<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, 1998
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 May 1, 1998, 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, 1998
INDEX
<TABLE>
<CAPTION>
PAGE
NO.
----
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements:
a) Unaudited Consolidated Statements of Financial
Condition - March 31, 1998 and December 31, 1997......... 3
b) Unaudited Consolidated Income Statements - Three
Months Ended March 31, 1998 and 1997..................... 4
c) Unaudited Consolidated Statements of Cash Flows -
Three Months Ended March, 1998 and 1997.................. 5
d) 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.................................. 14
SIGNATURES................................................................. 15
</TABLE>
2
<PAGE> 3
SOUTH FLORIDA BANK HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
- ------
Cash and due from banks ............................. $ 3,960,087 $ 5,001,112
Federal funds sold .................................. 5,655,000 1,998,000
Investments available-for-sale ...................... 13,493,750 16,584,500
Investments held-to-maturity (market value of
$7,199,116 and $7,980,325) ...................... 7,178,071 7,967,268
Loans, net of allowance for loan losses of
$925,954 and $882,034 ........................... 51,415,689 48,824,353
Accrued interest receivable ......................... 454,938 600,536
Premises and equipment, net ......................... 1,179,794 589,881
Other real estate owned ............................. 499,211 514,211
Other assets ........................................ 839,306 779,497
------------ ------------
Total assets ................................... $ 84,675,846 $ 82,859,358
============ ============
LIABILITIES
- -----------
Deposits:
Demand deposits ................................ $ 17,184,599 $ 14,238,948
NOW accounts ................................... 10,639,109 11,125,578
Money market accounts .......................... 9,768,160 8,621,852
Savings deposits ............................... 4,270,589 3,635,619
Time deposits under $100,000 ................... 26,998,234 29,279,400
Time deposits $100,000 and over ................ 5,836,768 6,197,891
------------ ------------
Total deposits ............................. 74,697,459 73,099,288
Securities sold under agreements to repurchase ...... 1,482,278 1,326,473
Accrued interest payable ............................ 389,490 457,407
Other liabilities ................................... 99,032 353,704
------------ ------------
Total liabilities .............................. 76,668,259 75,236,872
------------ ------------
SHAREHOLDERS' EQUITY
- --------------------
Common stock, $.01 par value, 10,000,000 shares
authorized, 1,210,975 shares outstanding ....... 12,110 12,110
Additional paid-in capital .......................... 10,366,378 10,366,378
Net unrealized securities gains ..................... 7,037 324
Retained deficit .................................... (2,377,938) (2,756,326)
------------ ------------
Total shareholders' equity ..................... 8,007,587 7,622,486
------------ ------------
Total liabilities and shareholders' equity ..... $ 84,675,846 $ 82,859,358
============ ============
</TABLE>
The accompanying Unaudited Notes to 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,
----------------------------
1998 1997
---------- ----------
<S> <C> <C>
INTEREST AND FEE INCOME FROM EARNING ASSETS:
Loans .................................................... $1,122,800 $1,024,439
Federal funds sold ....................................... 58,902 80,872
Investment securities .................................... 353,325 243,512
---------- ----------
Total interest income ............................... 1,535,027 1,348,823
---------- ----------
INTEREST EXPENSE:
Deposits:
NOW accounts ........................................ 37,208 30,571
Money market accounts ............................... 57,483 52,461
Savings deposits .................................... 21,218 15,536
Time deposits under $100,000 ........................ 391,773 371,494
Time deposits $100,000 and over ..................... 80,352 64,630
Other .................................................... 9,027 6,240
---------- ----------
Total interest expense .............................. 597,061 540,932
---------- ----------
NET INTEREST INCOME ...................................... 937,966 807,891
PROVISION FOR LOAN LOSSES ................................ -- --
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ...... 937,966 807,891
---------- ----------
NON-INTEREST INCOME:
Service charge income .................................... 133,864 116,287
Other .................................................... 20,984 20,923
---------- ----------
Total non-interest income ........................... 154,848 137,210
