- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
July 1, 1997
1ST UNITED BANCORP
(Exact Name of Registrant as Specified in its Charter)
FLORIDA 0-20254 65-0178023
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
980 N. FEDERAL HIGHWAY, BOCA RATON, FLORIDA 33432
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (561) 392-4000
- --------------------------------------------------------------------------------
<PAGE>
ITEM 2 ACQUISITION
On April 22, 1997, 1st United Bancorp ("Bancorp") and 1st United Bank
executed an agreement (the "Agreement") to acquire Seaboard Savings Bank, F.S.B.
("Seaboard"). A Form 8-K dated April 22, 1997 was filed upon the signing of the
Agreement.
On July 1, 1997 the transaction was consummated. Under the terms of the
Agreement, Bancorp issued approximately 260,000 shares of Bancorp Common Stock
and paid $4.125 million to the shareholders of Seaboard. The source of the cash
portion of the merger consideration was the working capital of Bancorp. The
acquisition is anticipated to be accounted for as a "purchase" under generally
accepted accounting principles.
As of March 31, 1997, Seaboard had total assets of approximately $75
million, total deposits of approximately $69 million and shareholders' equity of
approximately $5.3 million. Prior to the acquisition Seaboard served Stuart,
Florida with its banking center at 715 Colorado Avenue, Stuart, Florida and this
banking center will continue to be operated as a branch of 1st United Bank.
<PAGE>
Item 7 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
1. Audited financial statements for Seaboard Savings Bank, F.S.B.
for the years ended December 31, 1996 and 1995.
2. Interim financial statements for Seaboard Savings Bank, F.S.B.
for the period ended March 31, 1997.
(b) Pro Forma Financial Information
(c) Exhibits
2.1 Merger Agreement between 1st United Bancorp, 1st United Bank and
Seaboard Savings Bank, F.S.B. dated April 22, 1997 ("Merger
Agreement").*
2.2 Amendment No. 1 to the Merger Agreement.
*Incorporated by reference from the Form 8-K dated April 22, 1997
announcing the signing of the Merger Agreement.
<PAGE>
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.
1ST UNITED BANCORP
By: /s/ Warren S. Orlando
--------------------------------
Warren S. Orlando
President & CEO
Date: July 1, 1997
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2.2 Amendment No. 1 to the Merger Agreement.
<PAGE>
ITEM 7 (a)(l)
SEABOARD SAVINGS BANK, F.S.B.
Stuart, Florida
Audited Financial Statements
December 31, 1996 and 1995 and For
the Years then Ended
(Together with Independent Auditors' Report)
[LOGO] HACKER, JOHNSON, COHEN & GRIEB PA
=================================
Certified Public Accountants
and Consultants
<PAGE>
[HACKER, JOHNSON, COHEN & GRIEB PA LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Seaboard Savings Bank, F.S.B.
Stuart, Florida:
We have audited the balance sheet of Seaboard Savings Bank, F.S.B. (the "Bank")
at December 31, 1996, and the related statements of earnings, stockholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The financial
statements of the Bank at December 31, 1995 and for the year then ended were
audited by other auditors whose report, dated March 25, 1996 expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1996 financial statements referred to above, present fairly,
in all material respects, the financial position of the Bank at December 31,
1996, and the results of its operations and cash flows for the year then ended,
in conformity with generally accepted accounting principles.
/s/ Hacker, Johnson, Cohen & Grieb
- ----------------------------------
HACKER, JOHNSON, COHEN & GRIEB
Tampa, Florida
March 14, 1997
<PAGE>
<TABLE>
<CAPTION>
SEABOARD SAVINGS BANK, F.S.B.
