Copy of Form 8-A - SEC Registration
of Atlantic BancGroup, Inc. Securities pursuant to Section 12(g)
of the
Securities Exchange Act of 1934
<PAGE>
FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Atlantic BancGroup, Inc.
(Exact name of registrant as specified in its charter)
Florida EIN 59-3543956
---------------------------------------- ----------------
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
1315 South Third Street, Jacksonville, Florida 32250
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
---------------------------------- ----------------------------------
N/A N/A
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
If this form relates to the registration of a class of securities pursuant
to Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), check the following box.[ ]
If this form relates to the registration of a class of securities pursuant
to Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), check the following box. [X]
Securities Act registration statement file number to which this form
relates: N/A (if applicable)
Securities to be registered pursuant to Section 12(g) of the Act:
Shares of Common Stock, .01 par value
-------------------------------------
(Title of class)
<PAGE>
Form 8-A
Atlantic BancGroup, Inc.
Page Two
Item 1. Description of Registrant's Securities to be Registered Pursuant to Item
202 of Regulation S-B Section 228.202.
1. Common Stock Dividend, Voting and Preemption Rights:
Atlantic BancGroup's Articles of Incorporation do not provide for
preemptive rights with respect to the issuance of shares. The holders of
Atlantic BancGroup common stock will have sole voting rights on all matters
required to be voted and acted upon by the shareholders. Holders of Atlantic
BancGroup common stock are entitled to receive dividends, if any, when and as
declared by the Board of Directors out of funds legally available to pay
dividends. The right to receive dividends is subordinate to that of the holders
of Atlantic BancGroup preferred stock, if and when issued. Holders of Atlantic
BancGroup common stock do not have preemptive or other subscription rights, are
not subject to further calls or assessments of Atlantic BancGroup and upon
liquidation are entitled, if and when issued, after payment of the full amount
to which holders of shares of Atlantic BancGroup preferred stock are entitled,
to share ratably in the assets available for distribution to holders of Atlantic
BancGroup capital stock.
2. Preferred Stock, Dividend, Voting, Conversion and Liquidation Rights:
Atlantic BancGroup's Articles of Incorporation authorizes 12,000,000 shares
comprised of 2,000,000 shares of preferred stock and 10,000,000 shares of common
stock each having a par value of $0.01 per share. The number of shares of
capital stock were authorized to provide Atlantic BancGroup's Board of Directors
the flexibility to issue additional shares, without further shareholder
approval, for proper corporate purposes, including financing, acquisitions,
stock dividends, stock splits, employee stock options and other similar
purposes. None of the 2,000,000 shares of preferred stock of Atlantic BancGroup
will be issued in the Reorganization.
3. Other Material Rights of Common or Preferred Stockholders:
None.
4. Provisions that would delay, defer or prevent a change in control:
Atlantic BancGroup's Articles of Incorporation provide staggered terms for
its directors, therefore, only one class of directors is subject to reelection
in any one given year.
Atlantic BancGroup's Articles of Incorporation provides that the Board of
Directors, when evaluating any offer of another "Person", to: (i) make a tender
or exchange offer for any equity security of Atlantic BancGroup; (ii) merge or
consolidate Atlantic BancGroup with another corporation or entity; or (iii)
purchase or otherwise acquire all or substantially all of the properties and
assets of Atlantic BancGroup, shall, in connection with the exercise of its
judgment in determining what is in the best interest of Atlantic BancGroup and
its shareholders, give due consideration to all relevant factors involved, as
defined therein. While this authority of the Board is generally recognized, by
having this provision in Atlantic BancGroup's Articles of Incorporation, the
Board of Directors may be in a stronger position to oppose a transaction if the
Board concludes that the transaction would not be in the best interests of
Atlantic BancGroup, even if the price offered is significantly greater than the
then market price of any equity security of Atlantic BancGroup. Oceanside Bank's
Articles of Incorporation simply require the vote of a majority of outstanding
shares to approve a proposal to merger or acquire the Bank.
- Debt Securities:
------------------
Registrant is not offering debt securities.
- Other Securities to be Registered:
------------------------------------
None.
<PAGE>
Item 2. Exhibits
5. Atlantic BancGroup, Inc. Articles of Incorporation
Documents.
6. Sample Stock Certificate of Atlantic BancGroup, Inc.
7. Form 10-KSB - Annual Report and Disclosure Statement to
shareholders by Oceanside Bank. Effective May 5, 1999.
Atlantic BancGroup, Inc. became the holding company for
Oceanside Bank.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
REGISTRANT: Atlantic BancGroup, Inc.
DATE: May 17, 1999
/s/ M. Michael Witherspoon
--------------------------
BY: M. Michael Witherspoon, Chairman/CEO
EXHIBIT 1
Atlantic BancGroup, Inc. Articles of Incorporation Documents
<PAGE>
ARTICLES OF INCORPORATION
OF
ATLANTIC BANCGROUP, INC.
In compliance with the requirements of Chapter 607, Florida Statutes, the
undersigned, being a natural person, does hereby act as an incorporator in
adopting and filing the following Articles of Incorporation for the purpose of
organizing a business corporation.
ARTICLE I - NAME
The name of the corporation is Atlantic BancGroup, Inc. ("Corporation").
The initial street address of the principal office of the Corporation is 1315
South Third Street, Jacksonville Beach, Florida 32250 or at such other place
within the State of Florida as the Board of Directors may designate.
ARTICLE II - NATURE OF BUSINESS
The Corporation has been formed to be the bank-holding company of Oceanside
Bank, state-chartered bank. The Corporation may engage in or transact any or all
lawful activities or business permitted under the laws of the United States and
the State of Florida, or any other state, country, territory or nation.
ARTICLE III - CAPITAL STOCK
Section 1 - Classes of Stock: The total number of shares of all classes of
capital stock which the Corporation shall have authority to issue is 12,000,000,
consisting of:
A. 2,000,000 shares of preferred stock ("Preferred Stock"); and
B. 10,000,000 shares of common stock, par value one cent
($0.01) per share ("Common Stock").
Section 2 - Common Stock: There shall be one class of Common Stock. Each
share of Common Stock shall have the same relative rights and be identical in
all respects with every other share of Common Stock. The holders of Common Stock
are entitled to elect the members of the Board of Directors of the Corporation
and such holders are entitled to vote as a class on all matters required or
permitted to be submitted to the shareholders of the Corporation. Each holder of
Common Stock is entitled to one vote per share. No holder of any class of stock
of the Corporation has preemptive rights with respect to the issuance of shares
of that or any other class of stock and the Common Stock is not entitled to
cumulative voting rights with respect to the election of directors.
Section 3 - Preferred Stock: The Board of Directors is authorized, subject
to any limitations prescribed by law, to provide for the issuance of the shares
of Preferred Stock in series, and by filing a certificate pursuant to the
applicable laws of the State of Florida (such certificate being hereinafter
referred to as a "Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series and to fix the stated
value, designation, powers, preferences and right of the shares of each such
series and any qualifications, limitations or restrictions thereof. The number
of authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares then outstanding) by the affirmative vote of the
holders of a majority of the Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to the terms of any Preferred Stock Designation.
ARTICLE IV - INITIAL REGISTERED AGENT AND STREET ADDRESS
The name of the registered agent is Igler & Dougherty, P.A., 1501 Park
Avenue East, Tallahassee, Florida 32301, which address is also the address of
the Registered Office of the Corporation.
ARTICLE V - MANAGEMENT OF THE CORPORATION
Section 1 - Authority of the Board: The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. In addition to the powers and authority expressly conferred upon them
by the Florida Statutes or by these Articles of Incorporation or the Bylaws of
the Corporation, the directors are hereby empowered to exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation.
Section 2 - Action by Shareholders: Any action required or permitted to be
taken by the shareholders of the Corporation must be effected at a duly called
Annual or Special Meeting of Shareholders of the Corporation and may not be
effected by any consent in writing by such shareholders.
Section 3 - Special Meeting of Shareholders: Special Meeting of
Shareholders of the Corporation may be called by the Board of Directors pursuant
to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board for
adoption), the Chairman of the Board or Chief Executive Officer of the
Corporation, or by shareholders holding at least 20% of the outstanding shares
of the Corporation.
ARTICLE VI - DIRECTORS
Section 1 - Number of Directors: The Board of Directors of the Corporation
shall be comprised of not less than three (3) nor more than fifteen (15)
directors and shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the Full Board as
set forth in the Corporation's Bylaws. The Board of Directors is authorized to
increase the number of directors by no more than two and to immediately appoint
persons to fill the new director positions until the next Annual Meeting of
Shareholders, at which meeting the new director positions shall be filled by
persons elected by the shareholders of the voting power of all the
then-outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class.
Section 2 - Election and Term: Directors shall be elected by a plurality of
the votes cast by the shares entitled to vote in the election at a meeting at
which a quorum is present. The term of the initial directors of the Corporation
expires at the first shareholders' meeting at which directors are elected.
Section 3 - Classes: The Directors shall be divided into three classes, as
nearly equal in number as reasonably possible, with the term of office of the
first class (Class I) to expire at the 1999 Annual Meeting of the Shareholders,
the term of office of the second class (Class II) to expire at the 2000 Annual
Meeting of Shareholders and the term of office of the third class (Class III) to
expire at the 2001 Annual Meeting of Shareholders. At each Annual Meeting of
Shareholders following such initial classification and election, directors
elected to succeed those directors whose terms expire shall be elected for a
term of office to expire at the third succeeding Annual Meeting of Shareholders
after their election.
Section 4 - Vacancies: Subject to the rights of the holders of any series
of Preferred Stock then outstanding, newly created directorships resulting from
any increase in the authorized number of directors of any vacancies in the Board
of Directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause may be filled only by a majority vote of the
directors then in office, though less than a quorum. Directors so chosen shall
hold office for a term expiring at the next Annual Meeting of Shareholders. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
Section 5 - Notice: Advance notice of shareholder nominations for the
election of directors and of business to be brought by shareholders before any
meeting of the shareholders of the Corporation shall be given in the manner
provided in the Bylaws of the Corporation.
Section 6 - Removal by Shareholders: Subject to the rights of the holders
of any series of Preferred Stock then outstanding, any director, or the entire
Board of Directors, may be removed from office at any time by a majority of the
voting power of all of the then-outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.
Section 7- Initial Board of Directors: The initial Board of Directors shall
consist of ten (10) members. The names and address of the persons who will serve
on the initial Board of Directors are:
Name Address
Frank J. Cervone 91 Nina Lane
Ponte Vedra Beach, FL 32082
Barry W. Chandler 1022 Seawood Drive
Neptune Beach, FL 32266
Jimmy D. Dubberly 108 Greenwood Drive
Glennville, GA 30427
Donald F. Glisson, Jr. 2195 Osprey Point Drive
Jacksonville, FL 32224
Willard B. Nicholson, Jr. 699 Beach Avenue
Atlantic Beach, FL 32233
Robin Scheiderman 3419 Lands End Drive
St. Augustine, Florida 32095
Gordon K. Watson 1262 Fish Hook Way
Ponte Vedra Beach, FL 32082
Conrad I. Williams 314 12th Street
Atlantic Beach, FL 32233
M. Michael Witherspoon 3343 Lighthouse Pointe Lane
Jacksonville, FL 32250
Dennis M. Wolfson 9548 Waterford Road
Jacksonville, FL 32257
ARTICLE VIII - ACQUISITION OFFERS
The Corporation shall not be merged or consolidated with another
corporation or entity and the Corporation shall not sell or otherwise dispose of
all or substantially all of the properties or assets of the Corporation unless
such merger, consolidation, sale or disposition is approved by a vote of at
least 70% of the outstanding shares of common stock of the Corporation.
