<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission File Number 0-18514
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
A FLORIDA CORPORATION - I.R.S. EMPLOYER IDENTIFICATION NO. 65-0051022
10570 U.S. One South
Port St. Lucie, Florida 34952
Issuer's Telephone Number:
(407) 337-1188
Check whether the issuer: (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 the filing requirements for the past
90 days.
Yes X No
----------- -----------
The number of shares outstanding of each of the issuer's classes of common stock
as of March 31, 1996:
Common Stock, $.01 par value -- 739,496 shares
-----------------------------------------------
Transitional Small Business Disclosure Format:
Yes No X
------------ -------------
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
INDEX
-----
PAGE
NUMBER
PART I: Financial Information
<TABLE>
<CAPTION>
Item 1: Financial Statements
<S> <C>
Condensed Consolidated Balance Sheets as of March 31, 1996
and December 31, 1995 1
Condensed Consolidated Statements of Earnings for the three
months ended March 31, 1996 and 1995 2
Condensed Consolidated Statements of Shareholders' Equity for
the three months ended March 31, 1996 and 1995 3
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 1996 and 1995 4
Notes to Condensed Consolidated Financial Statements 5-7
Item 2: Management's Discussion and Analysis or Plan of Operation 8-14
PART II: Other Information 15
Signatures 16
</TABLE>
<PAGE>
Port St. Lucie National Bank Holding Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in Thousands, except for share data)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Assets
- ------
Cash and due from banks $ 4,451 4,051
Federal Funds Sold 3,225 4,200
Securities available for sale 13,810 17,260
Loans held for sale, net of deferred loan origination fees (estimated
market values of $6,854 and $5,919, respectively) 6,736 5,835
Securities held to maturity (estimated market values of $4,018 and
$3,947, respectively) 3,986 3,897
Loans 83,297 77,498
Less: Allowance for loan losses (831) (827)
Net deferred loan origination fees and costs (71) (76)
-------- -------
Net loans 82,395 76,595
Premises and equipment, net 1,132 1,181
Other assets 1,598 1,514
-------- -------
Total assets $117,333 114,533
======== =======
Liabilities and Shareholders' Equity
- ------------------------------------
Liabilities:
Deposits:
Noninterest bearing demand $ 19,007 20,011
Interest bearing:
Demand 10,729 7,996
Money market 6,236 5,680
Savings 21,518 21,117
Time 49,053 49,429
-------- -------
Total deposits 106,543 104,233
Other liabilities 1,496 1,345
-------- -------
Total liabilities 108,039 105,578
-------- -------
Shareholders' equity:
Common stock, $.01 par value, authorized 10,000,000 shares; issued
and outstanding 739,496 and 672,352, respectively 7 7
Additional paid-in capital 8,437 7,027
Retained earnings 1,010 2,084
Unrealized losses on securities available for sale, net (160) (163)
-------- -------
Total shareholders' equity 9,294 8,955
-------- -------
Total liabilities and shareholders' equity$ 117,333 114,533
======== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
Port St. Lucie National Bank Holding Corp. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Amounts in Thousands, except per share data)
Three Months Ended
March 31, March 31,
1996 1995
---------- ----------
<S> <C> <C>
Interest income:
Loans, including fees:
Taxable loans $ 1,687 1,249
Tax-exempt loans --- 12
Loans held for sale 89 17
Securities held to maturity:
Taxable 9 115
Tax-exempt 40 41
Securities available for sale 232 283
Federal funds sold 43 46
--------- --------
Total interest income 2,100 1,763
Interest expense:
Deposits 982 866
Other --- 1
--------- --------
Total interest expense 982 867
--------- --------
Net interest income 1,118 896
Provision for loan losses 33 24
--------- --------
Net interest income after provision for
loan losses 1,085 872
--------- --------
Noninterest income:
Service charge on deposit accounts 138 124
Gain on sale of loans held for sale 168 1
Gain on sale of securities available for sale 1 ---
Other fees for customer services 115 68
--------- --------
Total noninterest income 422 193
--------- --------
Noninterest expense:
Compensation and employee benefits 499 393
Occupancy 86 49
Furniture and equipment 61 38
Other 345 323
--------- --------
Total noninterest expense 991 803
--------- --------
Net income before income taxes 516 262
Income tax expense 178 81
--------- --------
Net income $ 338 181
========= ========
Net income per common and common equivalent share:
Primary $ 0.40 0.22
Fully diluted 0.39 0.22
Average common and equivalent shares outstanding:
Primary 855 817
Fully diluted 859 817
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>
Port St. Lucie National Bank Holding Corp. and Subsidiaries
Condensed Consolidated Statement of Shareholders' Equity
(Amounts in Thousands)
<TABLE>
<CAPTION>
Unrealized
gains (losses)
Common Stock Additional on Securities Total
------------ Paid-in Retained Available Shareholders'
Shares Amount Capital Earnings for Sale, net Equity
------ ------ ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 672 $ 7 7,027 2,084 (163) 8,955
Change in unrealized gains on securities
available for sale, net of tax effect -- -- -- -- 3 3