Balance Sheets
DECEMBER 31,
----------------------------
1996 1995
------------ ----------
<S> <C> <C>
Assets
Cash and due from banks $ 4,407,324 4,177,462
Securities available for sale 18,497,434 14,181,938
Loans receivable, net of allowance for loan losses of $355,327
in 1996 and $565,438 in 1995 55,054,179 59,804,195
Restricted securities-
Federal Home Loan Bank of Atlanta stock;, at cost 473,200 439,100
Accrued interest receivable 560,556 494,307
Premises and equipment 266,640 312,172
Foreclosed real estate 27,493 140,537
Refundable income taxes 176,592
Deferred income taxes 47,500 18,000
Other assets 51,976 39,344
------------ ----------
Total $ 79,562,894 79,607,055
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits 721,982 2,338,744
Savings and NOW deposits 7,801,127 6,622,344
Money market deposits 3,878,248 4,062,540
Time deposits 54,702,836 59,801,600
------------ ----------
Total deposits 67,104,193 72,825,228
Federal Home Loan Bank advance 6,700,000
Advance payments by borrowers for taxes and insurance 107,856 161,738
Accounts payable and accrued expenses 93,711 140,977
Current income taxes - 68,068
Official checks 251,922 1,341,515
------------ ----------
Total liabilities 74,257,682 74,537,526
------------ ----------
Commitments and contingencies (Note 4, 8 and 11)
Stockholders' equity:
Common stock, $1 par value; 3,000,000 shares
authorized; issued and outstanding
925,099 in 1996 and 889,099 in 1995 925,099 889,099
Additional paid-in capital 4,151,472 3,993,072
Retained earnings 459,593 217,514
Unrealized depreciation on securities available for sale,
net of taxes (230,952) (30,156)
------------ ----------
Total stockholders' equity 5,305,212 5,069,529
------------ ----------
Total $ 79,562,894 79.607,055
============ ==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
SEABOARD SAVINGS BANK, F.S.B.
Statements of Earnings
YEAR ENDED DECEMBER 31,
----------------------------
1996 1995
----------- ---------
<S> <C> <C>
Interest income:
Loans receivable $ 4,736,499 4,712,205
Securities available for sale 1,031,143 739,065
Interest-bearing deposits 27,186 58,788
Other interest earnings assets 33,773 31,174
----------- ---------
Total interest income 5,828,601 5,541,232
----------- ---------
Interest expense:
Deposits 3,362,708 3,502,385
Federal Home Loan Bank advance 113,919 15,818
----------- ---------
Total interest expense 3,476,627 3,518,203
----------- ---------
Net interest income 2,351,974 2,023,029
----------- ---------
Provision for loan losses 215,000 -
----------- ---------
Net interest income after provision for loan losses 2,136,974 2,023,029
----------- ---------
Noninterest income:
Fees and service charges on deposit accounts 120,780 152,072
Loss on sale of securities available for sale (55) (47,022)
Gain on sale of mortgage loans 29,167 22,561
Other 89,234 108,367
----------- ---------
Total noninterest income 239,126 235,978
----------- ---------
Noninterest expenses:
Salaries and employee benefits 741,528 728,291
Occupancy expense 202,209 202,197
Deposit insurance premiums 204,171 204,582
SAIF recapitalization assessment 447,855 -
Professional fees 80,083 113,667
Data processing services 85,923 107,011
Other 282,002 223,054
----------- ---------
Total noninterest expenses 2,043,771 1,578,802
----------- ---------
Earnings before income taxes 332,329 680,205
Income taxes 90,250 212,000
----------- ---------
Net earnings $ 242,079 468,205
=========== =========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
SEABOARD SAVINGS BANK, F.S.B.
