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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB
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<TABLE>
<S> <S>
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED,
EFFECTIVE OCTOBER 7, 1996).
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
</TABLE>
COMMISSION FILE NO. 0-18514
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
A Florida Corporation -- I.R.S. No. 65-0051022
1100 S.W. ST. LUCIE WEST BOULEVARD
PORT ST. LUCIE, FLORIDA 34986
REGISTRANT'S TELEPHONE NUMBER:
(561) 340-2800
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE PER SHARE
Check whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to the filing requirements for
the past 90 days.
Yes X No
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
The annual revenues of the registrant for the year ended December 31, 1995
were: $11,074,000
There is no established trading market for the Common Stock of the
registrant. The aggregate market value (based on the last sale of which the
registrant has knowledge) of the voting stock held by non-affiliates of the
registrant as of March 1, 1997:
COMMON STOCK, $.01 PAR VALUE -- $12,672,011
The number of shares outstanding of each of the registrant's classes of
common stock as of March 1, 1997:
COMMON STOCK, $.01 PAR VALUE -- 744,655 SHARES
Transitional Small Business Disclosure Format Yes No X
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SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and elsewhere in
this Annual Report may constitute forward-looking statements for purposes of the
Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as
amended and as such may involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of Port
St. Lucie National Bank Holding Corp. (the "Company") to be materially different
from future results, performance or achievements expressed or implied by such
forward-looking statements. The Company's actual results may differ materially
from the results anticipated in these forward looking statements due to a
variety of factors, including, without limitation: the effects of the Company's
rapid growth and whether such growth is sustainable in future economic
circumstances; the effects of future economic conditions; governmental monetary
and fiscal policies, as well as legislative and regulatory changes; the risks of
changes in interest rates on the level and composition of deposits, loan demand,
and the values of loan collateral, securities, and interest rate risks; the
effects of competition from other commercial banks, thrifts, mortgage banking
firms, consumer finance companies, credit unions, securities brokerage firms,
insurance companies, money market and other mutual funds and other financial
institutions operating in the Company's market area and elsewhere, including
institutions operating locally, regionally, nationally and internationally,
together with such competitors offering banking products and services by mail,
telephone, and computer and the Internet; and the failure of assumptions
underlying the establishment of the allowance for possible loan losses. All
written or oral forward-looking statements attributable to the Company are
expressly qualified in their entirety by these Cautionary Statements.
PART I
ITEM 1. BUSINESS
GENERAL
Port St. Lucie National Bank Holding Corp. (the "Company") is a one bank
holding company. The Company was organized in 1988 under the laws of the State
of Florida for the purpose of organizing and acquiring Port St. Lucie National
Bank (the "Bank"). The Bank is organized under the banking laws of the United
States and was chartered on April 3, 1989.
The Bank offers a wide range of commercial and consumer services from its
three offices in Port St. Lucie, Florida. These services include interest and
noninterest bearing deposit accounts, personal, business and real estate loans
and membership in a shared automatic teller system which has numerous locations
throughout Florida.
On February 19, 1997, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Seacoast Banking Corporation of Florida
("Seacoast"), pursuant to which the Company will merge with and into Seacoast.
It is anticipated that immediately after the Seacoast merger, the Bank will
merge with and into the First National Bank and Trust Company of the Treasure
Coast, a wholly-owned subsidiary of Seacoast. Under the terms of the Merger
Agreement, 900,000 shares of Seacoast Class A common stock will be issued for
all the outstanding shares of the Company's common stock, warrants and options
to purchase common stock of the Company. The value of the transaction is
approximately $25 million based on Seacoast's closing Class A share price of
$28.00 on February 18, 1997. The Seacoast Merger is subject to regulatory
approval and the approval of the Company's shareholders and Seacoast
shareholders. It is intended that the transaction qualify for the
pooling-of-interest method of accounting for business combinations. The Seacoast
headquarters and name will survive the PSHC merger. There are no assurances that
the transaction will be consummated. As of December 31, 1996, Seacoast had total
consolidated assets of approximately $808 million, total consolidated deposits
of approximately $693 million and total consolidated shareholders' equity of
approximately $67 million.
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In February 1995, the Company received approval and organized under the
laws of the State of Florida, a wholly owned mortgage subsidiary, Spirit
Mortgage Corp. ("SMC"). SMC originates residential mortgage loans for sale in
the secondary market. The activities of SMC are primarily outside of St. Lucie
County and do not compete with the Bank. These activities are anticipated to
provide additional fee income to the Company through increased utilization of
the Company's real estate lending expertise. SMC commenced operation in late
February 1995.
The Company's executive offices are located at 1100 S.W. St. Lucie West
Boulevard, Port St. Lucie, FL 34986. Principal Market Area and Marketing
PRINCIPAL MARKET AREA AND MARKETING
Wholly contained in St. Lucie County, the Bank's primary service area
("PSA") is part of Florida's Treasure Coast region. The Treasure Coast region,
as defined by the Company, contains the counties of Palm Beach, Martin, St.
Lucie, and Indian River. This region has enjoyed tremendous residential and
commercial growth over the last decade.
Located within the Treasure Coast, the Port St. Lucie/Ft. Pierce
metropolitan statistical area ("MSA") was the third fastest growing MSA
nationwide from 1980 through 1990 in terms of percentage population growth.
During this period, the MSA population increased to 251,071 residents from
151,196 residents or 66.1% according to figures released by the United States
Census Bureau.
More recently, the U.S. Census Bureau revealed that St. Lucie County
increased to 172,483 residents or 13.1% from 1990 to 1995. The Port St. Lucie
market accounted for almost all of this growth, increasing total residents to
approximately 72,000. Port St. Lucie is now the second largest city on the
four-county Treasure Coast, surpassing Boca Raton. This growth has made Port St.
Lucie the fastest growing midsize city in Florida in the 1990's.
During the 1990's, the majority of the new residents have located in the
western part of the PSA, west of the St. Lucie River. To serve this growing
segment of the PSA, the Bank has opened both its branch offices in this area.
The Boulevard Center was opened in December of 1991 and is strategically located
near City Hall on Port St. Lucie Boulevard, west of the St. Lucie River. More
recently, the Bank opened its third banking office in March of 1995 in the
rapidly growing St. Lucie West community, which is also west of the St. Lucie
River.
The Bank has targeted small to medium size businesses with gross revenues
up to $15 million and households earning $30 thousand or more per year as the
segments within the PSA having the most growth and profit potential. It is the
belief of the Bank's management that using these segments as the foundation of
the Bank's customer base may increase opportunities to establish profitable
banking operations in the PSA.
The Bank promotes new business through the personal efforts of the Bank's
directors and officers and through the personal efforts of the Company's local
shareholders. Advertising is directed at targeted segments of the PSA with
emphasis on service, loans, timely local decisions and accessibility, which are
all attributes of local ownership and management. The Bank is also well
represented in meaningful local activities through the active involvement of the
Bank's directors and officers, which also promotes its local independent image,
which management believes is an important factor to its targeted customer base.
In the South Florida economy, business activity can be expected to peak in
the winter months. This seasonal cycle is primarily the result of tourism and
agriculture. The effect of a seasonal cycle on the Bank has been minimal to
date. There has been some seasonal lending and an increase in deposit related
transactions during the winter months; however, the Bank's strong overall growth
throughout the year diminishes the impact of seasonality on the Bank.
Environmental laws primarily affect the Bank through real estate lending.
Real estate lending policy includes guidelines and restrictions to protect the
borrower and the Bank from title and liability problems arising from
environmental related issues. The cost of environmental studies on real estate
are typically paid by
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the borrower; however, the Bank could be impacted by administrative and
insurance costs relating to environmental law.
COMPETITION
The banking industry in Florida, in St. Lucie County, and in the Bank's PSA
in particular is highly competitive. The Bank competes for loans and deposits
with other financial institutions which are much larger than the Bank. Larger
commercial banks and banks associated with regional multi-bank holding companies
have higher lending limits and greater resources than the Bank. The Bank, along
with other commercial banks, also competes with savings banks, savings and loan
associations, insurance companies, regulated small loan companies, credit
unions, securities brokerage firms and issuers of commercial paper and other
securities, such as shares in money market funds.
Among the advantages such institutions have over the Bank are their ability
to conduct wide ranging advertising campaigns and to allocate their investment
assets to regions of highest yield and demand. Many institutions offer certain
services, such as trust services and international banking, which are not
offered by the Bank and, by virtue of their greater total capital, such
institutions have substantially higher lending limits than the Bank.
The Bank's PSA is currently served by six commercial banks with nineteen
offices, and three savings associations with eight offices. As of September 30,
1996, the total reported deposits in the PSA were $888,399,000. The Bank's
$118,704,000 in deposits as of September 30, 1996 represented a 13.4% market
share of deposits in the PSA. The dominant bank with which the Bank competes in
the PSA is Barnett Bank/Treasure Coast, N.A. which had deposits representing a
market share of approximately 22.2%. The dominant savings and loan association
in the PSA is Harbor Federal Savings Bank with a market share of approximately
15.5%. The principal methods of competition among financial institutions in the
PSA are convenience and quality of service, two factors that management of the
Bank continues to emphasize.
In addition to competing with banks and savings institutions, commercial
banks compete with non-banking financial institutions for funds. Money market
funds continue to provide substantial competition through typically higher
yields for deposits as well as corporate and government debt securities the
yields of which also affect the ability of commercial banks to attract and hold
deposits.
EMPLOYEES
All employees of the Company are also employees of the Bank and SMC. As of
December 31, 1996, the Bank had 58 full-time and 16 part-time and commissioned
employees and SMC had 6 full-time employees. Management believes that its
employee relations have been and continue to be satisfactory.
SUPERVISION AND REGULATION
Bank holding companies and banks are extensively regulated under federal
and state law. This discussion is qualified in its entirety by reference to the
particular statutory and regulatory provisions referred to below and is not
intended to be an exhaustive description of the status or regulations applicable
to the Company's and the Bank's business. Supervision, regulation, and
examination of the Company and the Bank and their respective Subsidiaries by the
bank regulatory agencies are intended primarily for the protection of depositors
rather than holders of Company capital stock. Any change in applicable law or
regulation may have a material effect on the Company's business.
BANK HOLDING COMPANY REGULATION
The Company, as a bank holding company, is subject to supervision and
regulation by the Board of Governors of the Federal Reserve System ("Federal
Reserve") under the BHC Act. The Company is required to file with the Federal
Reserve periodic reports and such other information as the Federal Reserve may
request. The Federal Reserve examines the Company, and may examine the Company's
Subsidiaries.
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The BHC Act requires prior Federal Reserve approval for, among other
things, the acquisition by a bank holding company of direct or indirect
ownership or control of more than 5% of the voting shares or substantially all
the assets of any bank, or for a merger or consolidation of a bank holding
company with another bank holding company. With certain exceptions, the BHC Act
prohibits a bank holding company from acquiring direct or indirect ownership or
control of voting shares of any company which is not a bank or bank holding
company and from engaging directly or indirectly in any activity other than
banking or managing or controlling banks or performing services for its
authorized subsidiaries. A bank holding company, may, however, engage in or
acquire an interest in a company that engages in activities which the Federal
Reserve has determined by regulation or order to be so closely related to
banking or managing or controlling banks to be a proper incident thereto.
The Company is a legal entity separate and distinct from the Bank and its
other subsidiaries. Various legal limitations restrict the Bank from lending or
otherwise supplying funds to the Company or its non-bank subsidiaries. The
Company and the Bank are subject to Section 23A of the Federal Reserve Act.
Section 23A defines "covered transactions", which include extensions of credit,
and limits a bank's covered transactions with any affiliate to 10% of such
bank's capital and surplus. All covered and exempt transactions between a bank
and its affiliates must be on terms and conditions consistent with safe and
sound banking practices, and banks and their subsidiaries are prohibited from
purchasing low-quality assets from the bank's affiliates. Finally, Section 23A
requires that all of a bank's extensions of credit to an affiliate be
appropriately secured by acceptable collateral, generally United States
government or agency securities. The Company and the Bank also are subject to
Section 23B of the Federal Reserve Act, which generally limits covered and other
transactions among affiliates to terms and under circumstances, including credit
standards, that are substantially the same or at least as favorable to the bank
or its subsidiary as prevailing at the time for transactions with unaffiliated
companies.
The BHC Act, as amended by the interstate banking provisions of the
Reigle-Neal Interstate Banking and Branch Efficiency Act of 1994 ("Interstate
Banking Act"), which became effective on September 29, 1995, repealed the prior
statutory restrictions on interstate acquisitions of banks by bank holding
companies, such that the Company and any other bank holding company located in
Florida may now acquire a bank located in any other state, and any bank holding
company located outside Florida may lawfully acquire any bank based in another
state, regardless of state law to the contrary, in either case subject to
certain deposit-percentage, aging requirements, and other restrictions. The
Interstate Banking Act also generally provides that, after June 1, 1997,
national and state-chartered banks may branch interstate through acquisitions of
banks in other states. By adopting legislation prior to that date, a state has
the ability to either "opt in" and accelerate the date after which interstate
branching is permissible or "opt out" and prohibit interstate branching
altogether. Florida has responded to the enactment of the Interstate Banking Act
by enacting the Florida Interstate Branching Act (the "Florida Branching Act"),
which is effective June 1, 1997, permits interstate branching, through merger
transactions under the Interstate Banking Act. Under the Florida Branching Act,
with the prior approval of the Florida Department of Banking and Finance, a
Florida bank may establish, maintain and operate one or more branches in a state
other than the State of Florida pursuant to a merger transaction in which the
Florida bank is the resulting bank. In addition, the Florida Branching Act
provides that one or more Florida banks may enter into a merger transaction with
one or more out-of-state banks, and an out-of-state bank resulting from such
transaction may maintain and operate the branches of the Florida bank that
participated in such merger. An out-of-state bank, however, is not permitted to
acquire a Florida bank in a merger transaction unless the Florida bank has been
in existence and continuously operated for more than three years.
Federal Reserve policy requires a bank holding company to act as a source
of financial strength and to take measures to preserve and protect bank
subsidiaries in situations where additional investments in a troubled bank may
not otherwise be warranted. In addition, under the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), where a bank holding
company has more than one bank or thrift subsidiary, each of the bank holding
company's subsidiary depository institutions are responsible for any losses to
the Federal Deposit Insurance Corporation ("FDIC") as a result of an affiliated
depository institution's failure. As a result, a bank holding company may be
required to loan money to its subsidiaries in the form of
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capital notes or other instruments which qualify as capital under regulatory
rules. However, any loans from the holding company to such subsidiary banks
likely will be unsecured and subordinated to such bank's depositors and perhaps
to other creditors of the bank.
On February 20, 1997, the Federal Reserve adopted, effective April 21,
1997, amendments to its Regulation Y implementing certain provisions of The
Economic Growth and Regulatory Paperwork Reduction Act of 1996 ("EGRPRA"), which
was signed into law on September 30,1996. Among other things, these amendments
to Federal Reserve Regulation Y reduce the notice and application requirements
applicable to bank and nonbank acquisitions and de novo expansion by
well-capitalized and well-managed bank holding companies; expand the list of
nonbanking activities permitted under Regulation Y; reduce certain limitations
on previously permitted activities; and amend Federal Reserve anti-tying
restrictions to allow banks greater flexibility to package products and services
with their affiliates.
BANK AND BANK SUBSIDIARY REGULATION GENERALLY
The Bank is subject to supervision, regulation, and examination by the
Office of the Comptroller of the Currency (the "OCC") which monitors all areas
of the operations of the Bank, including reserves, loans, mortgages, issuances
of securities, payment of dividends, establishment of branches, and capital. The
Bank is a member of the FDIC and, as such, its deposits are insured by the FDIC
to the maximum extent provided by law. See "FDIC Insurance Assessments".
Under Florida law, the Bank currently may establish and operate branches
throughout the State of Florida, subject to the maintenance of adequate capital
for each branch and the receipt of OCC approval.
The OCC recently has adopted a series of revisions to its regulations,
including expanding the powers exercisable by operations subsidiaries. These
changes also modernize and streamline corporate governance, investment and
fiduciary powers.
In December 1996, the OCC adopted the Federal Financial Institutions
Examination Council's ("FFIEC") updated statement of policy entitled "Uniform
Financial Institutions Rating System" ("UFIRS") effective January 1, 1997. UFIRS
is an internal rating system used by the federal and state regulators for
assessing the soundness of financial institutions on a uniform basis and for
identifying those institutions requiring special supervisory attention. Under
the previous UFIRS, each financial institution was assigned a confidential
composite rating based on an evaluation and rating of five essential components
of an institution's financial condition and operations including Capital
adequacy: Asset quality, Management, Earnings, and Liquidity. The major changes
include an increased emphasis on the quality of risk management practices and
the addition of a sixth component for Sensitivity to market risk. For most
institutions, the FFIEC has indicated that market risk primarily reflects
exposures to changes in interest rates. When regulators evaluate this component,
consideration is expected to be given to: management's ability to identify,
measure, monitor, and control market risk; the institution's size; the nature
and complexity of its activities and its risk profile; and the adequacy of its
capital and earnings in relation to its level of market risk exposure. Market
risk is rated based upon, but not limited to, an assessment of the sensitivity
of the financial institution's earnings or the economic value of its capital to
adverse changes in interest rates, foreign exchanges rates, commodity prices, or
equity prices; management's ability to identify, measure, monitor, and control
exposure to market risk; and the nature and complexity of interest rate risk
exposure arising from nontrading positions.
COMMUNITY REINVESTMENT ACT
The Company and the Bank are subject to the provisions of the Community
Reinvestment Act of 1977, as amended (the "CRA")and the federal banking
agencies' regulations thereunder. Under the CRA, all banks and thrifts have a
continuing and affirmative obligation, consistent with its safe and sound
operation to help meet the credit needs for their entire communities, including
low- and moderate-income neighborhoods. The CRA does not establish specific
lending requirements or programs for financial institutions, nor does it limit
an institution's discretion to develop the types of products and services that
it believes are best suited to its particular community, consistent with the
CRA. The CRA requires a depository institution's primary federal regulator, in
connection with its examination of the institution, to assess the institution's
record of assessing
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and meeting the credit needs of the community served by that institution,
including low- and moderate-income neighborhoods. The regulatory agency's
assessment of the institution's record is made available to the public. Further,
such assessment is required of any institution which has applied to: (i) charter
a national bank; (ii) obtain deposit insurance coverage for a newly-chartered
institution; (iii) establish a new branch office that accepts deposits, (iv)
relocate an office; or (v) merge or consolidate with, or acquire the assets or
assume the liabilities of, a federally regulated financial institution. In the
case of a bank holding company applying for approval to acquire a bank or other
bank holding company, the Federal Reserve will assess the records of each
subsidiary depository institution of the applicant bank holding company, and
such records may be the basis for denying the application.
Under new CRA regulations, effective January 1, 1996, the process-based CRA
assessment factors have been replaced with a new evaluation system that rates
institutions based on their actual performance in meeting community credit
needs. The evaluation system used to judge an institution's CRA performance
consists of three tests: a lending test; an investment test; and a service test.
Each of these tests will be applied by the institution's primary federal
regulator taking into account such factors as: (i) demographic data about the
community; (ii) the institution's capacity and constraints; (iii) the
institution's product offerings and business strategy; and (iv) data on the
prior performance of the institution and similarly-situated lenders. The new
lending test -- the most important of the three tests for all institutions other
than wholesale and limited purpose (e.g., credit card) banks -- will evaluate an
institution's lending activities as measured by its home mortgage loans, small
business and farm loans, community development loans, and, at the option of the
institution, its consumer loans.
Each of these lending categories will be weighed to reflect its relative
importance to the institution's overall business and, in the case of community
development loans, the characteristics and needs of the institution's service
area and the opportunities available for this type of lending. Assessment
criteria for the lending test will include: (i) geographic distribution of the
institution's lending; (ii) distribution of the institution's home mortgage and
consumer loans among different economic segments of the community; (iii) the
number and amount of small business and small farm loans made by the
institution; (iv) the number and amount of community development loans
outstanding; and (v) the institution's use of innovative or flexible lending
practices to meet the needs of low-to-moderate income individuals and
neighborhoods. At the election of an institution, or if particular circumstances
so warrant, the banking agencies will take into account in making their
assessments lending by the institution's affiliates as well as community
development loans made by the lending consortia and other lenders in which the
institution has invested. As part of the new regulation, all financial
institutions will be required to report data on their small business and small
farm loans as well as their home mortgage loans, which are currently required to
be reported under the Home Mortgage Disclosure Act.
The investment test focuses on the institution's qualified investments
within its service area that (i) benefit low-to-moderate income individuals and
small businesses or farms; (ii) address affordable housing needs; or (iii)
involve donations of branch offices to minority or women's depository
institutions. Assessment of an institution's performance under the investment
test is based upon the dollar amount of the institution's qualified investments,
its use of innovative or complex techniques to support community development
initiatives, and its responsiveness to credit and community development needs.
The service test evaluates an institution's systems for delivering retail
banking services, taking into account such factors as: (i) the geographic
distribution of the institution's branch offices and ATMs; (ii) the
institution's record of opening and closing branch offices and ATMs; and (iii)
the availability of alternative product delivery systems such as home banking
and loan production offices in low-to-moderate income areas. The federal
regulators also will consider an institution's community development service as
part of the service test. A separate community development test will be applied
to wholesale or limited purpose financial institutions.
Institutions having total assets of less than $250 million, including the
Bank, will be evaluated under more streamlined criteria. In addition, a
financial institution will have the option of having its CRA performance
evaluated based on a strategic plan of up to five years in length that it had
developed in cooperation with local
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community groups. In order to be rated under a strategic plan, the institution
will be required to obtain the prior approval of its federal regulator.
The interagency CRA regulations provide that an institution evaluated under
a given test will receive one of five ratings for that test: outstanding, high
satisfactory, low satisfactory, needs to improve, or substantial non-compliance.
An institution will receive a certain number of points for its rating on each
test, and the points are combined to produce an overall composite rating of
either outstanding, satisfactory, needs to improve, or substantial
non-compliance. Under the agencies' rating guidelines, an institution that
receives an "outstanding" rating on the lending test will receive an overall
rating of at least "satisfactory", and no institution can receive an overall
rating of "satisfactory" unless it receives a rating of at least "low
satisfactory" on its lending test. In addition, evidence of discriminatory or
other illegal credit practices would adversely affect an institution's overall
rating. Under the new regulations, an institution's CRA rating would continue to
be taken into account by its primary federal regulator in considering various
types of applications. As a result of the Bank's most recent CRA examination in
January 1996, the Bank received an outstanding CRA rating.
The Bank is also subject to, among other things, the provisions of the
Equal Credit Opportunity Act (the "ECOA") and the Fair Housing Act (the "FHA"),
both of which prohibit discrimination based on race or color, religion, national
origin, sex, and familial status in any aspect of a consumer or commercial
credit or residential real estate transaction. Based on recently heightened
concerns that some prospective home buyers and other borrowers may be
experiencing discriminatory treatment in their efforts to obtain loans, the
Department of Housing and Urban Development, the Department of Justice (the
"DOJ"), and all of the federal banking agencies in April 1994 issued an
Interagency Policy Statement on Discrimination in Lending in order to provide
guidance to financial institutions as to what the agencies consider in
determining whether discrimination exists, how the agencies will respond to
lending discrimination, and what steps lenders might take to prevent
discriminatory lending practices. The DOJ has also recently increased its
efforts to prosecute what it regards as violations of the ECOA and FHA.
PAYMENT OF DIVIDENDS
The Company is a legal entity separate and distinct from its banking and
other subsidiaries. The prior approval of the OCC is required if the total of
all dividends declared by a national bank (such as the Bank) in any calendar
year will exceed the sum of such bank's net profits for the year and its
retained net profits for the preceding two calendar years, less any required
transfers to surplus. Federal law also prohibits any national bank from paying
dividends that would be greater than such bank's undivided profits after
deducting statutory bad debt in excess of such bank's allowance for loan losses.
In addition, the Company and the Bank are subject to various general
regulatory policies and requirements relating to the payment of dividends,
including requirements to maintain adequate capital above regulatory minimums.
The appropriate federal regulatory authority is authorized to determine under
certain circumstances relating to the financial condition of a national or state
member bank or a bank holding company that the payment of dividends would be an
unsafe or unsound practice and to prohibit payment thereof. The OCC and the
Federal Reserve have indicated that paying dividends that deplete a national or
state member bank's capital base to an inadequate level would be an unsound and
unsafe banking practice. The OCC and the Federal Reserve have each indicated
that financial depository institutions should generally pay dividends only out
of current operating earnings.
CAPITAL
The Federal Reserve and the OCC have adopted final risk-based capital
guidelines for bank holding companies and national and state member banks. The
minimum ratio of capital to risk-weighted assets (including certain
off-balance-sheet activities, such as standby letters of credit) is 8%. At least
half of the total capital must consist of common equity, retained earnings and a
limited amount of qualifying preferred stock, less goodwill and certain core
deposit intangibles ("Tier 1 capital"). The remainder may consist of
subordinated debt, non qualifying preferred stock and a limited amount of any
loan loss allowance ("Tier 2 capital" and, together with Tier 1 capital, "Total
Capital"). As a "small one bank holding company" for
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Federal Reserve regulatory purposes, the Company's capital adequacy is generally
measured by the Bank's capital adequacy and not on a consolidated basis.
In addition, the federal bank regulatory agencies have established minimum
leverage ratio guidelines for bank holding companies, national banks, and state
member banks, which provide for a minimum leverage ratio of Tier 1 capital to
adjusted average quarterly assets ("leverage ratio") equal to 3%, plus an
additional cushion of 100 to 200 basis points (i.e., 1%-2%) if the institution
has less than the highest regulatory rating. The guidelines also provide that
institutions experiencing internal growth or making acquisitions will be
expected to maintain strong capital positions substantially above the minimum
supervisory levels without significant reliance on intangible assets.
Furthermore the Federal Reserve's guidelines indicate that the Federal Reserve
will continue to consider a "tangible Tier 1 leverage ratio" (deducting all
intangibles) in evaluating proposals for expansion or new activity. The Federal
Reserve and OCC have not advised the Company or the Bank of any specific minimum
leverage ratio or tangible Tier 1 leverage ratio applicable to them.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, requires the federal banking agencies to take
"prompt corrective action" regarding depository institutions that do not meet
minimum capital requirements. FDICIA establishes five capital tiers: "well
capitalized", "adequately capitalized", "undercapitalized", "significantly
undercapitalized", and "critically undercapitalized". A depository institution's
capital tier will depend upon how its capital levels compare to various relevant
capital measures and certain other factors, as established by regulation.
All of the federal banking agencies have adopted regulations establishing
relevant capital measures and relevant capital levels. The relevant capital
measures are the Total Capital ratio, Tier 1 capital ratio, and the leverage
ratio. Under the regulations, a national or state member bank will be (i) well
capitalized if it has a Total Capital ratio of 10% or greater, a Tier 1 capital
ratio of 6% or greater, and a leverage ratio of 5% or greater and is not subject
to any order or written directive by a federal bank regulatory agency to meet
and maintain a specific capital level for any capital measure, (ii) adequately
capitalized if it has a Total Capital ratio of 8% or greater, a Tier 1 capital
ratio of 4% or greater, and a leverage ratio of 4% or greater (3% in certain
circumstances), (iii) undercapitalized if it has a Total Capital ratio of less
than 8%, a Tier 1 capital ratio of less than 4% (3% in certain circumstances),
or (iv) critically undercapitalized if its tangible equity is equal to or less
than 2% of average quarterly tangible assets.
As of December 31, 1996, the consolidated capital ratios of the Company and
the Bank were as follows:
<TABLE>
<CAPTION>
REGULATORY
MINIMUM COMPANY BANK
---------- ------- -----
<S> <C> <C> <C>
Tier 1 capital ratio....................................... 4.0% 12.08% 11.49%
Total Capital ratio........................................ 8.0% 13.33% 12.74%
Leverage ratio............................................. 3.0-5.0% 7.98% 7.56%
</TABLE>
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to growth
limitations and are required to submit a capital restoration plan for approval.
For a capital restoration plan to be acceptable, the depository institution's
parent holding company must guarantee that the institution comply with such
capital restoration plan. The aggregate liability of the parent holding company
is limited to the lesser of 5% of the depository institution's total assets at
the time it became undercapitalized and the amount necessary to bring the
institution into compliance with applicable capital standards. If a depository
institution fails to submit an acceptable plan, it is treated as if it is
significantly undercapitalized. If the controlling holding company fails to
fulfill its obligations under FDICIA and files (or has filed against it) a
petition under the federal Bankruptcy Code, the claim would be entitled to a
priority in such bankruptcy proceeding over third party creditors of the bank
holding company.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to
9
<PAGE> 10
reduce total assets, and cessation of receipt of deposits from correspondent
banks. Critically undercapitalized institutions are subject to the appointment
of a receiver or conservator.
Because the Company and the Bank exceed applicable regulatory capital
requirements, the respective managements of the Company and the Bank do not
believe that the capital requirements of FDICIA have any material impact on the
Company and the Bank or their respective operations.
Bank regulators continue to indicate their desire to base capital
requirements upon the riskiness of the activities conducted and have long
discussed proposals to add an interest rate-risk component to risk-based capital
requirements.
FDICIA
FDICIA directs that each federal banking regulatory agency prescribe
standards for depository institutions and depository institution holding
companies relating to internal controls, information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth compensation, a maximum ratio of classified assets to capital, minimum
earnings sufficient to absorb losses, a minimum ratio of market value to book
value for publicly traded shares, and such other standards as the agency deems
appropriate.
FDICIA also contains a variety of other provisions that may affect the
operations of the Company and the Bank, including new reporting requirements,
regulatory standards for estate lending, "truth in savings' provisions, the
requirement that a depository institution give 90 days prior notice to customers
and regulatory authorities before closing any branch, and a prohibition on the
acceptance or renewal of brokered deposits by depository institutions that are
not well capitalized or are adequately capitalized and have not received a
waiver from the FDIC. Under regulations relating to brokered deposits, the Bank
is well capitalized and not restricted.
ENFORCEMENT POLICIES AND ACTIONS
FIRREA and subsequent federal legislation significantly increased the
enforcement authorities of the FDIC and other federal depository institution
regulators, and authorizes the imposition of civil money penalties up to $1
million per day. Persons who are affiliated with depository institutions can be
removed from any office held in such institution and banned for life from
participating in the affairs of any such institution. The banking regulators
have not hesitated to use the new enforcement authorities provided under FIRREA.
DEPOSITOR PREFERENCE
The Omnibus Budget Reconciliation Act of 1993 provides that deposits and
certain claims for administrative expenses and employee compensation against an
insured depository institution would be afforded a priority over other general
unsecured claims against such an institution in the "liquidation or other
resolution" of such an institution by any receiver.
FISCAL AND MONETARY POLICY
Banking is a business which depends on interest rate differentials. In
general, the difference between the interest paid by a bank on its deposits and
its other borrowings, and the interest received by a bank on its loans and
securities holdings, constitutes the major portion of a bank's earnings. Thus,
the earnings and growth of the Company and the Bank are subject to the influence
of economic conditions generally, both domestic and foreign, and also to the
monetary and fiscal policies of the United States and its agencies, particularly
the Federal Reserve. The Federal Reserve regulates the supply of money through
various means, including open market dealings in United States government
securities, the discount rate at which banks may borrow from the Federal
Reserve, and the reserve requirements on deposits. The nature and timing of any
changes in such policies and their effect on the Company and its subsidiaries
cannot be predicted.
10
<PAGE> 11
FDIC INSURANCE ASSESSMENTS
The Bank is subject to FDIC deposit insurance assessments. The Bank's
deposits are insured by Seacoast FDIC's Bank Insurance Fund ("BIF") and it has
no deposit insured by the Savings Association Insurance Fund ("SAIF"). In 1996,
the FDIC adopted a new risk-based premium schedule which decreased the
assessment rates for BIF depository institutions. Under this schedule, which
took effect for assessment periods after January 1, 1996, the annual premiums
ranged from zero to $.27 for every $100 of deposits. Prior to January 1, 1996,
the annual premiums ranged from $.04 to $.31 for every $100 of deposits. Each
financial institution is assigned to one of three capital groups -- well
capitalized, adequately capitalized or undercapitalized -- and further assigned
to one of three subgroups within a capital group, on the basis of supervisory
evaluations by the institution's primary federal regulator and other information
relevant to the institution's financial condition and the risk posed to the
applicable insurance fund. The actual assessment rate applicable to a particular
institution will, therefore, depend in part upon the risk assessment
classification so assigned to the institution by the FDIC. During the years
ended December 31, 1995, and 1996, the Bank paid $95 and $2 in BIF deposit
premiums.
The FDIC's Board of Directors has retained the 1996 BIF assessment schedule
of zero to 27 basis points per annum for the first semiannual period of 1997. In
addition, the FDIC Board eliminated the $2,000 minimum annual assessment and
authorized the refund of the fourth-quarter minimum assessment of $500 paid by
certain BIF-insured institutions on September 30, 1996 by crediting such amount
against each BIF member's first semiannual assessment in 1997. EGRPRA
recapitalized the FDIC's SAIF Fund to bring it into parity with BIF. As part of
this recapitalization, The Deposit Insurance Funds Act of 1996 (the "Funds Act")
authorized FICO to levy assessments on BIF-assessable deposits at a rate equal
to one-fifth of the FICO assessment rate that is applied to deposits assessable
by SAIF. The actual annual assessment rates for FICO for 1997 have been set at
1.30 basis points for BIF-assessable deposits and 6.48 basis points for SAIF
deposits.
COMMUNITY DEVELOPMENT ACT
The Community Development Act has several titles. Title I provides for the
establishment of community development financial institutions to provide equity
investments, loans and development services to financially underserved
communities. A portion of this Title also contains various provisions regarding
reverse mortgages, consumer protections for qualifying mortgages and hearings
for home equity lending, among other things. Title II provides for small
business loan securitization and securitizations of other loans, including
authorizing a study on the impact of additional securities based on pooled
obligations. Small business capital enhancement is also provided. Title III of
the Act provides for paperwork reduction and regulatory improvement, including
certain examination and call report issues, as well as changes in certain
consumer compliance requirements, certain audit requirements and real estate
appraisals, and simplification and expediting processing of bank holding company
applications, merger applications and securities filings, among other things. It
also provides for commercial mortgage-related securities to be added to the
definition of a "mortgage-related security" in the Exchange Act. This will
permit commercial mortgages to be pooled and securitized, and permit investment
in such instruments without limitation by insured depository institutions. It
also pre-empts state legal investment and blue sky laws related to qualifying
commercial mortgage securities. Title IV deals with money laundering and
currency transaction reports, and Title V reforms the national flood insurance
laws and requirements. The nature, timing, and effect upon the Company of any
changes resulting from the Community Development Act cannot be predicted.
LEGISLATIVE AND REGULATORY CHANGES
Various changes have been proposed with respect to restructuring and
changing the regulation of the financial services industry. FIRREA required a
study of the deposit insurance system. On February 5, 1991, the Department of
the Treasury released "Modernizing the Financial System; Recommendations for
Safer, More Competitive Banks". Among other matters, this study analyzed and
made recommendations regarding reduced bank competitiveness and financial
strength, overextension of deposit insurance, the fragmented regulatory system
and the under-capitalized deposit insurance fund. It proposed restoring
competitiveness by
11
<PAGE> 12
allowing banking organizations to participate in a full range of financial
services outside of insured commercial banks. Deposit insurance coverage would
be narrowed to promote market discipline.
EGRPRA streamlined the non-banking activities application process for
well-capitalized and well-managed bank holding companies. Under EGRPRA,
qualified bank holding companies may commence a regulatory approved non-banking
activity without prior notice to the Federal Reserve, and instead, written
notice is required within 10 days after commencing the activity. Under EGRPRA,
the prior notice period is reduced to 12 days in the event of any non-banking
acquisition or share purchase or de novo non-banking activity previously
approved by order of the Federal Reserve, but not yet implemented by
regulations, assuming the size of the acquisition or proposed activity does not
exceed 10% of risk-weighted assets of the acquiring bank holding company and the
consideration does not exceed 15% of Tier 1 capital.
Other legislative and regulatory proposals regarding changes in banking,
and the regulation of banks, thrifts and other financial institutions and bank
and bank holding company powers are being considered by the executive branch of
the Federal government, Congress and various state governments, including
Florida. Among other items under consideration are the possible combination of
BIF and SAIF, changes in or repeal of the Glass-Steagall Act which separates
commercial banking from investment banking, and changes in the BHC Act to
broaden the powers of "financial services" companies to own and control
depository institutions and engage in activities not closely related to banking.
Certain of these proposals, if adopted, could significantly change the
regulation of banks and the financial services industry. It cannot be predicted
whether any of these proposals will be adopted, and, if adopted, how these
proposals will affect the Company and the Bank.
In 1995, the United States Supreme Court determined that national banks
could sell annuities, and in a 1996 case arising with respect to Florida's
insurance statutes baring affiliations between banks and insurance companies
determined that national banks could sell other types of insurance from towns of
5,000 or fewer persons.
STATISTICAL INFORMATION
Certain statistical information (as required by Guide 3) is included in
response to Item 7 of this Annual Report on Form 10-KSB. Certain statistical
information is included in response to Item 6 and Item 8 of this Annual Report
on Form 10-KSB.
ITEM 2. PROPERTIES
The Bank's main offices are located at 10570 South U.S. Highway #1, Port
St. Lucie, Florida, in a three-story building called the Port St. Lucie National
Bank building, where the Bank leases approximately 6,000 square feet. The term
of the original lease for 3,000 square feet expires in April 1999. The lease of
an additional 1,800 square feet in the same building expires in September 1998.
In December 1992, an agreement was reached to lease an additional 1,200 square
feet in the same building, which expires in 1999. This facility has and
continues to be satisfactory for the Company's use.
In December 1989, the Company acquired approximately 1.6 acres of
unimproved property on Port St. Lucie Boulevard, west of the St. Lucie River and
east of the Florida Turnpike. The Bank was approved for a branch office on this
site in April 1991. The branch office opened in December 1991 in a 1,440 square
foot modular building with two drive-in lanes. It is anticipated that this
structure will be replaced by a larger permanent structure when sufficient
growth is obtained using the modular facility and if the local market can
support additional commercial office space.
The Company entered into two new lease agreements for a branch office
facility and for administrative offices in the same building in the St. Lucie
West community, effective in March of 1995. These facilities also serve as
corporate headquarters for the Company. The branch facility lease is for 4,320
square feet and has a 10 year term with a five year renewal option with a rental
increase. The lease for the administrative offices is for 1,200 square feet and
has a five year term.
12
<PAGE> 13
The Company entered into a new lease agreement for SMC in the same building
that houses the Bank's St. Lucie West office. The SMC office facility lease is
for 1,268 square feet and with a four year term and was effective May 1, 1996.
ITEM 3. LEGAL PROCEEDINGS
The Company, the Bank and SMC, because of the nature of their business, are
at times subject to numerous legal actions, threatened or filed, in the normal
course of their business. Although the amount of any ultimate liability with
respect to such matters cannot be determined, in the opinion of management,
after consultation with legal counsel, those claims and lawsuits, when resolved,
should not have a material adverse effect on the consolidated results of
operations or financial condition of the Company and its subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET
There is currently no established public trading market for the Company's
Common Stock. For information as to the Company's Warrants, see Item 12,
"Certain Relationships and Related Transactions."
Management of the Company believes that the following table sets forth the
high and low prices paid for the Company's Common Stock in actual purchase/sale
transactions (as opposed to original issuances by the Company) as reflected in
the records of the Company (which acts as its own transfer agent) for the last
two years:
<TABLE>
<CAPTION>
QUARTER ENDED HIGH PRICE LOW PRICE
- ------------- ---------- ---------
<S> <C> <C>
Fiscal Year 1996:
December 31, 1996......................................... $23.00 $22.00
September 30, 1996........................................ $22.00 $22.00
June 30, 1996............................................. $22.00 $21.00
March 31, 1996............................................ $21.00 $17.00
Fiscal Year 1995:
December 31, 1995......................................... $17.00 $16.00
September 30, 1995........................................ $16.00 $16.00
June 30, 1995............................................. $15.00 $14.25
March 31, 1995............................................ $14.00 $14.00
</TABLE>
The approximate number of record holders of the Company's Common Stock as
of March 1, 1997, is 829.
As of March 1, 1997, the aggregate amount of shares of Common Stock subject
to outstanding Options and outstanding Warrants was 50,820 and 150,478.625,
respectively. For information as to the Options, see Item 10, "Executive
Compensation."
DIVIDENDS
The Board of Directors of the Company considers earnings, capital
requirements, regulatory dividend limitations, the financial condition of the
Company, and other relevant factors in determining the payment of dividends to
shareholders. Cash dividends paid in 1994, 1993, and 1992 were 30.0 cents, 10.0
cents and 7.5 cents per share, respectively. Cash dividends were not declared in
1995 or 1996. As a result of past and planned growth, the Board of Directors
declared a stock dividend of 10% to shareholders of record on
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<PAGE> 14
February 16, 1995 and again on February 15, 1996. The Merger Agreement prohibits
the Company from paying future cash dividends.
The ability of the Company to pay dividends to its shareholders depends
almost entirely on the earnings of the Bank and the Bank's ability to pay
dividends to the Company. The Company is entitled to receive dividends as and
when declared by the Board of Directors of the Bank out of funds legally
available therefor, subject to the restrictions set forth in the National Bank
Act. Section 56 of the National Bank Act states that no dividends will be paid
in an amount greater than the Bank's undivided profits (as each term is defined
under the National Bank Act).
Section 60 of the National Bank Act provides that no dividends may be
declared until the Bank's surplus fund is equal to its common capital; provided,
however, that quarterly or semi-annual dividends may be paid if at least ten
percent of the Bank's net income from the preceding six-month period have been
carried to the surplus fund, and annual dividends may be paid if at least ten
percent of the Bank's net income from the preceding two consecutive six-month
periods have been carried to the surplus fund. Additionally, cash dividends must
receive the prior approval of the OCC if the total of all cash dividends
declared by the Bank in any calendar year, including the proposed cash dividend,
exceeds the total of the Bank's net income for that year plus its retained net
income from the preceding two years less any required transfers to surplus or a
fund for the retirement of preferred stock.
The payment of all stock dividends by the Bank must receive the prior
written approval of the OCC. The OCC also has the authority under the National
Bank Act to prohibit the payment of cash dividends by a national bank when it
determines such payment to be an unsafe and unsound banking practice.
RECENT SALES OF UNREGISTERED SECURITIES
The only unregistered securities sold by the Company since December 31,
1994 are the result of sales of Company common stock effected upon exercises of
stock options or warrants previously issued pursuant to the Company's stock plan
or employment arrangements. Set forth in chronological order below is
information regarding the number of shares of common stock issued by the Company
upon the exercise of such stock options or warrants. Also included is the
consideration, if any, received by the Company for such shares, and information
relating to the section of the Securities Act of 1933, as amended (the
"Securities Act"), or rule of the Securities and Exchange Commission ("SEC" or
"Commission") under which exemption from registration was claimed. No sale of
securities involved the use of an underwriter and no commissions were paid in
connection with the sales of any securities.
RECENT SALES OF UNREGISTERED SECURITIES
<TABLE>
<CAPTION>
SECURITY NUMBER PER SHARE
PURCHASER DATE EXERCISED OF SHARES CONSIDERATION
- --------- ------- --------- --------- -------------
<S> <C> <C> <C> <C>
David W. Skiles................................... 4/30/94 Options 4,538 8.72
4/3/95 Options 605 8.68
Daniel Goldman.................................... 6/1/95 Warrants 182 8.26
Patricia Goldman-Maloney.......................... 6/15/95 Warrants 121 8.26
Aileen Pruitt..................................... 6/30/95 Options 121 8.68
6/30/96 Options 2,904 10.18
Sol Alcalde....................................... 5/30/96 Warrants 468 8.26
Charlotte DeVane.................................. 1/15/97 Options 1,815 8.54
</TABLE>
Each of these transactions relied upon the Section 4(2) exemption from
registration under the Securities Act.
