FORM 8-K
Securities and Exchange Commission
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 30, 1999
Surety Capital Corporation
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(exact name of registrant as specified in its charter)
Delaware 33-1983 75-2065607
--------------- ------------ --------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
1845 Precinct Line Road, Suite 100, Hurst, Texas 76054
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(address of principal executive offices)
Registrant's telephone number, including area code: 817-498-2749
Not applicable
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(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
Surety Capital Corporation (the "Registrant") is a bank
holding company which owns all of the issued and outstanding
stock of Surety Bank, National Association, a national banking
association ("Surety Bank"). On April 14, 1999 Surety Bank
entered into a Purchase and Assumption Agreement (the
"Agreement") with The Citizens National Bank in Waxahachie
("Citizens"), Waxahachie, Texas, to sell to Citizens Surety
Bank's two branches located in Midlothian and Waxahachie, Texas
(the "Branches"). The sale of the Branches was consummated on
June 30, 1999.
At the closing Surety Bank sold loans totaling
approximately $13,117,000, real property, furniture and
equipment totaling approximately $1,543,000, and cash and other
assets totaling approximately $30,922,000, and Citizens assumed
deposits and other liabilities totaling approximately
$45,212,000. After giving effect to a deposit premium of eleven
percent (11%) on the deposits assumed totaling approximately
$4,950,000, and a loan premium of 2.5% of the loans sold
totaling approximately $328,000, Surety Bank paid approximately
$24,870,000 in cash to Citizens as consideration for the net
deposit liabilities assumed by Citizens.
As of June 30, 1999, after giving effect to the sale of the
Branches, Surety Bank had total assets of approximately
$117,426,000, total deposits of approximately $96,564,000 and
total stockholders' equity of approximately $18,455,000.
Following the sale, Surety Bank continues to operate seven
full service branches in Texas.
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
Pro Forma Balance Sheet as of March 31, 1999 F-1
Pro Forma Income Statement for the Three Months F-2
Ended March 31, 1999 and for the Twelve Months
Ended December 31, 1998
(c) Exhibits.
The following exhibits are furnished in accordance
with the provisions of Item 601 of Regulation S-K:
2.14 Purchase and Assumption Agreement by and
between The Citizens National Bank in
Waxahachie and Surety Bank, N.A., dated April
14, 1999. (1)
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(1) Filed with the Registrant's Annual Report on
Form 10-K for the fiscal year ended December
31, 1998.
<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 hereunto duly authorized.
SURETY CAPITAL CORPORATION
DATE: July 14, 1999 /s/ C. Jack Bean
----------------
C. Jack Bean, Chairman of the Board
<PAGE>
PRO FORMA BALANCE SHEET
as of March 31, 1999
<TABLE>
<CAPTION>
Sale of
Surety Ellis
Capital County Pro Forma
Corporation Branches Debits Credits Combined
------------ ----------- ---------- ---------- ------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 7,772,075 $ 391,432 $5,132,080(A) $ 12,512,723
Federal funds sold 22,509,673 19,335,956 3,173,717
------------ ----------- ---------- ---------- ------------
Cash and cash equivalents 30,281,748 19,727,388 5,132,080 15,686,440
Investment securities 26,419,007 10,000,000 16,419,007
Net loans 90,742,712 13,796,201 76,946,511
Medical claims receivables, net 140,177 140,177
Premises and equipment, net 6,562,402 1,557,275 5,005,127
Accrued interest receivable 927,509 101,558 825,951
Other real estate and
repossessed assets 329,004 329,004
Other assets 1,846,052 42,841 1,803,211
Excess of cost over fair value
of net assets acquired, net 8,329,635 $2,684,423(A) 5,645,212
------------ ----------- ---------- ---------- ------------
Total assets $165,578,246 $45,225,263 $5,132,080 $2,684,423 $122,800,640
============ =========== ========== ========== ============
Liabilities:
Demand deposits $ 31,591,991 $ 8,496,804 $ 23,095,187
Savings, NOW and money markets 41,798,600 17,408,628 24,389,972
Time deposits, $100,000 and over 20,782,840 1,075,605 19,707,235
Other time deposits 52,592,262 18,018,963 34,573,299
------------ ----------- ---------- ---------- ------------
Total deposits 146,765,693 45,000,000 101,765,693
Accrued interest payable and
other liabilities 1,405,161 225,263 $1,769,015(A) 2,948,913
Convertible subordinated debt 4,350,000 4,350,000
------------ ----------- ---------- ---------- ------------
Total liabilities 152,520,854 45,225,263 1,769,015 109,064,606
------------ ----------- ---------- ---------- ------------
Shareholders' equity:
Common stock 58,401 58,401
Additional paid in capital 17,093,786 17,093,786
Accumulated deficit (3,682,052) 678,642(A) (3,003,410)
Stock rights issuable 57,902 57,902
Treasury stock (375,443) (375,443)
Unrealized gain/(loss) on
available-for-sale securities (95,202) (95,202)
------------ ----------- ---------- ---------- ------------
Total equity 13,057,392 13,736,034
------------ ----------- ---------- ---------- ------------
Total liabilities
and equity $165,578,246 $45,225,263 $2,447,657 $122,800,640
============ =========== ========== ========== ============
</TABLE>
(A) To record sale of certain assets and certain liabilities of the
branches located in Midlothian and Waxahachie, Texas. The sales
price was based on a fixed price of 11% of the qualified
deposits and 2.5% of the loans, net of unearned interest,
subject to adjustments. The recognition of the sale includes
elimination of the goodwill associated with these branches and
an accrual for federal income taxes on the gross proceeds.