The Board of Directors of the Corporation, when evaluating any offer of
another Person to: (i) make a tender or exchange offer for any equity security
of the Corporation, (ii) merge or consolidate the Corporation with another
corporation or entity, or (iii) purchase or otherwise acquire all or
substantially all of the properties and assets of the Corporation, shall, in
connection with the exercise of its judgment in determining what is in the best
interest of the Corporation and its shareholders, give due consideration to all
relevant factors including, without limitation, the social and economic effect
of acceptance of such offer on the Corporation's present and future customers
and employees and those of its Subsidiaries; on the communities in which the
Corporation and its Subsidiaries operate or are located; on the ability of the
Corporation to fulfill its corporate objectives as a financial institution
holding company and on the ability of its subsidiary financial institutions to
fulfill the objectives of such institutions under applicable statutes and
regulations.
ARTICLE VIII - INCORPORATOR
The name and street address of the person signing these Articles of
Incorporation is:
Name Address
Sam Lester, Esq. Igler & Dougherty, P.A.
1501 Park Avenue East
Tallahassee, Florida 32301
ARTICLE IX - INDEMNIFICATION
The Corporation shall indemnify its directors, officers, employees, and
agents to the fullest extent permitted by Florida law.
ARTICLE XIII - AMENDMENT
The Corporation reserves the right to amend or repeal any provision
contained in these Articles of Incorporation in the manner prescribed by Chapter
607, Florida Statutes, and all rights conferred upon shareholders are granted
subject to this reservation; however, an affirmative vote of at least 70% of the
outstanding common stock of the Corporation shall be necessary to amend Section
6 of Article VI and Article VIII of these Articles.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 22 day of October, 1998.
/s/ Sam Lester
--------------
Sam Lester, Esq.
Incorporator/General Counsel
<PAGE>
CERTIFICATE OF DESIGNATION OF
REGISTERED AGENT/REGISTERED OFFICE
PURSUANT TO THE PROVISIONS OF SECTION 607.0501, FLORIDA STATUTES, THE
UNDERSIGNED CORPORATION, ORGANIZED UNDER THE LAWS OF THE STATE OF FLORIDA,
SUBMITS THE FOLLOWING STATEMENT IN DESIGNATING THE REGISTERED THE REGISTERED
OFFICE/REGISTERED AGENT, IN THE STATE OF FLORIDA.
1. The name of the corporation is Atlantic BancGroup, Inc.
2. The name and address of the registered agent and office is:
Igler & Dougherty, P.A.
1501 Park Avenue East
Tallahassee, Florida 32301
Having been named as registered agent and to accept service of process for the
above stated corporation at the place designated in this certificate, I hereby
accept the appointment as registered agent and agree to act in this capacity. I
further agree to comply with the provisions of all statutes relating to the
proper and complete performance of my duties, and I am familiar with and accept
the obligations of my position as registered agent.
Igler & Dougherty, P.A.
By: /s/ Sam Lester October 22, 1998
- ------------------ ----------------
Sam Lester, Esq. Date
EXHIBIT 2
Sample Stock Certificate of Atlantic BancGroup, Inc.
<PAGE>
Number Shares
- ------ ------
Incorporated under the Laws of
the State of Florida
Atlantic BancGroup, Inc.
12,000 SHARES AT $.01 PAR VALUE
THIS CERTIFIES THAT __________________ is hereby issued ____________________
shares fully paid and transferable only on the books of the Corporation by the
holder hereof in person or by an authorized attorney upon surrender of this
Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this _____ day of ______________ A.D. 19 __
- -------------------------------------- -----------------------------------
Secretary President
<PAGE>
For Value Received, ________________ hereby sell, assign and transfer
unto ______________________________________________ Shares of the Capital
Stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint ______________________ Attorney to transfer the said
Stock on the books of the within named Corporation with full power of
substitution in the premises.
Dated _______________, 19____
In presence of
------------------- -------------------
EXHIBIT 3
Form 10-KSB - Annual Report and Disclosure Statement to shareholders
by Oceanside Bank. Effective May 5, 1999
Atlantic BancGroup, Inc. became the holding company for Oceanside Bank
FEDERAL DEPOSIT INSURANCE CORPORATION
Washington, D.C. 20429
<PAGE>
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1998
FDIC File Number 34284
OCEANSIDE BANK
(Exact name of registrant as specified in its charter)
Florida 58-2232148
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1315 S. Third Street, Jacksonville Beach, Florida 32250
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 247-4092
Securities registered pursuant to Section 12(b) of the Act: None Securities
registered pursuant to Section 12(g) of the Act:
Common Stock, par value $5.00 per share
Warrants to Purchase Common Stock at $10.00 per share
(Title of Class)
Check whether the issuer has (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. YES X NO
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year were $2,483,000.
The aggregate market value of the Common Stock of the issuer held by
non-affiliates of the issuer (407,190 shares) on February 24, 1999, was
approximately $3,992,000. As of such date, no organized trading market existed
for the Common Stock of the issuer. The aggregate market value was computed by
reference the net book value of $8.49 per share as of December 31, 1998. For the
purposes of this response, directors, officers and holders of 5% or more of the
issuer's Common Stock are considered the affiliates of the issuer at that date.
As of February 24, 1999, there were issued and outstanding 594,750 shares
of the issuer's Common Stock.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
General
Oceanside Bank, a Florida state bank ("Oceanside"), was formed in March,
1997, and operates as a community bank in its primary service area ("PSA"),
providing general commercial banking services to businesses and individuals in
the community it serves. The principal business of Oceanside is to receive
demand and time deposits from the public and to make loans and other
investments. Oceanside operates from a main office located at 1315 South Third
Street, Jacksonville Beach, Florida, and a branch office located at 560 Atlantic
Boulevard, Neptune Beach, Florida. See PART I, ITEM 2. - "DESCRIPTION OF
PROPERTY." Oceanside draws most of its customer deposits and conducts a
significant portion of its lending transactions from and within its PSA in the
"beaches area" of Jacksonville, Florida. See "DESCRIPTION OF BUSINESS - Primary
Service Area."
Oceanside operates as a locally-owned and operated institution aimed at
providing prompt, efficient, and personalized service to individuals, small and
medium-sized businesses, professionals and other local organizations. Generally,
customers have one account officer to serve all of their banking needs and have
ready access to senior management when necessary. In addition, a committee of
the Board of Directors is responsible for maintaining a visible profile for
Oceanside in the local community. Because the officers and directors have
established reputations in the local community, they believe they are able to
actively promote Oceanside within the PSA.
Oceanside's principal strategy is to:
o Expand commercial and small business market within the PSA;
o Establish a real estate mortgage market within the PSA for retail
lending and throughout Duval County; and
o Develop a consumer loan base.
Oceanside believes that the most profitable banking relationships are
characterized by high deposit balances, low frequency of transactions and low
distribution requirements. Oceanside believes that a community bank with local
management is well-positioned to establish these relationships with smaller
commercial customers and households. Oceanside aggressively markets its high
quality and innovative services to the customer.
The principal sources of funds for Oceanside's loans and other investments
are demand, time, savings, and other deposits, amortization and prepayment of
loans, sales to other lenders or institutions of loans or participations in
loans, fees received from other lenders or institutions for servicing loans sold
to such lenders or institutions and borrowings. A portion of the net proceeds of
Oceanside's initial offering of its common stock (the "Offering") has been used
by Oceanside to fund loans and other investments. The principal sources of
income for Oceanside are interest and fees collected on loans, including fees
received for servicing loans sold to other lenders or institutions, and to a
lesser extent, interest and dividends collected on other investments. The
principal expenses of Oceanside are interest paid on savings and other deposits,
interest paid on other borrowings of Oceanside, employee compensation, office
expenses, and other overhead and operational expenses. Oceanside offers several
deposit accounts, including demand deposit accounts, negotiable order of
withdrawal accounts ("NOW" and "Super-NOW" accounts), money market accounts,
certificates of deposit, and various retirement accounts. In addition, Oceanside
has joined an electronic banking network so that its customers may use the
automated teller machines (the "ATMs") of other financial institutions and
operates a drive-in teller service and 24-hour depository.
The following credit services are offered by Oceanside:
o Consumer credit, automobile loans, real estate equity lines of
credit, education loans, and real estate loans secured by
single-family residences;
o Commercial and business credit for small and medium-sized
companies, including Small Business Administration and other
government-guaranteed financing;
o Individual and builder short-term residential construction
financing;
o Home improvement loans; and
o Consumer credit cards and credit card processing.
Oceanside provides a full range of competitive banking services and
emphasizes the way the services are delivered. Management of Oceanside focuses
its efforts on filling the void created by the increasing number of
locally-owned community banks that have been acquired by large regional holding
companies, negatively impacting the personal nature of the delivery, quality,
and availability of banking services available in the PSA and surrounding areas.
Primary Service Area
Oceanside's PSA, which encompasses the easternmost portion of Duval County,
Florida, and the northeasternmost portion of St. Johns County, Florida, is
bounded by the St. John's River to the north, State Road 210 in St. Johns County
to the south, the Atlantic Ocean to the east, and the Intracoastal Waterway in
Duval County and the Duval/St. Johns County line in St. Johns County to the
west. The PSA includes the communities and municipalities of Ponte Vedra Beach,
Jacksonville Beach, Atlantic Beach, Neptune Beach, Florida, and that portion of
the City of Jacksonville known as Mayport (the home of the Mayport U.S. Naval
Air Station). Duval and St. Johns Counties enjoy an abundant and educated work
force, attractive business costs, and a good relationship between the private
and public sectors.
<PAGE>
In general, commercial real estate in the PSA consists of small shopping
centers and office buildings. The type of residential real estate within the PSA
varies, with a number of condominiums and townhouses located along the beaches,
a greater concentration of apartments in the Mayport area and single-family
housing dispersed throughout the PSA. New residential growth in the PSA consists
primarily of working professionals with families. Over half of the population of
the PSA is between the ages of 15 and 44.
Oceanside operates around a base of local stock ownership and customers.
Because it is a local organization, all policies and procedures are tailored to
the local market instead of to statewide or regional markets, which represent
the areas of activity for the majority of the financial institutions currently
operating in the PSA.
Oceanside believes that the PSA is a desirable market in which to operate a
new independent, locally-owned bank with a broad base of shareholders from the
beaches area of Jacksonville can successfully penetrate the banking market in
the PSA, and that the existing conditions provide a positive environment for the
operation of Oceanside.
Competition
The business of banking is highly competitive. Oceanside competes with
other banks and credit unions in the PSA and with banks, savings and loan
associations and credit unions elsewhere in the Jacksonville market. As of the
date of this Registration Statement, there are eight banks operating in the PSA,
comprising a total of 12 banking offices, and two credit unions. The eight banks
currently operating in the PSA are Compass Bank; First Union National Bank of
Florida; People's First Community Bank; Monticello Bank; NationsBank of Florida,
N.A.; SouthTrust Bank of Florida, N.A.; SunTrust Bank, North Florida, National
Association, and Gordon Bank. The two credit unions operating within the PSA are
Jax Navy Federal Credit Union and Educational Community Credit Union. Oceanside
believes that its operation as a locally-owned and controlled bank with a broad
base of ownership in the PSA enhances its ability to compete with those
financial institutions now operating in its market, but no assurances can be
given in this regard.
Oceanside's competitive strategy with respect to the financial institutions
described above consists of:
o reviewing loan requests quickly with a locally-based loan
committee;
o maintaining flexible but prudent lending policies;
o personalizing service by establishing long-term banking
relationships with its customers; and
o maintaining a strong ratio of employees to customers to enhance
the level of service.