14
<PAGE> 15
RECENT SALES OF UNREGISTERED SECURITIES
The only unregistered securities sold by the Company since January 1, 1996
were the result of sales of Company common stock effected upon exercises of
stock options or warrants previously issued pursuant to the Company's stock plan
or employment arrangements. Set forth in chronological order below is
information regarding the number of shares of common stock issued by the Company
upon the exercise of such stock options or warrants. Also included is the
consideration, if any, received by the Company for such shares, and information
relating to the section of the Securities Act of 1933, as amended (the
"Securities Act"), or rule of the Securities and Exchange Commission under which
exemption from registration was claimed. No sale of securities involved the use
of an underwriter and no commissions were paid in connection with the sales of
any securities.
<TABLE>
<CAPTION>
SECURITY NUMBER PER SHARE
--------- --------- -------------
DATE EXERCISED PURCHASER OF SHARES CONSIDERATION
- ------------------------------------------------------ --------- --------- --------- -------------
- ---- -------- -------- -------- -----------
<S> <C> <C> <C> <C>
[INSERT INFORMATION ABOUT EACH ISSUANCE OF COMMON STOCK SINCE JANUARY 1, 1996]
</TABLE>
The shares of capital stock and securities issued in the above transactions
were offered and sold in reliance upon the exemption from registration under
Section 4(2) of the Securities Act.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
The Company went from a development stage entity to a one bank holding
company on April 3, 1989, with the Bank being chartered and opened for business
on that date. During 1988 and 1989, the Company raised $6,104 net of offering
and issuance costs, from the public sale of common stock to approximately 900
local investors, and invested $5,000 in the Bank to acquire 100% of its
outstanding common stock.
This section provides a narrative discussion and analysis of the Company's
financial condition for the last two years ended December 31, 1996 and 1995 and
results of operations for the last three years ended December 31, 1996, 1995 and
1994. All tables, financial statements and notes to the statements should be
considered an integral part of this analysis. All dollar amounts disclosed in
this section, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," except per share data, are expressed in thousands.
OVERVIEW
The most successful earnings year in Company history occurred in 1996. This
success can be attributed to efforts which began in 1995.
The Company made two major investments in 1995. The St. Lucie West office
represented the largest facility expansion since the Bank began operations in
1989. This office has served the Company well and is now the largest office in
deposit size. This growth was accomplished after four other financial
institutions had already established offices in St. Lucie West during 1994 and
1995.
Spirit Mortgage Corp. (SMC), a wholly-owned subsidiary of the Company,
began operations in 1995. The momentum SMC gained in the second half of 1995
carried over to 1996. In spite of increased overhead due to expansion in 1996,
SMC showed a modest profit in 1996 and was primarily responsible for the almost
75% increase in the Company's gains on sale of loans held for sale in 1996 as
compared to 1995.
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<PAGE> 16
Additionally in 1996, the net interest margin continued to improve as a
result of the continued loan growth (which resulted in a higher loan to deposit
ratio) and a stable cost of funds maintained.
A voice response unit (VRU) was installed in the fourth quarter of 1996 and
became operational in January, 1997. The VRU gives our customers 24 hour access
to information on their deposit and loan accounts.
An agreement was reached in the fourth quarter of 1996 to install a remote
automated teller machine (ATM) in the Columbia Medical Center of Port St. Lucie.
The ATM became operational in January, 1997 and affords the employees and
clients of the rapidly growing health services area even more reasons to do
business with the Bank.
Plans were begun in the fourth quarter of 1996 to open a branch office in
Fort Pierce. While the location still has to be finalized and regulatory
approval obtained, the new office is projected to begin operations in late
summer of 1997.
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<PAGE> 17
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
YEARS ENDED DECEMBER 31, 1996, 1995, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA
Interest income................................ $ 9,453 8,109 5,720 4,332 3,871
Interest expense............................... 4,332 4,164 2,162 1,612 1,570
Net interest income............................ 5,121 3,945 3,558 2,720 2,301
Provision for loan losses...................... 640 206 163 167 201
Noninterest income............................. 1,621 1,171 756 884 623
Noninterest expense............................ 4,251 3,520 2,679 2,280 2,087
Net income..................................... 1,230 947 1,001 748 418
PER SHARE DATA
Primary earnings............................... 1.43 1.16 1.28 0.97 0.55
Fully diluted earnings......................... 1.42 1.15 1.27 0.97 0.55
Cash dividends paid............................ -- -- 0.300 0.100 0.075
Stock dividend issued.......................... 10.00% 10.00% -- -- --
Book Value(1).................................. $ 11.85 11.00 9.39 9.46 8.54
Dividend payout ratio.......................... -- -- 0.20 0.08 0.12
BALANCE SHEET DATA
Total assets................................... 130,093 114,533 96,303 80,572 58,884
Total investment securities.................... 14,369 21,157 28,003 31,267 23,956
Net loans(2)................................... 99,800 76,595 61,828 38,279 27,659
Total deposits................................. 118,736 104,233 86,683 71,772 51,387
Shareholders' equity........................... 10,226 8,955 7,391 7,416 6,619
Primary shares outstanding..................... 863 814 787 784 775
Fully diluted shares outstanding............... 868 822 792 784 775
SELECTED FINANCIAL RATIOS
Return on average assets....................... 1.00% 0.85% 1.16% 1.10% 0.77%
Return on average equity....................... 12.61 11.62 13.58 10.82 6.57
Yield on average interest earning assets....... 8.07 7.71 7.05 6.76 7.60
Average equity to average assets............... 7.93 7.33 8.53 10.13 11.77
Allowance for loan loss to loans outstanding at
year end(2).................................. 1.35 1.07 1.11 1.59 1.70
Leverage capital to assets at year end......... 7.98 7.95 8.48 9.07 11.24
Tier 1 capital to risk-weighted assets at year
end.......................................... 12.08 12.55 15.08 17.00 23.05
Total capital to risk-weighted assets at year
end.......................................... 13.33 13.69 16.33 18.25 24.30
</TABLE>
- ---------------
(1) Assumes no exercise of outstanding options or Warrants to purchase PSHC
Common Stock.
(2) Excludes loans held for sale.
FINANCIAL PERFORMANCE SUMMARY
During 1996, the Company continued its trend of growth in excess of market
growth as reported in the Florida Bank Association Branch Deposit Report. The
success of the St. Lucie West office and SMC increased loan growth which allowed
the reduction in lower yielding investment securities. The net interest margin
and noninterest income were both improved over 1995. The increase in noninterest
expense in 1996 did not keep pace with the income improvements resulting in
improved earnings. Primary earnings per share for 1996 was $1.43 as compared to
$1.16 and $1.28 in 1995 and 1994, respectively. Net income was $1,230 in 1996 as
compared to $947 in 1995 and $1,001 in 1994. Overall in 1996, the Company grew
13.6% in asset size while earnings increased by 29.9%.
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<PAGE> 18
In 1995, interest income and noninterest income increased more than 40% and
50%, respectively, over 1994. However, these large increases were not enough to
offset interest expense and noninterest expense increases of more than 90% and
30%, respectively, over 1994. Growth in time deposits in late 1994 and early
1995 pushed up interest expense in 1995. Rate changes in these time deposits
lagged rate sensitive assets as interest rates declined slightly in 1995. The
opening of a new office in March, the origination of a new mortgage banking
company in January and operational growth all contributed to the increase in
noninterest expense in 1995. Overall in 1995, the Company grew in asset size by
18.9% while earnings decreased slightly by 5.4%.
In 1994, increased net interest income was the most significant
contribution to the Company's improved financial performance. Several factors
influenced the improved net interest margin. Rising interest rates coupled with
a slightly asset sensitive interest rate positioning helped improve net interest
income in 1994. A higher loan to deposit ratio and asset quality that maintained
the provision expensed for loan losses in 1994 at about the same level as 1993
also contributed to the improvement in income. Modest increases in noninterest
expenses and a decline in gains on sale of loans held for sale were more than
offset by the increase in net interest income. Overall in 1994, the Company
increased earnings by 33.8% and grew in asset size by 19.5%.
EARNINGS ANALYSIS
Net Interest Income
Net interest income is the difference between revenue generated from
earning assets and the interest cost of funding those assets. Net interest
income for 1996 was $5,121, an increase of $1,176 or 29.8% over 1995. This
improvement was due to an improved yield on earning assets and a lower yield on
interest bearing liabilities.
Net interest margin in 1996 was 4.40%, an increase of 61 basis points or
16.1% from 1995. The yield on interest earning assets increased from 7.71% in
1995 to 8.07% in 1996. The primary reasons for the 36 basis point or 4.7%
improvement was the increase of $11,794 in average interest earning assets, the
ability of the Company to change the mix of earning assets from lower yielding
investment securities to higher yielding loans and the upward repricing of
adjustable rate mortgages. The yield on interest bearing liabilities decreased
from 4.84% in 1995 to 4.63% in 1996. This 21 basis point decrease was primarily
due to the lower cost time deposit and higher average noninterest demand deposit
balances. The Company has plans to maintain and improve, if possible, the net
interest margin in the future. The Company has in development several demand
deposit products to increase the impact of noninterest bearing deposits on the
cost of funds. Also, the Company is continuing to focus on attracting higher
yielding earning assets in the loan portfolio.
Net interest margin in 1995 was 3.79%, a decrease of 64 basis points or
14.4% from 1994. The yield on interest earning assets increased from 7.05% in
1994 to 7.71% in 1995. This 66 basis point increase was primarily the result of
the loan growth in 1995. The yield on interest bearing liabilities increased
from 3.36% in 1994 to 4.84% in 1995. This 148 basis point increase was due in
part to growth in time deposit balances during the fourth quarter of 1994 and
first quarter of 1995 reflecting higher rates. The interest rate offered by the
Company on new and renewed time deposits peaked in the fourth quarter of 1994
and the first quarter of 1995. Higher rates on other interest bearing liability
products during 1995 helped to reduce the dependence on time deposit growth in
1995 and accounted for over 40% of the increase in the yield on interest bearing
liabilities during this period. In summary, reliance on higher cost interest
bearing liabilities in early 1995 negatively impacted the net interest margin by
64 basis points in 1995.
Net interest margin in 1994 was 4.43%, an increase of 16 basis points from
1993. The yield on interest earning assets was 7.05%, an increase of 29 basis
points from 1993. The increase can be primarily attributed to higher yielding
loan growth which accounted for almost 84% of total average interest earning
asset growth. The yield on interest bearing liabilities increased 14 basis
points from 1993. The increase in yield on interest bearing liabilities was due
to the increase in other borrowing in 1994. In summary, loan growth and interest
earning assets, which were more interest rate sensitive than interest bearing
liabilities, resulted in the 16 basis point increase in net interest margin in
1994.
18
<PAGE> 19
The analysis of interest income and interest expense table demonstrates the
impact on net interest income of changes in the volume and changes in rates of
earning assets and interest bearing liabilities. The changes for each category
of income and expense are divided between the portion of change attributable to
the variances in average levels and rates for that category with the amount of
change attributable to rate volume allocated to the volume variance.
The table below indicates that the $1,176 increase in net interest income
in 1996 was the combined effect of a favorable volume variance of $862 and a
favorable rate variance of $314. The favorable rate variance was the result of
decreases in cost of funds and increases in yield on earning assets. The
significant increase in the volume variance is due to the swing from lower
yielding investment securities and investment securities available for sale to
higher yielding loans. The overall net interest income increase continues the
previous years trends.
Noninterest Income
Noninterest income is derived primarily from fees on customer services and
from the gains on sale of loans held for sale. Noninterest income continues to
be an important contributor to the net income of the Company. In 1996,
noninterest income was $1,621, an increase of $450 or 38.4% from 1995. The
primary components of noninterest income are service charges on deposit accounts
which totaled $623 and gain on sale of loans held for sale which totaled $564 in
1996.
Income from service charges on deposit accounts income increased $45 or
7.8% in 1996. Average noninterest bearing demand deposit account growth in 1996
of 18.6% and increases in selected service charges which became effective August
1, 1995 and December 1, 1996 were primary contributors to the increased service
charge income in 1996.
Gains on sale of loans held for sale increased significantly in 1996. Gain
on sale of loans was $564 as compared to $323 in 1995. The continued success of
SMC contributed $428 to the total gain on sale of loans held for sale, which
represents an increase of $281 or 191.2% over 1995.
ANALYSIS OF INTEREST INCOME AND EXPENSE
<TABLE>
<CAPTION>
1996 VERSUS 1995 1995 VERSUS 1994
INCREASE (DECREASE DUE TO INCREASE (DECREASE DUE TO
CHANGE IN) CHANGE IN)
--------------------------- ---------------------------
VOLUME RATE NET VOLUME RATE NET
-------- ------ ------- -------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Loans............................................. $1,885 128 2,013 2,024 304 2,328
Nontaxable loans.................................. (37) -- (37) (10) 6 (4)
Loans held for sale............................... 98 (17) 81 9 (13) (4)
Taxable investment securities..................... (411) 52 (359) 73 (6) 67
Nontaxable investment securities.................. (7) 3 (4) 11 2 13
Investment securities available for sale.......... (347) (24) (371) (234) 91 (143)
Federal funds sold................................ 39 (18) 21 113 19 132
------ ---- ----- ------ ---- -----
Total interest income..................... 1,220 124 1,344 1,986 403 2,389
------ ---- ----- ------ ---- -----
INTEREST EXPENSE:
Interest bearing demand deposits.................. (48) (151) (199) 8 220 228
Money Market deposits............................. (11) (22) (33) (54) 46 (8)
Other savings deposits............................ 461 76 537 227 101 328
Time deposits..................................... (13) (88) (101) 1,064 453 1,517
Other borrowings.................................. (31) (5) (36) (87) 24 (63)
------ ---- ----- ------ ---- -----
Total interest expense.................... 358 (190) 168 1,158 844 2,002
------ ---- ----- ------ ---- -----
NET INTEREST INCOME....................... $ 862 314 1,176 828 (441) 387
====== ==== ===== ====== ==== =====
</TABLE>
19
<PAGE> 20
The Company adopted Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing
Rights," an amendment of SFAS No. 65 (SFAS No. 122), in the fourth quarter of
1995. The capitalized mortgage servicing rights on those loans sold servicing
retained in 1996 and 1995 contributed $67 and $105, respectively. The volume of
loans held for sale in 1997 will depend on the demand for residential real
estate loans, which will be governed by the economy and the interest rate
levels. The gain realized on loans held for sale that are sold servicing
retained will be increased as a result of recognizing mortgage servicing rights
as prescribed by SFAS No. 122.
Noninterest income from mortgage servicing fees increased from $73 in 1995
to $105 in 1996. The increased level of the noninterest income can be attributed
to the Company's loan sale late in 1995, which added servicing income during
1996. In 1995, noninterest income totaled $1,171, an increase of $415 or 54.9%
over 1994. The largest increase came from gain on sale of loans held for sale
which totaled $274 or an increase of 559.2%. The increase reflects the addition
of SMC. The next largest increase came from service charges on deposit accounts
which totaled $157 as compared to 1994. All other noninterest income categories
collectively decreased $16 or 5.6% in 1995 as compared to 1994. In 1997,
mortgage servicing fees can be expected to increase more slowly than in the
past. With the adoption of SFAS No. 122 and the recognition of mortgage
servicing rights upon sale of the loan, the resulting asset must be amortized
over the expected life of the servicing, which consequently reduces the monthly
servicing fee recognized. This accounting treatment only applies to those loans
sold servicing retained since the adoption of SFAS No. 122 at the beginning of
the fourth quarter of 1995.
Noninterest Expense
Total noninterest expense in 1996 was $4,251, an increase of $731 or 20.8%
over 1995. This increase is primarily due to increased facility costs and the
expansion of SMC and loan administration.
Compensation and employee benefit expense in 1996 was $2,101, an increase
of $411 or 24.3% over 1995. The increase is primarily due to the additional
staffing of the loan operations area and SMC Budgeted merit and promotional
increases as well as incentive rewards also contributed to the increase. In
1997, the increases in compensation and employee benefits anticipated are for
operational support, branch office expansion and annual merit and promotional
increases.
ANALYSIS OF NONINTEREST INCOME
<TABLE>
<CAPTION>
1995/1994
1996/1995 CHANGE CHANGE
---------------- ----------------
1996 1995 1994 AMOUNT PERCENT AMOUNT PERCENT
------ ------ ---- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts............. $ 623 $ 578 $421 $ 45 7.8% $157 37.3%
Gain on sale of loans held for sale............. 564 323 49 241 74.6% 274 559.2%
Gain on sale of investment securities available
for sale...................................... 4 (59) 12 63 -106.8% (71) -591.7%
Gain on sale of real estate owned............... -- (13) 6 13 -100.0% (19) -316.7%
Other fees for customer services................ 430 342 268 88 25.7% 74 27.6%
------ ------ ---- ---- ----
$1,621 1,171 756 $450 38.4% $415 54.9%
====== ====== ==== ==== ====
</TABLE>
Occupancy and furniture and equipment expenses were $371 and $257,
respectively, for a total of $628 in 1996. Aggregate occupancy, furniture and
equipment expenses increased 21.2% between 1995 and 1996, and 57.9% between 1994
and 1995. The increases reflect the expansion of SMC and a full year of overhead
expense associated with the St. Lucie West office. Occupancy and furniture
expenses are expected to increase in 1997 for the new branch office planned for
Fort Pierce. In addition, several budgeted technological improvements will
likely increase equipment expense again in 1997. The significance of the
increase will depend on the timing of implementation during 1997.
Data processing expense was $253 in 1996, an increase of $69 or 37.5%. A
contract extension for data processing was negotiated in 1995 which extended the
Company's current contract from September 1996 through August 1999 and resulted
in an increase in expense in 1996. In addition, the Company added some
20
<PAGE> 21
new services to the contract for 1996. An increase in this category is expected
in 1997 as a result of volume adjustments in the contract and well as additional
services that will be added in 1997.
Advertising and public relations expense increased $23 or 12.2% in 1996.
The increase is attributed to additional radio and television advertisements
during 1996.
FDIC insurance premium expense was $2 in 1996, a decrease of $93 or 97.9%.
This decrease in 1996 was due to the Bank Insurance Fund (BIF) reaching its
targeted funding level in May of 1995. Beginning in January 1997 and until
further notice, the Bank is in the lowest assessment group, paying an annual
rate of 1.296 basis points or .0000324 quarterly. The Bank currently meets the
well capitalized criteria and expects to remain in the well capitalized category
for the foreseeable future. The remaining noninterest expense categories
increased collectively 25.0% in 1996. This increase is primarily associated with
the Company's overall growth in 1996.
In 1995, noninterest expense totaled $3,520, an increase of $841 or 31.4%
over 1994. The largest dollar increase in individual category was compensation
and employee benefits which increased $496 or 41.5%. Compensation and employee
benefits expense reflected growth in staff to support loan operations, SMC and
budgeted merit and promotional increases. All other noninterest expense
categories collectively increased $345 or 23.2% in 1995 as compared to 1994.
This increase is consistent with the Company's overall growth in 1995.
ANALYSIS OF NONINTEREST EXPENSE
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Compensation and employee benefits.......................... $2,101 1,690 1,194
Data processing............................................. 253 184 150
Occupancy................................................... 371 304 211
Furniture and equipment..................................... 257 214 117
Advertising and public relations............................ 211 188 133
Professional fees........................................... 202 165 151
Stationary, supplies and printing........................... 118 119 80
FDIC insurance.............................................. 2 95 161
Other real estate owned..................................... 6 12 7
Miscellaneous expenses...................................... 730 549 475
------ ------ ------
Total Noninterest Expense $4,251 $3,520 $2,679
====== ====== ======
</TABLE>
Income Taxes
Income tax expense was $621 in 1996, an increase of $178 or 40.2% over
1995. The increased tax expense reflects a increase in net income before taxes
of $461 or 33.2% over 1995. Income tax expense was $443 in 1995, a decrease of
$28 or 5.9% compared to 1994. The decreased tax expense reflects a decrease in
net income before income taxes of $82 or 5.6%, which was mitigated by increased
average balances of tax exempt municipal securities and municipal loans.
21
<PAGE> 22
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEET AND SUMMARY OF NET INTEREST INCOME
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
--------------------------- --------------------------- --------------------------
AVERAGE AVERAGE AVERAGE
BALANCE INTEREST YIELD BALANCE INTEREST YIELD BALANCE INTEREST YIELD
-------- -------- ----- -------- -------- ----- ------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets:
Loan (net of unearned income)(1)(2)... $ 92,947 7,952 8.56% $ 70,919 5,939 8.37% $46,747 3,611 7.72%
Non-taxable loans(3).................. -- -- -- 610 44 7.21 781 62 7.95
Loans held for sale................... 4,070 293 7.20 2,709 212 7.83 2,591 216 8.34
Taxable investment securities......... 619 43 6.95 6,534 402 6.15 5,354 335 6.26
Non-taxable investment
securities(3)....................... 3,250 228 7.00 3,355 233 6.94 3,130 226 7.21
Investment securities available for
sale................................ 13,461 817 6.07 19,173 1,188 6.20 22,933 1,331 5.80
Federal funds sold.................... 3,658 190 5.19 2,911 169 5.81 959 37 3.86
-------- ------ -------- ------ ------- ------
Total earning assets............ 118,005 9,523 8.07 106,211 8,187 7.71 82,495 5,818 7.05
Noninterest earning assets:
Cash and due from banks............... 3,295 2,880 2,351
Premises and equipment (net).......... 1,133 1,156 889
Other assets.......................... 1,511 1,734 1,371
Allowance for loan losses............. (885) (774) (653)
-------- -------- -------
Total noninterest earning assets.... 5,054 4,996 3,958
-------- -------- -------
Total assets.................... $123,059 $111,207 $86,453
======== ======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
Demand deposits
Demand deposits....................... $ 11,090 247 2.23% $ 13,260 446 3.36% $13,036 218 1.67%
Money market deposits................. 5,995 152 2.54 6,440 185 2.87 8,328 193 2.31
Savings deposits...................... 23,157 986 4.26 12,332 449 3.64 6,093 121 1.98
Time deposits......................... 52,998 2,933 5.53 53,231 3,034 5.70 34,561 1,517 4.39
Other borrowings...................... 259 14 5.41 835 50 5.99 2,298 113 4.94
-------- ------ -------- ------ ------- ------
Total interest bearing
liabilities................... 93,499 4,332 4.63 86,098 4,164 4.84 64,316 2,162 3.36
Noninterest bearing liabilities:
Demand deposits....................... 17,754 14,972 13,169
Other liabilities..................... 2,052 1,988 1,596
-------- -------- -------
Total noninterest bearing
liabilities................... 19,806 16,960 14,765
-------- -------- -------
Shareholders' equity.................. 9,754 8,149 7,372
-------- -------- -------
Total liabilities and
shareholders' equity.......... $123,059 $111,207 $86,453
-------- -------- -------
NET INTEREST SPREAD/RATE................ $5,191 3.44 $4,023 2.87 $3,656 3.69
------ ---- ------ ---- ------ ----
Impact of noninterest bearing
liabilities........................... 0.96 0.92 0.74
NET INTEREST MARGIN................... 4.40% 3.79% 4.43%
------ ------ ------
</TABLE>
- ---------------
(1) Net loan fees recognized are included in calculation of average loan yields.
(2) Non-accruing loans are included in the average amount of loans outstanding
as well as in the calculation of average yield.
(3) Taxable equivalent basis, net of interest disallowance using a 34% tax rate.
22
<PAGE> 23
LIQUIDITY AND INTEREST RATE SENSITIVITY
Liquidity and the sensitivity of future earnings to interest rate changes
are carefully monitored by Company management. Liquidity is the capacity to
raise cash quickly when funds are needed. The Company's goal is to maintain
adequate liquidity to meet potential funding needs of loan and deposit customers
by maintaining a stable base of core deposits and other interest bearing funds,
accessibility to regional funding sources and readily marketable assets.
Adequate earnings and capital are also important in maintaining acceptable
liquidity levels.
Long term liquidity needs are provided by a large core deposit base and a
strong capital position. The most stable source of bank liquidity comes from
core deposits which represent long term relationships with deposit customers.
Core deposits as a percentage of total assets has been improving over the past
several years and remained at over 80% in 1996.
Actions taken by the Company in late 1995 to improve the net interest
margin also served to maintain this high percentage core deposit level by
allowing volatile funds to mature or runoff by selling lower yielding investment
securities and loans. This activity continued into 1996 with a core deposit
ratio of 80.6% as of December 31, 1996, only slightly down from 1995. The sale
of over $10,000 of adjustable rate residential real estate loans in the fourth
quarter of 1995 reduced the Company's need for volatile funds to meet loan
growth. In December 1996, a sale of over $5,000 of adjustable rate residential
real estate loans again reduced the Company's need for volatile funds. Core
deposits were at 82.7% of total assets as of December 31, 1995, compared to
78.6% in 1994. Those deposits not considered by management to be core deposits
consist of time deposits of $100 or greater and volatile municipal deposits.
There were $4,577 in municipal deposits considered to be volatile at year end
1996 as compared to no municipal deposits at year end 1995.
Short term needs for funds are created by withdrawal of deposits, draw
downs of commitments and requests for new loans. These needs for funds are being
met by core deposit growth, investment security maturities, principal repayments
and sale of investment securities designated as available for sale. In recent
years, these sources have been adequate to meet funding needs. Timing
differences of a few days between funds availability and funding needs have been
met utilizing unsecured federal funds purchase lines established at
correspondent banks. At December 31, 1996, there were no borrowings from this
source.
To meet more significant funding needs or funding needs of a longer
duration, the Company joined the Federal Home Loan Bank of Atlanta (FHLB) in
1993. The Company's residential real estate portfolio and capital position
currently supports $19,000 in potential borrowing from the FHLB. There were no
borrowings from the FHLB at December 31, 1996.
An adequate capital level contributes to long term liquidity by reducing
the need to continually access funding sources. The Company's Tier 1 leverage
capital ratio remained more than adequate at 7.98% at year end 1996. Tier 1
ratios at year end 1995 and 1994 were 7.95% and 8.48%, respectively. The Company
projects that the Tier 1 ratio will continue to be stable in 1997, assuming
growth and earnings goals are reached, and will continue to remain at a more
than adequate level.
Other sources of liquidity are investment securities available for sale and
loans held for sale and can include federal funds sold. At December 31, 1996,
the balance in investment securities available for sale was $10,757, down $6,503
from December 31, 1995. This reduction was due to the sale and maturity of those
investments. Liquidity from investment securities available for sale improved
slightly during the year as market values on these securities improved. Loans
held for sale decreased to $3,556 at year end from $5,835 at year end 1995.
These loans are held on average less than a month before they are funded by the
buyer. By controlling the volume, liquidity can be obtained from this source.
As detailed in the Consolidated Statement of Cash Flows, net cash and cash
equivalents increased $1,167 or 14.1% in 1996. Net income, net deposit growth
and net loan proceeds from the sale of loans held for sale provided net cash of
approximately $24,000. Net loan growth in excess of repayments partially offset
by proceeds from maturities and sales of investment securities available for
sale used approximately $23,000 in net cash. These activities primarily combined
to increase cash and cash equivalents at year end 1996 when compared to year end
1995.
23
<PAGE> 24
Net cash and cash equivalents increased $5,509 or 200.9% in 1995. Net
income, net deposit growth, net loan proceeds from the sale of loans held for
sale and net proceeds from maturities and sales of investments provided net cash
of approximately $32,000. Net loan growth in excess of repayments used
approximately $25,000 in net cash. These activities combined to increase cash
and cash equivalents at year end 1995 when compared to year end 1994.
INTEREST RATE SENSITIVITY ANALYSIS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
IMMEDIATELY 2 DAYS 90 DAYS 6 MONTHS
ADJUSTABLE OR THROUGH THROUGH THROUGH OVER NONINTEREST
1 DAY MATURITY 90 DAYS 6 MONTHS 12 MONTHS 12 MONTHS SENSITIVE TOTAL
-------------- ------- -------- --------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans (net of unearned
income)................... $16,715 $ 7,275 $ 9,034 $ 12,150 $55,997 $ -- $101,171
Federal funds sold.......... 4,400 -- -- -- -- -- 4,400
Non-taxable investment
securities................ -- -- -- 220 3,392 -- 3,612
Investments available for
sale...................... -- 7,479 -- 327 2,951 -- 10,757
Loans held for sale......... -- 3,556 -- -- -- -- 3,556
Noninterest earning
assets.................... -- -- -- -- -- 6,597 6,597
------- ------- -------- -------- ------- -------- --------
Total assets......... $21,115 $18,310 $ 9,034 $ 12,697 $62,340 $ 6,597 $130,093
======= ======= ======== ======== ======= ======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest bearing demand
deposits.................. 13,149 -- -- -- -- -- 13,149
Money market deposit
accounts.................. 5,673 -- -- -- -- -- 5,673
Savings deposits............ 3,634 -- 21,587 -- -- -- 25,221
Time deposits............... -- 15,346 11,729 18,551 9,485 -- 55,111
Noninterest bearing demand
deposits.................. -- -- -- -- -- 19,582 19,582
Other liabilities........... -- -- -- -- -- 1,131 1,131
Shareholders' equity.......... -- -- -- -- -- 10,226 10,226
Total liabilities and
shareholders'
equity............. 22,456 15,346 33,316 18,551 9,485 30,939 130,093
------- ------- -------- -------- ------- -------- --------
Interest rate sensitivity
gap......................... $(1,341) $ 2,964 $(24,282) $ (5,854) $52,855 $(24,342) $ 0
======= ======= ======== ======== ======= ======== ========
Cumulative interest rate
sensitivity gap............. $(1,341) $ 1,623 $(22,659) $(28,513) $24,342 $ 0 $ 0
======= ======= ======== ======== ======= ======== ========
</TABLE>
Interest Rate Sensitivity
Unlike most industrial companies, a substantial portion of the Company's
assets are monetary in nature. Accordingly, the effects of changes in interest
rates are more relevant than changes in the general level of consumer prices,
which may not move in the same direction or magnitude as interest rates.
Interest sensitivity management is concerned with managing the effects of
interest rate changes on net interest income. Interest sensitivity is measured
by gaps, defined as the difference between interest sensitive assets and
interest sensitive liabilities within any specific time frame.
Interest rate exposure is managed by monitoring the relationship between
earning assets and interest bearing liabilities, focusing primarily on those
that are rate sensitive. Rate sensitive assets and liabilities are those that
reprice at market interest rates within a relatively short period. The
difference between rate sensitive assets and rate sensitive liabilities
represents the Company's interest sensitivity gap, which may be either positive
(interest sensitive assets exceed interest sensitive liabilities) or negative
(interest sensitive liabilities exceed interest sensitive assets).
The Interest Rate Sensitivity table illustrates the Company's gap position
at December 31, 1996. The table should not be viewed as the only factor in
determining the impact of interest rate changes on net interest
24
<PAGE> 25
income. Certain assumptions have been made in the construction of the table. For
example, loans and investments have been assigned rate sensitivity categories
according to their maturities, call schedules, or scheduled rate adjustments
without regard to payment schedules or to the liquidity of those interest
sensitive assets.
The table discloses a negative gap or liability sensitive position over the
next twelve months. More interest bearing liabilities will reprice during this
period than interest earnings assets. This negative gap position would in
general indicate a reduction in net interest income in a rising interest rate
environment and an increase in net interest income in a falling interest rate
environment.
Gap analysis, when evaluated with other factors, such as changes in balance
sheet mix and interest rate spread relationships, can provide the basis for
projecting future net interest income. The Company uses a simulation model that
incorporates gap position, balance sheet mix and interest rate spread
relationships to provide a forecast of net interest income over the next twelve
months under different interest rate trend scenarios. The model consistently
indicated in 1996 that the Company was in a balanced interest rate risk position
falling well below the current guidelines of a no more than 5% change in net
interest income as a result of either falling or rising interest rates scenarios
over the next twelve months. The Company will actively continue to subject
earnings projections to a variety of interest rate scenarios, as well as
pricing, maturity, growth and mix strategies in order to make informed decisions
with a view to increasing income, maintaining stable net interest margins and
limiting interest rate risk. Stable net interest margins can generally be
maintained by matching the volume of assets and liabilities maturing, or subject
to repricing, and by adjusting rates to market conditions and changing interest
rates.
EARNING ASSETS AND FUNDING SOURCES
Earning assets averaged $118,005 in 1996, an increase of $11,794 or 11.1%
over 1995. In 1995, average earning assets totaled $106,211, an increase of
$23,716 or 28.7% over 1994. For the years ended 1996, 1995 and 1994, average
earning assets as a percentage of average total assets was 95.9%, 95.5% and
95.4%, respectively. This indicator of efficient use of productive assets
remained steady over the past three years.
At December 31, 1996, the Company's total earning assets reached $123,595.
The components of earning assets at year end were loans totaling $101,270 or
81.9%, investment securities available for sale totaling $10,757 or 8.7%,
federal funds sold of $4,400 or 3.6%, loans held for sale totaling $3,556 or
2.9% and investment securities held to maturity totaling $3,612 or 2.9%.
Deposits, the primary source of funds, totaled $118,736 at December 31, 1996. Of
total deposits, $99,154 or 83.5% were in interest bearing deposits and $19,582
or 16.5% were in noninterest bearing deposits.
Loans
Total loans at December 31, 1996 were $101,270, an increase of $23,772 or
30.7% over 1995. It has been the practice of the Company to sell fixed rate
residential loans to FNMA and retain adjustable rate residential loans in the
portfolio. While this is still the intention of the Company, a package of $5,500
in adjustable rate residential loans were sold to FNMA and a private investor,
in addition to normal fixed rate residential loans, in the fourth quarter of
1996 to maintain asset and liability management goals. If these loans had not
been sold, net loan growth shown in 1996 would have been significantly greater.
The largest category of loans in 1996 continued to be real state loans.
Included in the real estate category are loans on primary residences,
construction, and other types of real estate loans which aggregated $73,575 or
72.7% of the total loan portfolio at December 31, 1996. At year end 1995, the
real estate category aggregated $55,632 or 71.8% of total loans in 1995.
Commercial loans accounted for $12,602 or 12.4% of the loan portfolio
25
<PAGE> 26
in 1996 and $10,075 or 13.0% in 1995. Loans to individuals totaled $15,093 or
14.9% of the loan portfolio at December 31, 1996 as compared to $11,791 or 15.2%
in 1995.
In 1996, the Company benefited from the loan diversification in the
portfolio that began in 1995 by placing emphasis on high quality consumer and
commercial loans. The prime rate decreased 25 basis points during the year. The
slightly lower prime rate and the small range of rate movements during the year
made consumer and commercial loans more attractive to borrowers. The Company was
able to maintain a similar loan mix throughout 1996, as evident in the
comparison of ratios at year end 1996 to year end 1995.
LOANS BY TYPE AND MATURITY AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
MATURITIES DECEMBER 31,
---------------------------------- ----------------------------------------------
ONE YEAR
ONE YEAR THROUGH OVER % OF TOTAL % OF TOTAL
OR LESS FIVE YEARS FIVE YEARS 1996 LOANS 1995 LOANS
-------- ---------- ---------- -------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial loans................ $5,245 $6,582 $775 $ 12,602 12.4% $10,075 13.0%
Real estate -- construction..... 5,346 829 404 6,579 6.5 4,952 6.4
Real estate -- other:
Loans on primary residences... -- -- -- 49,228 48.6 38,015 49.1
Other......................... -- -- -- 17,768 17.5 12,665 16.3
Loans to individuals:
Installment................... -- -- -- 14,299 14.1 11,120 14.3
Other personal and business
loans....................... -- -- -- 794 0.9 671 0.9
------ ------ ---- -------- -----
Total.................. 10,591 7,411 1,179 $101,270 100.0% $77,498 100.0%
====== ====== ==== ======== ===== ======= =====
Commercial and real estate --
construction loans due after
one year......................
Having predetermined interest
rates....................... 5,607
Having floating interest
rates....................... 2,983
--------
Total....................... $ 8,590
========
</TABLE>
The largest category of loans in 1995 was also real estate loans which
aggregated $55,632 or 71.8% of the total loan portfolio at December 31, 1995. At
year end 1994, the real estate category aggregated $48,146 or 76.8% of total
loans in 1994. Commercial loans accounted for $10,075 or 13.0% of the loan
portfolio in 1995 and $6,634 or 10.6% in 1994. Loans to individuals totaled
$11,791 or 15.2% of the loan portfolio at December 31, 1995 as compared to
$7,134 or 11.4% in 1994. The tax exempt loan category was $800 in 1994. There
were no tax exempt loans in 1995.
The Company makes consumer and commercial loans in its PSA, principally in
the areas surrounding Port St. Lucie. Consumer loans are typically secured by
automobiles, recreational vehicles and personal
26
<PAGE> 27
residences. Commercial loans are typically secured by business assets and real
estate, and have personal guarantees.
Investment Securities
At December 31, 1996, investment securities available for sale totaled
$10,757, a decrease of $6,503 from year end 1995. The decline in 1996 was
primarily the result of maturities, calls and sales. This activity was slightly
mitigated by the reduction of unrealized losses by $17 ($11 net of tax effects).
The average yield on the available for sale portfolio decreased slightly from
5.62% in 1995 to 5.61% in 1996. See "CAPITAL RESOURCES."
At December 1996, investment securities held to maturity totaled $3,612, a
decrease of $285 from year end 1995. The decline was the result of securities
which matured in 1996. The investment securities held to maturity portfolio had
gross unrealized gains of $25 on December 31, 1996 and $57 on December 31, 1995.
Gross unrealized losses were $4 and $7 at December 31, 1996 and 1995,
respectively. The average yield on the held to maturity portfolio was 7.21%, up
from 6.92% of year end 1995. This increase in yields is the result of the lower
yielding securities maturing throughout the year. Since the current portfolio is
comprised primarily of fixed rate municipal bonds, future gains or losses and
yields will depend on interest rate levels and the Company's effective tax rate
on income.
ANALYSIS OF INVESTMENT SECURITIES AVAILABLE FOR SALE PORTFOLIO
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
------------------- -------
BOOK AVERAGE BOOK
VALUE YIELD(2) VALUE
------- -------- -------
<S> <C> <C> <C>
Maturity
U.S. Treasury securities
One to five years......................................... $ -- -- $ 3,815
-------
Securities of other U.S. Government agencies
One to five years......................................... 1,894 5.93% 3,054
------- -------
Total............................................. 1,894 5.93 3,054
------- -------
Mortgage related securities(1)
Within one year........................................... 327 5.89 --
One to five years......................................... 280 5.38 --
Five to ten years......................................... -- -- 936
Over ten years............................................ 8,256 5.53 9,455
------- -------
Total............................................. 8,863 5.54 10,391
------- -------
Total investment.................................. $10,757 5.61 $17,260
======= =======
</TABLE>
- ---------------
(1) Indicates contractual maturities, actual maturities are dependent upon
underlying prepayment rates and includes collateralized mortgage obligations
and real estate mortgage investment conduits.
(2) Federal tax equivalent yield
27
<PAGE> 28
ANALYSIS OF INVESTMENT SECURITIES HELD TO MATURITY PORTFOLIO
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1995
----------------- ------
BOOK AVERAGE BOOK
VALUE YIELD(2) VALUE
------ -------- ------
<S> <C> <C> <C>
Maturity
Municipal securities (2)
Less than one year........................................ 220 7.05% 110
One to five years......................................... 1,980 7.38 1,323
Five to ten years......................................... 535 6.60 1,414
Over ten years............................................ 236 7.97 501
------ ------
Total.................................................. 2,971 7.26 3,348
------ ------
Other securities
Over ten years (1)........................................ 641 6.96 549
------ ------
Total investment....................................... $3,612 7.21 $3,897
====== ======
</TABLE>
- ---------------
(1) Federal Reserve Stock and Federal Home Loan Bank Stock
(2) Federal tax equivalent yield
Funding Sources
The primary funding source of the Company continues to be deposits. In
1996, the Company continued to place emphasis on maintaining a high level of
core deposits. Investment securities that matured or were sold were not
replaced. A loan sale of adjustable rate residential real estate loans occurred
in late 1996. The funds generated from these activities were used to fund loan
growth rather than acquire high cost volatile funds. In 1997 the Company
anticipates that it will primarily fund loan growth with more stable and lower
cost core deposits.
At December 31, 1996, deposits totaled $118,736, an increase of $14,503 or
13.9% over 1995. The components of this increase were a $5,682 or 11.5% increase
in time deposits, a $5,153 or 64.4% increase in interest bearing demand
deposits, a $4,104 or 19.4% increase in savings deposits, a $429 or 2.1%
decrease in noninterest bearing demand deposits, and a $7 or 0.1% decrease in
money market deposits.
<TABLE>
<CAPTION>
MATURITY OF TIME DEPOSITS OF $100,000 OR MORE 1996 % OF TOTAL 1995 % OF TOTAL
- --------------------------------------------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Maturity
Three months or less.................................... $2,259 24.4% 2,735 28.6%
Over three through six months........................... 1,903 20.5 1,518 15.9
Over six through twelve months.......................... 2,980 32.1 2,991 31.3
Over twelve months...................................... 2,139 23.0 2,311 24.2
------ ----- ------ -----
Total time deposits of $100 or more at December 31,
1996............................................... $9,281 100.0% $9,555 100.0%
====== ===== ====== =====
</TABLE>
The growth in time deposits and savings accounts was due to the continued
success of our premium priced savings product (Grand Savings Account) and of our
specifically targeted short term time deposit marketing. Both these products had
great appeal in our St. Lucie West branch location, due to the significant
retirement age composition of the market.
Interest bearing demand deposit growth can be attributed to an increase in
a municipal deposit relationship. The Company accommodated a long time customer
for their short term (less than twelve months) deposit needs. These funds are
temporary and are expected to run off in 1997.
The decline in noninterest bearing demand deposits is primarily
attributable to the year end fluctuations in various commercial demand deposit
accounts. These fluctuations are temporary in nature and are expected
periodically.
28
<PAGE> 29
In 1997, the Company anticipates core deposit growth to keep pace with loan
growth. Should loan growth exceed core deposit growth, the Company will be
prepared to fund this growth with the sale of lower yielding investment
securities available for sale and loans or borrowings from approved credit lines
established with correspondent banks. The decision on sales or borrowing will be
made with interest rate risk and profitability as the primary determining
factors. The Company has short term unsecured lines of credit established to
meet temporary funding needs and $19,000 in credit availability approved through
the FHLB to meet longer term needs.
ASSET QUALITY
Asset quality continues to be of primary importance to the Company. When
deposit growth has exceeded loan demand, excess funds have been invested in the
investment securities portfolio, which is generally of high quality. The Company
structured its lending policy to avoid higher risk loans, to diversify risk by
making smaller loans and to provide proper monitoring of existing loans to
ensure continuing credit quality.
In addition to reviews by regulatory agencies, the services of outside
lending professionals have been engaged to assist in the evaluation of credit
quality and loan administration. These professionals compliment the system
implemented by the Company to evaluate the lending portfolio, which categorizes
the credits as to risk and puts a reporting process in place to monitor the
progress of the credits.
Although the Bank's legal lending limit is in excess of $1,600, the Bank
has adopted a policy to further restrict aggregate borrowing to any one borrower
to no more than $1,000. This emphasis on smaller loans diversifies and
consequently reduces risk. As of December 31, 1996, the Company had only eight
borrowers with aggregate borrowing in excess of $750 which loans totaled $7,643
or 7.5% of the total loan portfolio at December 31, 1996.
The Company's local market has traditionally emphasized real estate lending
due to its reputation for affordable housing. In 1996, real estate loans
continued to be the dominant lending category accounting for more than 73% of
the loan portfolio. In keeping with its asset quality priority, the Company has
concentrated its real estate lending efforts on owner occupied properties with
established debt service abilities. The construction loans made are primarily
single family residences with commitments for permanent financing. The Company
is not currently and does not plan to become a speculative real estate lender.
Allowance for Loan Losses
The allowance for loan losses represents the cumulative total of monthly
provisions for loan losses, less net charge-offs (charge-offs minus recoveries).
