<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For transition period from ____________ to _____________
Commission file number: 2-98960A
COMMERCE NATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)
FLORIDA
(State or Other Jurisdiction of Incorporation or Organization)
59-2497676
(I.R.S. Employer Identification No.)
1201 South Orlando Avenue
Winter Park, Florida 32789
(Address of principal executive offices)
(Zip Code)
(407) 741-8900
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
This filing contains 45 pages. The Exhibit Index is found on page 29.
<PAGE>
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
On August 1, 1998, Commerce National Corporation (the "Company") had
721,019 shares of common stock, par value $0.10 per share, issued and
outstanding.
(BALANCE OF PAGE INTENTIONALLY LEFT BLANK)
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The financial statements begin on the following page.
3
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Table of Contents
Accountants' Review Report
Condensed consolidated balance sheets (unaudited)--June 30, 1998
and December 31, 1997
Condensed consolidated statements of operations (unaudited)--Three months
ended June 30, 1998 and 1997; Six months ended June 30, 1998
and 1997
Condensed consolidated statements of cash flows (unaudited)--Six months
ended June 30, 1998 and 1997
Selected notes to condensed consolidated financial statements (unaudited)--June
30, 1998
4
<PAGE>
KPMG Peat Marwick LLP
111 North Orange Avenue, Suite 1600
P.O. Box 3031
Orlando, FL 32802
The Board of Directors
Commerce National Corporation and Subsidiary:
We have reviewed the condensed consolidated balance sheet of Commerce National
Corporation and subsidiary as of June 30, 1998 and the related condensed
consolidated statements of operations for the three month and six month periods
ended June 30, 1998 and 1997 and condensed consolidated statements of cash flows
for the six month periods ended June 30, 1998 and 1997. These condensed
consolidated financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical review procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Commerce National Corporation and
subsidiary as of December 31, 1997, and the related consolidated statements of
operations, stockholders' equity and cash flows for the year then ended not
presented herein; and in our report dated January 27, 1998, except as of note 22
which was of February 1, 1998, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of December 31, 1997,
is fairly presented, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
/s/ KPMG Peat Marwick LLP
Orlando, Florida
July 17, 1998
5
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Condensed Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1998 1997
------------ ------------
<S> <C> <C>
Cash and due from banks $ 3,648,950 6,095,762
Federal funds sold 7,250,000 300,000
Investment securities available for sale (note 2) 15,016,409 15,499,777
Investment securities held to maturity (note 2) 190,000 190,000
Loans, net (note 3) 107,364,853 97,317,521
Accrued interest receivable 818,358 748,897
Premises and equipment, net 3,791,159 3,925,251
Other real estate owned -- 251,622
Deferred tax asset, net 293,165 401,545
Federal Reserve Bank stock, at cost 171,000 171,000
Federal Home Loan Bank stock, at cost 378,600 341,300
Prepaid expenses and other assets 92,206 85,301
Executive supplemental income plan - cash
surrender value life insurance policies 1,334,883 1,302,706
</TABLE>
----------- -----------
Total assets $140,349,583 126,630,682
=========== ===========
See accompanying review report of KPMG Peat Marwick LLP and accompanying
selected notes to condensed consolidated financial statements (unaudited).
6
<PAGE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
LIABILITIES 1998 1997
---- ----
<S> <C> <C>
Deposits (note 4):
Noninterest bearing $ 21,531,064 18,481,616
Interest bearing 101,233,195 92,644,084
------------ -----------
Total deposits 122,764,259 111,125,700
Federal Home Loan Bank advances 1,172,234 1,176,534
Other borrowed funds 3,634,230 3,455,470
Accrued interest payable 146,999 133,134
Accounts payable and other liabilities 479,367 335,997
------------ -----------
Total liabilities 128,197,089 116,226,835
------------ -----------
STOCKHOLDERS' EQUITY
Common stock, par value $.10 per share (1,000,000 shares
authorized; 742,819 and 618,035 shares issued and 721,019
and 596,235 shares outstanding at June 30, 1998 and
December 31, 1997, respectively) 74,282 61,804
Additional paid-in capital 7,927,804 6,721,129
Retained earnings 4,351,906 3,808,136
Treasury stock, at cost (21,800 shares at June 30, 1998 and
December 31, 1997) (208,640) (208,640)
Accumulated other comprehensive income 7,142 21,418
------------ -----------
Total stockholders' equity 12,152,494 10,403,847
Commitments and contingencies (note 5)
------------ -----------
Total liabilities and stockholders' equity $140,349,583 126,630,682
============ ===========
</TABLE>
7
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JUNE 30, JUNE 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans $2,383,395 2,142,384 4,647,490 4,128,226
Investment securities 235,626 245,334 477,881 489,992
Federal funds sold 132,787 41,744 182,687 56,527
Federal Reserve Bank stock 2,565 2,250 5,074 4,500
Federal Home Loan Bank stock 6,903 -- 13,004 5,470
Due from banks 3,261 668 6,034 1,211
---------- --------- --------- ---------
Total interest income 2,764,537 2,432,380 5,332,170 4,685,926
Interest expense 1,234,219 1,079,972 2,356,684 2,115,636
---------- --------- --------- ---------
Net interest income 1,530,318 1,352,408 2,975,486 2,570,290
Provision for loan losses 62,253 36,000 124,506 72,000
---------- --------- --------- ---------
Net interest income after
provision for loan losses 1,468,065 1,316,408 2,850,980 2,498,290
---------- --------- --------- ---------
Other operating income:
Customer service fees 227,952 177,677 443,161 330,373
Other operating expenses:
Salaries and benefits 548,529 497,367 1,075,340 998,661
Occupancy expense 226,620 209,598 451,088 408,246
Legal and professional fees 62,966 59,233 133,778 120,245
Other expenses 303,743 295,463 615,750 545,456
Loss on sale and write down of other
real estate owned 30,058 -- 32,075 1,371
---------- --------- --------- ---------
1,171,916 1,061,661 2,308,031 2,073,979
---------- --------- --------- ---------
Net operating income before taxes 524,101 432,424 986,110 754,684
Income tax expense 208,051 176,198 376,754 296,695
---------- --------- --------- ---------
Net earnings $ 316,050 256,226 609,356 457,989
========== ========= ========= =========
Basic and diluted earnings per share (note 6) $ .44 .43 .87 .77
========== ========= ========= =========
</TABLE>
See accompanying review report of KPMG Peat Marwick LLP and accompanying
selected notes to condensed consolidated financial statements (unaudited).
8
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
JUNE 30,
1998 1997
---- ----
<S> <C> <C>
Cash flows provided by operating activities:
Net income $ 609,356 457,989
Adjustments to reconcile net income to net
cash provided
by operating activities:
Depreciation of premises and equipment 156,742 141,419
Net amortization of premiums and accretion of
discounts on investment securities held to
maturity and investment securities available
for sale (39,528) (34,890)
Provision for loan losses 124,506 72,000
Deferred loan origination fees 27,046 20,044
Deferred income taxes 117,000 (2,783)
Loss on sale of other real estate owned 32,075 1,371
Executive supplemental income plan -
additional cash
surrender value (32,177) (31,548)
Cash provided by (used in) changes in:
Accrued interest receivable (69,461) (32,354)
Prepaid expenses and other assets (6,905) 16,612
Accrued interest payable 13,865 14,933
Accounts payable and other liabilities 143,370 96,115
------------ ----------
Net cash provided by operating
activities 1,075,889 718,908
------------ ----------
Cash flows provided (used in) by investing
activities:
Net loans made to customers (10,242,380) (3,834,543)
Decrease (increase) in federal funds sold (6,950,000) (1,150,000)
Purchases of investment securities available for sale (7,000,000) (4,000,000)
Proceeds from maturity of investment
securities available for sale 3,500,000 2,500,000
Proceeds from called investment securities available for
sale 4,000,000 --
Purchase of premises and equipment (22,650) (214,267)
Proceeds from sale of other real estate
owned 263,043 290,353
Redemption (purchase) of Federal Home Loan Bank stock (37,300) (41,300)
------------ ----------
Net cash (used in) investing
activities (16,489,287) (6,449,757)
------------ ----------
</TABLE>
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
JUNE 30,
1998 1997
---- ----
<S> <C> <C>
Cash flows provided by (used in) financing activities:
Net increase in demand deposits, NOW accounts and passbook
savings accounts 5,474,343 1,277,193
Net increase in certificates of deposit 6,164,216 5,450,026
Principal payment on mortgage note payable (13,787) (12,725)
Increase in repurchase agreements 192,547 391,081
Net repayment of borrowings from the Federal Home Loan Bank (4,300) (3,912)
Shareholder dividends paid (65,586) --
Proceeds from employee stock options exercised 1,215,000 --
Proceeds from sale of common stock 4,153 5,863
----------- ---------
Net cash provided by financing activities 12,966,586 7,107,526
----------- ---------
Net increase in cash and cash equivalents (2,446,812) 1,376,677
Cash and cash equivalents at the beginning of period 6,095,762 3,389,652
----------- ---------
Cash and cash equivalents at end of period $ 3,648,950 4,766,329
=========== =========
Cash paid during the period for:
Interest $ 2,342,819 2,100,703
=========== =========
Income taxes $ 235,436 --
=========== =========
Supplemental disclosure for non-cash items:
Market value adjustment - investments available for sale:
Investments $ (11,445) 24,964
Deferred income tax liability 4,303 8,488
----------- ---------
Unrealized gain (loss) on investments available for sale $ (7,142) 16,476
=========== =========
Financing of other real estate owned $ 43,496 48,277
=========== =========
</TABLE>
See accompanying review report of KPMG Peat Marwick LLP and accompanying
selected notes to condensed consolidated financial statements (unaudited).