The operating policies for the majority of the financial institutions now
operating in the PSA are established by boards of directors located outside the
PSA (and in some cases, outside the Jacksonville area). As a result, management
believes that such institutions are not operating based primarily on the needs
of or convenience to residents and businesses in the PSA. Furthermore, customers
in the PSA often have little or no access to senior officers at such
institutions and that senior personnel are not available to assist or advise
lower level personnel in decision making or to provide high levels of lending
authority. Oceanside's operations are tailored to fill the gaps left by such
institutions.
Regulation
Oceanside is subject to comprehensive regulation, examination, and
supervision by the Florida Department of Banking and Finance (the "Department")
and the Federal Deposit Insurance Corporation ("FDIC") and is subject to other
laws and regulations applicable to banks. Such regulations include limitations
on loans to a single borrower and to Oceanside's 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; disclosure of the costs and terms of such
credit; and restrictions as to permissible investments. Oceanside is examined
periodically by both the Department and the FDIC, to each of whom it will submit
periodic reports regarding its financial condition and other matters. Both the
Department and the FDIC have a broad range of powers to enforce regulations
under their respective jurisdictions, and to take discretionary actions
determined to be for the protection of the safety and soundness of Oceanside,
including the institution of cease and desist orders and the removal of
directors and officers.
FDIC Regulations. Oceanside's deposit accounts are insured by the Bank
Insurance Fund ("BIF") of the FDIC up to a maximum of $100,000 per insured
depositor. The FDIC issues regulations, conducts periodic examinations, requires
the filing of reports, and generally supervises the operations of its insured
banks. The approval of the FDIC is required prior to a merger or consolidation
or the establishment or relocation of an office facility. This supervision and
regulation is intended primarily for protection of depositors and not
stockholders.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") substantially revised the depository institution regulatory and
funding provisions of the Federal Deposit Insurance Act. Amount other things,
FDICIA requires the federal banking regulators to take prompt corrective action
in respect of depository institutions that do not meet minimum requirements.
FDICIA establishes five capital tiers: "well capitalized," "adequately
capitalized," "undercapitalized," "significantly capitalized," and "critically
undercapitalized." A depository institution is well capitalized if it
significantly exceeds the minimum level required by regulation for each relevant
capital measure, adequately capitalized if it meets each such measure,
undercapitalized if it fails to meet any such measure, significantly
undercapitalized if it is significantly below such measure, and critically
undercapitalized if it fails to meet any critical capital level set forth in
regulations. The critically undercapitalized level occurs where tangible equity
is less than 2% of total tangible assets or less than 65% of the minimum
leverage ratio prescribed by regulation (except to the extent that 2% would be
higher than such 65% level). A depository institution may be deemed to be in a
capitalization category that is lower than is indicated by its actual capital
position if it receives an unsatisfactory examination rating.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) if the depository institution
would thereafter be undercapitalized. In addition, undercapitalized depository
institutions are subject to growth limitations and are required to submit
capital restoration plans. The federal banking agencies may not accept a capital
plan without determining, among other things, that the plan is based on
realistic assumptions and is likely to succeed in restoring the depository
institution's capital. If a depository fails to submit an acceptable plan, it is
treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks. Critically
undercapitalized depository institutions are subject to appointment of a
receiver or conservator.
FDICIA provides authority for special assessments against insured deposits
and for the development of a general risk-based insurance assessment system. The
risk-based insurance assessment system would be used to calculate a depository
institution's semi-annual deposit insurance assessment based on the probability
(as defined in the statute) that the BIF will incur a loss with respect to the
institution. In accordance with FDICIA, the FDIC implemented a transitional
risk-based insurance premium system. Since implementation, average assessments
have fallen and, in 1998, approximately 95% of all BIF-insured institutions,
including Oceanside, paid no assessment under this risk-based insurance premium
system.
FDICIA also contains various provisions related to an institution's
interest rate risk. Under certain circumstances, an institution may be required
to provide additional capital or maintain higher capital levels to address
interest rate risks.
In addition, the FDIC has adopted a minimum leverage ratio of 3%. The
minimum leverage ratio is the ratio of common equity, retained earnings, and
certain amounts of perpetual preferred stock (after subtracting goodwill and
after making certain other adjustments) to the total assets of the institution.
Generally, banking organizations are expected to operate well above the minimum
required capital level of 3%, unless they meet certain specified criteria,
including that they have the highest regulatory ratings. Most banking
organizations are required to maintain a leverage ratio of 3% plus an additional
cushion of 1% to 2%. The guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be expected to maintain
strong capital positions substantially above the minimum supervisory levels
without significant reliance upon intangible assets.
Dividend Restrictions. In addition to dividend restrictions placed on
Oceanside by the FDIC based on Oceanside's minimum capital requirements, the
Florida Financial Institutions Code prohibits the declaration of dividends in
certain circumstances. Section 658.37, Florida Statutes, prohibits the
declaration of any dividend until a bank has charged off bad debts, depreciation
and other worthless assets, and has made provision for reasonably-anticipated
future losses on loans and other assets. Such dividend is limited to the
aggregate of the net profits of the dividend period combined with a bank's
retained net profits of the preceding two years. A bank may declare a dividend
from retained net profits accruing prior to the preceding two years with the
approval of the Department. However, a bank will be required, prior to the
declaration of a dividend on its common stock, to carry 20% of its net profits
for such preceding period as is covered by the dividend to its surplus fund,
until the surplus fund equals at least the amount of the bank's common and
preferred stock then issued and outstanding. In no event may a bank declare a
dividend at any time in which its net income from the current year, combined
with the retained net income from the preceding two years is a loss or which
would cause the capital accounts of the bank to fall below the minimum amount
required by law, regulation, order, or any written agreement with the Department
or the FDIC.
Riegle-Neal Interstate Banking and Branching Efficiency Act. The
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act") provides that as of June 1, 1997, adequately
capitalized and managed banks will be able to engage in interstate branching by
merging banks in different states, including Florida, which did not opt out of
the application of this provision. If a state did not opt-out, banks will be
required to comply with the state's provisions with respect to branching across
state lines.
The foregoing is necessarily a general description of certain provisions of
federal and state law and does not purport to be complete. Proposals to change
the laws and regulations governing the banking industry are frequently
introduced in Congress, in the state legislatures, and before the various bank
regulatory agencies. The likelihood and timing of any such changes and the
impact such changes might have on Oceanside cannot be determined at this time.
Common Stock
Oceanside has 2,000,000 shares of its $5.00 par value Common Stock
authorized. As of February 24, 1999, 594,750 shares were outstanding. The
holders of Common Stock are entitled to one vote for each share held of record
on all matters to be voted on by stockholders. Upon liquidation, dissolution, or
winding-up of Oceanside, the holders of Common Stock are entitled to receive pro
rata all assets remaining legally available for distribution to shareholders.
The holders of Common Stock have no right to cumulate their votes in the
election of directors. the Common Stock has no preemptive or other subscription
rights, and there are no conversion rights or redemption or sinking fund
provisions with respect to such shares. All the outstanding shares of Common
Stock are fully paid and non-assessable.
The holders of Common Stock are entitled to receive such dividends, if any,
as may be declared from time to time by the Board of Directors in its discretion
from funds legally available therefor. Significant restrictions apply to
Oceanside's ability to pay dividends to its shareholders under applicable
banking laws and regulations. See "DESCRIPTION OF BUSINESS - Regulation Dividend
Restrictions." Oceanside has not declared or paid any dividends on the Common
Stock to date and does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future. Oceanside anticipates that the earnings of
Oceanside will be retained by Oceanside during the foreseeable future and held
for purposes of enhancing Oceanside's capital.
<PAGE>
Warrants
Each Subscriber to the Offering received warrants to purchase Common Stock
("Warrants") equal to the number of shares of Common Stock purchased. Each
Warrant gives the holder the right to purchase one share of Common Stock at
$10.00 per share at any time during the five (5) year period beginning on the
date of the opening of Oceanside; provided, however, that at any time after one
year following the date Oceanside commences business, the board of directors of
Oceanside, by written notice to each Warrant holder may shorten the period
during which the Warrant may be exercised to a period ending no sooner than 30
days after such notice is mailed. The Warrants may be exercised by delivery to
Oceanside of a check for the purchase price of the number of shares of Common
Stock being purchased or by authorizing Oceanside to retain whole shares of
Common Stock which would otherwise by issuable upon exercise of the Warrant
having a fair market value equal to the exercise price. The Warrants are
separately transferable. Holders of the Warrants do not have any of the rights
or privileges of shareholders of Oceanside (except to the extent they otherwise
own Common Stock) prior to the exercise of the Warrants. The Warrants will be
entitled to the benefit of adjustments in the exercise price and in the number
of shares of Common Stock deliverable upon the exercise thereof upon the
occurrence of certain events, including stock dividends, stock splits,
reclassification, reorganizations, consolidations, and mergers. The foregoing is
a summary of the principal terms of the Warrants and does not purport to be
complete.
Recent Sales of Unregistered Securities
From July 18, 1996, through December 31, 1997, Oceanside issued 594,430
shares of Common Stock and Warrants pursuant to the Offering. The securities
sold in the Offering prior to March 31, 1997, were sold solely through the
efforts of the organizers of Oceanside. After March 31, 1997, Oceanside engaged
the services of Josephthal Lyon & Ross (the "Placement Agent") to assist
Oceanside in selling an additional 167,220 shares of Common Stock and Warrants.
The proceeds of the Offering were $5,947,300, less $25,150 paid to the Placement
Agent as compensation for securities sold by or through the Placement Agent. The
Offering was exempt from registration pursuant to Section 3(a)(2) of the
Securities Act of 1933, since securities issued by a bank were sold pursuant to
the Offering.
Indemnification of Directors and Officers
Oceanside's Bylaws afford indemnification rights to its officers and
directors to the fullest extent permitted or required by the Florida Business
Corporation Act.
Under Section 607.0850 of the Florida Business Corporation Act, officers
and directors of a Florida corporation may be entitled to indemnification by the
corporation against liability incurred in connection with any threatened,
pending, or completed action, suit, or other type of proceeding, whether civil,
criminal, administrative, or investigative and whether formal or informal;
provided, however, that such officer or director 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 his conduct was unlawful. Such indemnification
includes obligations to pay a judgment, settlement, penalty, fine, and expenses
actually and reasonably incurred with respect to a proceeding. In addition,
Florida law provides that officers and directors shall be indemnified by a
Florida corporation against expenses actually and reasonably incurred by such
officer or director, to the extent that such officer or director has been
successful on the merits or otherwise in defense of any proceeding (as defined
in Section 607.0850) or in defense of any claim, issue, or matter therein.
In addition, Section 607.0831 of the Florida Business Corporation Act
provides that a director is not personally liable for monetary damages to a
corporation or any other person for any statement, vote, decision, or failure to
act, regarding corporate management or policy, by a director, unless such
director breached or failed to perform his duties as a director and such breach
or failure to perform constitutes:
o a violation of the criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful;
o a transaction from which the director derived an improper
personal benefit, either directly or indirectly;
o a circumstance involving a director's liability for unlawful
distributions under the Florida Business Corporation Act;
o in proceedings by or in the right of the corporation to procure a
judgment or by or in the right of a shareholder, conscious
disregard for the best interest of the corporation, or willful
misconduct; or
o in a proceeding by or in the right of someone other than the
corporation or a shareholder, recklessness or an act or omission
which was committed in bad faith or with malicious purpose or in
a manner exhibiting wanton and willful disregard of human rights,
safety, or property.
Employees
Oceanside has approximately 22 full-time employees and one part-time
employee. No significant changes in the number of its full-time employees are
currently anticipated. Because Oceanside believes that a primary deficiency of
large regional banks is the constant turnover of personnel and therefore a lack
of continuing personal relationships with local customers, Oceanside's goal is
to maintain a competently trained staff of local bankers who have settled in the
community on a permanent basis. Oceanside allocates funding for continuing
on-the-job and educational training, and personnel are encouraged to enroll in
various banking courses and other seminars to improve their overall knowledge of
the banking business.
