<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-19040
SOUTH FLORIDA BANK HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 65-0221393
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2017 MCGREGOR BOULEVARD, FORT MYERS, FLORIDA 33901
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 334-2020
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark 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 such filing
requirements for the past 90 days. YES X NO
--- ---
As of April 28, 1997, there were outstanding 1,210,975 shares of the
Registrant's Common Stock.
1
<PAGE> 2
SOUTH FLORIDA BANK HOLDING CORPORATION
FORM 10-Q - FOR THE QUARTER ENDED MARCH 31, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
NO.
---
PART I. FINANCIAL INFORMATION
<S> <C> <C> <C>
Item 1. Financial Statements:
a) Unaudited Consolidated Statements of Financial
Condition - March 31, 1997 and December 31, 1996.................. 3
b) Unaudited Consolidated Income Statements - Three
Months Ended March 31, 1997 and 1996.............................. 4
c) Unaudited Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996........................ 5
e) Notes to Unaudited Consolidated Financial Statements.............. 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................................... 15
SIGNATURES................................................................................... 16
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION Item 1. Financial Statements
SOUTH FLORIDA BANK HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ ------------
ASSETS (Unaudited)
<S> <C> <C>
Cash and due from banks ................................ $ 3,711,870 $ 4,663,206
Federal funds sold ..................................... 4,528,000 5,179,000
Investments available-for-sale ......................... 10,400,000 8,476,165
Investments held-to-maturity (market value of
$7,758,000 and $8,140,000) ......................... 7,830,740 8,163,011
Loans, net of allowance for loan losses of
$922,128 and $904,562 .............................. 45,253,356 43,135,706
Premises and equipment, net ............................ 379,940 408,434
Accrued interest receivable ............................ 467,679 451,821
Other real estate owned ................................ 533,500 548,500
Other assets ........................................... 541,458 503,684
------------ ------------
Total assets ....................................... $ 73,646,543 $ 71,529,527
============ ============
LIABILITIES
Deposits:
Demand deposits .................................... $ 13,940,528 $ 15,215,611
NOW accounts ....................................... 9,389,192 7,841,350
Money market accounts .............................. 7,785,424 7,749,782
Savings deposits ................................... 3,026,713 2,725,840
Time deposits under $100,000 ....................... 26,355,277 25,975,567
Time deposits $100,000 and over .................... 5,203,891 4,379,625
------------ ------------
Total deposits .................................. 65,701,025 63,887,775
Securities sold under agreements to repurchase ......... 808,676 749,057
Accrued interest payable ............................... 386,438 443,538
Other liabilities ...................................... 66,233 41,432
------------ ------------
Total liabilities .................................. 66,962,372 65,121,802
------------ ------------
SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 10,000,000
shares authorized, 1,210,975 outstanding ........... 12,110 12,110
Additional paid-in capital ............................. 10,366,378 10,366,378
Net unrealized securities losses ....................... (63,768) (32,911)
Retained deficit ....................................... (3,630,549) (3,937,852)
------------ ------------
Total shareholders' equity ......................... 6,684,171 6,407,725
------------ ------------
Total liabilities and shareholders' equity ......... $ 73,646,543 $ 71,529,527
============ ============
</TABLE>
The accompanying Notes to Unaudited Consolidated Financial Statements
are an integral part of these financial statements.
3
<PAGE> 4
SOUTH FLORIDA BANK HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1997 1996
---------- ----------
INTEREST AND FEE INCOME FROM EARNING ASSETS: (UNAUDITED)
<S> <C> <C>
Loans ....................................................... $1,024,439 $ 915,036
Federal funds sold .......................................... 80,872 60,174
Investment securities ....................................... 243,512 267,122
---------- ----------
Total interest income .................................. 1,348,823 1,242,332
---------- ----------
INTEREST EXPENSE:
Deposits:
NOW accounts ........................................... 30,571 34,283
Money market accounts .................................. 52,461 61,107
Savings deposits ....................................... 15,536 13,119
Time deposits under $100,000 ........................... 371,494 329,596
Time deposits $100,000 and over ........................ 64,630 42,817
Other ....................................................... 6,240 11,081
---------- ----------
Total interest expense ................................. 540,932 492,003
---------- ----------
NET INTEREST INCOME ......................................... 807,891 750,329
PROVISION (BENEFIT) FOR LOAN LOSSES ......................... -- --
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ......... 807,891 750,329
---------- ----------
NON-INTEREST INCOME:
Service charge income ....................................... 116,287 109,422
Other ....................................................... 20,923 22,477
---------- ----------
Total non-interest income .............................. 137,210 131,899
---------- ----------
NON-INTEREST EXPENSES:
Personnel expense ........................................... 319,393 311,927
Occupancy expense ........................................... 120,852 135,541
Legal expenses .............................................. 27,732 31,198
Advertising ................................................. 24,960 17,345
Loan collection expenses .................................... 22,712 38,368
Supplies .................................................... 18,646 19,600
Other ....................................................... 133,503 132,028
---------- ----------
Total non-interest expenses ............................ 667,798 686,007
---------- ----------
INCOME BEFORE INCOME TAXES .................................. 277,303 196,221
BENEFIT FOR INCOME TAXES .................................... 30,000 15,000
---------- ----------
NET INCOME .................................................. $ 307,303 $ 211,221
========== ==========
NET INCOME PER SHARE ........................................ $ .25 $ .18
========== ==========
Weighted average number of common shares and
common share equivalents outstanding ................... 1,225,182 1,197,788
========== ==========
</TABLE>
The accompanying Notes to Unaudited Consolidated Financial Statements
are an integral part of these financial statements.
