<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission file number 333-69973
First Capital Bank Holding Corporation
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Florida 59-3532208
------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1891 South 14th Street
Fernandina Beach, Florida 32034
---------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
904-321-0400
-----------------------------------
(Telephone Number)
Not Applicable
-----------------------------------
(Former name, former address
and former fiscal year,
if changed since last report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,000,000 shares of common stock,
$.01 par value per share, issued and outstanding as of November 5, 1999.
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
<PAGE> 2
FIRST CAPITAL BANK HOLDING CORPORATION
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements of First Capital Bank Holding
Corporation (the "Company") are set forth in the following
pages.
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FIRST CAPITAL BANK HOLDING CORPORATION
BALANCE SHEET
SEPTEMBER 30, 1999
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<CAPTION>
Assets
September 30,
1999
------------
<S> <C>
Cash $ 230,418
------------
Federal funds sold 4,968,000
------------
Total cash and cash equivalents 5,198,418
Investments available for sale 5,936,221
Other investments 231,000
Loans, net 3,025,485
Premises and equipment, net 1,417,926
Other assets 170,970
------------
$ 15,980,020
============
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing $ 904,042
Interest bearing 5,884,627
------------
Total deposits 6,788,669
Note payable - line of credit --
Other liabilities 38,705
------------
Total liabilities 6,827,374
------------
Preferred stock, par value $.01, 1,000,000 shares authorized;
no shares issued or outstanding --
Common stock, par value $.01, 10,000,000 shares authorized;
1,000,000 shares issued and outstanding 100,000
Additional paid-in capital 9,618,858
Accumulated deficit (534,859)
Other comprehensive loss (31,353)
------------
Total stockholders' equity 9,152,646
$ 15,980,020
============
</TABLE>
See accompanying notes to financial statements.
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FIRST CAPITAL BANK HOLDING CORPORATION
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1999 1999
------------- -------------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 39,259 39,259
Interest income on federal funds sold 92,581 131,435
Interest income on investment securities 43,405 43,405
--------- --------
Total interest income 175,245 214,099
--------- --------
Interest expense:
Interest bearing deposits 21,261 21,261
Other -- 33,449
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Total interest expense 21,261 54,710
--------- --------
Net interest income 153,984 159,389
Provision for loan losses 35,500 35,500
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Net interest income after provision
for loan losses 118,484 123,889
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Noninterest income 1,120 1,120
--------- --------
Noninterest expenses:
Salaries and employee benefits 115,626 255,586
Occupancy 27,683 40,236
Other 144,977 173,408
--------- --------
Total noninterest expenses 288,286 469,230
--------- --------
Net loss $(168,682) (344,221)
========= ========
Other comprehensive income, net of tax:
Unrealized losses arising during the period, net of taxes of $0 and $0 (31,353) (31,353)
--------- --------
Comprehensive loss $(200,035) (375,574)
========= ========
Net loss per share $ (0.17) (0.34)
========= ========
</TABLE>
See accompanying notes to financial statements.
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FIRST CAPITAL BANK HOLDING CORPORATION
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
September 30,
1999
-------------
<S> <C>
Cash flows from operating activities:
Net loss $ (344,221)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation expense 6,151
Provision for loan losses 35,500
Increase in other assets (89,654)
Decrease in other liabilities (15,467)
------------
Net cash used in operating activities (407,691)
------------
Cash flows from investing activities:
Purchase of premises and equipment (1,123,216)
Purchase of investment securities available for sale (5,967,574)
Purchase of other investments (231,000)
Increase in loans (3,060,985)
Payment of organizational expenses (281,142)
------------
Net cash used in investing activities (10,663,917)
------------
Cash flows from financing activities:
Proceeds from the sale of common stock 10,000,000
Increase in deposits 6,788,669
Repayment of note payable (520,678)
Redemption of organizational shares (500)
------------
Net cash provided by financing activities 16,267,491
------------
Net increase in cash 5,195,883
Cash and cash equivalents at the beginning of the year 2,535
------------
Cash and cash equivalents at the end of the year $ 5,198,418
============
Supplemental cash flow information:
Interest paid $ 52,463
============
</TABLE>
See accompanying notes to financial statements.