10
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 1998
See accompanying review report of KPMG Peat Marwick LLP
(1) Basis of Presentation
(a) Interim Financial Information
The accompanying unaudited condensed consolidated financial statements of
Commerce National Corporation and Subsidiary (the Company) have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial information. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the six months ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31,
1997.
(b) Reporting Information for Operating Segments
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information." This Statement
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders.
The Statement is required for fiscal years beginning after December 15,
1997.
The Company does not anticipate that adoption of this standard will have
a significant impact on its condensed consolidated financial statements.
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 1998
See accompanying review report of KPMG Peat Marwick LLP
(c) Comprehensive Income
In June 1997, the Financial Accounting Standards Board established
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income." This Statement establishes standards for
reporting and display of comprehensive income and its components in a
full set of financial statements. This Statement requires that an
enterprise classify items or other comprehensive income by nature in a
financial statement, and display the accumulated balance of other
comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of a balance sheet.
The Company adopted this Statement effective January 1, 1998. The
Company's other comprehensive income is the unrealized gain/(loss) on
investment securities available for sale. Total comprehensive income for
the three and six month periods ended June 30, 1998 and 1997 were
$311,920, $595,080, $196,945 and $434,105, respectively.
(d) Derivative Financial Instruments
The Company has interest rate risk exposure relating to its investments
in interest sensitive assets and funding through interest sensitive
liabilities. Management continually monitors the Company's interest rate
risk level by determining the effect of various interest rate movements
on the level of exposure. Management considers the level of exposure in
determining the appropriate duration mix of interest sensitive assets in
relation to interest sensitive liabilities, and the pricing of such
assets and liabilities. The Company does not have any investment in
derivative financial instruments.
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 1998
See accompanying review report of KPMG Peat Marwick LLP
(2) Investment Securities Held to Maturity and Investment Securities Available
For Sale
The amortized cost and estimated market values of investment securities held
to maturity at June 30, 1998 and December 31, 1997 are summarized as follows:
June 30, 1998 December 31, 1997
----------------------- -----------------------
Amortized Estimated Amortized Estimated
cost market value cost market value
---- ------------ ---- ------------
Municipal securities $ 190,000 190,004 190,000 190,454
======= ======= ======= =======
The amortized cost and estimated market value of investments available for
sale at June 30, 1998 and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
Amortized Estimated Amortized Estimated
cost market Value cost market Value
------------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 15,004,964 15,016,409 15,465,436 15,499,777
========== ========== ========== ===========
</TABLE>
As of June 30, 1998, the Company had securities sold under agreement to
repurchase of $3,349,453. All agreements were one day transactions, thus the
carrying value, market value, and borrowings were equal at quarter end.
The Company enters into sales of securities under agreements to repurchase
("Agreements"). Fixed-coupon Agreements are treated as financing, and the
obligations to repurchase securities sold are reflected as a liability in the
condensed consolidated balance sheet. The dollar amount of securities
underlying the Agreements remain in the asset accounts. At June 30, 1998,
all of the Agreements were to repurchase identical securities. The assets
underlying the Agreements, were held in safekeeping by a third party. During
the quarter ended June 30, 1998, Agreements outstanding averaged
approximately $4,653,859 and the maximum amount outstanding during the
quarter was $6,254,833. Total interest expense paid on repurchase Agreements
was $58,101 and $39,180 for the quarter ended June 30, 1998 and June 30,
1997, respectively, and $98,379 and $73,419 for the six months ended June 30,
1998 and June 30, 1997, respectively.
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 1998
See accompanying review report of KPMG Peat Marwick LLP
(3) Loans
Major categories of loans included in the loan portfolio at June 30, 1998 and
December 31, 1997 are summarized as follows:
<TABLE>
<CAPTION>
1998 1997
------------- -----------
<S> <C> <C>
Commercial-secured $ 12,901,215 11,113,710
Commercial-unsecured 2,736,658 4,326,247
Real estate - primarily commercial 89,776,864 80,223,450
Other (installment and overdrafts) 3,480,715 3,040,377
------------ ----------
108,895,452 98,703,784
Allowance for loan losses (1,130,371) (1,013,081)
Deferred loan origination fees (400,228) (373,182)
------------ ----------
$107,364,853 97,317,521
============ ==========
</TABLE>
The recorded investment in loans for which an impairment has been
recognized and the related allowance for loan losses at June 30, 1998 and
December 31, 1997 were $1,623,076 and $3,938 and $1,168,036 and $37,912,
respectively. All impaired loans had an associated general allowance for
loan losses. The average recorded investment in impaired loans during the
second quarter was $1,395,556. No interest income was recognized during the
quarter ended June 30, 1998 on impaired loans.
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 1998
See accompanying review report of KPMG Peat Marwick LLP
The activity in the allowance for loan losses for the three months ended June
30, 1998 and 1997 and the six months ended June 30, 1998 and 1997 is as
follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
-------- --------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Balance at the beginning of the period $1,070,515 912,959 1,013,081 887,803
Charge offs (24,460) -- (66,060) (13,547)
Recoveries 22,063 3,943 58,844 6,646
Provision for loan losses 62,253 36,000 124,506 72,000
---------- ------- --------- -------
Balance at the end of the period $1,130,371 952,902 1,130,371 952,902
========= ======= ========= =======
</TABLE>
At June 30, 1998 and December 31, 1997, certain stockholders, directors and
employees were indebted to the Bank in the aggregate amounts of $8,947,802
and $12,996,264, respectively. All such loans were made in the ordinary
course of business.
(4) Deposits
Included in interest bearing deposits are certificates of deposit issued in
amounts of $100,000 or more. These certificates and their remaining
maturities at June 30, 1998 and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Three months or less $24,084,300 23,954,183
Three through twelve months 8,722,146 4,921,535
Over one year 1,480,918 616,091
----------- ----------
$34,287,364 29,491,809
========== ==========
</TABLE>
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 1998
See accompanying review report of KPMG Peat Marwick LLP
(5) Commitments
In the normal course of business, the Bank has various commitments to extend
credit and standby letters of credit which are not reflected in the financial
statements. At June 30, 1998 and December 31, 1997, the Bank had commitments
to customers of approximately $329,698 and $870,486 for standby letters of
credit, $28,230,904 and $20,605,454 for unfunded firm loan commitments and
$63,561,473 and $50,832,223 for approved lines of credit, respectively.
(6) Basic and Diluted Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share." This
Statement simplifies the calculation of earnings per share (EPS) under APB 15
and was required to be implemented by companies for periods ending December
15, 1997 with prior period restated. The following calculations represent
EPS under SFAS 128:
<TABLE>
<CAPTION>
Income Shares Per share
(numerator) (denominator) amount
----------- ------------- ---------
<S> <C> <C> <C>
For the three months ended June 30, 1998:
BASIC AND DILUTED EARNINGS PER SHARE:
Net income $316,050 721,029 $.44
======= ======= ====
For the three months ended June 30, 1997:
BASIC AND DILUTED EARNINGS PER SHARE:
Net income $256,226 596,176 $.43
======= ======= ====
For the six months ended June 30, 1998:
BASIC AND DILUTED EARNINGS PER SHARE:
Net income $609,356 699,652 $.87
======= ======= ====
For the six months ended June 30, 1997:
BASIC AND DILUTED EARNINGS PER SHARE:
Net income $457,989 595,981 $.77
======= ======= ====
</TABLE>
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 1998
See accompanying review report of KPMG Peat Marwick LLP
(7) New Pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedge Activities" (FASB
133). This standard which is effective for all fiscal quarters and all
fiscal years beginning after June 15, 1999, requires all derivatives be
measured at fair value and be recognized as assets and liabilities in the
statement of financial position. FASB 133 sets forth the accounting for
changes in fair value of a derivative depending on the intended use and
designation of the derivative. Implementation of FASB 133 is not expected to
have a significant impact on the financial position or operations of the
Company.
