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, 2000
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
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(Exact name of registrant as specified in its charter)
Florida 59-3532208
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(State of Incorporation) (I.R.S. Employer Identification No.)
1891 South 14th Street
Fernandina Beach, Florida 32035
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(Address of principal executive offices) (Zip Code)
904-321-0400
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(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 XX 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 October 6, 2000.
Transitional Small Business Disclosure Format (check one): YES XX NO
----
<PAGE>
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.
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL BANK HOLDING CORPORATION
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999 DECEMBER 30, 1999
(UNAUDITED) (AUDITED)
Assets
<S> <C> <C>
Cash $ 2,768,151 $ 1,056,088
Federal funds sold 3,432,000 1,871,000
Interest bearing deposits with other banks 253,427 -
---------------- ----------------
Total cash and cash equivalents 6,453,578 2,927,088
Investments available for sale 14,083,977 10,059,587
Other investments 277,000 231,000
Loans, net 16,679,985 6,337,579
Premises and equipment, net 1,616,612 1,646,871
Other assets 329,732 204,357
--------------- ----------------
$39,440,884 $21,406,482
=============== ================
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing $ 2,948,853 $ 1,531,558
Interest bearing 27,290,574 10,851,144
---------------- ----------------
Total deposits 30,239,427 12,382,702
Other liabilities 58,120 11,185
---------------- ----------------
Total liabilities 30,297,547 12,393,887
---------------- ----------------
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 10,000 10,000
Additional paid-in capital 9,708,858 9,708,858
Accumulated deficit (557,701) (634,951)
Other comprehensive loss (17,820) (71,312)
---------------- ----------------
Total stockholders' equity 9,143,337 9,012,595
---------------- ----------------
$ 39,440,884 $ 21,406,482
================ ================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL BANK HOLDING CORPORATION
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 398,625 $ 39,259 $ 915,796 $ 39,259
Interest income on investment securities 224,972 43,405 630,465 43,405
Interest income on federal funds sold 60,738 92,581 117,553 131,435
------------ ------------ ----------- ------------
Total interest income 684,335 175,245 1,663,814 214,099
------------ ------------ ----------- ------------
Interest expense:
Interest bearing deposits 274,353 21,261 598,699 21,261
Other ------------ ------------ ----------- ------------
77 - 625 33,449
------------ ------------ ----------- ------------
Total interest expense 274,430 21,261 599,324 54,710
Net interest income 409,905 153,984 1,064,490 159,389
provision for loan losses 36,000 35,500 137,000 35,500
------------ ------------ ----------- ------------
Net interest income after
provision for loan losses 373,905 118,484 927,490 123,889
------------ ------------ ----------- ------------
Noninterest income:
Gain on sale of SBA loans 30,751 - 90,099 -
Other 53,656 1,120 94,735 1,120
------------ ------------ ----------- ------------
Total noninterest income 84,407 1,120 184,834 1,120
------------ ------------ ----------- ------------
Noninterest expense:
Salaries and employee benefits 196,953 115,626 563,679 255,586
Occupancy 59,825 27,683 162,506 40,236
Other 113,064 144,977 308,889 173,408
------------ ------------ ----------- ------------
Total noninterest expense 369,842 288,286 1,035,074 469,230
------------ ------------ ----------- ------------
Net earnings (loss) $ 88,470 $ (168,682) $ 77,250 $ (344,221)
============ ============ =========== ============
Other comprehensive loss:
Unrealized income (loss) arising during the period 116,937 (31,353) 53,493 (31,353)
------------ ------------ ----------- ------------
Comprehensive income (loss) 205,407 (200,035) 130,743 (375,574)
============ ============ =========== ============
Per Share:
Net earnings (loss) per share .09 (.17) .08 (.34)
============ ============ =========== ============
Shares outstanding 1,000,000 1,000,000 1,000,000 1,000,000
============ ============ =========== ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FIRST CAPITAL BANK HOLDING CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net gain (loss) $ 77,250 $ (344,221)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation, amortization and accretion 77,037 6,151
Provision for loan losses 137,000 35,500
Gain on sale of loans (90,099) -
Change in other assets (150,224) (89,654)
Change in other liabilities 46,935 (15,467)
--------------- --------------
Net cash provided by (used in) operating activities 97,899 (407,691)
--------------- --------------
Cash flows from investing activities:
Proceeds from maturities of investments available for sale 1,005,909 -
