<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission File Number 0-18514
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
A Florida Corporation - I.R.S. Employer Identification No. 65-0051022
1100 SW St. Lucie West Blvd.
Port St. Lucie, Florida 34986
Issuer's Telephone Number:
(561) 340-2800
Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to the filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of each of the issuer's classes of
common stock as of March 31, 1997:
Common Stock, $.01 par value -- 744,655 shares
Transitional Small Business Disclosure Format:
Yes No X
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
INDEX
PAGE
NUMBER
Part I: Financial Information
Item 1: Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996 3
Condensed Consolidated Statements of Earnings for the three months ended
March 31, 1997 and 1996 4
Condensed Consolidated Statements of Shareholders' Equity for the three
months ended March 31, 1997 and 1996 5
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 1997 and 1996 6
Notes to Condensed Consolidated Financial Statements 7-10
Item 2: Management's Discussion and Analysis or Plan of Operation 11-18
Part II: Other Information
Item 6: Exhibits and Reports on Form 8-K 19
Item 27: Financial Data Schedule
Signatures 20
<PAGE>
<TABLE>
Port St. Lucie National Bank Holding Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in Thousands, except for share data)
<CAPTION>
March 31,
1997 December 31,
(unaudited) 1996
Assets
<S> <C> <C>
Cash and due from banks $ 5,753 5,018
Federal Funds Sold 12,750 4,400
Securities available for sale 12,386 10,757
Loans held for sale, net of deferred loan
origination fees (estimated market values
of $2,408 and $3,613, respectively) 2,361 3,556
Securities held to maturity (estimated market
values of $3,703 and $3,633, respectively) 3,701 3,612
Loans 94,257 101,270
Less: Allowance for loan losses (1,419) (1,371)
Net deferred loan origination fees and costs (73) (99)
Net loans 92,765 99,800
Other real estate owned 63 53
Premises and equipment, net 1,125 1,103
Other assets 1,811 1,794
Total assets $ 132,715 130,093
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Noninterest bearing demand $ 18,882 19,582
Interest bearing:
Demand 11,453 13,149
Money market 5,778 5,673
Savings 26,792 25,221
Time 57,878 55,111
Total deposits 120,783 118,736
Other liabilities 1,380 1,131
Total liabilities 122,163 119,867
Shareholders' equity:
Common stock, $.01 par value, authorized
10,000,000 shares; issued and outstanding
744,655 and 742,840, respectively 7 7
Additional paid-in capital 8,417 8,401
Retained earnings 2,295 1,970
Unrealized losses on securities available
for sale, net (167) (152)
Total shareholders' equity 10,552 10,226
Total liabilities and shareholders'
equity $ 132,715 130,093
<FN>
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
Port St. Lucie National Bank Holding Corp. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Amount in Thousands, except for share data)
<CAPTION>
Three Months Ended
March 31, March 31,
1997 1996
(unaudited) (unaudited)
<S> <C> <C>
Interest income:
Loans, including fees:
Taxable loans $ 2,162 1,687
Loans held for sale 46 89
Securities held to maturity:
Taxable 11 9
Tax-exempt 36 40
Securities available for sale 190 232
Federal funds sold 84 43
Total interest income 2,529 2,100
Interest expense:
Deposits 1,179 982
Total interest expense 1,179 982
Net interest income 1,350 1,118
Provision for loan losses 66 33
Net interest income after
provision for loan losses 1,284 1,085
Noninterest income:
Service charge on deposit accounts 161 138
Gain on sale of loans held for sale 122 168
Loss on sale of other real estate owned (1) ---
Gain on sale of securities available
for sale --- 1
Other fees for customer services 89 115
Total noninterest income 371 422
Noninterest expense:
Compensation and employee benefits 553 499
Occupancy 96 86
Furniture and equipment 73 61
Other 441 345
Total noninterest expense 1,163 991
Net income before income taxes 492 516