4
<PAGE> 5
SOUTH FLORIDA BANK HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------------------------
1997 1996
-------------- ----------------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: (Unaudited)
Interest received .............................................. $ 1,332,965 $ 1,311,621
Non-interest income ............................................ 137,210 131,899
Interest paid .................................................. (598,032) (693,636)
Personnel expenses ............................................. (319,393) (311,927)
Other operating expenditures ................................... (282,088) (316,730)
----------- -----------
Net cash provided by operating activities ...................... 270,662 121,227
----------- -----------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Investments available-for-sale:
Purchases ................................................. (1,973,603) (3,054,314)
Maturities ................................................ -- 4,000,000
Investments held-to-maturity:
Purchases ................................................. -- (1,223,275)
Maturities ................................................ 332,271 99,416
Increase in loans .............................................. (2,102,650) (633,725)
Increase in premises and equipment ............................. (1,885) (9,985)
----------- -----------
Net cash used in investing activities .......................... (3,745,867) (821,883)
----------- -----------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Increase (Decrease) in:
Demand deposits ........................................... (1,275,083) 178,185
NOW accounts .............................................. 1,547,842 (714,931)
Money market accounts ..................................... 35,642 418,679
Savings deposits .......................................... 300,873 204,604
Time deposits ............................................. 1,203,976 (1,615,289)
Securities sold under agreements to repurchase ................. 59,619 (207,951)
Proceeds from issuance of common stock ......................... -- 75,000
----------- -----------
Net cash provided by (used in) financing activities ............ 1,872,869 (1,661,703)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........... (1,602,336) (2,362,359)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............... 9,842,206 8,081,597
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..................... $ 8,239,870 $ 5,719,238
=========== ===========
</TABLE>
The accompanying Notes to Unaudited Consolidated Financial Statements
are an integral part of these financial statements.
5
<PAGE> 6
SOUTH FLORIDA BANK HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
Reconciliation of net income to net cash provided by (used in)
operating activities
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------
1997 1996
-------- --------
(Unaudited)
<S> <C> <C>
Net income ........................................... $ 307,303 $ 211,221
Adjustments:
Depreciation and amortization ................... 30,379 44,105
Benefit for income taxes ........................ (30,000) (15,000)
Decrease (Increase) in:
Accrued interest receivable .................. (15,858) 69,289
Other assets ................................. 11,137 10,150
Increase (Decrease) in:
Accrued interest payable ..................... (57,100) (201,633)
Other liabilities ............................ 24,801 3,095
--------- ---------
Net cash provided by operating activities ............ $ 270,662 $ 121,227
========= =========
Supplemental schedule of non-cash activities:
Net unrealized securities gains (losses) (49,768) (46,403)
</TABLE>
The accompanying Notes to Unaudited Consolidated Financial Statements are an
integral part of these financial statements.
6
<PAGE> 7
SOUTH FLORIDA BANK HOLDING CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of South Florida
Bank Holding Corporation (the "Holding Corporation"), its wholly-owned
subsidiary South Florida Bank ("Bank"), and the Bank's two wholly-owned
subsidiaries, New Town Properties, Inc. and Valu Prop, Inc. (collectively, the
"Company") after elimination of all material intercompany balances and
transactions.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB and do not include
all of the information and footnotes required by generally accepted accounting
principles for complete consolidated financial statements. In the opinion of the
Company, the consolidated financial statements reflect all adjustments which are
of a normal recurring nature and which are necessary to present fairly the
consolidated financial position of the Company as of March 31, 1997 and December
31, 1996, and the results of operations for the three months ended March 31,
1997 and 1996, and cash flows for the three months ended March 31, 1997 and
1996. The results of operations for the three months ended March 31, 1997 are
not necessarily indicative of the results which may be expected for the entire
fiscal year.
