
* Estimated
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On April 13, 1998, the Company issued one common share to its Chairman of
the Board solely to facilitate the organization of the Company. The foregoing
sale of the common shares by the Company was exempt from the registration
requirements of the Securities Act by operation of Section 4(2) thereof, the
provision which exempts private offerings. No underwriter or independent selling
agent was used and no compensation or commission was paid in connection with the
sale of the common share.
II-3
<PAGE> 64
ITEM 27. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
(a) NUMBER DESCRIPTION OF EXHIBIT
---------------- -----------------------
<S> <C> <C>
1.1 - Form of Underwriting Agreement *
3.1 - Restated Articles of Incorporation *
3.3 - Bylaws *
4.1 - See Exhibits 3.1 and 3.2 for provisions
of the Restated Articles of Incorporation
and Bylaws of the Company defining rights
of holders of the Company's Common Shares
4.2 - Specimen Common Share Certificate *
5 - Form of Legal Opinion of Smith,
Mackinnon, Greeley, Bowdoin & Edwards, P.A.
with respect to the validity of the Common
Stock being offered hereby *
10.1 - Form of Employment Agreement to be entered into
between the Company and John T. Stafford *
10.2 - Form of Employment Agreement to be entered into
between the Bank and William F. Gnerre *
10.3 - Suncoast Bancorp, Inc. Director Stock Option Plan *
10.4 - Suncoast Bancorp, Inc. Employee Stock Option Plan *
10.5 - Lease Agreement dated August 28, 1998 between
Suncoast Bancorp, Inc. and Palmer Medical Center Ltd. *
21 - List of subsidiaries of the Company *
23.1 - Consent of Hill, Barth & King, Inc.
23.2 - Consent of Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A. (included in Exhibit
5)
24.1 - Power of Attorney (included in the signature page of the Registration Statement)
27 - Financial Data Schedule
</TABLE>
- -----------------------------
* Previously filed.
<PAGE> 65
ITEM 28. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Registrant will provide to the underwriter at the closing
specified in the underwriting agreement certificates in such denominations and
registered in such names as required by the Underwriter to permit prompt
delivery to each purchaser.
II-5
<PAGE> 66
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this Amendment
to Registration Statement to be signed in its behalf by the undersigned, in the
City of Sarasota, State of Florida, on March 9, 1999.
SUNCOAST BANCORP, INC.
/s/ John T. Stafford
-----------------------------------
John T. Stafford
President and Chief Executive Officer
/s/ William F. Gnerre
--------------------------------------
William F. Gnerre
Executive Vice President and Secretary
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
H.R. Foxworthy and John T. Stafford, for himself and not for one another, and
each and either of them and his substitutes, a true and lawful attorney in his
name, place and stead, in any and all capacities, to sign his name to any and
all amendments to this Registration Statement, including post-effective
amendments, and to cause the same to be filed with the Securities and Exchange
Commission, granting unto said attorneys and each of them full power of
substitution and full power and authority to do and perform any act and thing
necessary and proper to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present, and each of the
undersigned for himself hereby ratifies and confirms all that said attorneys or
any one of them shall lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933,
this Amendment to Registration Statement was signed by the following persons in
the capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ H. R. Foxworthy Chairman of the Board March 8, 1999
- -------------------------------------------- and Director
H. R. Foxworthy
/s/ John T. Stafford President and Chief Executive March 8, 1999
- -------------------------------------------- Officer and Director
John T. Stafford
</TABLE>
<PAGE> 67
<TABLE>
<S> <C> <C>
/s/ William F. Gnerre Executive Vice President, March 8, 1999
- -------------------------------------------- Secretary and Director
William F. Gnerre (Principal Financial Officer
and Principal Accounting Officer)
/s/ Larry Berberich Director March 8, 1999
- --------------------------------------------
Larry Berberich
/s/ Henry E. Black Director March 8, 1999
- --------------------------------------------
Henry E. Black, M.D.
/s/ James C. Rutledge Director March 8, 1999
- --------------------------------------------
James C. Rutledge
/s/ Stanley A. Williams Director March 8, 1999
- ------------------------------------
Stanley A. Williams
/s/ Roy A. Yahraus Director March 8, 1999
- --------------------------------------------
Roy A. Yahraus
</TABLE>
<PAGE> 68
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
(a) NUMBER DESCRIPTION OF EXHIBIT
---------------- -----------------------
<S> <C> <C>
1.1 - Form of Underwriting Agreement *
3.1 - Restated Articles of Incorporation *
3.3 - Bylaws *
4.1 - See Exhibits 3.1 and 3.2 for provisions
of the Restated Articles of Incorporation
and Bylaws of the Company defining rights
of holders of the Company's Common Shares
4.2 - Specimen Common Share Certificate *
5 - Form of Legal Opinion of Smith,
Mackinnon, Greeley, Bowdoin & Edwards, P.A.
with respect to the validity of the Common
Stock being offered hereby *
10.1 - Form of Employment Agreement to be entered into
between the Company and John T. Stafford *
10.2 - Form of Employment Agreement to be entered into
between the Bank and William F. Gnerre *
10.3 - Suncoast Bancorp, Inc. Director Stock Option Plan *
10.4 - Suncoast Bancorp, Inc. Employee Stock Option Plan *
10.5 - Lease Agreement dated August 28, 1998 between
Suncoast Bancorp, Inc. and Palmer Medical Center Ltd. *
21 - List of subsidiaries of the Company *
23.1 - Consent of Hill, Barth & King, Inc.
23.2 - Consent of Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A. (included in Exhibit
5)
24.1 - Power of Attorney (included in the signature page of the Registration Statement)
27 - Financial Data Schedule
</TABLE>
- -----------------------------
* Previously filed.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF HILL, BARTH & KING, INC., INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on the Pre-Effective Amendment No. 1 to Form SB-2 and
related Prospectus of Suncoast Bancorp, Inc. for the registration of 805,000
shares of its common stock and to the incorporation therein of our report dated
November 20, 1998 relating to the financial statements of Suncoast Bancorp,
Inc. as of October 31, 1998 and for the period from April 1, 1998 (date of
inception) to October 31, 1998.
/s/ HILL, BARTH & KING, INC.
-------------------------------------
HILL, BARTH & KING, INC.
Certified Public Accountants
Naples, Florida
(March 9, 1999)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE UNAUDITED INTERIM
FINANCIAL STATEMENTS DATED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 4,774
<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> 70,720
<DEPOSITS> 0
<SHORT-TERM> 101,188
<LIABILITIES-OTHER> 55,352
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> (85,820)
<TOTAL-LIABILITIES-AND-EQUITY> 70,720
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 3,367
<INTEREST-INCOME-NET> (3,367)
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 82,454
<INCOME-PRETAX> (85,821)
<INCOME-PRE-EXTRAORDINARY> (85,821)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (85,821)
<EPS-PRIMARY> 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>