<PAGE>
Statistical Profile and Other Financial Data
Reference is hereby made to the statistical and financial data contained in
the section captioned "PART II, ITEM 6. - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION, PLAN OF OPERATIONS, AND RESULTS OF OPERATIONS," for
statistical and financial data providing a review of Oceanside's business
activities.
ITEM 2. DESCRIPTION OF PROPERTY.
On October 29, 1996, Oceanside purchased from an unaffiliated entity the
two-story, 3,100 square-foot building at 1315 South Third Street, Jacksonville
Beach, Florida, as its main office ("Main Office"). The Main Office includes
three inside teller stations, four drive-up teller windows, an automated teller
machine, and on-site parking. The Main Office is the former home of a Barnett
Bank branch office. Oceanside purchased the facility for $850,000 and used a
portion of the proceeds of the Offering to add 2,200 square feet to the
Facility. Oceanside acquired the Main Office with funds drawn on a line of
credit with Columbus Bank and Trust Company, which was repaid out of the
proceeds of the Offering.
On June 3, 1998, Oceanside purchased from SouthTrust Bank, N.A., a 1,968
square foot building located at 560 Atlantic Boulevard, Neptune Beach, Florida.
This facility was formerly a branch office of SouthTrust Bank, N.A. Oceanside
purchased this building for $426,650 and spent $49,963 on renovations and
upgrades. This facility includes two offices, three inside teller windows,
general lobby space, three drive-up teller windows, an ATM, and on-site parking.
The current capital structure of Oceanside supported this purchase.
The Main Office and branch facility are centrally located within the PSA
and are within convenient travel distance to the concentration of the
residential population and to areas of major commercial activity within the PSA.
Using the existing road system within the PSA, residents and daytime inhabitants
in and near the PSA are able to access both locations by means of four major
north/south roads and two east/west roads. Third Street/A1A, on which
Oceanside's Main Office is located, stretches north from St. Johns County to
Mayport, and is the main north-south thoroughfare in the PSA. In addition, Beach
Boulevard, Atlantic Boulevard, and J. Turner Butler Boulevard provide convenient
travel to the Facilities for residents and businesses located west of the PSA,
including downtown Jacksonville.
ITEM 3. LEGAL PROCEEDINGS.
There are no material proceedings to which Oceanside is a party.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of Oceanside security holders during
the fourth quarter of the year ended December 31, 1998.
PART II
ITEM 5. MARKET PRICE FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The shares of Oceanside Common Stock are not actively traded, and such
trading activity, as it occurs, takes place in privately negotiated
transactions. There is no established public trading market for the shares of
Oceanside Common Stock. Oceanside has engaged a transfer agent to maintain the
record keeping for its Common Stock and Oceanside is not aware of the high and
low trading prices of its Common Stock during 1997 and 1998. As of February 24,
1999, there were 594,750 shares of Common Stock and 594,110 Warrants outstanding
and approximately 800 holders of record of Common Stock.
Dividends
Oceanside anticipates that for the foreseeable future, earnings will be
retained for the development of its business. Accordingly, Oceanside does not
anticipate paying dividends on the Common Stock in the foreseeable future. The
payment of future dividends will be at the sole discretion of Oceanside's Board
of Directors and will depend on, among other things, future earnings, capital
requirements, the general financial condition of Oceanside and general business
conditions.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION, PLAN OF OPERATIONS, AND RESULTS OF OPERATIONS.
Management's discussion and analysis of earnings and related financial data
are presented herein to assist investors in understanding the financial
condition of Oceanside at, and results of operations for Oceanside for the
periods ended, December 31, 1998 and 1997. This discussion should be read in
conjunction with the financial statements and related footnotes of Oceanside
presented elsewhere herein.
<PAGE>
At or for the
Period Ended December 31,
-------------------------
1998 1997
---- ----
Statement of Operations Data:
Total interest income $ 2,287 $ 346
Total interest expense 867 85
Net interest income before provision for
credit losses 1,420 261
Provision for credit losses 334 186
Net interest income after provision for
credit losses 1,086 75
Noninterest income 196 33
Noninterest expense 1,450 501
Net loss (168) (393)
Balance Sheet Data:
Total assets $ 45,571 $ 18,314
Earning assets 38,977 14,688
Investment securities 7,858 2,072
Loans 25,998 9,269
Allowance for credit losses 520 186
Deposit accounts 40,374 13,020
Stockholders' equity 5,050 5,265
Share Data:
Basic earnings per share $ (0.28) $ (0.70)
Book value per share (period end) $ 8.49 $ 8.85
Weighted average shares outstanding
Used for basic earnings per share 595 560
Performance Ratios:
Return on average assets -0.55% -7.38%
Return on average equity -3.27% -17.20%
Interest-rate spread during the period 4.31% 4.46%
Net interest margin 5.31% 6.20%
Noninterest expenses to average assets 4.71% 9.41%
Asset Quality Ratios:
Allowance for credit losses to period end loans 2.00% 2.01%
Net charge-offs to average loans -- --
Nonperforming assets to period end loans -- --
Nonperforming assets to period end total assets -- --
Capital and Liquidity Ratios:
Average equity to average assets 16.69% 42.92%
Leverage (4.00% required minimum) 12.92% 35.00%
Risk-based capital:
Tier 1 17.42% 53.27%
Total 18.68% 54.53%
Average loans to average deposits 69.30% 66.14%
Overview
Oceanside was incorporated under the laws of the State of Florida and began
business operations on July 21, 1997, in a permanent facility located at 1315
South Third Street, Jacksonville Beach, Florida. Oceanside operates a branch
office at 560 Atlantic Boulevard, Neptune Beach, Florida, which commenced
operations on September 1, 1998.
At December 31, 1998, Oceanside had grown to approximately $45.6 million in
total assets, $26.0 million in total loans, $40.4 million in deposits, and $5.1
million in stockholders' equity. The following discussion should be read in
conjunction with the preceding "Selected Financial Data" and Oceanside's
Financial Statements and the Financial Statement Notes and the other financial
data included elsewhere.
Oceanside conducts commercial banking business consisting of attracting
deposits from the general public and applying those funds to the origination of
commercial, consumer, and real estate loans (including commercial loans
collateralized by real estate). Profitability depends primarily on net interest
income, which is the difference between interest income generated from
interest-earning assets (i.e., loans and investments) less the interest expense
incurred on interest-bearing liabilities (i.e., customer deposits and borrowed
funds). Net interest income is affected by the relative amounts of
interest-earning assets and interest-bearing liabilities, and the interest rate
earned and paid on these balances. Net interest income is dependent upon
Oceanside's interest-rate spread which is the difference between the average
yield earned on its interest-earning assets and the average rate paid on its
interest-bearing liabilities. When interest-earning assets approximate or exceed
interest-bearing liabilities, any positive interest rate spread will generate
net interest income. The interest rate spread is impacted by interest rates,
deposit flows, and loan demand. Additionally, and to a lesser extent,
Oceanside's profitability is affected by such factors as the level of
noninterest income and expenses, the provision for credit losses, and the
effective tax rate. Noninterest income consists primarily of service fees on
deposit accounts. Noninterest expense consists of compensation and employee
benefits, occupancy and equipment expenses, deposit insurance premiums paid to
the FDIC, and other operating expenses.
Forward-looking Statements
When used in this Form 10-KSB, the words or phrases "will likely result,"
"are expected to," "will continue," "is anticipated," "estimate," "project," or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties including changes in
economic conditions in Oceanside's market area, changes in policies by
regulatory agencies, fluctuations in interest rates, demand for loans in
Oceanside's market area and competition, that could cause actual results to
differ materially from historical earnings and those presently anticipated or
projected. Readers should not place undue reliance on any such forward-looking
statements, which speak only as to the date made. Readers are advised that the
factors listed above could affect Oceanside's financial performance and could
cause Oceanside's actual results for future periods to differ materially from
any opinions or statements expressed with respect to future periods in any
current statements. Oceanside does not undertake, and specifically disclaims any
obligation, to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated
events.
<PAGE>
Year 2000
Management is aware of the issue associated with the programming code in
existing computer systems as the millennium (Year 2000) approaches. The issue is
whether computer systems will properly recognize date sensitive information when
the year changes to 2000. Primary systems that do not properly recognize such
information could generate erroneous data or cause a system to fail. Oceanside
is utilizing both internal and external resources to identify, correct, and test
their systems for the year 2000 compliance. Substantially all of the necessary
modifications and testing were completed by December 31, 1998. To date,
confirmations have been received from Oceanside's primary processing vendors
that their software is now year 2000 compliant. Management has not yet completed
their assessment of the compliance expense for the year 2000 and related
potential effect on Oceanside's earnings; however, presently Management
anticipates to spend approximately $15,000 during 1999. It is recognized that
any year 2000 compliance failures could result in additional expense to
Oceanside.
Time lines have been established for testing all ancillary systems, such as
telephone systems and security devices, which was completed, by December 31,
1998. There can be no assurances that all hardware and software that Oceanside
uses will be Year 2000 compliant, and Oceanside cannot predict with any
certainty the costs it will incur to respond to any Year 2000 issues. Factors
which may affect the amount of these costs include Oceanside's inability to
control third party modification plans, Oceanside's ability to identify and
correct all relevant computer codes, the availability and cost of engaging
personnel trained in solving Year 2000 issues, and other similar uncertainties.
Further, the business of many of Oceanside's customers may be negatively
affected by the Year 2000 issue, and any financial difficulties incurred by
customers in solving Year 2000 issues could negatively affect those customers'
ability to repay any loans which Oceanside may have extended. Therefore, even if
Oceanside does not incur significant direct costs in connection with responding
to the Year 2000 issue, there can be no assurance that the failure or delay of
customers or other third parties in addressing the Year 2000 issue or the costs
involved in such process will not have a material adverse effect on Oceanside's
business, financial condition, or results of operations.
Future Accounting Requirements
In September 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), which addresses the accounting
for derivative instruments and provides for matching the timing of gain or loss
recognition on the hedging instrument. Guidance on identifying derivative
instruments is also provided as well as additional disclosures. SFAS 133 becomes
effective for all fiscal quarters of all fiscal years beginning after September
15, 1999. Earlier application is permitted with certain exceptions. Management
does not anticipate that adoption of SFAS 133 will have a material impact on the
financial condition or results of operations of Oceanside.
In October 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 134, "Mortgage-Backed Securities Retained
After the Securitization of Mortgage Loans Held-for-Sale by a Mortgage Banking
Enterprise" ("SFAS 134"), which amends existing pronouncements to clarify the
classification of mortgage-backed securities retained after the securitization
of mortgage loans held-for-sale. SFAS 134 becomes effective for fiscal quarters
beginning after December 15, 1998. Earlier application is permitted. Management
does not anticipate that adoption of SFAS 134 will have a material impact on the
financial condition or results of operations of Oceanside.
Impact of Inflation
The financial statements and related data presented herein have been
prepared in accordance with Generally Accepted Accounting Principles ("GAAP"),
which require the measurements of financial position and operating results in
terms of historical dollars, without considering changes in the relative
purchasing power of money over time due to inflation. Unlike most industrial
companies, substantially all of the assets and liabilities of Oceanside are
monetary in nature. As a result, interest rates have a more significant impact
on Oceanside's performance than the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or in the same
magnitude as the prices of goods and services, since such prices are affected by
inflation to a larger extent than interest rates. As discussed previously,
management seeks to manage the relationships between interest sensitive assets
and liabilities in order to protect against wide interest rate fluctuations,
including those resulting from inflation.