Purchase of investment securities available for sale (4,915,659) (5,967,574)
Purchase of other investments (46,000) (231,000)
Net change in loans (12,878,048) (3,060,985)
Proceeds from sale of loans 2,488,740 -
Purchase of premises and equipment (83,077) (1,123,216)
Payment of organizational expenses (281,142)
-------------- --------------
Net cash used in investing activities (14,428,134) (10,663,917)
-------------- --------------
Cash flows from financing activities:
Net change in deposits 17,856,725 6,788,669
Proceeds from sale of common stock - 10,000,000
Repayment of note payable - (520,678)
Redemption of organizational shares (500)
-------------- --------------
Net cash provided by financing activities 17,856,725 16,267,491
-------------- --------------
Change in cash and cash equilvalents 3,526,490 5,195,883
Cash and cash equivalents at the beginning of the period 2,927,088 2,535
-------------- --------------
Cash and cash equivalents at the end of the period $ 6,453,578 $ 5,198,418
============== ==============
Supplemental cash flow information:
Interest paid $ 684,645 $ 52,463
============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FIRST CAPITAL BANK HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(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 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, 2000 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 consolidation.
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 is recorded at fair value. Held to maturity
securities is 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.
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.
<PAGE>
FIRST CAPITAL BANK HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
LOANS AND ALLOWANCE FOR LOAN LOSSES, CONTINUED
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.
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, 2000, the Company's significant deferred tax attribute was
its net operating loss since inception and this deferred tax asset has
been fully reserved.
(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
<PAGE>
$500,000 payable to the President's family. The agreement further provides
for other prerequisites, and subjects the President to certain noncompete
restrictions.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
AND 1999
FORWARD-LOOKING STATEMENTS
The following is a discussion of our financial condition as of and for the
period ended September 30, 2000 compared to December 31, 1999 and the results of
operations for the three months and nine months ended September 30, 2000. The
Bank commenced operations on July 26, 1999. Consequently, results of operations
for the three months and nine months ended September 30, 1999 reflect holding
company activity prior to the opening of the Bank and limited Bank operating
history, and therefore, a comparison with September 30, 1999 is not meaningful.
The discussion should be read in conjunction with our 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 our management, as well as assumptions made by and
information currently available to our management. The words "expect,"
"anticipate," and "believe," as well as similar expressions, are intended to
identify forward-looking statements. Our actual results may differ materially
from the results discussed in the forward-looking statements, and our operating
performance each quarter is subject to various risks and uncertainties that are
discussed in detail in our filings with the Securities and Exchange Commission,
including the "Risk Factors" section in our Registration Statement (Registration
Number 333-69973) as filed with and declared effective by the Securities and
Exchange Commission.
FINANCIAL CONDITION
As of September 30, 2000, the bank had concluded fourteen full months of
operations, and we had total assets of $39,440,884, an increase of 84% over
December 31, 1999. Significant contributors to the asset growth included
increases in cash and cash equivalents of $3,526,490 or 120%, loans of
$10,342,406 or 163% and investments available for sale of $4,024,390 or 40%. The
growth in these assets were funded by increased deposits. When compared to
December 31, 1999, deposits increased $17,856,725 or 144%.
At quarter end, the bank's loan to deposit ratio was 55%. Our long term target
for the loan to deposit ratio is 80%. The interest rates paid on interest
bearing deposits and the service charge rates for deposit services are
comparable to local market rates. We are 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, 2000 was as follows: $2,948,853 (10% of total
deposits) in noninterest bearing demand deposits: $19,801,820 (65% of total
deposits) in interest checking accounts; $258,491 (1% of total deposits) in
savings accounts; and $7,230,263 (24% of total deposits) in time deposits. As
the bank continues to grow, we expect 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, 2000, all securities were classified as available for sale
totaling $14,083,977. 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.