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FIRST CAPITAL BANK HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
------------
First Capital Bank Holding Corporation (the "Company") was incorporated
for the purpose of becoming a bank holding company. On July 26, 1999, the
Company acquired 100% of the outstanding common stock of First National
Bank of Nassau County (the "Bank"), which operates in the Fernandina
Beach, Florida area. The Bank is chartered and regulated by the Office of
the Comptroller of Currency and the Federal Deposit Insurance Corporation.
The Bank commenced operations on July 26, 1999.
The Company raised $10,000,000 through an offering of its common stock at
$10 per share, of which $7,000,000 was used to capitalize the Bank.
The Company was authorized to issue and sell up to 165,000 warrants in
this offering to the organizers. Each warrant entitles the holder to
purchase one share of common stock at an exercise price of $10.00 per
share for a period of five years beginning on the date the Bank opens for
business. The warrants will become exercisable in equal amounts beginning
on the date the Bank opens for business and on each of the four succeeding
anniversaries of that date. Each organizer will be granted one warrant for
every two shares that he or she purchased in the offering. The Company has
also reserved 100,000 shares for the issuance of options under an employee
incentive stock option plan.
The interim financial statements included herein are unaudited but reflect
all adjustments which, in the opinion of management, are necessary for a
fair presentation of the financial position and results of operations for
the interim period presented. All such adjustments are of a normal
recurring nature. The results of operations for the quarter ended
September 30, 1999 are not necessarily indicative of the results of a full
year's operations.
(2) BASIS OF PRESENTATION
---------------------
The consolidated financial statements include the accounts of the Company
and the Bank. All intercompany accounts and transactions have been
eliminated in consolidated. The financial statements of the Company
through June 30, 1999 were presented as a development stage corporation.
The accounting principles followed by the Company and its subsidiary, and
the method of applying these principles, conform with generally accepted
accounting principles (GAAP) and with general practices within the banking
industry. In preparing financial statements in conformity with GAAP,
management is required to make estimates and assumptions that affect the
reported amounts in the financial statements. Actual results could differ
significantly from those estimates. Material estimates common to the
banking industry that are particularly susceptible to significant change
in the near term include, but are not limited to, the determination of the
allowance for loan losses, the valuation of real estate acquired in
connection with foreclosures or in satisfaction of loans, and valuation
allowances associated with the realization of deferred tax assets which
are based on future taxable income.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
INVESTMENT SECURITIES
The Company classifies its securities in one of three categories: trading,
available for sale, or held to maturity. Trading securities are bought and
held principally for the purpose of selling them in the near term. Held to
maturity securities are those securities for which the Company has the
ability and intent to hold until maturity. All securities not included in
trading or held to maturity are classified as available for sale.
Available for sale securities are recorded at fair value. Held to
maturity securities are recorded at cost, adjusted for the amortization
or accretion of premiums or discounts. Unrealized holding gains and
losses, net of the related tax effect, on securities available for sale
are excluded from earnings and are reported as a separate component of
shareholders' equity until realized. Transfers of securities between
categories are recorded at fair value at the date of transfer. A
decline in the market value of any available for sale or held to maturity
security below cost that is deemed other than temporary is charged to
earnings and establishes a new cost basis for the security.
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FIRST CAPITAL BANK HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
-----------------------------------------------------
INVESTMENT SECURITIES, CONTINUED
Premiums and discounts are amortized or accreted over the life of the
related securities as adjustments to the yield. Realized gains and losses
for securities classified as available for sale and held to maturity are
included in earnings and are derived using the specific identification
method for determining the cost of securities sold.
LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans are stated at principal amount outstanding, net of the allowance for
loan losses. Unearned interest on discounted loans is recognized as income
over the term of the loans using a method which approximates a level
yield. Interest on other loans is calculated by using the simple interest
method on daily balances of the principal amount outstanding.
A loan is considered impaired when, based on current information and
events, it is probable that all amounts due according to the contractual
terms of the loan agreement will not be collected. Impaired loans are
measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate, or at the loan's
observable market price, or at the fair value of the collateral of the
loan if the loan is collateral dependent. Accrual of interest is
discontinued on a loan when management believes, after considering
economic and business conditions and collection efforts, that the
borrower's financial condition is such that collection of interest is
doubtful.
The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for
loan losses when management believes that the collectibility of the
principal is unlikely. The allowance represents an amount which, in
management's judgment, will be adequate to absorb probable losses on
existing loans that may become uncollectible.