Plan of Operations
Oceanside anticipates that it will have sufficient capital to meet its
obligations for the upcoming twelve months. At December 31, 1998, Oceanside had
stockholders' equity of $5.1 million, which significantly exceeds the minimum
regulatory requirements, and provides an adequate cushion to absorb any
unexpected losses in 1999. Approximately $695,000 in liquid assets were used
during 1998 to acquire real property and related fixed assets of which
substantially all of the expenditures were for the new branch office as
discussed in the preceding "DESCRIPTION OF BUSINESS - Facilities." Oceanside
initially became profitable during the third quarter of 1998. In the fourth
quarter of 1998, Oceanside incurred increased expenses in the operations of the
new branch; however, management expects Oceanside will be profitable again in
1999. As profitability is achieved, management anticipates that there will be no
requirement to raise additional capital in 1999. Oceanside is in the process of
forming a one-bank holding company, which will provide additional flexibility in
obtaining additional capital, if needed. The holding company reorganization is
expected to be completed during the second quarter of 1999.
Results of Operations
Oceanside recorded net losses of $393,000 (a negative $0.70 per share) from
inception (July 21, 1997) to December 31, 1997, and $168,000 (a negative $0.28
per share) in 1998. Return on average assets was a negative 7.38% for 1997, and
a negative 0.55% for 1998. Amortization of organizational costs, the provision
for credit losses, and other overhead and start-up costs associated with a de
novo bank operation in its first two years contributed to the losses recognized
in 1997 and 1998.
Net Income (Loss)
Net loss for 1998 and 1997 was $168,000 and $393,000, respectively. A
summary of the quarterly trends follows (in thousands):
<TABLE>
<CAPTION>
At or for the Quarter Ended
December 31, March 31, June 30, September 30, December 31,
1997 (1) 1998 1998 1998 1998
------------ --------- ---------------------- ------------
<S> <C> <C> <C> <C> <C>
Earning assets $ 14,688 $ 21,039 $ 27,913 $ 31,453 $ 38,977
Total assets 18,314 25,018 34,476 37,646 45,571
Interest-bearing deposits 10,401 15,834 24,437 26,730 33,206
Total deposits 13,020 19,795 29,305 32,419 40,374
Net interest income before provision
for credit losses 198 257 347 402 414
Provision for credit losses 115 94 81 74 85
Other income 16 35 44 52 65
Other expenses 285 272 352 369 457
Net income (loss) (186) (74) (42) 11 (63)
</TABLE>
(1) The period ended September 30, 1997, did not reflect a full quarter as
Oceanside commenced business on July 21, 1997.
Net Interest Income
Net interest income is Oceanside's primary source of operating income. Net
interest income is the difference between interest earned on loans and
securities and interest paid on deposits and other funding sources. The factors
that influence net interest income include changes in interest rates and changes
in the volume and mix of assets and liability balances.
Net interest income was $1,420,000 and $261,000 for 1998 and 1997,
respectively, an increase of $1,159,000 from 1997 to 1998. The average balances,
interest income and expense, and the average rates earned and paid for assets
and liabilities are found in Tables 1 and 2 on the following pages.
During 1998 and 1997, the average yield on earning assets was 8.55% and
8.22%, respectively, while the average cost of funds was 4.24% in 1998 and 3.76%
in 1997. Oceanside's favorable net interest margin of 6.20% in 1997 reflected
the high average ratio of loans to interest-earning deposits, which was 87.47%
for 1997. At December 31, 1998, the loan-to-interest-earning deposit ratio had
fallen to 78.29%. As the loan-to-interest-earning deposit ratio declines, the
net interest margin will be affected. With a loan-to-interest-earning deposit
ratio of 78.29% for all of 1998, the pro forma net interest margin would have
declined approximately 33 basis points with all other assumptions remaining
constant.
[Intentionally left blank.]
<PAGE>
<TABLE>
<CAPTION>
Table 1.1 - Rate/Volume Analysis (in thousands):
Years Ended December 31,
- -------------------------------------------------------------------------------------------------------------
1998 1997
- -------------------------------------------------------------------------------------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Rate Balance Dividends Rate
------- --------- ---- ------- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Loans $17,688 $ 1,792 10.13%$ 1,975 $ 219 11.09%
Investment securities (1) 5,325 293 5.50% 51 -- -%
Other interest-earning assets (2) 3,738 202 5.40% 2,184 127 5.82%
------- ------- ----- ------- ------- -----
Total interest-earning assets 26,751 2,287 8.55% 4,210 346 8.22%
Noninterest-earning assets 4,019 1,114
Total assets $30,770 $5,324
Interest-bearing liabilities:
Demand deposits $ 9,643 247 2.56%$ 1,328 34 2.56%
Savings 363 7 1.93% 32 1 3.13%
Certificates of deposit 10,419 613 5.88% 898 50 5.57%
Total interest-bearing liabilities 20,425 867 4.24% 2,258 85 3.76%
Noninterest-bearing liabilities 5,211 781
Stockholders' equity 5,134 2,285
----- -----
Total liabilities and
stockholders' equity $30,770 $5,324
======= ======
Net interest income $1,420 $261
====== ====
Interest-rate spread (3) 4.31% 4.46%
==== ====
Net interest margin (4) 5.31% 6.20%
==== ====
Ratio of average interest-earning assets
to average interest-bearing liabilities 130.97% 186.45%
====== ======
</TABLE>
- ---------------------------
(1) Recorded interest income in 1997 less than $1,000.
(2) Includes interest-bearing deposits due from other banks and federal funds
sold.
(3) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(4) Net interest margin is net interest income divided by average
interest-earning assets.
<PAGE>
Table 1.2 - Rate/Volume Analysis (in thousands):
Year Ended December 31,
1998 vs. 1997
Increase (Decrease) Due to
--------------------------
Rate/
Rate Volume Volume Total
---- ------ ------ -----
Interest-earning assets:
Loans $ (19) $1,742 $ (150) $1,573
Investment securities (1) 3 -- 290 293
Other interest-earning assets (2) (9) 90 (6) 75
Total interest-earning assets (25) 1,832 134 1,941
Interest-bearing liabilities:
Demand deposits -- 213 -- 213
Savings -- 10 (4) 6
Certificates of deposit 3 530 30 563
Total interest-bearing liabilities 3 753 26 782
Net interest income $ (28) $1,079 $ 108 $1,159
[Intentionally left blank.]
<PAGE>
Table 2 - Weighted Average Yield or Rate:
For the Year Ended December 31,
-------------------------------
1998 1997
---- ----
Interest-earning assets:
Loans 10.13% 11.09%
Investment securities 5.50% 0.00%
Other interest-earning assets 5.40% 5.82%
All interest-earning assets 8.55% 8.22%
Interest-bearing liabilities:
NOW deposits 0.92% 0.94%
Money market deposits 3.96% 4.17%
Savings 1.93% 3.13%
Certificates of deposit 5.88% 5.57%
All interest-bearing liabilities 4.24% 3.76%
Interest-rate spread 4.31% 4.46%
Other Income
Other income increased in 1998 to $196,000 from $33,000 for the year ended
1997. This increase reflects the growth in the number of deposit accounts.
Income from service charges on customer accounts accounted for approximately 68%
and 58% of total other income for the years ended 1998 and 1997, respectively.
Other Expenses
Other expenses totaled $1,450,000 for 1998 and $501,000 for 1997, or 4.71%
and 9.41% of average assets for respective year ends. Salaries and employee
benefits accounted for approximately 49% of total other expenses for 1998 as
opposed to 52% for 1997. At current staffing levels, Oceanside will be able to
support planned growth for 1999. Increases in other expenses reflect the opening
of a new branch on September 1, 1998, and total asset growth during 1998.
Loans Receivable
Average loans receivable, before the allowance for credit losses were
$17,688,000 for the year ended 1998 as compared to $1,975,000 for 1997. The
growth in loans (an increase of almost 800 percent) was directly attributable to
community acceptance of our new bank, the reputations of our lending team, and
favorable economic conditions in our market area. Table 3 on the following page
provides an analysis of Oceanside's loan distribution at the end of 1998 and
1997. Loans which are secured by real estate include residential and
nonresidential mortgages, and home equity loans to individuals.
<PAGE>
Table 3 - Loan Portfolio (in thousands)
For the Year
Ended December 31,
------------------
1998 1997
---- ----
Commercial and agricultural $ 6,039 $ 1,496
Real estate 16,853 6,445
Installment and other loans 3,194 1,372
-------- --------
Total loans 26,086 9,313
Less:
Less, unearned income (88) (44)
Less, allowance for credit losses (520) (186)
-------- --------
$ 25,478 $ 9,083
======== ========
<TABLE>
<CAPTION>
The following table shows the maturity of loans receivable.
Table 4 - Loan Maturities at December 31, 1998 (in thousands):
1 Year 1 Through After
or Less 5 Years 5 Years Total
------- ------- ------- -----
<S> <C> <C> <C> <C>
Commercial and agricultural $ 2,617 $ 2,249 $ 1,173 $ 6,039
Real estate 4,594 4,964 7,295 16,853
Installment and other loans 1,056 1,613 525 3,194
------- ------- ------- -------
Total loans $ 8,267 $ 8,826 $ 8,993 $26,086
======= ======= ======= =======
Loans with maturities over one year:
Fixed rate $17,204
Variable rate 615
-------
Total maturities greater than one year $17,819
=======
</TABLE>
<PAGE>
Table 5 - Loans Originated and Repaid (in thousands):
Years Ended December 31,
------------------------
1998 1997
---- ----
Originations:
Commercial and agricultural loans $ 7,778 $ 1,772
Real estate loans 12,615 6,881
Installment and other loans 5,723 1,263
-------- --------
Total 26,116 9,916
Principal reductions (9,343) (603)
-------- --------
Increase in loans $ 16,773 $ 9,313
======== ========
Nonperforming Loans
A loan is generally placed on nonaccrual when the contractual payment of
principal or interest has become 90 days past due, or management has serious
doubts about further collectibility of principal or interest, even though the
loan may be currently performing.
At December 31, 1998 and 1997, management had not observed any potential
problem loans in its portfolio. No loans were past due for 30 days or more at
December 31, 1997, and only one loan totaling $1,200 was past due for 30 days or
more at December 31, 1998.
<PAGE>
Allowance for Credit losses
The amount charged to operations and the related balance in the allowance
for credit losses is based upon periodic evaluations of the loan portfolio by
management. These evaluations consider several factors including but not limited
to, current economic conditions, loan portfolio composition, prior credit loss
experience, trends in portfolio volume, and management's estimation of future
potential losses. Management believes that the allowance for credit losses is
adequate. Table 6 is an analysis of the allowance for credit losses for 1998 and
1997.
Table 6 - Allowance for Credit Losses (in thousands):
1998 1997
---- ----
Balance, at beginning of period $186 $--
Provision for credit losses 334 186
Loans charged off -- --
Recoveries -- --
---- ----
Balance, at end of period $520 $186
==== ====
The specific allocations of the allowance for credit losses are based on
management's evaluation of the risks inherent in the specific portfolios for the
dates indicated. Amounts in a particular category may be used to absorb losses
if another category allocation proves to be inadequate. Table 7 reflects the
allocations of the allowance for the years ended 1998 and 1997.
Table 7 - Allocation of Allowance for Credit Losses (in thousands):
At December 31,
--------------------------------
1998 1997
--------------------------------
% of % of
Loans to Loans to
Total Total
Amount Loans Amount Loans
------ ----- ------ -----
Commercial and agricultural $-- 23% $-- 16%
Real estate -- 65 -- 69
Installment and other loans -- 12 -- 15
Unallocated 520 0 186 0
$520 100% $186 100%
Highly leveraged transactions generally include loans and commitments made
in connection with recapitalizations, acquisitions, and leveraged buyouts, and
result in the borrower's debt-to-total assets ratio exceeding 75%. Oceanside had
no loans at December 31, 1998 and 1997, that qualified as highly leveraged
transactions.