---------- ----------
NON-INTEREST EXPENSES:
Personnel expense ........................................ 331,633 319,393
Occupancy expense ........................................ 147,917 120,852
Data and item processing ................................. 52,155 --
Advertising .............................................. 33,393 24,960
Loan collection expenses ................................. 26,980 22,712
Supplies ................................................. 18,235 18,646
Legal expenses ........................................... 13,512 27,732
Other .................................................... 150,601 133,503
---------- ----------
Total non-interest expenses ......................... 774,426 667,798
---------- ----------
INCOME BEFORE INCOME TAXES ............................... 318,388 277,303
BENEFIT FOR INCOME TAXES ................................. 60,000 30,000
---------- ----------
NET INCOME ............................................... $ 378,388 $ 307,303
========== ==========
NET INCOME PER SHARE:
Basic ............................................... $ .31 $ .25
========== ==========
Diluted ............................................. $ .30 $ .25
========== ==========
Weighted average number of common shares ................. 1,210,975 1,210,975
========== ==========
</TABLE>
The accompanying Unaudited Notes to 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,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Interest received .................................... $ 1,680,625 $ 1,332,965
Non-interest income .................................. 154,848 137,210
Interest paid ........................................ (664,978) (598,032)
Personnel expenses ................................... (331,633) (319,393)
Other operating expenditures ......................... (413,340) (282,088)
----------- -----------
Net cash provided by operating activities ............ 425,522 270,662
----------- -----------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Investments available-for-sale:
Purchases ....................................... (1,994,375) (1,973,603)
Maturities ...................................... 5,095,952 --
Investments held-to-maturity:
Purchases ....................................... (503,750) --
Maturities ...................................... 1,292,947 332,271
Proceeds from the sales of other real estate owned ... 107,303 --
Increase in loans .................................... (2,683,639) (2,102,650)
Increase in premises and equipment ................... (635,766) (1,885)
----------- -----------
Net cash provided by (used in) investing activities .. 678,672 (3,745,867)
----------- -----------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Increase (Decrease) in:
Demand deposits ................................. 2,945,651 (1,275,083)
NOW accounts .................................... (486,469) 1,547,842
Money market accounts ........................... 1,146,308 35,642
Savings deposits ................................ 634,970 300,873
Time deposits ................................... (2,642,289) 1,203,976
Securities sold under agreements to repurchase ....... 155,805 59,619
Dividends paid ....................................... (242,195) --
----------- -----------
Net cash provided by financing activities ............ 1,511,781 1,872,869
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ................................ 2,615,975 (1,602,336)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ..... 6,999,112 9,842,206
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ........... $ 9,615,087 $ 8,239,870
=========== ===========
</TABLE>
The accompanying Unaudited Notes to 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 operating activities
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1998 1997
--------- ---------
<S> <C> <C>
Net income ............................................ $ 378,388 $ 307,303
Adjustments:
Depreciation and amortization .................... 45,853 30,379
Benefit for income taxes ......................... (60,000) (30,000)
Decrease (Increase) in:
Accrued interest receivable .................. 145,598 (15,858)
Other assets ................................. (3,923) 11,137
Increase (Decrease) in:
Accrued interest payable ..................... (67,917) (57,100)
Other liabilities ............................ (12,477) 24,801
--------- ---------
Net cash provided by operating activities ............. $ 425,522 $ 270,662
========= =========
Supplemental schedule of non-cash activities:
Loans transferred to other real estate owned ..... $ 111,788 $ --
Net unrealized securities gains (losses) ......... 10,827 (49,768)
</TABLE>
The accompanying Unaudited Notes to Consolidated Financial Statements are an
integral part of these financial statements.