Management's judgment in determining the adequacy of the allowance is
based on evaluations of the collectibility of loans. These evaluations
take into consideration such factors as changes in the nature and volume
of the loan portfolio, current economic conditions that may affect the
borrower's ability to pay, overall portfolio quality and review of
specific problem loans.
Management believes that the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part
of their examination process, periodically review the Bank's allowance for
loan losses. Such agencies may require the Bank to recognize additions to
the allowance based on judgments different than those of management.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Major additions and improvements are capitalized while maintenance and
repairs that do not improve or extend the useful lives of the assets are
expensed. When assets are retired or otherwise disposed of, the cost and
related accumulated depreciation are removed from the accounts, and any
gain or loss is reflected in earnings for the period.
Depreciation expense on furniture, fixtures and equipment is computed
using the straight-line method over 5 to 7 years.
ORGANIZATION COSTS
Costs incurred for the organization of the Company and the Bank
(consisting principally of legal, accounting, consulting and incorporation
fees) were expensed as incurred.
DEFERRED OFFERING EXPENSES
Costs incurred in connection with the stock offering, consisting of
direct, incremental costs of the offering, were deferred and were offset
against the proceeds of the stock sale as a charge to additional paid in
capital.
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FIRST CAPITAL BANK HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
-----------------------------------------------------
INCOME TAXES
The Company accounts for deferred income taxes using the liability
approach, and when this approach results in a net deferred tax asset,
management evaluates the likelihood of being able to realize that asset.
When management determines that some or all of the net deferred tax asset
is not realizable, a valuation allowance is recorded for that amount. At
September 30, 1999, the Company's only significant deferred tax attribute
was its net operating loss since inception, and this deferred tax asset
has been fully reserved.
PRE-OPENING EXPENSES
Costs incurred for overhead and other operating expenses are included in
the current period's operating results.
PROFORMA NET LOSS PER COMMON SHARE
Proforma net loss per common share is calculated by dividing net loss by
the number of common shares which were sold in the initial public
offering, and would be considered outstanding for all periods presented,
as prescribed in Staff Accounting Bulletin Topic 1:B.
(4) PREFERRED STOCK
---------------
Shares of preferred stock may be issued from time to time in one or more
series as established by resolution of the Board of Directors of the
Company. Each resolution shall include the number of shares issued,
preferences, special rights and limitations as determined by the Board.
(5) COMMITMENTS
-----------
The Company entered into an employment agreement with its President and
Chief Executive Officer, providing for an initial term of five years
commencing August 15, 1998. The agreement provides for a base salary, an
incentive bonus based on five percent of the Company's pre-tax earnings,
and annual stock options which vest equally over five years at $10 per
share equal to the lesser of 30,000 shares or five percent of the number
of shares sold in the initial public offering. Additionally, the Company
is to maintain a $1,000,000 key man life insurance policy, with $500,000
payable to the Company and $500,000 payable to the President's family. The
agreement further provides for other prerequisites, and subjects the
President to certain noncompete restrictions.
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<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
- --------------------------
The following is a discussion of the Company's financial condition as of
and for the period ended September 30, 1999. These comments should be read in
conjunction with the Company's condensed consolidated financial statements and
accompanying footnotes appearing in this report.
This report contains "forward-looking statements" relating to, without
limitation, future economic performance, plans and objectives of management for
future operations, and projections of revenues and other financial items that
are based on the beliefs of the Company's management, as well as assumptions
made by and information currently available to the Company's management. The
words "expect," "anticipate," and "believe," as well as similar expressions, are
intended to identify forward-looking statements. The Company's actual results
may differ materially from the results discussed in the forward-looking
statements, and the Company's operating performance each quarter is subject to
various risks and uncertainties that are discussed in detail in the Company's
filings with the Securities and Exchange Commission, including the "Risk
Factors" section in the Company's Registration Statement (Registration Number
333-69973) as filed with and declared effective by the Securities and Exchange
Commission.
FINANCIAL CONDITION
- -------------------
The Company was organized on July 29, 1998. The Company's initial principal
activities related to its organization, the conducting of its initial public
offering, the pursuit of approvals from the Office of the Comptroller of the
Currency (the "OCC") and Federal Deposit Insurance Corporation (the "FDIC") of
its application to charter the Bank and to obtain deposit insurance, and the
pursuit of approvals from the Federal Reserve Board for the Company to acquire
control of the Bank. By July 26, 1999, the Company received all required
approvals and on that day the Bank commenced operations.