The allowance for loan losses is established through a provision for loan losses
charged to expense. Loans are charged-off against the allowance when management
believes the collectibility of principal is unlikely. Recoveries of amounts
previously charged off are credited to the allowance. The provision for loan
losses is based on management's judgment after considering known and inherent
risks in the portfolio, past loss experience of the Company, adverse situations
that may affect the borrower's ability to repay, assumed values of the
underlying collateral securing the loans, the current and prospective financial
condition of the borrower, and the prevailing and anticipated economic condition
of the market.
The allowance for loan losses at December 31, 1996 was $1,371 or 1.35% of
loans outstanding at year end. The allowance for loan losses at December 31,
1995 was $827 or 1.07% of loans outstanding at year end. The increase in the
overall allowance for loan losses in 1996 as a percentage of the overall loan
portfolio, reflects management's cautious views concerning both economic and
portfolio trends in 1996. Nationally, consumer debt and delinquencies have both
trended upward in 1996. The Company has grown rapidly in consumer loans and has
also experienced some increase in delinquencies. Commercial loans have also
grown rapidly in 1996 and this type of lending has proven riskier than the
Company's dominant portfolio type of residential real estate loans.
The Company maintains the allowance for loan losses at a level that
management believes is sufficient to absorb all estimated losses inherent in the
loan portfolio. The allowance for loan losses is made up of two
29
<PAGE> 30
primary components: amounts allocated to loans based on collateral type, loan
grade, delinquency status and impairment and a general unallocated portion
designed to supplement the amounts allocated. For purposes of complying with
certain disclosure requirements, the table below presents an allocation of the
entire allowance for loan losses among various loan classifications and sets
forth the percentage of loans in each category to total loans. The allocation of
the allowance shown in the table should not be interpreted as an indication that
charge-offs in future periods will occur in these amounts or proportions or that
the allocation indicates future charge-off trends.
In comparing 1996 and 1995, the allowance for loan losses increased $544 or
65.8%, which was substantially more than the 30.7% increase in the loan
portfolio in 1996. Economic trends and rapid consumer and commercial loan growth
led management to increase the allowance as a percentage of the loan portfolio.
The table reflects an increase in the aggregate amounts specifically allocated
from $369 to $548. Correspondingly, the component of the allowance described as
unallocated increased from $458 to $823.
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1996 1995
---------------------- ----------------------
PERCENT OF PERCENT OF
LOANS IN EACH LOANS IN EACH
CATEGORY TO CATEGORY TO
AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS
------ ------------- ------ -------------
<S> <C> <C> <C> <C>
Commercial............................................. $ 189 12.4% $116 13.0%
Real estate:
Construction......................................... 26 6.5 20 6.4
Loans on primary residence........................... 175 48.6 97 49.1
Other................................................ 30 17.5 36 16.3
Loans to individuals:
Installment.......................................... 83 14.1 64 14.3
Other personal and business loans.................... 45 0.9 36 0.9
Unallocated............................................ 823 0.0 458 0.0
------ ----- ---- -----
$1,371 100.0% $827 100.0%
====== ===== ==== =====
</TABLE>
The provision for loan losses charged to expense in 1996 was $640, an
increase of $434 or 210.7% over 1995. This increase in provision is due to the
growth in the overall loan portfolio in 1996, loan mix and economic trends.
Net charge-offs for the year ended December 31, 1996 were $96, an increase
of $18 from the net charge-offs of $78 in 1995. The Company takes a very
aggressive position on delinquent loans and moves quickly to liquidate
collateral and record losses if payment is in doubt. The Company also
aggressively pursues collection activities on any loans charged-off.
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 1996.
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. When full collection of principal becomes doubtful, the
uncollectible portion of the loan is charged-off.
At December 31, 1996, there were 28 loans with an aggregate balance of $764
listed as nonaccrual, three loans with an aggregate balance of $8 over 90 days
past due on accrual status and no restructured loans. Of
30
<PAGE> 31
these, 14 loans totaling $573 are also included in the potential problem loans
classified substandard. At December 31, 1996, the Company's ratio of
nonperforming assets to loans outstanding plus other real estate owned was
0.77%, compared with 0.53% at December 31, 1995. At December 31, 1995, there
were 13 loans with an aggregate balance of $405 listed as nonaccrual, four loans
with a balance of $5 over 90 days past due on accrual status and no restructured
loans. Of these, 11 loans totaling $402 are also included below in the potential
problem loans classified substandard.
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 December 31, 1996, potential
problem loans classified substandard were $1,037 compared to $894 at year end
1995. Those loans classified as doubtful at December 31, 1996 were $11 as
compared to $40 at year end 1995. Although the loan portfolio grew by 31% in
1996, the increase in classified loans increased only 16%. This is primarily due
to an expanded loan administration area with stringent loan review guidelines on
the financial strength of these borrowers. While no specific trends or
significant deterioration in the overall portfolio quality has been identified,
management is monitoring increases in delinquencies closely.
Management is unaware of any loans 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 and
that are not included in the nonperforming and potential problem loans described
above.
31
<PAGE> 32
ANALYSIS OF LOAN LOSS DATA
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
---------------
1996 1995
------ -----
<S> <C> <C>
Allowance for loan losses
Balance, beginning of year.................................. $ 827 $ 699
Provision charged to expense................................ 640 206
Loans charged off:
Commercial................................................ 65 27
Installment............................................... 59 40
Other personal and business............................... 19 18
------ -----
143 85
------ -----
Recoveries:
Commercial................................................ 14 --
Installment............................................... 31 5
Other personal and business............................... 2 2
------ -----
47 7
------ -----
Net charge-offs................................... 96 78
------ -----
Balance, end of year........................................ $1,371 $ 827
====== =====
Ratios:
Allowance for loan losses as a percent of year end
loans.................................................. 1.35% 1.07%
====== =====
Net charge-offs to average loans.......................... 0.10% 0.11%
====== =====
</TABLE>
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 estimated costs
to sell.
As of December 31, 1996, the Company was carrying two properties as other
real estate owned. They consisted of a commercial condominium property, of which
was sold in January 1997, and residential lots. There were no other transactions
in other real estate owned during 1996. There were no properties held as other
real estate owned at year end 1995.
CHANGES IN OTHER REAL ESTATE OWNED
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------
1996 1995
---- -----
<S> <C> <C>
Beginning balance........................................... $-- $ 217
Foreclosure................................................. 29 --
Deed in lieu of foreclosure................................. 24 --
Sales....................................................... -- (217)
--- -----
Ending balance.............................................. $53 $ --
=== =====
</TABLE>
32
<PAGE> 33
DISTRIBUTION OF OTHER REAL ESTATE OWNED
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------
1996 1995
---- -----
<S> <C> <C>
Undeveloped residential lots................................ $24 --
Commercial property......................................... 29 --
--- -----
$53 --
=== =====
</TABLE>
CAPITAL RESOURCES
(Share data not in thousands)
A strong capital base that can sustain asset growth over time and absorb
losses, should the need arise, is a primary goal of the Company. At December 31,
1996, the Company had total shareholders' equity of $10,226, an increase of
$1,271 over 1995. The increase is primarily from the addition of $1,230 in after
tax income for the year ended December 31, 1996. The reduction of unrealized
losses in investment securities available for sale from $163 to $152 in
accordance with FAS No. 115 and the issuance of 3,372 shares of common stock as
the result of the exercise of options and warrants during 1996 accounted for
increases to capital of $11 and $32, respectively.
On December 19, 1991, the Federal Deposit Insurance Corporation Improvement
Act of 1991 (FDICIA) became law. While the FDICIA primarily addresses additional
sources of funding for the SAIF and BIF, it also imposes 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 establishes five capital categories and specifies
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.
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 undercapitalized........................ <6.00 <3.00 2.01-2.99
Critically undercapitalized........................... -- -- 2.00
</TABLE>
33
<PAGE> 34
The following table discloses the regulatory capital for the Bank as of
December 31, 1996 and December 31, 1995:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
CAPITAL:
Tier 1 capital.............................................. $ 9,784 $ 8,508
Tier 2 capital.............................................. 1,065 827
-------- --------
Total capital............................................. 10,849 9,335
-------- --------
Total adjusted assets....................................... $129,364 $114,059
======== ========
Risk-weighted assets........................................ $ 85,174 $ 72,071
-------- --------
RATIOS:
Leverage ratio.............................................. 7.56% 7.56%
-------- --------
Tier 1 capital to risk-weighted assets.................... 11.49 11.80
Tier 2 capital to risk-weighted assets.................... 1.25 1.15
-------- --------
Total capital to risk-weighted assets....................... 12.74 12.95
-------- --------
</TABLE>
The Bank does not anticipate any difficulty in meeting these requirements
in the foreseeable future. Based on these regulations, management believes the
Bank is classified as "well capitalized".
OTHER INFORMATION
(not in thousands)
Dividends
The ability of the Company to pay dividends to its shareholders depends
almost entirely on the earnings of the Bank and the Bank's ability to pay
dividends to the Company. The Company is entitled to receive dividends as and
when declared by the Board of Directors of the Bank out of funds legally
available therefor, subject to the restrictions set forth in the National Bank
Act. Section 56 of the National Bank Act states that no dividends will be paid
in an amount greater than the Bank's undivided profits (as each term is defined
under the National Bank Act).
Section 60 of the National Bank Act provides that no dividends may be
declared until the Bank's surplus fund is equal to its common capital: provided,
however, that quarterly or semi-annual dividends may be paid if at least ten
percent of the Bank's net income from the preceding six-month period have been
carried to the surplus fund, and annual dividends may be paid if at least ten
percent of the Bank's net income from the preceding two consecutive six-month
periods have been carried to the surplus fund. Additionally, cash dividends must
receive the prior approval of the OCC if the total of all cash dividends
declared by the Bank in any calendar year, including the proposed cash dividend,
exceeds the total of the Bank's net income for that year plus its retained net
income from the preceding two years less any required transfers to surplus or a
fund for the retirement of preferred stock.
The payment of all stock dividends by the Bank must receive the prior
written approval of the OCC. The OCC also has the authority under the National
Bank Act to prohibit the payment of cash dividends by a national bank when it
determines such payment to be an unsafe and unsound banking practice.
The Board of Directors of the Company considers earnings, capital
requirements, regulatory dividend limitations, financial condition of the
Company, and other relevant factors in determining the payment of dividends to
shareholders. Cash dividends paid in 1994 and 1993 were 30.0 cents and 10.0
cents per share. In 1995 and 1996, cash dividends were not declared, however a
10% stock dividend was declared and distributed in each year.
34
<PAGE> 35
Effects of Inflation and Changing Prices
The financial statements and related financial date presented herein have
been prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars, without considering the relative purchasing power of money,
over time, due to inflation. See Note (15) to the consolidated Financial
Statements for a description of the effects of SFAS 107 on the estimated fair
value of financial instruments.
Unlike most industrial companies, virtually all of the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates have a more significant impact on a financial institution's
performance than the general level of inflation. However, inflation affects
financial institutions' increased cost of goods and services purchased, the cost
of salaries and benefits, occupancy expense and similar items. Inflation and
related increases in interest rates generally decrease the market value of
investments and loans held and may adversely affect liquidity, earnings, and
stockholders' equity. Mortgage originations and refinancings tend to slow as
interest rates increase, an likely will reduce the Company's earnings from such
activities and the income from the sale of residential mortgage loans in the
secondary market.
ITEM 7. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report -- KPMG Peat Marwick LLP....... 36
Consolidated Balance Sheets................................. 37
Consolidated Statements of Earnings......................... 38
Consolidated Statements of Shareholders' Equity............. 39
Consolidated Statements of Cash Flows....................... 40
Notes to Consolidated Financial Statements.................. 41
</TABLE>
35
<PAGE> 36
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Port St. Lucie National Bank Holding Corp.:
We have audited the accompanying consolidated balance sheets of Port St.
Lucie National Bank Holding Corp. and subsidiaries as of December 31, 1996 and
1995 and the related consolidated statements of earnings, shareholders' equity
and cash flows for each of the years in the three-year period ended December 31,
1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Port St.
Lucie National Bank Holding Corp. and subsidiaries at December 31, 1996 and 1995
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1996, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, effective
October 1, 1995, the Company changed its method of accounting for mortgage
servicing rights to conform with Statement of Financial Accounting Standards No.
122.
KPMG Peat Marwick LLP
February 19, 1997
West Palm Beach, Florida
36
<PAGE> 37
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Cash and due from banks..................................... $ 5,018 $ 4,051
Federal funds sold.......................................... 4,400 4,200
Investment securities available for sale.................... 10,757 17,260
Loans held for sale, net of deferred loan origination fees
(estimated market value of $3,613 in 1996 and $5,919 in
1995)..................................................... 3,556 5,835
Investment securities held to maturity (estimated market
values of $3,634 in 1996 and $3,947 in 1995).............. 3,612 3,897
Loans....................................................... 101,270 77,498
Less: Allowance for loan losses............................. (1,371) (827)
Net deferred loan origination fees and costs......... (99) (76)
-------- --------
Net loans............................................ 99,800 76,595
Other real estate owned..................................... 53 --
Premises and equipment, net................................. 1,103 1,181
Other assets................................................ 1,794 1,514
-------- --------
Total assets...................................... $130,093 114,533
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest bearing demand............................. $ 19,582 20,011
Interest bearing:
Demand............................................... 13,149 7,996
Money market......................................... 5,673 5,680
Savings.............................................. 25,221 21,117
Time................................................. 55,111 49,429
-------- --------
Total deposits.................................... 118,736 104,233
Other liabilities........................................... 1,131 1,345
-------- --------
Total liabilities................................. 119,867 105,578
-------- --------
Shareholders' Equity:
Common stock, $0.01 par value, authorized 10,000,000
shares; issued and outstanding 742,840 shares in 1996
and 672,352 shares in 1995............................. 7 7
Additional paid-in capital................................ 8,401 7,027
Retained earnings......................................... 1,970 2,084
Unrealized gains (losses) on investment securities
available for sale (net of applicable income taxes).... (152) (163)
-------- --------
Total shareholders' equity........................ 10,226 8,955
-------- --------
Total liabilities and shareholders' equity........ $130,093 $114,533
======== ========
</TABLE>
See accompanying notes to Consolidated financial statements.
37
<PAGE> 38
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
INTEREST INCOME:
Loans, including fees:
Taxable loans............................................. $7,952 $5,939 $3,611
Tax-exempt loans.......................................... -- 37 41
Loans held for sale......................................... 293 212 216
Investment securities:
Taxable investment securities............................. 43 402 335
Tax-exempt investment securities.......................... 158 162 149
Investment securities available for sale.................... 817 1,188 1,331
Federal funds sold.......................................... 190 169 37
------ ------ ------
Total interest income............................. 9,453 8,109 5,720
INTEREST EXPENSE:
Deposits.................................................... 4,318 4,114 2,049
Other....................................................... 14 50 113
------ ------ ------
Total interest expense.................................... 4,332 4,164 2,162
------ ------ ------
Net interest income....................................... 5,121 3,945 3,558
Provision for loan losses................................... 640 206 163
------ ------ ------
Net interest income after provision for loan losses....... 4,481 3,739 3,395
------ ------ ------
NONINTEREST INCOME:
Service charge on deposit accounts.......................... 623 578 421
Gain on sale of loans held for sale......................... 564 323 49
(Loss) gain on sale of investment securities available for
sale...................................................... 4 (59) 12
(Loss) gain on sale of real estate owned.................... -- (13) 6
Other fees for customer services............................ 430 342 268
------ ------ ------
Total noninterest income.......................... 1,621 1,171 756
------ ------ ------
NONINTEREST EXPENSE:
Compensation and employee benefits.......................... 2,101 1,690 1,194
Occupancy................................................... 371 304 211
Furniture and equipment..................................... 257 214 117
Other....................................................... 1,522 1,312 1,157
------ ------ ------
Total noninterest expense......................... 4,251 3,520 2,679
------ ------ ------
Income before income taxes.................................. 1,851 1,390 1,472
Income tax expense.......................................... 621 443 471
------ ------ ------
NET INCOME.................................................. $1,230 $ 947 $1,001
====== ====== ======
Net income per common and common equivalent shares:
Primary................................................... $ 1.43 $ 1.16 $ 1.28
Fully diluted............................................. 1.42 1.15 1.27
Average common and equivalent shares outstanding:
Primary................................................... 863 814 787
Fully diluted............................................. 868 822 792
</TABLE>
See accompanying notes to Consolidated financial statements.
38
<PAGE> 39
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
UNREALIZED
GAINS (LOSSES)
ON INVESTMENT
COMMON STOCK ADDITIONAL SECURITIES TOTAL
--------------- PAID IN RETAINED AVAILABLE SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS FOR SALE EQUITY
------ ------ ---------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993......... 607 $ 6 $6,125 $ 1,175 $ 110 $ 7,416
Exercised options.................. 3 -- 40 -- -- 40
Dividends paid..................... -- -- -- (184) -- (184)
Net income......................... -- -- -- 1,001 -- 1,001
Unrealized gains on investment
securities available for sale,
net of tax...................... -- -- -- -- (882) (882)
--- --- ------ ------- ----- -------
Balance at December 31, 1994......... 610 6 6,165 1,992 (772) 7,391
Exercised options and warrants..... 1 -- 8 -- -- 8
10% common stock dividend.......... 61 1 854 (855) -- --
Net income......................... -- -- -- 947 -- 947
Unrealized gains on investment
securities available for sale,
net of tax...................... -- -- -- -- 609 609
--- --- ------ ------- ----- -------
Balance at December 31, 1995......... 672 7 7,027 2,084 (163) 8,955
Exercised options and warrants..... 4 -- 32 -- -- 32
10% common stock dividend.......... 67 -- 1,342 (1,344) -- (2)
Net income......................... -- -- -- 1,230 -- 1,230
Unrealized gains on investment
securities available for sale,
net of tax...................... -- -- -- -- 11 11
--- --- ------ ------- ----- -------
Balance at December 31, 1996......... 743 $ 7 $8,401 $ 1,970 $(152) $10,226
=== === ====== ======= ===== =======
</TABLE>
39
<PAGE> 40
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Cash flow from operating activities:
Net income................................................ $ 1,230 $ 947 $ 1,001
Adjustments to reconcile net income to net cash provided
(used) from operating activities:
Provision for loan losses............................... 640 206 163
Depreciation............................................ 227 198 131
Amortization of organization costs...................... -- -- 6
Loss (gain) on sale of investment securities available
for sale.............................................. (4) 59 (12)
Deferred loan origination fees and costs, net of
amortization.......................................... 23 (111) 142
Purchase of loans held for sale......................... (40,434) (39,065) (53,152)
Origination of loans held for sale...................... (36,687) (16,716) (2,053)
Proceeds from the sale of loans held for sale........... 84,903 61,317 60,289
Deferred income taxes................................... (183) (62) 90
Increases in other assets............................... (148) (181) (288)
Increase (decrease) in other liabilities................ (175) (176) 38
Increase (decrease) in taxes payable.................... (56) 254 (195)
-------- -------- --------
Net cash (used) provided from operating
activities....................................... 9,336 6,670 6,160
-------- -------- --------
Cash flow from investing activities:
Proceeds from maturities of investment securities held to
maturity................................................ 377 1,039 --
Purchase of investment securities held to maturity........ (92) (86) (4,762)
Purchase of investment securities available for sale...... -- (5,934) (4,521)
Proceeds from maturities of investment securities
available for sale...................................... 2,730 3,490 4,069
Proceeds from sale of investment securities available for
sale.................................................... 3,862 9,253 7,077
Loans originated, net of repayments....................... (29,422) (25,255) (23,887)
Purchase of premises and equipment........................ (158) (414) (195)
Proceeds from sale of other real estate owned............. -- 88 8
-------- -------- --------
Net cash used by investing activities.............. (22,703) (17,819) (22,211)
-------- -------- --------
Cash flow from financing activities:
Net increase in deposit accounts.......................... 14,503 17,550 14,911
Decrease in federal funds purchased....................... -- (900) 900
Issuance of common stock.................................. 33 8 40
Dividends................................................. -- -- (184)
Fractional shares related to stock dividend............... (2) -- --
-------- -------- --------
Net cash provided by financing activities.......... 14,534 16,658 15,667
-------- -------- --------
Net increase (decrease) in cash and cash
equivalents...................................... 1,167 5,509 (384)
Cash and cash equivalents at beginning of period............ 8,251 2,742 3,126
-------- -------- --------
Cash and cash equivalents at end of period.................. $ 9,418 $ 8,251 $ 2,742
======== ======== ========
Supplemental disclosures:
Cash paid during the period for:
Income taxes............................................ $ 867 $ 236 $ 576
Interest................................................ 4,439 4,193 2,139
Noncash investment and financing activities:
Reclassification of loans to other real estate owned.... 53 -- 90
Assumption of liabilities in connection with acquisition
of other real estated owned........................... -- -- 102
Loans to facilitate the sale of other real estate
owned................................................. -- 123 57
Change in unrealized gain (loss) on investment available
for sale, net of tax effect........................... 11 609 (882)
Reclassification of investments held to maturity to
investments available for sale........................ -- 5,809 --
Reclassification of loans to loans held for sale........ 5,501 -- --
</TABLE>
See accompanying notes to consolidated financial statements.
40
<PAGE> 41
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Port St. Lucie National Bank Holding Corp. (the Company) is a one bank
holding company whose subsidiaries consist of Port St. Lucie National Bank (the
Bank) and Spirit Mortgage Corp. (Spirit Mortgage).
The Bank provides a wide range of banking services to individual and
corporate customers primarily in St. Lucie County, Florida. The Bank is subject
to competition from other financial institutions. Spirit Mortgage provides
mortgage banking services inside the Bank's market and outside of the market in
which the Bank operates. The Company, the Bank and Spirit Mortgage are subject
to regulations of certain federal agencies and undergo periodic examinations by
these regulatory authorities.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries. Intercompany transactions and balances have
been eliminated in consolidation.
Basis of Financial Statement Presentation
The accounting and reporting policies of the Company conform with generally
accepted accounting principles and with reporting guidelines as prescribed by
banking regulatory authorities. In preparing the consolidated financial
statements, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities as of the date of the balance
sheet and revenues and expenses for the period. Actual results could differ
significantly from those estimates.
Material estimates that are particularly susceptible to significant change
in the near-term relate to the determination of the allowance for loan losses
and the valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans. In connection with the determination of the allowance for
loan losses and real estate owned, management obtains independent appraisals for
significant properties.
The majority of all of the Company's real estate loans and real estate
owned are secured by real estate in St. Lucie and Martin Counties, Florida.
Accordingly, the ultimate collectibility of the carrying amount of real estate
loans and real estate owned is susceptible to changes in market conditions in
St. Lucie and Martin Counties, Florida.
Management believes the allowance for losses on loans and real estate owned
are adequate. While management uses available information to recognize losses on
loans and real estate owned, future additions to the allowances may be necessary
based on changes in economic conditions. In addition, various regulatory
agencies, as an integral part of their examination process, periodically review
the Company's allowances for losses on loans and real estate owned. Such
agencies may require the Company to recognize additions to the allowances based
on their judgments about information available to them at the time of their
examination.
Cash and Cash Equivalents
The Company defines cash and cash equivalents as: cash on hand, amounts due
from banks and Federal Reserve, and highly liquid investments purchased with a
remaining maturity of three months or less at time of purchase, including
federal funds sold.
41
<PAGE> 42
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Loans
Loans receivable are stated at unpaid principal balance, less the allowance
for loan losses and net deferred loan origination fees and costs.
Interest is accrued only if deemed collectible. Generally, the Company's
policy is to discontinue the accrual of interest on loans delinquent over ninety
days unless fully secured and in the process of collection. The accrued and
unpaid interest is reversed from income, and thereafter, interest is recognized
only to the extent payments are received. A nonaccrual loan may be restored to
accrual basis when interest and principal payments are current and prospects for
future recovery are no longer in doubt.
The allowance for loan losses represents the cumulative total of monthly
provisions for loan losses, less net charge-offs (charge-offs minus recoveries).
The allowance for loan losses is established through a provision for loan losses
charged to expense. Loans are charged-off against the allowance when management
believes the collectibility of principal is unlikely.
Recoveries of amounts previously charged-off are credited to the allowance.
The allowance for loan losses is based on management's judgment after
considering all known and inherent risks in the portfolio diversification and
size within the loan portfolio, status and level of non-performing assets, past
and expected loss experience, adverse situations that may affect the borrower's
ability to repay, assumed values of the underlying collateral securing the
loans, current and prospective financial condition of the borrower, and the
prevailing and anticipated economic condition of the market.
The Bank adopted the provisions of Statement of Financial Accounting
Standard No. 114, "Accounting by Creditors for Impairment of a Loan," as amended
by Statement of Financial Accounting Standards No. 118, "Accounting by Creditors
for Impairment of a Loan -- Income Recognition and Disclosure," ("SFAS No. 114")
on January 1, 1995. SFAS No. 114 did not have a significant impact on financial
condition or results of operations upon adoption. Management, considering
current information and events regarding the borrowers' ability to repay their
obligations, considers a loan to be impaired when it is probable that the Bank
will be unable to collect all amounts due according to the contractual terms of
the loan agreement. When a loan is considered to be impaired, the amount of the
impairment is measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate or at the fair value of
collateral. Impairment losses and changes in estimates to the impairment losses
are included in the allowance for loans losses through a provision or credit for
loan losses. The Bank recognized interest income on impaired loans on a cash
basis.
Loan Origination and Commitment Fees
Loan origination and commitment fees and certain direct loan origination
costs are deferred and recognized over the term of the related loans as a yield
adjustment using the level-yield method (loan-by-loan basis). Amortization of
deferred fees and costs is discontinued when collectibility of the related loan
is deemed uncertain. Fees and direct loan origination costs for unexercised
commitments are recognized in income upon expiration of the commitment.
Mortgage Servicing Rights, Net
During May 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing
Rights an amendment of SFAS No. 65," ("SFAS No. 122").
Effective October 1, 1995, the Company elected to adopt early SFAS 122
which requires the recognition, as a separate asset, of the right to service
mortgage loans for others. The Company acquires mortgage servicing
42
<PAGE> 43
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
rights through the origination of mortgage loans, and the Company sells or
securities those loans with servicing rights retained. Under SFAS 122, the
Company allocates the total cost of the mortgage loans to the mortgage servicing
rights and the loans (without the mortgage servicing rights) based on their
relative fair value.
Under SFAS 122, the Company assesses its capitalized mortgage servicing
rights for impairment based on the fair value of those rights as of the year
ended December 31. The portfolio is stratified by two predominant risk
characteristics: loan type and fixed versus variable interest rate. Impairment,
if any, is recognized through a valuation allowance for each impaired stratum.
No valuation allowance was considered necessary for fiscal years 1996 and 1995.
Mortgage servicing rights are amortized in proportion to, and over the period
of, the estimated net future servicing income.
Prior to October 1, 1995, the Company had not purchased the rights to
service loans and consequently, had not recognized mortgage servicing rights as
an asset. The impact on earnings upon adoption was pretax approximately $105.
Loans Held for Sale
Loans held for sale in the secondary market are carried at the lower of
cost or estimated aggregate market value.
Investment Securities
The Bank classifies securities into three categories. Debt securities that
the Bank has the positive intent and ability to hold to maturity are reported at
amortized cost. Debt and equity securities that are bought and held principally
for the purpose of selling them in the near term are reported at fair value,
with unrealized gains and losses included in earnings. All other debt and equity
securities are considered available for sale and reported at fair value, with
unrealized gains and losses excluded from earnings and reported as a separate
component of stockholders' equity (net of tax effects). Permanent impairment of
securities is charged to the consolidated statement of earnings. Gains and
losses on the sale of securities available for sale are determined by the
specific identification method.
On November 15, 1995, the Financial Accounting Standards Board (FASB)
issued Special Report No. 155-B, "A Guide to Implementation of Statement 115 on
Accounting for Certain Investments in Debt and Equity Securities" (the Special
Report). Pursuant to the Special Report, the Bank was permitted to conduct a
one-time reassessment of the classifications of all securities held at that
time. Any reclassifications from the held to maturity category made in
conjunction with that reassessment would not call into question an enterprise's
intent to hold other debt securities to maturity in the future. The Bank
undertook such a reassessment and, effective December 1, 1995, certain
securities then classified as held to maturity were reclassified as available
for sale. On the effective date of the reclassification, the securities
transferred had a carrying value of $5,809, and an estimated fair value of
$5,821, resulting in a net increase to stockholder's equity for the unrealized
gains of $8, after deducting applicable income taxes of $4.
Other Real Estate Owned
Real estate acquired through foreclosure and deed in lieu of foreclosure is
recorded at the lower of cost or fair value minus estimated costs to sell. Sales
are recorded at closing and profit recognized when down payment and other profit
recognition criteria are met in accordance with SFAS No. 66, "Accounting for
Sales of Real Estate".
Valuations of real estate owned are periodically performed by management
through current appraisals and if the carrying value of a property exceeds fair
value less estimated costs to sell, an allowance is established by a charge to
operations. The amounts the Bank could ultimately recover from loans foreclosed
could differ
43
<PAGE> 44
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
materially from amounts used in arriving at the net carrying value of the asset
because of market factors beyond the Company's control or changes in the
Company's strategy for recovering its investments.
Premises and Equipment
Premises and equipment are carried at cost less accumulated depreciation
and amortization. Depreciation is provided on the straight-line method over the
estimated useful lives of the related assets. Estimated lives are three to ten
years for furniture and equipment and three to twenty years for land
improvements and buildings. Leasehold improvements are amortized on the
straight-line method over the shorter of the anticipated lease term or estimated
useful lives. Gains and losses on dispositions are reflected in current
operations. Maintenance and repairs are charged to expense as incurred.
Improvements and betterments that prolong the useful life of assets are
capitalized.
In 1995, the FASB issued Statement of Financial Accounting Standard SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." ("FAS 121"). FAS 121 requires that long-lived assets
and certain identifiable intangible to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In performing the review for
recoverability, the entity should estimate the future cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of the
expected future cash flows (undiscounted and without interest charges) is less
than the carrying amount of the asset, an impairment loss is recognized.
Measurement of an impairment loss for long-lived assets and identifiable
intangibles that an entity expects to hold and use should be based on the fair
value of the asset. FAS 121 is effective for financial statements for fiscal
years beginning after December 15, 1995. The adoption of FAS 121 did not have a
material effect on Consolidated Balance Sheet or Consolidated Statement of
Earnings upon adoption on January 1, 1996.
Income Taxes
The Company files a consolidated Federal income tax return. The Company
follows the asset and liability method of accounting for income taxes. Under
this method, deferred income taxes are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amount of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured by using
enacted statutory rates expected to apply to taxable income. The effect on
deferred taxes of a change in tax rates is recognized in income in the period
that includes the enactment date.
Earnings Per Share
Primary earnings per common share and common equivalent amounts are based
on the average number of common shares outstanding assuming exercise of all
stock options and warrants using the treasury stock method. On a fully diluted
basis, the market price at the end of the period reported has been used to
determine the number of shares which would be assumed to be repurchased under
the treasury stock method.
In February 1996, a 10% stock dividend was declared. All references to the
number of shares of common stock and per share data in the financial statement
have been adjusted to reflect the stock dividend on a retroactive basis, except
shares authorized and outstanding on the consolidated balance sheets and
statements of shareholders' equity.
Stock Based Compensation
On October 23, 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation" ("FAS 123"). This Statement applies to all
transactions in which an entity acquires goods or services by
44
<PAGE> 45
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
issuing equity instruments or by incurring liabilities where the payment amounts
are based on the entity's common stock price. The Statement covers transactions
with employees and non-employees and is applicable to both public and non-public
entities. Entities are allowed (1) to continue to use the Accounting Principles
Board Opinion No. 25 method ("APB 25"), or (2) to adopt the FAS 123 fair value
based method. Once the method is adopted, an entity cannot change and the method
selected applies to all of an entity's compensation plans and transactions. For
entities not adopting the FAS 123 fair value based method, as is the Company's
election, FAS 123 requires pro forma net income and earnings per share
information as if the fair value based method has been adopted. The pro forma
disclosures are not presented because options were not granted in 1996 and the
impact under the fair value based method is not material to proforma earnings in
1995.
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
In June 1996, the Financial Accounting Standards Board issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities." SFAS No. 125 is effective for transfers and servicing of
financial assets and Extinguishments of liabilities occurring after December 31,
1996 and is to be applied prospectively. This Statement provided accounting and
reporting standards for transfers and servicing of financial assets and
Extinguishments of liabilities based on consistent application of a
financial-components approach that focuses on control. It distinguishes
transfers of financial assets that are sales from transfers that are secured
borrowings. Management of the Company does not expect that adoption of SFAS No.
125 will have a material impact on the Company's financial position, results of
operations, or liquidity.
Reclassification
Certain amounts in 1995 and 1994 consolidated financial statements have
been reclassified to conform with the 1996 presentation.
(2) CASH AND DUE FROM BANKS
The Bank is required to maintain certain daily reserve balances in
accordance with Federal Reserve Board guidelines. Cash on hand and a due from
balance with the Federal Reserve fulfill this requirement. The Bank has
maintained sufficient cash balances with the Federal Reserve Bank to fulfill the
reserve requirement.
(3) INVESTMENT SECURITIES HELD TO MATURITY
The amortized cost and estimated fair value of investment securities held
to maturity are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Municipal securities.......................... $2,971 $25 $4 $2,992
------ --- -- ------
Total debt securities............... 2,971 25 4 2,992
Federal Home Loan Bank stock.................. 491 -- -- 491
Federal Reserve stock......................... 150 -- -- 150
------ --- -- ------
Total securities.................... $3,612 $25 $4 $3,633
====== === == ======
</TABLE>
45
<PAGE> 46
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR 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 securities.................... $3,897 $57 $7 $3,947
====== === == ======
</TABLE>
The amortized cost and estimated fair value of debt securities at December
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>
AMORTIZED COST FAIR VALUE
-------------- ----------
<S> <C> <C>
Due within one year......................................... $ 220 $ 222
Due after one year through five years....................... 1,980 1,991
Due after five years through ten years...................... 535 535
Due after ten years......................................... 236 245
------ ------
$2,971 $2,993
====== ======
</TABLE>
The interest and dividends on investment securities held to maturity for
1996, 1995 and 1994 are shown below:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Municipal securities........................................ $158 $162 $149
Federal Reserve & Federal Home Loan Bank Stock.............. 43 38 28
U.S. Treasury securities.................................... -- 192 204
Securities of other U.S. Government agencies................ -- 172 103
---- ---- ----
$201 $564 $484
==== ==== ====
</TABLE>
There were no sale of investment securities held to maturity in 1996, 1995
or 1994. At December 31, 1996 and 1995, investment securities held to maturity
with an amortized cost of $2,851 and $2,480, respectively, and a market value of
$2,871 and $2,523, respectively, were pledged as collateral for municipal
deposits.
The Company became a member of the Federal Home Loan Bank of Atlanta (FHLB)
in June 1993. As a requirement of membership, Federal Home Loan Bank stock of
$491 has been purchased. As a result of membership in the FHLB, the Company was
approved for $19,000 in aggregate borrowings collateralized by a blanket lien on
the residential mortgage loan portfolio.
46
<PAGE> 47
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(4) INVESTMENT SECURITIES AVAILABLE FOR SALE
The amortized cost and estimated fair value of the investment securities
available for sale at December 31, 1996 and 1995, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Securities of other U.S. Government
agencies.................................... $ 1,908 $-- $ 14 $ 1,894
Mortgage backed securities.................... 2,421 15 7 2,429
Collateralized mortgage obligation............ 2,864 18 52 2,830
Real estate mortgage investment conduits...... 3,808 -- 204 3,604
------- --- ---- -------
Total securities.................... $11,001 $33 $277 $10,757
======= === ==== =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR 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
Mortgage backed securities.................... 2,842 12 8 2,846
Collateralized mortgage obligation............ 3,288 15 74 3,229
Real estate mortgage investment conduits...... 4,525 -- 209 4,316
------- --- ---- -------
Total securities.................... $17,521 $55 $316 $17,260
======= === ==== =======
</TABLE>
The amortized cost and estimated fair value of debt securities available
for sale at December 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>
AMORTIZED FAIR
COST VALUE
--------- -------
<S> <C> <C>
Due after one year through five years....................... $ 1,908 $ 1,894
------- -------
Mortgage related securities................................. 9,093 8,863
------- =======
$11,001 $10,757
======= =======
</TABLE>
The interest and dividends on investment securities available for sale for
1996, 1995 and 1994 are shown on the following page:
<TABLE>
<CAPTION>
1996 1995 1994
---- ------ ------
<S> <C> <C> <C>
U.S. Treasury securities................................... $ 98 $ 18 $ 150
Securities of other U.S. Government agencies............... 129 432 536
Mortgage related securities................................ 590 738 645
---- ------ ------
$817 $1,188 $1,331
==== ====== ======
</TABLE>
Proceeds from sales of investment securities available for sale were
$3,862, $9,253 and $7,077 in 1996, 1995 and 1994, respectively. During 1996, $4
in gains were realized from the sale of investment securities available for
sale. During 1995, $59 in losses were realized from the sale of investment
securities available for sale. During 1994, $12 in gains were realized from the
sale of investment securities available for sale.
47
<PAGE> 48
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1996 and 1995, investment securities available for sale
with an amortized cost of $4,189 and $4,399, respectively, and a fair value of
$4,175 and $4,388, respectively, were pledged as collateral for municipal
deposits.
(5) LOANS
An analysis of loans follows:
<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Real Estate:
Construction.............................................. $ 6,579 $ 4,952
Loans on primary residences............................... 49,228 38,015
Other..................................................... 17,768 12,665
Commercial................................................ 12,602 10,075
Loans to individuals:
Installment............................................... 14,299 11,120
Other personal and business............................... 794 671
-------- -------
$101,270 $77,498
======== =======
</TABLE>
At December 31, 1996 and 1995, real estate-construction loans were
comprised of $4,605 and $3,686, respectively, in single family residential loans
and $1,974 and $1,266, respectively, in commercial real estate loans.
An analysis of the allowance for loan losses follow:
<TABLE>
<CAPTION>
1996 1995 1994
------ ---- ----
<S> <C> <C> <C>
Balance at beginning of year................................ $ 827 $699 $618
Provision charged to expense................................ 640 206 163
Loans charged-off........................................... (143) (85) (86)
Recoveries.................................................. 47 7 4
------ ---- ----
Balance at end of year............................ $1,371 $827 $699
====== ==== ====
</TABLE>
At December 31, 1996, there were 28 impaired loans with a balance of $764
on nonaccrual. No specific allowances have been provided for these loans. The
average net recorded investment in impaired loans for the years ended December
31, 1996 and 1995 was $529 and $371, respectively. Interest income of $30 and
$13 for the years ended December 31, 1996 and 1995 was recognized on impaired
loans during the period of impairment. Loans on nonaccrual status at December
31, 1996 had interest due but not recognized of approximately $40. At December
31, 1995 there were 13 loans with a balance of $405 on nonaccrual. During the
fourth quarter of 1996, the Company recorded a provision for loan losses
aggregating $400.
Interest income on tax exempt loans aggregated approximately $37 in 1995,
no interest income was earned on tax exempt loans in 1996.
At December 31, 1996 and 1995, the Company was servicing a residential
mortgage loan portfolio for the Federal National Mortgage Association (FNMA)
totaling $35,794 and $38,124, respectively. In addition, at December 31, 1996
the Company began servicing a residential mortgage loan portfolio for private
investors totaling $3,065.
48
<PAGE> 49
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(6) MORTGAGE SERVICING RIGHTS, NET
The following is an analysis of the mortgage servicing rights, net:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Balance at beginning of year................................ $102 $ --
Origination of mortgage servicing rights.................... 67 105
Amortization................................................ (25) (3)
---- ----
$144 $102
==== ====
</TABLE>
The fair value of capitalized mortgage servicing rights was estimated using
a discounted cash flow model. Prepayment speed projections and market
assumptions regarding discount rate, servicing cost, escrow earnings credits,
payment float and advance cost interest rates were determined from guidelines
provided by a third-party mortgage servicing rights broker.
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Mortgage servicing rights................................... $ 144 $ 102
======= =======
Unpaid principal balance of serviced loans for which
mortgage servicing rights are capitalized................. $15,053 $11,570
======= =======
</TABLE>
(7) OTHER REAL ESTATE OWNED
Other real estate owned at December 31, 1996 and 1995 follows:
<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C>
Commercial property......................................... $ 29 $ --
Undeveloped residential lot................................. 24 --
----- -----
$ 53 $ --
===== =====
</TABLE>
(8) PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1995
------ ------
<S> <C> <C>
Land........................................................ $ 398 $ 398
Land improvements........................................... 93 93
Building.................................................... 129 128
Leasehold improvements...................................... 289 276
Equipment and furniture..................................... 1,091 1,024
------ ------
2,000 1,919
Less accumulated depreciation and amortization.............. 897 738
------ ------
$1,103 $1,181
====== ======
</TABLE>
The Company, as of December 31, 1996, was obligated under various lease
agreements with terms of five, seven and ten years for a portion of its
operating facilities.
49
<PAGE> 50
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Minimum rental commitments under the lease agreements as of December 31,
1996 were as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------ ------
<S> <C>
1997.............................................. $165
1998.............................................. 166
1999.............................................. 102
2000.............................................. 54
2001.............................................. 47
2002 and thereafter............................... 139
----
$673
====
</TABLE>
Rental expense under the lease agreements was $212, $177 and $105 for years
1996, 1995 and 1994, respectively.
(9) DEPOSITS
Time deposits of $100 or more as of December 31, 1996 and 1995 aggregated
$9,281 and $9,555, respectively. Interest expense on time deposits of $100 or
more for 1996, 1995 and 1994 aggregated $528, $699 and $299, respectively.
(10) SHAREHOLDERS' EQUITY
(SHARE AND PER SHARE DATA NOT IN THOUSANDS)
The Company has an employee incentive stock option plan which provides for
the issuance of up to 64,130 shares of common stock. Options granted under the
plan will have an exercise price of not less than fair market value at the date
options first become exercisable and will be exercisable during a fixed term,
not to exceed ten years after the grant date. In the event options under the
plan are granted to an individual owning more than 10 percent of the Company's
common stock, the option price will be 110 percent of fair market value at the
date of grant and must be exercised within five years.
The exercise of options is dependent upon certain annual limitations. In
the event of employment termination, other than death, options expire after
three months of termination.
The ability of the Company to pay dividends to shareholders depends on the
Company's profitability and other factors and is restricted by Federal banking
regulations. As of December 31, 1996, the Company could distribute as dividends
to shareholders as much as its retained earnings less dividends paid without
prior approval from the Federal Reserve Bank. Within Federal banking
regulations, the Company paid a cash dividend of 10.0 cents per share in March
1993, and 30.0 cents per share in March 1994. In February of 1995 and 1996, the
Company issued a stock dividend in the amount of 10.0 percent.
In connection with the initial common stock offering, organizers were
granted warrants expiring in April 1999 to purchase 151,222.5 shares of common
stock at $8.26 per share. The warrants are exercisable through April 1999. As of
December 31, 1996, 743 warrants have been exercised.
50
<PAGE> 51
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the status of the Company's plan as of December 31, 1996,
1995, and 1994, and changes during the years ended on those dates is presented
below:
<TABLE>
<CAPTION>
1996 1995 1994
------------------ ------------------ ------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE SHARES EXERCISE SHARES EXERCISE
(000) PRICE (000) PRICE (000) PRICE
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year......... 55,539 $ 9.42 50,215 $ 8.91 46,283 $ 8.72
Granted.................................. 0 -- 6,050 13.44 8,470 10.83
Exercised................................ (2,904) 10.18 (726) 8.68 (4,538) 8.72
------ ------ ------
Total outstanding at end of year......... 52,635 10.17 55,539 9.42 50,215 8.91
====== ====== ======
Options exercisable at year-end.......... 51,728 46,090 37,250
====== ====== ======
</TABLE>
The following table summarizes information about options outstanding at
December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
- ----------------------------------------------------- OPTIONS EXERCISABLE
WEIGHTED- -----------------------
RANGE AVG WEIGHTED- WEIGHTED-
OF NUMBER REMAINING AVG NUMBER AVG
EXERCISE OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
PRICES AT 12/31/96 LIFE PRICE AT 12/31/96 PRICE
- -------------- ----------- ----------- --------- ----------- ---------
<C> <C> <C> <C> <C> <C>
$ 8 to 9 38,115 2.3 years $ 8.71 38,115 $ 8.71
10 to 11 1,210 2.3 10.33 1,210 10.33
12 to 14 -- -- -- -- --
15 to 17... 13,310 2.3 15.16 12,403 15.16
------ ------
52,635 2.3 10.38 51,728 10.38
====== ======
</TABLE>
(11) INCOME TAXES
Income tax expense (benefit) consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
<S> <C> <C> <C>
1996:
Federal................................................... $712 $(157) $555
State..................................................... 92 (26) 66
---- ----- ----
$804 (183) 621
==== ===== ====
1995:
Federal................................................... 448 (53) 395
State..................................................... 57 (9) 48
---- ----- ----
$505 $ (62) $443
==== ===== ====
1994:
Federal................................................... 325 76 401
State..................................................... 56 14 70
---- ----- ----
$381 $ 90 $471
==== ===== ====
</TABLE>
51
<PAGE> 52
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Total income tax expense differed from the amounts computed by applying the
U.S. Federal income tax rate of 34% for 1996, 1995 and 1994 to pre-tax income as
shown on following table.