Securities
Banks classify their securities' portfolio as either "held-to-maturity" or
"available-for-sale." Securities classified as held-to-maturity are carried at
amortized cost and include those securities that a bank has the intent and
ability to hold to maturity. Securities classified as available-for-sale, which
are those securities that a bank intends to hold for an indefinite amount of
time, but not necessarily to maturity, are carried at fair value with the
unrealized holding gains or losses, net of taxes, reported as a component of the
stockholders' equity on a bank's balance sheet. At December 31, 1998 and 1997,
all of Oceanside's securities were classified as available-for-sale. At December
31, 1997, the recorded fair value of securities approximated amortized cost and
no adjustment was made to Oceanside's stockholders' equity.
Tables 8.1 and 8.2 set forth the carrying amount of securities at the dates
indicated.
Table 8.1 - Carrying Value of Investment Securities (in thousands):
At December 31,
---------------
1998 1997
---- ----
Securities available-for-sale:
GNMA obligations $7,803 $2,055
Other 55 17
------ ------
Balance, end of year $7,858 $2,072
====== ======
Table 8.2 - Investment Securities at Amortized Cost (in thousands):
At December 31,
---------------
1998 1997
---- ----
1998 1997
Securities available-for-sale:
GNMA obligations $7,850 $2,055
Other 55 17
------ ------
Balance, end of year $7,905 $2,072
====== ======
Table 9 sets forth the maturities (excluding principal paydowns on
mortgage-backed securities) and the weighted average yields of securities by
contractual maturities at December 31, 1998 and 1997.
<PAGE>
<TABLE>
<CAPTION>
Table 9 - Analysis of Investment Securities (dollars in thousands)
Due in Ten
Years or More Other
------------- -----
Average Average
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
At December 31, 1998:
GNMA obligations $ 7,803 6.24% $ - -
Other - - 55 7.25%
------- -------
$ 7,803 6.24% $ 55 7.25%
======= =======
Due in One
Year or Less Other
------------ -----
Average Average
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
At December 31, 1997:
GNMA obligations $ 2,055 6.08% $ - -
Other - - 17 6.41%
------- -------
$ 2,055 6.08% $ 17 6.41%
======= =======
</TABLE>
Deposits
Oceanside's primary source of funds is core deposit accounts that include
both interest- and noninterest-bearing demand, savings, and time deposits under
$100,000. At December 31, 1998 and 1997, core deposits accounted for
approximately 88% and 87%, respectively, of all deposits. In 1997, the largest
single category of core deposits and the primary source of funds was time
deposits under $100,000. This category includes certificates of deposit and
individual retirement accounts. For the year ended 1998, the deposit mix had
shifted so that interest-bearing demand deposits was the single largest category
of core deposits, with time deposits under $100,000 the second largest category.
At December 31, 1998 and 1997, jumbo certificates of deposit (time deposits
$100,000 and greater) represented approximately 12% and 13%, respectively, of
total deposits. At December 31, 1998 and 1997, time deposits outstanding in an
individual amount of $100,000 or more totaled $4,704,000 and $1,652,000,
respectively. The maturity of these deposits are reflected in Table 12 herein.
Interest-bearing demand accounts, consisting of NOW and money market
accounts, averaged $9,643,000 for the year ended 1998 and $1,328,000 for the
year ended 1997, or approximately 38% and 44% of average total noninterest and
interest-bearing deposits in 1998 and 1997, respectively.
<PAGE>
<TABLE>
<CAPTION>
Table 10 - Distribution of Deposit Accounts by Type (dollars in thousands):
At December 31,
---------------
1998 1997
---- ----
% of % of
Amount Deposits Amount Deposits
------ -------- ------ --------
<S> <C> <C> <C> <C>
Demand deposits $ 7,168 17.8% $ 2,619 20.1%
NOW deposits 12,193 30.2 3,004 23.1
Money market deposits 6,542 16.2 2,231 17.1
Savings deposits 737 1.8 129 1.0
-------- ---- -------- ----
Subtotal 26,640 66.0 7,983 61.3
-------- ---- -------- ----
Certificates of deposit:
3.00% - 3.99% 175 0.4 4 0.0
4.00% - 4.99% 2,458 6.1 111 0.9
5.00% - 5.99% 7,182 17.8 2,684 20.6
6.00% - 6.99% 3,919 9.7 2,238 17.2
-------- ---- -------- ----
Total certificates of deposit (1) 13,734 34.0 5,037 38.7
-------- ---- -------- ----
Total deposits $40,374 100.0% $13,020 100.0%
======= ===== ======= =====
</TABLE>
(1) Includes individual retirement accounts ("IRAs") totaling $1,158,000 and
$247,000 in 1998 and 1997, respectively, all of which are in the form of
certificates of deposit.
Table 11 - Average Deposits and Average Rates (dollars in thousands)
<TABLE>
<CAPTION>
At December 31,
---------------
1998 1997
---- ----
Average Average Average Average
Balance Rate Balance Rate
------- ---- ------- ----
<S> <C> <C> <C> <C>
Demand, money market
and NOW deposits $ 14,742 1.68% $ 2,056 1.65%
Savings deposits 363 1.93% 32 3.13%
Certificates of deposit 10,419 5.88% 898 5.57%
-------- -------
Total deposits $ 25,524 3.40% $ 2,986 2.85%
======== =======
</TABLE>
<PAGE>
Table 12 - Maturities of Time Deposits of $100,000 or more (in thousands)
At December 31,
---------------
1998 1997
---- ----
Due in three months or less $1,237 $ 304
Over three through twelve months 3,366 1,348
Over three years 101 --
------ ------
$4,704 $1,652
====== ======
<TABLE>
<CAPTION>
Table 13 - Certificates of Deposits by Rate and Maturity Date (in thousands):
Year Ending December 31,
------------------------
1999 2000 2001 2002 2003 Total
---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
At December 31, 1998:
3.00% - 3.99% $ 175 $ -- $ -- $ -- $ -- $ 175
4.00% - 4.99% 2,422 14 22 -- -- 2,458
5.00% - 5.99% 6,781 148 80 -- 173 7,182
6.00% - 6.99% 3,804 -- -- 2 113 3,919
------- ------- ------- ------- ------- -------
Total certificates of deposit $13,182 $ 162 $ 102 $ 2 $ 286 $13,734
======= ======= ======= ======= ======= =======
Year Ending December 31,
------------------------
1998 1999 2000 2001 2002 Total
---- ---- ---- ---- ---- -----
At December 31, 1997:
3.00% - 3.99% $ 4 $ -- $ -- $ -- $ -- $ 4
4.00% - 4.99% 111 -- -- -- -- 111
5.00% - 5.99% 2,636 45 3 -- -- 2,684
6.00% - 6.99% 2,236 -- -- -- 2 2,238
------- ------- ------- ------- ------- -------
Total certificates of deposit $ 4,987 $ 45 $ 3 $ -- $ 2 $ 5,037
======= ======= ======= === ======= =======
</TABLE>
Capital Requirements/Ratios
Oceanside places a significant emphasis on maintaining a strong capital
base. The capital resources of Oceanside consist of two major components of
regulatory capital, stockholders' equity and the allowance for credit losses.
Current capital guidelines issued by federal regulatory authorities require a
company to meet minimum risk-based capital ratios in an effort to make
regulatory capital more responsive to the risk exposure related to a company's
on and off-balance sheet items.
Risk-based capital guidelines re-define the components of capital,
categorize assets into risk classes, and include certain off-balance sheet items
in the calculation of capital requirements. The components of risk-based capital
are segregated as Tier I and Tier II capital. Tier I capital is composed of
total stockholders' equity reduced by goodwill and other intangible assets. Tier
II capital is comprised of the allowance for credit losses and any qualifying
debt obligations. Regulators also have adopted minimum requirements of 4% of
Tier I capital and 8% of risk-adjusted assets in total capital.
Oceanside also subject to leverage capital requirements. This requirement
compares capital (using the definition of Tier I capital) to balance sheet
assets and is intended to supplement the risk- based capital ratio in measuring
capital adequacy. The guidelines set a minimum leverage ratio of 3% for
depository institutions that are highly rated in terms of safety and soundness,
and which are not experiencing or anticipating any significant growth. Other
depository institutions are expected to maintain capital levels of at least 1%
or 2% above the minimum. Oceanside's actual capital amounts, capital ratios, and
leverage ratios at December 31, 1998 and 1997, are reflected in the table on the
following page.
[Intentionally left blank]
<PAGE>
Table 14 - Capital Ratios (in thousands):
At December 31,
---------------
1998 1997
---- ----
Tier I
Stockholders' equity $ 5,097 $ 5,265
Less, intangible assets (95) (122)
-------- --------
5,002 5,143
Tier II
Allowable portion of allowance for credit losses 362 122
-------- --------
Risk-based capital $ 5,364 $ 5,265
======== ========
Risk adjusted assets $ 28,722 $ 9,655
======== ========
Tier I risk-based capital ratio 17.42% 53.27%
======== ========
Total risk-based capital ratio 18.68% 54.53%
======== ========
Adjusted assets $ 38,706 $ 14,695
======== ========
Leverage ratio 12.92% 35.00%
======== ========
Note: Any unrealized appreciation and depreciation on securities
available-for-sale was excluded from regulatory capital components of risk-based
capital and leverage ratios.
Table 15 - Capital Analysis
At December 31,
1998 1997
Average equity as a percentage of average assets 16.69% 42.92%
Equity to total assets at end of year 11.08% 28.75%
Return on average equity (3.27)% (17.20)%
Return on average assets (0.55)% (7.38)%
Noninterest expenses to average assets 4.71% 9.41%
In 1996, Oceanside commenced the sale of units (consisting of one share of
common stock and one warrant to purchase one share of common stock at a price of
$10.00 per share) at a price of $10.00 per unit. During 1996 and 1997, a total
of 594,430 shares were sold. During 1997, 300 warrants were exercised. The net
proceeds from common stock sold and exercised warrants totaled $5,658,000 in
1997. During 1998, 20 warrants were exercised, the proceeds of which were less
than $1,000.
Stockholders' equity is adjusted for the effect of unrealized appreciation
or depreciation, net of tax, on securities classified as available-for-sale. At
December 31, 1997, no adjustment was considered necessary. As of December 31,
1998, stockholders' equity declined $215,000 from December 31, 1997, as a result
of the net loss of $168,000 in 1998 and the decline in fair market value of
investment securities of $47,000. The return on average equity for the years
ended December 31, 1998 and 1997, was a negative 3.27% and a negative 17.20%,
respectively.
Interest Rate Sensitivity
The operations of Oceanside are subject to risk resulting from interest
rate fluctuations to the extent that there is a difference between the amount of
Oceanside's interest-earning assets and the amount of interest-bearing
liabilities that are prepaid/withdrawn, mature, or reprice in specified periods.
The principal objective of Oceanside's asset/liability management
activities is to provide consistently higher levels of net interest income while
maintaining acceptable levels of interest rate and liquidity risk and
facilitating the funding needs of Oceanside. Oceanside utilizes an interest rate
sensitivity model as the primary quantitative tool in measuring the amount of
interest rate risk that is present. The traditional maturity "gap" analysis,
which reflects the volume difference between interest rate sensitive assets and
liabilities during a given time period, is reviewed regularly by management. A
positive gap occurs when the amount of interest sensitive assets exceeds
interest sensitive liabilities. This position would contribute positively to net
income in a rising interest rate environment. Conversely, if the balance sheet
has more liabilities repricing than assets, the balance sheet is liability
sensitive or negatively gapped. Management continues to monitor sensitivity in
order to avoid overexposure to changing interest rates.