10% Common Stock Dividend 67 -- 1,410 (1,412) -- (2)
Net income -- -- -- 338 -- 338
--- --- ----- ------ ----- -----
BALANCE AT MARCH 31, 1996 739 $ 7 8,437 1,010 (160) 9,294
=== === ===== ====== ==== =====
Balance at December 31, 1994 610 $ 6 6,165 1,991 (772) 7,390
Change in unrealized gains on securities
available for sale, net of tax effect -- -- -- -- 248 248
10% Common Stock Dividend 61 1 854 (855) -- --
Net income -- -- -- 181 -- 181
--- --- ----- ------ ---- -----
BALANCE AT MARCH 31, 1995 671 $ 7 7,019 1,317 (524) 7,819
=== === ===== ====== ===== =====
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
Port St. Lucie National Bank Holding Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
-------- -------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 338 181
Adjustments to reconcile net income to net cash used by operating activities:
Provision for loan losses 33 24
Depreciation 56 38
Deferred loan origination fees and costs, net of amortization (5) (31)
Purchase of loans held for sale (11,770) (5,305)
Origination of loans held for sale (11,763) (936)
Proceeds from the sale of loans held for sale 22,632 5,409
Increase in other assets (86) (44)
Increase in other liabilities 151 179
-------- ------
Net cash used by operating activities (414) (485)
-------- ------
Cash flow from investing activities:
Purchase of securities held to maturity (89) (75)
Purchase of securities available for sale --- (4,447)
Proceeds from maturities of securities available for sale 1,455 263
Proceeds from sale of securities available for sale 2,000 ---
Loans originated, net of repayments (5,828) (2,468)
Purchase of premises and equipment (7) (221)
-------- ------
Net cash used by investing activities (2,469) (6,948)
-------- ------
Cash flow from financing activities:
Net increase in deposit accounts 2,310 14,039
Decrease in federal funds purchased --- (900)
Cash Dividends paid (2) ---
-------- ------
Net cash provided by financing activities 2,308 13,139
-------- ------
Net increase (decrease) in cash and cash equivalents (575) 5,706
Cash and cash equivalents at beginning of period 8,251 2,742
-------- ------
Cash and cash equivalents at end of period $ 7,676 8,448
======== ======
Supplemental disclosures:
Cash paid during the period for:
Interest $ 1,035 853
Income taxes 193 ---
Noncash investment and financing activities:
Decrease in unrealized loss on securities available for sale 5 395
</TABLE>
See accompanying notes to condensed consolidated financial statements
6
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
----------------------
(1) GENERAL
-------
The unaudited condensed consolidated interim financial statements for Port St.
Lucie National Bank Holding Corp. ("the Company") reflect all adjustments
(consisting only of normal recurring accruals) which, in the opinion of
management, are necessary to present fairly the results of operations, cash
flows and financial position for interim periods. The results for interim
periods are not necessarily indicative of trends or results to be expected for
the full year. These condensed consolidated interim financial statements and
notes should be read in conjunction with the Company's annual report and Form
10-KSB for the year ended December 31, 1995.
(2) SECURITIES HELD TO MATURITY
---------------------------
The amortized cost, gross unrealized gains, gross unrealized losses, and
estimated market values of securities held to maturity follows:
<TABLE>
<CAPTION>
March 31, 1996
-------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-------------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Municipal securities 3,345 43 11 3,377
------ ------ ------ -------
Total debt securities 3,345 43 11 3,377
Federal Home Loan Bank stock 491 --- --- 491
Federal Reserve stock 150 --- --- 150
------ ------ ------ -------
Total $3,986 43 11 4,018
====== ====== ====== =======
December 31, 1995
-------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-------------- ---------- ---------- ---------
Municipal securities 3,348 57 7 3,398
------ ------ ------ -------
Total debt securities 3,348 57 7 3,398
Federal Home Loan Bank stock 399 --- --- 399
Federal Reserve stock 150 --- --- 150
------ ------ ------ -------
Total $3,897 57 7 3,947
====== ====== ====== =======
</TABLE>
The amortized cost and estimated market value of securities held to maturity at
March 31, 1996, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Amortized Market
Cost Value
--------- ------
<S> <C> <C>
Due within one year $ 110 111
Due after one year through
five years 1,822 1,855
Due after five years through
ten years 915 911
Due after ten years 498 500
------ ------
Total debt securities $3,345 3,377
====== ======
</TABLE>
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
----------------------
At March 31, 1996 and December 31, 1995, securities held to maturity with
an amortized cost of $2,477 and $2,480, respectively, and a market value of
$2,507 and $2,523, respectively, were pledged as collateral for municipal
deposits. Port St. Lucie National Bank's (the Bank) pledging requirement on
average municipal deposits up to the Bank's capital position ($8,674 as of March
31, 1996) was 50%. On the aggregate balance in excess of the Bank's capital
position, the State's pledge requirement is 125%.
