<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 June 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)
Florida 59-3532208
---------------------------------------- ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1875A South 14th Street
Fernandina Beach, Florida 32034
---------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
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:
993,242 shares of common stock, $.01 par value per share, issued and
outstanding as of August 7, 1999.
Transitional Small Business Disclosure Format (check one):
YES [ ] NO [X]
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FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE 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
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
JUNE 30, 1999
(Unaudited)
<TABLE>
<S> <C>
Assets
------
Cash $ 75,428
Restricted cash 9,772,902
Premises and equipment, net 803,317
Deferred offering expenses 125,538
Other assets 308
------------
$ 10,777,493
============
Liabilities and Stockholders' Deficit
-------------------------------------
Subscribers' deposits $ 9,772,902
Accounts payable and accrued expenses 35,590
Note payable - line of credit 1,334,678
------------
Total liabilities 11,143,170
------------
Stockholders' deficit:
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;
10 shares issued and outstanding --
Additional paid-in capital 500
Deficit accumulated during the development stage (366,177)
------------
Total stockholders' deficit (365,677)
------------
$ 10,777,493
============
</TABLE>
See accompanying notes to financial statements.
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FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND
THE PERIOD FROM JULY 29, 1998 (INCEPTION) TO JUNE 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Six Months Cumulative
Ended Through
June 30, 1999 June 30, 1999
------------- -------------
<S> <C> <C>
Interest income $ 38,854 38,854
======== =======
Expenses:
Salaries and employee benefits 139,962 194,636
Consulting fees -- 54,102
Application fees 250 21,394
Interest 33,449 46,370
Occupancy 12,553 20,705
Other operating 28,179 67,824
-------- -------
Total expense 214,393 405,031
-------- -------
Net loss $175,539 366,177
======== =======
Net loss per share $ .18 .37
======== =======
</TABLE>
See accompanying notes to financial statements.
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FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND
THE PERIOD FROM JULY 29, 1998 (INCEPTION) TO JUNE 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Six Months Cumulative
Ended Through
June 30, 1999 June 30, 1999
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(175,539) (366,177)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation expense 2,321 4,642
Decrease (increase) in other assets 485 (308)
(Decrease) increase in accounts payable and accrued expenses (18,582) 35,590
--------- ---------
Net cash used in operating activities (191,315) (326,253)
--------- ---------
Cash flows from investing activities:
Purchase of premises and equipment (504,776) (807,958)
Payments for deferred stock offering expenses (45,016) (125,539)
--------- ---------
Net cash used in investing activities (549,792) (933,497)
--------- ---------
Cash flows from financing activities:
Proceeds from note payable 814,000 1,334,678
Proceeds from issuance of common stock -- 500
--------- ---------
Net cash provided by financing activities 814,000 1,335,178
--------- ---------
Net increase in cash 72,893 75,428
Cash at beginning of period 2,535 --
--------- ---------
Cash at end of period $ 75,428 75,428
========= =========
Supplemental disclosure of cash flow information:
Interest paid $ 40,030 46,370
========= =========
</TABLE>
As of June 30, 1999, restricted cash increased $9,772,902 as a result of
subscriptions for common stock and corresponding deposits to the escrow
account.
See accompanying notes to financial statements.
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FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE 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.
As of August 4, 1999, the Company raised $9,932,420 through an
offering of its common stock at $10 per share.
The Company is 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 purchases 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 June 30, 1999 are not necessarily
indicative of the results of a full year's operations.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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) are expensed as incurred.
DEFERRED OFFERING EXPENSES
Costs incurred in connection with the stock offering, consisting of
direct, incremental costs of the offering, are deferred and will be
offset against the proceeds of the stock sale as a charge to
additional paid in capital.
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 was calculated by dividing net loss
by the number (993,242) of common shares outstanding as a result of
the offering.
(3) 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.