Net Income Per Share
Net income per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period,
including the effect of unexercised stock options using the treasury stock
method. The treasury stock method assumes that common stock was purchased at the
average market price during the period. For the three months ended March 31,
1997 and 1996, the computation of weighted average number of common shares and
common share equivalents outstanding was as follows:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Common shares ........................................ 1,210,975 1,197,788
Stock options ........................................ 14,207 --
--------- ---------
Total ............................................ 1,225,182 1,197,788
========= =========
</TABLE>
In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS
128"), which becomes effective for the Company for the year ended December 31,
1997. FAS 128 replaces the presentation of primary earnings per share with a
presentation of basic earnings per share which excludes dilution and is computed
by dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted earnings per share
reflects the potential dilution that would occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. Diluted earnings per share is computed similarly to fully diluted
earnings per share pursuant to Accounting Principles Board Opinion No. 15,
"Earnings Per Share." FAS 128 also requires dual presentation of basic and
diluted earnings per share on the face of the income statement for all entities
with complex capital structure and requires a reconciliation of the numerator
and denominator of the basic earnings per share computation to the numerator and
denominator of the diluted earnings per share computation. The Company has not
yet determined the impact of implementing FAS 128.
NOTE B - INVESTMENTS AVAILABLE-FOR-SALE AND INVESTMENTS HELD-TO-
MATURITY
As of March 31, 1997 and December 31, 1996, the carrying value, gross
unrealized gains and losses, and estimated market value of investments
available-for-sale and investments held-to- maturity were as follows:
7
<PAGE> 8
<TABLE>
<CAPTION>
GROSS GROSS CARRYING
AMORTIZED UNREALIZED UNREALIZED VALUE
INVESTMENTS AVAILABLE-FOR-SALE: COST GAINS LOSSES (FAIR VALUE)
---------- --------- --------- -------------
<S> <C> <C> <C> <C>
1997
U.S. Treasury obligations due
in one year or less .......................... $ 1,001,065 $ -- $ (440) $ 1,000,625
U.S. Agency obligations due:
In one year or less ....................... 2,000,480 -- (2,980) 1,997,500
After one year through five years ......... 7,501,306 -- (99,431) 7,401,875
------------ ------------ ------------ ------------
Total investments
available-for-sale .................... $ 10,502,851 $ -- $ (102,851) $ 10,400,000
============ ============ ============ ============
1996
U.S. Treasury obligations due
in one year or less ....................... $1,002,67 $ -- $ (170) $ 1,002,500
U.S. Agency obligations due:
In one year or less ....................... 1,000,000 -- (2,500) 997,500
After one year through five years ......... 6,526,578 -- (50,413) 6,476,165
------------ ---------- ----------- ------------
Total investments
available-for-sale .................... $ 8,529,248 $ -- $ (53,083) $ 8,476,165
============ ========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
CARRYING
VALUE GROSS GROSS ESTIMATED
(AMORTIZED UNREALIZED UNREALIZED MARKET
INVESTMENTS HELD-TO-MATURITY: COST) GAINS LOSSES VALUE
------------ ---------- ------------- -------------
<S> <C> <C> <C> <C>
1997
U.S. Agency obligations due: ................... $ 1,000,000 $ -- $ (17,500) $ 982,500
After one year through five years ......... 4,536,364 -- (26,940) 4,509,424
Collateralized mortgage obligations
due after ten years ....................... 2,294,376 -- (28,522) 2,265,854
------------ ---------- ------------ ------------
Total investments held-to-maturity ............. $ 7,830,740 $ -- $ (72,962) $ 7,757,778
============ ========== ============ ============
1996
U.S. Agency obligations due
after one year through five years ......... $ 5,626,637 $ 10,082 $ (22,500) $ 5,614,219
Collateralized mortgage obligations
due after ten years ....................... 2,536,374 126 (10,741) 2,525,759
------------ ---------- ------------ ------------
Total investments held-to-maturity ............. $ 8,163,011 $ 10,208 $ (33,241) $ 8,139,978
============ ========== ============ ============
</TABLE>
Expected maturities for the collateralized mortgage obligations will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Consolidated total assets of South Florida Bank Holding Corporation (the
"Holding Corporation"), its subsidiary South Florida Bank (the "Bank"), and the
Bank's wholly-owned subsidiaries, New Town Properties, Inc. and Valu Prop, Inc.
(collectively, the "Company") increased to $73.6 million as of March 31, 1997,
from $71.5 million as of December 31, 1996, an increase of $2.1 million or
2.96%. During 1997, the Bank emphasized growth by means of an advertising
campaign and an officer calling program. The Company's shareholders' equity
increased to $6.7
8
<PAGE> 9
million as of March 31, 1997 from $6.4 million as of December 31, 1996, an
increase of $276,000 or 4.31%. This increase was primarily the result of net
income of $307,000, partially offset with the $31,000 decrease resulting from
unrealized securities losses. As of March 31, 1997, the Bank's total risk-based
capital ratio was 14.06% and leverage ratio was 8.63%, as compared to 13.70% and
8.82%, respectively, as of December 31, 1996.