(3) SECURITIES AVAILABLE FOR SALE
-----------------------------
The amortized cost, gross unrealized gains, gross unrealized losses, and
estimated market values of securities available for sale follows:
<TABLE>
<CAPTION>
March 31, 1996
-----------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-------------- ---------- ---------- ------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 1,768 7 --- 1,775
Securities of other U.S.
Government Agencies 2,000 --- 14 1,986
FHLMC/FNMA Mortgage
backed securities 10,298 28 277 10,049
------- ------ ------ ------
Total $14,066 35 291 13,810
======= ====== ====== ======
December 31, 1995
---------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---------- ---------- ---------- ------
U.S. Treasury securities $ 3,807 16 8 3,815
Securities of other U.S.
Government Agencies 3,059 12 17 3,054
FHLMC/FNMA Mortgage
backed securities 10,655 27 291 10,391
------- ------ ------ ------
Total $17,521 55 316 17,260
======= ====== ====== ======
</TABLE>
The amortized cost and estimated market value of securities available for sale
at March 31, 1996, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Estimated
Amortized Market
Cost Value
--------- ---------
<S> <C> <C>
Due within one year $ 760 765
Due after one year through
five years 3,008 2,996
------- ------
3,768 3,761
Mortgage backed securities 10,298 10,049
------- ------
Total $14,066 13,810
======= ======
</TABLE>
During the three months ended March 31, 1996, there were $2,000 in sales of
securities available for sale. During this same period, $1 in gains were
realized from the sale of securities available for sale.
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
----------------------
At March 31, 1996 and December 31, 1995, securities available for sale with an
amortized cost of $1,335 and $4,399, respectively, and a market value of $1,319
and $4,388, respectively, were pledged as collateral for municipal deposits.
The Bank's pledging requirement on average municipal deposits up to the Bank's
capital position ($8,674 as of March 31, 1996) was 50%. On the aggregate
balance in excess of the Bank's capital position, the State's pledge requirement
is 125%.
(4) LOANS
-----
<TABLE>
<CAPTION>
An analysis of loans follows:
March 31, December 31,
1996 1995
-------- -----------
<S> <C> <C>
Real Estate:
Construction $ 6,545 4,952
Loans on primary residences 41,122 38,015
Other 13,871 12,665
Commercial 8,948 10,075
Loans to individuals:
Installment 12,166 11,120
Other personal and business loans 645 671
------- ------
Total $83,297 77,498
======= ======
</TABLE>
At March 31, 1996, real estate-construction loans were comprised of $5,030 in
single family residential loans and $1,515 in commercial real estate loans. As
of December 31, 1995, real estate-construction loans were comprised of $3,686 in
single family residential loans and $1,266 in commercial real estate loans.
At March 31, 1996 and December 31, 1995, loans to directors, executive officers,
and principal shareholders aggregated $1,642 and $1,423, respectively. Total
unfunded commitments to this group at March 31, 1996 and December 31, 1995
aggregated $1,096 and $820, respectively.
(5) OTHER REAL ESTATE OWNED
-----------------------
Other real estate owned represents property acquired through foreclosure or
deeded to the Bank in lieu of foreclosure on real estate mortgage loans on which
the borrowers have defaulted as to payment of principal and interest. Other
real estate owned is valued at the lower of cost or fair value less costs to
dispose. Any write-downs at date of acquisition are charged to the allowance
for loan losses. Expenses incurred in maintaining assets and subsequent
write-downs to reflect declines in the fair value of the property are included
in other operating expenses.