Income tax expense 167 178
Net income $ 325 338
Net income per common and common
equivalent share:
Primary 0.37 0.40
Fully diluted 0.37 0.39
Average common and equivalent shares
outstanding:
Primary 869 855
Fully diluted 869 859
<FN>
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
Port St. Lucie National Bank Holding Corp. and Subsidiaries
Condensed Consolidated Statement of Shareholders' Equity
(Amounts in Thousands)
<CAPTION>
Unrealized
gains (losses)
Common Stock Additional on Securities Total
Paid-in Retained Available Shareholders'
Shares Amount Capital Earnings for Sale,net Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 743 $7 8,401 1,970 (152) 10,226
Change in unrealized losses on
securities available for sale,
net of tax effect --- --- --- --- (15) (15)
Stock issue, options and
warrants 2 --- 16 --- --- 16
Net income --- --- --- 325 --- 325
Balance at March 31, 1997
(unaudited) 745 $7 8,417 2,295 (167) 10,552
Balance at December 31, 1995 672 $7 7,027 2,084 (163) 8,955
Change in unrealized losses on
securities available for sale,
net of tax effect --- --- --- --- 3 3
10% Common Stock Dividend 67 --- 1,410 (1,412) --- (2)
Net income --- --- --- 338 --- 338
Balance at March 31, 1996
(unaudited) 739 $7 8,437 1,010 (160) 9,294
<FN>
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
Port St. Lucie National Bank Holding Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands)
<CAPTION>
Three Months Ended
March 31, March 31,
1997 1996
(unaudited) (unaudited)
<S> <C> <C>
Cash flow from operating activities:
Net income 325 338
Adjustments to reconcile net income to net cash
used by operating activities:
Provision for loan losses 66 33
Depreciation 65 56
Deferred loan origination fees and costs,
net of amortization (26) (5)
Purchase of loans held for sale (8,808) (11,770)
Origination of loans held for sale (6,390) (11,763)
Proceeds from the sale of loans held for sale 21,237 22,632
Increase in other assets (17) (86)
Increase in other liabilities 230 151
Net cash (used by) provided by operating
activities 6,682 (414)
Cash flow from investing activities:
Purchase of securities held to maturity (89) (89)
Purchase of securities available for sale (2,000) ----
Proceeds from maturities of securities available
for sale 345 1,455
Proceeds from sale of securities available
for sale ---- 2,000
Loans originated, net of repayments 2,142 (5,828)
Proceeds from sale of other real estate owned 29 ----
Purchase of premises and equipment (87) (7)
Net cash (used by) provided by investing
activities 340 (2,469)
Cash flow from financing activities:
Net increase in deposit accounts 2,047 2,310
Issuance of common stock 16 ----
Cash Dividends paid --- (2)
Net cash provided by financing activities 2,063 2,308
Net increase (decrease) in cash and cash
equivalents 9,085 (575)
Cash and cash equivalents at beginning of period 9,418 8,251
Cash and cash equivalents at end of period $ 18,503 7,676
Supplemental disclosures:
Cash paid during the period for:
Interest $ 1,266 1,035
Income taxes 215 193
Noncash investment and financing activities:
Decrease (increase) in unrealized loss on
securities available for sale (15) 3
Reclassification of loans to other real estate
owned 27 ----
Reclassification of loans to loans held for sale 4,844 ----
<FN>
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
(1) GENERAL
The unaudited condensed consolidated interim financial statements
for Port St. Lucie National Bank Holding Corp. (the "Company")
reflect all adjustments (consisting only of normal recurring
accruals) which, in the opinion of management, are necessary to
present fairly the results of operations, cash flows and financial
position for interim periods. The results for interim periods are
not necessarily indicative of trends or results to be expected for
the full year. These condensed consolidated interim financial
statements and notes should be read in conjunction with the
Company's annual report and Form 10-KSB for the year ended December
31, 1996.