17
<PAGE>
Item 2. Management's Discussion And Analysis Of Financial Condition And
Results Of Operations.
Except for historical information contained herein, the matters discussed
in this report contain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that involve substantial risks and uncertainties. When used in this
report, or in the documents incorporated by reference herein, the words
"anticipate", "believe", "estimate", "may", "intend", "expect" and similar
expressions identify certain of such forward-looking statements. Actual
results, performance or achievements could differ materially from those
contemplated, expressed or implied by the forward-looking statements contained
herein. These forward-looking statements are based largely on the expectations
of the Company and are subject to a number of risks and uncertainties,
including, but not limited to, economic, competitive and other factors affecting
the Company's operations, markets, products and services, as well as expansion
strategies and other factors discussed elsewhere in this report filed by the
Company with the Securities and Exchange Commission. Many of these factors are
beyond the Company's control.
The accompanying condensed consolidated financial statements of the Company
are primarily affected by the operation of the NATIONAL BANK OF COMMERCE (the
"Bank"), its wholly owned subsidiary.
The following discussion and analysis presents a review of the Company's
Condensed Consolidated Financial Condition and Results of Operation. This
review should be read in conjunction with the condensed consolidated financial
statements and other financial data presented herein.
Summary:
- -------
During the second quarter and the first six months of 1998, the Company had
net income of $316,050 and $609,356, respectively. This compares with net
income of $256,226 for the second quarter of 1997 and $457,989 for the first six
months of 1997. This is the result of loans increasing to an all-time high of
$107,364,853 at the end of the second quarter of 1998 compared to $97,317,521 at
year-end 1997. This resulted in total interest income of $5,332,170 at the end
of the second quarter of 1998 compared to the same period in 1997 of $4,685,926.
Interest expense for the second quarter ending June 30, 1998, was $1,234,219
compared to $1,079,972 for the same time period in 1997, while interest expense
totaled $2,356,684 for the first six months of 1998 compared to $2,115,636 for
the same period in 1997. While interest-bearing deposits increased to
$101,233,195 as of June 30, 1998, compared to the year-end 1997 figure of
$92,644,084, the rates paid on these deposits have remained the same since the
second quarter of 1997.
Two indicators which measure profitability are net income as a percentage
of average assets (ROAA) and net income as a percentage of average shareholder
equity (ROAE). A comparison of these ratios for the first six months of the
last two years is as follows:
18
<PAGE>
<TABLE>
<CAPTION>
For the Six Months Ending
6/30/98 6/30/97
- -------------------------------------------------
<S> <C> <C>
ROAA .91% .78%
- -------------------------------------------------
ROAE 10.36% 9.70%
- -------------------------------------------------
NET INCOME $609,356 $457,989
- -------------------------------------------------
AVERAGE ASSETS $133,920,167 $117,808,934
- -------------------------------------------------
AVERAGE CAPITAL $ 11,763,545 $ 9,447,257
- -------------------------------------------------
</TABLE>
Net Interest Income
- -------------------
Net interest income, the difference between interest earned on interest-
earning assets and interest expense incurred on interest-bearing liabilities, is
the most significant component of the Company's earnings. Net interest income is
affected by changes in the volumes and rates of interest-earning assets and
interest-bearing liabilities and the volume of interest-earning assets funded
with interest-bearing deposits, non-interest-bearing deposits, and stockholders'
equity. Net interest income for the first six months of the last two years is as
follows:
<TABLE>
<CAPTION>
For the Six Months Ending
<S> <C> <C>
6/30/98 6/30/97
- ------------------------------------------------
INTEREST INCOME $5,332,170 $4,685,926
- ------------------------------------------------
INTEREST EXPENSE $2,356,684 $2,115,636
- ------------------------------------------------
NET INTEREST INCOME $2,975,486 $2,570,290
- ------------------------------------------------
</TABLE>
Net interest income of increased 13% in the second quarter and 16% in the
first six months of 1998 compared to the same periods in 1997.
On an annualized basis, the Company's net interest margin was 4.56% through
the second quarter of 1998 compared to 4.68% through the second quarter of 1997.
Changes in net interest income from period to period result from increases
or decreases in the average balances of interest-earning assets and interest-
bearing liabilities, increases or decreases in the average rates earned and paid
on such assets and liabilities, the banks' ability to manage their earning asset
portfolios and the availability of particular sources of funds.
Provision for Loan Losses
- -------------------------
There were seven (7) non-accruing loans totaling $1,598,616 at June 30,
1998. This compares with eleven (11) non-accruing loans totaling $1,132,848 as
of June 30, 1997. Of the
19
<PAGE>
1998 figure, three (3) loans totaling $932,030 are collateralized with first
mortgages. One loan secured by a first mortgage on a commercial warehouse in the
amount of $71,997 was paid off July 15, 1998.
One property that is secured by a first mortgage is a 100-lot subdivision
in Seminole County, Florida. There is an acquisition and development loan in
the amount of $568,178 on the remaining 63 lots in this subdivision. At the
same time, of the 37 lots which have been sold, the Bank continues to carry
first mortgages on six (6) completed houses in the subdivision in the amount of
$291,855. Foreclosure proceedings have commenced in June of this year. It is
anticipated at this time that there will be no loss to the Bank.
There are two unsecured loans totaling $65,319. Litigation is in process
against the principals in these two loans.
There is one loan in the amount of $90,644 secured by business assets and a
custom parasail boat and trailer. A lawsuit has also been filed against the
principals in this loan. It is anticipated at this time that there will be no
loss to the Bank.
A loan in the amount of $510,623 is secured by the limited guarantees of 51
physicians, each of whom is a limited partner in a limited partnership, the
majority of which guarantees range between $10,000 and $20,000. There are also
guarantees from three (3) general partners in this partnership totaling $177,500
and a lien against accounts receivable currently totaling $425,808. This
partnership has filed a Chapter 11 reorganization plan, and it is currently
anticipated that no loss will be incurred by the Bank. The partnership has
entered into a purchase contract to be acquired by a national concern in the
same field. It is anticipated that this loan will be paid off by the end of the
third quarter of 1998.
The Company's allowance for loan losses at June 30, 1998 was $1,130,371, a
1.04% reserve on total loans outstanding. This compares to an allowance of
$952,902, a 1.04% reserve of total loans outstanding, at June 30, 1997.
Non-Interest Income
- -------------------
Non-interest income in the second quarter of 1998 increased 28% to $227,952
compared to $177,677 for the same period in 1997, while non-interest income for
the first six months of 1998 increased 34% to $443,161 compared to $330,373 for
the same time period in 1997. Service charge income on deposits increased to
$44,827 through the first six months of 1998 compared to $29,967 for the same
time period in 1997. Other income on time deposit accounts, which includes
collecting penalties on insufficient funds and checks, increased to $105,618
through the first six months of 1998 compared to $78,796 for the same time
period in 1997.
Non-Interest Expense
- --------------------
Non-interest expense in the second quarter of 1998 increased 10% to
$1,171,916 compared to $1,061,661 in the same period in 1997, while non-interest
expense for the first six months of 1998 increased 11% to $2,308,031 compared to
$2,073,979 for the same time period
20
<PAGE>
in 1997. Personnel expense, consisting of salaries, other compensation and
employment benefits, increased 10.3% and 7.7% over the aforementioned periods.
This is a result of additional hirings during the first six months of 1998 which
increased salary expense and group insurance costs.
Occupancy expense in the second quarter of 1998 increased 8% to $226,620
compared to $209,598 for the same period in 1997, while occupancy expense for
the first six months of 1998 increased 10.5% to $451,088 compared to $408,246
during the same time period in 1997. This is a result of a new five-year lease
which the Bank committed to which increased lease expense in the first six
months by $17,818. Also, equipment expense, which is included under occupancy
expense, increased $26,778 during the second quarter of 1998 compared to the
same time period in 1997. This is a result of increased depreciation expense on
new computer systems plus the maintenance and repair expense to maintain the
computer system. The investment in equipment will continue to grow due to the
Company's commitment to maintain state of the art capabilities and computer
software information as it heads for the year 2000.
Also, data processing expense, which is included in the other expense
category, increased by $19,804 during the second quarter of 1998 as the Bank
continued to grow with more customers. Advertising and marketing expenses
increased in the second quarter of 1998 by $31,675 as compared to the same
quarter of 1997. New expenditures were made in connection with various products
to continue to stimulate business growth and development. Also, the final piece
of property in the other real estate owned category was sold during the second
quarter of 1998. This resulted in a loss on the sale of the property of
$30,058.