6
<PAGE> 7
SOUTH FLORIDA BANK HOLDING CORPORATION
UNAUDITED NOTES TO 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"), South Florida Bank (the
"Bank"), 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, 1998 and December 31, 1997, and the results of operations for the three
months ended March 31, 1998 and 1997, and cash flows for the three months ended
March 31, 1998 and 1997. The results of operations for the three months ended
March 31, 1998 are not necessarily indicative of the results which may be
expected for the entire fiscal year.
Net Income Per Share
For the three months ended March 31, 1998 and 1997, the reconciliation of
the denominators of the basic and diluted per-share computations was as follows:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Common shares ..................... 1,210,975 1,210,975
Stock options ..................... 30,858 14,207
--------- ---------
Diluted shares .................... 1,241,833 1,225,182
========= =========
</TABLE>
NOTE B-INVESTMENTS AVAILABLE-FOR-SALE AND INVESTMENTS HELD-TO-MATURITY
At March 31, 1998 and December 31, 1997, 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:
<TABLE>
<CAPTION>
GROSS GROSS CARRYING
AMORTIZED UNREALIZED UNREALIZED VALUE
INVESTMENTS AVAILABLE-FOR-SALE: COST GAINS LOSSES (FAIR VALUE)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1998
- ----
U.S. Agency obligations due:
In one year or less ............... $ 2,501,345 $ 730 $ (5,825) $ 2,496,250
After one year through five years . 10,981,056 17,527 (1,083) 10,997,500
----------- ----------- ----------- -----------
Total investments
available-for-sale ............ $13,482,401 $ 18,257 $ (6,908) $13,493,750
=========== =========== =========== ===========
1997
- ----
U.S. Agency obligations due:
In one year or less ............... $ 2,502,245 $ 70 $ (5,440) $ 2,496,875
After one year through five years.. 14,081,733 15,756 (9,864) 14,087,625
----------- ----------- ----------- -----------
Total investments
available-for-sale ............ $16,583,978 $ 15,826 $ (15,304) $16,584,500
=========== =========== =========== ===========
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
CARRYING
VALUE GROSS GROSS ESTIMATED
(AMORTIZED UNREALIZED UNREALIZED MARKET
INVESTMENTS HELD-TO-MATURITY: COST) GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1998
- ----
U.S. Agency obligations due
after one year through five years.. $5,430,751 $ 16,942 $ -- $5,447,693
Collateralized mortgage obligations
due after ten years ............... 1,747,320 5,670 (1,567) 1,751,423
---------- ---------- ---------- ----------
Total investments held-to-maturity ..... $7,178,071 $ 22,612 $ (1,567) $7,199,116
========== ========== ========== ==========
1997
- ----
U.S. Agency obligations due:
In one year or less ............... $1,000,000 $ -- $ -- $1,000,000
After one year through five years.. 5,125,282 12,536 (10) 5,137,808
Collateralized mortgage obligations
due after ten years ............... 1,841,986 4,016 (3,485) 1,842,517
---------- ---------- ---------- ----------
Total investments held-to-maturity ..... $7,967,268 $ 16,552 $ (3,495) $7,980,325
========== ========== ========== ==========
</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
CAPITAL RESOURCES
South Florida Bank Holding Corporation's (the "Holding Corporation") total
shareholders' equity was $8.0 million and $7.6 million as of March 31, 1998 and
December 31, 1997, respectively. This increase was the result of 1998's net
income of $378,000 and the $7,000 increase in the net unrealized securities
gains (losses) to March 31, 1998 from December 31, 1997 South Florida Bank's
(the "Bank") total shareholder's equity was $7.6 million and $7.2 million as of
March 31, 1998 and December 31, 1997, respectively. The increase in the Bank's
shareholder's equity was the result of the Bank's net income of $387,000 and the
$7,000 increase in the net unrealized securities gains (losses) to March 31,
1998 from December 31, 1997.