(2) SECURITIES HELD TO MATURITY
The amortized cost, gross unrealized gains, gross unrealized
losses, and estimated market values of securities held to maturity
follows:
<TABLE>
<CAPTION>
March 31, 1997
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Municipal securities 2,970 13 11 2,972
Total debt securities 2,970 13 11 2,972
Federal Home Loan Bank
stock 581 --- --- 581
Federal Reserve stock 150 --- --- 150
Total $ 3,701 13 11 3,703
<CAPTION>
December 31, 1996
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses 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 $ 3,612 25 4 3,633
</TABLE>
The amortized cost and estimated market value of debt securities
held to maturity at March 31, 1997, by contractual maturity, are
shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<PAGE>
<TABLE>
<CAPTION>
Estimated
Amortized Market
Cost Value
<S> <C> <C>
Due within one year $ 220 221
Due after one year through
five years 1,710 1,713
Due after five years through
ten years 805 798
Due after ten years 235 240
Total debt securities $ 2,970 2,972
</TABLE>
At March 31, 1997 and December 31, 1996, securities held to
maturity with an amortized cost of $2,850 and $2,851, respectively,
and a market value of $2,851 and $2,871, respectively, were pledged
as collateral for municipal deposits. Port St. Lucie National
Bank's (the "Bank") pledging requirement on average municipal
deposits up to the Bank's capital position ($9,999 as of March 31,
1997) was 50%. On the aggregate balance in excess of the Bank's
capital position, the State's pledge requirement is 125%.
(3) SECURITIES AVAILABLE FOR SALE
The amortized cost, gross unrealized gains, gross unrealized
losses, and estimated market values of securities available for
sale follows:
<TABLE>
<CAPTION>
March 31, 1997
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 2,012 --- 14 1,998
Securities of other U.S.
Government Agencies 1,908 --- 33 1,875
Mortgage backed securities 2,304 14 23 2,295
Collateralized mortgage
obligations 2,770 18 41 2,747
Real estate mortgage invest-
ment conduits 3,662 --- 191 3,471
Total $ 12,656 32 302 12,386
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
December 31, 1996
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses 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
obligations 2,864 18 52 2,830
Real estate mortgage invest-
ment conduits 3,808 --- 204 3,604
Total $ 11,001 33 277 10,757
</TABLE>
The amortized cost and estimated market value of securities
available for sale at March 31, 1997, by contractual maturity, are
shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Amortized Market
Cost Value
<S> <C> <C>
Due after one year through
five years $ 3,920 3,873
3,920 3,873
Mortgage backed securities 8,736 8,513
Total $ 12,656 12,386
</TABLE>
During the three months ended March 31, 1997, there were no sales
of securities available for sale.
At March 31, 1997 and December 31, 1996, securities available for
sale with an amortized cost of $3,614 and $4,189, respectively, and
a market value of $3,580 and $4,175, respectively, were pledged as
collateral for municipal deposits. The Bank's pledging requirement
on average municipal deposits up to the Bank's capital position
($9,999 as of March 31, 1997) was 50%. On the aggregate balance in
excess of the Bank's capital position, the State's pledge
requirement is 125%.
<PAGE>
(4) LOANS
An analysis of loans follows:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
<S> <C> <C>
Real Estate:
Construction $ 5,115 6,579
Loans on primary residences 45,564 49,228
Other 17,927 17,768
Commercial 11,055 12,602
Loans to individuals:
Installment 13,857 14,299
Other personal and business
loans 739 794
Total $ 94,257 101,270
</TABLE>
At March 31, 1997, real estate-construction loans were comprised of
$3,405 in single family residential loans and $1,710 in
commercial real estate loans. As of December 31, 1996, real
estate-construction loans were comprised of $4,605 in single family
residential loans and $1,974 in commercial real estate loans.
At March 31, 1997 and December 31, 1996, loans to directors,
executive officers, and principal shareholders aggregated $1,075
and $1,320, respectively. Total unfunded commitments to this group
at March 31, 1997 and December 31, 1996 aggregated $1,020 and $679,
respectively.
(5) OTHER REAL ESTATE OWNED
Other real estate owned represents property acquired through
foreclosure or deeded to the Bank in lieu of foreclosure on real
estate mortgage loans on which the borrowers have defaulted as to
payment of principal and interest. Other real estate owned is
valued at the lower of cost or fair value less costs to dispose.