Net income increased to $307,000 for the three months ended March 31, 1997,
or $.25 per share, from $211,000 for the three months ended March 31, 1996, or
$.18 per share. Income before income taxes increased to $277,000 for 1997, from
$196,000 for 1996. The Company's improved earnings during 1997 as compared to
the prior year resulted partly from net interest income increasing $58,000 from
1996 to 1997 as the Bank's total interest-earning assets grew. In addition, the
total of legal and collection expenses decreased to $50,000 during 1997 from
$70,000 during 1996, and the Bank recorded a benefit for income taxes of $30,000
during 1997 and $15,000 during 1996.
The following discussion provides a more in-depth analysis of the Company's
financial condition and results of operations. The financial statements and
accompanying notes included in this report are an integral part of this
discussion and should be read in conjunction with it.
FINANCIAL CONDITION
The Bank's advertising campaign, coupled with an officer calling program,
resulted in an increase in total assets and liabilities. The Company's total
assets increased to $73.6 million as of March 31, 1997 from $71.5 million as of
December 31, 1996, an increase of $2.1 million or 2.96%. Earning assets,
comprised of loans and the investment portfolio (which in turn is comprised of
investments held-to-maturity, investments available-for-sale, and federal funds
sold) increased, as discussed below, to $68.0 million as of March 31, 1997 from
$64.9 million as of December 31, 1996, an increase of $3.1 million or 4.71%.
Non-earning assets, comprised of cash and due from banks, premises and
equipment, accrued interest receivable, other real estate owned and other
assets, decreased to $5.6 million as of March 31, 1997 from $6.6 million as of
December 31, 1996, a decrease of $1.0 million (primarily due to a $951,000
decrease in cash and due from banks) or 14.31%.
Net loans increased to $45.3 million as of March 31, 1997 from $43.1
million as of December 31, 1996, an increase of $2.2 million or 4.91%. Mortgage
loans which increased $2.2 million were the primary components of outstanding
loans. In addition, installment loans increased $217,000 (primarily with a
mobile home loan product)and commercial loans increased $154,000. Management's
strategy is to lend to small-to-medium sized businesses.
The investment portfolio increased to $22.8 million as of March 31, 1997
from $21.8 million as of December 31, 1996, an increase of $1.0 million or
4.31%. The proceeds from the increase in deposits and the decrease in cash and
federal funds sold were primarily used to fund the increase in loans and the
investment portfolio.
Cash and due from banks decreased to $3.7 million as of March 31, 1997 from
$4.7 million as of December 31, 1996, or a decrease of $1.0 million or 20.40%.
This decrease resulted primarily from the decrease in funds due from banks.
These funds were used primarily to fund the decrease in demand deposit accounts
which decreased $1.3 million from December 31, 1996 to March 31, 1997.
Deposits increased to $65.7 million as of March 31, 1997 from $63.9 million
as of December 31, 1996, an increase of $1.8 million or 2.84%. Core deposits
increased to $60.5 million as of March 31, 1997 from $59.5 million as of
December 31, 1996, an increase of $1.0 million or 1.66%. This increase in core
deposits primarily reflected deposit accounts opened as a result of the
advertising campaign and officer calling program. As of March 31, 1997 and
December 31, 1996, the ratio of net loans to deposits was 68.88% and 67.52%,
respectively.
9
<PAGE> 10
For the three months ended March 31, 1997 and 1996, the Bank's average
statements of financial condition, interest income and expense, and yields
earned and rates paid were as follows:
<TABLE>
<CAPTION>
AVERAGE BALANCES, INTEREST YIELDS AND RATES
1997 1996
------------------------------------ ---------------------------------
Average Yield/ Average Yield/
ASSETS: Balance Interest Rate Balance Interest Rate
- ------- ------- -------- ---- ------- -------- ----
Loans:
<S> <C> <C> <C> <C> <C> <C>
Commercial .................................... $ 8,017,358 $ 206,620 10.45% $ 6,939,258 $ 209,965 12.17%
Mortgage (a) .................................. 30,848,314 672,822 8.85 25,265,354 596,250 9.49
Installment ................................... 3,571,240 73,873 8.39 1,714,034 39,977 9.38
Other ......................................... 2,968,014 71,124 9.72 2,710,971 68,844 10.21
----------- ----------- ---- ---------- ----------- -----
Total loans, net of unearned income (b) ......... 45,404,926 1,024,439 9.15 36,629,617 915,036 10.05
Investment securities-all taxable ............... 16,783,278 243,512 5.80 17,905,469 267,122 5.97
Federal funds sold .............................. 6,300,590 80,872 5.21 4,493,733 60,174 5.39
----------- ----------- ---- ---------- ----------- -----
Total earning assets (c) ........................ 68,488,794 $ 1,348,823 7.99% 59,028,819 $ 1,242,332 8.46%
=========== ==== =========== =====
Cash and due from banks ......................... 3,500,989 2,671,492
Other assets .................................... 1,921,787 1,851,078
Allowance for loan losses ....................... (912,858) (914,779)
Total assets .................................... $72,998,712 $62,636,610
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing deposits:
NOW accounts .................................. $ 9,257,681 $ 30,571 1.34% $ 8,006,992 $ 34,283 1.72%