Liquidity
- ---------
The liquidity of a banking institution reflects its ability to provide
funds to meet loan requests, to accommodate possible outflows in deposits and to
take advantage of interest rate market opportunities. Funding of loan requests,
providing for liability outflows, and management of interest rate fluctuations,
require continuous analysis in order to match the maturities of specific
categories of specific short-term loans and investments with specific types of
deposits and borrowings. The objective of liquidity management is to maintain a
balance between sources and uses of funds such that the cash flow needs of the
Company are met in the most economical manner. On the asset side, the Company's
liquidity is provided by Federal funds sold, loan principal repayments, and by
investment securities, of which 100% have maturities of five years or less.
Moreover, liquidity is provided by an investment portfolio that is readily
marketable.
Closely related to the concept of liquidity is the management of interest-
earning assets and interest-bearing liabilities, which focuses on maintaining
stability in the net interest spread, an important factor in earnings' growth
and stability. The interest rate volatility of recent years and rate
deregulation have significantly affected the way in which banks manage their
business and have highlighted the importance of asset and liability management.
For the Company, the most important objectives in assets and liability
management include: (1) controlling interest rate exposure, (2) ensuring
adequate liquidity, and (3) maintaining strong capital foundation.
21
<PAGE>
Capital Resources
- -----------------
On January 27, 1989, the Office of the Comptroller of the Currency issued
an amendment to 12 CFR Part 3 adopting final risk based capital guidelines for
national banks. Developed in conjunction with the Federal Deposit Insurance
Corporation and the Board of Governors of the Federal Reserve System, these
guidelines provide an additional measure of a bank's capital adequacy and are
intended to reflect the relative degree of credit risk associated with various
assets by setting different capital requirements for assets having less credit
risk than others. Secondly, banks are required to systematically hold capital
against such off-balance sheet activities as loans sold with recourse, loan
commitments, guarantees and standby letters of credit. Finally, the guidelines
strengthen the quality of capital by increasing the emphasis on common equity
and restricting the amount of loss reserves and other forms of equity, such as
preferred stock, that can be counted as capital.
Under the terms of the guidelines, banks must meet minimum capital adequacy
based upon both total assets and risk adjusted assets. To the extent that an
institution has a favorable risk based capital ratio, it would more likely be
permitted to operate at or near minimum primary capital levels. On December 31,
1992, the guidelines took effect in their final form whereupon all banks are
required to maintain a risk based capital ratio of 8.0%. At June 30, 1998, the
Bank had a total risk based capital ratio (i.e. Tier One plus Tier Two capital)
of 10.16% (11.40% for the Company on a consolidated basis). The Bank and the
Company are well capitalized.
The Company stands ready to infuse additional capital into the Bank should
it be warranted.
Impact of Inflation
- -------------------
The condensed consolidated financial statements and related financial data
and notes presented herein have been prepared in accordance with Generally
Accepted Accounting Principles ("GAAP"), which require the measurement 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, virtually all of the assets and
liabilities of the Company and the Bank are monetary in nature. As a result,
interest rates have a more significant impact on the performance of the Company
and the Bank than the effects of general price levels. Although interest rates
generally move in the same direction as inflation, the magnitude of such changes
varies.
Competition
- -----------
All areas of the Company's business are highly competitive. The Company
faces heavy competition, both from local and national financial institutions and
from various other providers of financial services. By industry standards, the
Company relies heavily on large deposit customers. In the opinion of
management, this factor is a result of its customer base and local demographics.
22
<PAGE>
Accounting Pronouncements
- -------------------------
SFAS No. 131
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 131, "Disclosure about Segments
of an Enterprise and Related Information." This Statement establishes standards
for the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. The Statement is required for fiscal years
beginning after December 15, 1997.
The Company does not anticipate that adoption of this standard will have a
significant impact on its consolidated financial statements upon adoption.
SFAS No. 133
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedge Activities" (FASB
133). This standard, which is effective for all fiscal quarters and all fiscal
years beginning after June 15, 1999, requires all derivatives be measured at
fair value and be recognized as assets and liabilities in the statement of
financial position. FASB 133 sets forth the accounting for changes in fair
value of a derivative depending on the intended use and designation of the
derivative. Implementation of FASB 133 is not expected to have a significant
impact on the financial position or results of operations of the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
The business of the Company and the composition of its consolidated balance
sheet consists of investments in interest-earning assets (primarily loans and
investment securities) which are primarily funded by interest-bearing
liabilities (deposits). Such financial instruments have varying levels of
sensitivity to changes in market interest rates resulting in market risk.
INTEREST RATE RISK MEASUREMENT
Interest rate risk results when the maturity or repricing intervals and
interest rate indices of the interest-earning assets and interest-bearing
liabilities are different. In an attempt to manage its exposure to changes in
interest rates, management monitors the Company's interest rate risk.
Management's asset/liability committee meets monthly to review the Company's
interest rate risk position and profitability, and recommend adjustments for
consideration by the Board of Directors. Management also reviews the Bank's
securities portfolio, formulates investment strategies, and oversees the timing
and implementation of transactions to assure attainment of the Board's
objectives in the most effective manner. Notwithstanding the Company's interest
rate risk management activities, the potential for changing interest rates is an
uncertainty that can have an adverse effect on net income.
23
<PAGE>
In adjusting the Company's asset/liability position, the Board and
management attempt to manage the Company's interest rate risk while enhancing
net interest margins. The rates, terms and interest rate indices of the
Company's interest-earning assets result primarily from the Company's strategy
of investing in loans and securities which permit the Company to limit its
exposure to interest rate risk, together with credit risk, while at the same
time achieving a positive interest rate spread from the difference between the
income earned on interest-earning assets and the cost of interest-bearing
liabilities.
One method of measuring interest rate risk is to determine the earnings-at-
risk for a given change in interest rates which is done on a monthly basis. The
impact on value (earnings) is significant because reduced earnings will affect
capital. The change in interest rates does not necessarily represent an
immediate or parallel shift.
NET ECONOMIC VALUE
The interest rate risk ("IRR") component is a dollar amount that is
deducted from total capital for the purpose of calculating an institution's
risk-based capital requirement and is measured in terms of the sensitivity of
its net economic value ("NEV") to changes in interest rates. An institution's
NEV is calculated as the net discounted cash flows from assets, liabilities, and
off-balance sheet contracts. An institution's IRR component is measured as the
change in the ratio of NEV to the net present value of total assets as a result
of a hypothetical 200 basis point change in market interest rates. A resulting
decline in this ratio of more than 2% of the estimated present value of an
institution's total assets prior to the hypothetical 200 basis point change will
require the institution to deduct form its regulatory capital 50% of that excess
decline. Based on quarterly calculations, the Bank experienced no such decline.
Although certain assets and liabilities may have similar maturities or
periods to repricing, they may react in different degrees to changes in market
interest rates. Also, the interest rates on certain types of assets and
liabilities may fluctuate in advance of changes in market interest rates, while
interest rates on other types may lag behind changes in market rates.
Additionally, certain assets, such as adjustable-rate mortgage loans, have
features that restrict changes in interest rates on a short-term basis and over
the life of the loan. Further, in the event of a change in interest rates,
prepayment and early withdrawal levels could deviate significantly. Finally,
the ability of many borrowers to service their debt may decrease in the event of
a significant interest rate increase.
The repricing of certain categories of assets and liabilities are subject
to competitive and other pressures beyond the Company's control. As a result,
certain assets and liabilities indicated as maturing or otherwise repricing
within a stated period may in fact mature or reprice at different times and at
different volumes. There were no substantial changes in the Company's
asset/liability position in the quarter ended June 30, 1998.
24
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Neither the Company nor the Bank are involved at this time in any
claims or lawsuits other than routine matters arising out of the normal day-to-
day banking business.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the Company was held on May 26,
1998. At that meeting, C. Durham Barnes, M.D., Kenneth M. Clayton, Guy D. Colado
and Anthony Lombardi, Jr. were each elected as a director for a three (3) year
term. Donald J. Barker, Robert E. Battaglia, Jane H. Louttit, Ernst R. Janvrin,
W. Charles Shuffield, Russell Barkett, C. Durham Barnes, M.D., Robert B.
Boswell, M.D., Kenneth M. Clayton, Guy D. Colado, Tony Lombardi, Jr., Stephen G.
Miller, Willie C. Moss, and Frederick A. Raffa, Ph.D. will continue as directors
following the annual meeting.