Any write-downs at date of acquisition are charged to the allowance
for loan losses. Expenses incurred in maintaining assets and
subsequent write-downs to reflect declines in the fair value of the
property are included in other operating expenses.
Changes in Other Real Estate Owned:
<TABLE>
<CAPTION>
Three months
ended Year ended
March 31, December 31,
1997 1996
<S> <C> <C>
Beginning balance $ 53 ---
Foreclosure --- 29
Deed in lieu of foreclosure 39 24
Sales (29) ---
Ending balance $ 63 53
</TABLE>
<PAGE>
OVERVIEW
Port St. Lucie National Bank Holding Corp.'s (the "Company") total
assets at March 31, 1997 were $132,715, an increase of $2,622 or
2.0% over December 31, 1996. Net income for the three months ended
March 31, 1997 was $325 as compared to $338 for the three months
ended March 31, 1996. Earnings for the three months ended March
31, 1997 represent $0.44 per share as compared to $0.46 for the
three months ended March 31, 1996.
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 of
900,000 shares of Seacoast Class A common stock for the stock of
the Company and all outstanding common stock warrants and options.
The Seacoast headquarters and name would survive. The agreement is
subject to regulatory approval and approval of the Company's
shareholders on May 22, 1997 and Seacoast's shareholders on May 30,
1997. The merger is to be consummated as soon as practical on or
after May 30, 1997 and no later than August 31, 1997. There are no
assurances that the transaction will be consummated.
EARNINGS ANALYSIS
NET INTEREST INCOME
For the three months ended March 31, 1997, interest income totaled
$2,529, an increase of $429 or 20.4% over the three months ended
March 31, 1996. The primary reasons for the change in interest
income is the increase of $18,478 or 17.3% in average earning
assets as of March 31, 1997 as compared to March 31, 1996.
Interest expense for the three months ended March 31, 1997 was
$1,179, an increase of $197 or 20.1%. Total average deposit growth
of $18,945 or 18.7% during the twelve months ended March 31, 1997
was the primary reason for the increase during the comparison
periods. Net interest income for the three months ended March 31,
1997 was $1,350, an increase of $232 or 20.8% over the three months
ended March 31, 1996.
The net interest yield for the three months ended March 31, 1997
was 4.37%, an increase of 18 basis points over the three months
ended March 31, 1996. The components of the net interest yield
reflect an increase of 32 basis points in the yield on average
earning assets with a 14 basis point increase in the interest
expense to average earning assets. The Bank was successful in
changing the mix of earning assets by reducing lower yielding
investment securities and replacing them with higher yielding
loans.
NONINTEREST INCOME
Noninterest income was $371 for the three months ended March 31,
1997. This represents a $51 or 12.1% decrease over the three
months ended March 31, 1996. The primary source of noninterest
income during 1997 was service charges on deposit accounts.
Service charges on deposit accounts totaled $161 for the three
months ended March 31, 1997, an increase of $23
<PAGE>
or 16.7% over the three months ended March 31, 1996. This increase
can be attributed to service charge changes that were implemented
in September of 1996.
Gains on sale of loans held for sale totaled $122, a decrease of
$46 or 27.4% over the three months ended March 31, 1996. These
decreases are attributable to reduced sales of real estate in the
local market in the first quarter of 1997 as compared to the first
quarter of 1996. During the three months ended March 31, 1997,
$21,237 of loans held for sale were sold. Spirit Mortgage Corp.
originated $6,709 of the loans sold resulting in gains of $80, as
compared to first quarter 1996 of $9,906 sold resulting in $158 in
gains. These fixed rate residential loans were sold to various
correspondents servicing released and without recourse. The Bank
originated and sold $6,121 of loans without recourse to the Federal
National Mortgage Association and other private investors resulting
in $42 in gains. The Company intends to continue emphasizing this
type of business; however, future volume will depend on the
direction and stability of interest rates during the remainder of
the year.