Money market .................................. 8,980,871 55,462 2.50 9,583,844 63,814 2.68
Savings ....................................... 2,835,973 15,536 2.22 2,352,434 13,119 2.24
Time deposits under $100,000 .................. 26,297,493 371,494 5.73 22,422,141 329,596 5.91
Time deposits $100,000 and over ............... 4,673,473 64,630 5.61 2,992,782 42,817 5.75
----------- ----------- ---- ----------- ----------- ----
Total interest-bearing deposits ................. 52,045,491 537,693 4.19 45,358,193 483,629 4.29
Sweep accounts .................................. 803,641 6,240 3.15 1,357,343 11,081 3.28
----------- ----------- ---- ----------- ----------- ----
Total interest-bearing liabilities .............. 52,849,132 $ 543,933 4.17% 46,715,536 $ 494,710 4.26%
Demand deposits ................................. 13,543,554 =========== ==== 10,322,174 =========== ====
Other liabilities ............................... 486,535 497,946
Shareholders' equity ............................ 6,119,491 5,100,954
----------- -----------
Total ........................................... $72,998,712 $62,636,610
=========== ===========
SPREAD AND INTEREST DIFFERENTIAL:
Interest rate spread ............................ 3.82% 4.20%
Excess of total earning assets over ==== =====
total interest-bearing liabilities ......... $15,639,662 $12,313,283
=========== ===========
Net yield on interest-earnings assets ........... $ 804,890 4.77% $ 747,622 5.09%
=========== ==== =========== ====
</TABLE>
- -----------------------
(a) Interest income on mortgage loans included loan fees
recognized as income of $4,000 and $2,000 during the three
months ended March 31, 1997 and 1996, respectively.
(b) Non-accrual loans were included in loans, net of
unearned income.
(c) The Company has made no loans or investments that
qualify for tax-exempt treatment and, accordingly, has
no tax-exempt income.
LOAN PORTFOLIO
The Bank's loan portfolio is primarily concentrated in commercial,
mortgage, and installment loans. As of March
10
<PAGE> 11
31, 1997 and December 31, 1996, the composition of the Bank's loan portfolio was
as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------- ----------------------
% OF % OF
TOTAL TOTAL
AMOUNT LOANS AMOUNT LOANS
------ ----- ------ -----
<S> <C> <C> <C> <C>
Commercial ........................ $ 8,216,912 17.79% $ 8,062,573 18.31%
Mortgage: (a)
Construction .................. 982,690 2.13 1,029,003 2.34
Non-construction .............. 30,383,085 65.80 28,172,195 63.97
Installment (b) ................... 3,807,088 8.24 3,589,684 8.15
Other loans (c) ................... 2,785,709 6.04 3,186,813 7.23
------------ ------ ------------ --------
Total loans, net of
unearned income ............... 46,175,484 100.00% 44,040,268 100.00%
====== ========
Allowance for loan losses ......... (922,128) 2.00% (904,562) 2.05%
------------ ====== ------------ ========
Loans, net ........................ $ 45,253,356 $ 43,135,706
============ ============
</TABLE>
- ---------------------
(a) In addition to loans for the purchase, construction, improvement of or
investment in real estate, the Bank's real estate loans include all
loans for various other consumer or business purposes which are secured
by real estate mortgages.
(b) Installment loans generally include loans secured with mobile homes,
automobiles, trucks, boats, and equipment.
(c) Other loans generally include credit card loans, equity lines to
individuals, deposit overdraft protection and deposit overdrafts.
ALLOWANCE FOR LOAN LOSSES
For the three months ended March 31, 1997 and 1996, the Bank's loan loss
experience and its provision for loan losses were as follows:
<TABLE>
<CAPTION>
1997 1996
--------------- -------------
<S> <C> <C>
Average loans outstanding ................................ $ 45,404,926 $ 36,629,617
============ ============
Net loans at end of period ............................... $ 45,253,356 $ 36,361,092
============ ============
Allowance for loan losses at beginning of period ......... $ 904,562 $ 852,270
Loans charged-off:
Mortgage ............................................ -- 17,348
Installment ......................................... -- 210
Other loans ......................................... 2,271 7,218
------------ ------------
Total loans charged-off .................................. 2,271 24,776
----------- -------------
Recoveries of loans previously charged-off:
Commercial .......................................... 18,554 92,339
Mortgage ............................................ 983 17,807
Installment ......................................... 74 341
Other loans ......................................... 226 1,682
------------ ------------
Total recoveries ......................................... 19,837 112,169
------------ ------------
Net loan charged-offs (recoveries) ....................... (17,566) (87,393)
Provision charged to expense ............................. -- --
------------ ------------
Allowance for loan losses at end of period ............... $ 922,128 $ 939,663
============ ============
Ratio of net charge-offs during period
to average net loans outstanding .................... (.15)% (.95)%
Allowance for loan losses as a percentage of loans,
net of unearned income at end of period ............. 2.00% 2.52%
</TABLE>
11
<PAGE> 12
During 1997, one loan was charged-off. During 1997, the largest loan
recovery was $9,000, or 43.72% of total recoveries. The remaining recoveries,
which totaled $11,000, encompassed ten loans.