A total of $9,618,858, net of offering costs of $281,142, was used to
capitalize the Company. Of this amount, $7,000,000 was used to capitalize the
Bank and the remainder will be used to pay organization expenses of the Company
and provide working capital, including additional future capital for investment
in the Bank, if needed. The Company believes this amount will be sufficient to
fund the activities of the Bank in its initial stages of operations, and that
the Bank will generate sufficient income from operations to fund its activities
on an ongoing basis.
As of September 30, 1999, the Bank had concluded two full month of
operations, and the Company had total assets of $15,980,020. During this period,
total deposits had grown to $6,788,669 and total loans had grown to $3,025,485.
The Bank had $5,936,221 in its investment portfolio, with an additional
$4,968,000 in overnight investments at September 30, 1999.
At September 30, 1999 the Bank's loan to deposit ratio was 45%.
Management's long term target for the loan to deposit ratio is 80%. The interest
rates being paid on interest bearing deposits and the service charge rates for
deposit services are comparable to local market rates. Management is making a
concerted effort to develop quality loan business in the local market and to
manage the deposit growth consistent with expected loan demand.
The deposit mix at September 30, 1999 was as follows: $904,042 (13% of
total deposits) in noninterest bearing demand deposits: $5,122,113 (75% of total
deposits) in interest checking accounts; $67,631 (1% of total deposits) in
savings accounts; and $694,883 (10% of total deposits) in time deposits. As the
Bank continues to grow, management expects the deposit mix to become more
heavily weighted towards the higher costing time deposits, thus increasing the
average cost of funds and reducing the Bank's net interest margin.
While the Bank continues to build its loan portfolio, excess funds are
invested in short to intermediate term government and mortgage-backed
securities. At September 30, 1999, all securities were classified as available
for sale totaling $5,936,221. Overnight interest bearing deposits (federal funds
sold) were $4,968,000. The current investment portfolio strategy is primarily to
provide liquidity for funding loans and initial operating expenditures and
secondarily for earnings enhancement. Accordingly, no investment securities have
final maturities greater than five years and all are pledgeable to raise funding
through secured borrowing or repurchase agreements.
Premises and equipment (net of depreciation) were $1,417,926 and consisted
primarily of main office location as well as furniture and fixtures acquired.
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<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
FINANCIAL CONDITION, CONTINUED
- -------------------
The Company had an accumulated deficit of $534,859 as of September 30,
1999. During the first nine months of 1999, the Company incurred a net loss of
$344,221. The first three quarters of 1999 reflected two full month of banking
operations with 14 full-time employees. Prior to commencing operations, the
losses were a result of expenses incurred in connection with activities related
to the organization of the Company and the Bank.
Net interest income for the nine months ended September 30, 1999 was
$159,389 ($153,984 in the third quarter). The Company had interest expense on
interest bearing deposits of $21,261 and the lines of credit of $33,449 for the
first nine months of 1999.
Total interest income in the first three quarters of 1999 was $214,099
($175,245 in the third quarter). Interest income on loans including fees was
$39,259 in the first three quarters of 1999 (all in the third quarter). Loan
interest income and deposit interest expense in 1999 were not incurred until the
Bank opened on July 26, 1999.
The provision for loan losses for the nine months ended September 30, 1999
was $35,500 (all in the third quarter). The provision for loan losses is the
charge to operating earnings that management believes is necessary to maintain
the allowance for possible loan losses at an adequate level. Since the Bank's
loan portfolio is only two months old, the Bank has no historical data about
loan losses on its portfolio on which to base projections for future losses.
Until more substantial evidence about potential loan losses is developed,
management believes the Bank should establish an allowance for loan losses that
will approximate 1.15% of total loans. At September 30, 1999, the allowance for
loan losses was $35, 500, which represented 1.16% of total loans. The loan
portfolio is periodically reviewed to evaluate the outstanding loans and to
measure both the performance of the portfolio and the adequacy of the allowance
for loan losses. This analysis includes a review of delinquency trends, actual
losses, and internal credit ratings. Management's judgment as to the adequacy of
the allowance is based upon a number of assumptions about future events which it
believes to be reasonable, but which may or may not be accurate. Because of the
inherent uncertainty of assumptions made during the evaluation process, there
can be no assurance that loan losses in future periods will not exceed the
allowance for loan losses or that additional allocations will not be required.