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Computed "expected" tax expense............................. $629 $473 $500
Reduction in income taxes resulting from:
Tax-exempt interest income, net........................... (46) (51) (65)
State income taxes, net of federal income tax benefit....... 44 32 46
Other, net.................................................. (6) (11) (10)
---- ---- ----
$621 $443 $471
==== ==== ====
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1996 and 1995 are presented below.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Loans receivable, principally due to difference in
allowance for loan loss................................ $456 $269
Unrealized loss on securities available for sale.......... 92 98
Other..................................................... 60 57
---- ----
Total gross deferred tax assets........................... 608 424
Less valuation allowance............................... -- --
---- ----
Deferred tax assets......................................... 608 424
---- ----
Deferred tax liabilities:
Premises and equipment, principally due to differences in
depreciation........................................... 25 29
Receivables, principally due to differences in recognizing
income................................................. 201 184
Other..................................................... -- 12
---- ----
Total gross deferred tax liabilities.............. 226 225
---- ----
Net deferred tax assets................................... $382 $199
==== ====
</TABLE>
(12) NONINTEREST EXPENSE
Other expenses for 1996, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Data Processing.......................................... $ 253 $ 184 $ 150
Advertising and public relations......................... 211 188 133
Professional fees........................................ 202 165 151
Stationary, supplies and printing........................ 118 119 80
Postage and freight...................................... 99 81 57
Other real estate owned.................................. 6 12 7
FDIC insurance........................................... 2 95 161
Miscellaneous expense.................................... 631 468 418
------ ------ ------
$1,522 $1,312 $1,157
====== ====== ======
</TABLE>
(13) RELATED PARTY TRANSACTIONS
Certain directors and executive officers of the Company and certain
corporations and individuals related to such persons incurred indebtedness, in
the form of loans, as customers. These loans were made on
52
<PAGE> 53
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other customers and did
not involve more than the normal risk of collectibility.
Following is a summary of activity during 1996 and 1995 for such loans:
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Outstanding loans at the beginning of the year.............. $1,423 $1,164
Loan originations........................................... 431 727
Repayments.................................................. (534) (468)
------ ------
Outstanding loans at the end of the year.................... $1,320 $1,423
====== ======
</TABLE>
Unused portions of lines of credit to directors, officers, or principal
shareholders as of December 31, 1996 aggregated $679.
During 1996 and 1995, the Company incurred $14 and $16, respectively, in
expense to a law firm in which a director is of counsel to the firm. In
addition, the law firm represents the Bank at certain mortgage loan closings
with the firm's fees being paid by the borrower.
The Company leases its main office facility from a corporation controlled
by a director. The annual rental amounts were $87, $85 and $82 for 1996, 1995
and 1994, respectively.
In 1991, the Company adopted a non-qualified deferred compensation plan
which provides both death and retirement benefits to certain directors. The plan
is unfunded but partially insured. The Company purchases and pays premiums for
life insurance policies on the lives of the participants, with the Company as
beneficiary. These premiums are paid from compensation deferred by the
participants. Expense recognized under the plan was $21 for 1996, $25 for 1995
and $22 for 1994.
(14) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Company is a party to financial instruments with off-balance sheet risk
in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit. Those instruments involve, to varying degrees, elements of
credit, and interest rate risk in excess of the amount recognized in the balance
sheet. The contract or notional amounts of those instruments reflect the extent
of involvement the company has in particular classes of financial instruments.
The following summarizes these instruments at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Financial instruments whose credit risk is represented by
contract amount:
Commitments to extend credit.............................. $12,199 $13,041
Standby letters of credit................................. 157 297
------- -------
$12,356 $13,338
======= =======
</TABLE>
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual notional amount of
those instruments. The Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance sheet
instruments.
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without
53
<PAGE> 54
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
being drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. The Company evaluates each customer's creditworthiness
on a case-by-case basis. The amount of collateral obtained, if deemed necessary
by the Company upon extension of credit, is based on management's credit
evaluation of the counterparty. Collateral held varies but may include accounts
receivable, inventory, property, plant, and equipment, and income-producing
commercial properties.
Standby letters of credit are written conditional commitments issued by the
Company to guarantee the performance of a customer to a third party and are
normally issued in support of private borrowing. Most standby letters of credit
expire in 1997. The credit risk involved in issuing letters of credit is
essentially the same as the credit risk involved in extending loan facilities to
customers. Unless the standby letters of credit are unsecured, the Company
requires 100% of the standby letters of credit to be collateralized.
(15) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The information set forth below provides disclosure of the estimated fair
value of the Company's financial instruments presented in accordance with the
requirements of Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments" ("SFAS 107") issued by
the FASB.
Management has made estimates of fair value discount rates that it believes
to be reasonable. However, because there is no market for many of these
financial instruments, management has no basis to determine whether the fair
value presented would be indicative of the value negotiated in an actual sale.
The Company's fair value estimates do not consider the tax effect that would be
associated with the disposition of the assets or liabilities at their fair value
estimates.
Fair value is estimated for loan portfolios with similar financial
characteristics. Loans are segregated by category such as commercial, commercial
real estate, residential mortgage, and other installment. Each loan category is
further segmented into fixed and adjustable rate interest terms.
The fair value of loans is calculated by discounting scheduled cash flows
through the estimated maturity using estimated market discount rates that
reflect the credit and interest rate risk inherent in the loan. The estimate of
average maturity is based on the Bank's historical experience with prepayments
for each loan classification, modified, as required, by an estimate of the
effect of current economic and lending conditions.
For adjustable rate loans, the fair value is estimated at book value after
adjusting for credit risk inherent in the loan. The Company's interest rate risk
is considered insignificant since the majority of the Company's adjustable rate
loans are based on prime rates or one year Constant Maturity Treasuries ("CMT")
rates and adjust monthly or generally not greater than one year.
Under SFAS 107, the fair value of deposits with no stated maturity, such as
noninterest bearing demand deposits, savings and NOW accounts, and money market
and checking accounts, is equal to the amount payable on demand at December 31,
1996. The fair value of certificates of deposits is based on the discounted
value of contractual cash flows. The discount rate is estimated using
alternative borrowing rates adjusted for maintenance and insurance costs.
54
<PAGE> 55
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table presents information for the Company's financial
instruments at December 31, 1996:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------
CARRYING FAIR
AMOUNT VALUE
-------- --------
<S> <C> <C>
Financial assets:
Cash and due from banks................................... $ 5,018 $ 5,018
Federal funds sold........................................ 4,400 4,400
Debt instruments securities available for sale............ 10,757 10,757
Investment securities held to maturity.................... 3,612 3,634
Loans receivable.......................................... 99,800 100,289
Financial liabilities:
Deposits.................................................. 118,736 118,862
</TABLE>
The contract amounts and related fees with respect to the Company
commitments to extend credit, standby letters of credit, and financial
guarantees approximate fair value (see Note 14 for the contractual amounts of
the Company's financial instrument commitments).
(16) REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements
administrated by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1996, that the Bank
meets all capital adequacy requirements to which it is subject.
As of December 31, 1996, the most recent notification from the Office of
Comptroller of the Currency categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based,
Tier I leverage ratios as set forth in the table. There are no conditions or
events since that notification that Management believes have changed the
institution's category.
The Bank's actual capital amounts and ratios are shown in the following
table. Consolidated capital ratios are in excess of the Bank's capital ratios.
55
<PAGE> 56
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
BANK ONLY
<TABLE>
<CAPTION>
TO BE WELL
FOR CAPITAL CAPITALIZED UNDER
ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION PROVISIONS
--------------- ------------------- -------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1996
Total Capital (to risk-weighted assets)..... $10,849 12.74 $6,814 > $8.00% $8,517 > $10.00%
- -
Tier 1 Capital (to risk-weighted assets).... 9,784 11.49 3,407 > $4.00 5,110 > $ 6.00
- -
Tier 1 Capital (to average assets).......... 9,784 7.98 4,903 > $4.00 6,129 > $ 5.00
- -
AS OF DECEMBER 31, 1995
Total Capital (to risk-weighted assets)..... $ 9,335 12.95 $5,766 > $8.00 $7,207 > $10.00
- -
Tier 1 Capital (to risk-weighted assets).... 8,508 11.81 2,883 > $4.00 4,324 > $ 6.00
- -
Tier 1 Capital (to average assets).......... 8,508 7.56 4,449 > $4.00 5,561 > $ 5.00
- -
</TABLE>
The Leverage Ratio is also a capital measure used by all federal banking
agencies to determine whether a bank is considered well capitalized. The ratio
compares total capital to total assets and establishes a minimum range of 3%-5%
under specific circumstances. At year end 1996 and 1995 the Bank's Leverage
Ratios were 7.56% and 7.46, respectively.
The ability of the Company to pay cash dividends to it's shareholder's
depends primarily on the earnings of the Bank and the Bank's ability to pay cash
dividends to the Company. The Company is entitled to receive dividends as and
when declared by the Board of Directors of the Bank out of funds legally
available therefor, subject to the restrictions set forth in the National Bank
Act. Section 56 of the National Bank Act states that no dividends will be paid
in an amount greater than the Bank's undivided profits (as each term is defined
under the National Bank Act).
Section 60 of the National Bank Act provides that no dividends may be
declared until the Bank's surplus fund is equal to its common capital; provided,
however, that quarterly or semi-annual dividends may be paid if at least ten
percent of the Bank's net income from the preceding six-month period have been
carried to the surplus fund, and annual dividends may be paid if at least ten
percent of the Bank's net income from the preceding two consecutive six-month
periods have been carried to the surplus fund. Additionally, cash dividends must
receive the prior approval of the OCC if the total of all cash dividends
declared by the Bank in any calendar year, including the proposed cash dividend,
exceeds the total of the Bank's net income for that year plus its retained net
income from the preceding two years less any required transfers to surplus or a
fund for the retirement of preferred stock.
The payment of all stock dividends by the Bank must receive the prior
written approval of the OCC. The OCC also has the authority under the National
Bank Act to prohibit the payment of cash dividends by a national bank when it
determines such payment to be an unsafe and unsound banking practice.
(17) SUBSEQUENT EVENTS
On February 19, 1997, Seacoast Banking Corporation of Florida (Seacoast)
and the Company entered into a definitive agreement to merge the two companies.
The agreement calls for the exchange 900,000 shares of Seacoast Class A common
stock for the stock of the Company and all outstanding common stock warrants and
options. It is intended that the transaction qualify for the pooling of interest
method of accounting for business combinations. The Seacoast headquarters and
name would survive. The agreement, after receiving regulatory and stockholder
approval, is to be consummated no later than August 31, 1997. There are no
assurances that the transaction will be consummated.
56
<PAGE> 57
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(18) PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
(Parent Company only)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1995
------- ------
<S> <C> <C>
CONDENSED BALANCE SHEETS:
Assets:
Cash...................................................... $ -- $ 3
Cash in subsidiary bank................................... 12 166
Investment in subsidiary bank............................. 9,632 8,345
Investment in subsidiary mortgage company................. 76 54
Premises and equipment, net............................... 454 461
Other assets.............................................. 204 10
------- ------
$10,378 $9,039
======= ======
Liabilities:
Other liabilities......................................... 152 84
Shareholders' equity...................................... 10,226 8,955
------- ------
$10,378 $9,039
======= ======
</TABLE>
<TABLE>
<CAPTION>
FOR YEARS ENDED
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
CONDENSED STATEMENT OF INCOME:
Income:
Interest on deposits in subsidiary bank................... $ 5 $ 5 $ 9
Other..................................................... 30 30 30
------ ------ ------
35 35 39
Expenses:
Other..................................................... 160 146 127
------ ------ ------
160 146 127
------ ------ ------
Loss before income taxes and equity in income of
subsidiaries.............................................. (125) (111) (88)
Income tax benefit.......................................... 56 42 33
------ ------ ------
Loss before equity in income of subsidiaries................ (69) (69) (55)
Equity in income of subsidiary mortgage company............. 22 4 --
Equity in income of subsidiary bank......................... 1,277 1,012 1,056
------ ------ ------
Net income.................................................. $1,230 $ 947 $1,001
====== ====== ======
</TABLE>
57
<PAGE> 58
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
FOR YEARS ENDED
-----------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
CONDENSED STATEMENT OF CASH FLOWS:
Cash flows from operating activities:
Net income................................................ $ 1,230 $ 947 $ 1,001
Adjustments to reconcile net income to net cash used by
operating activities:
Equity in income of subsidiary......................... (1,277) (1,012) (1,056)
Equity in income of mortgage company................... (22) (4) --
Other, net............................................. (113) 135 (231)
------- ------- -------
Net cash provided (used by) operating activities....... (182) 66 (286)
------- ------- -------
Cash flows from investing activities:
(Increase) decrease in deposits in subsidiary bank........ 154 (77) 165
------- ------- -------
Net cash (used in) provided by investing activities....... 154 (77) 165
------- ------- -------
Cash flows from financing activities:
Proceeds of stock issuance................................ 33 8 40
Dividends received........................................ -- -- 200
Dividends paid............................................ (2) -- (184)
------- ------- -------
Net cash provided by financing activities.............. 31 8 56
------- ------- -------
Net increase (decrease) in cash................... 3 (3) (65)
Cash at beginning of year................................... (3) -- 65
------- ------- -------
Cash at end of year......................................... $ -- $ (3) $ --
======= ======= =======
Supplemental information:
Cash paid during the period for:
Income taxes........................................... $ 789 $ 236 $ 574
</TABLE>
The Company has a land lease agreement with the Bank for the property on
which the Bank's branch office was constructed. The term of the lease is five
years, terminating on December 1996, with rental fees totaling $30 in each of
1996, 1995 and 1994.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
58
<PAGE> 59
PART III
ITEM 9. DIRECTORS, EXECUTIVE, OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
DIRECTORS WHOSE TERMS EXPIRE IN 1997
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
DIRECTOR BENEFICIALLY OUTSTANDING
NAME, AGE, AND BUSINESS EXPERIENCE DURING PAST FIVE YEARS SINCE OWNED(1) SHARES(2)
--------------------------------------------------------- -------- ------------ -------------
<S> <C> <C> <C>
Howard L. Bickford(3)....................................... 1988 22,627.00 3.0%
Mr. Bickford, age 73, has been a part-time real estate
broker since 1989
Charles E. Bigge(4)......................................... 1988 30,439.5 4.0%
Mr. Bigge, age 66, has been owner and Chairman of the
Board of Custom Air Systems, Inc., an air conditioning
contractor in Port St. Lucie since 1974
Raymond L. Isenburg(5)...................................... 1988 21,498.00 2.9%
Mr. Isenburg, age 53, has been the Vice President of
Applied Science and Technology at Indian River Community
College since 1991. From 1986 to 1991, he was Dean of
Vocational Education
George V. Weston(6)......................................... 1991 43,014.75 5.7%
Mr. Weston, age 65, has been President and sole owner of
Marathon Abrasive Company, Inc. since 1970. Marathon
Abrasive Company manufactures grinding wheels for use in
the steel industry
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 1998
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
DIRECTOR BENEFICIALLY OUTSTANDING
NAME, AGE, AND BUSINESS EXPERIENCE DURING PAST FIVE YEARS SINCE OWNED(1) SHARES(2)
--------------------------------------------------------- -------- ------------ -------------
<S> <C> <C> <C>
Jeffrey S. Furst(7)......................................... 1988 50,275.00 6.5%
Mr. Furst, age 52, is Chairman of the Board of Directors
of the Company and the Bank, and a real estate broker and
part owner of Century 21 The Real Estate Center since 1987
Harold H. Goldman(8)........................................ 1988 38,447.15 5.0%
Mr. Goldman, age 65, is a retired attorney and was
formerly the senior partner in the law firm of Goldman,
Bruning & Mildner, P.A. in Port St. Lucie since 1975. Mr.
Goldman serves as Bank Secretary
J. Hal Roberts, Jr.(9)...................................... 1988 56,591.00 7.3%
Mr. Roberts, age 48, has served as President and Chief
Executive Officer of the Company since April 1988 and of
the Bank since its inception
</TABLE>
59
<PAGE> 60
DIRECTORS WHOSE TERMS EXPIRE IN 1999
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
DIRECTOR BENEFICIALLY OUTSTANDING
NAME, AGE, AND BUSINESS EXPERIENCE DURING PAST FIVE YEARS SINCE OWNED(1) SHARES(2)
--------------------------------------------------------- -------- ------------ -------------
<S> <C> <C> <C>
Christopher E. Fogal(10).................................... 1988 24,200.00 3.2%
Mr. Fogal, age 45, is a certified public accountant who is
the managing partner of Fogal, Lynch, Johnson, Long & Co.,
a St. Lucie County accounting firm formed in 1990
Ellen J. Guterl(11)......................................... 1988 24,200.00 3.2%
Ms. Guterl, age 56, Vice Chairperson of the Board of
Directors of the Company and of Port St. Lucie National
Bank (the "Bank"), has been employed since 1979 as an
officer for several privately owned real estate companies,
including Tropical Homes Construction, Inc., of which she
is President
Joe Marinaro(12)............................................ 1990 17,883.00 2.4%
Mr. Marinaro, age 66, has been President and sole owner of
Atlantic Fruit Company since 1985. Atlantic Fruit Company
is a wholesale broker for fruit and vegetables.
</TABLE>
OTHER EXECUTIVE OFFICER
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
DIRECTOR BENEFICIALLY OUTSTANDING
NAME, AGE, AND BUSINESS EXPERIENCE DURING PAST FIVE YEARS SINCE OWNED(1) SHARES(2)
--------------------------------------------------------- -------- ------------ -------------
<S> <C> <C> <C>
Randall A. Ezell(13)........................................ 1988 19,930.00 2.6%
Mr. Ezell, age 46, has been the Senior Vice President and
Chief Financial Officer of the Company since October 1988,
and the Chief Financial Officer of the Bank since April 3,
1989, and Executive Vice President of the Bank since April
1, 1995
All Directors and Executive Officers as a group (11
persons)(3-13)............................................ 349,092.00 39.0%
</TABLE>
- ---------------
1. Includes the number of shares that could be purchased by exercise of Company
warrants ("Warrants") or Options ("Options") presently exercisable or
exercisable within 60 days from March 1, 1996. The shares that could be
purchased by exercise of Warrants or Options reflect the stock dividends
paid in 1995 and 1996 in accordance with the Form of Warrant and the Stock
Option Plan. As a result, all shares beneficially owned reflect the two 10%
stock dividends paid in 1995 and 1996.
2. As required by SEC rules, any shares not outstanding which are subject to
Warrants or Options are deemed to be outstanding to the extent exercisable
within 60 days, for the purpose of computing the percentage of outstanding
shares owned by a person, but are not deemed to be outstanding for the
purpose of computing the percentage of outstanding shares owned by any other
person.
3. Includes 121 shares held directly, 11,979 shares held by a trust of which
Mr. Bickford and his wife are the sole trustees for the benefit of Mr.
Bickford's wife, and 10,527 Warrants.
4. Includes 121 shares held directly, 1,415 shares held in his individual
retirement account, 6,231 shares held by a trust of which Mr. Bigge is the
sole trustee for the benefit of Mr. Bigge, and 605 shares held by a trust of
which Mr. Bigge is the sole trustee for the benefit of the Custom Air
Systems, Inc. Profit Sharing Plan; Mr. Bigge disclaims beneficial ownership
of 605 of these shares. Also includes 6,231 shares held by a trust of which
Mr. Bigge's wife is the sole trustee for the benefit of Mr. Bigge's wife,
1,125 shares held in his wife's individual retirement account and 14,701.5
Warrants.
5. Includes 121 shares directly, 12,577 shares held jointly with his wife, and
8,800 Warrants.
6. Includes 121 shares held directly, 36,632 shares held jointly with his wife
and 6,261.75 Warrants.
7. Includes 121 shares held directly, 6.050 shares held in his individual
retirement account, 15,004 shares held jointly with his wife and 21,175
Warrants. Also includes 3,327 shares and 4,598 Warrants held by his wife,
beneficial ownership of which is disclaimed by Mr. Furst.
60
<PAGE> 61
8. Includes 4,790 shares held directly, 15,104 shares held by his IRA and
18,553.15 Warrants.
9. Includes 1,583 shares held directly, 13,857 held jointly with his wife,
4,821 held in his individual retirement account, and 635 shares held in his
wife's individual retirement account, beneficial ownership of which is
disclaimed by Mr. Roberts. Also includes 11,495 Warrants and 24,200 vested
Options.
10. Includes 121 shares held directly, 11,979 shares held jointly with his wife,
and 12,100 Warrants.
11. Includes 12,100 shares held directly and 12,100 Warrants.
12. Includes 121 shares held directly, 12,100 shares held jointly with his wife,
2,226 shares held in his individual retirement account, and 3,436 shares
held by his wife's individual retirement account, beneficial ownership of
which is disclaimed by Mr. Marinaro.
13. Includes 1,294 shares held jointly by Mr. Ezell and his wife, 5,929 shares
held by his individual retirement account, 605 Warrants and 12,100 vested
Options.
To the Company's knowledge, which is based solely on a review of reports of
changes in ownership of the Common Stock as received by the Company from each
person who, at any time during 1996, was a director, executive office or
beneficial owner of more than 10% of the Common Stock, the Company believes that
only one person has failed to file on a timely basis reports required by Section
16(a) of the Exchange Act during 1996 or prior fiscal years. Mr. David W.
Skiles, an executive officer of the Bank, failed to report on a timely basis his
purchase of 747 shares of Common stock at the then market price of $21 per share
on April 4, 1996. This has subsequently been reported through the Form 5 filing
as of year end 1996.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth a summary for the last three fiscal years of
the cash and noncash compensation awarded to, earned by, or paid to, the Chief
Executive Officer of the Company. No other executive officer exceeded the
individual remuneration level of $100,000 to be included in this table as a
highly compensated officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
- --------------------------- ---- -------- ------ ---------------
<S> <C> <C> <C> <C>
J. Hal Roberts, Jr..................................... 1996 $130,725 $2,931 $8,533
President and Chief 1995 124,500 3,088 7,961
Executive Officer 1994 118,125 6,793 7,591
</TABLE>
- ---------------
(1) The amounts shown above as other annual compensation include director's fees
earned by Mr. Roberts and expensed by the Company in the year shown as well
as other items shown below. Mr. Roberts elected to defer a portion of the
Bank related director's fees pursuant to the nonqualified deferred
compensation plan discussed below:
<TABLE>
<CAPTION>
LIFE
INSURANCE
BANK COMPANY BENEFITS IN
DIRECTOR'S DIRECTOR'S EXCESS OF 401K
DATE FEES FEES $50,000 MATCHING TOTAL
- ---- ---------- ---------- ----------- -------- ------
<S> <C> <C> <C> <C> <C>
1996..................................... $5,400 $650 $703 $1,780 $8,533
1995..................................... 5,400 -0- 693 1,868 7,961
1994..................................... 4,800 375 644 1,772 7,591
</TABLE>
All of the Company Directors are also Directors of the Bank. The fees for
the Company Board meetings were $125 per meeting. There was a total of $6,475
paid for the Company Board meetings in 1996. The fees for the Bank Board
meetings were $450 per meeting with the Chairman of the Board receiving a fee of
$675 per meeting. All members were compensated for committee meetings at $100
per meeting. These fees aggregated $68,450 in 1996 and were recognized as an
expense to the Bank. Effective January 1, 1997, fees for the Bank Board meetings
were increased to $550 per meeting with the Chairman of the Board receiving $825
per meeting. All members will receive $250 per committee meeting.
61
<PAGE> 62
Board members who are also members of management receive no fee for
attendance at committee meetings but are compensated for attendance at Board of
Directors meetings. Mr. Roberts is currently the only member of management to
serve on the Board.
Effective December 1991, the Company adopted a nonqualified deferred
compensation plan in which Board members and key employees may voluntarily
participate. Participants can contribute by deferring director's fees or a
portion of their salary. The contributions are used to purchase and carry a life
insurance policy with the Bank as owner but with the proceeds to be paid to the
Company, with the Company distributing to the participants' beneficiaries. There
is no administrative cost arising out of this plan to the Bank or to the
Company. To date, there are four participants in the plan.
On March 15, 1990, the Company, the Bank and Mr. Roberts entered into a
three-year employment agreement, which commenced on April 1, 1990, with an
annual salary of $80,000 for the first year and annual salaries of $90,000 and
$100,000 for the second and third years, respectively. In addition, Mr. Roberts
was entitled to receive an additional 1,000 shares of Common Stock at the end of
each year of the employment agreement. The Company also granted Options to Mr.
Roberts which entitle him to purchase 20,000 shares of Common Stock under the
Company's Stock Option Plan. The Options vested over a period of five years at
the rate of 4,000 shares per year, commencing on April 3, 1989, and they expire
on April 3, 1999. The exercise price for the Options is equal to the greater of
(a) the fair market value of the Common Stock on the date of vesting, or (b)
$8.26 per share. The terms of the stock option plan discussed are prior to the
stock dividends. The plan allows both the number of options and the exercise
price to be adjusted to reflect any stock dividends. See further discussion of
the Company Stock Option plan below.
Mr. Roberts has continued to receive one-year extensions at each
anniversary date on his three-year employment contract with progressively higher
annual salary amounts. The most recent annual renewal of Mr. Roberts' contract
was on April 1, 1996, at an annual salary of $132,300. A one-year extension of
the contract will continue to be added at each anniversary upon satisfactory
performance as determined by the Board of Directors. Mr. Roberts will be
entitled to salary for the remaining terms of his contract at the then current
level unless he voluntarily resigns or his termination is caused by death, a
demand by a regulatory agency or his conviction of a crime relating to moral
turpitude.
The Company Stock Option Plan is authorized to grant options to such
full-time employees of the Company (i.e., directors who are not employees are
not eligible) who are deemed to have contributed in the past or who may be
expected to contribute materially in the future to the successful performance of
the Company based on such factors as the Board or Compensation Committee may, in
its discretion, deem appropriate. The Stock Option Plan permits the Board of
Directors to issue options to purchase up to an aggregate of 64,130 shares of
Common Stock. The minimum price at which any option may be exercised will be the
fair market value of the Common Stock on the date of grant, except that the
exercise price for any option granted to a person owning more than 10% of the
Company's outstanding Common Stock must be at least 110% of the fair market
value of the Common Stock on the date of grant. All Options granted under the
Plan must be exercised within 10 years of the date of grant, except that Options
granted to a person owning more than 10% of the Common Stock must be exercised
within five years. To date, Options to purchase 62,883 shares of Common Stock
have been awarded under the plan to key employees of the Company of which 50,820
Options were outstanding at March 1, 1997, and 9,983 have been exercised. The
Options and
62
<PAGE> 63
shares reflect the 10% stock dividend declared February 15, 1996 and 1994. The
Options to purchase shares are first exercisable as follows:
<TABLE>
<CAPTION>
EXERCISE PRICE
SHARES PER OPTIONS
------ --------------
<S> <C> <C>
Prior to 1990............................................... 7,260 8.26
1990........................................................ 7,260 8.68
1991........................................................ 7,260 8.68
1992........................................................ 7,260 8.88
1993........................................................ 7,260 9.09
1994........................................................ 3,934 10,83
1995........................................................ 5,746 13.44
1996........................................................ 3,933 20.75
1997........................................................ 907 *
------
50,820
</TABLE>
- ---------------
* Option price per share is determined by the greater of the fair market value
of the Common Stock when the Options first become exercisable or $8.26 per
share.
The following table indicates the number of exercisable and unexercisable
options held by the only executive officer meeting disclosure requirements at
December 31, 1996. No options to purchase Common Stock by the executive officer
were exercised in 1996. The Options shown reflect the two 10% stock dividends
paid in 1995 and 1996.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING
UNEXERCISED OPTIONS AT FISCAL YEAR-END VALUE OF UNEXERCISED IN-THE-
NAME EXERCISABLE/UNEXERCISABLE MONEY OPTIONS AT FISCAL YEAR-END
---- --------------------------------------- --------------------------------
<S> <C> <C>
J. Hal Roberts, Jr................. 24,200/-0- $345,600/-0-
</TABLE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On March 1, 1997, the following persons owned, of record, or were known by
the Company to own beneficially more than five percent of the Common Stock of
the Company.
<TABLE>
<CAPTION>
SHARES OWNED SHARES PERCENTAGE OF
DIRECTLY ACQUIRABLE OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OR INDIRECTLY* WITHIN 60 DAYS SHARES*
------------------------------------ -------------- --------------- -------------
<S> <C> <C> <C>
Jeffrey S. Furst(7).................................... 24,502 25,773 6.5%
1161 SW Mirror Lake Cove, Port St. Lucie, Florida
Harold H. Goldman(8)................................... 19,894 18,553.15 5.0%
1881 S. Irwin Road, Port St. Lucie, Florida
J. Hal Roberts, Jr.(9)................................. 20,896 35,695 7.3%
2401 Dade Road, Fort Pierce, Florida
George V. Weston(6).................................... 36,753 6,262.75 5.7%
104 Toteka Circle, Jupiter, Florida
</TABLE>
- ---------------
* Please refer to footnotes on pervious pages.
For a discussion of the Company's directors' and officers' beneficial
ownership of Company common stock, see response to Item 9 herein.
63
<PAGE> 64
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's directors, executive officers, nominees for directors and
their immediate family and affiliates, including corporations and firms of which
they are officers or in which they or their families have an ownership interest,
are customers of the Company's principal subsidiary, the Bank. These persons,
corporations and firms have had transactions in the ordinary course of business
with the Bank, including borrowings of material amounts, all of which, in the
opinion of the management, were made in substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unaffiliated persons and did not involve more than the normal
risk of collectability or present other unfavorable features. The Company
expects the Bank to have such transactions on similar terms with its directors,
executive officers and their affiliates in the future. The approximate total
amount of such indebtedness at December 31, 1996, was $1,320,000. The largest
aggregate amount of indebtedness outstanding to such persons, corporations, and
firms as a group during 1996 was $1,862,000.
The Bank's main office is located in premises leased from a corporation
controlled by Harold H. Goldman, a director, at a current annual rental of
$86,670. The Company has obtained a market study from an independent real estate
appraiser which concludes that the rent paid under the lease is comparable to
the prevailing rental rates in the Port St. Lucie area. The lease was for an
initial term of five years which expired in 1994 and has been renewed for
another five years with a rental increase. In the opinion of the management of
the Company, the terms of the lease are comparable to those that could have been
obtained had the property been leased from an unaffiliated person.
In February 1992, the Bank entered into an agreement to lease additional
space in the same building as the main office. The lease has a term of seven
years and calls for an annual rental of $23,000 for the first two years, $25,000
for the third and fourth years, and $27,000 for the years thereafter. The
Company performed an additional market study that indicates that the lease from
the corporation Mr. Goldman controls was comparable to prevailing rental rates
in the Port St. Lucie area. In the opinion of management of the Company, the
terms of this lease are comparable to those that could have been obtained had
the property been leased from an unaffiliated person.
In January 1993, the Bank again expanded main office operations and entered
into an agreement to lease additional space. The lease has a term of six years
and an annual rental of $15,000 for the first two years, $16,200 the third and
fourth years, and $16,800 thereafter. A market study of rental rates in the Port
St. Lucie area was performed by management which indicated the cost of the
additional rental space from the corporation controlled by Mr. Goldman was
comparable to the prevailing rental costs of similar space in the Port St. Lucie
area. In the opinion of management of the Company, the terms of this lease are
comparable to those that could have been obtained had the property been leased
from an unaffiliated person.
64
<PAGE> 65
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits are either filed as part of this
report or are incorporated herein by reference to documents previously filed by
the Company with the Security and Exchange Commission:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
2 -- Agreement and Plan of Merger, dated February 19, 1997, by
and between Seacoast Banking Corporation of Florida and Port
St. Lucie National Bank Holding Corp
3.1 -- Articles of Incorporation and By-Laws of Port St. Lucie
National Bank Holding Corp(1)
3.2 -- Articles of Association and By-laws of Port St. Lucie
National Bank(1)
4 -- Form of Warrant(1)
10.1 -- Law and Finance Building Lease, dated April 11, 1988,
between Law and Finance Building, Inc. and Port St. Lucie
National Bank(1)
10.2 -- Letter of Understanding, dated February 11, 1988, between J.
Hal Roberts, Jr. and the Organizers(1)
10.3 -- Option Agreement, dated May 23, 1988, between the Company
and J. Hal Roberts, Jr.(1)
10.4 -- Employee Stock Option Plan(1)
10.5 -- Law and Finance Building Lease, dated January 23, 1990,
between Law and Finance Building, Inc. and Port St. Lucie
National Bank(2)
10.6 -- Employment Agreement, dated September 19, 1988, between
Randall A. Ezell and Port St. Lucie National Bank(2)
10.7 -- Incentive Stock Option Agreement, dated September 22, 1988,
between the Company and Randall A. Ezel1(2)
10.8 -- Contract for Sale and Purchase, dated December 8, 1989,
between the Company and Hanover Properties, Inc.(2)
10.9 -- Letter Agreement, dated March 15, 1990, among J. Hal
Roberts, Jr., Port St. Lucie National Bank Holding Corp. and
Port St. Lucie National Bank(2)
10.10 -- Law and Finance Building Lease, dated May 1, 1991, between
Law and Finance Building, Inc., and Port St. Lucie National
Bank(3)
10.11 -- Law and Finance Building Lease, dated December 17, 1992,
between Law and Finance Building, Inc. and Port St. Lucie
National Bank(4)
10.12 -- Employment Agreement, dated February 18, 1993, between J.
Hal Roberts, Jr. and Port St. Lucie National Bank(4)
10.13 -- Port St. Lucie National Bank Deferred Compensation Plan(4)
10.14 -- Employment Agreement dated February 4, 1994, between J. Hal
Roberts, Jr. and Port St. Lucie National Bank(5)
10.15 -- Port St. Lucie National Bank Deferred Compensation Plan as
amended June 17, 1993(5)
10.16 -- Renar Centre building lease, dated June 10, 1994, between
Renar Development Company and Port St. Lucie National
Bank(6)
10.17 -- Renar Centre building lease, dated November 1, 1994, between
Renar Development Company and Port St. Lucie National
Bank(6)
10.18 -- Employment Agreement, dated February 16, 1995, between J.
Hal Roberts, Jr. and Port St. Lucie National Bank(6)
10.19 -- Employment Agreement, dated January 18, 1996, J. Hal
Roberts, Jr. and Port St. Lucie National Bank(7)
10.20 -- Renar Centre building lease, dated February 8, 1996, between
Port St. Lucie National Bank and Renar Development Company
21 -- Subsidiaries of the registrant
23 -- Consent of KPMG Peat Marwick LLP
27 -- Financial Data Schedule (for SEC use only)
</TABLE>
65
<PAGE> 66
- ---------------
(1) Incorporated by reference to the exhibits filed with the Registration
Statement on Form S-18, (File No. 33-22692-A).
(2) Incorporated by reference to the exhibits filed with the Form 10-K for the
fiscal year ended December 31, 1989 (Commission File No. 0-18514).
(3) Incorporated by reference to the exhibits filed with the Form 10-K for the
fiscal year ended December 31, 1991 (Commission File No. 0-18514).
(4) Incorporated by reference to the exhibits filed with the Form 10-KSB for the
fiscal year ended December 31, 1992 (Commission File No. 0-18514).
(5) Incorporated by reference to the exhibits filed with the Form 10-KSB for the
fiscal year ended December 31, 1993 (Commission File No. 0-18514).
(6) Incorporated by reference to the exhibits filed with the form 10-KSB for the
fiscal year ended December 31, 1994 (Commission File No. 0-18514).
(7) Incorporated by reference to the exhibits filed with the form 10-KSB for the
fiscal year ended December 31, 1995 (Commission File No. 0-18514).
(b) Reports on Form 8-K. No reports on Form 8-K in fourth quarter 1996.
66
<PAGE> 67
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PORT ST. LUCIE NATIONAL BANK HOLDING
CORP
By: /s/ J. HAL ROBERTS, JR.
------------------------------------
J. Hal Roberts, Jr.
President and Chief Executive
Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ J. HAL ROBERTS, JR. President, Chief Executive
- ----------------------------------------------------- Officer, and Director
J. Hal Roberts, Jr. (Principal Executive Officer) March 20, 1997
/s/ RANDALL A. EZELL SR. Vice President and Chief
- ----------------------------------------------------- Financial Officer (Principal
Randall A. Ezell Accounting and Financial March 20, 1997
Officer)
/s/ HOWARD L. BICKFORD Director
- -----------------------------------------------------
Howard L. Bickford March 20, 1997
/s/ CHARLES E. BIGGE Director
- -----------------------------------------------------
Charles E. Bigge March 20, 1997
/s/ CHRISTOPHER E. FOGAL Director
- -----------------------------------------------------
Christopher E. Fogal March 20, 1997
/s/ JEFFREY S. FURST Director
- -----------------------------------------------------
Jeffrey S. Furst March 20, 1997
/s/ HAROLD H. GOLDMAN Director
- -----------------------------------------------------
Harold H. Goldman March 20, 1997
/s/ ELLEN J. GUTERL Director
- -----------------------------------------------------
Ellen J. Guterl March 20, 1997
Director
- -----------------------------------------------------
Raymond L. Isenburg
/s/ JOE MARINARO Director
- -----------------------------------------------------
Joe Marinaro March 20, 1997
/s/ GEORGE V. WESTON Director
- -----------------------------------------------------
George V. Weston March 20, 1997
</TABLE>
67
<PAGE> 68
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
2 -- Agreement and Plan of Merger, dated February 19, 1997, by
and between Seacoast Banking Corporation of Florida and Port
St. Lucie National Bank Holding Corp........................
3.1 -- Articles of Incorporation and By-Laws of Port St. Lucie
National Bank Holding Corp(1)...............................
3.2 -- Articles of Association and By-laws of Port St. Lucie
National Bank(1)............................................
4 -- Form of Warrant(1)..........................................
10.1 -- Law and Finance Building Lease, dated April 11, 1988,
between Law and Finance Building, Inc. and Port St. Lucie
National Bank(1)............................................
10.2 -- Letter of Understanding, dated February 11, 1988, between J.
Hal Roberts, Jr. and the Organizers(1)......................
10.3 -- Option Agreement, dated May 23, 1988, between the Company
and J. Hal Roberts, Jr.(1)..................................
10.4 -- Employee Stock Option Plan(1)...............................
10.5 -- Law and Finance Building Lease, dated January 23, 1990,
between Law and Finance Building, Inc. and Port St. Lucie
National Bank(2)............................................
10.6 -- Employment Agreement, dated September 19, 1988, between
Randall A. Ezell and Port St. Lucie National Bank(2)........
10.7 -- Incentive Stock Option Agreement, dated September 22, 1988,
between the Company and Randall A. Ezell(2).................
10.8 -- Contract for Sale and Purchase, dated December 8, 1989,
between the Company and Hanover Properties, Inc.(2).........
10.9 -- Letter Agreement, dated March 15, 1990, among J. Hal
Roberts, Jr., Port St. Lucie National Bank Holding Corp. and
Port St. Lucie National Bank(2).............................
10.10 -- Law and Finance Building Lease, dated May 1, 1991, between
Law and Finance Building, Inc., and Port St. Lucie National
Bank(3).....................................................
10.11 -- Law and Finance Building Lease, dated December 17, 1992,
between Law and Finance Building, Inc. and Port St. Lucie
National Bank(4)............................................
10.12 -- Employment Agreement, dated February 18, 1993, between J.
Hal Roberts, Jr. and Port St. Lucie National Bank(4)........
10.13 -- Port St. Lucie National Bank Deferred Compensation
Plan(4).....................................................
10.14 -- Employment Agreement dated February 4, 1994, between J. Hal
Roberts, Jr. and Port St. Lucie National Bank(5)............
10.15 -- Port St. Lucie National Bank Deferred Compensation Plan as
amended June 17, 1993(5)....................................
10.16 -- Renar Centre building lease, dated June 10, 1994, between
Renar Development Company and Port St. Lucie National
Bank(6).....................................................
10.17 -- Renar Centre building lease, dated November 1, 1994, between
Renar Development Company and Port St. Lucie National
Bank(6).....................................................
10.18 -- Employment Agreement, dated February 16, 1995, between J.
Hal Roberts, Jr. and Port St. Lucie National Bank(6)........
10.19 -- Employment Agreement, dated January 18, 1996, J. Hal
Roberts, Jr. and Port St. Lucie National Bank(7)............
10.20 -- Renar Centre building lease, dated February 8, 1996, between
Port St. Lucie National Bank and Renar Development
Company.....................................................
21 -- Subsidiaries of the registrant..............................
23 -- Consent of KPMG Peat Marwick LLP............................
27 -- Financial Data Schedule.....................................
</TABLE>
68
<PAGE> 69
- ---------------
(1) Incorporated by reference to the exhibits filed with the Registration
Statement on Form S-18 (File No. 33-22692-A).
(2) Incorporated by reference to the exhibits filed with the Form 10-K for the
fiscal year ended December 31, 1989 (Commission File No. 0-18514).
(3) Incorporated by reference to the exhibits filed with the Form 10-K for the
fiscal year ended December 31, 1991 (Commission File No. 0-18514).
(4) Incorporated by reference to the exhibits filed with the Form 10-KSB for the
fiscal year ended December 31, 1992 (Commission File No. 0-18514).
(5) Incorporated by reference to the exhibits filed with the Form 10-KSB for the
fiscal year ended December 31, 1993 (Commission File No. 0-18514).
(6) Incorporated by reference to the exhibits filed with the form 10-KSB for the
fiscal year ended December 31, 1994 (Commission File No. 0-18514).
(7) Incorporated by reference to the exhibits filed with the form 10-KSB for the
fiscal year ended December 31, 1995 (Commission File No. 0-18514).