The shareholders, by a majority vote, approved that the Articles of
Incorporation of the Corporation be amended and restated in their entirety. Of
the 721,019 shares outstanding, 476,153 shares were voted in favor of amending
the Articles, 35,200 shares were voted against amending the Articles, and 3,000
shares abstained from voting. The Amended and Restated Articles (i) increase
the voting requirement for shareholders over that required by the Florida
Business Corporation Act, (ii) include provisions related to Business
Combinations (as defined therein), (iii) eliminate information in the Articles
which was of historic value and (iv) reform the original Articles to take into
consideration the changes noted above. These Amended and Restated Articles were
adopted by a majority of the members of the Board of Directors on February 17,
1998, and by a majority of the Shareholders at the annual meeting of
shareholders held on May 26, 1998.
The shareholders, by a majority vote, also approved that certain
sections of the Bylaws be amended. Of the 721,019 shares outstanding, 476,153
shares were voted in favor of amending the Bylaws, 35,200 shares were voted
against amending the Bylaws, and 3,000 shares abstained from voting. The
Amendment to the Bylaws (i) amended the procedure for setting the number of
members of the Board of Directors; (ii) amended the procedure for making
nominations for the election of directors; (iii) increased the voting
requirement for shareholders in the removal of directors; and (iv) added the
requirement of approval by holders of seventy-five percent (75%) of the
outstanding voting stock prior to the amendment of certain sections of the
Bylaws.
25
<PAGE>
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
---------
- --------------------------------------------------------------------------------
SEQUENTIAL
PAGE
EXHIBIT DESCRIPTION NUMBER
- -------------------------------------------------------------------------------
3.2 First Amended and Restated Bylaws of *
Commerce National Corporation effective
January 14, 1988, incorporated by reference
from Exhibit 3.2 to the Company's Report on
Form 10-K for the fiscal year ended
December 31, 1992.
- -------------------------------------------------------------------------------
3.3 First Amendment to First Amended and 30
Restated Bylaws of Commerce National
Corporation dated effective May 26, 1998.
- -------------------------------------------------------------------------------
3.4 Articles of Restatement of the Articles of 32
Incorporation of Commerce National
Corporation, and Amended and Restated
Articles of Incorporation, filed June 22,
1998.
- -------------------------------------------------------------------------------
4.1 Specimen copy of common stock certificate *
for Common Stock of Commerce National
Corporation, incorporated by reference from
Exhibit 4.1 to the Company's Report on Form
10-K for the fiscal year ended December 31,
1992.
- -------------------------------------------------------------------------------
4.2 Article IV of Articles of Incorporation of *
Commerce National Corporation included in
the Articles of Incorporation of Commerce
National Corporation incorporated by
reference from Exhibit 3.1 to Registration No.
2-98960-A.
- -------------------------------------------------------------------------------
4.3 Stock Redemption/Repurchase Policy *
incorporated by reference from Exhibit 4.3 to
the Company's Report on Form 10-Q for the
fiscal quarter ended June 30, 1993.
- -------------------------------------------------------------------------------
26
<PAGE>
- --------------------------------------------------------------------------------
SEQUENTIAL
PAGE
EXHIBIT DESCRIPTION NUMBER
- -------------------------------------------------------------------------------
10.1 First Amendment to Amended and Restated *
1985 Commerce National Corporation
Directors' Stock Plan dated October 20, 1997
incorporated by reference from Exhibit 10.1
to the company's Report on Form 10-K for
the fiscal year ended December 31, 1997
- -------------------------------------------------------------------------------
27 Article 9 Financial Data Schedule (for SEC 45
use only).
- -------------------------------------------------------------------------------
* Incorporated by reference as noted in the narrative under "Description."
(b) Reports on Form 8-K.
-------------------
No reports on Form 8-K were filed by the Company for the fiscal quarter
ended June 30, 1998.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMERCE NATIONAL CORPORATION
Dated: August 14, 1998
By:/s/ Guy D. Colado
----------------------------------
GUY D. COLADO, President and
Chief Executive Officer
Dated: August 14, 1998
By:/s/ Alan M. Scarboro
----------------------------------
ALAN M. SCARBORO,
Secretary/Treasurer
28
<PAGE>
INDEX OF EXHIBITS FILED WITH THIS REPORT
----------------------------------------
- --------------------------------------------------------------------------------
SEQUENTIAL
PAGE
EXHIBIT DESCRIPTION NUMBER
- --------------------------------------------------------------------------------
3.3 First Amendment to First Amended and 30
Restated Bylaws of Commerce National
Corporation dated effective May 26, 1998.
- --------------------------------------------------------------------------------
3.4 Articles of Restatement of the Articles of 32
Incorporation of Commerce National
Corporation, and Amended and Restated
Articles of Incorporation, filed June 22,
1998.
- --------------------------------------------------------------------------------
27 Article 9 Financial Data Schedule (for SEC 45
use only).
- --------------------------------------------------------------------------------
29
<PAGE>
EXHIBIT 3.3
FIRST AMENDMENT TO
FIRST AMENDED AND RESTATED BYLAWS OF
COMMERCE NATIONAL CORPORATION
May 26, 1998
Pursuant to Section 607.1020, Florida Statutes, the First Amended and
Restated Bylaws of COMMERCE NATIONAL CORPORATION (the "Corporation"), as adopted
by the Board of Directors of the Corporation effective January 14, 1988, are
hereby amended as follows:
FIRST, Section 2 of Article II shall be amended by deleting said section as
the same now exists, and by substituting in lieu thereof the following:
Section 2. Qualification. Directors need not be residents of the
-------------------------
State of Florida or shareholders of the Corporation. Nominations for the
election of directors may be made by the Board of Directors or by any
shareholder entitled to vote in the election of directors. However, any
shareholder entitled to vote in the election of directors at a meeting may
nominate a director only if written notice of such shareholder's intent to
make such nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Corporation not later than: (a) with respect to an election to be held at
an annual meeting of shareholders, ninety (90) days in advance of the date
in the current year corresponding to the date of the previous year's annual
meeting at which directors were elected; and (b) with respect to an
election to be held at a special meeting of shareholders for the election
of the directors, the close of business on the seventh (7th) day following
the date on which notice of such meeting is first given to shareholders.
Each such notice shall set forth: (a) the name and address of the
shareholder who intends to make the nomination and of the person or persons
to be nominated; (b) a representation that the shareholder is a holder of
record of shares of the Corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all
arrangements or understanding between the shareholder and each nominee and
any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the shareholder; (d)
such other information regarding each nominee proposed by such shareholder
as would be required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission had the nominee
been nominated, or intended to be nominated, by the Board of Directors; and
(e) the consent of each nominee to serve as a Director of the Corporation
if so elected. The Chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing
procedure.
30
<PAGE>
SECOND, Section 6 of Article II shall be amended by deleting said section
as the same now exists, and by substituting in lieu thereof the following:
Section 6. Number. Directors shall be elected for one term and shall
------------------
continue in office until their successors are elected and qualified. The
number of members of the Board of Directors constituting the entire Board
shall be determined by a two-thirds majority vote of the "Disinterested
Directors" (as defined in the Articles of Incorporation, as amended), or,
if there is no "Interested Shareholder" (as defined in the Articles of
Incorporation, as amended), a majority vote of the whole Board of Directors
of the Corporation, and such exact number shall be fifteen (15) until
otherwise so determined; provided, however, that in no event shall a change
be made to the number of directors elected of greater than two positions in
any one year.
THIRD, Section 11 of Article II shall be amended by deleting said section
as the same now exists, and by substituting in lieu thereof the following:
Section 11. Removal of Directors. At a meeting of shareholders
---------------------------------
called expressly for that purpose, any director or the entire Board of
Directors may be removed, with or without cause, but only by the
affirmative vote of the holders of 75 percent of the outstanding voting
stock qualified to vote at a meeting for the election of directors.
FOURTH, Article VIII shall be amended by deleting said article as the same
now exists, and by substituting in lieu thereof the following:
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted, by the Board of Directors; provided, however, that the provisions
set forth in Article II, Sections 2, 6, 9 and 11 shall not be altered,
amended or repealed unless approved by the affirmative vote of the holders
of seventy-five percent (75%) of the outstanding voting stock qualified to
vote at a meeting for the election of directors.
FIFTH, this Amendment shall be effective as of the date first above
written.
IN WITNESS WHEREOF, the Secretary of the Corporation hereby certifies that
the foregoing Amendment was duly adopted by the Board of Directors of the
Corporation on February 17, 1998, and duly adopted by the shareholders of the
Corporation on May 26, 1998.