Non-performing assets increased to $858,000 as of March 31, 1997 as
compared to $811,000 as of December 31, 1996, or an increase of $47,000 or
5.73%. The ratio of non-performing loans as a percent of total loans, net of
unearned income, was .70% and .60% as of March 31, 1997 and December 31, 1996,
respectively. The allowance for loan losses as a percentage of non-performing
loans was 284.47% and 344.34% as of March 31, 1997 and December 31, 1996,
respectively.
As of March 31, 1997 and December 31, 1996, the Bank's non-performing loans
and repossessed assets were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------ ---------------
% OF % OF
TOTAL TOTAL
AMOUNT LOANS AMOUNT LOANS
-------- ----- -------- -----
Non-accruing loans:
<S> <C> <C> <C> <C>
Under 90 days delinquent ................ $152,901 .33% $117,930 .27%
90 or more days delinquent .............. 171,253 .37 144,762 .33
-------- ----- -------- ---
Total non-accruing loans ..................... $324,154 .70% $262,692 .60%
======== ===== ======== ===
Total real estate owned ...................... $533,500 $548,500
-------- --------
Total non-performing assets .................. $857,654 $811,192
======== ========
Loans delinquent and accruing:
30 to 59 days ........................... $ 17,509 .04% $ 21,818 .05%
60 to 89 days ........................... 77,971 .17 105,835 .24
Over 90 days ............................ 43,495 .09 -- --
-------- ----- -------- ---
Total ............................... $138,975 .30% $127,653 .29%
======== ===== ======== ===
Total delinquencies 30 days and over ......... $463,129 1.00% $390,345 .89%
======== ===== ======== ===
</TABLE>
As of March 31, 1997 and December 31, 1996, the Bank did not have any
troubled debt restructurings.
Non-accruing loans totaled $324,000 as of March 31, 1997 as compared to
$263,000 as of December 31, 1996, an increase of $61,000 or 23.40%. The largest
non-accruing loan as of March 31, 1997 was a $111,000 first mortgage loan
secured with commercial real estate. As of March 31, 1997, this loan was
current.
Management continues to manage its non-performing assets to restore them to
performing status when possible, or otherwise liquidate such assets in an
orderly fashion to maximize the value of such assets to the Company. Although
the Company is endeavoring to actively manage the risks in its loan portfolio,
there is no assurance that the level of non-accrual loans and other real estate
owned will not increase during 1997.
CAPITAL RESOURCES
The Holding Corporation's total shareholders' equity was $6.7 million and
$6.4 million as of March 31, 1997 and December 31, 1996, respectively. This
increase was the result of 1997's net income of $307,000, partially offset with
the $31,000 increase in the net unrealized securities losses to March 31, 1997
from December 31, 1996. The Bank's total shareholder's equity was $6.2 million
and $6.0 million as of March 31, 1997 and December 31, 1996, respectively. The
increase in the Bank's shareholder's equity was the result of the Bank's net
income of $314,000 partially offset with the $31,000 increase in the net
unrealized securities losses to March 31, 1997 from December 31, 1996.
The Bank's total risk-based capital (total capital to risk-weighted
assets), Tier 1 risk-based capital (Tier 1 capital
12
<PAGE> 13
to risk-weighted assets) and leverage (Tier 1 capital to total average assets
during the prior three months) ratios as compared to the ratios mandated by the
FDIC were as follows:
<TABLE>
<CAPTION>
TOTAL TIER 1
RISK-BASED RISK-BASED LEVERAGE
CAPITAL RATIO CAPITAL RATIO RATIO
------------- ------------- --------
<S> <C> <C> <C>
Well capitalized per FDIC(minimum ratios) ......... 10.00% 6.00% 5.00%
Bank: December 31, 1996 ........................ 13.70 12.45 8.82
March 31, 1997 ........................... 14.06 12.80 8.63
</TABLE>
LIQUIDITY
During the three months ended March 31, 1997 and 1996, investing activities
used $3.7 million and $822,000, respectively, of cash. During the three months
ended March 31, 1997 and 1996, financing activities provided (used) $1.9 million
and $(1.7) million, respectively, of cash. During 1997 and 1996, the Company
focused on growth with an advertising campaign and an officer calling program.