The Bank's total risk-based capital (total capital to risk-weighted
assets), Tier 1 risk-based capital (Tier 1 capital to risk-weighted assets) and
leverage (Tier 1 capital to total average assets during the three months ended
as of the respective periods) 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, 1997 ............. 15.46 14.20 8.55
March 31, 1998................. 15.55 14.30 9.02
</TABLE>
FINANCIAL CONDITION
Consolidated total assets of the Holding Corporation, its subsidiary the
Bank, and the Bank's wholly-owned subsidiaries, New Town Properties, Inc. and
Valu Prop, Inc. (collectively, the "Company") increased to $84.7 million
8
<PAGE> 9
as of March 31, 1998, from $82.9 million as of December 31, 1997, an increase of
$1.8 million or 2.19%. The Bank's advertising campaign, coupled with an officer
calling program, resulted in an increase in total assets and deposits. 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 $77.7 million as of March
31, 1998 from $75.4 million as of December 31, 1997, an increase of $2.3 million
or 3.14%. 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 $7.0 million as of March 31, 1998 from $7.5 million as of
December 31, 1997, a decrease of $552,000 or 7.37%.
Net loans increased to $51.4 million as of March 31, 1998 from $48.8
million as of December 31, 1997, an increase of $2.6 million or 5.31%. Mortgage
loans which increased $2.6 million were the primary components of outstanding
loans. During the three months ended March 31, 1998 and 1997, the Bank
originated $4.9 million and $4.3 million of loans and had loan repayments of
$2.2 million and $2.2 million, respectively. Management's strategy is to lend to
small-to-medium sized businesses.
The investment portfolio decreased to $26.3 million as of March 31, 1998
from $26.6 million as of December 31, 1997, a decrease of $223,000 or .84%. The
proceeds from the decrease in investments and the increase in deposits were
primarily used to fund the increase in loans.
Cash and due from banks decreased to $4.0 million as of March 31, 1998 from
$5.0 million as of December 31, 1997, or a decrease of $1.0 million or 20.82%.
This decrease resulted primarily from the decrease in funds on deposit with
other banks.
Premises and equipment increased to $1.2 million as of March 31, 1998 from
$590,000 as of December 31, 1997, an increase of $590,000 or 100.01%. This
increase resulted primarily from the excess of the cost of purchasing the main
office in February, 1998, over depreciation expense of $46,000 during the three
months ended March 31, 1998. On March 15, 1998, the Bank entered into a Contract
for Sale and Purchase to acquire for $675,000 land on which the Bank intends to
build a branch office. The contract, which is subject to a number of conditions,
calls for a closing prior to June 17, 1998.
Deposits increased to $74.7 million as of March 31, 1998 from $73.1 million
as of December 31, 1997, an increase of $1.6 million or 2.19%. Core deposits
increased to $68.9 million as of March 31, 1998 from $66.9 million as of
December 31, 1997, an increase of $2.0 million or 2.93%. This increase in core
deposits primarily reflected deposit accounts opened as a result of the
advertising campaign and the officer calling program. As of March 31, 1998 and
December 31, 1997, the ratio of net loans to deposits was 68.83% and 66.79%,
respectively.
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.