/s/ Alan M. Scarboro
--------------------------------------
Alan M. Scarboro, Secretary of
Commerce National Corporation
31
<PAGE>
EXHIBIT 3.4
ARTICLES OF RESTATEMENT
OF THE ARTICLES OF INCORPORATION OF
COMMERCE NATIONAL CORPORATION
A Florida Corporation
THE UNDERSIGNED, as President of COMMERCE NATIONAL CORPORATION, a Florida
corporation, Florida Document Number H43827 (the "Corporation"), in accordance
with Section 607.1007(4), Florida Statutes, hereby submits for filing these
Articles of Restatement of the Articles of Incorporation of the Corporation.
1. NAME OF CORPORATION. The name of the Corporation is "Commerce National
-------------------
Corporation"
2. TEXT OF AMENDED AND RESTATED ARTICLES. The text of the Amended and
-------------------------------------
Restated Articles of Incorporation of the Corporation is attached hereto as
Exhibit A.
3. REQUIREMENT OF SHAREHOLDER APPROVAL. The Amended and Restated Articles of
-----------------------------------
Incorporation contain amendments which required the approval of the
Corporation's Shareholders.
4. DATE OF AUTHORIZATION. The Amended and Restated Articles of Incorporation
---------------------
were adopted by the Board of Directors on February 17, 1998, and adopted by
the Shareholders of the Corporation on May 26, 1998.
5. SUFFICIENCY OF VOTE. The Amended and Restated Articles of Incorporation
-------------------
were approved by a majority of the Corporation's Directors and were
approved by a majority of the Corporation's Shareholders, which is a vote
sufficient to approve the Amendment under the Corporation's Articles of
Incorporation and Bylaws and under the laws of the State of Florida.
6. EFFECTIVE DATE OF AMENDED AND RESTATED ARTICLES OF INCORPORATION. The
----------------------------------------------------------------
Amended and Restated Articles of Incorporation shall be effective
immediately upon filing by the Department of State.
IN WITNESS WHEREOF, the undersigned President of the Corporation has
executed these Articles of Amendment this 15th day of June, 1998.
/s/ Guy D. Colado
---------------------------------
Guy D. Colado, President
32
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
COMMERCE NATIONAL CORPORATION
The following Articles of Incorporation of COMMERCE NATIONAL CORPORATION, a
Florida corporation (the "Corporation") amend in their entirety and restate
those Articles of Incorporation which were originally filed for the Corporation
on February 21, 1985. These Amended and Restated Articles permit the
shareholders of the Corporation to increase the voting requirement for
shareholders over that required by the Florida Business Corporation Act. The
Amended and Restated Articles also include provisions related to Business
Combinations (as defined therein). These Amended and Restated Articles
eliminate information in the Articles which was of historic value and reform the
original Articles to take into consideration the changes noted above. These
Amended and Restated Articles were adopted by the Board of Directors on February
17, 1998, and shall be presented to the Shareholders for approval at a meeting
duly called for said purpose on May 26, 1998.
All amendments included herein were adopted pursuant to Section 607.194(4),
Florida Statutes, and there is no discrepancy between the Corporation's Articles
of Incorporation as theretofore amended other than the inclusion of these
amendments and the omission of matters of historical interest.
ARTICLE I
---------
NAME AND PRINCIPAL OFFICE
-------------------------
The name of this Corporation shall be COMMERCE NATIONAL CORPORATION, whose
principal office shall be located at 1201 South Orlando Avenue, Winter Park,
Florida 32789, and whose mailing address shall be Post Office Box 8181, Winter
Park, Florida 32790-8181.
ARTICLE II
----------
COMMENCEMENT OF CORPORATE EXISTENCE
-----------------------------------
This Corporation commenced existence on February 21, 1985, and shall exist
perpetually unless sooner dissolved according to law.
ARTICLE III
-----------
PURPOSES AND GENERAL POWERS
---------------------------
The general purpose of this Corporation shall be the transaction of any and
all lawful business. This Corporation shall have all of the powers enumerated
in the Florida General Corporation Act, as the same now exists and as hereafter
amended, and all such other powers as are permitted by applicable law,
including, without limitation to act as a bank holding company and, to the
extent permitted under applicable federal and state laws, now or hereafter
existing, relating to bank holding companies and their activities.
33
<PAGE>
ARTICLE IV
----------
CAPITAL STOCK
-------------
1. Number and Class of Shares Authorized; Par Value.
------------------------------------------------
The capital stock authorized, the par value thereof, and the class of such
stock shall be as follows:
<TABLE>
<CAPTION>
Number of Par Value Class
Shares Authorized Per Share of Stock
----------------- --------- --------
<S> <C> <C>
1,000,000 $0.10 Common
</TABLE>
The consideration for all of the above stock shall be payable in cash or,
in lieu of cash, property (tangible and intangible), labor or services (past,
present or future), at a just valuation to be fixed by the Board of Directors of
the Corporation.
2. Voting Rights.
-------------
The Common Stock shall possess and exercise exclusive voting rights and at
all meetings of the shareholders, each record holder of such stock shall be
entitled to one vote for each share held. Shareholders holding Common Stock
shall have no cumulative voting rights in any election of directors of the
Corporation.
3. No Preemptive Rights.
--------------------
No shareholder of the Corporation shall have the right, upon the sale for
cash or otherwise, of any new stock of the Corporation or of any stock of the
Corporation held by it in its treasury or otherwise, of the same or any other
kind, class or series as that which he already holds, to purchase his pro rata
or any other share of such stock at the same price at which it is offered to
others or any other price.
4. Relative Rights.
---------------
Each share of Common Stock shall have the same relative rights as and be
identical in all respects with all other shares of common stock.
ARTICLE V
---------
BOARD OF DIRECTORS
------------------
The business of the Corporation shall be conducted by a Board of Directors.
As of the date of adoption of these Amended and Restated Articles, there are
fifteen (15) members of the Board of Directors. The number of directors may be
either increased or diminished from time to time as provided in the bylaws.
Directors may be removed with or without cause.
34
<PAGE>
ARTICLE VI
----------
DISTRIBUTION OF ASSETS
----------------------
The Board of Directors of the Corporation may, from time to time, and at
its discretion, distribute a portion of the assets of the Corporation to its
shareholders out of the capital surplus of the Corporation.
ARTICLE VII
-----------
PURCHASE OF SHARES
------------------
The Board of Directors of the Corporation may, from time to time, and at
its discretion, cause the Corporation to purchase its own shares to the extent
of unreserved and unrestricted capital surplus available for said purchase.
ARTICLE VIII
------------
BYLAWS
------
Except as otherwise provided by law, the power to adopt, alter, amend or
repeal the bylaws shall be vested in the Board of Directors. The shareholders
of the Corporation may adopt or amend a bylaw that fixes a greater quorum or
voting requirement for shareholders (or voting groups of shareholders) than is
required by the Florida Business Corporation Act.
ARTICLE IX
----------
INDEMNIFICATION
---------------
In addition to any and all rights and duties under applicable law, the
Corporation shall indemnify and hold harmless all of its directors, officers,
employees and agents, and former directors, officers, employees and agents from
and against all liabilities and obligations, including attorneys' fees, incurred
in connection with any actions taken or failed to be taken by said directors,
officers, employees and agents in their capacity as such to the fullest extent
possible under law.
ARTICLE X
---------
CONFLICTS OF INTEREST
---------------------
No contract or other transaction between this Corporation and any other
corporation, and no act of this Corporation, shall in any way be affected or
invalidated by the fact that any of the directors of this Corporation are
pecuniarily or otherwise interested in, or are the directors or officers of,
such other corporation. Any director individually, or any firm of which any
director may be a member, may be a party to, or may be pecuniarily to otherwise
interested in any contract or transaction of this Corporation, provided that the
fact that he or such firm is so interested shall be disclosed or shall have been
known to the Board of Directors or a majority thereof, and any director of this
Corporation who is also a director or an officer of such other corporation, or
who is so interested may be counted in determining the existence of a quorum at
any meeting of the Board of Directors of this Corporation which shall authorize
any such contract or transaction with like force and effect as if he were not
such a director or officer of such other corporation, or not so interested.
35
<PAGE>
ARTICLE XI
----------
LIMITED LIABILITY OF SHAREHOLDERS
---------------------------------
The private property of the shareholders shall not be subject to payment of
the Corporation's debts to any extent.
ARTICLE XII
-----------
AMENDMENT
---------
This Corporation reserves the right to amend or repeal any provisions
contained in these Articles of Incorporation, or any amendment hereto, subject
to the consent thereof by the holders of a majority of the Shares entitled to
vote thereon and any right conferred upon the shareholders is subject to this
reservation.
ARTICLE XIII
------------
FAIR PRICE AND SUPER VOTE REQUIREMENT
-------------------------------------
A. Definitions as Used in This Article XIII.
----------------------------------------
(1) "Affiliate" or "Associate" shall have the respective meanings given to
such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934.
