<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 September 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 September 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 September 30, 1996
and December 31, 1995 3
Condensed Consolidated Statements of Earnings for the nine months ended
and the three months ended September 30, 1996 and 1995 4
Condensed Consolidated Statements of Shareholders' Equity for the nine
months ended September 30, 1996 and 1995 5
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 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
Item 6: Exhibits and Reports on Form 8-K 20
Item 27: Financial Data Schedule
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>
September 30,
1996 December 31,
(unaudited) 1995
Assets
<S> <C> <C>
Cash and due from banks $ 2,762 4,051
Federal Funds Sold 5,200 4,200
Securities available for sale 12,791 17,260
Loans held for sale, net of deferred
loan origination fees (estimated
market values of $2,037 and $5,919,
respectively) 1,991 5,835
Securities held to maturity (estimated
market values of $3,983 and $3,947,
respectively) 3,979 3,897
Loans 101,412 77,498
Less: Allowance for loan losses (936) (827)
Net deferred loan origination
fees and costs (96) (76)
Net loans 100,380 76,595
Premises and equipment, net 1,113 1,181
Other assets 1,563 1,514
Total assets $ 129,779 114,533
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Noninterest bearing demand $ 17,614 20,011
Interest bearing:
Demand 12,894 7,996
Money market 6,005 5,680
Savings 24,219 21,117
Time 56,974 49,429
Total deposits 117,706 104,233
Other liabilities 2,001 1,345
Total liabilities 119,707 105,578
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 8,470 7,027
Retained earnings 1,776 2,084
Unrealized losses on securities
available for sale, net (181) (163)
Total shareholders' equity 10,072 8,955
Total liabilities and
shareholders' equity $ 129,779 114,533
<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>
Nine Months Ended Three Months Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees:
Taxable loans $ 5,735 4,294 2,109 1,632
Tax-exempt loans --- 36 --- 12
Loans held for sale 238 136 66 79
Securities held to maturity:
Taxable 32 334 11 102
Tax-exempt 122 122 41 41
Securities available for sale 639 946 201 300
Federal funds sold 121 87 54 4
Total interest income 6,887 5,955 2,482 2,170
Interest expense:
Deposits 3,143 3,041 1,150 1,101
Other 14 47 --- 44
Total interest expense 3,157 3,088 1,150 1,145
Net interest income 3,730 2,867 1,332 1,025
Provision for loan losses 156 164 59 68
Net interest income
after provision for
loan losses 3,574 2,703 1,273 957
Noninterest income:
Service charge on deposit
accounts 431 428 151 176
Gain on sale of loans
held for sale 382 84 98 55
Gain on sale of other
real estate owned --- (13) --- (14)
Gain on sale of securities
available for sale 1 (24) --- (24)
Other fees for customer services 317 239 89 101
Total noninterest
income 1,131 714 338 294
Noninterest expense:
Compensation and employee
benefits 1,492 1,235 513 435
Occupancy 274 221 94 88
Furniture and equipment 186 154 64 62
Other 1,064 971 348 309
Total noninterest
expense 3,016 2,581 1,019 894
Net income before income taxes 1,689 836 592 357
Income tax expense 585 263 207 117
Net income $ 1,104 573 385 240
Net income per common and common equivalent share:
Primary 1.28 0.70 0.45 0.29
Fully diluted 1.28 0.69 0.45 0.29
Average common and equivalent shares outstanding:
Primary 862 822 862 822
Fully diluted 865 833 865 833
<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 --- --- --- --- (18) (18)
Stock issue, options and warrants 4 --- 33 --- --- 33
10% Common Stock Dividend 67 --- 1,410 (1,412) --- (2)
Net income --- --- --- 1,104 --- 1,104
Balance at September 30, 1996
(unaudited) 743 $7 8,470 1,776 (181) 10,072
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 --- --- --- --- 526 526
Stock issue, options and warrants 1 --- 8 --- --- 8
10% Common Stock Dividend 61 1 854 (855) --- ---
Net income --- --- --- 573 --- 573
Balance at September 30, 1995
(unaudited) 672 $7 7,027 1,710 (246) 8,498
<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>
Nine Months Ended
September 30, September 30,
1996 1995
<S> <C> <C>
Cash flow from operating activities:
Net income 1,104 573
Adjustments to reconcile net income to net cash
used by operating activities:
Provision for loan losses 156 164
Depreciation 177 146
Deferred loan origination fees and costs, net of
amortization 20 (82)
Purchase of loans held for sale (31,757) (27,287)
Origination of loans held for sale (29,727) (7,804)
Proceeds from the sale of loans
held for sale 65,328 31,700