Statements of Stockholders' Equity
NET
UNREALIZED
DEPRECIATION
ON
ADDITIONAL SCCURITIES TOTAL
PREFERRED COMMON PAID-IN RETAINED AVAILABLE STOCKHOLDERS
STOCK STOCK CAPITAL EARNINGS FOR SALE EQUITY
--------- ------ ---------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $ 5,050 370,000 3,830,810 169,276 (1,105,627) 3,269,509
Net earnings -- -- -- 468,205 -- 468,205
Common stock split -- 370,000 -- (370,000) -- --
Dividends on preferred stock -- -- -- (49,967) -- (49,967)
Issuance of common stock, net
of costs -- 92,726 408,585 -- -- 501,311
Redemption of preferred stock (1,950) -- (193,050) -- -- (195,000)
Conversion of preferred stock (3,100) 56,373 (53,273) -- -- --
Net change in unrealized
depreciation on
securities available
for sale, net of taxes -- -- -- -- 1,075,471 1,075,471
---------- ---------- ---------- ---------- ---------- ----------
Balance at December 31, 1995 -- 889,099 3,993,072 217,514 (30,156) 5,069,529
Net earnings -- -- -- 242,079 -- 242,079
Exercise of stock options -- 36,000 158,400 -- -- 194,400
Net change in unrealized
depreciation on
securities available
for sale, net of
taxes -- -- -- -- (200,796) (200,796)
---------- ---------- ---------- ---------- ---------- ----------
Balance at December 31, 1996 $ -- 925,099 4,151,472 459,593 (230,952) 5,305,212
========== ========== ========== ========== ========== ==========
See accompanying notes to financial sta~ements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SEABOARD SAVINGS BANK, 17.S.B.
Statements of Cash Flows
YEAR ENDED DECEMBER 31.
-----------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 242,079 468,205
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for loan losses 215,000
Net deferred loan fees 7,434 6,275
Net amortization of discounts and premiums -- 41,999
Depreciation and amortization 109,246 61,501
Proceeds from sale of loans held for sale 3,458,297 2,286,858
Originations and purchases of loans held for sale (3,429,130) (2,264,297)
Gain on sale of loans (29,167) (22,561)
Increase in accrued interest receivable (66,2495 (34,454)
Increase in refundable income taxes (176,592)
Decrease in other assets 12,632 19,055
(Decrease) increase in accounts payable, accrued expenses
and of ficial checks (1,136,859 478,482
Decrease in current income taxes (68,068) --
Deferred income tax provision (credit) 91,500 (43,000)
Loss on sale of secunt~es available for sale 55 47,022
Loss on sale of foreclosed real estate 20,391 32,607
Write-down on foreclosed real estate 68,927 --
----------- -----------
Net cash (used in) provided by operating activities (680,504) 1,077,692
----------- -----------
Cash flows from investing activities:
Net decrease (increase) in loans 3,636,162 (1,457,919)
Purchases of securities available for sale (11,736,920) (6,863,127)
Proceeds from maturities and repayments of securities
available for sale 4,070,311 3,450,922
Proceeds from sale of securities available for sale 3,003,998 2,019,127
Proceeds from the sale of foreclosed real estate 915,146 160,286
Purchase of premises and equipment (63,714) (105,340)
Purchase of Federal Home Loan Bank stock (34,100) (46,200)
Additions to foreclosed real estate -- (8,094)
----------- -----------
Net cash used by investing activities (209,117) (2,850,345)
----------- -----------
Cash flows from financing activities:
Net decrease in demand, savings, NOW and money market deposits (622,271) (1,252,396)
Net (decrease) increase in time deposits (5,098,764) 6,540,080
Repayment of Federal Home Loan Bank advance -- (1,500,000)
Issuance of common stock, net 194,400 501,311
Redemption of preferred stock -- (195,000)
Dividends on preferred stock -- (49,967)
Decrease in advance payments by borrowers for taxes
and insurance (53,882) (9,344)
Proceeds from Federal Home Loan Bank advance 6,700,000 --
----------- -----------
Net cash provided by financing activities 1,119,483 4,034,684
----------- -----------
Increase in cash and cash equivalents 229,862 2,262,031
Cash and due from banks at beginning of year 4,177,462 1,915,431
----------- -----------
Cash and due from banks at end of year $ 4,407,324 4,177,462
=========== ===========
(continued)
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SEABOARD SAVINGS BANK, F.S.B.
