<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission File Number 0-18514
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
A Florida Corporation - I.R.S. Employer Identification No. 65-0051022
1100 SW St Lucie West Blvd
Port St. Lucie, Florida 34986
Issuer's Telephone Number:
(561) 340-2800
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 June 30, 1996:
Common Stock, $.01 par value -- 742,840 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
Item 1: Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995 3
Condensed Consolidated Statements of Earnings for the six months ended
and the three months ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Shareholders' Equity for the six
months ended June 30, 1996 and 1995 5
Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7-10
Item 2: Management's Discussion and Analysis or Plan of Operation 11-19
Part II: Other Information 20
Signatures 21
<PAGE>
<TABLE>
Port St. Lucie National Bank Holding Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in Thousands, except for share data)
<CAPTION>
June 30, December 31,
1996 1996
Assets
<S> <C> <C>
Cash and due from banks 3,412 4,051
Federal Funds Sold 3,950 4,200
Securities available for sale 13,254 17,260
Loans held for sale, net of deferred
loan origination fees (estimated market
values of $3,417 and $5,919, respectively) 3,363 5,835
Securities held to maturity (estimated
market values of $3,977 and $3,947,
respectively) 3,982 3,897
Loans 97,259 77,498
Less: Allowance for loan losses (896) (827)
Net deferred loan origination fees and costs(85) (76)
Net loans 96,278 76,595
Premises and equipment, net 1,143 1,181
Other assets 1,690 1,514
Total assets $ 127,072 114,533
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Noninterest bearing demand $ 19,470 20,011
Interest bearing:
Demand 12,186 7,996
Money market 5,686 5,680
Savings 24,222 21,117
Time 53,986 49,429
Total deposits 115,550 104,233
Other liabilities 1,829 1,345
Total liabilities 117,379 105,578
Shareholders' equity:
Common stock, $.01 par value, authorized
10,000,000 shares; issued and outstanding
742,840 and 672,352, respectively 7 7
Additional paid-in capital 8,466 7,027
Retained earnings 1,392 2,084
Unrealized losses on securities available
for sale, net (172) (163)
Total shareholders' equity 9,693 8,955
Total liabilities
and shareholders' equity $ 127,072 114,533
<FN>
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
Port St. Lucie National Bank Holding Corp. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Amount in Thousands, except for share data)
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees:
Taxable loans $ 3,627 2,662 1,940 1,413
Tax-exempt loans --- 24 --- 12
Loans held for sale 172 57 83 40
Securities held to maturity:
Taxable 21 232 12 117
Tax-exempt 81 81 41 40
Securities available for sale 437 646 205 363
Federal funds sold 67 83 24 37
Total interest income 4,405 3,785 2,305 2,022
Interest expense:
Deposits 1,994 1,940 1,012 1,074
Other 13 3 13 2
Total interest expense 2,007 1,943 1,025 1,076
Net interest income 2,398 1,842 1,280 946
Provision for loan losses 97 96 64 72
Net interest income after
provision for loan losses 2,301 1,746 1,216 874
Noninterest income:
Service charge
on deposit accounts 280 252 142 128
Gain on sale of
loans held for sale 284 29 116 28
Gain on sale of
other real estate owned --- 1 --- 1
Gain on sale of
securities available for sale 1 --- --- ---
Other fees for customer services 228 138 113 70
Total noninterest income 793 420 371 227
Noninterest expense:
Compensation and employee benefit 979 800 480 407
Occupancy 180 133 94 84
Furniture and equipment 122 92 61 54
Other 716 662 371 339
Total noninterest
expense 1,997 1,687 1,006 884
Net income before income taxes 1,097 479 581 217
Income tax expense 377 146 199 65
Net income $ 720 333 382 152
Net income per common and common
equivalent share:
Primary 0.84 0.41 0.44 0.18
Fully diluted 0.83 0.40 0.44 0.18
Average common and equivalent shares
outstanding:
Primary 860 822 860 822
Fully diluted 865 826 865 826
<FN>
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
Port St. Lucie National Bank Holding Corp. and Subsidiaries
Condensed Consolidated Statement of Shareholders' Equity
(Amounts in Thousands)
<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 losses on
securities available for sale,
net of tax effect --- --- --- --- (9) (9)
Stock issue 4 --- 29 --- --- 29