Other fees for customer services was $89 for the three months ended
March 31, 1997 as compared to $115 for the three months ended March
31, 1996. This represents a $26 or 22.6% decrease. The $26
decrease in the three month comparison period is primarily
attributable to the decrease in fees associated with FHA loans
purchased and sold, the recognition of fee income from the services
provided by Spirit Mortgage Corp.
NONINTEREST EXPENSE
Noninterest expense for the three months ended March 31, 1997 was
$1,163, an increase of $172 or 17.4% over the three months ended
March 31, 1996. This increase is attributable to increased
compensation expenses, occupancy, furniture and equipment expenses
and other noninterest expenses. Compensation increases of $54 or
10.8% can be attributed to annual merit and promotional increases,
Spirit Mortgage Corp. personnel expansion, education and insurance
expense increases. Occupancy and furniture and equipment expenses
increased $22 and can be attributed to additional space and
equipment requirements for Spirit Mortgage Corp in late first
quarter of 1996. The increase of $96 in other noninterest expenses
can primarily be attributed to the expenses associated with the
pending merger. The Company has also incurred additional
professional fee expenses in addition to higher levels of printing,
postage and advertising expenses.
INCOME TAXES
The net income of $492 before income taxes for the three months
ended March 31, 1997, reflects a decrease of $24 or 4.7% over the
three months ended March 31, 1996. The resulting income tax expense
of $167 for the three month period is a decrease of $11 over the
three months ended March 31, 1996. Income tax expense decreased
primarily as a result of the decrease in income before income
taxes.
<PAGE>
LIQUIDITY AND INTEREST RATE SENSITIVITY
Liquidity and interest rate sensitivity positions are regularly
examined and evaluated by management in conjunction with market
interest rates, balance sheet composition and funding source
requirements. While a balanced interest rate sensitivity position
has been and continues to be maintained, a shift in balance sheet
composition had the impact of improving net interest income growth
in 1996. Management will continue its efforts to maintain a
balanced interest rate sensitivity position and will monitor loan
demand and deposit growth in order to influence the changes in
balance sheet composition necessary to maximize net interest income
growth under prevailing conditions.
For financial institutions, liquidity represents the ability of the
institution to meet both loans and other commitments as well as
depositor withdrawals. Loan demand did not keep pace with loan
payments and payoffs in the first quarter 1997. Combined with
deposit growth of $2,047 and a loan sale of $4,844, liquidity
improved in the first quarter of 1997. Loan demand is anticipated
to improve during the remainder of 1997 and this improvement in
liquidity will help fund future growth.
At March 31, 1997, the Company had potential funding needs of
$11,959 in outstanding loan commitments and $122 in standby letters
of credit. In addition, volatile deposits consisted of $10,482 in
time deposits of $100 or more and $3,732 in municipal deposits.
Since a portion of these municipal deposits are not subject to
maturity, the duration of these balance levels is not precisely
known. The municipal deposits also require the pledge of qualified
investment securities to the State of Florida in accordance with
the Florida Security for Public Deposit Act. Based on the prior
month's daily average balance of municipal deposits, a 50% pledge
level is required up to the Bank's capital position and a 125%
pledge level is required on balances in excess of the Bank's
capital position.
To provide funds for these potential liquidity needs, the Company
maintained cash equivalents of $27,497 at March 31, 1997,
consisting of loans held for sale of $2,361, federal funds sold of
$12,750, and securities available for sale of $12,386. In
addition, unfunded federal funds purchase commitments aggregating
$4,000, and a $19,000 commitment from the Federal Home Loan Bank of
Atlanta, are also available to meet potential liquidity needs. In
the opinion of management, the Company maintains liquidity levels
adequate to meet its potential funding demands.
EARNING ASSETS AND FUNDING SOURCES
At March 31, 1997, earning asset categories totaled $123,963 and
comprised 93.4% of total assets. Loans held for sale of $2,361 or
1.9%, investment securities held to maturity of $3,701 or 3.0%,
investment securities available for sale of $12,386 or 10.0%,
federal funds sold of $12,750 or 10.3% and net loans of $92,765 or
74.8% make up all earning assets. Deposits, the primary source of
funds, totaled $120,783 at March 31, 1997, of which $18,882 or
15.6% was in noninterest bearing demand deposits and $101,901 or
84.4% of total deposits was in interest bearing deposits.