(2) A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly, any shares of Voting
Stock; or
(ii) which such person or any of its Affiliates or Associates has by
itself or with others: (a) the right to acquire (whether such
right is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote
pursuant to any agreement, arrangement or understanding; or
(iii) which is beneficially owned, directly or directly, by any other
person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any
shares of Voting Stock.
(3) "Business Combination" shall include:
(i) any merger or consolidation of the Corporation or any of its
subsidiaries with or into an Interested Shareholder, regardless
of which person is the surviving entity;
36
<PAGE>
(ii) any sale, lease, exchange, mortgage, pledge, or other
disposition (in one transaction or a series of transactions)
from the Corporation or any of its subsidiaries to an Interested
Shareholder, or from an Interested Shareholder to the
Corporation or any of its subsidiaries, of assets having an
aggregate Fair Market Value of five percent (5%) or more of the
Corporation's total stockholders' equity;
(iii) the issuance, sale or other transfer by the Corporation or any
subsidiary thereof of any securities of the Corporation or any
subsidiary thereof to an Interested Shareholder (other than an
issuance or transfer of securities which is effected on a pro
rata basis to all shareholders of the Corporation);
(iv) the acquisition by the Corporation or any of its subsidiaries of
any securities of an Interested Shareholder;
(v) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an
Interested Shareholder;
(vi) any reclassification or recapitalization of securities of the
Corporation if the effect, directly or indirectly, of any
transaction is to increase the relative voting power of an
Interested Shareholder; or
(vii) any agreement, contract or other arrangement providing for or
resulting in any of the transactions described in this
definition of Business Combination.
(4) "Disinterested Director" shall mean any member of the Board of
Directors of the Corporation who is unaffiliated with the Interested
Shareholder and was a member of the Board of Directors prior to the
time that the Interested Shareholder became an Interested Shareholder;
any successor of a Disinterested Director who is unaffiliated with the
Interested Shareholder and is approved to succeed a Disinterested
Director by the Disinterested Directors; any member of the Board of
Directors who is unaffiliated with the Interested Shareholder and is
approved by the Disinterested Directors.
(5) "Fair Market Value" shall mean:
(i) in the case of securities listed on a national securities
exchange or quoted in the National Association of Securities
Dealers Automated Quotations System (or any successor thereof),
the highest sales price or bid quotation, as the case may be,
reported for securities of the same class or series traded on a
national securities exchange or in the over-the-counter market
during the 30-day period immediately prior to the date in
question, or if no such report or quotation is available, the
fair market value as determined by the Disinterested Directors;
and
37
<PAGE>
(ii) in the case of other securities and of other property or
consideration (other than cash), the Fair Market Value as
determined by the Disinterested Directors; provided, however, in
the event the prior and authority of the Disinterested Directors
ceases and terminates pursuant to Subdivision F of this Article
XIII as a result of there being less than five (5) Disinterested
Directors at any time, then: (a) for purpose of clause (ii) of
the definition of "Business Combination," any sale, lease,
exchange, mortgage, pledge or other disposition of assets from
the Corporation or any of its subsidiaries to an Interested
Shareholder or from an Interested Shareholder to the Corporation
or any of its subsidiaries, regardless of the Fair Market Value
thereof, shall constitute a Business Combination; and (b) for
purposes of Paragraph 1 of Subdivision D of this Article XIII,
in determining the amount of consideration received or to be
received per share by the Independent Shareholders in a Business
Combination, there shall be excluded all consideration other
than cash and the Fair Market Value of securities listed on a
national securities exchange or quoted in the National
Association of Securities Dealers Automated Quotations System
(or any successor thereof) for which there is a reported sales
price or bid quotation, as the case may be, during the 30-day
period immediately prior to the date in question.
(6) "Independent Shareholder" shall mean shareholders of the Corporation
other than the Interested Shareholder engaged in or proposing the
Business Combination.
(7) "Interested Shareholder" shall mean: (a) any person (other than the
Corporation or any of its subsidiaries); and (b) the Affiliates and
Associates of such person, who, or which together, are:
(i) the beneficial owner, directly or indirectly, of 10 percent or
more of the outstanding Voting Stock or were within the two-year
period immediately prior to the date in question the beneficial
owner, directly or indirectly, of 10 percent or more of the then
outstanding Voting Stock; or
(ii) an assignee of or other person who has succeeded to any shares
of the Voting Stock which were at any time within the two-year
period immediately prior to the date in question beneficially
owned by an Interested Shareholder, if such assignment or
succession shall have occurred in the course of a transaction or
series of transactions not involving a public offering within
the meaning of the Securities Act of 1933.
Notwithstanding the foregoing, no Trust Department, or designated
fiduciary or other trustee of such Trust Department of the Corporation
or a subsidiary of the Corporation, or other similar fiduciary
capacity of the Corporation with direct
38
<PAGE>
voting control of the outstanding Voting Stock shall be included or
considered as an Interested Shareholder. Further, no profit-sharing,
employee stock ownership, employee stock purchase and savings,
employee pension, or other employee benefit plan of the Corporation or
any of its subsidiaries, and no trustee of any such plan in its
capacity as such trustee, shall be included or considered as an
Interested Shareholder.
(8) A "person" shall mean an individual, partnership, trust, corporation,
or other entity and includes two or more of the foregoing acting in
concert.
(9) "Voting Stock" shall mean all outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of
directors of the Corporation.
B. Supermajority Vote to Effect Business Combination.
-------------------------------------------------
No Business Combination shall be effected or consummated unless:
(1) Authorized and approved by the Disinterested Directors and, if
otherwise required by law to authorize or approve the transaction, the
approval or authorization of shareholders of the Corporation, by the
affirmative vote of the holders of such number of shares as is
mandated by the Florida Business Corporation Act; or
(2) Authorized and approved by the affirmative vote of holders of note
less than 80 percent of the outstanding Voting Stock voting together
as a single class.
The authorization and approval required by this Subdivision B is in
addition to any authorization and approval required by Subdivision C of
this Article XIII.
C. Fair Price Required to Effect Business Combination.
--------------------------------------------------
No Business Combination shall be effected or consummated unless:
(1) All the conditions and requirements set forth in Subdivision D of this
Article XIII have been satisfied; or
(2) Authorized and approved by the Disinterested Directors; or
(3) Authorized and approved by the affirmative vote of holders of not less
than 66-2/3 percent of the outstanding Voting Stock held by all
Independent Shareholders voting together as a single class.
Any authorization and approval required by this Subdivision C is in
addition to any authorization and approval required by Subdivision B of
this Article XIII.
39
<PAGE>
D. Conditions and Requirements to Fair Price.
-----------------------------------------
All the following conditions and requirements must be satisfied in order
for clause (1) of Subdivision C of this Article XIII to be applicable.
(1) The cash and Fair Market Value of the property, securities or other
consideration to be received by the Independent Shareholders in the
Business Combination per share for each class or series of capital
stock of the Corporation must not be less than the sum of:
(i) the highest per share price (including brokerage commissions,
transfer taxes, soliciting dealer's fees and similar payments)
paid by the Interested Shareholder in acquiring any shares of
such class or series, respectively, and, in the case of Preferred
Stock, if greater, the amount of the per share redemption price;
and
(ii) the amount, if any, by which interest on the per share price,
calculated at the Treasury Bill Rate from time to time in effect,
from the date the Interested Shareholder first became an
Interested Shareholder until the Business Combination has been
consummated, exceeds the per share amount of cash dividends
received by the Independent Shareholders during such period. The
"Treasury Bill Rate" means for each calendar quarter, or part
thereof, the interest rate of the last auction in the preceding
calendar of 91-day United States Treasury Bills expressed as a
bond equivalent yield.
For purposes of this Paragraph (1), per share amounts shall be
appropriately adjusted for any recapitalization, reclassification,
stock dividend, stock split, reverse split, or other similar
transaction. Any Business Combination which does not result in the
Independent Shareholders receiving consideration for or in respect of
their shares of capital stock of the Corporation shall not be treated
as complying with the requirements of this Paragraph (1).
(2) The form of the consideration to be received by the Independent
Shareholders owning the Corporation's shares must be the same as was
previously paid by the Interested Shareholder(s) for shares of the
same class or series; provided, however, if the Interested Shareholder
previously paid for shares of such class or series with different
forms of consideration, the form of the consideration to be received
by the Independent Shareholders owning shares of such class or series
must be in the form as was previously paid by the Interested
Shareholder in acquiring the largest number of shares of such class or
series previously acquired by the Interested Shareholder, provided,
further, in the event no shares of the same class or series had been
previously acquired by the Interested Shareholder, the form of
consideration must be cash. The provisions of this Paragraph (2) are
not intended to diminish the aggregate amount of cash and Fair Market
Value of any other consideration that any holder of the Corporation's
shares is otherwise entitled to receive upon the liquidation or
40
<PAGE>
dissolution of the Corporation, under the terms of any contract with
the Corporation or an Interested Shareholder, or otherwise.