Another method used by management to review its interest sensitivity
position is through "simulation." In simulation, Oceanside projects the future
net interest streams in light of the current gap position. Various interest rate
scenarios are used to measure levels of interest income associated with
potential changes in Oceanside's operating environment. Management cannot
measure levels of interest income associated with potential changes in
Oceanside's operating environment. Management cannot predict the direction of
interest rates or how the mix of assets and liabilities will change. The use of
this information will help formulate strategies to minimize the unfavorable
effect on net interest income caused by interest rate changes.
The operations of Oceanside do not subject it to foreign currency exchange
or commodity price risk. Also, Oceanside does not utilize interest rate swaps,
caps, or other hedging transactions. Oceanside's overall sensitivity to interest
rate risk is low due to its non-complex balance sheet. Oceanside has implemented
several strategies to manage interest rate risk that include originating most
residential mortgages for a third party lender, increasing the volume of
variable rate commercial loans, requiring interest rate calls on commercial
loans, and maintaining a short repricing maturity a significant portion of its
investment portfolio.
<PAGE>
The following table provides information about Oceanside's financial
instruments that are sensitive to changes in interest rates. For securities,
loans, and deposits, the table presents principal cash flows and related
weighted average interest rates by maturity dates or repricing frequency.
Oceanside has no market risk sensitive instruments entered into for trading
purposes.
<TABLE>
<CAPTION>
Table 16 - Interest Rate Sensitivity at December 31, 1998 (in thousands):
Under 3 to 12 Over
3 Months Months 1 - 5 Years 5 Years Total
-------- ------ ----------- ------- -----
<S> <C> <C> <C> <C> <C>
Federal funds sold $ 4,915 $ -- $ -- $ -- $ 4,915
Interest-bearing deposits in other banks -- 206 -- -- 206
Loans(1) 8,002 1,088 7,027 9,879 25,996
Securities(2) 1,245 2,677 3,881 55 7,858
-------- -------- -------- -------- --------
Total rate-sensitive assets $ 14,162 $ 3,971 $ 10,908 $ 9,934 $ 38,975
======== ======== ======== ======== ========
Money market and NOW(2) $ 6,542 $ -- $ -- $ 12,193 $ 18,735
Savings accounts (2) -- -- -- 737 737
Certificates of deposit (2) 3,870 9,245 619 -- 13,734
-------- -------- -------- -------- --------
Total rate-sensitive liabilities $ 10,412 $ 9,245 $ 619 $ 12,930 $ 33,206
======== ======== ======== ======== ========
Gap (repricing differences) $ 3,750 $ (5,274) $ 10,289 $ (2,996) $ 5,769
======== ======== ======== ======== ========
Cumulative Gap $ 3,750 $ (1,524) $ 8,765 $ 5,769
======== ======== ======== ========
Cumulative Gap/total assets 8.23% (3.34)% 19.23% 12.66%
======== ======== ======== ========
Total assets $ 45,571
========
</TABLE>
(1) In preparing the table above, adjustable-rate loans were included in the
period in which the interest rates are next scheduled to adjust rather than
in the period in which the loans mature. Fixed-rate loans were scheduled
according to their contractual maturities.
(2) Excludes noninterest-bearing deposit accounts. Money market deposits were
regarded as maturing immediately, and other core deposits were assumed to
mature in the over 5-year category. All other time deposits were scheduled
through the maturity or repricing dates. Investments were scheduled through
their contractual, repricing, or principal payment dates.
Management anticipates that its one-year gap will remain negative during
the initial growth period of this de novo bank; however, management attempts to
maintain a range of positive 20% to negative 20%.
Liquidity
Liquidity management involves meeting the funds flow requirements of
customers who may either be depositors wanting to withdraw funds, or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs. Liquid assets consist of vault cash, securities, and maturities of
earning assets.
<PAGE>
Oceanside's principal sources of asset liquidity are federal funds sold and
the securities portfolio, including principal paydowns from mortgage-backed
securities. In 1998, such payments totaled $1,227,000.
Other sources of funds are principal paydowns and maturities in the loan
portfolio. The loan maturity schedule (Table 4) illustrates the maturities of
loans receivable at December 31, 1998.
Oceanside also has sources of liability liquidity that include core
deposits as previously discussed.
At December 31, 1998 and 1997, Oceanside's liquidity ratio of liquid assets
to transaction deposit accounts was 38.5% and 98.7%, respectively. Management
believes that Oceanside's liquidity is sufficient to meet its anticipated needs.
ITEM 7. FINANCIAL STATEMENTS.
The financial statements of Oceanside as of and for the periods ended
December 31, 1998 and 1997, are set forth in this Form 10-KSB as Exhibit 13.1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT.
Executive Officers and Directors
The board of directors is comprised of nine directors, each of whom will
hold office until the 1999 annual meeting of shareholders and until their
successors are duly elected and qualified. Beginning July, 1998, Oceanside began
paying $100 per month per director.
The following sets forth certain information concerning the current
directors and executive officers of Oceanside:
M. Michael Witherspoon, age 54, has served as Chief Executive Officer and
Chairman of the Board of Oceanside since its organization in March, 1997. Mr.
Witherspoon has more than 30 years of experience in the banking industry. From
December, 1994, until Oceanside's organization, Mr. Witherspoon was
self-employed as a computer consultant in Eastman, Georgia. Mr. Witherspoon was
the President and CEO of The Bank of Dodge County in Eastman, Georgia, from 1992
until December, 1994. Prior to that, Mr. Witherspoon was the CEO and President
of The Beach Bank In Organization and was the founding President and CEO of
United Bank & Trust in Rockmart, Georgia, from 1988 to 1991. Mr. Witherspoon
received his associate business degree from Georgia Military College and his
B.B.S. degree from Georgia State University. Mr. Witherspoon has also received
advance degrees in banking from the Georgia Banking School at the University of
Georgia and from the Stonier Graduate School of Banking at Rutgers University.
Barry W. Chandler, age 47, has served as the President, Chief Lending
Officer, and a director of Oceanside since its organization in March, 1997. Mr.
Chandler was the Senior Vice President and Senior Lender at Ponte Vedra National
Bank from 1990 until 1996, when Ponte Vedra National Bank was sold to SunTrust
Bank, North Florida, National Association, at which Mr. Chandler served as a
Vice President. Prior to 1990, Mr. Chandler was a Senior Vice President at Ocean
State Bank, a Jacksonville Beach-based community bank, from 1973 until its sale
to NationsBank in 1990. Mr. Chandler received a diploma from the Graduate School
of Retail Bank Management at the University of Virginia.
David L. Young, age 52, is a Senior Vice President and Chief Financial
Officer and Secretary of Oceanside. Prior to his employment at Oceanside in May,
1997, Mr. Young served as the Finance Manager of the Loan and Investment
Operations division of Barnett Bank in Jacksonville, Florida. He began his
career in banking in 1970 with Ocean State Bank in Neptune Beach, Florida,
rising to the position of Senior Vice President; Senior Operations Officer until
it was sold to NationsBank in January of 1990. He then became a Vice President
in NationsBank's Jacksonville retail branch network until March, 1995. Mr. Young
received a B.A. degree from Jacksonville University and received a diploma from
the Graduate School of Retail Bank Management at the University of Virginia.
Frank J. Cervone, age 46, has served as a director of Oceanside since its
organization in March, 1997. Dr. Cervone has been a resident of the Jacksonville
Beach area for 13 years and since 1990 has been in private practice in
Jacksonville Beach as an endodontist. Dr. Cervone received his B.S. in biology
from the University of Pittsburgh, his D.M.D. from the University of Pittsburgh
School of Dental Medicine, and a specialty certificate in endodontics from the
University of Pennsylvania.
Jimmy D. Dubberly, age 56, has served as a director of Oceanside since its
organization in March, 1997. Mr. Dubberly has been the President, a loan
officer, and a director of South Georgia Bank in Glennville, Georgia, since
1986. Prior to South Georgia Bank, Mr. Dubberly was a Vice President and loan
officer of First Citizens Bank in Glennville, Georgia, from 1964 to 1986 and
served as a director of that bank from 1976 to 1986. Mr. Dubberly attended
Armstrong State College, the University of Georgia, and Louisiana State
University, where he studied accounting and banking.
Donald F. Glisson, age 39, has served as a director of Oceanside since its
organization in March, 1997. Since 1982, Mr. Glisson has served as an executive
officer and currently is President of Triad Financial Services, a consumer
finance company headquartered in Jacksonville. Mr. Glisson is also the President
of TFS Properties, Inc., a company which owns mobile home parks. Mr. Glisson has
been a resident of the Jacksonville Beach community since 1963. He holds an
insurance agent's license from the Florida Department of Insurance, a mortgage
broker's license from the Florida Department of Banking, and a recovery agent's
license from the Florida Department of State. Mr. Glisson received his B.S. in
finance from Florida State University.
Robin H. Scheiderman, age 42, has served as a director of Oceanside since
May 29, 1997. Ms. Scheiderman, a native of Jacksonville, Florida, has owned and
operated an accounting firm in St. Augustine, Florida, since 1992. From
September, 1993, to May, 1996, Ms. Scheiderman served as the Chief Financial
Officer of California College for Health Sciences, a private college
specializing in distance learning. Prior to 1992, Ms. Scheiderman was the
Director of Taxes at Florida Rock Industries, Inc., in Jacksonville, Florida.
She is a licensed certified public accountant in Florida and received her B.B.A.
and M.A. degrees from the University of North Florida. She also has a diploma
for the completion of the CFP Professional Education Program from the College of
Financial Planning in Denver, Colorado.
G. Keith Watson, age 49, has served as a director of Oceanside since its
organization in March, 1997. Mr. Watson owns and operates Watson & Osborne,
P.A., the largest residential closing law firm in the Jacksonville area. Mr.
Watson has practiced law in the Jacksonville area since 1974, is involved with
the Jacksonville Chamber of Commerce and is a member of the Northeast Florida
Association of Realtors. In addition, Mr. Watson is a member of the board of
directors of the Jacksonville University Athletic Foundation. Mr. Watson is one
of the initial inductees in the Jacksonville University Athletic Hall of Fame.
Mr. Watson received his B.S. in marketing and management from Jacksonville
University and his J.D. from the University of Florida.
Conrad L. Williams, age 69, has served as a director of Oceanside since its
organization in March, 1997. Dr. Williams is a retired veterinarian who has been
a member of the Jacksonville Beach community since 1959. Dr. Williams served as
a director of Ocean State Bank from 1968 until 1990 when Ocean State Bank was
purchased by NationsBank. Dr. Williams received his undergraduate degrees from
Louisiana Tech University and the University of Florida and his D.V.M. from the
University of Georgia.
Dennis M. Wolfson, age 57, has served as a director of Oceanside since its
organization in March, 1997. Mr. Wolfson is a Jacksonville native who has been
self-employed as a real estate developer and investor as a mortgage broker and
real estate broker for more than the preceding five years. Mr. Wolfson has
served as a Senior Vice President and director of Daylight Grocery Company and
as Vice President and director of Merritt-Chapman & Scott Corporation, where he
was a loan officer of a mortgage portfolio ranging from $10 million to $90
million. Mr. Wolfson is a trustee and executive committee member of Wolfson
Children's Hospital in Jacksonville and is a member of the Baseball Task Force
of the Jacksonville Sports Development Authority. Mr. Wolfson received his
B.B.A. in finance from the University of Georgia and attended Bentley College
and Boston University.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth certain information concerning compensation
paid in 1998 and 1997 to Mr. Witherspoon, Oceanside's Chief Executive Officer.