<PAGE>
LOANS
Total loans at March 31, 1997, were $94,257, a decrease of $7,013
or 6.9% over December 31, 1996. From December 31, 1996 to March
31, 1997, outstanding balances on other real estate lending
aggregated a $159 or 0.9% increase, other personal and business
loans decreased $55 or 6.9%, installment loans decreased $442 or
3.1%, real estate construction loans decreased by $1,464 or 22.3%,
commercial loans decreased $1,547 or 12.3% and loans on primary
residences decreased $3,664 or 7.4%. The largest decline in the
loan portfolio during the three month period was in real estate
loan category, primarily made up of adjustable rate residential
real estate loans. The decrease is primarily attributable to a
loan sale of those adjustable rate loans late in the first quarter
of 1997 totaling $4,844. Commercial loans declined due to seasonal
repayments on lines of credit. Real estate construction loans
declined due to an increase amount of conversion to permanent
financing. The slow down in real estate demand did not allow
replacement volume to keep pace with the payoffs and conversion to
permanent financing.
The Company does not engage in any speculative real estate lending
or real estate development lending. The real estate loans are
predominately made on owner occupied properties with established
cash flows.
SECURITIES
At March 31, 1997, total securities held to maturity were $3,701,
an increase of $89 or 2.5% over December 31, 1996. The change is
attributable to an increase in Federal Home Loan Bank Stock of $90,
offset by a $1 decrease associated with the premium amortization of
the existing portfolio.
The securities held to maturity had gross unrealized gains of $13
as of March 31, 1997 and $25 as of December 31, 1996. The gross
unrealized losses in the portfolio of securities held to maturity
as of March 31, 1997 were $11 and as of December 31, 1995 were $4.
At March 31, 1997, securities available for sale were $12,386, an
increase of $1,629 or 15.1% over December 31, 1996. The components
of the change were an increase in U.S. Treasury securities of
$2,012 and a decrease in mortgage backed securities of $357 or
3.9%. These changes in the securities portfolio and the increase
of $26 in net unrealized losses ($15 net of tax effect) resulted in
the $1,629 decrease in total securities available for sale. The
increase in the available for sale securities portfolio is due to
the purchaseof higher yielding investment securities with overnight
investment funds.
At December 31, 1996, the available for sale portfolio included
$244 of net unrealized losses which resulted in an after tax
deduction of shareholders' equity by $152 as compared to the $270
of net unrealized losses at March 31, 1997 which resulted in an
after tax adjustment decreasing shareholders' equity by $167.
<PAGE>
FUNDING SOURCES
Deposits at March 31, 1997 were $120,783, an increase of $2,047 or
1.7% from December 31, 1996. The components of this change were a
$2,767 or 5.0% increase in time deposits, a $1,571 or 6.2%
increase in savings deposits, a $105 or 1.9% increase in money
market deposits, a $700 or 3.6% decrease in noninterest bearing
demand deposits and a $1,696 or 12.9% decrease in interest bearing
demand deposits,. The decrease in interest bearing demand deposits
is primarily due to the reduction in a temporary municipal fund
account. The decrease in non-interest bearing demand deposits
reflects seasonal activity. The remaining deposit growth during
the three months ended March 31, 1997 can be attributed to the
Company's market acceptance and its ability to respond to market
needs with new products.
The Company also continues to utilize federal fund purchase lines
and advances through the Federal Home Loan Bank ("FHLB") to
accommodate temporary timing differences between earning asset
growth and deposit growth. At March 31, 1997, there were no
outstanding balances under federal funds purchase lines or FHLB
advance agreements.