Statements of Cash Flows, Continued
YEAR ENDED DECEMBER 31,
---------------------------
1996 1995
----------- ---------
<S> <C> <C>
Supplemental disclosures:
Cash paid during the year for:
Interest $ 3,484,210 3,518,544
=========== =========
Income taxes $ 250,758 381,032
=========== =========
Noncash transactions:
Decrease (increase) in unrealized depreciation on securities
available-for-sale, net of income taxes $ (200,796) 1,075,471
=========== =========
Transfer of loans to foreclosed real estate $ 891,420 196,563
=========== =========
Loans to facilitate sale of foreclosed real estate $ -- 92,000
=========== =========
Conversion of preferred.stock to common stock $ -- 56,373
=========== =========
Common stock split $ -- 370,000
=========== =========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION. Seaboard Savings Bank, F.S.B. (the "Bank") is a
federally-chartered savings bank. The Bank provides a wide range of
banking services to small and middle-market businesses and to individuals
through its banking office located in Stuart, Martin County, Florida.
The accounting and reporting practices of the Bank conform to generally
accepted accounting principles and to general practices within the banking
industry. The following summarizes the more significant of these policies
and practices:
ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from
those estimates.
SECURITIES. The Bank may classify its securities as either trading, held to
maturity or available for sale. Trading securities are held principally
for resale and recorded at their fair values. Unrealized gains and losses
on trading securities are included immediately in earnings.
Held-to-maturity securities are those which the Bank has the positive
intent and ability to hold to maturity and are reported at amortized cost.
Available-for-sale securities consist of securities not classified as
trading securities nor as held-to-maturity securities. Unrealized holding
gains and losses, net of tax, on available-for-sale securities are
reported as a net amount in a separate component of stockholders' equity
until realized. Gains and losses on the sale of available-for-sale
securities are determined using the specific-identification method.
Premiums and discounts on securities available for sale and held to
maturity are recognized in interest income using the interest method over
the period to maturity.
LOANS RECEIVABLE. Loans receivable that management has the intent and
ability to hold for the foreseeable future or until maturity or pay-off
are reported at their outstanding principal adjusted for any charge-offs,
the allowance for loan losses, and any deferred fees or costs on
originated loans and unamortized premiums or discounts on purchased loans.
Loan origination fees and certain direct origination costs are capitalized
and recognized as an adjustment of the yield of the related loan.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they
become due. When interest accrual is discontinued, all unpaid accrued
interest is reversed. Interest income is subsequently recognized only to
the extent cash payments are received.
The allowance for loan losses is increased by charges to earnings and
decreased by charge-offs (net of recoveries). Management's periodic
evaluation of the adequacy of the allowance is based on the Bank's past
loan loss experience, known and inherent risks in the portfolio, adverse
situations that may affect the borrower's ability to repay, the estimated
value of any underlying collateral, and current economic conditions.
(continued)
7
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(1) ORGANIZATION AND SIGNITICANT ACCOUNTING POLICIES, CONTINUED
FORECLOSED REAL ESTATE. Real estate properties acquired through, or in lieu
of, foreclosure are to be sold and are initially recorded at fair value at
the date of foreclosure establishing a new cost basis. After foreclosure,
valuations are periodically performed by management and the real estate is
carried at the lower of carrying amount or fair value less cost to sell.
Revenue and expenses from operations and changes in the valuation
allowance are included in the statements of earnings.
INCOME TAXES. Deferred tax assets and liabilities are reflected at currently
enacted income tax rates applicable to the period in which the deferred
tax assets or liabilities are expected to be realized or settled. As
changes in tax laws or rates are enacted, deferred tax assets and
liabilities are adjusted through the provision for income taxes.
PREMISES AND EQUIPMENT. Premises and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization
are computed on the straight-line method over the estimated useful lives
of the assets.
OFF-BALANCE-SHEET INSTRUMENTS. In the ordinary course of business the Bank
has entered into off-balance-sheet financial instruments consisting of
commitments to extend credit. Such financial instruments are recorded in
the financial statements when they are funded.
FUTURE ACCOUNTING REQUIREMENTS. The FASB has issued Statement of Financial
Accounting Standards No. 125 ("SFAS 125"). This Statement provides
accounting and reporting standards for transfers and servicing of
financial assets as well as extinguishments of liabilities. This Statement
also provides consistent standards for distinguishing transfers of
financial assets that are sales from transfers that are secured
borrowings. SFAS 125 is effective for transfers and servicing of financial
assets as well as extinguishments of liabilities occurring in 1997.