Changes in Other Real Estate Owned:
- -------------------------------------
<TABLE>
<CAPTION>
Three months
ended Year ended
March 31, December 31,
1996 1995
------------ -------------
<S> <C> <C>
Beginning balance $ --- 217
Sales --- (217)
Other --- ---
------------ ------------
Ending balance $ --- ---
============ ============
</TABLE>
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
(Dollars in Thousands)
----------------------
OVERVIEW
Port St. Lucie National Bank Holding Corp's (the "Company") total assets at
March 31, 1996 were $117,333, an increase of $2,800 or 2.4% over December 31,
1995. Net income for the three months ended March 31, 1996 was $338 as compared
to $181 for the three months ended March 31, 1995. Earnings for the three
months ended March 31, 1996 represent $0.46 per share as compared to $0.24 for
the three months ended March 31, 1995. On February 15, 1996, the Company
declared a 10% stock dividend. The stock dividend increased the outstanding
shares from 672 to 739. The earnings per share for both comparison periods
shown above have been restated to reflect the stock dividend.
On March 17, 1995, Port St. Lucie National Bank (the "Bank") opened its second
branch office, a 4,300 square foot facility located in the rapidly growing St.
Lucie West development in Port St. Lucie, Florida. The Bank also expanded its
administrative offices, taking an additional 1,200 square feet in the same
facility. This expansion had a direct impact on the Company's personnel,
occupancy, premises and equipment expenses reflecting three full months of
operations in the first quarter of 1996.
In February 1995, the Company organized and approved a mortgage banking company,
Spirit Mortgage Corp., which began doing business primarily outside of the
market in which the Bank operates. This operation also impacted the Company's
personnel, premises and equipment expenses reflecting three full months of
operations in the first quarter of 1996.
EARNINGS ANALYSIS
NET INTEREST INCOME
For the three months ended March 31, 1996, interest income totaled $2,100, an
increase of $337 or 19.1% over the three months ended March 31, 1995. The
primary reasons for the change in interest income are the increase of $11,869 or
12.5% in average earning assets over the past twelve months and the Bank's
ability over the same period to change the mix of average earning assets. As of
March 31, 1995 investments totaled 33.7% of average earning assets compared to
21.5% as of March 31, 1996. In addition, net loans increased from 66.3% of
average earning assets to 78.5% during the comparison periods. Interest expense
for the three months ended March 31, 1996 was $982, an increase of $115 or
13.3%. Total average deposit growth of 11.5% during the twelve months ended
March 31, 1996 was the primary reason for the increase during the comparison
periods.
Net interest income for the three months ended March 30, 1996 was $1,118, an
increase of $222 or 24.8% over the three months ended March 31, 1995. The net
interest yield for the three months ended March 31, 1996 was 4.19%, a increase
of 41 basis points over the three months ended March 31, 1995. The components
of the net interest yield reflect a significant increase in the yield on average
earning assets with only a slight, 2 basis point increase in the interest
expense to average earning assets. As discussed above, the Bank was successful
in changing the mix of earning assets by reducing lower yielding investment
securities and real estate loans and replacing them with higher yielding
consumer and commercial loans.
NONINTEREST INCOME
Noninterest income was $422 for the three months ended March 31, 1996. This
represents a $229 or 118.7% increase over the three months ended March 31, 1995.
The primary source of noninterest income during the first quarter of 1996 was
gains on sale of loans held for sale. Gains on sale of loans held for sale
totaled $168, an increase of $167 over the three months ended March 31, 1995.
This increase is attributable to the success of the newly established mortgage
company, Spirit Mortgage Corp. During the three months ended March 31, 1996,
$22,632 of loans held for sale were sold. Spirit Mortgage Corp. originated
$9,906
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
(Dollars in Thousands)
----------------------
of the loans sold resulting in gains of $158. These fixed rate residential
loans were sold to various correspondents servicing released and without
recourse. The Bank originated and sold $704 of loans without recourse to the
Federal National Mortgage Association resulting in $10 in gains. The Company
intends to emphasize this type of business the remainder of the year; however,
future volume will depend on the direction and stability of interest rates
during the remainder of the year.
Service charges on deposit accounts totaled $138 for the three months ended
March 31, 1996, an increase of $14 or 11.3% over the three months ended March
31, 1995. The increase in service charges is primarily attributable to growth
in transaction accounts and increases in selected service charge amounts which
became effective on August 1, 1995.
Sales of investment securities available for sale totaled $2,000 for the three
months ended March 31, 1996. $1 in gains on sale of investment securities
available for sale were realized. There were no investment securities available
for sale sold in first quarter 1995.