Noninterest income for the nine months ended September 30, 1999 was $1,120
(all in the third quarter). This consists of service charges on deposit
accounts.
Noninterest expense for the first three quarters of 1999 was $469,230
($288,286 in the third quarter). Salaries and benefits for the nine and three
months ended September 30, 1999 totaled $255,586 and $115,626, respectively. At
September 30, 1999 the Company had 14 employees. Occupancy costs are primarily
related to operations occurring in the rented office space until the permanent
bank building was completed. The remainder of the expenses relate primarily to
organizational costs incurred prior to commencement of operations.
Management does not expect the Company to make a quarterly profit at least
until the second half of 2000, while it establishes its position in the local
market and builds its banking services infrastructure. Management continues to
believe that the local market presents good opportunities for business
development to support a growing and profitable community bank. Despite the
anticipated losses in the first years of operations, the Company expects
earnings from loans and investments and other banking services as well as steady
deposit growth to provide sufficient liquidity for both the short and long term.
The Bank intends to manage its loan growth such that deposit flows will provide
funding for all loans as well as cash reserves for working capital and short to
intermediate term, liquid investments.
The Bank has established short-term Federal Funds Purchase lines of credit
with its correspondent banks which totals $6,150,000. This line is unsecured and
is designed to provide the Bank with short-term liquidity. These lines may be
revoked at any time by the correspondent banks and are available to the Bank
simply as an accommodation for short-term (two weeks or less) liquidity needs.
In the early years, the investment practices of the Company will limit
investments to highly liquid overnight investments in correspondent banks and
short to intermediate term U.S. Treasury and government agency securities. For
the foreseeable future, the Bank will consider its investment portfolio
primarily as a source for liquidity and secondarily as a source for earnings.
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CAPABILITY OF DATA PROCESSING SOFTWARE TO ACCOMMODATE THE YEAR 2000
- -------------------------------------------------------------------
Like many financial institutions, we rely upon computers for the daily
conduct of our business and for information systems processing. There is concern
among industry experts that on January 1, 2000, computers will be unable to
"read" the new year and there may be widespread computer malfunctions. In June
1996, the Federal Financial Institutions Examination Council alerted the banking
industry that serious challenges could be encountered with Year 2000 issues. In
addition, the OCC and the FDIC have issued guidelines to require compliance with
Year 2000 issues. In accordance with these guidelines, we have developed and are
executing a plan to ensure that our computer and telecommunication systems do
not have these Year 2000 problems. We generally rely on software and hardware
developed by independent third parties for our information systems. We are a new
company and therefore, despite our reliance upon third parties for many of our
information systems, we believe that by following the procedures that are
outlined below, we have the ability to minimize our Year 2000 risk.
We have entered into an agreement with Fiserv to provide our mission
critical hardware and software and to perform all overnight processing and
reconciliation of our daily transaction data. Fiserv is a well-established
company which provides similar systems and services to thousands of financial
institutions in the United States. Fiserv has completed testing the system we
will be using with generic data which has been artificially "aged" to simulate
all critical Year 2000 related dates. Banking regulators have approved this type
of testing as a valid means of testing. We have reviewed these tests and are
satisfied that the system tested is similar to ours and that the Fiserv system
did not encounter any Year 2000 problems. We therefore do not expect to
encounter any Year 2000 issues in the Fiserv system. Our agreements with Fiserv
include warranties that their system is Year 2000 compliant in all respects,
although the remedies available under such agreements are limited and
specifically exclude special, incidental, indirect, and consequential damages.
We will require all other significant vendors to provide similar test
results and warranties regarding Year 2000 compliance. Because we have chosen
our information systems and software with the Year 2000 in mind, we do not
believe we will have any significant expenses associated with Year 2000 issues.
We may also incur losses if our loan customers encounter Year 2000 problems
which would prevent them from repaying loans. We intend to require certification
from our larger commercial borrowers that their systems are Year 2000 compliant
and that thy do not expect to be adversely affected by the year change. Although
these certifications will be helpful, it would be very difficult for us to
accurately assess the Year 2000 readiness of any borrower. We may therefore
suffer loan losses from customers who have significant Year 2000 problems. The
amount of potential loss from this issue is not quantifiable.