69
<PAGE> 1
EXHIBIT 2
Agreement and Plan of Merger, dated February 19, 1997, by
and between Seacoast Banking Corporation of Florida and Port St. Lucie National
Bank Holding Corp
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
SEACOAST BANKING CORPORATION OF FLORIDA
AND
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
DATED AS OF FEBRUARY 19, 1997
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Parties ........................................................................................ 1
Preamble ........................................................................................ 1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER..................................................... 1
1.1 Merger......................................................................... 1
1.2 Time and Place of Closing...................................................... 1
1.3 Effective Time................................................................. 1
1.4 Bank Merger.................................................................... 2
ARTICLE 2 - TERMS OF MERGER...................................................................... 2
2.1 Charter........................................................................ 2
2.2 Bylaws......................................................................... 2
2.3 Directors and Officers......................................................... 2
ARTICLE 3 - MANNER OF CONVERTING SHARES.......................................................... 2
3.1 Conversion of Shares........................................................... 2
3.2 Anti-Dilution Provisions....................................................... 3
3.3 Shares Held by PSHC or Seacoast................................................ 3
3.4 Dissenting Shareholders........................................................ 3
3.5 Fractional Shares.............................................................. 3
3.6 Conversion of Stock Options; Restricted Stock.................................. 3
ARTICLE 4 - EXCHANGE OF SHARES................................................................... 5
4.1 Exchange Procedures............................................................ 5
4.2 Rights of Former PSHC Shareholders............................................. 5
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF PSHC............................................... 6
5.1 Organization, Standing, and Power.............................................. 6
5.2 Authority of PSHC; No Breach By Agreement...................................... 6
5.3 Capital Stock.................................................................. 7
5.4 PSHC Subsidiaries.............................................................. 7
5.5 SEC Filings; Financial Statements.............................................. 8
5.6 Absence of Undisclosed Liabilities............................................. 8
5.7 Absence of Certain Changes or Events........................................... 8
5.8 Tax Matters.................................................................... 8
5.9 Allowance for Possible Loan Losses............................................. 9
5.10 Assets......................................................................... 10
5.11 Intellectual Property.......................................................... 10
5.12 Environmental Matters.......................................................... 11
5.13 Compliance with Laws........................................................... 11
5.14 Labor Relations................................................................ 12
5.15 Employee Benefit Plans......................................................... 12
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
5.16 Material Contracts............................................................. 13
5.17 Legal Proceedings.............................................................. 14
5.18 Reports........................................................................ 14
5.19 Statements True and Correct.................................................... 14
5.20 Accounting, Tax and Regulatory Matters......................................... 15
5.21 State Takeover Laws............................................................ 15
5.22 Charter Provisions............................................................. 15
5.23 Opinion of Financial Advisor................................................... 15
5.24 Board Recommendation........................................................... 15
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF Seacoast........................................... 16
6.1 Organization, Standing, and Power.............................................. 16
6.2 Authority; No Breach By Agreement.............................................. 16
6.3 Capital Stock.................................................................. 17
6.4 Seacoast Subsidiaries.......................................................... 17
6.5 SEC Filings; Financial Statements.............................................. 18
6.6 Absence of Undisclosed Liabilities............................................. 18
6.7 Absence of Certain Changes or Events........................................... 18
6.9 Allowance for Possible Loan Losses............................................. 19
6.10 Assets......................................................................... 19
6.11 Intellectual Property.......................................................... 19
6.12 [Reserved]..................................................................... 20
6.13 Compliance With Laws........................................................... 20
6.14 Legal Proceedings.............................................................. 20
6.15 Reports........................................................................ 20
6.16 Statements True and Correct.................................................... 21
6.17 Accounting, Tax and Regulatory Matters......................................... 21
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION............................................. 21
7.1 Affirmative Covenants of PSHC.................................................. 21
7.2 Negative Covenants of PSHC..................................................... 22
7.3 Covenants of Seacoast.......................................................... 24
7.4 Adverse Changes in Condition................................................... 24
7.5 Reports........................................................................ 24
ARTICLE 8 - ADDITIONAL AGREEMENTS................................................................ 25
8.1 Registration Statement; Proxy Statement; Shareholder Approval.................. 25
8.2 Nasdaq Listing................................................................. 25
8.3 Applications................................................................... 25
8.4 Filings with State Offices..................................................... 25
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C>
8.5 Agreement as to Efforts to Consummate.......................................... 25
8.6 Investigation and Confidentiality.............................................. 26
8.7 Press Releases................................................................. 26
8.8 Certain Actions................................................................ 26
8.9 Accounting and Tax Treatment................................................... 27
8.10 State Takeover Laws............................................................ 27
8.11 Charter Provisions............................................................. 27
8.12 PSHC Meetings.................................................................. 27
8.13 Agreements of Affiliates....................................................... 27
8.14 Employee Benefits and Contracts................................................ 28
8.15 Indemnification................................................................ 28
8.16 Certain Policies of PSHC....................................................... 29
8.17 Nomination and Election of Directors........................................... 29
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE.................................... 30
9.1 Conditions to Obligations of Each Party........................................ 30
9.2 Conditions to Obligations of Seacoast.......................................... 31
9.3 Conditions to Obligations of PSHC.............................................. 32
ARTICLE 10 - TERMINATION......................................................................... 33
10.1 Termination.................................................................... 33
10.2 Effect of Termination.......................................................... 34
10.3 Non-Survival of Representations and Covenants.................................. 34
ARTICLE 11 - MISCELLANEOUS....................................................................... 34
11.1 Definitions.................................................................... 34
11.2 Expenses....................................................................... 41
11.3 Brokers and Finders............................................................ 41
11.4 Entire Agreement............................................................... 41
11.5 Amendments..................................................................... 42
11.6 Waivers........................................................................ 42
11.7 Assignment..................................................................... 42
11.8 Notices........................................................................ 42
11.9 Governing Law.................................................................. 43
11.10 Counterparts................................................................... 43
11.11 Captions; Articles and Sections................................................ 43
11.12 Interpretations................................................................ 43
11.13 Enforcement of Agreement....................................................... 43
11.14 Severability................................................................... 43
Signatures....................................................................................... 45
</TABLE>
iii
<PAGE> 6
LIST OF EXHIBITS
EXHIBIT NUMBER DESCRIPTION
1. Bank Plan of Merger. (ss. 1.4).
2. Form of agreement of affiliates of PSHC. (ss.ss. 8.13,
9.2(g)).
3. Matters as to which Gunster, Yoakley, Valdes-Fauli & Stewart,
P.A. will opine. (ss. 9.2(d)).
4. Form of Director's Agreement. (ss. 9.2(h)).
5. Claims Letter. (ss. 9.2(i)).
6. Matters as to which Alston & Bird will opine. (ss. 9.3(d)).
-iv-
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into as of February 19, 1997, by and between SEACOAST BANKING
CORPORATION OF FLORIDA ("Seacoast"), a Florida corporation, and PORT ST. LUCIE
NATIONAL BANK HOLDING CORP.
("PSHC"), a Florida corporation.
PREAMBLE
The respective Boards of Directors of PSHC and Seacoast are
of the opinion that the transactions described herein are in the best interests
of the parties to this Agreement and their respective shareholders. This
Agreement provides for the acquisition of PSHC by Seacoast pursuant to the
merger of PSHC with and into Seacoast. At the effective time of such merger,
the outstanding shares of the capital stock of PSHC shall be converted into the
right to receive shares of the common stock of Seacoast (except as provided
herein). As a result, shareholders of PSHC shall become shareholders of
Seacoast and Seacoast shall continue to conduct the business and operations of
PSHC. The transactions described in this Agreement are subject to the approvals
of the shareholders of PSHC, the shareholders of Seacoast, the Board of
Governors of the Federal Reserve System, and the Office of the Comptroller of
the Currency, and the satisfaction of certain other conditions described in
this Agreement. It is the intention of the parties to this Agreement that the
Merger for federal income tax purposes shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code, and for
accounting purposes shall qualify for treatment as a pooling of interests.
Certain terms used in this Agreement are defined in Section
11.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties, intending to be legally bound, agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER1 - TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, PSHC shall be merged with and into Seacoast
in accordance with the provisions of, and with the effect provided in Sections
607.1101, 607.1103, 607.1105, 607.1106 and 607.1107 of the FBCA (the "Merger").
Seacoast shall be the Surviving Corporation resulting from the Merger and shall
continue to be governed by the Laws of the State of Florida. The Merger shall
be consummated pursuant to the terms of this Agreement, which has been approved
and adopted by the respective Boards of Directors of PSHC and Seacoast.
1.2 TIME AND PLACE OF CLOSING. The closing of the
transactions contemplated hereby (the "Closing") will take place at 9:00 A.M.
on the date that the Effective Time occurs (or the immediately preceding day if
the Effective Time is earlier than 9:00 A.M.), or at such other time as the
Parties, acting through their authorized officers, may mutually agree. The
Closing shall be held at such location as may be mutually agreed upon by the
Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Articles of Merger reflecting the Merger shall become effective with
the Secretary of State of the State of Florida (the "Effective Time"). Subject
to the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the authorized officers of each Party, the Parties shall use their
reasonable efforts to cause the Effective Time to occur on the first business
day following the last to occur of (i) the effective date (including expiration
of any applicable waiting period) of the last required
<PAGE> 8
Consent of any Regulatory Authority having authority over and approving or
exempting the Merger, and (ii) the date on which the shareholders of PSHC and
Seacoast approve this Agreement to the extent such approval is required by
applicable Law; or such later date within 30 days thereof as may be mutually
agreed upon by Seacoast and PSHC.
1.4 BANK MERGER. After consummation of the Merger, PSN Bank
shall (at Seacoast's discretion) be merged with and into First National (the
"Bank Merger") in accordance with the provisions of and with the effect
provided in 12 U.S.C. 215a on terms and subject to the provisions of the Bank
Plan of Merger ("Bank Plan"), attached hereto as Exhibit 1. The Bank Plan shall
be executed and the transactions contemplated therein shall be consummated at
such time as Seacoast directs. PSHC shall vote all shares of capital stock of
PSN Bank in favor of the Bank Plan and the Bank Merger provided therein.
ARTICLE 2
TERMS OF MERGER2 - TERMS OF MERGER
2.1 CHARTER. The Articles of Incorporation of Seacoast in
effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until duly amended or repealed.
2.2 BYLAWS. The Bylaws of Seacoast in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
until duly amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Seacoast in
office immediately prior to the Effective Time, together with two such
additional persons from PSHC's Board of Directors as may thereafter be elected,
shall serve as the directors of the Surviving Corporation from and after the
Effective Time in accordance with the Bylaws of the Surviving Corporation. The
officers of Seacoast in office immediately prior to the Effective Time,
together with such additional persons as may thereafter be elected, shall serve
as the officers of the Surviving Corporation from and after the Effective Time
in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES3 - MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any
action on the part of Seacoast, PSHC, or the shareholders of either of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of capital stock of Seacoast issued and
outstanding immediately prior to the Effective Time shall remain issued
and outstanding from and after the Effective Time.
(b) Each share of PSHC Common Stock, excluding shares held by
any PSHC Entity or any Seacoast Entity, in each case other than in a
fiduciary capacity or as a result of debts previously contracted, and
excluding shares held by shareholders who perfect their statutory
dissenters' rights as provided in Section 3.4 issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding
and shall be converted into and exchanged for the right to receive
shares of Seacoast Common Stock in an amount equal to the Purchase Price
Per Share divided by the Seacoast Stock Price (the "Exchange Ratio");
provided, that, in the event that the Purchase Price Per Share shall be
less than $24.62 (the "Lower Threshold Price") then PSHC shall have the
right to terminate the Agreement.
(c) Each issued and outstanding PSHC Warrant shall be
converted into and exchanged for shares of Seacoast Common Stock based
upon the exchange ratio (the "Warrant Exchange Ratio") obtained
-2-
<PAGE> 9
by dividing (i) the difference between the Purchase Price Per Share
and $8.26 by (ii) the Seacoast Stock Price.
3.2 ANTI-DILUTION PROVISIONS. In the event Seacoast changes
the number of shares of Seacoast Common Stock issued and outstanding prior to
the Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in
the case of a stock dividend) or the effective date thereof (in the case of a
stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio and the
Warrant Exchange Ratio shall be proportionately adjusted. In the event Seacoast
changes the number of shares of Seacoast Common Stock issued and outstanding
prior to the Effective Time as a result of a stock split, stock dividend, or
similar recapitalization with respect to such stock and the record date
therefor (in the case of a stock dividend) or the effective date thereof (in
the case of a stock split or similar recapitalization for which a record date
is not established) shall be after the Exchange Ratio and the Warrant Exchange
Ratio have been determined in accordance with Sections 3.1(b) and (c) and prior
to the Effective Time, the Exchange Ratio and Warrant Exchange Ratio shall be
proportionately adjusted. In the event Seacoast changes the number of shares of
Seacoast Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or
similar recapitalization for which a record date is not established) shall be
prior to date on which the Exchange Ratio and the Warrant Exchange Ratio is
determined in accordance with Sections 3.1(b) and (c), (i) the Threshold Prices
shall be adjusted appropriately, and (ii) if necessary, the anticipated
Effective Time shall be postponed for an appropriate period of time agreed upon
by the parties in order for the Seacoast Stock Price to reflect the market
effect of such stock split, stock dividend, or similar recapitalization.
3.3 SHARES HELD BY PSHC OR SEACOAST. Each of the shares of
PSHC Common Stock held by any PSHC Entity or by any Seacoast Entity, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 DISSENTING SHAREHOLDERS. Any holder of shares of PSHC
Common Stock who perfects his dissenters' rights in accordance with and as
contemplated by Section 607.1301 et seq. of the FBCA shall be entitled to
receive the value of such shares in cash as determined pursuant to such
provision of Law; provided, that no such payment shall be made to any
dissenting shareholder unless and until such dissenting shareholder has
complied with the applicable provisions of the FBCA and surrendered to PSHC the
certificate or certificates representing the shares for which payment is being
made. In the event that after the Effective Time a dissenting shareholder of
PSHC fails to perfect, or effectively withdraws or loses, his right to
appraisal and of payment for his shares subject to Seacoast's consent in its
sole discretion, Seacoast shall issue and deliver the consideration to which
such holder of shares of PSHC Common Stock is entitled under this Article 3
(without interest) upon surrender by such holder of the certificate or
certificates representing shares of PSHC Common Stock held by him.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision
of this Agreement, each holder of shares of PSHC Common Stock exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of Seacoast Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
Seacoast Common Stock multiplied by the Seacoast Stock Price. No such holder
will be entitled to dividends, voting rights, or any other rights as a
shareholder in respect of any fractional shares.
3.6 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK.
(a) At the Effective Time, each option or other
Equity Right (excluding PSHC Warrants) to purchase shares of PSHC Common Stock
pursuant to stock options or stock appreciation rights ("PSHC Options") granted
by PSHC under the PSHC Stock Plan[s], which are outstanding at the Effective
Time, whether or not exercisable, shall be converted into and become rights
with respect to Seacoast Common Stock, and Seacoast shall assume each PSHC
Option, in accordance with the terms of the PSHC Stock Plan and stock option
-3-
<PAGE> 10
agreement by which it is evidenced, except that from and after the Effective
Time, (i) Seacoast and its Compensation Committee shall be substituted for PSHC
and the Committee of PSHC's Board of Directors (including, if applicable, the
entire Board of Directors of PSHC) administering such PSHC Stock Plan, (ii)
each PSHC Option assumed by Seacoast may be exercised solely for shares of
Seacoast Common Stock (or cash, if so provided under the terms of such PSHC
Option), (iii) the number of shares of Seacoast Common Stock subject to such
PSHC Option shall be equal to the number of shares of PSHC Common Stock subject
to such PSHC Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, and (iv) the per share exercise price under each such PSHC
Option shall be adjusted by dividing the per share exercise price under each
such PSHC Option by the Exchange Ratio and rounding up to the nearest cent.
Notwithstanding the provisions of clause (iii) of the preceding sentence,
Seacoast shall not be obligated to issue any fraction of a share of Seacoast
Common Stock upon exercise of PSHC Options and any fraction of a share of
Seacoast Common Stock that otherwise would be subject to a converted PSHC
Option shall represent the right to receive a cash payment upon exercise of
such converted PSHC Option equal to the product of such fraction and the
difference between the market value of one share of Seacoast Common Stock at
the time of exercise of such Option and the per share exercise price of such
Option. The market value of one share of Seacoast Common Stock at the time of
exercise of an Option shall be the last sale price of such common stock on the
Nasdaq National Market (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source selected by Seacoast) on the
last trading day preceding the date of exercise. In addition, notwithstanding
the provisions of clauses (iii) and (iv) of the first sentence of this Section
3.6(a), each PSHC Option which is an "incentive stock option" shall be adjusted
as required by Section 424 of the Internal Revenue Code, and the regulations
promulgated thereunder, so as not to constitute a modification, extension or
renewal of the option, within the meaning of Section 424(h) of the Internal
Revenue Code. Each of PSHC and Seacoast agrees to take all necessary steps to
effectuate the foregoing provisions of this Section 3.6, including using its
reasonable efforts to obtain from each holder of a PSHC Option any Consent or
Contract that may be deemed necessary or advisable in order to effect the
transactions contemplated by this Section 3.6. Anything in this Agreement to
the contrary notwithstanding, Seacoast shall have the right, in its sole
discretion, not to deliver the consideration provided in this Section 3.6 to a
former holder of a PSHC Option who has not delivered such Consent or Contract.
(b) As soon as practicable after the Effective Time,
Seacoast shall deliver to the participants in each PSHC Stock Plan an
appropriate notice setting forth such participant's rights pursuant thereto and
the grants subject to such PSHC Stock Plan shall continue in effect on the same
terms and conditions (subject to the adjustments required by Section 3.6(a)
after giving effect to the Merger), and Seacoast shall comply with the terms of
each PSHC Stock Plan to ensure, to the extent required by, and subject to the
provisions of, such PSHC Stock Plan, that PSHC Options which qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time. At or prior to the Effective
Time, Seacoast shall take all corporate action necessary to reserve for
issuance sufficient shares of Seacoast Common Stock for delivery upon exercise
of PSHC Options assumed by it in accordance with this Section 3.6. As soon as
practicable after the Effective Time, Seacoast shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or
other appropriate forms), with respect to the shares of Seacoast Common Stock
subject to such options and shall use its reasonable efforts to maintain the
effectiveness of such registration statements (and maintain the current status
of the prospectus or prospectuses contained therein) for so long as such
options remain outstanding. With respect to those individuals who subsequent to
the Merger will be subject to the reporting requirements under Section 16(a) of
the Exchange Act, where applicable, Seacoast shall administer the PSHC Stock
Plan assumed pursuant to this Section 3.6 in a manner that complies with Rule
16b-3 promulgated under the Exchange Act to the extent the PSHC Stock Plan
complied with such rule prior to the Effective Time.
(c) All contractual restrictions or limitations on
transfer with respect to PSHC Common Stock awarded under the PSHC Stock Plans
or any other plan, program, Contract or arrangement of any PSHC Entity, to the
extent that such restrictions or limitations shall not have already lapsed
(whether as a result of the Merger or otherwise), and except as otherwise
expressly provided in such plan, program, Contract or arrangement, shall remain
in full force and effect with respect to shares of Seacoast Common Stock into
which such restricted stock is converted pursuant to Section 3.1.
-4-
<PAGE> 11
ARTICLE 4
EXCHANGE OF SHARES4 - EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective
Time, Seacoast and PSHC shall cause the exchange agent selected by Seacoast
(the "Exchange Agent") to mail to each holder of record of a certificate or
certificates which represented shares of PSHC Common Stock immediately prior to
the Effective Time (the "Certificates") appropriate transmittal materials and
instructions (which shall specify that delivery shall be effected, and risk of
loss and title to such Certificates shall pass, only upon proper delivery of
such Certificates to the Exchange Agent). The Certificate or Certificates of
PSHC Common Stock so delivered shall be duly endorsed as the Exchange Agent may
require. In the event of a transfer of ownership of shares of PSHC Common Stock
represented by Certificates that are not registered in the transfer records of
PSHC, the consideration provided in Section 3.1 may be issued to a transferee
if the Certificates representing such shares are delivered to the Exchange
Agent, accompanied by all documents required to evidence such transfer and by
evidence satisfactory to the Exchange Agent that any applicable stock transfer
taxes have been paid. If any Certificate shall have been lost, stolen, mislaid
or destroyed, upon receipt of (i) an affidavit of that fact from the holder
claiming such Certificate to be lost, mislaid, stolen or destroyed, (ii) such
bond, security or indemnity as Seacoast and the Exchange Agent may reasonably
require and (iii) any other documents necessary to evidence and effect the bona
fide exchange thereof, the Exchange Agent shall issue to such holder the
consideration into which the shares represented by such lost, stolen, mislaid
or destroyed Certificate shall have been converted. The Exchange Agent may
establish such other reasonable and customary rules and procedures in
connection with its duties as it may deem appropriate. After the Effective
Time, each holder of shares of PSHC Common Stock (other than shares to be
canceled pursuant to Section 3.3 or as to which statutory dissenters' rights
have been perfected as provided in Section 3.4) issued and outstanding at the
Effective Time shall surrender the Certificate or Certificates representing
such shares to the Exchange Agent and shall promptly upon surrender thereof
receive in exchange therefor the consideration provided in Section 3.1,
together with all undelivered dividends or distributions in respect of such
shares (without interest thereon) pursuant to Section 4.2. To the extent
required by Section 3.5, each holder of shares of PSHC Common Stock issued and
outstanding at the Effective Time also shall receive, upon surrender of the
Certificate or Certificates, cash in lieu of any fractional share of Seacoast
Common Stock to which such holder may be otherwise entitled (without interest).
Seacoast shall not be obligated to deliver the consideration to which any
former holder of PSHC Common Stock is entitled as a result of the Merger until
such holder surrenders such holder's Certificate or Certificates for exchange
as provided in this Section 4.1. Any other provision of this Agreement
notwithstanding, neither Seacoast nor the Exchange Agent shall be liable to a
holder of PSHC Common Stock for any amounts paid or property delivered in good
faith to a public official pursuant to any applicable abandoned property,
escheat or similar Law. Adoption of this Agreement by the shareholders of PSHC
shall constitute ratification of the appointment of the Exchange Agent.
4.2 RIGHTS OF FORMER PSHC SHAREHOLDERS. At the Effective
Time, the stock transfer books of PSHC shall be closed as to holders of PSHC
Common Stock immediately prior to the Effective Time and no transfer of PSHC
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1, each
Certificate theretofore representing shares of PSHC Common Stock (other than
shares to be canceled pursuant to Sections 3.3 and 3.4) shall from and after
the Effective Time represent for all purposes only the right to receive the
consideration provided in Sections 3.1 and 3.5 in exchange therefor, subject,
however, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time which
have been declared or made by PSHC in respect of such shares of PSHC Common
Stock in accordance with the terms of this Agreement and which remain unpaid at
the Effective Time. Whenever a dividend or other distribution is declared by
Seacoast on the Seacoast Common Stock, the record date for which is at or after
the Effective Time, the declaration shall include dividends or other
distributions on all shares of Seacoast Common Stock issuable pursuant to this
Agreement, but beginning 45 days after the Effective Time, no dividend or other
distribution payable to the holders of record of Seacoast Common Stock as of
any time subsequent to the Effective Time shall be delivered to the holder of
any Certificate until such holder surrenders such Certificate for exchange as
provided in Section 4.1. However, upon surrender of such Certificate, both the
Seacoast Common Stock certificate (together with all such undelivered
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dividends or other distributions, without interest) and any undelivered
dividends and cash payments payable hereunder (without interest) shall be
delivered and paid with respect to each share represented by such Certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PSHCPSHC
PSHC hereby represents and warrants to Seacoast as follows:
5.1 ORGANIZATION, STANDING, AND POWER. PSHC is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Florida, and has the corporate power and authority to
carry on its business as now conducted and to own, lease and operate its
Assets. PSHC is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a PSHC Material
Adverse Effect. The minute books and other organizational documents and
corporate records for PSHC have been made available to Seacoast for its review
and, except as disclosed in Section 5.1 of the PSHC Disclosure Memorandum, are
true and complete in all material respects as in effect as of the date of this
Agreement and accurately reflect in all material respects all amendments
thereto and all proceedings of the Board of Directors and shareholders thereof.
5.2 AUTHORITY OF PSHC; NO BREACH BY AGREEMENT.
(a) PSHC has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of PSHC, subject to the approval of this Agreement by the holders of a
majority of the outstanding shares of PSHC Common Stock, which is the only
shareholder vote required for approval of this Agreement and consummation of
the Merger by PSHC. Subject to such requisite shareholder approval, this
Agreement represents a legal, valid, and binding obligation of PSHC,
enforceable against PSHC in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
may be brought).
(b) Neither the execution and delivery of this
Agreement by PSHC, nor the consummation by PSHC of the transactions
contemplated hereby, nor compliance by PSHC with any of the provisions hereof,
will (i) conflict with or result in a breach of any provision of PSHC's
Articles of Incorporation or Bylaws or the certificate or articles of
incorporation or bylaws of any PSHC Subsidiary or any resolution adopted by the
board of directors or the shareholders of any PSHC Entity, or (ii) except as
disclosed in Section 5.2 of the PSHC Disclosure Memorandum, constitute or
result in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any PSHC Entity under, any Contract or
Permit of any PSHC Entity, where such Default or Lien, or any failure to obtain
such Consent, is reasonably likely to have, individually or in the aggregate, a
PSHC Material Adverse Effect or where such event would cause a breach hereof or
a Default hereunder, or, (iii) subject to receipt of the requisite Consents
referred to in Section 9.1(b), constitute or result in a Default under, or
require any Consent pursuant to, any Law or Order applicable to any PSHC Entity
or any of their respective material Assets (including any Seacoast Entity or
any PSHC Entity becoming subject to or liable for the payment of any Tax or any
of the Assets owned by any Seacoast Entity or any PSHC Entity being reassessed
or revalued by any Taxing authority).
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required
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from Regulatory Authorities, and other than notices to or filings with the
Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, or under the HSR Act, and other than
Consents, filings, or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a PSHC Material
Adverse Effect, no notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by PSHC of the Merger and the other
transactions contemplated in this Agreement.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of PSHC consists of
(i) 10,000,000 shares of PSHC Common Stock, of which 744,655 shares are issued
and outstanding as of the date of this Agreement and assuming the issue and
exercise of all issued and outstanding warrants and options to purchase
201,298.625 shares of PSHC Common Stock, not more than 945,954 shares will be
issued and outstanding at the Effective Time, and (ii) no shares of preferred
stock are authorized, issued or outstanding. All of the issued and outstanding
shares of capital stock of PSHC are duly and validly issued and outstanding and
are fully paid and nonassessable under the FBCA. None of the outstanding shares
of capital stock of PSHC has been issued in violation of any preemptive rights
of the current or past shareholders of PSHC.
(b) Except as set forth in Section 5.3(a), or as
disclosed in Section 5.3(b) of the PSHC Disclosure Memorandum, there are no
shares of capital stock or other equity securities of PSHC outstanding and no
outstanding Equity Rights relating to the capital stock of PSHC.
5.4 PSHC SUBSIDIARIES. PSHC has disclosed in Section 5.4
of the PSHC Disclosure Memorandum all of the PSHC Subsidiaries that are
corporations (identifying its jurisdiction of incorporation, each jurisdiction
in which it is qualified and/or licensed to transact business, and the number
of shares owned and percentage ownership interest represented by such share
ownership) and all of the PSHC Subsidiaries that are general or limited
partnerships, limited liability companies, trusts or other non-corporate
entities (identifying the Law under which such entity is organized, each
jurisdiction in which it is qualified and/or licensed to transact business, the
type of entity the type of entity and the amount and nature of the ownership
interest therein). Except as disclosed in Section 5.4 of the PSHC Disclosure
Memorandum, PSHC or one of its wholly-owned Subsidiaries owns all of the issued
and outstanding shares of capital stock (or other equity interests) of each
PSHC Subsidiary. No capital stock (or other equity interest) of any PSHC
Subsidiary is or may become required to be issued (other than to another PSHC
Entity) by reason of any Equity Rights, and there are no Contracts by which any
PSHC Subsidiary is bound to issue (other than to another PSHC Entity)
additional shares of its capital stock (or other equity interests) or Equity
Rights or by which any PSHC Entity is or may be bound to transfer any shares of
the capital stock (or other equity interests) of any PSHC Subsidiary (other
than to another PSHC Entity). There are no Contracts relating to the rights of
any PSHC Entity to vote or to dispose of any shares of the capital stock (or
other equity interests) of any PSHC Subsidiary. All of the shares of capital
stock (or other equity interests) of each PSHC Subsidiary held by a PSHC Entity
are fully paid and (except pursuant to 12 USC Section 55 in the case of
national banks and comparable, applicable state Law, if any, in the case of
state depository institutions) nonassessable under the applicable corporation
Law of the jurisdiction in which such Subsidiary is incorporated or organized
and are owned by the PSHC Entity free and clear of any Lien. Except as
disclosed in Section 5.4 of the PSHC Disclosure Memorandum, each PSHC
Subsidiary is either a bank, a savings association, or a corporation, and each
such Subsidiary is duly organized, validly existing, and (as to corporations)
in good standing under the Laws of the jurisdiction in which it is incorporated
or organized, and has the corporate power and authority necessary for it to
own, lease, and operate its Assets and to carry on its business as now
conducted. Each PSHC Subsidiary is duly qualified or licensed to transact
business as a foreign corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
PSHC Material Adverse Effect. Each PSHC Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and the deposits in which
are insured by the Bank Insurance Fund. The minute books, and other
organizational and corporate documents for each PSHC Subsidiary have been made
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available to Seacoast for its review, and, except as disclosed in Section 5.4
of the PSHC Disclosure Memorandum, are true and complete in all material
respects as in effect as of the date of this Agreement and accurately reflect
in all material respects all amendments thereto and all proceedings of the
Board of Directors, all committees of the Board of Directors and shareholders
thereof.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) PSHC has timely filed and made available to
Seacoast, all SEC Documents required to be filed by PSHC since December 31,
1992 (the "PSHC SEC Reports"). The PSHC SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Laws and other applicable Laws and (ii) did not, at the time they
were filed (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
PSHC SEC Reports or necessary in order to make the statements in such PSHC SEC
Reports, in light of the circumstances under which they were made, not
misleading. No PSHC Subsidiary is required to file any SEC Documents.
(b) Each of the PSHC Financial Statements
(including, in each case, any related notes) contained in the PSHC SEC Reports,
including any PSHC SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto, was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited interim statements, as permitted by
Form 10-Q of the SEC), and fairly presented in all material respects the
consolidated financial position of PSHC and its Subsidiaries as at the
respective dates and the consolidated results of operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount or effect.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. Absence of
No PSHC Entity has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a PSHC Material Adverse Effect, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of PSHC as of December 31, 1995 and September 30, 1996, included in the
PSHC Financial Statements delivered prior to the date of this Agreement or
reflected in the notes thereto. Except as set forth in Section 5.6 of the PSHC
Disclosure Memorandum, no PSHC Entity has incurred or paid any Liability since
September 30, 1996, except for such Liabilities incurred or paid (i) in the
ordinary course of business consistent with past business practice and which
are not reasonably likely to have, individually or in the aggregate, a PSHC
Material Adverse Effect or (ii) in connection with the transactions
contemplated by this Agreement.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31,1995, except as disclosed in the PSHC Financial Statements delivered prior
to the date of this Agreement or as disclosed in Section 5.7 of the PSHC
Disclosure Memorandum, (i) there have been no events, changes, or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a PSHC Material Adverse Effect, and (ii) the PSHC Entities have not
taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of PSHC provided in Article 7.
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on
behalf of any of the PSHC Entities have been timely filed or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1995, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time, except to the
extent that all such failures to file, taken together, are not reasonably
likely to have a PSHC Material Adverse Effect, and all Tax Returns filed are
complete and accurate in all material respects. All Taxes shown on filed Tax
Returns have been paid. As of the date of this Agreement, there is no
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audit examination, deficiency, or refund Litigation with respect to any Taxes,
except as reserved against in the PSHC Financial Statements delivered prior to
the date of this Agreement or as disclosed in Section 5.8 of the PSHC
Disclosure Memorandum. PSHC's federal income Tax Returns have not been audited
by the IRS. All Taxes and other Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid. There are no Liens
with respect to Taxes upon any of the Assets of the PSHC Entities, except for
any such Liens which are not reasonably likely to have a PSHC Material Adverse
Effect.
(b) None of the PSHC Entities has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.
(c) The provision for any Taxes due or to become due
for any of the PSHC Entities for the period or periods through and including
the date of the respective PSHC Financial Statements that has been made and is
reflected on such PSHC Financial Statements is sufficient to cover all such
Taxes.
(d) Deferred Taxes of the PSHC Entities have been
provided for in accordance with GAAP.
(e) Except as disclosed in Section 5.8(e) of the
PSHC Disclosure Memorandum, none of the PSHC Entities is a party to any Tax
allocation or Tax sharing agreement and none of the PSHC Entities has been a
member of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was PSHC) has any Liability for
Taxes of any Person (other than PSHC and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or
foreign Law) as a transferee or successor or by Contract or otherwise.
(f) Except as disclosed in Section 5.8(f) of the
PSHC Disclosure Memorandum, each of the PSHC Entities is in compliance with,
and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state, and local Tax
Laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for such
instances of noncompliance and such omissions as are not reasonably likely to
have, individually or in the aggregate, a PSHC Material Adverse Effect.
(g) Except as disclosed in Section 5.8 of the PSHC
Disclosure Memorandum, none of the PSHC Entities has made any payments, is
obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction under
Section 280G or 162(m) of the Internal Revenue Code.
(h) There has not been an ownership change, as
defined in Internal Revenue Code Section 382(g), of the PSHC Entities that
occurred during or after any Taxable Period in which the PSHC Entities incurred
a net operating loss that carries over to any Taxable Period ending after
December 31,1995.
(i) No PSHC Entity has or has had in any foreign
country a permanent establishment, as defined in any applicable tax treaty or
convention between the United States and such foreign country.
5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. In the opinion
of management of PSHC, the allowances for possible loan, credit or securities
losses (collectively, the "Allowance") shown on the consolidated balance sheets
of PSHC included in the most recent PSHC Financial Statements dated prior to
the date of this Agreement was, and the Allowance shown on the consolidated
balance sheets of PSHC included in the PSHC Financial Statements as of dates
subsequent to the execution of this Agreement will be, as of the dates thereof,
adequate (within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for all
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known or reasonably anticipated losses relating to or inherent in the loan,
lease and securities portfolios (including accrued interest receivables) of the
PSHC Entities and other extensions of credit (including letters of credit and
commitments to make loans or extend credit) by the PSHC Entities as of the
dates thereof.
5.10 ASSETS.
(a) Except as disclosed in Section 5.10 of the PSHC
Disclosure Memorandum or as disclosed or reserved against in the PSHC Financial
Statements delivered prior to the date of this Agreement, the PSHC Entities
have good and marketable title, free and clear of all Liens, to all of their
respective Assets, except for any such Liens or other defects of title which
are not reasonably likely to have a PSHC Material Adverse Effect. Except as set
forth in Section 5.10 of the PSHC Disclosure Memorandum, all tangible
properties used in the businesses of the PSHC Entities are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary course of
business consistent with PSHC's past practices.
(b) All Assets which are material to PSHC's business
on a consolidated basis, held under leases or subleases by any of the PSHC
Entities, are held under valid Contracts enforceable as to the PSHC Entity and
to the Knowledge of PSHC as to the counter-party to such Contracts in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect.
(c) The PSHC Entities currently maintain insurance
similar in amounts, scope, and coverage to that maintained by other peer
banking organizations. None of the PSHC Entities has received notice from any
insurance carrier that (i) any policy of insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. There
are presently no claims for amounts exceeding in any individual case $5,000, or
in the aggregate $100,000, pending under such policies of insurance and no
notices of claims in excess of such amounts have been given by any PSHC Entity
under such policies.
(d) The Assets of the PSHC Entities include all
Assets required to operate the business of the PSHC Entities as presently
conducted.
5.11 INTELLECTUAL PROPERTY. Except as disclosed in
Section 5.11 of the PSHC Disclosure Memorandum, each PSHC Entity owns or has a
license to use all of the Intellectual Property used by such PSHC Entity in the
course of its business. Each PSHC Entity is the owner of or has a license to
any Intellectual Property sold or licensed to a third party by such PSHC Entity
in connection with such PSHC Entity's business operations, and such PSHC Entity
has the right to convey by sale or license any Intellectual Property so
conveyed. No PSHC Entity is in Default under any of its Intellectual Property
licenses. No proceedings have been instituted, or are pending or to the
Knowledge of PSHC threatened, which challenge the rights of any PSHC Entity
with respect to Intellectual Property used, sold or licensed by such PSHC
Entity in the course of its business, nor has any person claimed or alleged any
rights to such Intellectual Property. The conduct of the business of the PSHC
Entities does not infringe any Intellectual Property of any other person.
Except as disclosed in Section 5.11 of the PSHC Disclosure Memorandum, no PSHC
Entity is obligated to pay any recurring royalties to any Person with respect
to any such Intellectual Property. Except as disclosed in Section 5.11 of the
PSHC Disclosure Memorandum, every officer, director, or employee of any PSHC
Entity is a party to a Contract which requires such officer, director or
employee to assign any interest in any Intellectual Property to a PSHC Entity
and to keep confidential any trade secrets, proprietary data, customer
information, or other business information of a PSHC Entity, and no such
officer, director or employee is party to any Contract with any Person other
than a PSHC Entity which requires such officer, director or employee to assign
any interest in any Intellectual Property to any Person other than a PSHC
Entity or to keep confidential any trade secrets, proprietary data, customer
information, or other business information of any Person other than a PSHC
Entity. Except as disclosed in Section 5.11 of the PSHC Disclosure Memorandum,
no officer, director or to the Knowledge of PSHC any employee of any PSHC
Entity is party to any
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Contract which restricts or prohibits such officer, director or employee from
engaging in activities competitive with any Person, including any PSHC Entity.
5.12 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of PSHC, each PSHC Entity, its
Participation Facilities, and its Operating Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a PSHC Material
Adverse Effect.
(b) There is no Litigation pending or, to the
Knowledge of PSHC, threatened before any court, governmental agency, or
authority or other forum in which any PSHC Entity or any of its Operating
Properties or Participation Facilities (or PSHC in respect of such Operating
Property or Participation Facility) has been or, with respect to threatened
Litigation, may be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release, discharge, spillage, or disposal into the environment of any
Hazardous Material, whether or not occurring at, on, under, adjacent to, or
affecting (or potentially affecting) a site owned, leased, or operated by any
PSHC Entity or any of its Operating Properties or Participation Facilities, nor
is there any reasonable basis for any Litigation of a type described in this
sentence.
(c) During the period of (i) any PSHC Entity's
ownership or operation of any of their respective current properties, (ii) any
PSHC Entity's participation in the management of any Participation Facility, or
(iii) any PSHC Entity's holding of a security interest in a Operating Property,
there have been no releases, discharges, spillages, or disposals of Hazardous
Material in, on, under, adjacent to, or affecting (or potentially affecting)
such properties; provided that with respect to the period set forth in (iii)
above, this representation shall be made to the Knowledge of PSHC. Prior to the
period of (i) any PSHC Entity's ownership or operation of any of their
respective current properties, (ii) any PSHC Entity's participation in the
management of any Participation Facility, or (iii) any PSHC Entity's holding of
a security interest in a Operating Property, to the Knowledge of PSHC, there
were no releases, discharges, spillages, or disposals of Hazardous Material in,
on, under, or affecting any such property, Participation Facility or Operating
Property.
5.13 COMPLIANCE WITH LAWS. PSHC is duly registered as a
bank holding company under the BHC Act. Each PSHC Entity has in effect all
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
PSHC Material Adverse Effect, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a PSHC Material Adverse Effect. Except as
disclosed in Section 5.13 of the PSHC Disclosure Memorandum, none of the PSHC
Entities:
(a) is in Default under any of the provisions of its Articles
of Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Permits
applicable to its business or employees conducting its business,
except for Defaults which are not reasonably likely to have,
individually or in the aggregate, a PSHC Material Adverse Effect; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or
local government or any Regulatory Authority or the staff thereof (i)
asserting that any PSHC Entity is not in compliance with any of the
Laws or Orders which such governmental authority or Regulatory
Authority enforces, (ii) threatening to revoke any Permits, or (iii)
requiring any PSHC Entity to enter into or consent to the issuance of
a cease and desist order, formal agreement, directive, commitment, or
memorandum of understanding, or to adopt any Board resolution or
similar undertaking, which restricts materially the conduct of its
business or in any manner relates to its capital adequacy, its credit
or reserve policies, its management, or the payment of dividends.
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Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to
Seacoast.
5.14 LABOR RELATIONS. No PSHC Entity is the subject of
any Litigation asserting that it or any other PSHC Entity has committed an
unfair labor practice (within the meaning of the National Labor Relations Act
or comparable state law) or seeking to compel it or any other PSHC Entity to
bargain with any labor organization as to wages or conditions of employment,
nor is any PSHC Entity party to any collective bargaining agreement, nor is
there any strike or other labor dispute involving any PSHC Entity, pending or
to the Knowledge of PSHC is (i) any such strike or dispute threatened or (ii)
there any activity involving any PSHC Entity's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
5.15 EMPLOYEE BENEFIT PLANS.
(a) PSHC has disclosed in Section 5.15 of the PSHC
Disclosure Memorandum, and has delivered or made available to Seacoast prior to
the execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including "employee benefit plans" as
that term is defined in Section 3(3) of ERISA, currently adopted, maintained
by, sponsored in whole or in part by, or contributed to by any PSHC Entity or
ERISA Affiliate thereof for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries and under
which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate (collectively,
the "PSHC Benefit Plans"). Any of the PSHC Benefit Plans which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA, is
referred to herein as a "PSHC ERISA Plan." Each PSHC ERISA Plan which is also a
"defined benefit plan" (as defined in Section 414(j) of the Internal Revenue
Code) is referred to herein as a "PSHC Pension Plan." No PSHC Pension Plan is
or has been a multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) All PSHC Benefit Plans are in compliance with
the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a PSHC Material Adverse Effect. Each PSHC
ERISA Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and PSHC is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. No PSHC Entity
has engaged in a transaction with respect to any PSHC Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
would subject any PSHC Entity to a Tax imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA.
(c) No PSHC Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
fair market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Since the date of the most
recent actuarial valuation, there has been (i) no material change in the
financial position of any PSHC Pension Plan, (ii) no change in the actuarial
assumptions with respect to any PSHC Pension Plan, and (iii) no increase in
benefits under any PSHC Pension Plan as a result of plan amendments or changes
in applicable Law which is reasonably likely to have, individually or in the
aggregate, a PSHC Material Adverse Effect or materially adversely affect the
funding status of any such plan. Neither any PSHC Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any PSHC Entity, or the single-employer
plan of any entity which is considered one employer with PSHC under Section
4001 of ERISA or Section 414 of the Internal Revenue Code or Section 302 of
ERISA (whether or not waived) (an "ERISA Affiliate") has an "accumulated
funding deficiency" within the meaning of Section 412 of the Internal Revenue
Code or Section 302 of ERISA. No PSHC Entity has provided, or is required to
provide, security
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to a PSHC Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the
Effective Time, no Liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by any PSHC Entity with respect to any
ongoing, frozen, or terminated single-employer plan or the single-employer plan
of any ERISA Affiliate. No PSHC Entity has incurred any withdrawal Liability
with respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate. No notice
of a "reportable event," within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to be
filed for any PSHC Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof.
(e) Except as disclosed in Section 5.15 of the PSHC
Disclosure Memorandum, no PSHC Entity has any Liability for retiree health and
life benefits under any of the PSHC Benefit Plans and there are no restrictions
on the rights of such PSHC Entity to amend or terminate any such retiree health
or benefit Plan without incurring any Liability thereunder.
(f) Except as disclosed in Section 5.15 of the PSHC
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any PSHC Entity from
any PSHC Entity under any PSHC Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any PSHC Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued
deferred compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees
and former employees of any PSHC Entity and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
the provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the PSHC Financial Statements to the extent
required by and in accordance with GAAP.
(h) PSHC (including its subsidiaries and successors)
may satisfy its current and future liabilities under the Port St. Lucie
National Bank Deferred Compensation Plan (the "Deferred Plan") by making, as
soon as administratively feasible after the date on which it terminates the
Deferred Plan, single lump sum payments (which in the aggregate are equal to or
less than the fair market value of the life insurance policy or policies
purchased to fund the benefits under the Deferred Plan) to each participant or
his beneficiary, which payments are equal to each such participant's respective
accrued benefit under the Deferred Plan as of the date on which the Deferred
Plan is terminated. In the case of a life insurance policy held in the trust,
"fair market value" shall mean the net cash surrender value of the policy,
after deducting any cancellation, liquidation or surrender charges or fees.
There are no restrictions on PSHC's (including its subsidiaries and successors)
ability to obtain such cash surrender value as of or immediately following the
Closing Date (other than applicable surrender charges). Neither Seacoast nor
any PSHC Entity shall be obligated to contribute cash or other property to fund
such benefits under the Deferred Plan. There are no restrictions on the PSHC's
(including its subsidiaries and successors) right to terminate the Deferred
Plan as to benefits which have not accrued as of the Closing Date.