Increase in other assets (38) (168)
Increase in other liabilities 656 646
Net cash (used by) provided by
operating activities 5,919 (2,075)
Cash flow from investing activities:
Purchase of securities held to maturity (82) ----
Proceeds from maturities of investment
securities held to maturity ---- 945
Purchase of securities available for sale ---- (5,918)
Proceeds from maturities of securities
available for sale 2,439 3,095
Proceeds from sale of securities
available for sale 2,000 4,430
Loans originated, net of repayments (23,962) (19,272)
Proceeds from sale of other real estate owned ---- 88
Purchase of premises and equipment (107) (393)
Net cash used by investing activities (19,712) (17,025)
Cash flow from financing activities:
Net increase in deposit accounts 13,473 25,277
Decrease in federal funds purchased ---- (900)
Increase in other borrowed funds ---- 2,000
Issuance of common stock 33 8
Cash Dividends paid (2) ----
Net cash provided by financing activities 13,504 26,385
Net increase (decrease) in cash and
cash equivalents (289) 7,285
Cash and cash equivalents at beginning of period 8,251 2,742
Cash and cash equivalents at end of period $ 7,962 10,027
Supplemental disclosures:
Cash paid during the period for:
Interest $ 3,181 2,985
Income taxes 467 151
Noncash investment and financing activities:
Fair value of stock dividend distributed 1,410 854
Decrease (increase) in unrealized loss on
securities available for sale (30) 843
Loans to facilitate the sale of other
real estate owned --- 123
<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>
September 30, 1996
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Municipal securities 3,339 18 15 3,342
Total debt securities 3,339 18 15 3,342
Federal Home Loan Bank
stock 491 --- --- 491
Federal Reserve stock 150 --- --- 150
Total $ 3,980 18 15 3,983
<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 September 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 $ 110 110
Due after one year through
five years 1,821 1,831
Due after five years through
ten years 915 908
Due after ten years 493 493
Total debt securities $ 3,339 3,342
</TABLE>
At September 30, 1996 and December 31, 1995, securities held to maturity
with an amortized cost of $2,851 and $2,480, respectively, and a market
value of $2,859 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
($9,443 as of September 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>
September 30, 1996
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 1,759 3 --- 1,762
Securities of other U.S.
Government Agencies 1,907 --- 29 1,878
FHLMC/FNMA Mortgage
backed securities 9,416 30 295 9,151
Total $ 13,082 33 324 12,791
</TABLE>
<TABLE>
<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 September 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 $ 1,759 1,761
Due after one year through
five years 1,907 1,879
3,666 3,640
Mortgage backed securities 9,416 9,151
Total $ 13,082 12,791
</TABLE>
During the nine months ended September 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 September 30, 1996 and December 31, 1995, securities available for sale
with an amortized cost of $4,402 and $4,399, respectively, and a market
value of $4,361 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 ($9,443 as of September 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>
September 30, December 31,
1996 1995
<S> <C> <C>
Real Estate:
Construction $ 8,698 4,952
Loans on primary residences 52,907 38,015
Other 15,394 12,665
Commercial 10,173 10,075
Loans to individuals:
Installment 13,551 11,120
Other personal and business loans 689 671
Total $ 101,412 77,498
</TABLE>
At September 30, 1996, real estate-construction loans were comprised of
$6,165 in single family residential loans and $2,533 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.
<PAGE>
At September 30, 1996 and December 31, 1995, loans to directors, executive
officers, and principal shareholders aggregated $1,611 and $1,423,
respectively. Total unfunded commitments to this group at September 30,
1996 and December 31, 1995 aggregated $1,109 and $820, respectively.
(5) NEW ACCOUNTING PRONOUNCEMENTS
In June 1996, the FASB issued Statement of Financial Accounting Standards
No. 125 ("Statement 125"), "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." Statement 125
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities based on a financial-
components approach that focuses on control. Statement 125 is effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996 and is to be prospectively
applied. Management is currently evaluating the impact of adoption of
FAS 125 on its financial position and results of operations.