ASSET QUALITY
The allowance for loan losses as of March 31, 1997 was $1,419 or
1.51% of loans outstanding as compared to $1,371 or 1.35% at
December 31, 1996. This is a net increase of $48 or 3.5% over
March 31, 1996. The increase in the allowance for loan losses was
due to a low net charge off amount of $18 in relation to the
provision charged to expense. The increase in allowance compared
to loans outstanding from 1.35% to 1.51% reflects a lower amount of
loans outstanding at March 31, 1997 as compared to December 31,
1996. Management recognized that rapid growth in consumer and
commercial loans over the past two years coupled with recent
economic trends increase the risk profile of the loan portfolio.
As a result, the allowance for loan losses was increased in 1996
with this trend continuing in the first quarter of 1997.
A reconciliation of the allowance for loan losses follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31, December 31,
1997 1996
<S> <C> <C>
Beginning Balance $ 1,371 827
Provision charged to
expense 66 640
Loans charged-off (59) (143)
Recoveries 41 47
Ending Balance $ 1,419 1,371
Allowance for loan losses
as a percent of ending
loans 1.51% 1.35%
</TABLE>
<PAGE>
NONPERFORMING LOANS
Loans are placed on a nonaccrual status when they become 90 days
past due unless determined to be both adequately collateralized and
actively in the process of collection or when they are classified
as doubtful. When full collection of principal becomes doubtful,
the uncollectible portion of the loan is charged-off.
As of March 31, 1997, the Company had two loans totaling $4 past
due 90 days or more and on accrual, 27 loans in the amount of $870
on nonaccrual and $63 in other real estate owned. Of these loans,
$699 were also included in the potential problem loans classified
as substandard. As of December 31, 1996, the Company had three
loans totaling $8 past due 90 days or more and on accrual, 28 loans
on nonaccrual in the amount of $764 and $53 in other real estate
owned. Of these loans, $406 were also included in the potential
problem loans classified as substandard.
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
<S> <C> <C>
Loans past due 90 days or
more $ 4 8
Nonaccrual loans 870 764
Other real estate owned 63 53
Nonperforming assets as a
percent of ending loans
and other real estate owned 0.99% 0.81
</TABLE>
Interest would have been recorded for all nonperforming loans in
the amount of $15 and $33 during the three months ended March 31,
1997 and 1996, respectively, if these loans had been current in
accordance with their original terms.
OTHER POTENTIAL PROBLEM LOANS
Other potential problem loans include nonperforming loans and
represent those loans where information about possible credit
problems of borrowers has caused management to have serious doubts
about the borrowers' ability to comply with present repayment
terms. The Company follows a loan review program to evaluate the
credit risk in its loan portfolio. Through the loan review
process, the Company maintains a classified account list which,
along with the delinquency list of loans, helps management assess
the overall quality of the loan portfolio and the adequacy of the
allowance for loan losses. Loans classified as "substandard" are
those loans with clear and defined weaknesses, such as highly
leveraged positions, unfavorable financial ratios, uncertain
repayment sources or poor financial condition, that may jeopardize
recoverability of the debt. Loans classified as "doubtful" are
those loans which have characteristics similar to substandard
accounts but with an increased risk that a loss may occur, or at
least a portion of the loan may require a charge-off if liquidated
at present. At March 31,
<PAGE>
1997, potential problem loans classified as substandard were $1,417
compared to $1,037 at year end 1996. Three loans totaling $61 were
classified as doubtful at March 31, 1997 as compared to one loan
that totaled $11 at year end 1996. Classified loans in the
aggregate increased by $430 at March 31, 1997 from year end 1996.
The increase in those loans classified as doubtful and substandard
was primarily due to increases in real estate loan deliquencies and
consumer and commercial loan growth. Loans continue to migrate
into and from these categories due to financial deterioration or
strengthening.
Management is unaware of any loans other than those noted above
which are classified for regulatory purposes that represent or
result from trends or uncertainties that will materially impact
future operating results, liquidity, or capital resources.