No executive officer of Oceanside received in excess of $100,000 in cash
compensation during fiscal 1998 or 1997.
SUMMARY COMPENSATION TABLE
All other
Annual Compensation Compensation
------------------- ------------
Name and Principal Position Year Salary Bonus
M. Michael Witherspoon, 1998 $92,235 $ 200 $600(1)
Chief Executive Officer
1997 $79,231 $ 100 $ 0
(1) Director's fees
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth information, as of February 24, 1999, with
respect to the beneficial ownership of Common Stock by
o each person known by Oceanside to be the beneficial owner of more than
5% of Oceanside's outstanding Common Stock;
o the directors and executive officers of Oceanside, individually; and
o directors and executive officers of Oceanside as a group.
[Intentionally left blank.]
<PAGE>
<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage of
of Beneficial Owner Beneficially Owned(1) Common Stock(2)
- ------------------- --------------------- ---------------
<S> <C> <C>
M. Michael Witherspoon
1315 South Third Street
Jacksonville Beach, Florida 32250 41,320(3) 6.71%
Barry W. Chandler
1315 South Third Street
Jacksonville Beach, Florida 32250 25,000(4) 4.12%
David L. Young
1315 South Third Street
Jacksonville Beach, Florida 32250 4,000(5) *
Frank J. Cervone
474 Jacksonville Drive
Jacksonville Beach, Florida 32250 24,400(6) 4.02%
Jimmy D. Dubberly
401 S. Main Street
Glennville, Georgia 30427 12,400(7) 2.06%
Donald F. Glisson, Jr.
13535 Beach Boulevard
Jacksonville, Florida 32246 22,000(8) 3.63%
Robin H. Scheiderman
3419 Lands End Drive
St. Augustine, Florida 32095 42,000(9) 6.82%
G. Keith Watson
208 Ponte Vedra Park Drive, Ste. 101
Ponte Vedra Beach, Florida 32082 54,000(10) 8.69%
Conrad L. Williams
314 12th Street
Atlantic Beach, Florida 32233 10,000(11) 1.67%
Dennis M. Wolfson
7829 Bayberry Road
Jacksonville, Florida 32256 16,000(12) 2.65%
Directors, nominees, and executive
officers of Oceanside as a group (10 persons) 251,120 34.81%
</TABLE>
* Less than one percent (1%).
(1) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), beneficial ownership of a security consists
of sole or shared voting power (including the power to vote or direct the
vote) and/or the sole or shared investment power (including the power to
dispose or direct the disposition) with respect to a security. The number
of shares of Common Stock includes the number of shares of Common Stock
that are subject to warrants that are exercisable within 60 days of the
date of this Registration Statement.
(2) Percent of Class of Common Stock with respect to each beneficial owner of
Common Stock was calculated based on the ratio of the number of shares of
Common Stock beneficially owned by such beneficial owner to the sum of (a)
the total number of outstanding shares of Common Stock as of February 24,
1999, and (b) the number of shares of Common Stock issuable upon exercise
of warrants held by the applicable beneficial owner exercisable within 60
days of the date of this Registration Statement.
(3) Includes 20,660 shares subject to a presently exercisable warrant.
(4) Includes 12,500 shares subject to a presently exercisable warrant.
(5) Includes 2,000 shares subject to a presently exercisable warrant.
(6) Includes 12,200 shares subject to a presently exercisable warrant.
(7) Includes 7,200 shares subject to a presently exercisable warrant.
(8) Includes 11,000 shares subject to a presently exercisable warrant.
(9) Includes 21,000 shares subject to a presently exercisable warrant. Also
includes 1,000 shares owned by Ms. Scheiderman's husband and his sister.
(10) Includes 27,000 shares subject to a presently exercisable warrant. Includes
2,000 shares held by Mr. Watson as custodian for his minor children.
(11) Includes 5,000 shares subject to a presently exercisable warrant. All
shares are owned jointly by Dr. Williams' wife.
(12) Includes 8,000 shares subject to a presently exercisable warrant.
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Oceanside has adopted a policy pursuant to which it will make loans to
eligible directors, executive officers, and members of their immediate families
for the financing of their personal residences and for consumer or business
purposes. Under Oceanside's policy, all such loans will be made in the ordinary
course of business and on substantially the same terms and conditions (including
interest rates and collateral) as those of comparable transactions prevailing at
the time, and will not involve more than the normal risk of collectibility or
present other unfavorable features. Each such loan is approved first by the Loan
Committee of the Board and then by the full Board.
Set forth below is certain information about the only loans made by
Oceanside to a director, nominee for election as a director, executive officer,
or member of their immediate families, whose aggregate indebtedness to Oceanside
exceeded $60,000 at any time since Oceanside's inception. Such loans were made
in accordance with Oceanside's policy as described above.
<TABLE>
<CAPTION>
Largest
Amount
Outstanding Balance
Date Type Since as of Interest
Name of Borrower of Loan of Loan Inception 2/24/99 Rate
- ---------------- ------- ------- --------- ------- ----
<S> <C> <C> <C> <C> <C>
Watson & Osborne, P.A.(1) 2/11/98 Business Line $264,363 $ 1,003 Prime
+ .50%
G. Keith Watson 11/1/97 Auto 32,984 26,220 9%
G. Keith Watson (6) 3/2798 Unsecured 4,157 - 15.5%
Personal loan -------- --------
$301,504 $ 27,223
======== ========
Kenne Scheiderman (2) 11/27/97 Personal Line $ 30,000 $ - Prime
and Robin H. Scheiderman ======== ======== +2%
Dennis M. Wolfson (3) 1/28/98 Commercial $350,000 $ - 8.50%
Dennis M. Wolfson 12/15/98 Commercial 225,000 225,000 8.25%
Real Estate
Dennis M. Wolfson 4/17/98 Residential 161,500 161,500 Prime
Dennis M. Wolfson 10/22/97 Overdraft 10,000 3,178 Prime
Protection -------- -------- + 3%
$746,500 $389,678
======== ========
Frank J. Cervone, DMD 5/22/98 Commercial $210,900 $202,139 Prime
Real Estate ======== ========
Triad Financial Services 11/24/98 Commercial $150,000 $ - Prime
Junior lien + .25%
on all assets
Donald F. Glisson, Jr. 1/8/98 Overdraft - - Prime
Protection + 3%
-------- --------
$150,000 $ -
======== ========
Nicris Enterprises (4) 3/25/98 Commercial $104,421 $102,767 9%
Real Estate
Nicholson Properties, Inc.(4) 2/20/98 Unsecured 10,111 10,111 Prime
Business Loan + 2%
Nicholson Properties, Inc.(4)(5) 7/17/98 Unsecured 10,111 - Prime
Business Loan + 2%
Willard B. Nicholson, Jr.(4) 12/16/98 Commercial 92,183 91,535 Prime
Real Estate +.25%
Judith M. Nicholson (4) 12/29/98 Commercial 85,047 84,496 Prime
Real Estate -------- --------
$301,873 $288,909
======== ========
</TABLE>
(1) The maximum amount that can be borrowed under the credit line is $300,000.
G. Keith Watson, a director of Oceanside, is a shareholder in the law firm
of Watson & Osborne, P.A.
(2) The maximum amount that can be borrowed under the credit line is $100,000.
Kenne Scheiderman is the husband of Robin H. Scheiderman, a director of
Oceanside.
(3) Paid off May 26, 1998.
(4) Willard B. Nicholson, Jr., resigned from Board of Directors on January 27,
1999.
(5) Paid off January 5, 1999.
(6) Paid off February 11, 1999.
<PAGE>
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statements
Independent Auditors' Report
Balance Sheets as of December 31, 1998 and 1997
Statements of Operations and Comprehensive Income for the year
ended December 31, 1998, and from inception (July 21, 1997) to
December 31, 1997
Statements of Cash Flows for the year ended December 31, 1998,
and from inception (July 21, 1997) to December 31, 1997
Statement of Changes in Stockholders' Equity from inception
(July 21, 1997) to December 31, 1998
Notes to Financial Statements
2. Financial Statement Schedules
All schedules have been omitted as the required information is
either inapplicable or included in the Notes to Consolidated
Financial Statements.
3. Exhibits
Charter and Bylaws:
(a) Articles of Incorporation filed March 24, 1997
(Incorporated by reference to Exhibit (2)(a) to
Oceanside's Registration Statement Form 10-SB,
FDIC File No. 34284, filed on April 30, 1998
("Registration Statement"))
(b) Bylaws (Incorporated by reference to Exhibit
(2)(b) to the Registration Statement)
Instruments Defining the Rights of Security Holders
(a) Form of Common Stock Warrant (Incorporated by
reference to Exhibit (3)(a) to the Registration
Statement)
<PAGE>
Material Contracts:
(a) Software License Agreement dated as of October 6,
1997, between Oceanside and File Solutions, Inc.
(Incorporated by reference to Exhibit (6)(a) to
the Registration Statement)
(b) File Solutions Software Maintenance Agreement
dated as of July 15, 1997, between Oceanside and
SPARAK Financial Systems, Inc. (Incorporated by
reference to Exhibit (6)(b) to the Registration
Statement)
(c) Remote Data Processing Agreement dated as of March
3,1 1997, between Oceanside and Bankers Data
Services, Inc. (Incorporated by reference to
Exhibit (6)(c) to the Registration Statement)
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed by Oceanside
during the last fiscal quarter covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has caused this report to be duly signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Jacksonville Beach, State of Florida, on the 8th day of March, 1999.
OCEANSIDE BANK
/s/ M. Michael Witherspoon
---------------------------
M. Michael Witherspoon
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the 8th day of March, 1999.
Signature Title
- --------- -----
/s/ M. Michael Witherspoon Chief Executive Officer and
----------------------------- Chairman of the Board
M. Michael Witherspoon
/s/ Barry W. Chandler President, Chief Lending Officer, and
------------------------ Director
Barry W. Chandler
/s/ David L. Young Senior Vice President,
--------------------- Chief Financial Officer, and Director
David L. Young
/s/ Frank J. Cervone Director
-----------------------
Frank J. Cervone
/s/ Jimmy D. Dubberly Director
- -------------------------
Jimmy D. Dubberly
/s/ Donald F. Glisson, Jr. Director
- ------------------------------
Donald F. Glisson, Jr.
/s/ Robin H. Scheiderman Director
- ----------------------------
Robin H. Scheiderman
/s/ G. Keith Watson Director
- -----------------------
G. Keith Watson
/s/ Conrad L. Williams Director
- --------------------------
Conrad L. Williams
/s/ Dennis M. Wolfson Director
- -------------------------
Dennis M. Wolfson
OCEANSIDE BANK
Form 10-KSB
For Fiscal Year Ending December 31, 1998
EXHIBIT INDEX
-------------
Exhibit Page
No. Exhibit No.
--- ------- ---
13.1 Oceanside Bank 1998 Annual Report F-1 - F-15
21.1 Subsidiaries of the Registrant
23.1 Consent of Stevens, Sparks & Company, P.A.
(formerly Stevens, Thomas, Schemer & Sparks, P.A.)
<PAGE>
Exhibit 21.1
OCEANSIDE BANK
Form 10-KSB
For Fiscal Year Ended December 31, 1998
Subsidiaries of Registrant
--------------------------
None.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We agree to the inclusion in this Form 10-KSB of our report, dated February 9,
1999, on our audit of the financial statements of Oceanside Bank
/s/ STEVENS, SPARKS & COMPANY, P.A.
-----------------------------------
STEVENS, SPARKS & COMPANY, P. A.
Jacksonville, Florida
March 8, 1999