<PAGE>
OVERVIEW
Port St. Lucie National Bank Holding Corp.'s (the "Company") total assets
at September 30, 1996 were $129,779, an increase of $15,246 or 13.3% over
December 31, 1995. Net income for the nine months ended September 30, 1996
was $1,104 as compared to $573 for the nine months ended September 30,
1995. Earnings for the nine months ended September 30, 1996 represent
$1.28 per common and common equivalent share as compared to $0.70 for the
nine months ended September 30, 1995. Net income for the three months
ended September 30, 1996 was $385 as compared to $240 for the three months
ended September 30, 1995. Earnings for the three months ended September
30, 1996 represent $0.45 per common and common equivalent share as compared
to $0.29 for the three months ended September 30, 1995. On February 15,
1996, the Company declared a 10% stock dividend. The stock dividend and
stock issued increased the outstanding shares from 672 to 743. 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
nine full months of operations in 1996 as compared to six full months of
operations in 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 six full months of operations in 1995 as compared to nine full
months in 1996.
EARNINGS ANALYSIS
NET INTEREST INCOME
For the nine months ended September 30, 1996, interest income totaled
$6,887, an increase of $932 or 15.7% over the nine months ended September
30, 1995. The primary reasons for the change in interest income is the
increase of $10,525 or 10.1% in average earning assets over the past twelve
months ending September 30, 1996 and the Bank's ability over the same
period to change the mix of average earning assets. As of September 30,
1995, investments totaled 31.5% of average earning assets compared to 18.5%
as of September 30, 1996. In addition, net loans increased from 68.6% of
average earning assets to 81.5% during the comparison periods. Interest
expense for the nine months ended September 30, 1996 was $3,157, an
increase of $69 or 2.2%. Total average deposit growth of 9.8% during the
twelve months ended September 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 nine months ended
September 30, 1996 of $3,730, an increase of $863 or 30.1% over the nine
months ended September 30, 1995. Net interest income for the three months
ended September 30, 1996 was $1,332, an increase of $307 or 30.0% over the
three months ended September 30, 1995.
<PAGE>
The net interest yield for the nine months ended September 30, 1996 was
4.34%, an increase of 67 basis points over the nine months ended September
30, 1995. The components of the net interest yield reflect an increase of
38 basis points in the yield on average earning assets with a 28 basis
point decrease in the interest expense to average earning assets. The net
interest yield for the three months ended September 30, 1996 was 4.35%, an
increase of 67 basis points over the three months ended September 30, 1995.
The components of the net interest yield reflect an increase of 31 basis
points in the yield on average earning assets with a 36 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 replacing them with
higher yielding 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 $1,131 for the nine months ended September 30, 1996.
This represents a $417 or 58.4% increase over the nine months ended
September 30, 1995. For the three months ended September 30, 1996,
noninterest income was $338, an increase of $44 or 15.0% as compared to
September 30, 1995. The primary source of noninterest income during 1996
was service charges on deposit accounts. Service charges on deposit
accounts totaled $431 for the nine months ended September 30, 1996, an
increase of $3 or 0.7% over the nine months ended September 30, 1995. For
the three months ended September 30, 1996, service charges on deposit
accounts totaled $151, a decrease $25 or 14.2% over three months ended
September 30, 1995. The decrease in service charges for the three month
comparison periods can be attributed to the reduction in specific service
charges on deposit accounts, although maintenance charges on deposit
accounts remained flat. The decrease is considered temporary and does not
represent a trend.
Gains on sale of loans held for sale totaled $382, an increase of $298 or
354.7% over the nine months ended September 30, 1995. For the three months
ended September 30, 1996, gains on sale of loans held for sale totaled $98,
an increase of $43 or 78.2% over the three months ended September 30, 1995.
These increases are attributable to the success of the newly established
mortgage company, Spirit Mortgage Corp. During the nine months ended
September 30, 1996, $65,328 of loans held for sale were sold. Spirit
Mortgage Corp. originated $28,402 of the loans sold resulting in gains of
$367. These fixed rate residential loans were sold to various
correspondents servicing released and without recourse. The Bank
originated and sold $3,054 of loans without recourse to the Federal
National Mortgage Association resulting in $15 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.
<PAGE>
Sales of investment securities available for sale totaled $2,000 for the
nine months ended September 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 three quarters of 1995.
Other fees for customer services was $317 for the nine months ended
September 30, 1996 as compared to $239 for the nine months ended September
30, 1995. This represents a $78 or 32.6% increase. For the three months
ended September 30, 1996, other fees for customer services totaled $89, a
decrease of $12 or 11.9% over the three months ending September 30, 1995.