RESULTS OF OPERATIONS
SUMMARY
The Company's net income was $307,000 for the three months ended March 31,
1997, or $.25 per share, as compared to $211,000 for the three months ended
March 31, 1996, or $.18 per share. For the three months ended March 31, 1997 and
1996, the Company's annualized performance ratios were as follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Return on average assets ................. 1.68% 1.35%
Return on average equity ................. 20.09 17.19
Average equity to average assets ......... 8.38 8.14
</TABLE>
NET INTEREST INCOME
The Bank's earnings are dependent primarily on its net interest income
which is the excess of interest income earned on earning assets (primarily loans
and the investment portfolio - all of which are taxable) over interest expense
paid on deposits and short-term borrowings. Changes in net interest income are
caused by changes in the interest rates earned or paid and by volume changes in
loans, the investment portfolio, deposits and short-term borrowings.
The Bank's net interest income increased to $805,000 during the three
months ended March 31, 1997 from $748,000 during the three months ended March
31, 1996, an increase of $57,000 or 7.66%. The increase was primarily due to the
increase in average interest-earning assets and average interest-bearing
liabilities. The 23.54% volume increase in 1997 from 1996 in loan interest
income was primarily attributable to the 19.33% increase in average loans and
the 2.32% volume increase in 1997 from 1996 in investment interest income was
primarily attributable to the 2.97% increase in average investments. The 16.37%
volume increase in 1997 from 1996 in interest expense was primarily attributable
to the 11.61% increase in average interest-bearing liabilities. The interest
rate variance for loans primarily resulted from the decrease in interest rates
in 1997 from 1996, including a 24 basis point decrease in average prime interest
rate. The yield on the investment portfolio decreased 26 basis points reflecting
the reinvestment of the proceeds from investment securities maturing subsequent
to 1996 at lower interest rates. The interest rates paid on interest-bearing
liabilities decreased 9 basis points as the Bank paid lower rates on new deposit
accounts than those maturing subsequent to 1996. The result was a decrease in
the net interest margin to 4.77% during 1997 from 5.09% during 1996.
13
<PAGE> 14
The increase (decrease) during the three months ended March 31, 1997 from
the three months ended March 31, 1996 in the Bank's interest income earned and
interest expense paid resulting from changes in volumes of, rates earned or paid
on, and the combined effect of changes in both volume and rate on, various
categories of interest-earning assets and interest-bearing liabilities were as
follows:
<TABLE>
<CAPTION>
VOLUME/
VOLUME RATE RATE TOTAL
------ ---- ---- -----
<S> <C> <C> <C> <C>
ASSETS:
Loans:
Commercial .............................. $ 32,800 $ (29,799) $ (6,346) $ (3,345)
Mortgage ................................ 132,479 (40,819) (15,088) 76,572
Installment ............................. 43,554 (4,249) (5,409) 33,896
Other ................................... 6,563 (3,356) (927) 2,280
--------- --------- --------- ---------
Total loans ......................... 215,396 (78,223) (27,770) 109,403
Investment securities ........................ (16,741) (7,328) 459 (23,610)
Federal funds sold ........................... 24,328 (2,024) (1,606) 20,698
--------- --------- --------- ---------
Total interest income ........................ 222,983 (87,575) (28,917) 106,491
--------- --------- --------- ---------
LIABILITIES:
Interest-bearing deposits:
NOW accounts ............................ 5,384 (7,663) (1,433) (3,712)
Money market accounts ................... 4,037) (4,157) (158) (8,352)
Savings deposits ........................ 2,711 (125) (169) 2,417
Time deposits:
Under $100,000 ...................... 57,279 (10,259) (5,122) 41,898
$100,000 and over ................... 24,177 (1,090) (1,274) 21,813
--------- --------- --------- ---------
Total interest-bearing deposits ......... 85,514 (23,294) (8,156) 54,064
Securities sold under agreements
to repurchase ........................... (4,545) (456) 160 (4,841)
--------- --------- --------- ---------
Total interest expense ....................... 80,969 (23,750) (7,996) 49,223
--------- --------- --------- ---------
Net interest income .......................... $ 142,014 $ (63,825) $ (20,921) $ 57,268
========= ========= ========= =========
</TABLE>
As interest rates continue to change, the Bank's net interest margin may be
squeezed by the repricing of the interest-earning assets at different times than
the repricing of interest-costing liabilities.
PROVISION FOR LOAN LOSSES
The Bank made no provision for loan losses during the three months ended
March 31, 1997 and 1996. Net loan recoveries during 1997 were $18,000 as
compared to $87,000 during 1996. The amount provided for loan losses was based
on an evaluation by management of the amount needed to maintain the allowance at
a level sufficient to cover anticipated losses and the inherent risk of losses
in the loan portfolio. As of March 31, 1997 and December 31, 1996, the allowance
for loan losses as a percentage of loans net of unearned income was 2.00% and
2.05%, respectively, and as a percentage of non-accrual loans was 284.47% and
344.34%, respectively. See "--Financial Condition-Allowance for Loan Losses".