Management does not anticipate SFAS 125 will have a material impact on the
Bank.
RECLASSIFICATION. Certain amounts in the 1995 financial statements have been
reclassified to conform with the 1996 presentation.
(continued)
8
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(2) SECURITIES AVAILABLE FOR SALE
Securities have been classified according to management's intent. The
carrying amount of securities and their approximate fair values are
summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------ ----- ------- ----------
<S> <C> <C> <C> <C>
AVAILABL-FOR-SALE SECURITIES:
AT DECEMBER 31, 1996:
FNMA and FHLMC bonds $ 1,999,469 156 10,641 1,988,984
FHLB and FFCB bonds 5,000,000 -- 44,109 4,955,891
SBA pools 2,321,286 8,330 3,847 2,325,769
----------- ----- ------- ----------
9,320,755 8,486 58,597 9,270,644
----------- ----- ------- ----------
FHLMC collateralized mortgage
obligations 3,738,699 -- 138,230 3,600,469
FNMA collateralized mortgage
obligations 2,961,457 -- 162,849 2,798,608
Mortgage-backed securities 2,846,817 -- 19,104 2,827,713
----------- ----- ------- ----------
9,546,973 -- 320,183 9,226,790
----------- ----- ------- ----------
Total $18,867,728 8,486 378,780 18,497,434
=========== ===== ======= ==========
AT DECEMBER 31, 1995:
U.S. Treasury notes 997,782 5,966 -- 1,003,748
FNMA and FHLMC bonds 1,500,000 -- 8,344 1,491,656
FHLB bond 1,500,000 888 -- 1,500,888
SBA pools 2,807,246 1,653 -- 2,808,899
----------- ----- ------- ----------
6,805,028 8,507 8,344 6,805,191
----------- ----- ------- ----------
FHLMC collateralized mortgage
obligations 3,860,410 -- 15,945 3,844,465
FNMA collateralized mortgage
obligations 3,096,114 -- 31,939 3,064,175
Mortgage-backed securities 395,456 -- -- 395,456
Other 73,281 _ 630 72,651
----------- ----- ------- ----------
7,425,261 _ 48,514 7,376,747
----------- ----- ------- ----------
Total $14,230,289 8,507 56,858 14,181,938
=========== ===== ======= ==========
(continued)
</TABLE>
9
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(2) SECURITIES AVAILABLE FOR SALE, CONTINUED
The scheduled maturities of securities available for sale at December 31,
1996 are summarized as follows:
AVAILABLE FOR SALE
---------------------------
AMORTIZED FAIR
COST VALUE
------------ ----------
Due in one year or less $ -- --
Due after one year through five years 7,364,109 7,312,816
Due after five years through ten years 1,510,674 1,514,678
Due after ten years 445,972 443,150
Mortgage-backed securities and collateralized
mortgage obligations 9,546,973 9,226,790
------------ ----------
Total $ 18,867,728 18,497,434
============ ==========
The following summarizes sales of securities available for sale:
YEAR ENDED DECEMBER 31,
---------------------
1996 1995
---------- ---------
Proceeds from sale of securities available for sale $3,003,998 2,019,127
========== =========
Gross gains from sale of securities available for sale 7,915 --
Gross losses from sale of securities available for sale (7,970) (47,022)
---------- ---------
Net loss $ (55) (47,022)
========== =========
(3) LOANS RECEIVABLE
The components of loans are as follows:
AT DECEMBER 31,
---------------------------
1996 1995
----------- ----------
Mortgage loans:
Residential, one-to-four family permanent $44,697,315 47,272,276
Nonresidential 4,233,357 6,352,795
Residential construction 467,200 900,000
Land 3,582,214 4,126,240
Commercial loans 1,418,792 794,190
Consumer loans 1,216,002 1,594,222
----------- ----------
Total loans receivable 55,614,880 61,039,723
(Deduct) add:
Allowance for loan losses (355,327) (565,438)
Net deferred loan costs 13,562 20,996
Loans in process (218,936) (691,086)
----------- ----------
$55,054,179 59,804,195
=========== ==========
(continued)
10
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(3) LOANS RECEIVABLE, CONTINUED
An analysis of the change in the allowance for loan losses is summarized as
follows:
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995
--------- -------
Balance at beginning of year $ 565,438 522,424
Loans charged-off (480,048) (53,032)
Recoveries 54,937 96,046
Provision for loan losses 215,000 --
--------- -------
Balance at end of year $ 355,327 565,438