The $78 increase in the nine 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 nine months ended September 30, 1996 was
$3,016, an increase of $435 or 16.9% over the nine months ended September
30, 1995. For the three months ended September 30, 1996, noninterest
expense was $1,019, an increase of $125 or 14.0% over the three months
ended September 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 nine 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 three quarters of 1995.
INCOME TAXES
The net income of $1,689 before income taxes for the nine months ended
September 30, 1996, reflects an increase of $853 or 102.0% over the nine
months ended September 30, 1995. The resulting income tax expense of $585
for the nine month period is an increase of $322 over the nine months ended
September 30, 1995. For the three months ended September 30, 1996, net
income before income taxes was $592, an increase of $235. 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.
<PAGE>
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 available for sale 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 September 30, 1996, the Company had potential funding needs of $14,582
in outstanding loan commitments and $148 in standby letters of credit. In
addition, volatile deposits consisted of $10,359 in time deposits of $100
or more and $4,894 in municipal deposits. Since a portion of 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 $19,982 at September 30, 1996, consisting
of loans held for sale of $1,991, federal funds sold of $5,200, and
securities available for sale of $12,791. 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 September 30, 1996, earning asset categories totaled $124,341 and
comprised 95.8% of total assets. Loans held for sale of $1,991 or 1.6%,
investment securities held to maturity of $3,979 or 3.2%, federal funds
sold of $5,200 or 4.2%, investment securities available for sale of $12,791
or 10.3% and net loans of $100,380 or 80.7% make up all earning assets.
Deposits, the primary source of funds, totaled $117,706 at September 30,
1996, of which $17,614 or 15.0% was in noninterest bearing demand deposits
and $100,092 or 85.0% of total deposits was in interest bearing deposits.
LOANS
Total loans at September 30, 1996, were $101,412, an increase of $23,914 or
30.9% over December 31, 1995. From December 31, 1995 to September 30,
1996, outstanding balances on other personal and business loans increased
$18 or 2.7%, commercial loans increased $98 or 1.0%, installment loans
increased $2,431 or 21.9%, other real estate lending aggregated a $2,729 or
21.5% increase, real estate construction loans increased by $3,746 or 75.6%
and loans on primary residences increased $14,891 or 39.2%. The largest
growth in the loan portfolio during the nine 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.
<PAGE>
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 September 30, 1996, total securities held to maturity were $3,979, an
increase of $82 or 2.1% over December 31, 1995. The change is attributable
to an increase in Federal Home Loan Bank Stock of $92, offset by a $10
decrease associated with the premium amortization of the existing
portfolio.
The securities held to maturity had gross unrealized gains of $18 as of
September 30, 1996 and $57 as of December 31, 1995. The gross unrealized
losses in the portfolio of securities held to maturity as of September 30,
1996 were $15 and as of December 31, 1995 were $7.
At September 30, 1996, securities available for sale were $12,791, a
decrease of $4,469 or 25.9% over December 31, 1995. The components of the
change were a decrease in U.S. Treasury securities of $2,048 or 53.8%, a
decrease in U.S. Government Agency securities of $1,152 or 37.7% and a
decrease in mortgage backed securities of $1,239 or 11.6%. These changes
in the securities portfolio and the increase of $30 in net unrealized
losses ($18 net of tax effect) resulted in the $4,469 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 $291 of net unrealized
losses at September 30, 1996 which resulted in an after tax adjustment
decreasing shareholders' equity by $181.
FUNDING SOURCES
Deposits at September 30, 1996 were $117,706, an increase of $13,473 or
12.9% from December 31, 1995. The components of this change were a $7,545
or 15.3% increase in time deposits, a $4,898 or 61.3% increase in interest
bearing demand deposits, a $3,102 or 14.7% increase in savings deposits, a
$325 or 5.7% increase in money market deposits and a $2,387 or 11.9%
decrease in noninterest bearing demand deposits. The increase in interest
bearing demand deposits is due to a temporary $5,000 deposit of municipal
funds. The decrease in non-interest bearing demand deposits reflects
seasonal activity. The remaining deposit growth during the nine months
ended September 30, 1996 can be attributed to the Company's market
acceptance and its ability to respond to market needs with new products.
<PAGE>
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 September 30, 1996, there were no outstanding balances under
federal funds purchase lines or FHLB advance agreements.