NON-INTEREST INCOME
Deposit service charge income increased $7,000 or 6.27% to $116,000 (or
.71% of average deposits) during the three months ended March 31, 1997 from
$109,000 (or .79% of average deposits) during the three months ended March 31,
1996. This increase primarily resulted from an increased volume of overdraft
charges.
14
<PAGE> 15
NON-INTEREST EXPENSE
Personnel expenses increased $7,000 or 2.39% to $319,000 during the three
months ended March 31, 1997, from $312,000 during the three months ended March
31, 1996. This increase primarily resulted from compensation increases for
existing employees and the increase in the number of employees. The monthly
average of full-time equivalent employees during 1997 was 35.63 as compared to
32.63 employees during 1996. As of March 31, 1997 and December 31, 1996, the
Bank employed 34 and 33 full-time and four and five part-time employees,
respectively.
Occupancy expense decreased to $121,000 during the three months ended March
31, 1997, from $136,000 during the three months ended March 31, 1996, or a
decrease of $15,000 or 10.84%. This decrease primarily resulted from lower
depreciation expense as assets became fully depreciated.
Legal expenses decreased to $28,000 during the three months ended March 31,
1997, from $31,000 during the three months ended March 31, 1996, or a decrease
of $3,000 or 11.11%. This decrease reflected the reduction in collection actions
handled by the Bank's attorneys.
Advertising expense increased to $25,000 during the three months ended
March 31, 1997 from $17,000 during the three months ended March 31, 1996, or an
increase of $8,000 or 43.90%. This increase primarily resulted from the cost of
the advertising campaign conducted during 1997.
Loan collection expenses, excluding legal expenses but including real
estate taxes, insurance, gain (loss) on the sale of other real estate owned, and
appraisal costs on real estate in foreclosure, decreased to $23,000 during the
three months ended March 31, 1997, from $38,000 during the three months ended
March 31, 1996, or a decrease of $15,000 or 40.80%. This decrease resulted from
a reduction in write-downs and losses on disposal of other real estate owned.
Other operating expenses increased to $134,000 during the three months
ended March 31, 1997, from $132,000 during the three months ended March 31,
1996, or an increase of $2,000 or 1.12%. This increase primarily resulted from
increased ATM and postage expenses.
INCOME TAXES
During the three months ended March 31, 1997 and 1996, the Company had a
benefit for income taxes of $30,000 and $15,000 by recording deferred income tax
assets resulting from the corresponding reduction in the valuation allowance
associated with the Company's tax loss carry forward.
PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
During the three months ended March 31, 1997, the Company filed no reports on
Form 8-K.
Exhibits.
- ---------
27 Financial Data Schedule (for SEC use only)
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTH FLORIDA BANK HOLDING CORPORATION
Date: April 28, 1997
By: /s/ William P. Valenti
--------------------------------
William P. Valenti,
President and Chief Executive
Officer (Principal financial
officer)
Date: April 28, 1997 By: /s/ Sharon Landel
-------------------------------
Sharon Landel, Controller
(Principal accounting officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SOUTH FLORIDA BANK HOLDING COMPANY FOR THE THREE MONTH
PERIOD ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,711,870
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,528,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 10,400,000
<INVESTMENTS-CARRYING> 7,830,740
<INVESTMENTS-MARKET> 7,758,000
<LOANS> 45,253,356
<ALLOWANCE> 922,128
<TOTAL-ASSETS> 73,646,543
<DEPOSITS> 65,701,025
<SHORT-TERM> 808,676
<LIABILITIES-OTHER> 452,671
<LONG-TERM> 0
0
0
<COMMON> 12,110
<OTHER-SE> 6,672,061
<TOTAL-LIABILITIES-AND-EQUITY> 73,646,543
<INTEREST-LOAN> 1,024,439
<INTEREST-INVEST> 243,512
<INTEREST-OTHER> 80,872
<INTEREST-TOTAL> 1,348,823
<INTEREST-DEPOSIT> 534,692
<INTEREST-EXPENSE> 540,932
<INTEREST-INCOME-NET> 807,891
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 667,798
<INCOME-PRETAX> 277,303
<INCOME-PRE-EXTRAORDINARY> 307,303
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 307,303
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
<YIELD-ACTUAL> 7.99
<LOANS-NON> 324,154
<LOANS-PAST> 367,649
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 904,562
<CHARGE-OFFS> 2,271
<RECOVERIES> 19,837
<ALLOWANCE-CLOSE> 922,128
<ALLOWANCE-DOMESTIC> 922,128
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