5.16 MATERIAL CONTRACTS. Except as disclosed in Section 5.16
of the PSHC Disclosure Memorandum or otherwise reflected in the PSHC Financial
Statements, none of the PSHC Entities, nor any of their respective Assets,
businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination,
consulting, or retirement Contract providing for aggregate payments to any
Person in any calendar year in excess of $50,000, (ii) any Contract relating to
the borrowing of money by any PSHC Entity or the guarantee by any PSHC Entity
of any such obligation (other than Contracts evidencing deposit liabilities,
purchases of federal funds, fully-secured repurchase agreements, and Federal
Home Loan Bank advances of depository institution Subsidiaries, trade payables
and Contracts relating to borrowings or
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<PAGE> 20
guarantees made in the ordinary course of business), (iii) any Contract which
prohibits or restricts any PSHC Entity from engaging in any business activities
in any geographic area, line of business or otherwise in competition with any
other Person, (iv) any Contract between or among PSHC Entities, (v) any
Contract involving Intellectual Property (other than Contracts entered into in
the ordinary course with customers and commercial "shrink-wrap" software
licenses), (vi) any Contract relating to the provision of data processing,
network communication, or other technical services to or by any PSHC Entity,
(vii) any Contract relating to the purchase or sale of any goods or services
(other than Contracts entered into in the ordinary course of business and
involving payments under any individual Contract not in excess of $100,000),
(viii) any exchange-traded or over-the-counter swap, forward, future, option,
cap, floor, or collar financial Contract, or any other interest rate or foreign
currency protection Contract not included on its balance sheet which is a
financial derivative Contract, and (ix) any other Contract or amendment thereto
that would be required to be filed as an exhibit to a Form 10-K filed by PSHC
with the SEC as of the date of this Agreement (together with all Contracts
referred to in Sections 5.10 and 5.15(a), the "PSHC Contracts"). With respect
to each PSHC Contract and except as disclosed in Section 5.16 of the PSHC
Disclosure Memorandum: (i) the Contract is in full force and effect; (ii) no
PSHC Entity is in Default thereunder or would be in Default thereunder as a
result of this Agreement or the transaction contemplated herein; (iii) no PSHC
Entity has repudiated or waived any material provision of any such Contract;
and (iv) no other party to any such Contract is, to the Knowledge of PSHC, in
Default in any respect or has repudiated or waived any material provision
thereunder. All of the indebtedness of any PSHC Entity for money borrowed is
prepayable at any time by such PSHC Entity without penalty or premium. None of
PSHC nor any of the PSHC Entities has any obligation or liability to any
wholesale mortgage business ("Wholesale Mortgage Business") or to any Affiliate
of such Persons to purchase, fund or extend credit with respect to any loans,
extensions of credit, mortgages, or any participation or other interest therein
originated, brokered or referred by or through such Persons, and the only
outstanding balances under any such arrangements whereby PSNB is obligated to
provide funding aggregate not more than $212,000, all of which will be repaid
in full by not later than April 30, 1997. Except as described in Section 5.16
of the PSHC Disclosure Memorandum, all Contracts to which PSHC and/or its
Subsidiaries are parties may be terminated by such PSHC Entity and its
successors and assigns without penalty, charge, liability or further
obligation.
5.17 LEGAL PROCEEDINGS. There is no Litigation instituted
or pending, or, to the Knowledge of PSHC, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any PSHC Entity or
any employee benefit plan of any PSHC Entity, or against any director or
employee of any PSHC Entity, in their capacity as such, or against any Asset,
interest, or right of any of them, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any PSHC Entity. Section 5.17 of the PSHC Disclosure Memorandum contains a
summary of all Litigation as of the date of this Agreement to which any PSHC
Entity is a party and which names a PSHC Entity as a defendant or
cross-defendant or for which any PSHC Entity has any potential Liability.
5.18 REPORTS. Except as set forth in Section 5.18
of the PSHC Disclosure Memorandum, since January 1, 1993, or the date of
organization if later, each PSHC Entity has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with Regulatory Authorities (except, in
the case of state securities authorities, failures to file which are not
reasonably likely to have, individually or in the aggregate, a PSHC Material
Adverse Effect). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its
respective date, each such report and document did not, in all material
respects, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
5.19 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument, or other writing furnished or to be furnished by any PSHC Entity or
any Affiliate thereof to Seacoast pursuant to this Agreement or any other
document, agreement, or instrument referred to herein contains or will contain
any untrue statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the
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<PAGE> 21
circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by any PSHC Entity or any Affiliate
thereof for inclusion in the Registration Statement to be filed by Seacoast
with the SEC will, when the Registration Statement becomes effective, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein not misleading. None of the
information supplied or to be supplied by any PSHC Entity or any Affiliate
thereof for inclusion in the Joint Proxy Statement to be mailed to each Party's
shareholders in connection with the Shareholders' Meetings, and any other
documents to be filed by a PSHC Entity or any Affiliate thereof with the SEC or
any other Regulatory Authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are filed, and with respect
to the Joint Proxy Statement, when first mailed to the shareholders of PSHC and
Seacoast, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or, in the case
of the Joint Proxy Statement or any amendment thereof or supplement thereto, at
the time of the Shareholders' Meetings, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meetings. All documents that any PSHC Entity or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
5.20 ACCOUNTING, TAX AND REGULATORY MATTERS. No PSHC Entity
or any Affiliate thereof has taken or agreed to take any action or has any
Knowledge of any fact or circumstance that is reasonably likely to (i) prevent
the Merger from qualifying for pooling-of-interests accounting treatment or as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section.
5.21 STATE TAKEOVER LAWS. Each PSHC Entity has taken all
necessary action to exempt the transactions contemplated by this Agreement
from, or if necessary to challenge the validity or applicability of, any
applicable "moratorium," "fair price," "business combination," "control share,"
or other anti-takeover Laws (collectively, "Takeover Laws").
5.22 CHARTER PROVISIONS. Each PSHC Entity has taken all
action so that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement do not and
will not result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any PSHC Entity or
restrict or impair the ability of Seacoast or any of its Subsidiaries to vote,
or otherwise to exercise the rights of a shareholder with respect to, shares of
any PSHC Entity that may be directly or indirectly acquired or controlled by
them. This Agreement and the transactions contemplated herein will not trigger
any supermajority voting provisions under the Articles of Incorporation,
Bylaws, or other governing instruments of any PSHC Entity.
5.23 OPINION OF FINANCIAL ADVISOR. PSHC has received the
opinion of Austin Associates, Inc., dated the date of this Agreement, to the
effect that the consideration to be received in the Merger by the holders of
PSHC Common Stock is fair, from a financial point of view, to such holders, a
signed copy of which has been delivered to Seacoast.
5.24 BOARD RECOMMENDATION. The Board of Directors of PSHC,
at a meeting duly called and held, has by unanimous vote of the directors
present (who constituted all of the directors then in office) (i) determined
that this Agreement and the transactions contemplated hereby, including the
Merger, taken together, are fair to and in the best interests of the
shareholders and (ii) resolved to recommend that the holders of the shares of
PSHC Common Stock approve this Agreement.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SEACOAST
Seacoast hereby represents and warrants to PSHC as follows:
6.1 ORGANIZATION, STANDING, AND POWER.6.1 Organ Seacoast
is a corporation duly organized, validly existing, and in good standing under
the Laws of the State of Florida, and has the corporate power and authority to
carry on its business as now conducted and to own, lease and operate its
material Assets. Seacoast is duly qualified or licensed to transact business as
a foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Seacoast
Material Adverse Effect.
6.2 AUTHORITY OF SEACOAST; NO BREACH BY AGREEMENT.6.2
(a) Seacoast has the corporate power and authority
necessary to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
Seacoast, subject to the approval of the issuance of the shares of Seacoast
Common Stock pursuant to the Merger by sixty-six and two-thirds percent
(66-2/3%) of all and each class of the votes cast at the Seacoast Shareholders'
Meeting (assuming for such purpose that the votes cast in respect of such
proposal represent sixty-six and two-thirds percent (66-2/3%) of all and each
class of the outstanding Seacoast Common Stock eligible to vote at the Seacoast
Shareholders' Meeting), which is the only shareholder vote required for
approval of this Agreement and consummation of the merger by Seacoast. Subject
to such requisite shareholder approval, this Agreement represents a legal,
valid, and binding obligation of Seacoast, enforceable against Seacoast in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this
Agreement by Seacoast, nor the consummation by Seacoast of the transactions
contemplated hereby, nor compliance by Seacoast with any of the provisions
hereof, will (i) conflict with or result in a breach of any provision of
Seacoast's Articles of Incorporation or Bylaws, or (ii) constitute or result in
a Default under, or require any Consent pursuant to, or result in the creation
of any Lien on any Asset of any Seacoast Entity under, any Contract or Permit
of any Seacoast Entity, where such Default or Lien, or any failure to obtain
such Consent, is reasonably likely to have, individually or in the aggregate, a
Seacoast Material Adverse Effect, or, (iii) subject to receipt of the requisite
Consents referred to in Section 9.1(b), constitute or result in a Default
under, or require any Consent pursuant to, any Law or Order applicable to any
Seacoast Entity or any of their respective material Assets (including any
Seacoast Entity or any PSHC Entity becoming subject to or liable for the
payment of any Tax or any of the Assets owned by any Seacoast Entity or any
PSHC Entity being reassessed or revalued by any Taxing authority).
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Seacoast Material Adverse Effect, no
notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by Seacoast of the Merger and the other
transactions contemplated in this Agreement.
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6.3 CAPITAL STOCK.
(a) The authorized capital stock of Seacoast
consists of (i) 10,000,000 shares of Seacoast Class A Common Stock, of which
3,903,392 shares are issued and 3,872,500 outstanding as of the date of this
Agreement, (ii) 810,000 shares of $.10 par value Class B Common Stock, of which
384,638 shares are issued and outstanding as of the date of this Agreement, and
(iii) 1,000,000 shares of Seacoast Preferred Stock, none of which are issued
and outstanding. All of the issued and outstanding shares of Seacoast Capital
Stock are, and all of the shares of Seacoast Common Stock to be issued in
exchange for shares of PSHC Common Stock upon consummation of the Merger, when
issued in accordance with the terms of this Agreement, will be, duly and
validly issued and outstanding and fully paid and nonassessable. None of the
outstanding shares of Seacoast Capital Stock has been, and none of the shares
of Seacoast Common Stock to be issued in exchange for shares of PSHC Common
Stock upon consummation of the Merger will be, issued in violation of any
preemptive rights of the current or past shareholders of Seacoast.
(b) Except as set forth in Section 6.3(a), or as
disclosed in Section 6.3 of the Seacoast Disclosure Memorandum, there are no
shares of capital stock or other equity securities of Seacoast outstanding and
no outstanding Equity Rights relating to the capital stock of Seacoast.
6.4 SEACOAST SUBSIDIARIES. Seacoast has disclosed in
Section 6.4 of the Seacoast Disclosure Memorandum all of the
Seacoast Subsidiaries as of the date of this Agreement that are corporations
(identifying its jurisdiction of incorporation, each jurisdiction in which the
character of its Assets or the nature or conduct of its business requires it to
be qualified and/or licensed to transact business, and the number of shares
owned and percentage ownership interest represented by such share ownership)
and all of the Seacoast Subsidiaries that are general or limited partnerships
or other non-corporate entities (identifying the Law under which such entity is
organized, each jurisdiction in which the character of its Assets or the nature
or conduct of its business requires it to be qualified and/or licensed to
transact business, and the amount and nature of the ownership interest
therein). Except as disclosed in Section 6.4 of the Seacoast Disclosure
Memorandum, Seacoast or one of its wholly-owned Subsidiaries owns all of the
issued and outstanding shares of capital stock (or other equity interests) of
each Seacoast Subsidiary. No capital stock (or other equity interest) of any
Seacoast Subsidiary are or may become required to be issued (other than to
another Seacoast Entity) by reason of any Equity Rights, and there are no
Contracts by which any Seacoast Subsidiary is bound to issue (other than to
another Seacoast Entity) additional shares of its capital stock (or other
equity interests) or Equity Rights or by which any Seacoast Entity is or may be
bound to transfer any shares of the capital stock (or other equity interests)
of any Seacoast Subsidiary (other than to another Seacoast Entity). There are
no Contracts relating to the rights of any Seacoast Entity to vote or to
dispose of any shares of the capital stock (or other equity interests) of any
Seacoast Subsidiary. All of the shares of capital stock (or other equity
interests) of each Seacoast Subsidiary held by a Seacoast Entity are fully paid
and (except pursuant to 12 USC Section 55 in the case of national banks and
comparable, applicable state Law, if any, in the case of state depository
institutions) nonassessable and are owned by the Seacoast Entity free and clear
of any Lien. Each Seacoast Subsidiary is either a bank, a savings association,
or a corporation, and is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it
is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease and operate its Assets and to carry on its
business as now conducted. Each Seacoast Subsidiary is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Seacoast Material Adverse Effect. Each Seacoast Subsidiary
that is a depository institution is an "insured institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, and the
deposits in which are insured by the Bank Insurance Fund or the Savings
Association Insurance Fund.
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<PAGE> 24
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Seacoast has timely filed and made available to
PSHC all SEC Documents required to be filed by Seacoast since December 31, 1992
(the "Seacoast SEC Reports"). The Seacoast SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Laws and other applicable Laws and (ii) did not, at the time they
were filed (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
Seacoast SEC Reports or necessary in order to make the statements in such
Seacoast SEC Reports, in light of the circumstances under which they were made,
not misleading. Except for Seacoast Subsidiaries that are registered as a
broker, dealer, or investment advisor, no Seacoast Subsidiary is required to
file any SEC Documents.
(b) Each of the Seacoast Financial Statements
(including, in each case, any related notes) contained in the Seacoast SEC
Reports, including any Seacoast SEC Reports filed after the date of this
Agreement until the Effective Time, complied as to form in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, was prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements or, in the case of unaudited interim statements,
as permitted by Form 10-Q of the SEC), and fairly presented in all material
respects the consolidated financial position of Seacoast and its Subsidiaries
as at the respective dates and the consolidated results of operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount or effect.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Seacoast
Entity has any Liabilities that are reasonably likely to have, individually or
in the aggregate, a Seacoast Material Adverse Effect, except Liabilities which
are accrued or reserved against in the consolidated balance sheets of Seacoast
as of December 31, 1995 and September 30, 1996, included in the Seacoast
Financial Statements delivered prior to the date of this Agreement or reflected
in the notes thereto. No Seacoast Entity has incurred or paid any Liability
since September 30, 1996, except for such Liabilities incurred or paid (i) in
the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Seacoast Material Adverse Effect or (ii) in connection with the transactions
contemplated by this Agreement.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since
December 31, 1995, except as disclosed in the Seacoast Financial Statements
delivered prior to the date of this Agreement or as disclosed in Section 6.7 of
the Seacoast Disclosure Memorandum, (i) there have been no events, changes or
occurrences which have had, or are reasonably likely to have, individually or
in the aggregate, a Seacoast Material Adverse Effect, and (ii) the Seacoast
Entities have not taken any action, or failed to take any action, prior to the
date of this Agreement, which action or failure, if taken after the date of
this Agreement, would represent or result in a material breach or violation of
any of the covenants and agreements of Seacoast provided in Article 7.
6.8 CERTAIN ENVIRONMENTAL AND EMPLOYEE BENEFIT MATTERS.
(a) To the Knowledge of Seacoast, each Seacoast
Entity, its Participation Facilities and its Operating Properties, are, and
have been, in compliance with all environmental law, except for violations
which are not reasonably likely to have, individually or in the aggregate, a
Seacoast Material Adverse Effect.
(b) Seacoast has delivered or made available to PSHC
prior to the execution hereof, copies or summary plan descriptions of all
pension, retirement, profit/life insurance, deferred compensation, common stock
option, employee stock ownership, severance pay, vacation, bonus, or other
incentive plan, all other written employee programs, arrangements or
agreements, all medical, vision, dental and other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including "employee benefit plans" as that term is defined in Section 3(3) of
ERISA, currently adopted and maintained by, sponsored in whole or in part by,
or contributed to by any Seacoast Entity or ERISA Affiliate thereof for the
benefit of employees, retirees,
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<PAGE> 25
dependents, spouses, directors, independent contractors or other beneficiaries
and under which such employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries are eligible to participate
(collectively, the "Seacoast Benefit Plans"). All Seacoast Benefit Plans are in
compliance with the applicable terms of ERISA, the Internal Revenue Code or any
other applicable Laws, except for such breaches or violations the which are not
reasonably likely to have individually or in the aggregate, a Seacoast Material
Adverse Effect.
6.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. In the opinion
of management of Seacoast, the Allowance shown on the consolidated balance
sheets of Seacoast included in the most recent Seacoast Financial Statements
dated prior to the date of this Agreement was, and the Allowance shown on the
consolidated balance sheets of Seacoast included in the Seacoast Financial
Statements as of dates subsequent to the execution of this Agreement will be,
as of the dates thereof, adequate (within the meaning of GAAP and applicable
regulatory requirements or guidelines) to provide for all known or reasonably
anticipated losses relating to or inherent in the loan, lease and securities
portfolios (including accrued interest receivables) of the Seacoast Entities
and other extensions of credit (including letters of credit and commitments to
make loans or extend credit) by the Seacoast Entities as of the dates thereof.
6.10 ASSETS.
(a) Except as disclosed in Section 6.10 of the
Seacoast Disclosure Memorandum or as disclosed or reserved against in the
Seacoast Financial Statements delivered prior to the date of this Agreement,
the Seacoast Entities have good and marketable title, free and clear of all
Liens, to all of their respective Assets, except for any such Liens or other
defects of title which are not reasonably likely to have a Seacoast Material
Adverse Effect. All tangible properties used in the businesses of the Seacoast
Entities are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with Seacoast's past
practices.
(b) All Assets which are material to Seacoast's
business on a consolidated basis, held under leases or subleases by any of the
Seacoast Entities, are held under valid Contracts enforceable in accordance
with their respective terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect.
(c) The Seacoast Entities currently maintain
insurance similar in amounts, scope and coverage to that maintained by other
peer banking organizations. None of the Seacoast Entities has received notice
from any insurance carrier that (i) such insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. There
are presently no claims for amounts exceeding in any individual cases $5,000 or
in the aggregate $100,000 pending under such policies of insurance and no
notices have been given by any Seacoast Entity under such policies.
(d) The Assets of the Seacoast Entities include all
assets required to operate the business of the Seacoast Entities as presently
conducted.
6.11 INTELLECTUAL PROPERTY. Each Seacoast Entity owns or
has a license to use all of the Intellectual Property used by such Seacoast
Entity in the course of its business. Each Seacoast Entity is the owner of or
has a license to any Intellectual Property sold or licensed to a third party by
such Seacoast Entity in connection with such Seacoast Entity's business
operations, and such Seacoast Entity has the right to convey by sale or license
any Intellectual Property so conveyed. No Seacoast Entity is in Default under
any of its Intellectual Property licenses. No proceedings have been instituted,
or are pending or to the Knowledge of Seacoast threatened, which challenge the
rights of any Seacoast Entity with respect to Intellectual Property used, sold
or licensed by such Seacoast Entity in the course of its business, nor has any
person claimed or alleged any rights to
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such Intellectual Property. The conduct of the business of the Seacoast
Entities does not infringe any Intellectual Property of any other person.
Except as disclosed in Section 6.11 of the Seacoast Disclosure Memorandum, no
Seacoast Entity is obligated to pay any recurring royalties to any Person with
respect to any such Intellectual Property. Except as disclosed in Section 6.11
of the Seacoast Disclosure Memorandum, every officer, director, or employee of
any Seacoast Entity is a party to a Contract which requires such officer,
director or employee to assign any interest in any Intellectual Property to a
Seacoast Entity and to keep confidential any trade secrets, proprietary data,
customer information, or other business information of a Seacoast Entity, and
no such officer, director or employee is party to any Contract with any Person
other than a Seacoast Entity which requires such officer, director or employee
to assign any interest in any Intellectual Property to any Person other than a
Seacoast Entity or to keep confidential any trade secrets, proprietary data,
customer information, or other business information of any Person other than a
Seacoast Entity. Except as disclosed in Section 6.11 of the Seacoast Disclosure
Memorandum, no officer, director or employee of any Seacoast Entity is party to
any Contract which restricts or prohibits such officer, director or employee
from engaging in activities competitive with any Person, including any Seacoast
Entity.
6.12 [RESERVED].
6.13 COMPLIANCE WITH LAWS. Seacoast is duly registered
as a bank holding company under the BHC Act. Each Seacoast Entity has in effect
all Permits necessary for it to own, lease or operate its material Assets and
to carry on its business as now conducted, except for those Permits the absence
of which are not reasonably likely to have, individually or in the aggregate, a
Seacoast Material Adverse Effect, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Seacoast Material Adverse Effect. Except as
disclosed in Section 6.13 of the Seacoast Disclosure Memorandum, none of the
Seacoast Entities:
(a) is in Default under its Articles of Incorporation or
Bylaws (or other governing instruments); or
(b) is in Default under any Laws, Orders or Permits
applicable to its business or employees conducting its business,
except for Defaults which are not reasonably likely to have,
individually or in the aggregate, a Seacoast Material Adverse Effect;
or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or
local government or any Regulatory Authority or the staff thereof (i)
asserting that any Seacoast Entity is not in compliance with any of
the Laws or Orders which such governmental authority or Regulatory
Authority enforces, (ii) threatening to revoke any Permits or (iii)
requiring any Seacoast Entity to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment
or memorandum of understanding, or to adopt any Board resolution or
similar undertaking, which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its credit
or reserve policies, its management, or the payment of dividends.
6.14 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Seacoast, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any Seacoast Entity
or employee benefit plan of any Seacoast Entity, or against any director or
employee of any Seacoast Entity, in their capacity as such, or against any
Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Seacoast Material Adverse Effect, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any Seacoast Entity.
6.15 REPORTS.Since January 1, 1993, or the date of
organization if later, each Seacoast Entity has filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with Regulatory Authorities (except, in
the case of state securities authorities, failures to file which are not
reasonably likely to have, individually or in the aggregate, a Seacoast
Material Adverse Effect).
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As of their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
6.16 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by any Seacoast Entity
or any Affiliate thereof to PSHC pursuant to this Agreement or any other
document, agreement or instrument referred to herein contains or will contain
any untrue statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by any Seacoast Entity or any Affiliate thereof for inclusion in the
Registration Statement to be filed by Seacoast with the SEC, will, when the
Registration Statement becomes effective, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Seacoast Entity or any Affiliate thereof for inclusion in the
Joint Proxy Statement to be mailed to each Party's shareholders in connection
with the Shareholders' Meetings, and any other documents to be filed by any
Seacoast Entity or any Affiliate thereof with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Joint Proxy
Statement, when first mailed to the shareholders of PSHC and Seacoast, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or, in the case of the Joint Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meetings, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meetings. All documents that any Seacoast Entity or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all
material respects with the provisions of applicable Law.
6.17 ACCOUNTING, TAX AND REGULATORY MATTERS. No Seacoast
Entity or any Affiliate thereof has taken or agreed to take any action or has
any Knowledge of any fact or circumstance that is reasonably likely to (i)
prevent the Merger from qualifying for pooling-of-interests accounting
treatment or as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) or result in
the imposition of a condition or restriction of the type referred to in the
last sentence of such Section. All Tax Returns required to be filed by or on
behalf of any of the Seacoast Entities have been timely filed or requests for
extensions have been timely filed, granted and have not expired for periods on
or before December 31, 1995 and on or before the day of the most recent fiscal
year end immediately preceding the Effective Time, except to the extent that
all such failures to file, taken together, are not reasonably likely to have a
Seacoast Material Adverse Effect and all such Tax Returns filed are complete
and accurate in all material respects. All Taxes shown on Tax Returns have been
paid. As of the date of this Agreement, there is no audit examination,
deficiency, or refund Litigation with respect to any Taxes, except as reserved
against any Seacoast Financial Statements delivered prior to the date of this
Agreement or as disclosed in Section 6.17 of the Seacoast Disclosure
Memorandum. The provision for Taxes due or to become due for any of the
Seacoast Entities for the period or periods through and including the day of
the respective Seacoast Financial Statements has been made and is reflected on
such Seacoast Financial Statements is sufficient to cover all such Taxes.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF PSHC. Except as disclosed in
Section 7.1 of the PSHC Disclosure Memorandum with respect to PSNB's proposed
Ft. Pierce branch office, the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement, unless the prior written
consent of
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Seacoast shall have been obtained, and except as otherwise expressly
contemplated herein, PSHC shall and shall cause each of its Subsidiaries to
operate its business only in the usual, regular, and ordinary course, and in a
manner designed to preserve intact its business organization and Assets and
maintain its rights and franchises, and shall take no action which would (i)
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentences of Section 9.1(b) or
9.1(c), or (ii) adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement. Furthermore, except for the up
to $212,000 of credit, heretofore committed by PSNB and described in the fourth
sentence of Section 5.16 hereof, any loans, leases or extensions of credit
secured by real property originated, purchased or funded in whole or in part by
any PSHC Entity, where the obligor thereon and the real property related
thereto are not both located in St. Lucie, Martin and/or Indian River Counties,
Florida (collectively, the "Counties") shall conform to the FNMA or FHLMC
seller/servicer guidelines applicable to such Loans and shall be immediately
saleable to FNMA and/or FHLMC. PSHC and each PSHC Entity shall immediately
terminate and discontinue purchasing, funding or otherwise extending credit or
committing or agreeing to any of the foregoing with respect to any loans,
extensions of credit, leases and/or mortgages or any participations or other
interests therein from any Wholesale Mortgage Business and/or any Affiliate of
such Wholesale Mortgage Business, except to meet PSNB's contractual obligations
under the existing commitments described in the fourth sentence of Section 5.16
hereof, and except to purchase and hold as temporary investments, up to $2.5
million at any time of fully-approved FHA and VA Loans at any time through
April 30, 1997.
7.2 NEGATIVE COVENANTS OF PSHC. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of Seacoast shall have been
obtained, and except as otherwise expressly contemplated herein, PSHC covenants
and agrees that it will not do or agree or commit to do, or permit any of its
Subsidiaries to do or agree or commit to do, any of the following:
(a) amend the Articles of Incorporation, Bylaws or other
governing instruments of any PSHC Entity or, except as expressly
contemplated by this Agreement, or
(b) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of a PSHC Entity to
another PSHC Entity) in excess of an aggregate of $50,000 (for the
PSHC Entities on a consolidated basis) except in the ordinary course
of the business of PSHC Subsidiaries consistent with past practices
(which shall include, for PSHC Subsidiaries that are depository
institutions, creation of deposit liabilities, purchases of federal
funds, advances from the Federal Reserve Bank or Federal Home Loan
Bank, and entry into repurchase agreements fully secured by U.S.
government or agency securities), or impose, or suffer the imposition,
on any Asset of any PSHC Entity of any Lien or permit any such Lien to
exist (other than in connection with deposits, repurchase agreements,
bankers acceptances, "treasury tax and loan" accounts established in
the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and Liens in effect as
of the date hereof that are disclosed in the PSHC Disclosure
Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of any PSHC Entity,
or declare or pay any dividend or make any other distribution in
respect of PSHC's capital stock; or
(d) except for this Agreement, or pursuant to the exercise of
stock options or warrants or warrants outstanding as of the date
hereof and pursuant to the terms thereof in existence on the date
hereof, or as disclosed in Section 7.2(d) of the PSHC Disclosure
Memorandum, issue, sell, pledge, encumber, authorize the issuance of,
enter into any Contract to issue, sell, pledge, encumber, or authorize
the issuance of, or otherwise permit to become outstanding, any
additional shares of PSHC Common Stock or any other capital stock of
any PSHC Entity, or any stock appreciation rights, or any option,
warrant, or other Equity Right; or
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(e) adjust, split, combine or reclassify any capital stock of
any PSHC Entity or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of PSHC Common
Stock, or sell, lease, mortgage or otherwise dispose of or otherwise
encumber (x) any shares of capital stock of any PSHC Subsidiary (unless
any such shares of stock are sold or otherwise transferred to another
PSHC Entity) or (y) any Asset having a book value in excess of $50,000
other than in the ordinary course of business for reasonable and
adequate consideration; or
(f) (1) except for purchases of U.S. Treasury securities or
U.S. Government agency securities, which in either case have maturities
of one year or less, purchase any securities or make any material
investment, either by purchase of stock or securities, contributions to
capital, Asset transfers, or purchase of any Assets, in any Person other
than a wholly owned PSHC Subsidiary, or otherwise acquire direct or
indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business, (ii) acquisitions of
control by a depository institution subsidiary solely in its fiduciary
capacity, or (iii) the creation of new wholly owned Subsidiaries
organized to conduct or continue activities otherwise permitted by this
Agreement; (2) make any new loans or extensions of credit or renew,
extend or renegotiate any existing loans or extensions of credit (i)
with respect to properties or businesses outside of the Counties or to
borrowers whose principal residence is outside of the Counties, (ii)
that are unsecured in excess of $100,000, or (iii) that are secured in
excess of $250,000; (3) purchase or sell (except for sales of single
family residential first mortgage loans in the ordinary course of PSHC's
business for fair market value) any whole loans, leases, mortgages or
any loan participations or agented credits or other interest therein,
(4) renew or renegotiate any loans or credits that are on any watch list
and/or are classified or special mentioned or take any similar actions
with respect to collateral held with respect to debts previously
contracted or other real estate owned, except pursuant to safe and sound
banking practices and with prior disclosure to First National; provided,
however, that PSHC may, without the prior notice to or written consent
of First National, renew or extend existing credits on substantially
similar terms and conditions as present at the time such credit was made
or last extended, renewed or modified, for a period not to exceed one
year and at rates not less than market rates for comparable credits and
transactions and without any release of any collateral except as any
PSHC Entity is presently obligated under existing written agreements
kept as part of such PSHC Entity's official records. If any PSHC Entity
makes, extends, renews, renegotiates, compromises or settles any loans
or extensions of credit or releases any collateral therefore that are
subject to the prior disclosure to First National hereunder and First
National has objected thereto the Purchase Price shall be reduced on a
dollar for dollar basis in an amount equal to all outstanding principal
of, all accrued but unpaid interest and other charges on such loan(s) as
of the Closing Date; or
(g) grant any increase in compensation or benefits to the
employees or officers of any PSHC Entity, except in accordance with past
practice disclosed in Section 7.2(g) of the PSHC Disclosure Memorandum
or as required by Law; pay any severance or termination pay or any bonus
other than pursuant to written policies or written Contracts in effect
on the date of this Agreement and disclosed in Section 7.2(g) of the
PSHC Disclosure Memorandum; and enter into or amend any severance
agreements with officers of any PSHC Entity; grant any material increase
in fees or other increases in compensation or other benefits to
directors of any PSHC Entity except in accordance with past practice
disclosed in Section 7.2(g) of the PSHC Disclosure Memorandum; or
voluntarily accelerate the vesting of any stock options or other
stock-based compensation or employee benefits or other Equity Rights; or
(h) enter into or amend any employment Contract between any
PSHC Entity and any Person (unless such amendment is required by Law)
that the PSHC Entity does not have the unconditional right to terminate
without Liability (other than Liability for services already rendered),
at any time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any PSHC Entity or
terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any PSHC Entity other than any such
change that is required by Law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax qualified status of any such
plan, or make any distributions from such employee benefit plans, except
as required by Law, the terms of such plans or consistent with past
practice; or
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(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in Tax Laws or regulatory accounting
requirements or GAAP; or
(k) commence any Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of any PSHC
Entity for material money damages or restrictions upon the operations of
any PSHC Entity; or
(l) except in the ordinary course of business and as
expressly permitted in Section 7.2(f), enter into, modify, amend or
terminate any material Contract (including any loan Contract with an
unpaid balance or any Contract calling for payments exceeding $100,000)
or waive, release, compromise or assign any material rights or claims.
7.3 COVENANTS OF SEACOAST. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
unless the prior written consent of PSHC shall have been obtained, and except
as otherwise expressly contemplated herein, Seacoast covenants and agrees that
it shall (a) continue to conduct its business and the business of its
Subsidiaries in a manner designed in its reasonable judgment, to enhance the
long-term value of the Seacoast Capital Stock and the business prospects of the
Seacoast Entities and to the extent consistent therewith use all reasonable
efforts to preserve intact the Seacoast Entities' core businesses and goodwill
with their respective employees and the communities they serve, and (b) take no
action which would (i) materially adversely affect the ability of any Party to
obtain any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentences of Section 9.1(b) or 9.1(c), or (ii) materially adversely affect the
ability of any Party to perform its covenants and agreements under this
Agreement; provided, that the foregoing shall not prevent any Seacoast Entity
from acquiring any Assets or other businesses or from discontinuing or
disposing of any of its Assets or business if such action is, in the judgment
of Seacoast, desirable in the conduct of the business of Seacoast and its
Subsidiaries. Seacoast further covenants and agrees that it will not, without
the prior written consent of PSHC, which consent shall not be unreasonably
withheld, amend the Articles of Incorporation or Bylaws of Seacoast, in each
case, in any manner adverse to the holders of PSHC Common Stock as compared to
rights of holders of Seacoast Common Stock generally as of the date of this
Agreement.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the
occurrence or impending occurrence of any event or circumstance relating to it
or any of its Subsidiaries which (i) is reasonably likely to have, individually
or in the aggregate, a PSHC Material Adverse Effect or a Seacoast Material
Adverse Effect, as applicable, or (ii) would cause or constitute a material
breach of any of its representations, warranties, or covenants contained
herein, and to use its reasonable efforts to prevent or promptly to remedy the
same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and shall deliver to the other Party
copies of all such reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC, such financial
statements will fairly present in all material respects the consolidated
financial position of the entity filing such statements as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows for the periods then ended in accordance with GAAP
(subject in the case of interim financial statements to normal recurring
year-end adjustments that are not material). As of their respective dates, such
reports filed with the SEC will comply in all material respects with the
Securities Laws and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Any financial statements contained in any other
reports to another Regulatory Authority shall be prepared in accordance with
Laws applicable to such reports.
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ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER
APPROVAL. As soon as reasonably practicable after execution of this Agreement,
at a date determined by Seacoast in its sole discretion, Seacoast shall prepare
and file the Registration Statement with the SEC, and shall use its reasonable
efforts to cause the Registration Statement to become effective under the 1933
Act and take any action required to be taken under the applicable state Blue
Sky or securities Laws in connection with the issuance of the shares of
Seacoast Common Stock upon consummation of the Merger. PSHC shall cooperate in
the preparation and filing of the Registration Statement and shall furnish all
information concerning it and the holders of its capital stock as Seacoast may
reasonably request in connection with such action. PSHC shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. Seacoast shall call a Shareholders' Meeting, to be held as
soon as reasonably practicable after the Registration Statement is declared
effective by the SEC, for the purpose of voting upon the issuance of shares of
Seacoast Common Stock pursuant to the Merger and such other related matters as
it deems appropriate. In connection with the Shareholders' Meetings, (i) PSHC
and Seacoast shall prepare and file with the SEC a Joint Proxy Statement and
mail such Joint Proxy Statement to their respective shareholders, (ii) the
Parties shall furnish to each other all information concerning them that they
may reasonably request in connection with such Joint Proxy Statement, (iii) the
Board of Directors of PSHC and Seacoast shall recommend to their respective
shareholders the approval of the matters submitted for approval, and (iv) the
Board of Directors and officers of PSHC and Seacoast shall use their reasonable
efforts to obtain such shareholders' approval. Seacoast and PSHC shall make all
necessary filings with respect to the Merger under the Securities Laws.
8.2 NASDAQ LISTING. Seacoast shall use its reasonable efforts
to list, prior to the Effective Time, on the Nasdaq National Market the shares
of Seacoast Common Stock to be issued to the holders of PSHC Common Stock
pursuant to the Merger, and Seacoast shall give all notices and make all
filings with the NASD required in connection with the transactions contemplated
herein.
8.3 APPLICATIONS. Seacoast shall promptly prepare and file,
and PSHC shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement. The
Parties shall deliver to each other copies of all filings, correspondence and
orders to and from all Regulatory Authorities in connection with the
transactions contemplated hereby.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to
the conditions of this Agreement, Seacoast shall execute and file the Articles
of Merger with the Secretary of State of the State of Florida in connection
with the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the
terms and conditions of this Agreement, each Party agrees to use, and to cause
its Subsidiaries to use, its reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use,
and shall cause each of its Subsidiaries to use, its reasonable efforts to
obtain all Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
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8.6 INVESTIGATION AND CONFIDENTIALITY
(a) Prior to the Effective Time, each Party shall
keep the other Party advised of all material developments relevant to its
business and to consummation of the Merger and shall permit the other Party to
make or cause to be made such investigation of the business and properties of
it and its Subsidiaries and of their respective financial and legal conditions
as the other Party reasonably requests, provided that such investigation shall
be reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations. No investigation by a Party
shall affect the representations and warranties of the other Party.
(b) In addition to the Parties' respective
obligations under the Confidentiality Agreement, which are hereby reaffirmed
and adopted, and incorporated by reference herein each Party shall, and shall
cause its advisers and agents to, maintain the confidentiality of all
confidential information furnished to it by the other Party concerning its and
its Subsidiaries' businesses, operations, and financial positions and shall not
use such information for any purpose except in furtherance of the transactions
contemplated by this Agreement. In the event that a Party is required by
applicable law or valid court process to disclose any such confidential
information then such Party shall provide the other Party with prompt written
notice of any such requirement so that the other Party may seek a protective
order or other appropriate remedy and/or waive compliance with this Section
8.6. If in the absence of a protective order or other remedy or the receipt of
a waiver by the other Party, a Party is nonetheless, in the written opinion of
counsel, legally compelled to disclose any such confidential information to any
tribunal or else stand liable for contempt or suffer other censure or penalty,
a Party may, without liability hereunder, disclose to such tribunal only that
portion of the confidential information which such counsel advises such Party
is legally required to be disclosed, provided that such disclosing Party use
its best efforts to preserve the confidentiality of such confidential
information, including without limitation, by cooperating with the other Party
to obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded such confidential information by such
tribunal. If this Agreement is terminated prior to the Effective Time, each
Party shall promptly return or certify the destruction of all documents and
copies thereof, and all work papers containing confidential information
received from the other Party.
(c) PSHC shall use its reasonable efforts to
exercise its rights under confidentiality agreements entered into with Persons,
if any, which were considering an Acquisition Proposal with respect to PSHC to
preserve the confidentiality of the information relating to the PSHC Entities
provided to such Persons and their Affiliates and Representatives.
(d) Each Party agrees to give the other Party notice
as soon as practicable after any determination by it of any fact or occurrence
relating to the other Party which it has discovered through the course of its
investigation and which represents, or is reasonably likely to represent,
either a material breach of any representation, warranty, covenant or agreement
of the other Party or which has had or is reasonably likely to have a PSHC
Material Adverse Effect or a Seacoast Material Adverse Effect, as applicable.
8.7 PRESS RELEASES Prior to the Effective Time, PSHC and
Seacoast shall consult with each other as to the form and substance of any
press release or other public disclosure materially related to this Agreement
or any other transaction contemplated hereby; provided, that nothing in this
Section 8.7 shall be deemed to prohibit any Party from making any disclosure
which its counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement
and the transactions contemplated hereby, no PSHC Entity nor any Affiliate
thereof nor any Representatives thereof retained by any PSHC Entity shall
directly or indirectly solicit any Acquisition Proposal by any Person. Except
to the extent the Board of Directors of PSHC, after having consulted with and
considered the advice of outside counsel, reasonably determines in good faith
that the failure to take such actions would constitute a breach of fiduciary
duties of the members of such Board of Directors to PSHC's shareholder under
applicable law, no PSHC Entity or any Affiliate or Representative thereof shall
furnish any non-public information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any Contract with respect to, any
Acquisition Proposal, but PSHC may
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communicate information about such an Acquisition Proposal to its shareholders
if and to the extent that it is required to do so in order to comply with its
legal obligations. PSHC shall promptly advise Seacoast following the receipt of
any Acquisition Proposal and the details thereof, and advise Seacoast of any
developments with respect to such Acquisition Proposal promptly upon the
occurrence thereof. PSHC shall (i) immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any Persons conducted
heretofore with respect to any of the foregoing, and (ii) direct and use its
reasonable efforts to cause all of its Affiliates and Representatives not to
engage in any of the foregoing.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties
undertakes and agrees to use its reasonable efforts to cause the Merger, and to
use its reasonable efforts to take no action which would cause the Merger not,
to qualify for treatment as a pooling of interests for accounting purposes or
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code for federal income tax purposes.
8.10 STATE TAKEOVER LAWS. Each PSHC Entity and each PSHC
shareholder shall take the necessary steps to exempt the transactions
contemplated by this Agreement from, or if necessary to challenge the validity
or applicability of, any applicable Takeover Law, including the FBCA.
8.11 CHARTER PROVISIONS. Except as required by applicable Law
or as otherwise provided in this Agreement, each PSHC Entity shall take all
necessary action to ensure that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby do
not and will not result in the grant of any rights to any Person under the
Articles of Incorporation, Bylaws or other governing instruments of any PSHC
Entity or restrict or impair the ability of Seacoast or any of its Subsidiaries
to vote, or otherwise to exercise the rights of a shareholder with respect to,
shares of any PSHC Entity that may be directly or indirectly acquired or
controlled by them.
8.12 PSHC MEETINGS. Each PSHC Entity shall give prior notice
of each meeting or proposed action by any of their respective Boards of
Directors and/or committees, including a description of any matters to be
discussed and/or acted upon, and shall permit a representative of Seacoast to
attend each such meeting, except during discussions relating to the
transactions contemplated herein that present conflict of interest and/or
confidentiality issues.8.12 PSHC Meetings
8.13 AGREEMENT OF AFFILIATES. PSHC has disclosed in Section
8.13 of the PSHC Disclosure Memorandum all Persons whom it reasonably believes
is an "affiliate" of PSHC for purposes of Rule 145 under the 1933 Act. PSHC
shall use its reasonable efforts to cause each such Person to deliver to
Seacoast upon the execution of this Agreement a written agreement,
substantially in the form of Exhibit 2, providing that such Person will not
sell, pledge, transfer, or otherwise dispose of the shares of PSHC Common Stock
held by such Person except as contemplated by such agreement or by this
Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of Seacoast Common Stock to be received by such Person upon consummation
of the Merger except in compliance with applicable provisions of the 1933 Act
and the rules and regulations thereunder and, until such time as financial
results covering at least 30 days of combined operations of Seacoast and PSHC
have been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. Shares of Seacoast Common Stock
issued to such affiliates of PSHC in exchange for shares of PSHC Common Stock
shall not be transferable until such time as financial results covering at
least 30 days of combined operations of Seacoast and PSHC have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies, regardless of whether each such affiliate has provided the
written agreement referred to in this Section 8.13 (and Seacoast shall be
entitled to place restrictive legends upon certificates for shares of Seacoast
Common Stock issued to affiliates of PSHC pursuant to this Agreement to enforce
the provisions of this Section 8.13; provided that Seacoast removes such
legends at the appropriate time). Seacoast shall not be required to maintain
the effectiveness of the Registration Statement under the 1933 Act for the
purposes of resale of Seacoast Common Stock by such affiliates.
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8.14 EMPLOYEE BENEFITS AND CONTRACTS.