10% Common Stock Dividend 67 --- 1,410 (1,412) --- (2)
Net income --- --- --- 720 --- 720
Balance at June 30, 1996 743 $7 8,466 1,392 (172) 9,693
Balance at December 31, 1994 610 $6 6,165 1,991 (772) 7,390
Change in unrealized losses on
securities available for sale, net
of tax effect --- --- --- --- 456 456
Stock issue 1 --- 8 --- --- 8
10% Common Stock Dividend 61 1 854 (855) --- ---
Net income --- --- --- 333 --- 333
Balance at June 30, 1995 672 $7 7,027 1,469 (316) 8,187
<FN>
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
Port St. Lucie National Bank Holding Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands)
<CAPTION>
Six Months Ended
June 30, June 30,
1996 1995
<S> <C> <C>
Cash flow from operating activities:
Net income 720 333
Adjustments to reconcile net income to net cash used by
operating activities:
Provision for loan losses 97 96
Depreciation 112 91
Deferred loan origination fees and costs, net of
amortization 9 (44)
Purchase of loans held for sale (22,554) (13,315)
Origination of loans held for sale (21,830) (3,511)
Proceeds from the sale of loans held for sale 46,856 14,426
Increase in other assets (170) (98)
Increase in other liabilities 484 541
Net cash (used by) provided by operating activities 3,724 (1,481)
Cash flow from investing activities:
Purchase of securities held to maturity (85) (66)
Purchase of securities available for sale ---- (5,918)
Proceeds from maturities of securities available for sale 1,991 2,578
Proceeds from sale of securities available for sale 2,000 ----
Loans originated, net of repayments (19,789) (11,337)
Proceeds from sale of other real estate owned ---- 25
Purchase of premises and equipment (74) (344)
Net cash used by investing activities (15,957) (15,062)
Cash flow from financing activities:
Net increase in deposit accounts 11,317 16,885
Decrease in federal funds purchased ---- (20)
Issuance of common stock 29 8
Cash Dividends paid (2) ----
Net cash provided by financing activities 11,344 16,873
Net increase (decrease) in cash and cash equivalents (889) 330
Cash and cash equivalents at beginning of period 8,251 2,742
Cash and cash equivalents at end of period $ 7,362 3,072
Supplemental disclosures:
Cash paid during the period for:
Interest $ 2,009 1,872
Income taxes 338 ---
Noncash investment and financing activities:
Fair value of stock dividend distributed 1,410 854
Decrease (increase) in unrealized loss on securities
available for sale (14) 731
Loans to facilitate the sale of other real estate owned --- 23
<FN>
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
(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>
June 30, 1996
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Municipal securities 3,341 14 19 3,336
Total debt securities 3,341 14 19 3,336
Federal Home Loan Bank
stock 491 --- --- 491
Federal Reserve stock 150 --- --- 150
Total $ 3,982 14 19 3,977
<CAPTION>
December 31, 1995
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
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 debt securities held to
maturity at June 30, 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.
<PAGE>
<TABLE>
<CAPTION>
Estimated
Amortized Market
Cost Value
<S> <C> <C>
Due within one year $ 110 111
Due after one year through
five years 1,821 1,828
Due after five years through
ten years 915 903
Due after ten years 495 494
Total debt securities $ 3,341 3,336
</TABLE>
At June 30, 1996 and December 31, 1995, securities held to maturity with an
amortized cost of $3,231 and $2,480, respectively, and a market value of
$3,226 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 ($9,046
as of June 30, 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>
June 30, 1996
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 1,764 2 --- 1,766
Securities of other U.S.
Government Agencies 1,907 --- 44 1,863
FHLMC/FNMA Mortgage
backed securities 9,859 29 263 9,625
Total $ 13,530 31 307 13,254
<CAPTION>
December 31, 1995
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
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>
<PAGE>
The amortized cost and estimated market value of securities available for
sale at June 30, 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 $ 1,764 1,766
Due after one year through
five years 1,907 1,864
3,671 3,630
Mortgage backed securities 9,859 9,624
Total $ 13,530 13,254
</TABLE>
During the six months ended June 30, 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.