Other fees for customer services was $115 for the three months ended March 31,
1996 as compared to $68 for the three months ended March 31, 1995. The $47
increase in the three month comparison period is primarily attributable to the
improvement in service fees associated with the purchase of Federal Housing
Administration (FHA) guaranteed real estate loans which are sold servicing
released without recourse under commitment to specific secondary market lenders.
This increase in fees is the direct result of increased FHA loans purchased and
sold. Sales volume was $12,022 at March 31, 1996 as compared to $4,624 at March
31, 1995.
NONINTEREST EXPENSE
Noninterest expense for the three months ended March 31, 1996 was $991, an
increase of $188 or 23.4% over the three months ended March 31, 1995. This
increase is attributable to increased personnel expenses, occupancy, furniture
and equipment expenses and other noninterest expenses. These increases can be
attributed to three full months of operations of the Bank's new branch office,
additional administrative office and Spirit Mortgage Corp., as compared to only
partial personnel expense increases associated with the expansion in the first
quarter 1995.
INCOME TAXES
The net income of $516 before income taxes for the three months ended March 31,
1996, reflects an increase of $254 or 96.9% over the three months ended March
31, 1995. The resulting income tax expense of $178 for the three month period is
an increase of $97 over the three months ended March 31, 1995. Income tax
expense increased primarily as a result of the increase in income before income
taxes.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Liquidity and interest rate sensitivity positions are regularly examined and
evaluated by management in conjunction with market interest rates, balance sheet
composition and funding source requirements. While a balanced interest rate
sensitivity position has been and continues to be maintained, a shift in balance
sheet composition has had the impact of improving net interest income growth in
1996. Management will continue its efforts to maintain a balanced interest rate
sensitivity position and will monitor loan demand and deposit growth in order to
influence the changes in balance sheet composition necessary to maximize net
interest income growth under prevailing conditions.
For financial institutions, liquidity represents the ability of the institution
to meet both loans and other commitments as well as depositor withdrawals.
Recently, loan demand has exceeded deposit growth allowing the Bank to utilize
maturing and sold investment securities to fund those loans. Should loan demand
continue
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
(Dollars in Thousands)
----------------------
to exceed deposit growth, the Company will look to the sale of loans, the
additional sale of investment securities or the use of specific borrowings as
deemed prudent to support high quality, higher yielding loan growth.
At March 31, 1996, the Company had potential funding needs of $14,796 in
outstanding loan commitments and $122 in standby letters of credit. In
addition, volatile deposits consisted of $9,317 in time deposits of $100 or more
and $5,137 in municipal deposits. Since these municipal deposits are not
subject to maturity, the duration of these balance levels is not precisely
known. The municipal deposits also require the pledge of qualified investment
securities to the State of Florida in accordance with the Florida Security for
Public Deposit Act. Based on the prior month's daily average balance of
municipal deposits, a 50% pledge level is required up to the Bank's capital
position and a 125% pledge level is required on balances in excess of the Bank's
capital position.
To provide funds for these potential liquidity needs, the Company maintained
cash equivalents of $23,771 at March 31, 1996, consisting of loans held for sale
of $6,736, federal funds sold of $3,225, and securities available for sale of
$13,810. In addition, unfunded federal funds purchase commitments aggregating
$4,000, and $19,000 in funding from the Federal Home Loan Bank of Atlanta are
also available to meet potential liquidity needs. In the opinion of management,
the Company maintains liquidity levels adequate to meet its potential funding
demands.
EARNING ASSETS AND FUNDING SOURCES
At March 31, 1996, earning asset categories totaled $110,152 and comprised 93.8%
of total assets. Federal funds sold of $3,225 or 2.9%, investment securities
held to maturity of $3,986 or 3.6%, loans held for sale of $6,736 or 6.1%,
investment securities available for sale of $13,810 or 12.5% and net loans of
$82,395 or 74.8% make up all earning assets. Deposits, the primary source of
funds, totaled $106,543 at March 31, 1996, of which $19,007 or 17.8% was in
noninterest bearing demand deposits and $87,536 or 82.2% of total deposits was
in interest bearing deposits.
LOANS
Total loans at March 31, 1996, were $83,297, an increase of $5,799 or 7.5% over
December 31, 1995. From December 31, 1995 to March 31, 1996, outstanding
balances on installment loans increased $1,046 or 9.4%, other real estate
lending aggregated a $1,206 or 9.5% increase, real estate construction loans
increased by $1,593 or 32.2% and loans on primary residences increased $3,107 or
8.2%. During the three month period other personal and business loans decreased
$26 or 3.9% and commercial loans decreased $1,127 or 11.2%. The largest growth
in the loan portfolio during the three month period was in real estate loan
category, primarily made up of adjustable rate residential real estate loans.