========= =======
The following summarizes the amounts of impaired loans:
DECEMBER 31,
1996
------------
Loans identified as impaired:
Gross loans with no related allowance for losses $ --
Gross loans with related allowance for losses recorded 567,872
Less: Allowances on these loans (74,107)
--------
Net investment in impaired loans $493,765
========
The average net investment in impaired loans and interest income recognized
and received on impaired loans is as follows:
YEAR ENDED
DECEMBER 31,
1996
------------
Average investment in impaired loans $ 729,646
=========
Interest income recognized on impaired loans $ 54,960
=========
Interest income received on impaired loans $ 54,960
=========
(continued)
11
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(4) PREMISES AND EQUIPMENT
Premises and equipment is summarized as follows:
AT DECEMBER 31,
---------------------
1996 1995
-------- -------
Cost:
Leasehold improvements $293,485 293,485
Furniture and equipment 382,957 408,263
-------- -------
Total at cost 676,442 701,748
Less accumulated depreciation and amortization 409,802 389,576
-------- -------
Net book value $266,640 312,172
======== =======
The Bank leases its office facility under a noncancelable operating lease.
The lease has a remaining term of four years and two five year renewal
options with rental rates increased yearly based on changes in the
consumer price index. Rent expense was approximately $94,300 and $92,600
for the years ended December 31, 1996 and 1995. Futures minimum lease
payments under these noncancelable operating leases at December 31, 1996
are as follows:
YEAR ENDING DECEMBER 31:
- ------------------------
1997 $ 94,773
1998 94,773
1999 94,773
2000 94,773
--------
Total minimum lease payments $379,092
========
(5) LOAN SERVICING
Mortgage loans serviced for others are not included in the accompanying
balance sheets. The unpaid principal balances of the loans are summarized
as follows:
AT DECEMBER 31,
----------------------
1996 1995
-------- ---------
Mortgage loan portfolio serviced for:
FHLMC $513,786 5,877,101
Others 195,702 1,690,717
-------- ---------
$709,488 7,567,818
======== =========
Custodial escrow balances maintained in
connection with loan servicing $ 919 39,752
======== =========
(continued)
12
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(6) Deposits
The aggregate amount of short-term certificates of deposit with a minimum
denomination of $100,000 was approximately $4,300,000 and $5,300,000 at
December 31, 1996 and 1995, respectively.
At December 31, 1996, the scheduled maturities of time deposits were as
follows:
YEAR ENDIN2 DECEMBER 31, AMOUNT
- ------------------------- -----------
1997 $50,051,614
1998 3,122,867
1999 1,020,162
2000 475,134
2001 and thereafter 33,059
-----------
$54,702,836
===========
(7) FEDERAL HOME LOAN BANK ADVANCES
At December 31, 1996, the Bank had a $6,700,000 advance from the Federal
Home Loan Bank of Atlanta. The advance bears interest at 6.95% and matures
September 24, 1997 and was collateralized by collateralized mortgage
obligations and mortgage-backed securities with carrying values of
$8,287,152.
(8) FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers
and to reduce its own exposure to fluctuations in interest rates. These
financial instruments are commitments to extend credit and may involve, to
varying degrees, elements of credit and interest-rate risk in excess of
the amount recognized in the balance sheet. The contract amounts of these
instruments reflect the extent of involvement the Bank has in these
financial instruments.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit
is represented by the contractual amount of those instruments. The Bank
uses the same credit policies in making commitments as it does for
on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since some of the commitments
are expected to expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. The Bank
evaluates each customer's credit worthiness on a case-by-case basis. The
amount of collateral obtained if deemed necessary by the Bank upon
extension of credit is based on management's credit evaluation of the
counterparty.