Most Likely Consequences of Year 2000 Problems. We expect to identify and
resolve all Year 2000 problems that could materially adversely affect our
business. However, we believe that it is not possible to determine with complete
certainty that we have identified and corrected all Year 2000 problems. The
number of devices that could be affected and the interactions among these
devices are simply too numerous. In addition, we cannot accurately predict how
many failures related to the Year 2000 problem will occur with our suppliers,
customers, or other third parties or the severity, duration, or financial
consequences of such failures.
As a result, we expect that we could possibly suffer the following
consequences:
- A number of operational inconveniences and inefficiencies for the
Bank, its service providers, or its customers that may divert our
time and attention and financial and human resources from our
ordinary business activities; and
- System malfunctions that may require significant efforts by us or
our service providers or customers to prevent or alleviate material
business disruptions.
Additionally, there may be a higher than usual demand for liquidity
immediately prior to the century change due to deposit withdrawals by customers
concerned about Year 2000 issues. Because we have only recently opened and will
not have generated a large number of loans by year-end, we expect to have more
than adequate liquidity. However, to address this possible demand, we may also
secure an additional line of credit with the Federal Home Loan Bank or another
financial institution.
Contingency Plans. We have developed contingency plans to be implemented
as part of our efforts to identify and correct any Year 2000 problems affecting
our internal systems. Depending on the systems affected, these plans include
(a) accelerated replacement of affected equipment or software; (b) short term
use of backup equipment and software; (c) increased work hours for our
personnel or use of contract personnel to correct, on an accelerated schedule,
any Year 2000 problems which arise; and (d) other similar approaches. If we are
required to implement any of these contingency plans, these plans could have a
material adverse effect on our business.
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<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company
is a party or of which any of their property is the subject.
ITEM 2. CHANGES IN SECURITIES
<TABLE>
<S> <C>
(a) Not applicable
(b) Not applicable
(c) Effective data of Form SB-2 Registration Statement - March 18, 1999
Form SB-2 SEC Commission file number 333-69973
Termination date of offering - July 26, 1999
Sales agent - Allen C. Ewing & Co.
Class of Securities Registered - Common stock .01 par value
Amount and Aggregate Price of Shares Registered - 1,000,000 shares @ $10 per share for $10,000,000
Amount and Aggregate Price of Shares Sold - 1,000,000 shares @ $10 per share for $10,000,000
Estimated Direct payments to others for expenses incurred in connection with the issuance of shares - $281,000
Estimated Net proceeds from offering - $9,719,000
Use of proceeds:
- capitalization of First National of Nassau County -
$7,000,000
- working capital - $2,719,000
</TABLE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to security holders for a vote
during the three months ended June 30, 1999.
ITEM 5. OTHER INFORMATION
On November 4, 1999, the U.S. Senate and House of Representatives
each passed the Gramm-Leach-Bliley Act, previously known as the Financial
Services Modernization Act of 1999. The Act is expected to be signed into law by
President Clinton in early November 1999. Among other things, the Act repeals
the restrictions on banks affiliating with securities firms contained in
sections 20 and 32 of the Glass-Steagall Act. The Act also creates a new
"financial holding company" under the Bank Holding Company Act, which will
permit holding companies to engage in a statutorily provided list of financial
activities, including insurance and securities underwriting and agency
activities, merchant banking, and insurance company portfolio investment
activities. The Act also authorizes activities that are "complementary" to
financial activities. The Act is intended to grant to community banks certain
powers as a matter of right that larger institutions have accumulated on an ad
hoc basis. Nevertheless, the Act may have the result of increasing the amount of
competition that the Company faces from larger institutions and other types of
companies. In fact, it is not possible to predict the full effect that the Act
will have on the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27.1 Financial Data Schedule (for SEC use only)
(b) Not applicable
-12-
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST CAPITAL BANK HOLDING CORPORATION
Date: November 9, 1999 By: /s/ Michael G. Sanchez
------------------------- ---------------------------------------
Michael G. Sanchez
Chief Executive Officer
Date: November 9, 1999 By: /s/ Timothy S. Ayers
------------------------- ---------------------------------------
Timothy S. Ayers
Chief Financial Officer
-13-
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