Increases in installment, other real estate and construction loans reflects the
Company's emphasis on building loan volume in other higher yielding types of
loans. The decline in commercial loans is primarily due to the paydown of
seasonal line of credit after year end.
The Company does not engage in any speculative real estate lending or real
estate development lending. The real estate loans are predominately made on
owner occupied properties with established cash flows.
SECURITIES
At March 31, 1996, total securities held to maturity were $3,986, an increase of
$89 or 2.3% over December 31, 1995. The change is attributable to an increase
in Federal Home Loan Bank Stock of $92, offset by a $3 decrease associated with
the premium amortization of the existing portfolio.
The securities held to maturity had gross unrealized gains of $43 as of March
31, 1996 and $57 as of
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
(Dollars in Thousands)
----------------------
December 31, 1995. The gross unrealized losses in the portfolio of securities
held to maturity as of March 31, 1996 were $11 and as of December 31, 1995 were
$7.
At March 31, 1996, securities available for sale were $13,810, a decrease of
$3,450 or 20.0% over December 31, 1995. The components of the change were a
decrease in U.S. Treasury securities of $2,039 or 53.6%, a decrease in U.S.
Government Agency securities of $1,059 or 34.6% and a decrease in mortgage
backed securities of $357 or 3.4%. These changes in the securities portfolio
and the reduction of $5 in net unrealized losses ($3 net of tax effect)
aggregates the $3,450 decrease in total securities available for sale. The
decrease in the available for sale securities portfolio is due to increased loan
demand and the sale of securities to assist the funding of loan production and
the maturity of various securities.
At December 31, 1995, the available for sale portfolio included $261 of net
unrealized losses which resulted in an after tax adjustment decreasing
shareholders' equity by $163 as compared to the $256 of net unrealized losses at
March 31, 1996 which resulted in an after tax adjustment decreasing
shareholders' equity by $160.
FUNDING SOURCES
Deposits at March 31, 1996 were $106,543, an increase of $2,310 or 2.2% from
December 31, 1995. The components of this change were a $2,733 or 34.2%
increase in interest bearing demand deposits, a $556 or 9.8% increase in money
market deposits, a $401 or 1.9% increase in savings deposits, a $376 or 0.8%
decrease in time deposits, and a $1,004 or 5.0% decrease in noninterest bearing
demand deposits. Overall deposit growth during the three months ended March 31,
1996 can be attributed to the Company's ability to attract lower cost funds by
developing several deposit products as alternatives to time deposits. The
decrease in noninterest bearing demand deposit balances does not reflect a
decline in growth and is primarily due to the timing of quarter end falling on a
non-business day.
The Company also continues to utilize federal fund purchase lines and advances
through the Federal Home Loan Bank ("FHLB") to accommodate temporary timing
differences between earning asset growth and deposit growth. At March 31, 1996,
there were no outstanding balances under federal funds purchase lines or FHLB
advance agreements.
ASSET QUALITY
The allowance for loan losses as of March 31, 1996 was $831 or 1.00% of loans
outstanding as compared to $718 or 1.10% at March 31, 1995. This is a net
increase of $113 or 15.7% over March 31, 1995. The increase in the allowance
for loan losses was primarily due to growth in the loan portfolio of 27.8% over
the twelve months ended March 31, 1996. The decline in the allowance compared
to loans outstanding from 1.10% to 1.00% is primarily due to the continued
concentration in lower risk loans on residential real estate and due to the
maintenance of the overall portfolio quality at a level that does not require
additional allowance.
A reconciliation of the allowance for loan losses follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
---------- ----------
<S> <C> <C>
Beginning Balance $ 827 699
Provision charged to expense 33 24
Loans charged-off (43) (6)
Recoveries 14 1
----- -----
Ending Balance $ 831 718
===== =====
Allowance for loan losses as
a percent of ending loans 1.00% 1.10%
</TABLE>
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
(Dollars in Thousands)
----------------------
NONPERFORMING LOANS
Loans are placed on a nonaccrual status when they become 90 days past due unless
determined to be both adequately collateralized and actively in the process of
collection or when they are classified as doubtful. When full collection of
principal becomes doubtful, the uncollectible portion of the loan is charged-
off.
As of March 31, 1996, the Company had three loans totaling $9 past due 90 days
or more and on accrual, 31 loans in the amount of $452 on nonaccrual and no
other real estate owned. As of December 31, 1995, the Company had four loans
totaling $5 past due 90 days or more and on accrual, 13 loans on nonaccrual in
the amount of $405 and no other real estate owned.