9
<PAGE> 10
For the three months ended March 31, 1998 and 1997, the Bank's average
statements of financial condition, interest income and expense, and yields
earned and rates paid were as follows:
AVERAGE BALANCES, INTEREST YIELDS AND RATES
<TABLE>
<CAPTION>
1998 1997
------------------------------------------ ----------------------------------------
Average Yield/ Average Yield/
ASSETS: Balance Interest Rate Balance Interest Rate
- ------- ----------- ------------ ------- ----------- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Loans:
Commercial ............................. $ 9,264,581 $ 219,449 9.61% $ 8,017,358 $ 206,620 10.45%
Mortgage (a) ........................... 33,462,373 729,880 8.85 30,848,314 672,822 8.85
Installment ............................ 4,872,793 110,091 9.16 3,571,240 73,873 8.39
Other .................................. 3,047,324 63,380 8.43 2,968,014 71,124 9.72
------------ ------------ ---- ------------ ------------ -----
Total loans, net of unearned income (b) ... 50,647,071 1,122,800 8.99 45,404,926 1,024,439 9.15
Investment securities-all taxable ......... 23,305,321 353,325 6.06 16,783,278 243,512 5.80
Federal funds sold ........................ 4,190,612 58,902 5.70 6,300,590 80,872 5.21
------------ ------------ ---- ------------ ------------ -----
Total earning assets (c) .................. 78,143,004 $ 1,535,027 7.97% 68,488,794 $ 1,348,823 7.99%
Cash and due from banks ................... 3,118,985 ============ ==== 3,500,989 ============ =====
Other assets .............................. 2,755,219 1,921,787
Allowance for loan losses ................. (910,938) (912,858)
Total assets .............................. $ 83,106,270 $ 72,998,712
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
- -------------------------------------
Interest-bearing deposits:
NOW accounts ........................... $ 10,788,155 $ 37,208 1.40% $ 9,257,681 $ 30,571 1.34%
Money market ........................... 10,354,865 60,919 2.39 8,980,871 55,462 2.50
Savings ................................ 3,888,826 21,218 2.21 2,835,973 15,536 2.22
Time deposits under $100,000 ........... 27,903,545 391,773 5.69 26,297,493 371,494 5.73
Time deposits $100,000 and over ........ 5,880,679 80,352 5.54 4,673,473 64,630 5.61
------------ ------------ ---- ------------ ------------ -----
Total interest-bearing deposits ........... 58,816,070 591,470 4.08 52,045,491 537,693 4.19
Sweep accounts ............................ 1,206,421 9,027 3.03 803,641 6,240 3.15
------------ ------------ ---- ------------ ------------ -----
Total interest-bearing liabilities ........ 60,022,491 $ 600,497 4.06% 52,849,132 $ 543,933 4.17%
Demand deposits ........................... 15,096,398 ============ ==== 13,543,554 ============ =====
Other liabilities ......................... 602,673 486,535
Shareholders' equity ...................... 7,384,708 6,119,491
Total ..................................... $ 83,106,270 $ 72,998,712
============ ============
SPREAD AND INTEREST DIFFERENTIAL:
- ---------------------------------
Interest rate spread ...................... 3.91% 3.82%
==== ======
Excess of total earning assets over
total interest-bearing liabilities ..... $ 18,120,513 $ 15,639,662
============ ============
Net yield on interest-earnings assets ..... $ 934,530 4.85% $ 804,890 4.77%
============ ==== ============ =====
</TABLE>
- -----------------------
(a) Interest income on mortgage loans included loan fees recognized as
income of $3,000 and $4,000 during the three moths ended March 31, 1998
and 1997, 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 31, 1998 and December 31, 1997, the
composition of the Bank's loan portfolio was as follows:
10
<PAGE> 11
<TABLE>
<CAPTION>
1998 1997
----------------------- ----------------------
% OF % OF
TOTAL TOTAL
AMOUNT LOANS AMOUNT LOANS
------------ ------ --------- ------
<S> <C> <C> <C> <C>
Commercial ................... $ 9,167,134 17.51% $ 9,289,611 18.69%
Mortgage: (a)
Construction ............ 1,187,950 2.27 961,264 1.93
Non-construction ........ 33,887,727 64.74 31,508,547 63.39
Installment (b) .............. 5,087,455 9.72 4,781,456 9.62
Other loans (c) .............. 3,011,377 5.76 3,165,509 6.37
------------ ------ --------- ------
Total loans, net of
unearned income ......... 52,341,643 100.00% 49,706,387 100.00%
====== ======
Allowance for loan losses .... (925,954) 1.77% (882,034) 1.77%
------------ ====== ----------- ======
Loans, net ................... $ 51,415,689 $48,824,353
============ ===========
</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