(3) From the date the Interested Shareholder first became an Interested
Shareholder until the Business Combination has been consummated, the
following requirements must be complied with unless the Disinterested
Directors otherwise approve:
(i) the Interested Shareholder has not received, directly or
indirectly, the benefit (except proportionately as a
shareholder) of any loan, advance, guaranty, pledge, or other
financial assistance, tax credit or deduction, or other benefit
from the Corporation or any of its subsidiaries;
(ii) there shall have been no failure to declare and pay in full,
when and as due or scheduled, any dividends required to be paid
on any class or series of the Corporation's shares.
(iii) there shall have been: (a) no reduction in the annual rate of
dividends paid on Common Stock of the Corporation (except as
necessary to reflect any split of such shares); and (b) an
increase in the annual rate of dividends as necessary to reflect
reclassification (including a reverse split), recapitalization
or any similar transaction which has the effect of reducing the
number of outstanding Common Stock; and
(iv) there shall have been no amendment or other modification to any
profit-sharing, employee stock ownership, employee stock
purchase and savings, employee pension or other employee benefit
plan of the Corporation or any of its subsidiaries, the effect
of which is to change in any manner the provisions governing the
voting of any shares of capital stock of the Corporation in or
covered by such plan.
(4) A proxy or information statement describing the Business Combination
and complying with the requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations under it (or any
subsequent provisions replacing that Act and the rules and regulations
under it) has been mailed at least 30 days prior to the completion of
the Business Combination to the holders of all outstanding Voting
Stock. If deemed advisable by the Disinterested Directors, the proxy
or information statement shall contain a recommendation by the
Disinterested Directors as to the advisability (or inadvisability) of
the Business Combination and/or an opinion by an investment banking
firm, selected by the Disinterested Directors and retained at the
expense of the Corporation, as to the fairness (or unfairness) of the
Business Combination to the Independent Shareholders.
41
<PAGE>
E. Other Applicable Voting Requirement.
-----------------------------------
The affirmative votes or approvals required to be received from
shareholders of the Corporation under Subdivisions B, C and H of this
Article XIII are in addition to the vote of the holders of any class of
shares of capital stock of the Corporation otherwise required by law, or by
other provisions of these Articles of Incorporation, or by the express
terms of the shares of such class. The affirmative votes or approvals
required to be received from shareholders of the Corporation under
Subdivisions B, C and H of this Article XIII shall apply even though no
vote or a lesser percentage vote, may be required by law, or by other
provisions of these Articles of Incorporation, or otherwise. Any
authorization, approval or other action of the Disinterested Directors
under this Article XIII is in addition to any required authorization,
approval or other action of the Board of Directors.
F. Disinterested Directors.
-----------------------
All actions required or permitted to be taken by the Disinterested
Directors shall be taken with or without a meeting by the vote or written
consent of two-thirds of the Disinterested Directors, regardless of whether
the Disinterested Directors constitute a quorum of the members of the Board
of Directors then in office. In the event that the number of Disinterested
Directors is at any time less than five (5), all power and authority of the
Disinterested Directors under this Article XIII shall thereupon cease and
terminate, including, without limitation, the authority of the
Disinterested Directors to authorize and approve a Business Combination
under Subdivisions B and C of this Article XIII and to approve a successor
Disinterested Director. Two-thirds of the Disinterested Directors shall
have the power and duty, consistent with their fiduciary obligations, to
determine for the purpose of this Article XIII, on the basis of information
known to them:
(1) Whether any person is in Interested Shareholder;
(2) Whether any person is an Affiliate or Associate of another;
(3) Whether any person has an agreement, arrangement, or understanding
with another or is acting in concert with another; and
(4) The Fair Market Value of property, securities or other consideration
(other than cash).
The good faith determination of the Disinterested Directors on such matters
shall be binding and conclusive for purposes of this Article XIII.
G. Effect on Fiduciary Obligations of Interested Shareholders.
----------------------------------------------------------
Nothing contained in this Article XIII shall be construed to relieve any
Interested Shareholder from any fiduciary obligations imposed by law.
42
<PAGE>
H. Repeal.
------
Notwithstanding any other provisions of these Articles of Incorporation
(and notwithstanding the fact that a lesser percentage vote may be required
by law or other provision of these Articles of Incorporation), the
provisions of this Article XIII may not be repealed, amended, supplemented
or otherwise modified, unless:
(1) The Disinterested Directors (or, if there is no Interested
Shareholder, a majority vote of the whole Board of Directors of the
Corporation) recommend such repeal, amendment, supplement or
modification and such repeal, amendment or modification is approved by
the affirmative vote of the holders of not less than 66-2/3 percent of
the outstanding Voting Stock; or
(2) Such repeal, amendment, supplement or modification is approved by the
affirmative vote of holders of: (a) not less than 80 percent of the
outstanding Voting Stock voting together as a single class; and (b)
not less than 66-2/3 percent of the outstanding Voting Stock held by
all shareholders other than Interested Shareholders voting together as
a single class.
I. Further Considerations to Effect Business Combination.
-----------------------------------------------------
No Business Combination shall be effected or consummated unless, in
addition to the consideration set forth in Subdivisions B, C, D and E of
this Article XIII, the Board of Directors of the Corporation, including the
Disinterested Directors, shall consider all of the following factors and
any other factors which they deem relevant:
(1) The social and economic effects of the transaction on the Corporation
and its subsidiaries, employees, depositors, loan and other customers,
creditors and other elements of the communities in which the
Corporation and its subsidiaries operate or are located;
(2) The business and financial conditions and earnings prospects of the
Interested Shareholder, including, but not limited to, debt service
and other existing or likely financial obligations of the Interested
Shareholder, and the possible effect on other elements of the
communities in which the Corporation and its subsidiaries operate or
are located; and
(3) The competence, experience and integrity of the Interested Shareholder
and his (its) or their management.
ARTICLE XIV
-----------
HEADINGS AND CAPTIONS
---------------------
The headings or captions of these various articles are inserted for
convenience and none of them shall have any force or effect, and the
interpretation of the various articles shall not be influenced by any of said
headings or captions.
43
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the President and Secretary of
the Corporation, for the purpose of amending and restating the Articles of
Incorporation as heretofore filed for the Corporation under the laws of the
State of Florida, hereby make and file these Amended and Restated Articles of
Incorporation declaring and certifying that the facts stated herein are true,
and hereby subscribe thereto and hereunto sets their hand and seal this 15th day
of April, 1998.
(CORPORATE SEAL) /s/ Guy D. Colado
------------------------------------
Guy D. Colado, President
/s/ Alan M. Scarboro
------------------------------------
Alan M. Scarboro, Secretary
44
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR COMMERCE NATIONAL CORPORATION
AND SUBSIDIARY DATED JUNE 30, 1998 AND DECEMBER 31, 1997
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,648,950
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 7,250,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,016,409
<INVESTMENTS-CARRYING> 15,016,409
<INVESTMENTS-MARKET> 15,016,409
<LOANS> 107,364,853
<ALLOWANCE> 1,130,371
<TOTAL-ASSETS> 140,349,583
<DEPOSITS> 122,764,259
<SHORT-TERM> 1,172,234
<LIABILITIES-OTHER> 626,366
<LONG-TERM> 3,634,230
0
0
<COMMON> 74,282
<OTHER-SE> 12,078,212
<TOTAL-LIABILITIES-AND-EQUITY> 140,349,583
<INTEREST-LOAN> 4,647,490
<INTEREST-INVEST> 477,881
<INTEREST-OTHER> 206,799
<INTEREST-TOTAL> 5,332,170
<INTEREST-DEPOSIT> 2,199,094
<INTEREST-EXPENSE> 2,356,684
<INTEREST-INCOME-NET> 2,975,486
<LOAN-LOSSES> 124,506
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,864,870
<INCOME-PRETAX> 986,110
<INCOME-PRE-EXTRAORDINARY> 986,110
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 609,356
<EPS-PRIMARY> 0.87
<EPS-DILUTED> 0.87
<YIELD-ACTUAL> 0.046
<LOANS-NON> 1,447,746
<LOANS-PAST> 0
<LOANS-TROUBLED> 86,137
<LOANS-PROBLEM> 3,326,685
<ALLOWANCE-OPEN> 1,013,081
<CHARGE-OFFS> 66,060
<RECOVERIES> 58,844
<ALLOWANCE-CLOSE> 1,130,371
<ALLOWANCE-DOMESTIC> 1,130,371
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 732,306
</TABLE>