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------- ------------
<S> <C> <C>
Loans past due 90 days or more $ 9 5
Nonaccrual loans 452 405
Other real estate owned --- ---
Nonperforming assets as a
percent of ending loans
and other real estate owned 0.6% 0.5
</TABLE>
Interest would have been recorded for all nonperforming loans in the amount of
$30 and $10 during the three months ended March 31, 1996 and 1995, respectively,
if these loans had been current in accordance with their original terms.
On January 1, 1995, the Company adopted Statement of Financial Accounting
Standards No. 114, "Accounting by Creditors for Impairment of a Loan" (Statement
114), as amended by Statement 118, which prescribes the recognition criteria for
loan impairment and the measurement methods for certain impaired loans and loans
whose terms are modified in troubled debt restructuring (a "restructured loan").
Statement 114 adoption did not have a material impact on the financial condition
or results of operations of the Company in 1995. FAS 114 does not apply to
large groups of smaller balance homogeneous loans that are collectively
evaluated for impairment. For the Company, loans collectively reviewed for
impairment include all residential real estate loans and consumer loans. The
Company's impaired loans within the scope of FAS 114 include nonaccrual
commercial loans restructured, and performing commercial loans less than 90 days
delinquent which management believes will be collected in full, but it is
probable they will not be collected in accordance with the contractual terms of
the loans.
OTHER POTENTIAL PROBLEM LOANS
Other potential problem loans exclude nonperforming loans and represent those
loans where information about possible credit problems of borrowers has caused
management to have serious doubts about the borrowers' ability to comply with
present repayment terms. The Company follows a loan review program to evaluate
the credit risk in its loan portfolio. Through the loan review process, the
Company maintains a classified account list which, along with the delinquency
list of loans, helps management assess the overall quality of the loan portfolio
and the adequacy of the allowance for loan losses. Loans classified as
"substandard" are those loans with clear and defined weaknesses, such as highly
leveraged positions, unfavorable financial ratios, uncertain repayment sources
or poor financial condition, that may jeopardize recoverability of the debt.
Loans classified as "doubtful" are those loans which have characteristics
similar to substandard accounts but with an increased risk that a loss may
occur, or at least a portion of the loan may require a charge-off if liquidated
at present. At March 31, 1996, potential problem loans classified as
substandard were $751 compared to $894 at year end 1995. One loan was
classified as doubtful at March 31, 1996 in the amount of $8 as compared to six
loans that totaled $40 at year end 1995. Classified loans in aggregate
decreased by $175 at March 31, 1996 from year end 1995. The decrease in those
loans
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
(Dollars in Thousands)
----------------------
classified as doubtful and substandard is primarily due to repayment and
migration from the substandard category as some loans deteriorated and others
improved in financial strength.
Management is unaware of any loans other than those noted above which are
classified for regulatory purposes that represent or result from trends or
uncertainties that will materially impact future operating results, liquidity,
or capital resources.
CAPITAL RESOURCES (SHARE INFORMATION NOT IN THOUSANDS)
Total shareholders' equity at March 31, 1996 was $9,294, an increase of $339 or
3.8% from December 31, 1995. Net income for the three months ended March 31,
1996 of $338 and the reduction of $3 in after tax unrealized losses on the
available for sale investment securities portfolio in accordance with FAS No.
115 make up the increase in shareholders' equity. During the three months ended
March 31, 1996, there were no warrants or options exercised. Also, the Company
did declare and issue a stock dividend of 10% on February 15, 1996. The stock
dividend increased total outstanding shares by 67,144 for a total of 739,496.
Since December 31, 1993, regulatory capital guidelines require bank holding
companies to have a minimum total risk-based capital ratio of 8.00% and a
minimum leverage ratio of 3.00% for the highest rated bank holding companies
with an additional 1% or 2% required depending on their regulatory ratings and
expansion plans.
On December 19, 1991, the Federal Deposit Insurance Corporation Improvement Act
of 1991 (FDICIA) became law as it relates to the Bank. While the FDICIA
primarily addresses additional sources of funding for the Savings Association
Insurance Fund (SAIF) and Bank Insurance Fund (BIF), it also imposed a number of
mandatory and discretionary supervisory measures on financial institutions.
The FDICIA requires financial institutions to take certain actions relating to
their internal operations and also imposes certain operational and managerial
standards on financial institutions relating to internal controls, loan
documentation, credit underwriting, interest rate exposure, asset growth and
compensation, fees and benefits.