At June 30, 1996 and December 31, 1995, securities available for sale with
an amortized cost of $2,155 and $4,399, respectively, and a market value of
$2,134 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 ($9,046 as of June 30, 1996) was 50%. On
the aggregate balance in excess of the Bank's capital position, the State's
pledge requirement is 125%.
(4) LOANS
An analysis of loans follows:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
Real Estate:
Construction $ 10,013 4,952
Loans on primary residences 48,913 38,015
Other 14,266 12,665
Commercial 9,860 10,075
Loans to individuals:
Installment 13,551 11,120
Other personal and business loans 656 671
Total $ 97,259 77,498
</TABLE>
At June 30, 1996, real estate-construction loans were comprised of $7,711
in single family
<PAGE>
residential loans and $2,302 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 June 30, 1996 and December 31, 1995, loans to directors, executive
officers, and principal shareholders aggregated $1,862 and $1,423,
respectively. Total unfunded commitments to this group at June 30, 1996
and December 31, 1995 aggregated $1,024 and $820, respectively.
<PAGE>
OVERVIEW
Port St. Lucie National Bank Holding Corp.'s (the "Company") total assets
at June 30, 1996 were $127,072, an increase of $12,539 or 10.9% over
December 31, 1995. Net income for the six months ended June 30, 1996 was
$720 as compared to $333 for the six months ended June 30, 1995. Earnings
for the six months ended June 30, 1996 represent $0.84 per common and
common equivalent share as compared to $0.41 for the six months ended
June 30, 1995. Net income for the three months ended June 30, 1996 was
$382 as compared to $152 for the three months ended June 30, 1995.
Earnings for the three months ended June 30, 1996 represent $0.44 per
common and common equivalent share as compared to $0.18 for the three
months ended June 30, 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 and the stock
issuance of exercised options and warrants.
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 six full months of operations in the first half of 1996 as
compared to three full months of operations in the first half of 1995.
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 half of 1995 as
compared to six full months in the first half of 1996.
EARNINGS ANALYSIS
NET INTEREST INCOME
For the six months ended June 30, 1996, interest income totaled $4,405, an
increase of $620 or 16.4% over the six months ended June 30, 1995. The
primary reasons for the change in interest income are the increase of
$10,220 or 10.2% in average earning assets over the past twelve months
ending June 30, 1996 and the Bank's ability over the same period to change
the mix of average earning assets. As of June 30, 1995, investments
totaled 33.8% of average earning assets compared to 19.2% as of June 30,
1996. In addition, net loans increased from 66.2% of average earning
assets to 80.8% during the comparison periods. Interest expense for the
six months ended June 30, 1996 was $2,007, an increase of $64 or 3.3%.
Total average deposit growth of 8.6% during the twelve months ended
June 30, 1996 was the primary reason for the increase during the comparison
periods. The combination of growth and change in mix resulted in net
interest income for the six months ended June 30, 1996 of $2,398, an
increase of $556 or 30.2% over the six months ended June 30, 1995. Net
interest income for the three months
<PAGE>
ended June 30, 1996 was 1,280, an increase of $334 or 35.3% over the three
months ended June 30, 1995.
The net interest yield for the six months ended June 30, 1996 was 4.34%, an
increase of 66 basis points over the six months ended June 30, 1995. The
components of the net interest yield reflect an increase of 42 basis points
in the yield on average earning assets with a 24 basis point decrease in
the interest expense to average earning assets. The net interest yield
for the three months ended June 30, 1996 was 4.47%, an increase of 89 basis
points over the three months ended June 30, 1995. The components of the
net interest yield reflect an increase of 41 basis points in the yield on
average earning assets with a 48 basis point decrease 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. In addition to changing the mix
in earning assets, the Bank was also able to change the mix in deposits by
attracting lower cost deposits while higher cost time deposits repriced at
lower rates.