F-1
<PAGE>
PRO FORMA INCOME STATEMENT
for the three months ended March 31, 1999
<TABLE>
<CAPTION>
Sale of Pro Forma
Surety Ellis Adjustments
Capital County ------------------------- Pro Forma
Corporation Branches Debits Credits Combined
------------ ----------- ---------- ---------- ------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $2,312,800 $342,624 $1,970,176
Medical claims receivable factoring 60,714 60,714
Interest on federal funds sold 256,493 234,433 22,060
Interest on securities and interest
Bearing deposits 340,600 127,500 213,100
------------ ----------- ---------- ---------- ------------
Total interest income 2,970,607 704,557 2,266,050
------------ ----------- ---------- ---------- ------------
Interest expense:
Interest on deposits 1,192,439 454,532 737,907
Interest expense on borrowings 108,273 108,273
------------ ----------- ---------- ---------- ------------
Total interest expense 1,300,712 454,532 846,180
------------ ----------- ---------- ---------- ------------
Net interest income before
provision for credit losses 1,669,895 250,025 1,419,870
Provision for credit losses and
medical claims receivables losses
------------ ----------- ---------- ---------- ------------
Net interest income 1,669,895 250,025 1,419,870
------------ ----------- ---------- ---------- ------------
Non interest income 460,162 120,138 340,024
------------ ----------- ---------- ---------- ------------
Non interest expense:
Salaries and employee benefits 1,220,228 178,712 1,041,516
Occupancy & equipment 511,207 76,928 434,279
General & administrative 1,188,193 179,713 1,008,480
------------ ----------- ---------- ---------- ------------
Total noninterest expense 2,919,628 435,353 2,484,275
------------ ----------- ---------- ---------- ------------
Loss before income taxes (789,571) (65,190) (724,381)
Income tax expense:
Net loss $ (789,571) $(65,190) $ (724,381)
============ =========== ========== ========== ============
Basic earnings (loss) per share of
Common stock $ (0.14) $ (0.13)
Weighted average shares outstanding 5,760,235 5,760,235
Diluted earnings per share of
common stock $ (0.14) $ (0.13)
Weighted average shares outstanding
and common stock equivalents 5,760,235 5,760,235
</TABLE>
F-2
<PAGE>
PRO FORMA INCOME STATEMENT
for the twelve months ended December 31, 1998
<TABLE>
<CAPTION>
Sale of Pro Forma
Surety Ellis Adjustments
Capital County ------------------------- Pro Forma
Corporation Branches Debits Credits Combined
------------ ----------- ---------- ---------- ------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $11,759,497 $1,779,857 $9,979,640
Medical claims receivable factoring 1,044,069 1,044,069
Interest on federal funds sold 1,718,964 1,386,322 332,642
Interest on securities and interest
Bearing deposits 1,995,262 510,000 1,485,262
------------ ----------- ---------- ---------- ------------
Total interest income 16,517,792 3,676,179 12,841,613
------------ ----------- ---------- ---------- ------------
Interest expense:
Interests on deposits 6,782,611 2,040,578 4,742,033
Interest expense on borrowings 318,082 318,082
------------ ----------- ---------- ---------- ------------
Total interest expense 7,100,693 2,040,578 5,060,115
------------ ----------- ---------- ---------- ------------
Net interest income before
provision for credit losses 9,417,099 1,635,601 7,781,498
Provision for credit losses and
medical claims receivables losses 2,004,987 12,000 1,992,987
------------ ----------- ---------- ---------- ------------
Net interest income 7,412,112 1,623,601 5,788,511
------------ ----------- ---------- ---------- ------------
Non interest income 3,425,302 390,679 3,034,623
------------ ----------- ---------- ---------- ------------
Non interest expense:
Salaries and employee benefits 5,620,710 647,059 4,973,651
Occupancy & equipment 2,004,070 337,641 1,666,429
General & administrative 4,507,990 518,455 3,989,535
------------ ----------- ---------- ---------- ------------
Total noninterest expense 12,132,770 1,503,155 10,629,615
------------ ----------- ---------- ---------- ------------
(Loss)/income before income taxes (1,295,356) 511,125 (1,806,481)
Income tax expense: 567,757 168,536 399,221
------------ ----------- ---------- ---------- ------------
Net income $(1,863,113) $ 342,589 $(2,205,702)
============ =========== ========== ========== ============
Basic earnings (loss) per share of
common stock $ (0.32) $ (0.38)
Weighted average shares outstanding 5,759,579 5,759,579
Diluted earnings per share of
common stock $ (0.32) $ (0.38)
Weighted average shares outstanding
and common stock equivalents 5,759,579 5,759,579
</TABLE>
F-3