Furthermore, the FDICIA established five capital categories and specified
supervisory actions in regard to undercapitalized institutions. The regulation,
which became effective December 19, 1992, ties the capital categories to three
capital measures: Total risk-based, Tier 1 risk-based and leverage capital. The
definitions of Tier 1 and total capital under the FDICIA are similar to the
definitions under the previously existing capital guidelines, except for the
ratio of tangible equity to total assets used to define critically
undercapitalized banks. The ratios for each category are as follows:
<TABLE>
<CAPTION>
Total Tier 1
Risk-based Risk-based Leverage
Ratio Ratio Ratio
------------------ ---------------- ---------------
<S> <C> <C> <C>
Less than Less than Less than
Well capitalized or equal to 10.00% or equal to 6.00% or equal to 5.00%
Adequately capitalized 8.00-9.99 4.00-5.99 4.00-4.99
Undercapitalized 6.00-7.99 3.00-3.99 3.00-3.99
Significantly undercapitalized Less than 6.00 Less than 3.00 2.01-2.99
Less than
Critically undercapitalized --- --- or equal to 2.00
</TABLE>
The following table discloses the regulatory capital for the Bank as of March
31, 1996 and December 31, 1995:
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
(Dollars in Thousands)
----------------------
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------- -------------
<S> <C> <C>
CAPITAL:
Tier 1 capital $ 8,834 8,508
Tier 2 capital 831 827
-------- --------
Total capital $ 9,665 9,335
======== ========
Total adjusted assets $116,883 114,059
======== ========
Risk-weighted assets $ 76,936 72,071
======== ========
RATIOS:
Leverage ratio 7.56% 7.46%
======== ========
Tier 1 capital to risk-weighted
assets 11.48% 11.80%
Tier 2 capital to risk-weighted
assets 1.08% 1.15%
-------- --------
Total capital to risk-weighted
assets 12.56% 12.95%
======== ========
</TABLE>
The Bank does not anticipate any difficulty in continuing to meet these minimum
capital requirements in the foreseeable future. Based on these regulations,
management believes the Bank is classified as "well capitalized."
FORWARD LOOKING STATEMENTS
This 10-QSB report contains forward looking statements that involve risks and
uncertainties, and there are certain important factors that could cause actual
results to differ materially from those anticipated. These important factors
include, but are not limited to, economic conditions (both generally and more
specifically in the markets in which the Company and the Bank operate),
competition for the Company's and the Bank's customers from other providers of
financial services, government legislation and regulation (which changes from
time to time and over which the Company and the Bank have no control), changes
in interest rates, the impact of the Company's rapid growth, and other risks
detailed in the Annual Report on Form 10-KSB and in this filing with the
Securities and Exchange Commission, all of which are difficult to predict and
many of which are beyond the control of the Company.
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
27. Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the first quarter
of 1996.
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
S I G N A T U R E S
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
------------------------------------------
Date: May 7, 1996 By: /s/ J. Hal Roberts, Jr.
--------------------------- -----------------------------
J. Hal Roberts, Jr.
President/Chief Executive Officer
Date: May 7, 1996 By: /s/ Randall A. Ezell
--------------------------- -----------------------------
Randall A. Ezell
Senior Vice President
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,451
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,225
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,810
<INVESTMENTS-CARRYING> 3,986
<INVESTMENTS-MARKET> 4,018
<LOANS> 83,297
<ALLOWANCE> 831
<TOTAL-ASSETS> 117,333
<DEPOSITS> 106,543
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,496
<LONG-TERM> 0
0
0
<COMMON> 7
<OTHER-SE> 9,287
<TOTAL-LIABILITIES-AND-EQUITY> 117,333
<INTEREST-LOAN> 1,776
<INTEREST-INVEST> 324
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,100
<INTEREST-DEPOSIT> 982
<INTEREST-EXPENSE> 982
<INTEREST-INCOME-NET> 1,118
<LOAN-LOSSES> 33
<SECURITIES-GAINS> 1
<EXPENSE-OTHER> 991
<INCOME-PRETAX> 516
<INCOME-PRE-EXTRAORDINARY> 516
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 338
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.39
<YIELD-ACTUAL> 4.19
<LOANS-NON> 452
<LOANS-PAST> 9
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 759
<ALLOWANCE-OPEN> 827
<CHARGE-OFFS> 43
<RECOVERIES> 14
<ALLOWANCE-CLOSE> 831
<ALLOWANCE-DOMESTIC> 831
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