As of March 31, 1998, the allowance for loan losses was $926,000 or 1.77%
of total loans, net of unearned income, as compared to $882,000 or 1.77% as of
December 31, 1997. For the three months ended March 31, 1998 and 1997, the
Bank's loan loss experience and its provision for loan losses were as follows:
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Average loans outstanding ............................. $ 50,647,071 $ 45,404,926
============ ============
Net loans at end of period ............................ $ 51,415,689 $ 45,253,356
============ ============
Allowance for loan losses at beginning of period ...... $ 882,034 $ 904,562
Loans charged-off:
Commercial ....................................... 534 --
Installment ...................................... 683 --
Other loans ...................................... 1,758 2,271
------------ ------------
Total loans charged-off ............................... 2,975 2,271
------------ ------------
Recoveries of loans previously charged-off:
Commercial ....................................... 40,213 18,554
Mortgage ......................................... 1,966 983
Installment ...................................... 4,149 74
Other loans ...................................... 567 226
------------ ------------
Total recoveries ...................................... 46,895 19,837
------------ ------------
Net loan charged-offs (recoveries) .................... (43,920) (17,566)
Provision charged to expense .......................... -- --
------------ ------------
Allowance for loan losses at end of period ............ $ 925,954 $ 922,128
============ ============
Ratio of net charge-offs during period
to average net loans outstanding ................. (.35)% (.15)%
Allowance for loan losses as a percentage of loans,
net of unearned income at end of period .......... 1.77% 2.00%
</TABLE>
11
<PAGE> 12
During 1998, three loans were charged-off, none of which exceeded $2,000,
and there were 11 loans with recoveries, none of which exceeded $23,000.
Non-performing assets decreased to $793,000 as of March 31, 1998, as
compared to $858,000 as of December 31, 1997, or a decrease of $65,000 or 7.58%.
The decrease during 1998 resulted primarily from the decrease in non-accruing
loans. The ratio of non-performing loans as a percent of total loans, net of
unearned income, was .56% and .69% as of March 31, 1998 and December 31, 1997,
respectively. The allowance for loan losses as a percentage of non-performing
loans was 315.24% and 256.59% as of March 31, 1998 and December 31, 1997,
respectively. As of March 31, 1998 and December 31, 1997, the Bank's
non-performing loans and repossessed assets were as follows:
<TABLE>
<CAPTION>
1998 1997
------------------ ----------------
% OF % OF
TOTAL TOTAL
AMOUNT LOANS AMOUNT LOANS
------ ----- ------ -----
<S> <C> <C> <C> <C>
Non-accruing loans:
Under 90 days delinquent ................. $122,796 .23% $154,278 .31%
90 or more days delinquent ............... 170,932 .33 189,470 .38
-------- --- -------- ---
Total non-accruing loans .................... $293,728 .56% $343,748 .69%
======== === ======== ===
Total real estate owned ..................... $499,211 $514,211
-------- --------
Total non-performing assets ................. $792,939 $857,959
======== ========
Loans delinquent and accruing:
30 to 59 days ............................ $ 1,053 --% $ 12,648 .03%
60 to 89 days ............................ 4,859 .01 20,638 .04
-------- --- -------- ---
Total ................................ $ 5,912 .01% $ 33,286 .07%
======== === ======== ===
Total delinquencies 30 days and over ........ $299,640 .57% $377,034 .76%
======== === ======== ===
</TABLE>
As of March 31, 1998 and December 31, 1997, the Bank did not have any
troubled debt restructurings and no loans were over 90 days delinquent and still
accruing interest. Non-accruing loans totaled $294,000 as of March 31, 1998 as
compared to $344,000 as of December 31, 1997, a decrease of $50,000 or 14.55%.
The largest non-accruing loan as of March 31, 1998 was a $91,000 first mortgage
loan secured with commercial real estate. As of March 31, 1998, 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 1998.
LIQUIDITY
During the three months ended March 31, 1998 and 1997, investing activities
provided (used) $679,000 and $(3.7) million, respectively, of cash. During the
three months ended March 31, 1998 and 1997, financing activities provided $1.5
million and $1.9 million, respectively, of cash. These activities primarily
resulted from the Bank focusing its efforts on growth through an advertisement
campaign and an officer calling campaign.