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FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(4) COMMITMENTS AND RELATED PARTY TRANSACTIONS
On August 19, 1998 the Company entered into an operating lease
agreement with two of the organizers for space which will serve as the
temporary main office of the Company and the Bank at a rate of $1,200
per month, subject to increase after 6 months. The lease expires on
June 30, 1999 and can be canceled with a 30 day written notice.
Land on which the main office will be constructed was purchased from a
company owned by the spouse of one of the organizers.
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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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 June 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 have been 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.
At June 30, 1999, the Company had total assets of $10,777,493. These
assets consisted principally of restricted cash of $9,772,902 related to
subscribers' deposits and premises and equipment of $803,317. Premises and
equipment consists primarily of improvements to the Bank's current main office
site and the acquisition of land related to the Bank's permanent facility.
Additionally, the Company expects to spend approximately $850,000 in related
construction costs associated with the Bank's permanent facility.
The Company's liabilities at June 30, 1999 were $11,143,170 and
consisted primarily to subscribers' deposits of $9,772,902 and advances under a
line of credit from a bank of $1,334,678. The Company's line of credit was
repaid subsequent to July 26, 1999 with proceeds from the offering. The Company
had a stockholders' deficit of $365,677 at June 30, 1999.
The Company had a net loss of $175,539 for the six months ended June
30, 1999, and $366,177 cumulatively from inception through June 30, 1999, or a
pro forma net loss of $.18 per share for the quarter ended June 30, 1999 and
$.37 per share cumulatively since inception based on the actual shares of
993,242 which were outstanding as a result of the offering. This loss resulted
from expenses incurred in connection with activities related to the
organization of the Company and the Bank. These activities included preparing
and filing an application with the OCC and the FDIC to charter the Bank and to
obtain deposit insurance, preparing an application with the Federal Reserve
Board for approval of the Company to acquire the Bank, responding to questions
and providing additional information to the OCC, the FDIC, and the Federal
Reserve Board in connection with the application process, preparing a
prospectus and filing a registration statement with the Securities and Exchange
Commission (the "SEC"), selling the Company's common stock, meetings and
discussions among various organizers regarding various preopening issues,
hiring qualified personnel to work for the Bank, conducting public relation
activities on behalf of the Bank, developing prospective business contacts for
the Bank and the Company, and taking other actions necessary for a successful
bank opening. Because the Company was in the organization stage, it had no
operations from which to generate revenues with the exception of interest
earned on subscribers' deposits.
On July 26, 1999, a total of $9,932,420 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. For purposes of its charter application with the OCC, the
organizers estimated the Company's deficit when the Bank opens to be
approximately $500,000, although the actual deficit may be significantly higher
or lower. The Company believes that income from the operations of the Bank will
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be sufficient to fund the activities of the Company on an ongoing basis;
however, there can be no assurance that either the Bank or the Company will
achieve any particular level of profitability.
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
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(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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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
(a) Not applicable
(b) Not applicable
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
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule (for SEC use only)
(b) Not applicable
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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: August 9, 1999 By: /s/ Michael G. Sanchez
------------------------------ --------------------------------------
Michael G. Sanchez
Chief Executive Officer
Date: August 9, 1999 By: /s/ Timothy S. Ayers
------------------------------ --------------------------------------
Timothy S. Ayers
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE FIRST CAPITAL BANK HOLDING CORPORATION FOR THE SIX
MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 9,848,330
<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> 10,777,493
<DEPOSITS> 0
<SHORT-TERM> 1,370,268
<LIABILITIES-OTHER> 0
<LONG-TERM> 0
0
0
<COMMON> 500
<OTHER-SE> (366,177)
<TOTAL-LIABILITIES-AND-EQUITY> 10,777,493
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 38,854
<INTEREST-TOTAL> 38,854
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 12,553
<INTEREST-INCOME-NET> 26,301
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 0
<INCOME-PRETAX> 0
<INCOME-PRE-EXTRAORDINARY> (175,539)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (175,539)
<EPS-BASIC> 0.18
<EPS-DILUTED> 0.18
<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>