CAPITAL RESOURCES (Share information not in thousands)
Total shareholders' equity at March 31, 1997 was $10,552, an
increase of $326 or 3.2% from December 31, 1996. Net income for
the three months ended March 31, 1997 of $325 and the increase
of $15 in after tax unrealized losses on the available for sale
investment securities portfolio in accordance with FAS No. 115
primarily make up the increase in shareholders' equity. During the
three months ended March 31, 1997, there were 1,815 options
exercised resulting in a $16 increase in capital.
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 judgements 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 March 31, 1997, 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 I risk-based and Tier I
leverage ratios as set forth in the following table. There are no
conditions or events that notification that Management believes
have changed the institution's category.
<PAGE>
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.
BANK ONLY
<TABLE>
<CAPTION>
To be Well
For Capital Capitalized
under
Adequacy Prompt
corrective
Actual Purposes Capital
Provisions
Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
As of March 31, 1997
Total Capital (to risk-
weighted assets) $11,193 13.64% $6,566 8.00% $8,207 10.00%
Tier I capital (to risk-
weighted assets) 10,167 12.39 3,283 4.00 4,924 6.00
Tier I capital (to
average assets) 10,167 7.70 5,284 4.00 6,605 5.00
As of December 31, 1996
Total Capital (to risk-
weighted assets) $10,849 12.74% $6,814 8.00% $8,517 10.00%
Tier I capital (to risk-
weighted assets) 9,784 11.49 3,407 4.00 5,110 6.00
Tier I capital (to
average assets) 9,784 7.98 4,903 4.00 6,129 5.00
</TABLE>
FORWARD LOOKING STATEMENTS
This Form 10-QSB report contains forward looking statements that
involve risks and uncertainties, and there are certain important
factors that could cause actual results to differ materially from
those anticipated. These important factors include, but are not
limited to, economic conditions (both generally and more
specifically in the markets in which the Company and the Bank
operate), competition for the Company's and the Bank's customers
from other providers of financial services, government legislation
and regulation (which changes from time to time and over which the
Company and the Bank have no control), changes in interest rates,
the impact of the Company's rapid growth, and other risks detailed
in the Annual Report on Form 10-KSB and in this filing with the
Securities and Exchange Commission, all of which are difficult to
predict and many of which are beyond the control of the Company.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
None
(b) Reports on Form 8-K:
The merger agreement with Seacoast Banking Corp was
reported on Form 8-K dated February 19, 1997.
Item 27. Financial Data Schedule
<PAGE>
PORT ST. LUCIE NATIONAL BANK HOLDING CORP. AND SUBSIDIARIES
S I G N A T U R E S
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PORT ST. LUCIE NATIONAL BANK HOLDING CORP.
Date:May 14, 1997 By: /s/ J. Hal Roberts, Jr.
J. Hal Roberts, Jr.
President/Chief Executive Officer
Date:May 14, 1997 By: /s/ Randall A. Ezell
Randall A. Ezell
Senior Vice President
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 5753
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 12750
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12386
<INVESTMENTS-CARRYING> 3701
<INVESTMENTS-MARKET> 3703
<LOANS> 94257
<ALLOWANCE> 1419
<TOTAL-ASSETS> 132715
<DEPOSITS> 120783
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1380
<LONG-TERM> 0
0
0
<COMMON> 7
<OTHER-SE> 10515
<TOTAL-LIABILITIES-AND-EQUITY> 132715
<INTEREST-LOAN> 2208
<INTEREST-INVEST> 321
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2529
<INTEREST-DEPOSIT> 1179
<INTEREST-EXPENSE> 1179
<INTEREST-INCOME-NET> 1350
<LOAN-LOSSES> 66
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1163
<INCOME-PRETAX> 492
<INCOME-PRE-EXTRAORDINARY> 492
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 325
<EPS-PRIMARY> .37
<EPS-DILUTED> .37
<YIELD-ACTUAL> 4.37
<LOANS-NON> 870
<LOANS-PAST> 4
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1417
<ALLOWANCE-OPEN> 1371
<CHARGE-OFFS> 59
<RECOVERIES> 41
<ALLOWANCE-CLOSE> 1419
<ALLOWANCE-DOMESTIC> 1419
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