(continued)
13
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(8) FINANCIAL INSTRUMENTS, CONTINUED
A summary of the notional amounts of the Bank's financial instruments with
off balance sheet risk at December 31, 1996, follows:
NOTIONAL
AMOUNT
--------
Unfunded loan commitments at variable rates $635,000
========
Available lines of credit $703,000
========
(9) CREDIT RISK
The Bank grants real estate and consumer loans to customers located in
Martin, Palm Beach and St. Lucie Counties, Florida. Therefore, the Bank's
exposure to credit risk is significantly affected by changes in the
economies of the Martin, Palm Beach and St. Lucie Counties.
(10) INCOME TAXES
The provision for income taxes consisted of the following:
YEAR ENDED DECEMBER 31, 1996: CURRENT DEFERRED TOTAL
- ----------------------------- ------- -------- -----
Federal $ 1,000 78,000 79,000
State (2,250) 13,500 11,250
-------- ------- -------
Total (1,250) 91,500 90,250
======== ======= =======
YEAR ENDED DECEMBER 31, 1995:
- -----------------------------
Federal 223,000 (42,500) 180,500
State 32,000 (500) 31,500
-------- ------- -------
Total $255,000 (43,000) 212,000
======== ======= =======
(continued)
14
<PAGE>
SEABOARD SAVIN'GS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS, CONT:INUED
(10) INCOME TAXES, CONTINUED
The reasons for the differences between the statutory Federal income tax
rate and the effective tax rates are as follows:
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995
-------- -------
Tax provision at statutory rate $113,000 231,000
Increase (decrease) in taxes resulting from:
Change in the beginning of the period balance of the
valuation allowance for deferred tax assets
allocated to income tax expense -- (40,000)
Other, including state taxes, net of federal
income tax benefit (22,750) 21,000
-------- -------
Income tax provision $ 90,250 212,000
======== =======
The tax effects of temporary differences that give rise to a significant
portion of the deferred tax assets and deferred tax liabilities are
presented below.
AT DECEMBER 31,
----------------------
1996 1995
-------- -------
Deferred tax assets:
Net unrealized depreciation on available for
sale securities $139,342 18,000
Allowance for loan losses 133,709 213,000
Charitable contribution carryforward 26,365 11,000
Net deferred loan fees and costs 7,489 9,000
Other, net 26,942 14,000
-------- -------
Total gross deferred tax assets 333,847 265,000
-------- -------
Deferred tax liabilities:
Federal Home Loan Bank of Atlanta stock, principally
due to nontaxable stock dividends 77,000 89,000
Tax bad debt reserve 209,347 145,000
Other, net -- 13,000
-------- -------
Total gross deferred tax liabilities 286,347 247,000
-------- -------
Net deferred income tax asset $ 47,500 18,000
(11) COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Bank has various outstanding
commitments and contingent liabilities that are not reflected in the
accompanying financial statements.
(continued)
15
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(12) STOCK OPTION PLAN
The Bank has an incentive stock option plan for key employees. Options to
acquire 100,000 shares of common stock may be granted to officers and
other key employees. The options are for a period of five years and vest
at the date of grant.
PER
SHARE NUMBER OF
PRICE SHARES
----- ----------
Outstanding at December 31, 1994 $5.40 36,000
Options granted in 1995 $5.40 20,000
Options exercised in 1996 $5.40 (36,000)
-------
Outstanding at December 31, 1996 $5.40 20,000
===== =======
On January 1, 1996, the Bank adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," which
establishes financial accounting and reporting standards for stock-based
employee compensation plans. As permitted by this Statement, the Bank has
elected to continue utilizing the intrinsic value method of accounting
defined in APB Opinion No. 25. Due to the exercise price of the options
approximating the market value of the common stock at the date of grant,
no compensation expense has been recognized in the statements of earnings.