(a) Following the Effective Time, Seacoast shall provide
generally to officers and employees of the PSHC Entities employee benefits
under employee benefit and welfare plans (other than stock option or other
plans involving the potential issuance of Seacoast Common Stock), on terms and
conditions which when taken as a whole are substantially similar to those
currently provided by the Seacoast Entities to their similarly situated
officers and employees; provided, that, for a period of 12 months after the
Effective Time, Seacoast shall provide generally to officers and employees of
PSHC Entities severance benefits in accordance with the policies of either (i)
PSHC as disclosed in Section 8.14 of the PSHC Disclosure Memorandum, or (ii)
Seacoast, whichever of (i) or (ii) will provide the greater benefit to the
officer or employee. Seacoast shall waive any pre-existing condition exclusion
under any employee health plan for which any employees and/or officers and
dependents covered by PSHC plans as of Closing of the PSHC Entities shall
become eligible by virtue of the preceding sentence, to the extent (i) such
pre-existing condition was covered under the corresponding plan maintained by
the PSHC Entity and (ii) the individual affected by the pre-existing condition
was covered by the PSHC Entity's corresponding plan on the date which
immediately precedes the Effective Time, provided that PSHC has disclosed in
Section 8.14 of the PSHC Disclosure Memorandum and at Closing that none of its
employees, officers or other participants or their respective dependents, to
the best of PSHC and PSNB's knowledge and belief, have any long-term
disabilities or conditions, which in the reasonable judgment of Seacoast would
materially adversely affect the claims experience and/or costs of any employee
benefit plan or insurance maintained by or through any Seacoast Entity. For
purposes of participation, vesting and (except in the case of Seacoast
retirement plans) benefit accrual under Seacoast's employee benefit plans, the
service of the employees of the PSHC Entities prior to the Effective Time shall
be treated as service with a Seacoast Entity participating in such employee
benefit plans. Seacoast also shall cause the Surviving Corporation and its
Subsidiaries to honor in accordance with their terms all employment, severance,
consulting and other compensation Contracts disclosed in Section 8.14 of the
PSHC Disclosure Memorandum to Seacoast between any PSHC Entity and any current
or former director, officer, or employee thereof, and all provisions for vested
benefits or other vested amounts earned or accrued through the Effective Time
under the PSHC Benefit Plans.
(b) Upon the execution hereof, a mutually acceptable
employment agreement between J. Hal Roberts, Jr. and Seacoast or First National
shall be executed and delivered, and which shall become effective at the
Effective Time.
(c) Subject to compliance with applicable Laws and
the absence of any Material Adverse Effects upon Seacoast or any PSHC Benefit
Plans and/or Seacoast Benefit Plans, Seacoast intends to merge the PSHC 401(k)
Plan with the Seacoast 401(k) Plan.
(d) Effective upon the Effective Time, PSHC and, as
applicable, its Subsidiaries shall terminate, their Employee Non-Qualified
Stock Investment Plan and Trust of Port St. Lucie National Bank and the
Deferred Compensation Plan offered to Directors. Such termination and the
effects thereof shall be in accordance with Section 5.15(h) hereof..
8.15 INDEMNIFICATION.
(a) With respect to all claims brought during the
period of four years after the Effective Time, Seacoast shall indemnify, defend
and hold harmless the present and former directors, officers, employees and
agents of the PSHC Entities (each, an "Indemnified Party") against all
Liabilities arising out of actions or omissions arising out of the Indemnified
Party's service or services as directors, officers, employees or agents of PSHC
or, at PSHC's request, of another corporation, partnership, joint venture,
trust or other enterprise occurring at or prior to the Effective Time
(including the transactions contemplated by this Agreement) to the fullest
extent permitted under Florida Law and by PSHC's Articles of Incorporation and
Bylaws as in effect on the date hereof, including provisions relating to
advances of expenses incurred in the defense of any Litigation and whether or
not any Seacoast Entity is insured against any such matter. Without limiting
the foregoing, in any case in which approval by the Surviving Corporation is
required to effectuate any indemnification, the Surviving
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Corporation shall direct, at the election of the Indemnified Party, that the
determination of any such approval shall be made by independent counsel
mutually agreed upon between Seacoast and the Indemnified Party.
(b) Seacoast shall, to the extent available, (and
PSHC shall cooperate prior to the Effective Time in these efforts) maintain in
effect for a period of two years after the Effective Time PSHC's existing
directors' and officers' liability insurance policy (provided that Seacoast may
substitute therefor (i) policies of at least the same coverage and amounts
containing terms and conditions which are substantially no less advantageous or
(ii) with the consent of PSHC given prior to the Effective Time, any other
policy) with respect to claims arising from facts or events which occurred
prior to the Effective Time and covering persons who are currently covered by
such insurance; provided, that Seacoast shall not be obligated to make
aggregate premium payments for such two-year period in respect of such policy
(or coverage replacing such policy) which exceed, for the portion related to
PSHC's directors and officers, 150% of the annual premium payments on PSHC's
current policy in effect as of the date of this Agreement (the "Maximum
Amount").
(c) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 8.15, upon learning of any
such Liability or Litigation, shall promptly notify Seacoast thereof. In the
event of any such Litigation (whether arising before or after the Effective
Time), (i) the Surviving Corporation shall have the right to assume the defense
thereof and the Surviving Corporation shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the
defense thereof, except that if the Surviving Corporation elects not to assume
such defense or counsel for the Indemnified Parties advises that there are
substantive issues which raise conflicts of interest between the Surviving
Corporation and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, that the Surviving
Corporation shall be obligated pursuant to this paragraph (c) to pay for only
one firm of counsel for all Indemnified Parties in any jurisdiction, (ii) the
Indemnified Parties will cooperate in the defense of any such Litigation, and
(iii) the Surviving Corporation shall not be liable for any settlement effected
without its prior written consent; and provided further that the Surviving
Corporation shall not have any obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
Law.
8.16 CERTAIN POLICIES OF PSHC. Seacoast and PSHC shall
consult with respect to their respective loan, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) and PSHC shall make such modification or changes to its policies and
practices, if any, prior to the Effective Time as may be mutually agreed upon.
Seacoast and PSHC also shall consult with respect to the character, amount and
timing of restructuring and Merger-related expense charges to be taken by each
of the Parties in connection with the transactions contemplated by this
Agreement and shall take such charges in accordance with GAAP, prior to the
Effective Time, as may be mutually agreed upon by the Parties. Neither Party's
representations, warranties, covenants or agreements contained in this
Agreement shall be deemed to be inaccurate or breached in any respect as a
consequence of any modifications or charges undertaken solely on account of
this Section 8.16.
8.17 NOMINATION AND ELECTION OF DIRECTORS. Seacoast shall as
soon as practicable following the Effective Time nominate and use its best
efforts to cause to be elected to the Seacoast and First National Board of
Directors two candidates from the current PSHC Board of Directors. In addition,
Seacoast shall cause First National to amend its Bylaws as soon as practicable
following the Effective Time to provide for one or more First National Advisory
Boards, including an First National Advisory Board for Port St. Lucie County.
Seacoast shall cause each of the current directors of PSHC (other than such
PSHC and/or PSNB directors who are elected as directors of Seacoast and/or
First National) to be nominated and elected to the First National Advisory
Board for St. Lucie County as soon as practicable after such Advisory Board is
constituted according to the preceding sentence.
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ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6:
(A) SHAREHOLDER APPROVAL. The shareholders of PSHC shall have
approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required
by Law, by the provisions of any governing instruments, or by the rules
of the NASD. The shareholders of Seacoast shall have approved the
issuance of shares of Seacoast Common Stock pursuant to the Merger, as
and to the extent required by Law, by the provisions of any governing
instruments, or by the rules of the NASD.
(B) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or made
and shall be in full force and effect and all waiting periods required
by Law shall have expired. No Consent obtained from any Regulatory
Authority which is necessary to consummate the transactions contemplated
hereby shall be conditioned or restricted in a manner (including
requirements relating to the raising of additional capital or the
disposition of Assets) which in the reasonable judgment of the Board of
Directors of Seacoast would so materially adversely affect the economic
or business benefits of the transactions contemplated by this Agreement
that, had such condition or requirement been known, such Party would
not, in its reasonable judgment, have entered into this Agreement.
(C) CONSENTS AND APPROVALS. Each Party shall have obtained
any and all Consents required for consummation of the Merger (other than
those referred to in Section 9.1(b)) or for the preventing of any
Default under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a PSHC Material Adverse Effect or a Seacoast Material Adverse
Effect, as applicable. No Consent so obtained which is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner which in the reasonable judgment of the Board of
Directors of Seacoast would so materially adversely affect the economic
or business benefits of the transactions contemplated by this Agreement
that, had such condition or requirement been known, such Party would
not, in its reasonable judgment, have entered into this Agreement.
(D) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated
by this Agreement.
(E) REGISTRATION STATEMENT. The Registration Statement shall
be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no
action, suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing, and
all necessary approvals under state securities Laws or the 1933 Act or
1934 Act relating to the issuance or trading of the shares of Seacoast
Common Stock issuable pursuant to the Merger shall have been received.
(F) SHARE LISTING. The shares of Seacoast Common Stock
issuable pursuant to the Merger shall have been approved for listing
on the Nasdaq National Market.
(G) POOLING LETTERS. Each of the Parties shall have received
letters, dated as of the date of filing of the Registration Statement
with the SEC and as of the Effective Time, addressed to Seacoast, in
form and substance reasonably acceptable to Seacoast, from Arthur
Andersen LLP to the effect that the
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Merger will qualify for pooling-of-interests accounting treatment.
Each of the Parties also shall have received letters, dated as of the
date of filing of the Registration Statement with the SEC and as of
the Effective Time, addressed to Seacoast, in form and substance
reasonably acceptable to Seacoast, from KPMG Peat Marwick to the
effect that such firm is not aware of any matters relating to PSHC and
its Subsidiaries which would preclude the Merger from qualifying for
pooling-of-interests accounting treatment.
(H) TAX MATTERS. Each Party shall have received a written
opinion of counsel from Alston & Bird, in form reasonably satisfactory
to such Parties (the "Tax Opinion"), to the effect that (i) the Merger
will constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code, (ii) the exchange in the Merger of PSHC
Common Stock for Seacoast Common Stock will not give rise to gain or
loss to the shareholders of PSHC with respect to such exchange (except
to the extent of any cash received), and (iii) none of PSHC or Seacoast
will recognize gain or loss as a consequence of the Merger (except for
amounts resulting from any required change in accounting methods and any
income and deferred gain recognized pursuant to Treasury regulations
issued under Section 1502 of the Internal Revenue Code). In rendering
such Tax Opinion, such counsel shall be entitled to rely upon
representations of officers of PSHC and Seacoast reasonably satisfactory
in form and substance to such counsel.
9.2 CONDITIONS TO OBLIGATIONS OF SEACOAST. The obligations of
Seacoast to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Seacoast pursuant to Section 11.6(a):
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of
PSHC set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date). The representations and warranties set forth in Section 5.3,
5.20, 5.21, and 5.22 shall be true and correct (except for inaccuracies
which are de minimus in amount). There shall not exist inaccuracies in
the representations and warranties of PSHC set forth in this Agreement
(including the representations and warranties set forth in Sections 5.3,
5.20, 5.21, and 5.22) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a PSHC Material
Adverse Effect; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or to the "Knowledge" of any
Person shall be deemed not to include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of PSHC to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with.
(C) CERTIFICATES. PSHC shall have delivered to Seacoast (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9.1 as relates to PSHC
and in Section 9.2(a) and 9.2(b) have been satisfied, and (ii) certified
copies of resolutions duly adopted by PSHC's Board of Directors and
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated hereby, all in such
reasonable detail as Seacoast and its counsel shall request.
(D) OPINION OF COUNSEL. Seacoast shall have received an
opinion of Gunster, Yoakley, Valdes-Fauli & Stewart, P.A, counsel to
PSHC, dated as of the Closing, in form reasonably satisfactory to
Seacoast, as to the matters set forth in Exhibit 3.
(E) ACCOUNTANT'S LETTERS. Seacoast shall have received from
KPMG Peat Marwick letters dated not more than five days prior to (i) the
date of the Joint Proxy Statement and (ii) the Effective Time,
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with respect to certain financial information regarding PSHC, in form
and substance reasonably satisfactory to Seacoast, which letters shall
be based upon customary specified procedures undertaken by such firm
in accordance with Statement of Auditing Standard Nos. 71, 72 and 75.
(F) AFFILIATES' AGREEMENTS. Seacoast shall have received from
each affiliate of PSHC the affiliates letter referred to in Section
8.13, to the extent necessary to assure in the reasonable judgment of
Seacoast that the transactions contemplated hereby will qualify for
pooling-of-interests accounting treatment.
(G) SHAREHOLDERS' EQUITY. PSHC's shareholders' equity as of
the Closing shall not be less than PSHC's shareholders' equity as of
December 31, 1996, excluding for purposes of the calculation of such
shareholders' equity the effects of (i) all costs, fees and charges,
including fees and charges of PSHC's accountants, counsel and financial
advisors, whether or not accrued or paid, that are related to the
transactions contemplated by this Agreement not to exceed $200,000 in
the aggregate, (ii) all net charges resulting from the application of
FASB Statement No. 115 with respect to unrealized securities gains and
losses, and (iii) any reductions in PSHC's shareholders' equity
resulting from any actions or changes in policies of PSHC taken at the
request of Seacoast, including those described in Section 8.16 and (iv)
the effect on or after the Effective Time, as Seacoast may determine, of
the PSHC and/or PSNB data processing agreements as shown in Section
9.2(g) of the PSHC Disclosure Memorandum. .
(H) DIRECTOR'S AGREEMENTS. Seacoast shall have received
from each director of PSHC the Director's Agreement set forth hereto at
Exhibit 4.
(I) CLAIMS LETTER. Seacoast shall have received from
each director and officer of PSHC the Claims Letter set forth hereto at
Exhibit 5.
9.3 CONDITIONS TO OBLIGATIONS OF PSHC.9.3 Conditions to
Obligations of PSHC The obligations of PSHC to perform this Agreement and
consummate the Merger and the other transactions contemplated hereby are
subject to the satisfaction of the following conditions, unless waived by PSHC
pursuant to Section 11.6(b):
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of
Seacoast set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date). There shall not exist inaccuracies in the representations and
warranties of Seacoast set forth in this Agreement such that the
aggregate effect of such inaccuracies has, or is reasonably likely to
have, a Seacoast Material Adverse Effect; provided that, for purposes of
this sentence only, those representations and warranties which are
qualified by references to "material" or "Material Adverse Effect" or to
the "Knowledge" of any Person shall be deemed not to include such
qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of Seacoast to be performed and complied
with pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and
complied with in all material respects.
(C) CERTIFICATES. Seacoast shall have delivered to PSHC (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9.1 as relates to
Seacoast and in Section 9.3(a) and 9.3(b) have been satisfied, and (ii)
certified copies of resolutions duly adopted by Seacoast's Board of
Directors and shareholders evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as PSHC and its counsel shall request.
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(D) OPINION OF COUNSEL. PSHC shall have received an opinion
of Alston & Bird, counsel to Seacoast, dated as of the Effective Time,
in form reasonably acceptable to PSHC, as to the matters set forth in
Exhibit 6.
(E) FAIRNESS OPINION. PSHC shall have received from Austin
Associates, Inc. a letter, dated not more than five business days prior
to the date of the Proxy Statement, to the effect that, in the opinion
of such firm, the consideration to be received by PSHC shareholders in
connection with the Merger is fair, from a financial point of view, to
such shareholders.
ARTICLE 10
TERMINATION10 - TERMINATION
10.1 TERMINATION.10.1 Termination Notwithstanding any other
provision of this Agreement, and notwithstanding the approval of this Agreement
by the shareholders of PSHC and Seacoast or both, this Agreement may be
terminated and the Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of Seacoast and PSHC; or
(b) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant,
or other agreement contained in this Agreement) in the event of a breach
by the other Party of any representation or warranty contained in this
Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such breach and which
breach is reasonably likely, in the opinion of the non-breaching Party,
to have, individually or in the aggregate, a PSHC Material Adverse
Effect or a Seacoast Material Adverse Effect, as applicable, on the
breaching Party; or
(c) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant,
or other agreement contained in this Agreement) in the event of a
material breach by the other Party of any covenant or agreement
contained in this Agreement which cannot be or has not been cured within
30 days after the giving of written notice to the breaching Party of
such breach; or
(d) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant,
or other agreement contained in this Agreement) in the event (i) any
Consent of any Regulatory Authority required for consummation of the
Merger and the other transactions contemplated hereby shall have been
denied by final nonappealable action of such authority or if any action
taken by such authority is not appealed within the time limit for
appeal, or (ii) the shareholders of PSHC or Seacoast fail to vote their
approval of the matters relating to this Agreement and the transactions
contemplated hereby at the Shareholders' Meetings where such matters
were presented to such shareholders for approval and voted upon; or
(e) By either Party in the event that the Merger shall not
have been consummated by August 31, 1997, if the failure to consummate
the transactions contemplated hereby on or before such date is not
caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant,
or other agreement contained in this Agreement) in the event that any of
the conditions precedent to the obligations of such Party to consummate
the Merger cannot be satisfied or fulfilled by the date specified in
Section 10.1(e); or
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(g) By Seacoast, in the event that the Board of
Directors of PSHC shall have failed to reaffirm its approval of the
Merger and the transactions contemplated by this Agreement (to the
exclusion of any other Acquisition Proposal), or shall have resolved not
to reaffirm the Merger, or shall have affirmed, recommended or
authorized entering into any other Acquisition Proposal or other
transaction involving a merger, share exchange, consolidation or
transfer of substantially all of the Assets of PSHC.
(h) By PSHC in the event that the Purchase Price Per
Share shall be less than $24.62.
10.2 EFFECT OF TERMINATION.10.2 Effect of Termination In the
event of the termination and abandonment of this Agreement pursuant to Section
10.1, this Agreement shall become void and have no effect, except that (i) the
provisions of this Section 10.2 and Article 11 and Sections 8.6(b) and 8.7
shall survive any such termination and abandonment, and (ii) a termination
pursuant to Sections 10.1(b), 10.1(c) or 10.1(f) shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS.10.3
Non-Survival of Representations and Covenants The respective representations,
warranties, obligations, covenants, and agreements of the Parties shall not
survive the Effective Time except this Section 10.3 and Articles 1, 2, 3, 4 and
11 and Sections 8.7, 8.13, 8.14, 8.15 and 8.17.
ARTICLE 11
MISCELLANEOUS11 - MISCELLANEOUS
11.1 DEFINITIONS.11.1 Definitions
(a) Except as otherwise provided herein, the
capitalized terms set forth below shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"ACQUISITION PROPOSAL" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition of all
of the stock or assets of, or other business combination involving the
acquisition of such Party or any of its Subsidiaries or the acquisition of a
substantial equity interest in, or a substantial portion of the assets of, such
Party or any of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect beneficial owner of any 10%
or greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated herein by
reference.
"ARTICLES OF MERGER" shall mean the Articles of Merger to be
executed by Seacoast and filed with the Secretary of State of the State of
Florida relating to the Merger as contemplated by Section 1.1.
"ASSETS" of a Person shall mean all of the assets,
properties, businesses and rights of such Person of every kind, nature,
character and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in
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whole or in part, whether or not carried on the books and records of such
Person, and whether or not owned in the name of such Person or any Affiliate of
such Person and wherever located.
"BHC ACT" shall mean the federal Bank Holding Company Act of
1956, as amended.
"CLOSING DATE" shall mean the date on which the Closing
occurs.
"CONFIDENTIALITY AGREEMENT" shall mean that certain
Confidentiality Agreement, dated May 10, 1996, between PSHC and Seacoast.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant to
any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of any
kind or character, or other document to which any Person is a party or that is
binding on any Person or its capital stock, Assets or business.
"DEFAULT" shall mean (i) any breach or violation of, default
under, contravention of, or conflict with, any Contract, Law, Order, or Permit,
(ii) any occurrence of any event that with the passage of time or the giving of
notice or both would constitute a breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time or
the giving of notice would give rise to a right of any Person to exercise any
remedy or obtain any relief under, terminate or revoke, suspend, cancel, or
modify or change the current terms of, or renegotiate, or to accelerate the
maturity or performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface, or subsurface strata) and which
are administered, interpreted, or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the environment,
including the Comprehensive Environmental Response Compensation and Liability
Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases, or threatened releases of any
Hazardous Material, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of any
Hazardous Material.
"EQUITY RIGHTS" shall mean all arrangements, calls,
commitments, Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for, shares of the
capital stock of a Person or by which a Person is or may be bound to issue
additional shares of its capital stock or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"EXHIBITS" 1 through 6, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits are
hereby incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation
"FNMA" shall mean the Federal National Mortgage Association.
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"FBCA" shall mean the Florida Business Corporation Act.
"FIRST NATIONAL" shall mean First National Bank & Trust
Company of the Treasure Coast, a national banking association and a
Seacoast Subsidiary.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic substance
(as those terms are defined by any applicable Environmental Laws) and (ii) any
chemicals, pollutants, contaminants, petroleum, petroleum products, or oil (and
specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and any
polychlorinated biphenyls).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as
amended.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"INTELLECTUAL PROPERTY" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, applications therefor,
technology rights and licenses, computer software (including any source or
object codes therefor or documentation relating thereto), trade secrets,
franchises, know-how, inventions, and other intellectual property rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder.
"JOINT PROXY STATEMENT" shall mean the proxy statement used
by PSHC and Seacoast to solicit the approval of their respective shareholders
of the transactions contemplated by this Agreement, which shall include the
prospectus of Seacoast relating to the issuance of the Seacoast Common Stock to
holders of PSHC Common Stock.
"KNOWLEDGE" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall mean those
facts that are known or should reasonably have been known after due inquiry by
the chairman, president, chief financial officer, chief accounting officer,
chief operating officer, chief credit officer, general counsel, any assistant
or deputy general counsel, or any senior, executive or other vice president of
such Person and the knowledge of any such persons obtained or which would have
been obtained from a reasonable investigation.
"LAW" shall mean any code, law (including common law),
ordinance, regulation, reporting or licensing requirement, rule, or statute
applicable to a Person or its Assets, Liabilities, or business, including those
promulgated, interpreted or enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature
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whatsoever of, on, or with respect to any property or property interest, other
than (i) Liens for current property Taxes not yet due and payable, (ii) for
depository institution Subsidiaries of a Party, pledges to secure deposits and
other Liens incurred in the ordinary course of the banking business, (iii)
Liens which do not materially impair the use of or title to the Assets subject
to such Lien, and which are disclosed in Section 11.1 of the PSHC Disclosure
Memorandum or Seacoast Disclosure Memorandum, as applicable.
"LITIGATION" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other proceeding
relating to or affecting a Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by this Agreement, but shall
not include regular, periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
"MATERIAL" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question; provided
that any specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"NASDAQ NATIONAL MARKET" shall mean the National
Market System of the National Association of Securities Dealers Automated
Quotations System.
"OPERATING PROPERTY" shall mean any property owned, leased,
or operated by the Party in question or by any of its Subsidiaries or in which
such Party or Subsidiary holds a security interest or other interest (including
an interest in a fiduciary capacity), and, where required by the context,
includes the owner or operator of such property, but only with respect to such
property.
"ORDER" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such facility
or property.
"PARTY" shall mean either PSHC or Seacoast, and "PARTIES"
shall mean both PSHC and Seacoast.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person or its securities,
Assets, or business.
"PERSON" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"PSHC COMMON STOCK" shall mean the $0.01 par value common
stock of PSHC.
"PSHC DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Port St. Lucie National Bank Holding Corp. Disclosure
Memorandum" delivered prior to the date of this Agreement to Seacoast
describing in reasonable detail the matters contained therein and, with respect
to each disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being
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made. Information disclosed with respect to one Section shall not be deemed to
be disclosed for purposes of any other Section not specifically referenced with
respect thereto.
"PSHC ENTITIES" shall mean, collectively, PSHC and all PSHC
Subsidiaries.
"PSHC FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of PSHC
as of September 30, 1996, and as of December 31,1995 and 1994, and the related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for the nine months ended
September 30, 1996, and for each of the three fiscal years ended December
31,1995, 1994 and 1993, as filed by PSHC in SEC Documents, and (ii) the
consolidated statements of condition of PSHC (including related notes and
schedules, if any) and related statements of income, changes in shareholders'
equity, and cash flows (including related notes and schedules, if any) included
in SEC Documents filed with respect to periods ended subsequent to September
30, 1996.
"PSHC MATERIAL ADVERSE EFFECT" shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of PSHC and its Subsidiaries, taken as a
whole, or (ii) the ability of PSHC to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement, provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in generally accepted accounting principles or regulatory
accounting principles generally applicable to banks and their holding
companies, (c) actions and omissions of PSHC (or any of its Subsidiaries) taken
with the prior informed written Consent of Seacoast in contemplation of the
transactions contemplated hereby, and (d) the direct effects of compliance with
this Agreement on the operating performance of PSHC, including expenses
incurred by PSHC in consummating the transactions contemplated by this
Agreement.
"PSHC STOCK PLANS" shall mean the existing stock option,
stock purchase and other stock-based plans of PSHC.
"PSHC SUBSIDIARIES" shall mean the Subsidiaries of PSHC,
which shall include the PSHC Subsidiaries described in Section 5.4 and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of PSHC in the future and held as a Subsidiary by PSHC at the
Effective Time.
"PSN BANK" shall mean Port St. Lucie National Bank, a
national banking association and a PSHC Subsidiary.
"PURCHASE PRICE PER SHARE" shall mean (i) the sum of (x) the
average of the closing prices on the Nasdaq National Market as reported by The
Wall Street Journal of Seacoast Common Stock for the 20 trading days preceding
the fifth trading day preceding the Closing Date (the "Seacoast Stock Price")
multiplied by 900,000 and (y) 1,242,953 (ii) divided by the number of shares of
PSHC Common Stock plus the number of shares of PSHC Common Stock subject to
PSHC Options, including PSHC Warrants, outstanding at the Effective Time.
"REGISTRATION STATEMENT" shall mean the Registration
Statement on Form S-4, or other appropriate form, including any pre-effective
or post-effective amendments or supplements thereto, filed with the SEC by
Seacoast under the 1933 Act with respect to the shares of Seacoast Common Stock
to be issued to the shareholders of PSHC in connection with the transactions
contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the SEC,
the NASD, the Federal Trade Commission, the United States Department of
Justice, the Board of the Governors of the Federal Reserve System, the Office
of the Comptroller of the Currency, the Federal Deposit Insurance Corporation,
and all
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other federal, state, county, local or other governmental or regulatory
agencies, authorities (including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having jurisdiction over the
Parties and their respective Subsidiaries.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative engaged by a
Person.
"SEACOAST CAPITAL STOCK" shall mean, collectively, the
Seacoast Common Stock, the Seacoast Preferred Stock and any other class or
series of capital stock of Seacoast.
"SEACOAST COMMON STOCK" shall mean the $0.10 par value Class
A common stock of Seacoast.
"SEACOAST DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Seacoast Banking Corporation of Florida Disclosure
Memorandum" delivered prior to the date of this Agreement to PSHC describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information disclosed with
respect to one Section shall not be deemed to be disclosed for purposes of any
other Section not specifically referenced with respect thereto.
"SEACOAST ENTITIES" shall mean, collectively, Seacoast and all
Seacoast Subsidiaries.
"SEACOAST FINANCIAL STATEMENTS" shall mean (i) the
consolidated statements of condition (including related notes and schedules, if
any) of Seacoast as of September 30, 1996, and as of December 31, 1995 and
1994, and the related statements of income, changes in shareholders' equity,
and cash flows (including related notes and schedules, if any) for the nine
months ended September 30, 1996, and for each of the three fiscal years ended
December 31, 1995, 1994 and 1993, as filed by Seacoast in SEC Documents, and
(ii) the consolidated statements of condition and balance sheets of Seacoast
(including related notes and schedules, if any) and related statements of
income, changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to September 30, 1996.
"SEACOAST MATERIAL ADVERSE EFFECT" shall mean an event,
change or occurrence which, individually or together with any other event,
change or occurrence, has a material adverse impact on (i) the financial
position, business, or results of operations of Seacoast and its Subsidiaries,
taken as a whole, or (ii) the ability of Seacoast to perform its obligations
under this Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect" shall
not be deemed to include the impact of (a) changes in banking and similar Laws
of general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles or
regulatory accounting principles generally applicable to banks and their
holding companies, (c) actions and omissions of Seacoast (or any of its
Subsidiaries) taken with the prior informed written Consent of PSHC in
contemplation of the transactions contemplated hereby, and (d) the direct
effects of compliance with this Agreement on the operating performance of
Seacoast, including expenses incurred by Seacoast in consummating the
transactions contemplated by this Agreement.
"SEACOAST PREFERRED STOCK" shall mean the $1.00 par value
preferred stock of Seacoast.
"SEACOAST STOCK PLANS" shall mean the existing stock option
and other stock-based compensation plans of Seacoast designated as follows: (i)
Seacoast Banking Corporation of Florida 1991 Stock Option and Stock
Appreciation Rights Plan and (ii) Seacoast Banking Corporation of Florida 1996
Long-term Incentive Plan.
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"SEACOAST STOCK PRICE" shall mean the average of the closing
prices on the Nasdaq National Market as reported by The Wall Street Journal of
Seacoast Common Stock for the 20 trading days preceding the fifth trading day
preceding the Closing Date.
"SEACOAST SUBSIDIARIES" shall mean the Subsidiaries of
Seacoast, which shall include the Seacoast Subsidiaries described in Section
6.4 and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of Seacoast in the future and held as a Subsidiary by
Seacoast at the Effective Time.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed, or
required to be filed, by a Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules
and regulations of any Regulatory Authority promulgated thereunder.
"SHAREHOLDERS' MEETINGS" shall mean the respective meetings
of the shareholders of PSHC and Seacoast to be held pursuant to Section 8.1,
including any adjournment or adjournments thereof.
"SIGNIFICANT SUBSIDIARY" shall mean any present or future
consolidated Subsidiary of the Party in question, the assets of which
constitute ten percent (10%) or more of the consolidated assets of such Party
as reflected on such Party's consolidated statement of condition prepared in
accordance with GAAP.
"SUBSIDIARIES" shall mean all those corporations,
associations, or other business entities of which the entity in question either
(i) owns or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which 50% or
more of the outstanding equity securities is owned directly or indirectly by
its parent (provided, there shall not be included any such entity the equity
securities of which are owned or controlled in a fiduciary capacity), (ii) in
the case of partnerships, serves as a general partner, (iii) in the case of a
limited liability company, serves as a managing member, or (iv) otherwise has
the ability to elect a majority of the directors, trustees or managing members
thereof.
"SURVIVING CORPORATION" shall mean Seacoast as the surviving
corporation resulting from the Merger.
"TAX RETURN" shall mean any report, return, information
return, or other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined or
unitary group that includes a Party or its Subsidiaries.
"TAX" or "TAXES" shall mean any federal, state, county,
local, or foreign taxes, charges, fees, levies, imposts, duties, or other
assessments, including income, gross receipts, excise, employment, sales, use,
transfer, license, payroll, franchise, severance, stamp, occupation, windfall
profits, environmental, federal highway use, commercial rent, customs duties,
capital stock, paid-up capital, profits, withholding, Social Security, single
business and unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever, imposes or
required to be withheld by the United States or any state, county, local or
foreign government or subdivision or agency thereof, including any interest,
penalties, and additions imposed thereon or with respect thereto.
(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
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<TABLE>
<S> <C>
Allowance Section 5.9
Bank Merger Section 1.4
Bank Plan Section 1.4
Closing Section 1.2
Counties Section 7.1.
Effective Time Section 1.3
ERISA Affiliate Section 5.15(b)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(b)
Lower Threshold Price Section 3.1(b)
Maximum Amount Section 8.15
Merger Section 1.1
PSHC Benefit Plans Section 5.15
PSHC Contracts Section 5.16
PSHC ERISA Plan Section 5.15
PSHC Options Section 3.6
PSHC Pension Plan Section 5.15
PSHC SEC Reports Section 5.5(a)
Seacoast Benefit Plans Section 6.15
Seacoast Contracts Section 6.16
Seacoast ERISA Plan Section 6.15
Seacoast Pension Plan Section 6.15
Seacoast SEC Reports Section 6.5(a)
Takeover Laws Section 5.21
Tax Opinion Section 9.1(h)
Wholesale Mortgage Business Section 5.16
</TABLE>
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 EXPENSES
Except as otherwise provided in this Section 11.2,
each of the Parties shall bear and pay all direct costs
and expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including filing, registration and
application fees, printing fees, and fees and expenses of its own financial or
other consultants, investment bankers, accountants, and counsel, except that
each of the Parties shall bear and pay one-half of the filing fees payable in
connection with the Registration Statement and the Joint Proxy Statement and
printing costs incurred in connection with the printing of the Registration
Statement and the Joint Proxy Statement.
11.3 BROKERS AND FINDERS. Except for Austin Associates, Inc.
as to PSHC and except for The Robinson-Humphrey Company as to Seacoast, each of
the Parties represents and warrants that neither it nor any of its officers,
directors, employees, or Affiliates has employed any broker or finder or
incurred any Liability for any financial advisory fees, investment bankers'
fees, brokerage fees, commissions, or finders' fees in connection with this
Agreement or the transactions contemplated hereby. In the event of a claim by
any broker or finder based upon his or its representing or being retained by or
allegedly representing or being retained by PSHC or by Seacoast, each of PSHC
and Seacoast, as the case may be, agrees to indemnify and hold the other Party
harmless of and from any Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements
or understandings
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with respect thereto, written or oral (except, as to Section 8.6(b), for the
Confidentiality Agreement). Nothing in this Agreement expressed or implied, is
intended to confer upon any Person, other than the Parties or their respective
successors, any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, other than as provided in Sections 8.14 and 8.15.
11.5 AMENDMENTS.11.5 Amendments To the extent permitted by
Law, this Agreement may be amended by a subsequent writing signed by each of
the Parties upon the approval of each of the Parties, whether before or after
shareholder approval of this Agreement has been obtained; provided, that after
any such approval by the holders of PSHC Common Stock, there shall be made no
amendment that reduces or modifies in any material respect the consideration to
be received by holders of PSHC Common Stock; and further provided, that after
any such approval by the holders of Seacoast Common Stock, the provisions of
this Agreement relating to the manner or basis in which shares of PSHC Common
Stock will be exchanged for shares of Seacoast Common Stock shall not be
amended after the Shareholders' Meetings in a manner adverse to the holders of
Seacoast Common Stock without any requisite approval of the holders of the
issued and outstanding shares of Seacoast Common Stock entitled to vote
thereon.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, Seacoast,
acting through its Board of Directors, chief executive officer or other
authorized officer, shall have the right to waive any Default in the
performance of any term of this Agreement by PSHC, to waive or extend the time
for the compliance or fulfillment by PSHC of any and all of its obligations
under this Agreement, and to waive any or all of the conditions precedent to
the obligations of Seacoast under this Agreement, except any condition which,
if not satisfied, would result in the violation of any Law. No such waiver
shall be effective unless in writing signed by a duly authorized officer of
Seacoast.
(b) Prior to or at the Effective Time, PSHC,
acting through its Board of Directors, chief executive officer or other
authorized officer, shall have the right to waive any Default in the
performance of any term of this Agreement by Seacoast, to waive or extend the
time for the compliance or fulfillment by Seacoast of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of PSHC under this Agreement, except any condition
which, if not satisfied, would result in the violation of any Law. No such
waiver shall be effective unless in writing signed by a duly authorized officer
of PSHC.
(c) The failure of any Party at any time or
times to require performance of any provision hereof shall in no manner affect
the right of such Party at a later time to enforce the same or any other
provision of this Agreement. No waiver of any condition or of the breach of any
term contained in this Agreement in one or more instances shall be deemed to be
or construed as a further or continuing waiver of such condition or breach or a
waiver of any other condition or of the breach of any other term of this
Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby,
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any Party hereto (whether by operation of Law or
otherwise) without the prior written consent of the other Party. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the Parties and their respective successors and
assigns.
11.8 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
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<TABLE>
<CAPTION>
<S> <C>
PSHC: Port St. Lucie National Bank Holding Corp.
1100 S.W. St. Lucie West Boulevard
Port St. Lucie, Florida 34986
Telecopy Number: (561) 878-5431
Attention: J. Hal Roberts, Jr.
Copy to Counsel: Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
777 South Flagler Drive
Suite 500 East
West Palm Beach, Florida 33401-6194
Telecopy Number: (561) 655-5677
Attention: Michael V. Mitrione, Esq.
Seacoast: Seacoast Banking Corporation of Florida
815 Colorado Avenue
P.O. Box 9012
Stuart, Florida 34995-9012
Telecopy Number: (561) 288-6012
Attention: Mr. Dennis S. Hudson, III
Copy to Counsel: Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30327
Telecopy Number: (404) 881-7777
Attention: Ralph F. MacDonald, III, Esq.
</TABLE>
11.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Florida, without regard
to any applicable conflicts of Laws.
11.10 Counterparts This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
11.11 Captions; Articles and Sections The captions contained
in this Agreement are for reference purposes only and are not part of this
Agreement. Unless otherwise indicated, all references to particular Articles or
Sections shall mean and refer to the referenced Articles and Sections of this
Agreement.
11.12 Interpretations Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any
party, whether under any rule of construction or otherwise. No party to this
Agreement shall be considered the draftsman. The parties acknowledge and agree
that this Agreement has been reviewed, negotiated, and accepted by all parties
and their attorneys and shall be construed and interpreted according to the
ordinary meaning of the words used so as fairly to accomplish the purposes and
intentions of all parties hereto.
11.13 Enforcement of Agreement The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.14 Severability Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
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unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
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<PAGE> 51
IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be executed on its behalf by its duly authorized officers as of
the day and year first above written.
SEACOAST BANKING CORPORATION OF FLORIDA
By: /s/ Dennis S. Hudson, III
-----------------------------------------
President
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
By: /s/ J. HAL ROBERTS, JR.
-----------------------------------------
President
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EXHIBIT 1 TO AGREEMENT
AND PLAN OF MERGER
PLAN OF MERGER
OF
PORT ST. LUCIE NATIONAL BANK
WITH AND INTO
FIRST NATIONAL BANK & TRUST COMPANY OF THE TREASURE COAST
This Plan of Merger ("Plan of Merger") is made and entered
into as of February 19, 1997, by and between PORT ST. LUCIE NATIONAL BANK, a
national banking association organized and existing under the laws of the
United States with its main office located in Port St. Lucie, Florida ("PSNB"),
and FIRST NATIONAL BANK & TRUST COMPANY OF THE TREASURE COAST, a national
banking association organized and existing under the laws of the United States
with its main office located in Stuart, Florida ("FNB").
FNB is a wholly-owned subsidiary of Seacoast Banking
Corporation of Florida, a corporation organized and existing under the laws of
the State of Florida, with its principal office located in Stuart, Florida
("Seacoast"). PSNB is a wholly-owned subsidiary of Port St. Lucie National Bank
Holding Corporation, a corporation organized and existing under the laws of the
State of Florida, with its principal office in Port St. Lucie, Florida
("PSHC"). Prior to the execution and delivery of this Plan of Merger, Seacoast
and PSHC have entered into a Agreement and Plan of Merger (the "Parent
Agreement") pursuant to which PSHC would merge with and into Seacoast. The
Parent Agreement also contemplates that PSNB will be merged with and into FNB.
The Boards of Directors of PSNB and FNB are of the opinion that the bests
interests of their respective banks would be served if PSNB is merged with and
into FNB on the terms and conditions provided in this Plan of Merger.
NOW, THEREFORE, in consideration of the covenants and
agreements contained herein, PSNB and FNB hereby make, adopt and approve this
Plan of Merger in order to set forth the terms and conditions for the merger of
PSNB into FNB.
ARTICLE ONE
DEFINITIONS
Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
1.1 "PSNB Common Stock" shall mean the $5.00 par value
common stock of PSNB.
1.2 "Bank Merger" shall refer to the merger of PSNB
with and into FNB as provided in Section 2.1 of this Plan of Merger.
1.3 "FNB Common Stock" shall mean the $10.00 par value
common stock of FNB.
1.4 "Certificate of Merger" shall mean the Certificate of
Merger to be issued by the Office of the Comptroller of the Currency of the
United States approving the Bank Merger.
1.5 "Effective Time" shall mean the date and time on which
the Bank Merger becomes effective as specified in the Certificate of Merger.
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ARTICLE TWO
TERMS OF BANK MERGER
2.1 Merger. Subject to the terms and conditions set forth in
this Plan of Merger, at the Effective Time, PSNB shall be merged with and into
FNB under the Charter and Articles of Association of FNB pursuant to the
provisions of and with the effect provided in Title 12, United States Code,
Section 215a. FNB shall be the surviving bank and the receiving association
resulting from the Bank Merger and shall continue to conduct its business under
the name "FIRST NATIONAL BANK & TRUST COMPANY OF THE TREASURE COAST." The Bank
Merger shall be consummated pursuant to the terms of this Plan of Merger, which
has been approved and adopted by the respective Boards of Directors and
shareholders of FNB and PSNB.
2.2 Method of Converting Shares. All of the shares of FNB
Common Stock issued and outstanding at the Effective Time shall remain issued
and outstanding after the Effective Time and shall be unaffected by the Bank
Merger. At the Effective Time, the certificates representing all of the issued
and outstanding shares of PSNB Common Stock shall be surrendered to FNB for
cancellation and no consideration shall be issued in exchange therefor.
ARTICLE THREE
EFFECT OF BANK MERGER
3.1 Business of FNB. The business of FNB from and after the
Effective Time shall continue to be that of a national banking association. The
business shall be conducted from its main office located in Stuart, Florida and
at its legally established branches, which shall also include the main office
and all branches, whether in operation or approved but unopened, of PSNB at the
Effective Time.
3.2 Assumption of Rights. At the Effective Time, the separate
existence and corporate organization of PSNB shall be merged into and continued
in FNB, as the surviving bank and receiving association of the Bank Merger. All
rights, franchises and interests of PSNB and FNB in and to every type of
property (real, personal and mixed), and all choses in action of PSNB and FNB
shall be transferred to and vested in FNB as the surviving bank and receiving
association by virtue of the Bank Merger without any deed or other transfer.
FNB, upon consummation of the Bank Merger and without any order or other action
on the part of any court or otherwise, shall hold and enjoy all rights of
property, franchises and interests, including appointments, designations and
nominations, and all other rights and interests as trustee, executor,
administrator, registrar of stocks and bonds, guardian of estates, assignee,
receiver and committee of estates of lunatics, and in every other fiduciary
capacity, in the same manner and to the same extent as such rights, franchises,
and interests were held or enjoyed by either of PSNB or by FNB at the Effective
Time, subject to the conditions imposed by Title 12, United States Code,
Section 215a.
3.3 Assumption of Liabilities. All liabilities and
obligations of both of PSNB and of FNB of every kind and description shall be
assumed by FNB as the surviving bank and receiving association by virtue of the
Bank Merger, and FNB shall be bound thereby in the same manner and to the same
extent that either of PSNB or FNB was so bound at the Effective Time.
3.4 Articles of Association. At the Effective Time, following
consummation of the Bank Merger, the Articles of Association of FNB shall be in
the form set forth in Annex A to this Plan of Merger, as modified only by such
amendments as may be adopted by the sole shareholder of FNB prior to the
Effective Time. The Bylaws of FNB shall be in the form set forth in Annex B to
this Plan of Merger, as modified only by such amendments as may be adopted by
the sole shareholder of FNB prior to the Effective Time.
3.5 Officers, Employees and Directors. The officers and
employees of FNB immediately following the Effective Time shall include, among
others, the officers and employees of FNB and PSNB immediately prior to the
Effective Time. The Board of Directors of FNB immediately following the
Effective Time shall consist of the persons named in Annex C to this Plan of
Merger, including two persons from FNB's Board of
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Directors, each of whom shall serve until his respective successor is elected
and qualified or until a new Board of Directors is elected as provided in the
Articles of Association or Bylaws of FNB or as provided by law. All directors
of PSNB as of the Closing who do not become directors of FNB shall serve as
members of FNB's St. Lucie Advisory Board, and shall have such rights and
powers as are set out in FNB's Bylaws, as amended form time to time, and shall
receive fees for their service on such advisory board consistent with the fees
paid by FNB to members of its other advisory boards.
3.6 Capital Stock of FNB. The capital stock of FNB upon
completion of the Bank Merger shall be approximately $14.5 million, consisting
of 2,000,000 authorized shares and 1,450,000 issued and outstanding shares of
common stock of a par value of $10 per share. In addition, FNB shall have a
surplus of approximately $18 million and undivided profits, including
capital reserves, of approximately $38 million adjusted, however, for
earnings and expenses between December 31, 1996 and the Effective Time.
ARTICLE FOUR
EFFECTIVENESS
4.1 Conditions Precedent. Consummation of the Bank Merger is
conditioned upon (i) the Closing of the transactions contemplated by the Parent
Agreement and (ii) receipt of all approvals, consents, waivers, and other
clearances of all federal and state regulatory authorities having jurisdiction
over the transactions contemplated by this Plan of Merger.