NONINTEREST INCOME
Noninterest income was $793 for the six months ended June 30, 1996. This
represents a $373 or 88.8% increase over the six months ended June 30,
1995. For the three months ended June 30, 1996, noninterest income was
$371, an increase of $144 or 63.4% as compared to June 30, 1995. The
primary source of noninterest income during 1996 was gains on sale of loans
held for sale. Gains on sale of loans held for sale totaled $284, an
increase of $255 over the six months ended June 30, 1995. For the three
months ended June 30, 1996, gains on sale of loans held for sale totaled
$116, an increase of $88 over the three months ended June 30, 1995. These
increases are attributable to the success of the newly established mortgage
company, Spirit Mortgage Corp. During the six months ended June 30, 1996,
$46,856 of loans held for sale were sold. Spirit Mortgage Corp. originated
$19,637 of the loans sold resulting in gains of $275. These fixed rate
residential loans were sold to various correspondents servicing released
and without recourse. The Bank originated and sold $2,704 of loans
without recourse to the Federal National Mortgage Association resulting in
$9 in gains. The Company intends to continue emphasizing this type of
business; 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 $280 for the six months ended
June 30, 1996, an increase of $28 or 11.1% over the six months ended June
30, 1995. For the three months ended June 30, 1996, service charges on
deposit accounts totaled $142, an increase $14 or 10.9% over three months
ended June 30, 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
six months ended June 30, 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 two quarters of 1995.
<PAGE>
Other fees for customer services was $228 for the six months ended June 30
1996 as compared to $138 for the six months ended June 30, 1995. This
represents a $90 or 65.2% increase. For the three months ended June 30,
1996, other fees for customer services totaled $113, an increase of $43 or
61.4% over the three months ending June 30, 1995. The $90 increase in the
six month comparison period is primarily attributable to the improvement in
service fees associated with all loan products. This increase in fees is
the result of increased FHA loans purchased and sold, the recognition of
fee income from the services provided by Spirit Mortgage Corp. and the
impact of increased residential real estate loan volume generated by the
Bank and Spirit Mortgage Corp.
NONINTEREST EXPENSE
Noninterest expense for the six months ended June 30, 1996 was $1,997, an
increase of $310 or 18.4% over the six months ended June 30, 1995. For the
three months ended June 30, 1996, noninterest expense was $1,006, an
increase of $122 or 13.8% over the three months ended June 30, 1995. This
increase is attributable to increased personnel expenses, occupancy,
furniture and equipment expenses and other noninterest expenses. These
increases can be attributed to six full months of operations of the Bank's
new branch office and Spirit Mortgage Corp., as compared to only partial
expense increases associated with the expansions during the first half
of 1995.
INCOME TAXES
The net income of $1,097 before income taxes for the six months ended June
30, 1996, reflects an increase of $618 or 129.0% over the six months ended
June 30, 1995. The resulting income tax expense of $377 for the six month
period is an increase of $231 over the six months ended June 30, 1995. For
the three months ended June 30, 1996, net income before income taxes was
$581, an increase of $364. 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. During the first half of 1996, loan demand has exceeded
deposit growth allowing the Bank to utilize maturing and sold investment
securities
<PAGE>
to fund those loans. While that trend has recently slowed, the Company
will continue to look to the sale of loans, the sale of investment
securities available for sale or the use of specific borrowings as deemed
prudent to support high quality, higher yielding loan growth.
At June 30, 1996, the Company had potential funding needs of $17,438 in
outstanding loan commitments and $149 in standby letters of credit. In
addition, volatile deposits consisted of $10,014 in time deposits of $100
or more and $7,213 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 $20,567 at June 30, 1996, consisting of
loans held for sale of $3,363, federal funds sold of $3,950, and securities
available for sale of $13,254. In addition, unfunded federal funds
purchase commitments aggregating $4,000, and a $19,000 commitment 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 June 30, 1996, earning asset categories totaled $120,827 and comprised
95.1% of total assets. Loans held for sale of $3,363 or 2.8%, federal
funds sold of $3,950 or 3.3%, investment securities held to maturity of
$3,982 or 3.3%, investment securities available for sale of $13,254 or
11.0% and net loans of $96,278 or 79.7% make up all earning assets.