RESULTS OF OPERATIONS
SUMMARY
The Company's net income was $378,000 for the three months ended March 31,
1998, or $.31 per basic share, as compared to $307,000 for the three months
ended March 31, 1997, or $.25 per basic share. For the three months
ended March 31, 1998 and 1997, the Company's performance ratios were as follows:
12
<PAGE> 13
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Return on average assets............................. 1.82% 1.68%
Return on average equity............................. 20.50 20.09
Average equity to average assets..................... 8.89 8.38
</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
increase (decrease) during 1998 from 1997 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/
ASSETS: VOLUME RATE RATE TOTAL
- ------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Loans:
Commercial ........................ $ 32,589 $ (16,946) $ (2,814) $ 12,829
Mortgage .......................... 57,806 41 (789) 57,058
Installment ....................... 27,297 6,907 2,014 36,218
Other ............................. 1,927 (9,524) (147) (7,744)
--------- --------- --------- ---------
Total loans ................... 119,619 (19,522) (1,736) 98,361
Investment securities .................. 94,630 10,934 4,249 109,813
Federal funds sold ..................... (27,459) 7,794 (2,305) (21,970)
--------- --------- --------- ---------
Total interest income .................. 186,790 (794) 208 186,204
--------- --------- --------- ---------
LIABILITIES:
Interest-bearing deposits:
NOW accounts ...................... 5,124 1,377 136 6,637
Money market accounts ............. 8,603 (2,663) (483) 5,457
Savings deposits .................. 5,848 (63) (103) 5,682
Time deposits:
Under $100,000 ................ 23,003 (2,302) (422) 20,279
$100,000 and over ............. 16,926 (784) (420) 15,722
--------- --------- --------- ---------
Total interest-bearing deposits ... 59,504 (4,435) (1,292) 53,777
Securities sold under agreements
to repurchase ..................... 3,171 (230) (154) 2,787
--------- --------- --------- ---------
Total interest expense ................. 62,675 (4,665) (1,446) 56,564
--------- --------- --------- ---------
Net interest income .................... $ 124,115 $ 3,871 $ 1,654 $ 129,640
========= ========= ========= =========
</TABLE>
The Bank's net interest income increased to $935,000 during 1998 from
$805,000 during 1997, an increase of $130,000 or 16.11%. The increase was
primarily due to the increase in average interest-earning assets and average
interest-bearing liabilities. The 11.68% volume increase in 1998 from 1997 in
loan interest income was primarily attributable to the 10.35% increase in
average loans and the 20.71% volume increase in 1998 from 1997 in investment
interest income was primarily attributable to the 16.05% increase in average
investments. The 11.52% volume increase in 1998 from 1997 in interest expense
was primarily attributable to the 11.95% increase in average interest-bearing
liabilities. The yield on the loan portfolio decreased 16 basis points, while
the yield on the investment portfolio increased 30 basis points. The interest
rates paid on interest-bearing liabilities decreased 12 basis points. The result
was an increase in the net interest margin to 4.85% during 1998 from 4.77%
during 1997.
13
<PAGE> 14
PROVISION FOR LOAN LOSSES
The Bank made no provisions for loan losses during the three months ended
March 31, 1998 and 1997. Net loan recoveries during 1998 and 1997 were $44,000
and $18,000, respectively. 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, 1998 and December 31, 1997, the allowance
for loan losses as a percentage of loans net of unearned income was 1.77% and
1.77%, respectively, and as a percentage of non-accrual loans was 315.24% and
256.59%, respectively.
NON-INTEREST INCOME
Deposit service charge income increased $18,000 or 15.12% to $134,000 (or
.72% of average deposits) during the three months ended March 31, 1998, from
$116,000 (or .71% of average deposits) during the three months ended March 31,
1997. This increase primarily resulted from the increase in the volume of
overdraft charges.