4.2 Termination. This Plan of Merger may be terminated at any
time prior to the Effective Time by the parties hereto after termination of the
Parent Agreement in accordance with the provisions of Section 10.1 thereof.
4.3 Effectiveness. Subject to the satisfaction of all
requirements of applicable laws and regulations and the terms and conditions
set forth herein, the Bank Merger contemplated by this Plan of Merger shall be
and become effective at the time and on the date specified in the Certificate
of Merger.
ARTICLE FIVE
REPRESENTATIONS
5.1 Organization, Standing, and Power.0.1 Organization,
Standing, and Power PSNB is a bank duly organized and validly existing under
the Laws of the State of Florida, and has the power and authority to carry on
its business as now conducted and to own, lease and operate its Assets.
5.2 Authority; No Breach By Agreement.
(a) PSNB has the corporate power and
authority necessary to execute, deliver, and perform its obligations under this
Bank Plan of Merger and to consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Bank Plan of Merger and the
consummation of the transactions contemplated herein have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
PSNB. Subject to such requisite shareholder approval, this Agreement represents
a legal, valid, and binding obligation of PSNB, enforceable against PSNB in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable, insolvency, reorganization, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
may be brought).
(b) Neither the execution and delivery of this
Bank Plan of Merger by PSNB, nor the consummation by PSNB of the transactions
contemplated hereby, nor compliance by PSNB with any of the
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provisions hereof, will except as specifically disclosed in the PSHC Disclosure
Memorandum delivered pursuant to the Parent Agreement (i) conflict with or
result in a breach of any provision of PSNB's Articles of Incorporation or
Bylaws, (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any PSHC
Company under, any Contract or Permit of any PSHC Company, or (iii) subject to
receipt of the requisite approvals referred to in Section 4.1 of this Bank Plan
of Merger, violate any Law or Order applicable to any PSHC Company or any of
their respective material Assets.
(c) Other than in connection or compliance with
the provisions of the Securities Laws, applicable state corporate and
securities Laws, and other than Consents required from Regulatory Authorities,
and other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit
plans, or under, and other than Consents, filings, or notifications which, if
not obtained or made, are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PSNB, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
PSNB of the Merger and the other transactions contemplated in this Bank Plan of
Merger.
5.3 Capital Stock.
(a) The authorized capital stock of PSNB consists
of 5,000,000 shares of PSNB Common Stock, of which 5,000,000 shares
are issued and outstanding as of the date of this Bank Plan of Merger and not
more than 5,000,000 shares will be issued and outstanding at the Effective
Time. All of the issued and outstanding shares of capital stock of PSHC are
duly and validly issued and outstanding and are fully paid and nonassessable.
None of the outstanding shares of capital stock of PSNB has been issued in
violation of any preemptive rights of the current or past shareholders of PSNB.
(b) Except as set forth in Section 5.3(a) hereof,
there are no shares of capital stock or other equity securities of PSNB
outstanding and no outstanding Rights relating to the capital stock of PSNB.
ARTICLE SIX
MISCELLANEOUS
6.1 Amendment. To the extent permitted by law, this Plan of
Merger may be amended by a subsequent written instrument upon the approval of
the Boards of Directors of each of the parties hereto and upon execution of
such instrument by the duly authorized officers of each and by a majority of
the Boards of Directors of PSNB and FNB; provided that no amendment to this
Plan of Merger shall modify the requirements of regulatory approval as set
forth in Section 4.1 hereof.
6.2 Governing Law. This Plan of Merger shall be governed by
and construed in accordance with the laws of the State of Florida, except to
the extent that the federal laws of the United States of America apply to
consummation of the Bank Merger.
6.3 Headings. The headings in this Plan of Merger are
for convenience only and shall not affect the construction or interpretation of
this Plan of Merger.
6.4 Counterparts. This Plan of Merger may be executed in two
or more counterparts, each of which shall be deemed an original instrument, but
all of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, PSNB and FNB has caused this Plan of Merger to be
executed on its behalf by its officers thereunto duly authorized and by a
majority of its Board of Directors, all as of the day and year first above
written.
<TABLE>
<CAPTION>
<S> <C>
ATTEST: FIRST NATIONAL BANK & TRUST COMPANY OF THE
TREASURE COAST
By: By:
------------------------------------- -------------------------------------------
Title: Title:
[BANK SEAL]
ATTEST: PORT ST. LUCIE NATIONAL BANK
By: By:
-------------------------------------- -------------------------------------------
Title: Title:
[BANK SEAL]
</TABLE>
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<PAGE> 57
EXHIBIT 2 TO AGREEMENT
AND PLAN OF MERGER
FORM OF AFFILIATE AGREEMENT
Seacoast Banking Corporation of Florida
P. O. Box 9012
Stuart, Florida 34995-9012
Attention: Dennis S. Hudson, III
Executive Vice President
Gentlemen:
The undersigned is a shareholder of Port St. Lucie National Bank
Holding Corp. ("PSHC"), a corporation organized and existing under the laws of
the State of Florida, and will become a shareholder of Seacoast Banking
Corporation of Florida ("Seacoast"), a corporation organized and existing under
the laws of the State of Florida, pursuant to the transactions described in the
Agreement and Plan of Merger, dated as of February 19, 1997 (the "Agreement"),
by and between Seacoast and PSHC. Under the terms of the Agreement, PSHC will
be merged into and with Seacoast (the "Merger"), and the shares of the $0.01
par value common stock of PSHC ("PSHC Common Stock") will be converted into and
exchanged for shares of the $0.10 par value Class A common stock of Seacoast
("Seacoast Common Stock"). This Affiliate Agreement represents an agreement
between the undersigned and Seacoast regarding certain rights and obligations
of the undersigned in connection with the shares of Seacoast to be received by
the undersigned as a result of the Merger.
In consideration of the Merger and the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are acknowledged, the undersigned and Seacoast hereby agree as
follows:
1. Affiliate Status. The undersigned understands and agrees that as to
PSHC he is an "affiliate" under Rule 145(c) as defined in Rule 405 of the Rules
and Regulations of the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended ("1933 Act"), and the undersigned
anticipates that he will be such an "affiliate" at the time of the Merger.
2. Initial Restriction on Disposition. The undersigned agrees that he
will not sell, transfer, or otherwise dispose of his interests in, or reduce
his risk relative to, any of the shares of Seacoast Common Stock into which his
shares of PSHC Common Stock are converted upon consummation of the Merger until
such time that the requirements of SEC Accounting Series Release Nos. 130 and
135 ("ASR 130 and 135") have been met. The undersigned understands that ASR 130
and 135 relate to publication of financial results of post-Merger combined
operations of Seacoast and PSHC. Seacoast agrees that it will publish such
results within 45 days after the end of the first fiscal quarter of Seacoast
containing the required period of post-Merger combined operations and that it
will notify the undersigned promptly following such publication.
3. Covenants and Warranties of Undersigned. The undersigned
represents, warrants and agrees that:
(a) The Seacoast Common Stock received by the undersigned as a result
of the Merger will be taken for his own account and not for others,
directly or indirectly, in whole or in part.
(b) Seacoast has informed the undersigned that any distribution by the
undersigned of Seacoast Common Stock has not been registered under the
1933 Act and that shares of Seacoast Common Stock received pursuant to
the Merger can only be sold by the undersigned (1) following
registration under the 1933 Act, or (2) in conformity with the volume
and other requirements of Rule 145(d) promulgated by the
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SEC as the same now exist or may hereafter be amended, or (3) to the
extent some other exemption from registration under the 1933 Act might
be available. The undersigned understands that Seacoast is under no
obligation to file a registration statement with the SEC covering the
disposition of the undersigned's shares of Seacoast Common Stock or to
take any other action necessary to make compliance with an exemption
from such registration available.
(c) The undersigned will, and will cause each of the other parties
whose shares are deemed to be beneficially owned by the undersigned
pursuant to Section 8 hereof to, have all shares of PSHC Common Stock
beneficially owned by the undersigned registered in the name of the
undersigned or in the name of any bank, broker-dealer, or clearinghouse
or nominee of any such bank, broker-dealer or clearinghouse, subject in
all cases to the restrictions contained herein and not for the purposes
of, or in any manner otherwise, changing the beneficial ownership of
such shares, reducing the undersigned's risk of ownership of such
shares, or avoiding the purposes of this Agreement. The undersigned
shall promptly notify any such bank, broker-dealer, clearinghouse or
nominee of the restrictions imposed hereby by providing such persons a
copy of this Agreement.
(d) During the 30 days immediately preceding the Effective Time of the
Merger, the undersigned has not sold, transferred, or otherwise disposed
of his interests in, or reduced his risk relative to, any of the shares
of PSHC Common Stock beneficially owned by the undersigned as of the
record date for determination of shareholders entitled to vote at the
Shareholders' Meeting of PSHC held to approve the Merger.
(e) The undersigned is aware that Seacoast intends to treat the Merger
as a tax-free reorganization under Section 368 of the Internal Revenue
Code ("Code") for federal income tax purposes. The undersigned agrees to
treat the transaction in the same manner as Seacoast for federal income
tax purposes. The undersigned acknowledges that Section 1.368-1(b) of
the Income Tax Regulations requires "continuity of interest" in order
for the Merger to be treated as tax-free under Section 368 of the Code.
This requirement is satisfied if, taking into account those PSHC
shareholders who receive cash in exchange for their stock, who receive
cash in lieu of fractional shares, or who dissent from the Merger, there
is no plan or intention on the part of the PSHC shareholders to sell or
otherwise dispose of the Seacoast Common Stock to be received in the
Merger that will reduce such shareholders' ownership to a number of
shares having, in the aggregate, a value at the time of the merger of
less than 50% of the total fair market value of the PSHC Common Stock
outstanding immediately prior to the Merger. The undersigned has no
prearrangement, plan or intention to sell or otherwise dispose of an
amount of his Seacoast Common Stock to be received in the Merger which
would cause the foregoing requirement not to be satisfied.
4. Restrictions on Transfer. The undersigned understands and agrees
that stop transfer instructions with respect to the shares of Seacoast Common
Stock received by the undersigned pursuant to the Merger will be given to
Seacoast's Transfer Agent and that there will be placed on the certificates for
such shares, or shares issued in substitution thereof, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO A
BUSINESS COMBINATION WHICH IS ACCOUNTED FOR AS A "POOLING OF INTERESTS"
AND MAY NOT BE SOLD, NOR MAY THE OWNER THEREOF REDUCE HIS RISKS RELATIVE
THERETO IN ANY WAY, UNTIL SUCH TIME AS SEACOAST BANKING CORPORATION OF
FLORIDA ("SEACOAST") HAS PUBLISHED THE FINANCIAL RESULTS COVERING AT
LEAST 30 DAYS OF COMBINED OPERATIONS AFTER THE EFFECTIVE DATE OF THE
MERGER THROUGH WHICH THE BUSINESS COMBINATION WAS EFFECTED. IN ADDITION,
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF EXCEPT OR UNLESS (1) COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (2)
IN ACCORDANCE WITH (I) RULE 145(D) (IN THE CASE OF SHARES ISSUED TO AN
INDIVIDUAL WHO IS NOT AN AFFILIATE OF SEACOAST) OR (II) RULE 144 (IN THE
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CASE OF SHARES ISSUED TO AN INDIVIDUAL WHO IS AN AFFILIATE OF SEACOAST)
OF THE RULES AND REGULATIONS OF SUCH ACT, OR (3) IN ACCORDANCE WITH A
LEGAL OPINION SATISFACTORY TO COUNSEL FOR SEACOAST THAT SUCH SALE OR
TRANSFER IS OTHERWISE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT."
Such legend will also be placed on any certificate representing Seacoast
securities issued subsequent to the original issuance of the Seacoast Common
Stock pursuant to the Merger as a result of any transfer of such shares or any
stock dividend, stock split, or other recapitalization as long as the Seacoast
Common Stock issued to the undersigned pursuant to the Merger has not been
transferred in such manner to justify the removal of the legend therefrom. Upon
the request of the undersigned, Seacoast shall cause the certificates
representing the shares of Seacoast Common Stock issued to the undersigned in
connection with the Merger to be reissued free of any legend relating to
restrictions on transfer by virtue of ASR 130 and 135 as soon as practicable
after the requirements of ASR 130 and 135 have been met. In addition, if the
provisions of Rules 144 and 145 are amended to eliminate restrictions
applicable to the Seacoast Common Stock received by the undersigned pursuant to
the Merger, or at the expiration of the restrictive period set forth in Rule
145(d), Seacoast, upon the request of the undersigned, will cause the
certificates representing the shares of Seacoast Common Stock issued to the
undersigned in connection with the Merger to be reissued free of any legend
relating to the restrictions set forth in Rules 144 and 145(d) upon receipt by
Seacoast of an opinion of its counsel to the effect that such legend may be
removed.
5. Understanding of Restrictions on Dispositions. The undersigned has
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and effects upon his ability to sell, transfer, or otherwise
dispose of the shares of Seacoast Common Stock received by the undersigned, to
the extent he believes necessary, with his counsel or counsel for PSHC.
6. Filing of Reports by Seacoast. Seacoast agrees, for a period of
three years after the effective date of the Merger, to file on a timely basis
all reports required to be filed by it pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended, so that the public information provisions of
Rule 145(d) promulgated by the SEC as the same are presently in effect will be
available to the undersigned in the event the undersigned desires to transfer
any shares of Seacoast Common Stock issued to the undersigned pursuant to the
Merger.
7. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of Seacoast Common Stock received by him in
connection with the Merger at any time during the restrictive period set forth
in Rule 145(d), the undersigned will provide the necessary representation
letter to the transfer agent for Seacoast Common Stock together with such
additional information as the transfer agent may reasonably request. If
Seacoast's counsel concludes that such proposed sale or transfer complies with
the requirements of Rule 145(d), Seacoast shall cause such counsel to provide
such opinions as may be necessary to Seacoast's Transfer Agent so that the
undersigned may complete the proposed sale or transfer.
8. Acknowledgments and Further Agreements. The undersigned recognizes
and agrees that the foregoing provisions also apply to all shares of the
capital stock of PSHC and Seacoast that are deemed to be beneficially owned by
the undersigned pursuant to applicable federal securities laws, which the
undersigned agrees may include, without limitation, shares owned or held in the
name of (i) the undersigned's spouse, (ii) any relative of the undersigned or
of the undersigned's spouse who has the same home as the undersigned, (iii) any
trust or estate in which the undersigned, the undersigned's spouse, and any
such relative collectively own at least a 10% beneficial interest or of which
any of the foregoing serves as trustee, executor, or in any similar capacity,
and (iv) any corporation or other organization in which the undersigned, the
undersigned's spouse and any such relative collectively own at least 10% of any
class of equity securities or of the equity interest. The undersigned further
recognizes that, in the event that the undersigned is a director or officer of
Seacoast or becomes a director or officer of Seacoast upon consummation of the
Merger, among other things, any sale of Seacoast Common Stock by the
undersigned within a period of less than six months following the effective
time of the Merger may subject the undersigned to liability pursuant to Section
16(b) of the Securities Exchange Act of 1934, as amended.
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9. Miscellaneous. This Affiliate Agreement is the complete agreement
between Seacoast and the undersigned concerning the subject matter hereof. Any
notice required to be sent to any party hereunder shall be sent by registered
or certified mail, return receipt requested, using the addresses set forth
herein or such other address as shall be furnished in writing by the parties.
This Affiliate Agreement shall be governed by the laws of the State of Florida.
This Affiliate Agreement is executed as of the 19th day of February,
1997.
<TABLE>
<S> <C>
Very truly yours,
---------------------------
Signature
---------------------------
Print Name
---------------------------
---------------------------
---------------------------
Address
[add below the signatures of all registered owners
of shares deemed beneficially owned by the affiliate]
---------------------------
Name:
---------------------------
Name:
---------------------------
Name:
AGREED TO AND ACCEPTED as of
February ___, 1997
SEACOAST BANKING CORPORATION OF FLORIDA
By:
---------------------------------
</TABLE>
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EXHIBIT 4 TO AGREEMENT
AND PLAN OF MERGER
FORM OF DIRECTOR'S AGREEMENT
THIS DIRECTOR'S AGREEMENT ("Agreement") is made and entered
into as of the 19th day of February, 1997, by and between the undersigned,
______________________, a resident of ______________, Florida, and Seacoast
Banking Corporation of Florida, a corporation organized and existing under the
laws of the State of Florida ("Seacoast").
On even date herewith, Seacoast and Port St. Lucie National
Bank Holding Corp., a corporation organized and existing under the laws of the
State of Florida ("PSHC"), have entered into an Agreement and Plan of Merger
(the "Merger Agreement"). The Merger Agreement generally provides for the
merger of PSHC with and into Seacoast ("Merger"), and the conversion of the
issued and outstanding shares of the $0.01 par value common stock of PSHC
("PSHC Common Stock") into shares of the $0.10 par value Class A common stock
of Seacoast. The transactions contemplated by the Merger Agreement are subject
to the affirmative vote of the shareholders of PSHC, the receipt of certain
regulatory approvals and the satisfaction of other conditions.
The undersigned is a member of the Board of Directors of PSHC
and is the owner of _________ shares of PSHC Common Stock and has rights by
option, warrants and otherwise to acquire _________ additional shares of PSHC
Common Stock ("Shares"). To induce Seacoast to enter into the Merger Agreement,
the undersigned is entering into this Agreement with Seacoast to set forth
certain terms and conditions governing the actions to be taken by the
undersigned with respect to the Shares until consummation of the Merger.
NOW, THEREFORE, in consideration of the transactions
contemplated by the Merger Agreement and the mutual promises and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties, intending to be legally
bound, agree as follows:
1. Without the prior written consent of Seacoast, the
undersigned shall not transfer, sell, assign, convey or encumber any of the
Shares during the term of this Agreement, except to Seacoast pursuant to the
terms of the Merger Agreement. Without limiting the generality of the
foregoing, the undersigned shall not grant to any party any option or right to
purchase the Shares or any interest therein. Further, except with respect to
the Merger, the undersigned shall not approve or ratify any agreement or
contract pursuant to which the Shares would be transferred to any other party
as a result of a consolidation, merger, reorganization or acquisition.
2. The undersigned intends to, and will, vote all of the
Shares beneficially owned by him (and with respect to which he has voting
power) in favor of the Merger. The undersigned will also recommend that the
shareholders of PSHC approve the Merger when the same is presented to the
shareholders for consideration in properly prepared proxy materials, subject
only to the undersigned's legal obligations (if any) as a director of PSHC, and
will use his or her best efforts to effect consummation of the Merger and the
other transactions contemplated by the Merger Agreement. Further, the
undersigned intends to, and will, surrender the certificate or certificates
representing his or her Shares which are beneficially owned by him (and with
respect to which he has sole dispositive power) to Seacoast upon consummation
of the Merger as described in the Merger Agreement.
3. The undersigned covenants and agrees with Seacoast that
for a period of two years after the effective time of the Merger, the
undersigned shall not, without the prior written consent of Seacoast, directly
or indirectly serve as a consultant to, serve as a management official of, or
be or become a major shareholder of any Depository Institution having an office
in Indian River, St. Lucie and/or Martin Counties, Florida. It is expressly
understood that the covenants contained in this paragraph 3 do not apply to (i)
"management official" positions which the undersigned holds with financial
institutions other than PSHC as of the date of this Agreement,
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<PAGE> 62
(ii) securities holdings which cause the undersigned to be deemed a major
shareholder of a Depository Institution other than PSHC as of the date of this
Agreement, or (iii) advisory relationships with a Depository Institution which
the undersigned has as of the date of this Agreement or may have after the date
hereof solely in the capacity as legal counsel. For the purposes of the
covenants contained in this paragraph 3, the following terms shall have the
following respective meanings:
(a) The term "management official" shall refer to service of
any type which gives the undersigned the authority to participate,
directly or indirectly, in policy-making functions. This includes, but
is not limited to, service as an organizer, officer, director, or
advisory director of a Depository Institution. It is expressly
understood and agreed that the undersigned may be deemed a management
official of the Depository Institution whether or not he holds any
official, elected, or appointed position with such Depository
Institution.
(b) The term "Depository Institution" shall refer to any
person which engages in the business of making loans and taking deposits
or which owns or controls, or is under common control with, a company
which engages in such business.
(c) The term "major shareholder" shall refer to the
beneficial ownership of 2% or more of any class of voting securities of
such company or the ownership of 2% of the total equity interest in such
company, however denominated.
4. The undersigned waives and releases any claims and/or
rights he may have in or under the PSHC directors deferred compensation plan
(the "Deferred Plan"), except for the delivery to the undersigned of any cash
surrender value of any insurance policies held with respect to the
undersigned's accrued benefits under the Deferred Plan, net of any
cancellation, liquidation or surrender charges or fees.
5. The undersigned acknowledges and agrees that Seacoast
could not be made whole by monetary damages in the event of any default by the
undersigned of the terms and conditions set forth in this Agreement. It is
accordingly agreed and understood that Seacoast in addition to any other remedy
which it may have at law or in equity, shall be entitled to an injunction,
injunctions or a restraining order or orders to prevent breaches of this
Agreement and specifically to enforce the terms and provisions hereof in any
action instituted in any court of the United States or in any state having
appropriate jurisdiction.
6. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
7. Except with respect to the covenants contained in
paragraph 3, which shall be governed by the terms set forth therein and shall
be effective only upon consummation of the Merger, the covenants and
obligations set forth in this Agreement shall expire and be of no further force
and effect when the Merger Agreement has been terminated.
-56-
<PAGE> 63
IN WITNESS WHEREOF, this Agreement has been duly executed
under seal and delivered by the undersigned as of the day and year first above
written.
<TABLE>
<S> <C>
WITNESS
________________________ _______________________________(SEAL)
Name:__________________________
(Please print or type)
ATTEST: SEACOAST BANKING CORPORATION OF
FLORIDA
By:_____________________ By:__________________________________
Secretary Executive President
[CORPORATE SEAL]
</TABLE>
-57-
<PAGE> 64
EXHIBIT 5 TO AGREEMENT
AND PLAN OF MERGER
FORM OF CLAIMS LETTER
February 19, 1997
Seacoast Banking Corporation of Florida
P.O. Box 9012
Stuart, Florida 34995-9012
Attention: Dennis S. Hudson, III
Executive Vice President
Gentlemen:
This letter is delivered pursuant to Section 9.2(i) of the Agreement
and Plan of Merger ("Merger Agreement"), dated as of February 19,1997 by and
Seacoast Banking Corporation of Florida ("Seacoast") and Port St. Lucie
National Bank Holding Corp. ("PSHC")
Concerning claims which the undersigned may have against PSHC,
Seacoast or any of their respective Subsidiaries in my capacity as an officer,
director, employee, partner, Controlling Person or Affiliate of PSHC or its
Subsidiaries, and in consideration of the premises, and the mutual covenants
contained herein and in the Merger Agreement and the mutual benefits to be
derived hereunder and thereunder, and other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, the undersigned,
intending to be legally bound, I hereby affirm and agree to the following in
each and every such capacity of the undersigned:
1. CLAIMS. The undersigned does not have, and is not aware of, any
claims it might have against Seacoast, PSHC or any of their respective
Subsidiaries, except for (i) compensation for services rendered that have
accrued but not yet been paid in the ordinary course of business consistent
with past practice, (ii) contract rights, under loan commitments and agreements
between the undersigned and PSHC or its subsidiaries, specifically limited to
possible future advances in accordance with the terms of such commitments or
agreements, (iii) certificates of deposits, (iv) payment obligations under the
PSHC Directors Deferred Compensation Plan, (if any) consistent with any subject
to the terms and conditions of the Merger Agreement and the undersigned's
Director's Agreement with Seacoast (if applicable), and (v) obligations of any
PSHC Entity under any lease agreement between Harold H. Goldman and PSHC or its
subsidiaries consistent with Section 4 of the Director's Agreement entered into
by the undersigned.
2. RELEASES. The undersigned hereby releases and forever discharges
Seacoast, PSHC, and their respective directors, officers, employees, agents,
attorneys, representatives, Subsidiaries, partners, affiliates, controlling
persons and insurers, and its successors and assigns, and each of them
(hereinafter, individually and collectively, the "Releasees") of and from any
and all liabilities, claims, demands, debts, accounts, covenants, agreements,
obligations, costs, expenses, actions or causes of action of every nature,
character or description, now accrued or which may hereafter accrue, without
limitation and whether or not in law, equity or otherwise, based in whole or in
part on any facts, conduct, activities, transactions, events or occurrences
known or unknown, matured or unmatured, contingent or otherwise, which have or
allegedly have existed, occurred, happened, arisen or transpired from the
beginning of time to the date of the closing of the transactions contemplated
by the Merger Agreement, except for (i) compensation for services rendered that
have accrued but not yet been paid in the
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<PAGE> 65
ordinary course of business consistent with past practice or (ii) contract
rights, under loan commitments and agreements between the undersigned and PSHC
or its subsidiaries (collectively, the "Claims"). The undersigned represents,
warrants and covenants that no Claim released herein has been assigned,
expressly, impliedly, by operation of law or otherwise, and that all Claims
released hereby are owned solely by the undersigned, which has the sole
authority to release them.
3. INDEMNITY. The undersigned shall indemnify and hold harmless, to
the fullest extent permitted by law, the Releasees from and against any and all
Claims which are released hereby and all claims, damages, losses, liabilities,
actions and expenses, including, without limitation, reasonable attorneys' fees
and disbursements, arising from, out of, or in connection with the performance
or nonperformance of any obligation of the undersigned hereunder, or any action
or proceeding in respect thereof.
4. FORBEARANCE. The undersigned shall forever refrain and
forebear from commencing, instituting or prosecuting any lawsuit, action, claim
or proceeding before or in any court, regulatory, governmental, arbitral or
other authority to collect or enforce any Claims which are released and
discharged hereby.
5. MISCELLANEOUS.
(a) This Release shall be governed and construed in accordance with
the laws of the State of Florida (other than the choice of law provisions
thereof).
(b) This Release contains the entire agreement between the parties
with respect to the Claims released hereby, and such Release supersedes all
prior agreements, arrangement or understandings (written or otherwise) with
respect to such Claims and no representation or warranty, oral or written,
express or implied, has been made by or relied upon by any party hereto, except
as expressly contained herein, in the Merger Agreement.
(c) This Release shall be binding upon and inure to the benefit of
the undersigned and the Releasees and their respective successors and assigns.
(d) This Release may not be modified, amended or rescinded except
by the written agreement of the undersigned and the Releasees, it being the
express understanding of the undersigned and the Releasees that no term hereof
may be waived by the action, inaction or course of delaying by or between the
undersigned or the Releasees, except in strict accordance with this paragraph,
and further that the waiver of any breach of this Release shall not constitute
or be construed as the waiver of any other breach of the terms hereof.
(e) The undersigned represents, warrants and covenants that it is
fully aware of its rights to discuss any and all aspects of this matter with
any attorney chosen by it, and that it has carefully read and fully understands
all the provisions of this Release, and that it is voluntarily entering into
this Release.
(f) This Release is effective when signed by the undersigned and
delivered to Seacoast and acknowledged by Seacoast, and its operation to
extinguish all of the Claims released hereby is not dependent on or affected by
the performance or non-performance of any future act by the undersigned or the
Releasees.
Unless otherwise defined herein, all capitalized terms shall have the
same meanings as provided in the Merger Agreement.
Sincerely,
-----------------------------------------------------
Signature of Officer, Director, or Controlling Person
-59-
<PAGE> 66
On behalf of Seacoast, the undersigned thereunto duly authorized,
acknowledges receipt of this letter as of __________________, 1997.
Seacoast Banking Corporation of Florida
By:
----------------------------------
Name:
Title:
-60-
<PAGE> 1
Exhibit 10.20
Renar Centre building lease, dated February 8, 1996, between
Port St. Lucie National Bank and Renar Development Company
<PAGE> 2
RENAR CENTRE LEASE
<TABLE>
<S> <C>
=========================================== ===========================================
Lessor: Renar Development Company
Agent for Owner of Renar Centre Lessee: Port St Lucie National Bank
Address: 1000 St Lucie West Blvd. Address: 10570 South Federal Highway
Port St Lucie, FL 34986 Port St. Lucie, FL 34986
Tel: (407) 468-0000 Fax: (407) 468-91 11 Tel: (407) 377-1188 FAX: (407) 337-0164
=========================================== ===========================================
</TABLE>
1. Office. The approximately 1,268 sq ft designated as office
suite # 204 on the second floor of Renar Centre , all as substantially
sketched in Exhibit A, is leased by Lessor to Lessee under this lease.
2. Term. Subject to completion as stated in paragraph 10, the lease
term shall be four years, commencing May, 1996, and terminating April
30, 2000, unless the lease term is extended by Lessee's exercise of a
renewal option or terminated by Lessor or Lessee pursuant to a right
of termination expressly granted under this lease.
3. Use. The office shall be used by Lessee for banking or general
office purposes and for no other purposes without the prior written
consent of Lessor. Lessee shall not use the office for any unlawful
purpose or so as to constitute a nuisance, to store inflammable or
explosive materials that would change the Insurance classification of
the building, or to commit any act that would damage the building or
any person or property within the building. Lessee shall comply with
all reasonable building rules and regulations from time to time
promulgated by Lessor.
4. Hours of Operation. Lessee shall have around the clock (seven days
a week, twenty four hours a day) access and use of the leased office,
including office air conditioning, electricity, water, sewer, elevator
and other required services. For economy and security, however, Lessor
may curtail halfway air conditioning :and lock main entry doors when
there is no scheduled off hour use of the building.
5. Monthly Base Rent. Lessee shall pay $ 1,374 as monthly base rent
beginning on the commencement date of this lease and on the first day
of each month thereafter throughout the term of this lease. If this
lease shall commence on other than the first day of the month, the
first and last rental payments shall be apportioned in accordance with
the number of days to which they apply.
6. Limited CPI Adjustment, Every five years from the initial
commencement date of this lease, the monthly base rent shall be
increased by the percentage increase in the Consumer Price Index - All
Cities Average measured from the initial commencement date of this
lease to the date of the last index published prior to the date of the
adjustment. In no event shall this adjustment increase monthly base
rent at a compound rate of more than 3% per annum over the period for
which the percentage change in the CPI Index is measured. In the event
the referenced index is no longer published or available to Lessor,
the Lessor may in good faith select another available published index
that measures general price inflation in the United States.
7. Common Operating Expenses. In addition to monthly base rent, Lessee
shall pay Lessor a proportionate share of the cost of operating and
maintaining the building, (including, but not by way of limitation,
the amounts expended for property taxes, insurance, electricity,
water, sewage, trash removal, cleaning, security and repairs excluding
depreciation). Lessee's proportionate share of these common operating
expenses shall be the percentage determined by dividing the sq ft of
Lessee's office indicated above by 32,000, the approximate sq ft of
leasable space in Renar Centre. These common operating expenses shall
be billed and paid monthly along with monthly
-1-
<PAGE> 3
base rent. For mutual convenience, Lessor may bill on an estimated
average monthly basis so as to minimize fluctuations in these charges.
8. Sales, Use and Other Taxes. Concurrent with the payment of monthly
rent Lessee shall pay all sales, use and other taxes (excluding income
taxes) levied on the use, occupancy or rental paid by Lessee in
respect to the office. Lessee shall also pay as due all taxes
including income, sales, use, and intangible and tangible property
taxes, if any, applicable to Lessee's business or property maintained
in the office.
9. Lessee Improvements. Lessor shall, at Lessor's expense, improve the
office in accordance with the Renar Centre standard tenant work letter
and a design mutually approved by Lessor and Lessee. Lessor and Lessee
may mutually agree in writing to amend the Lessee work letter and add
upgrades or additional work to the Lessee work letter; in such event
Lessor shall bill Lessee for such upgrades or additional work and the
Lessee shall pay for such upgrades or additional work as provided in
the written amendment. Any subsequent alterations, additions or
improvements to the office by Lessee shall require Lessor's prior
written approval (which will not be unreasonably withheld), shall be
at the expense of Lessee, and shall become the property of Lessor and
shall remain in the office at such time as Lessee surrenders
possession of the office.
10. Occupancy and Acceptance of Possession. Lessor shall complete and
have the office ready for Lessee's possession on or before the
commencement of the lease term; provided that if completion is delayed
by reason of strikes, the unavailability of material or labor,
governmental action or Inaction, Acts of God, casualty, delays by
contractors or subcontractors or other events beyond the reasonable
control of Lessor, the commencement date and lease term shall be
extended until completion. The acceptance of the keys and entry to the
office shall constitute Lessee's acceptance of the office.
11. Signs. Well designed, tasteful and appropriate signage is
Important to the image of Renar Centre and its occupants. Lessor shall
provide a public and prominent signage monument outside and a
directory Inside the building identifying Lessee as an occupant of
Renar Centre. Lessor will also provide signage at the entry of each
office on the interior of the building. Lessee may propose, at Its own
expense, to establish additional signage, which proposal Lessor may,
in Its sole discretion, accept or reject. Lessee acknowledges that two
anchor Lessees, Port St Lucie National Bank and Medical Center of Port
St Lucie may, with the consent Of Lessor and at their own expense,
design and establish signage at the top of the building, and maintain
such signage for as long as they shall maintain their initial leases,
and any renewals or extensions of those leases. Port St Lucie National
Bank shall place its sign on the north face of Renar Centre. No other
signage visible outside of the office shall be permitted without the
prior written consent of Lessor.
12. Cleaning and Trash Removal. Lessor shall provide for the daily
weekday cleaning of all common areas and the collection and removal of
trash from a central area. Lessee shall provide for the daily weekday
cleaning of the interior of the office and the placement of trash in
the central trash collector. For cleaning the office interior, Lessee
shall use either the cleaning contractor selected by Lessor to clean
Renar Centre or a duly licensed cleaning contractor approved by
Lessor, which approval shall not be unreasonably withheld.
13. Repairs. Lessor shall maintain common areas in good repair, less
normal wear and tear, as part of common operating expenses. Lessee
shall, at its own expense, keep and maintain all of the office,
including but not limited to partition walls, doors, hardware, carpet,
acoustical ceiling, windows and glass, air conditioning, electrical
and plumbing systems and fixtures, within or dedicated to the leased
office, In good repair, less normal wear and tear.
-2-
<PAGE> 4
14. Utilities. Lessee shall pay before delinquency all charges for
telephone, gas, electricity, water, sewer, trash collection and other
similar charges incurred by Lessee with respect to and during its
occupancy of the office - excluding such services as are provided and
charged as common operating expenses.
15. Insurance. Throughout the term of this lease, Lessee shall
maintain with Insurance companies approved by Lessor Insurance
policies naming the Lessor and its designees as additional insureds
and beneficiaries, which policies shall insure (a) against liability
for death or Injury to persons and damage to property in the amount of
$100,000 for any one person injured or killed, $300,000 for any one
accident, and $1 00,000 for property damage, together with an umbrella
policy of $2,000,000 per person and $5,000,000 per accident; (b) the
office for fire, hazard and all risks at full replacement cost, (c)
workman's compensation as required by the laws of Florida; and (d)
against plate glass damage. Policies shall be evidenced by
certificates of insurance and require thirty days prior notice to
Lessor and Its designees In the event of cancellation or non-renewal.
In the event Lessee shall fail to obtain or maintain such insurance,
Lessor may do so and charge the cost of such as additional rent on the
next monthly bill following the payment of same.
16. Indemnification. Lessor shall have no liability and Lessee shall
indemnify and hold Lessor harmless against all claims, liens, claims
of lien, demands, charges, litigation or other liabilities (including
court costs and attorney fees and appellate fees,) arising out of or
In connection with Lessee's use or occupancy of the office or property
in it , including but not limited to Injury or damage to the person or
property of Lessee or Lessee's employees, guests, invitees, agents,
clients, or otherwise and claims for work, services, material or labor
provided to Lessee or the office.
17. Quiet Enjoyment. Lessor covenants that Lessee, upon paying the
monthly basic rent and other sums provided In this lease and
performing all other obligations under this lease, shall and may
peacefully and quietly hold and enjoy the office for the term of this
lease.
18. Inspection & Maintenance; Showing To Prospective Lessees. Lessor
shall have the right at all reasonable times to enter the office,
inspect and effect such maintenance and repairs in the office as
Lessor shall In good faith deem necessary. In the last six months of
the lease term, Lessor may show the office to prospective Lessees
during normal business hours and with reasonable notice if Lessee has
not effected a lease renewal.
19. Casually Damage; Repairs Abatement of Rent. Either Lessee or
Lessor may terminate this lease if during the last year of the lease
term Renar Centre is damaged by casualty to an extent exceeding 60% of
the then reconstruction cost of Renar Centre as a whole: provided that
the right to terminate because of such casualty will cease if not
effected by the delivery of a written notice of termination within
thirty days from the happening of the casualty causing such damage. If
the lease is not so terminated, Lessee shall continue to use the
office to the extent it may be practical to do so from the standpoint
of good business. During such use and until Lessor has repaired the
premises, the monthly basic rent shall be equitably reduced In the
proportion that the unusable part of the office bears to the whole
office. No rental shall be payable while the office is wholly
unoccupied pending repair of the casualty damage. Lessor shall, upon
receipt of the applicable insurance proceeds, Immediately and
diligently proceed to repair so that the office will have, to the
extent feasible, substantially the same design and quality that it had
before the casualty. Lessor shall not be liable to Lessee for any
Inconvenience or Interruption of Lessee's business occasioned by the
casualty.
20. Condemnation. If a public authority condemns all or such part of
Renar Centre as shall make the office unusable for the purpose leased,
this lease shall terminate on and rent shall be proportioned to the
date when title or possession Is given to the public authority,
whichever last
-3-
<PAGE> 5
occurs. Lessor shall be entitled to the entire award for such taking,
except for any statutory claim of Lessee for injury to Lessee's
business. If only a part of Renar Centre is condemned and the office
is usable in part for the purpose leased, the lease shall continue but
rent shall be fairly and equitably adjusted for the part of the office
not usable.
21. Transfer, Assignment and Sublease. Lessee shall not transfer,
assign, encumber or sublease this lease or any part of the office
without the prior written consent of Lessor and any such attempted
transfer, assignment, encumbrance or sublease shall be void and an
event of default under this lease. In no event shall this lease be
assigned or transferred by operation of law or by voluntary or
Involuntary bankruptcy or judicial proceedings nor shall this lease be
an asset or right of Lessee under any bankruptcy, Insolvency or
reorganization proceedings.
22. Holdover. If Lessee shall continue to occupy the office after the
expiration of the lease term, such tenancy shall be a tenancy at
sufferance, unless such occupancy is with the Lessees written consent,
In which event Lessee will be a Lessee from month to month upon the
same terms as this lease , except at the monthly basic rent stated in
Lessor's written consent. Acceptance by Lessor of rent after such
termination shall not constitute a lease renewal.
23. Subordination, This lease shall be subordinate to any mortgages or
security interests now existing or hereafter created by Lessor
encumbering all or any part of the office and/or Renar Centre and
Lessee shall immediately execute any instrument permitting and
acknowledging any such mortgage or security interest and the
subordination of this lease as Lessor may request. If such a mortgage
or security interest is foreclosed, Lessee's peaceful enjoyment and
possession of the office under this lease shall not be disturbed by
the purchaser at a foreclosure sale or such purchaser's successor in
title so long as Lessee shall pay the monthly basic rent and all other
sums and fully perform all other obligations under this lease.
24. Default. In the event Lessee shall not pay monthly basic rent or
any other sum payable to Lessor under this lease and such non-payment
shall remain for ten days or in the event Lessee shall fail to perform
any other obligation under this lease and such failure shall continue
for ten days after written notice, Lessee shall be deemed in default
under this lease without further notice, demand or action of Lessor,
and Lessor may: (a) declare the entire unpaid balance of monthly basic
rent for the remainder of the lease term due and payable and may
collect the same by an action for money judgment, distress or
otherwise and shall have a lien on the personal property of Lessee in
the office and may protect such lien by locking up the office without
first obtaining a distress warrant, (b) terminate this lease and
retake possession of the office, and/or (c) enter, retake possession
and relet the office without terminating this lease, in which event
Lessee shall be liable for the deficiency after the Lessee is credited
with all rent thereby obtained less all repairs and expenses.
Notwithstanding any provision as to notice, if in the judgment of
Lessor the continued default by Lessee will jeopardize the office or
the rights and interests of Lessor, Lessor may, without notice, elect
to perform those acts in respect to which Lessee is in default, at the
expense of Lessee, and Lessee shall thereupon reimburse Lessor, with
interest at the rate of eighteen (18%) per annum, on three days notice
to Lessee by Lessor. The remedies available to Lessor are cumulative,
and the exercise of one or more shall not necessarily preclude the
exercise of any other remedy. Lessee waives all claims or demands for
damages that may be caused by Lessor reentering, taking possession and
reletting the office and for any loss or damage to the property of
Lessee or any other person as may be in the office.
25. Enforcement Costs. If either party incurs any expense in
enforcing any provision of this lease, the party in default shall pay
the other all such expenses, including reasonable attorney fees and
costs of appeal.
26. Notice. Notice shall be sufficient and deemed given if written
notice is hand delivered or sent by regular United States mail or
overnight package courier to the address of Lessor or
-4-
<PAGE> 6
Lessee first written above or faxed to the fax number first written
above; provided that Lessor or Lessee may at any time notify the other
of a change in address or fax number.
27. Miscellaneous. This lease shall be binding upon and inure to the
benefit of the successors, heirs and assigns of the parties (except as
prohibited by this lease), interpreted and governed under the laws of
Florida, enforceable by legal proceedings commenced only in a court
sitting in the County of St Lucie, Florida, and amended only by a
written instrument signed by both parties. In interpreting the
efficacy of any action or inaction under this lease, time shall be of
the essence and no waiver or acquiescence by either party in one or
more instances shall constitute or imply a waiver or acquiescence in
further instances.
28. Renewal Option. Lessee has the option of renewing this lease two
times, with each renewal being for a term of five years and being on
the same terms and conditions as this lease except for the extension
of the lease expiration date.. This option shall be exercised only by
Lessee giving Lessor written notice of the exercise at least six
months before the expiration of the lease term being renewed and the
failure to exercise the option for any renewal shall terminate the
option for succeeding renewals.
29. Special Provisions. Notwithstanding any other provisions contained
in the lease, in the event the Lessee is closed or taken over by any
banking or supervisory authority, the Lessor may terminate this lease
only with the concurrence of such authority, and any such authority
shall in any event have the election to either continue or terminate
this lease; provided that in the event this lease is so terminated the
maximum claim of Lessor for damages or indemnity for injury resulting
from the rejection or abandonment of the unexpired term of the lease
shall in no event be an amount exceeding the rent reserved by the
lease, without acceleration, for the next year succeeding the date of
the surrender of the leased office to the lessor or the date of the
re-entry of the Lessor, whichever first occurs whether before or after
the closing of the bank plus an amount equal to the unpaid rent
accrued without acceleration up to the subject date. As of February 8,
1996, Lessor and Lessee duty execute this lease.
<TABLE>
<CAPTION>
<S> <C>
Lessee: WITNESSES:
------------------------
By:
------------------------ ----------------------
Its:
------------------------ ----------------------
Lessor:
Renar Development Company,
As Agent for Owner
By:
------------------------ ----------------------
Its:
------------------------ ----------------------
</TABLE>
-5-
<PAGE> 1
Exhibit 21
Subsidiaries of the Registrant
1. Port St. Lucie National Bank, a national banking association organized
under the laws of the United States.
2. Spirit Mortgage Corp., incorporated under the laws of the State of
Florida.
<PAGE> 1
EXHIBIT 23
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors and Shareholders
Port St. Lucie National Bank Holding Corp.:
We consent to the use of our report incorporated herein. Our report refers
to a change in the accounting for mortgage servicing rights to conform with
Statement of Financial Accounting Standards No. 122.
/s/ KPMG Peat Marwick LLP
--------------------------------------
West Palm Beach, Florida
March 27, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 5,018
<INT-BEARING-DEPOSITS> 0
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0
0
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</TABLE>