We had an accumulated deficit of $557,701 as of September 30, 2000. During the
first nine months of 2000, we had net income of $77,250. Prior to commencing
operations we incurred losses in July 1999 in connection with expenses related
to our organization.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
RESULTS OF OPERATIONS
Net interest income for the nine months ended September 30, 2000 was $1,064,490.
We had interest expense on interest bearing deposits of $598,699 for the first
nine months of 2000. Total interest income in the first three quarters of 2000
was $1,663,814 including interest income on loans totaling $915,796 and interest
income on investments of $630,465. Loan interest income and deposit interest
expense in 1999 were not incurred until the bank opened on July 26, 1999, and
totaled $39,259 and $21,261 for the nine months ending September 30, 1999.
The provision for loan losses for the nine months ended September 30, 2000 was
$137,000. Since the bank's loan portfolio is only fourteen 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
losses is developed, we believe the bank should establish an allowance for loan
losses that will approximate between 1.15% and 1.5% of total loans. At September
30, 2000, the allowance for loan losses was $211,000, which represented 1.25% of
total loans.
Noninterest income for the nine months ended September 30, 2000 was $184,834.
This consists primarily of gains on sales of SBA loans. Total proceeds
associated with these sales were $2,488,740. There were no loan sales related to
the period ended September 30, 1999.
Noninterest expense for the first three quarters of 2000 was $1,035,074.
Salaries and benefits for the nine months ended September 30, 2000 and 1999
totaled $563,679 and $255,586, respectively. The increase is due to a change in
head count as a result of the bank commencing operations. The remainder of the
expenses relate primarily to occupancy expenses and operational costs for data
processing, ATM processing and advertising.
LIQUIDITY
The bank has established short-term federal funds purchase lines of credit with
its correspondent banks, which total $6,150,000. These lines are unsecured and
are 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.
Additionally, the bank has investments available for sale of $14,083,977 and
cash and cash equivalents of $6,453,578 to fund operations and loan growth.
In the early years, our investment practices 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.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which we are a
party or of which any of our property is the subject.
ITEM 2. CHANGES IN SECURITIES
(a) Not applicable
(b) Not applicable
(c) Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
See Exhibit List attached hereto.
(b) Reports on Form 8-K.
There were no reports filed on Form 8-K for the period ended
September 30, 2000.
<PAGE>
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 3, 2000 By: /s/ Michael G. Sanchez
-----------------------------------
Michael G. Sanchez
Chief Executive Officer
Date: November 3, 2000 By: /s/ Timothy S. Ayers
------------------------------------
Timothy S. Ayers
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
------------------
Exhibit
Number Description
-------- -----------
3.1. Amended and Restated Articles of Incorporation (incorporated
by reference to Exhibit 3.1 of the Registration Statement on
Form SB-2, File No. 333-69973).
3.2. Bylaws (incorporated by reference to Exhibit 3.2 of the
Registration Statement on Form SB-2, File No. 333-69973).
4.1. Form of Certificate of Common Stock (incorporated by reference
to Exhibit 4.1 of the Registration Statement on Form SB-2,
File No. 333-69973).
10.1. Real Estate Sales Contract for the proposed site of the
Company dated September 16, 1998 (incorporated by reference to
Exhibit 10.1 of the Registration Statement on Form SB-2, File
No. 333-69973).
10.2. Amended and Restated Employment Agreement between the
Organizers of the Company and Michael G. Sanchez, dated
September 1, 1998 (incorporated by reference to Exhibit 10.2
of the Registration Statement on Form SB-2, File No.
333-69973).
10.3. The Company's 1999 Stock Incentive Plan (incorporated by
reference to Exhibit 10.3 of the Company's Form 10-KSB for the
period ended December 31, 1999).
10.4. Form of Organizer Warrant Certificate (incorporated by
reference to Exhibit 10.4 of the Registration Statement on
Form SB-2, File No. 333-69973).
27.1. Financial Data Schedule for the period ended September 30,
2000. (for SEC use only).