Deposits, the primary source of funds, totaled $115,550 at June 30, 1996,
of which $19,470 or 16.8% was in noninterest bearing demand deposits and
$96,080 or 83.2% of total deposits was in interest bearing deposits.
LOANS
Total loans at June 30, 1996, were $97,259, an increase of $19,761 or 25.5%
over December 31, 1995. From December 31, 1995 to June 30, 1996,
outstanding balances on other real estate lending aggregated a $1,601 or
12.6% increase, installment loans increased $2,431 or 21.9%, real estate
construction loans increased by $5,061 or 102.2% and loans on primary
residences increased $10,898 or 28.7%. During the six month period other
personal and business loans decreased $15 or 2.2% and commercial loans
decreased $215 or 2.1%. The largest growth in the loan portfolio during
the six 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 flucuations
<PAGE>
in seasonal lines of credit.
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 June 30, 1996, total securities held to maturity were $3,982, an
increase of $85 or 2.2% over December 31, 1995. The change is attributable
to an increase in Federal Home Loan Bank Stock of $92, offset by a $7
decrease associated with the premium amortization of the existing
portfolio.
The securities held to maturity had gross unrealized gains of $14 as of
June 30, 1996 and $57 as of December 31, 1995. The gross unrealized losses
in the portfolio of securities held to maturity as of June 30, 1996 were
$19 and as of December 31, 1995 were $7.
At June 30, 1996, securities available for sale were $13,254, a decrease of
$4,006 or 23.2% over December 31, 1995. The components of the change were
a decrease in U.S. Treasury securities of $2,043 or 53.7%, a decrease in
U.S. Government Agency securities of $1,152 or 37.7% and a decrease in
mortgage backed securities of $796 or 7.5%. These changes in the
securities portfolio and the increase of $15 in net unrealized losses ($9
net of tax effect) results in the $4,006 decrease in total securities
available for sale. The decrease in the available for sale securities
portfolio is due to 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 $276 of net unrealized
losses at June 30, 1996 which resulted in an after tax adjustment
decreasing shareholders' equity by $172.
FUNDING SOURCES
Deposits at June 30, 1996 were $115,550, an increase of $11,317 or 10.9%
from December 31, 1995. The components of this change were a $4,557 or
9.2% decrease in time deposits, a $4,190 or 52.4% increase in interest
bearing demand deposits, a $3,105 or 14.7% increase in savings deposits, a
$6 or 0.1% increase in money market deposits and a $541 or 2.7% decrease
in noninterest bearing demand deposits. Overall deposit growth during the
six months ended June 30, 1996 can be attributed to the Company's market
acceptance and its ability to respond to market needs with new products.
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 June 30, 1996, there were no outstanding balances under federal
funds purchase lines or FHLB advance agreements.
<PAGE>
ASSET QUALITY
The allowance for loan losses as of June 30, 1996 was $896 or 0.92% of
loans outstanding as compared to $782 or 1.06% at June 30, 1995. This is a
net increase of $114 or 14.6% over June 30, 1995. The increase in the
allowance for loan losses was primarily due to growth in the loan portfolio
of 25.5% over the twelve months ended June 30, 1996. The decline in the
allowance compared to loans outstanding from 1.06% to 0.92% is 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>
Six Months Ended Three Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Beginning Balance $ 827 699 831 718
Provision charged to
expense 97 96 64 72
Loans charged-off (46) (15) (3) (8)
Recoveries 18 2 4 ---
Ending Balance $ 896 782 896 782
Allowance for loan losses
as a percent of ending
loans 0.92% 1.06% 0.92% 1.06%
</TABLE>
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 June 30, 1996, the Company had seven loans totaling $10 past due 90
days or more and on accrual, 26 loans in the amount of $534 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.
<PAGE>
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
Loans past due 90 days or
more $ 10 5
Nonaccrual loans 534 405
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
$36 and $17 during the six months ended June 30, 1996 and 1995, respectively,
if these loans had been current in accordance with their original terms.