NON-INTEREST EXPENSE
Personnel expenses increased to $332,000 during the three months ended
March 31, 1998, from $319,000 during the three months ended March 31, 1997, or
an increase of $13,000 or 3.83%. This increase primarily resulted from salaries
paid to the employees at the Bank's Iona branch which opened in July, 1997, as
well as compensation increases for existing employees. The monthly average of
full-time equivalent employees during 1998 was 36.4 as compared to 35.6
employees during 1997. As of March 31, 1998 and December 31, 1997, the Bank
employed 37 and 33 full-time and two and three part-time employees,
respectively.
Occupancy expense increased $27,000 or 22.40% during the three months ended
March 31, 1998 to $148,000 from $121,000 during the three months ended March 31,
1997. This increase primarily resulted from additional costs of the new branch
and computers. Item and data processing was $52,000 for the three months ended
March 31, 1998, as compared to no expense for the three months ended March 31,
1997. During the last half of 1997, the Bank out sourced its item and data
processing.
Advertising expense increased to $33,000 during the three months ended
March 31, 1998 from $25,000 during the three months ended March 31, 1997, or an
increase of $8,000 or 33.79%. This increase primarily resulted from the cost of
the advertising campaign.
Legal expenses decreased to $14,000 during the three months ended March 31,
1998, from $28,000 during the three months ended March 31, 1997, or a decrease
of $14,000 or 51.28%. This decrease reflected the reduction in collection
actions handled by the Bank's attorneys.
Other operating expenses increased to $151,000 during the three months
ended March 31, 1998, from $134,000 during the three months ended March 31,
1997, or an increase of $17,000 or 12.81%. This increase primarily resulted from
the increased costs associated with the increase in the size of the Bank, as
well as the additional banking office.
INCOME TAXES
During the three months ended March 31, 1998 and 1997, the Company had a
benefit for income taxes of $60,000 and $30,000 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, 1998, the Company filed no reports on
Form 8-K.
Ex. 27 Financial Data Schedule is included herewith.
14
<PAGE> 15
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: May 11, 1998 By: /s/ William P. Valenti
------------ -------------------------
William P. Valenti, President and Chief
Executive Officer (Principal financial
officer)
Date: May 11, 1998 By: /s/ Jim Booth
------------ ------------------------
Jim Booth, Vice President and Controller
(Principal accounting officer)
15
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SOUTH FLORIDA BANK HOLDING CORPORATION FOR THE PERIOD
ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 3,960,087
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,655,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,493,750
<INVESTMENTS-CARRYING> 7,178,071
<INVESTMENTS-MARKET> 7,199,116
<LOANS> 51,415,689
<ALLOWANCE> 925,954
<TOTAL-ASSETS> 84,675,846
<DEPOSITS> 74,697,459
<SHORT-TERM> 1,482,278
<LIABILITIES-OTHER> 488,522
<LONG-TERM> 0
0
0
<COMMON> 10,378,488
<OTHER-SE> (2,370,901)
<TOTAL-LIABILITIES-AND-EQUITY> 84,675,846
<INTEREST-LOAN> 1,122,800
<INTEREST-INVEST> 353,325
<INTEREST-OTHER> 58,902
<INTEREST-TOTAL> 1,535,027
<INTEREST-DEPOSIT> 588,034
<INTEREST-EXPENSE> 597,061
<INTEREST-INCOME-NET> 937,966
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 774,426
<INCOME-PRETAX> 318,388
<INCOME-PRE-EXTRAORDINARY> 378,388
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 378,388
<EPS-PRIMARY> .31
<EPS-DILUTED> .30
<YIELD-ACTUAL> .080
<LOANS-NON> 293,728
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 882,034
<CHARGE-OFFS> 2,975
<RECOVERIES> 46,895
<ALLOWANCE-CLOSE> 925,954
<ALLOWANCE-DOMESTIC> 925,954
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