ASSET QUALITY
The allowance for loan losses as of September 30, 1996 was $936 or 0.92% of
loans outstanding as compared to $845 or 1.03% at September 30, 1995. This
is a net increase of $91 or 10.8% over September 30, 1995. The increase in
the allowance for loan losses was primarily due to growth in the loan
portfolio of 23.5% over the twelve months ended September 30, 1996. The
decline in the allowance compared to loans outstanding from 1.03% 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>
Nine Months Ended Three Months Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Beginning Balance $ 827 699 896 782
Provision charged to
expense 156 164 59 68
Loans charged-off (84) (23) (31) (9)
Recoveries 36 6 11 4
Ending Balance $ 936 845 936 845
Allowance for loan losses
as a percent of ending
loans 0.92% 1.03% 0.92% 1.03%
</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 September 30, 1996, the Company had four loans totaling $10 past due 90
days or more and on accrual, 17 loans in the amount of $490 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>
September 30, December 31,
1996 1995
<S> <C> <C>
Loans past due 90 days or
more $ 10 5
Nonaccrual loans 490 405
Other real estate owned --- ---
Nonperforming assets as a
percent of ending loans
and other real estate owned 0.5% 0.5
</TABLE>
Interest would have been recorded for all nonperforming loans in the amount of
$33 and $17 during the nine months ended September 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 September 30, 1996,
potential problem loans classified as substandard were $573 compared to $894
at year end 1995. There were two loans totaling $67 classified as doubtful at
September 30, 1996 as compared to six loans that totaled $40 at year end 1995.
Classified loans in aggregate decreased by $294 at September 30, 1996 from
year end 1995. The change 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.
<PAGE>
CAPITAL RESOURCES (Share information not in thousands)
Total shareholders' equity at September 30, 1996 was $10,072, an increase of
$1,117 or 12.5% from December 31, 1995. Net income for the nine months ended
September 30, 1996 of $1,104 and the increase of $18 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 nine months ended September 30, 1996, there were 468
warrants and 2,904 options exercised resulting in a $33 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> <S><C> <S><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>
<PAGE>
The table discloses the regulatory capital for the Bank as of September 30,
1996 and December 31, 1995:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C>
Capital:
Tier 1 capital $ 9,624 8,508
Tier 2 capital 936 827
Total capital $ 10,560 9,335
Total adjusted assets $ 129,309 114,059
Risk-weighted assets $ 83,032 72,071
Ratios:
Leverage ratio 7.44% 7.46%
Tier 1 capital to risk-weighted
assets 11.59% 11.80%
Tier 2 capital to risk-weighted
assets 1.13% 1.15%
Total capital to risk-weighted
assets 12.72% 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 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
None
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the third quarter
of 1996.
Item 27. Financial Data Schedule
<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: 11/13/96 By: /s/ J. Hal Roberts, Jr.
J. Hal Roberts, Jr.
President/Chief Executive Officer
Date: 11/13/96 By: /s/ Randall A. Ezell
Randall A. Ezell
Senior Vice President
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,762
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,791
<INVESTMENTS-CARRYING> 3,983
<INVESTMENTS-MARKET> 3,947
<LOANS> 101,412
<ALLOWANCE> 936
<TOTAL-ASSETS> 129,779
<DEPOSITS> 117,706
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,001
<LONG-TERM> 0
0
0
<COMMON> 7
<OTHER-SE> 10,065
<TOTAL-LIABILITIES-AND-EQUITY> 129,779
<INTEREST-LOAN> 5,973
<INTEREST-INVEST> 914
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 6,887
<INTEREST-DEPOSIT> 3,143
<INTEREST-EXPENSE> 3,143
<INTEREST-INCOME-NET> 3,730
<LOAN-LOSSES> 156
<SECURITIES-GAINS> 1
<EXPENSE-OTHER> 3,016
<INCOME-PRETAX> 1,689
<INCOME-PRE-EXTRAORDINARY> 1,689
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,104
<EPS-PRIMARY> 1.28
<EPS-DILUTED> 1.28
<YIELD-ACTUAL> 4.34
<LOANS-NON> 490
<LOANS-PAST> 10
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 573
<ALLOWANCE-OPEN> 827
<CHARGE-OFFS> 84
<RECOVERIES> 36
<ALLOWANCE-CLOSE> 936
<ALLOWANCE-DOMESTIC> 936
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