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 June 30, 1996, potential
problem loans classified as substandard were $590 compared to $894 at year end
1995. There were no loans classified as doubtful at June 30, 1996 as compared
to six loans that totaled $40 at year end 1995. Classified loans in
aggregate decreased by $344 at June 30, 1996 from year end 1995. The decrease
in those loans 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 June 30, 1996 was $9,693, an increase of $738 or
8.2% from December 31, 1995. Net income for the six months ended June 30,
1996 of $720 and the
<PAGE>
increase of $9 in after tax unrealized losses on the available for sale
investment securities portfolio in accordance with FAS No. 115 primarily
make up the increase in shareholders' equity. During the six months ended
June 30, 1996, there were 468 warrants and 2,904 options exercised resulting
in a $29 increase in capital. Also, the Company declared and issued a stock
dividend of 10% on February 15, 1996. The stock dividend increased total
outstanding shares by 67,116 for a total of 739,468 and cash equivalent
dividends totaled $2.
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>
Well capitalized >= 10.00% >= 6.00% >= 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 under-
capitalized < 6.00 < 3.00 2.01-2.99
Critically under-
capitalized --- --- <= 2.00
</TABLE>
The table on the following page discloses the regulatory capital for the
Bank as of June 30, 1996 and December 31, 1995:
<PAGE>
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
Capital:
Tier 1 capital $ 9,217 8,508
Tier 2 capital 896 827
Total capital $ 10,113 9,335
Total adjusted assets $ 126,595 114,059
Risk-weighted assets $ 84,493 72,071
Ratios:
Leverage ratio 7.28% 7.46%
Tier 1 capital to risk-weighted
assets 10.91% 11.80%
Tier 2 capital to risk-weighted
assets 1.06% 1.15%
Total capital to risk-weighted
assets 11.97% 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 form 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>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual meeting of Shareholders of Port St. Lucie National Bank
Holding Corp. was held on April 22, 1996. Proxies for the meeting were
solicited pursuant to Regulation 14A under the Securities Exchange Act of
1934, and there was not solicitation in opposition to management's
solicitations. The following summarizes all matters voted upon at this
meeting:
1. The following directors were elected for terms expiring in 1999:
Number of Votes Cast
Against/ Abstentions/
Name For Withheld Broker Non-Votes
Christopher Fogal 525,846 542 0
Ellen Guterl 524,318 2,070 0
Joe Marinaro 526,208 180 0
2. The shareholders ratified the selection of KPMG Peat Marwick as
the independent auditors for the Company for 1996. The number of
votes cast were as follows:
Number of Votes Cast
Against/ Abstentions/
For Withheld Broker Non-Votes
519,301 1,851 5,236
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 second 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: 8/12/96 By: /s/ J. Hal Roberts, Jr.
J. Hal Roberts, Jr.
President/Chief Executive Officer
Date: 8/12/96 By: /s/ Randall A. Ezell
Randall A. Ezell
Senior Vice President
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 3412
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3950
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13254
<INVESTMENTS-CARRYING> 3982
<INVESTMENTS-MARKET> 3977
<LOANS> 97259
<ALLOWANCE> 896
<TOTAL-ASSETS> 127072
<DEPOSITS> 115551
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1829
<LONG-TERM> 0
7
0
<COMMON> 0
<OTHER-SE> 9685
<TOTAL-LIABILITIES-AND-EQUITY> 127072
<INTEREST-LOAN> 3799
<INTEREST-INVEST> 606
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 4405
<INTEREST-DEPOSIT> 1994
<INTEREST-EXPENSE> 2007
<INTEREST-INCOME-NET> 2398
<LOAN-LOSSES> 97
<SECURITIES-GAINS> 1
<EXPENSE-OTHER> 2176
<INCOME-PRETAX> 1097
<INCOME-PRE-EXTRAORDINARY> 1097
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 720
<EPS-PRIMARY> .84
<EPS-DILUTED> .83
<YIELD-ACTUAL> 4.34
<LOANS-NON> 534
<LOANS-PAST> 10
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 590
<ALLOWANCE-OPEN> 827
<CHARGE-OFFS> 46
<RECOVERIES> 18
<ALLOWANCE-CLOSE> 896
<ALLOWANCE-DOMESTIC> 896
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