In order to calculate the fair value of the options, it was assumed that the
risk-free interest rate was 6.0%, there would be no dividends paid by the
Bank over the exercise period, the expected life of the options would be
the entire exercise period and stock volatility would be zero due to the
lack of an active market for the stock. For purposes of pro forma
disclosures, the estimated fair value is included in expense in the period
vesting occurs. The following information pertains to the options granted
to purchase common stock in 1995 (in thousands):
1995
----
Weighted-average grant-date fair value of options issued during 1995 $ 24
====
Proforma net earnings $444
====
(13) STOCKHOLDERS' EQUITY
The Board of Directors approved a stock split effected in the form of a
one-for-one stock dividend, effective August, 1995.
In 1995, the Board of Directors approved a private placement offering of
common stock. The proceeds from this offering were used in part to redeem
preferred stock. Certain other holders of preferred stock converted such
shares into common shares prior to redemption by the Bank. As of December
31, 1995, no preferred shares were outstanding.
The Bank's ability to pay dividends to shareholders is subject to prior
regulatory approval. For the year ended December 31, 1995, the Bank
obtained the required approvals for dividends declared each quarter. There
were no dividends paid in 1996.
(continued)
16
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(14) REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered
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 December 31,
1996, that the Bank meets all capital adequacy requirements to which it is
subject.
As of December 31, 1996, the most recent notification from the regulatory
authorities categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as adequately
capitalized the Bank must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table. There
are no conditions or events since that notification that management
believes have changed the Bank's category.
(continued)
17
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(14) REGULATORY, MATTERS, CONTINUED
The Bank's regulatory capital and applicable requirements are as follows:
<TABLE>
<CAPTION>
TO BE WELL
MINIMUM CAPITALIZED
FOR CAPITAL FOR PROMPT
ADEQUACY CORRECTIVE ACTION
ACTUAL PURPOSES PROVISIONS
---------------- ------------- --------------
RATIO AMOUNT RATIO AMOUNT RATIO AMOUNT
------ ------- ---- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
AT DECEMBER 31, 1996:
Stockholders' equity,
and ratio to total
assets 6.95% $ 5,536 -- -- -- --
Intangible assets -- -- -- -- --
-------
Tangible capital,
and ratio to adjusted
total assets 6.95% $ 5,536 1.5% $1,195 -- --
======= ======
Tier 1 (core) capital, and
ratio to adjusted total
assets 6.95% $ 5,536 4.0% $3,187 5.0% $3,983
======= ====== ======
Tier 1 capital, and ratio
to risk-weighted assets 11.82% 5,536 -- -- 6.0% $4,780
------- ======
Allowance for loan losses -- 355 -- -- -- --
Tier 2 capital -- -- -- -- -- --
-------
Total risk-based capital,
and ratio to risk
weighted assets 12.58% $ 5,891 8.0% $3,747 10.0% $4,684
======= ====== ======
Total assets $79,664
=======
Adjusted total assets $79,664
=======
Risk-weighted assets $46,839
=======
(continued)
</TABLE>
18
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
Notes to Financial Statements, Continued
(14) Regulatory Matters, Continued
<TABLE>
<CAPTION>
TO BE WELL
MINIMUM CAPITALIZED
FOR CAPITAL FOR PROMPT
ADEQUACY CORRECTIVE ACTION
ACTUAL PURPOSES PROVISIONS
-------------------- ------------------- ------------------
RATIO AMOUNT RATIO AMOUNT RATIO AMOUNT
------ -------- ----- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
AT DECEMBER 31, 1995:
Stockholders' equity,
and ratio to total
assets 6.41% $ 5,100 -- -- -- --
Intangible assets -- -- -- -- --
Tangible capital,
and ratio to adjusted
total assets 6.41% $ 5,100 1.5% $ 1,194
======== ========
Tier I (core) capital, and
ratio to adjusted total
assets 6.41% $ 5,100 4.0% $ 3,184 5.0% $ 3,980
======== ======== =======
Tier I capital, and ratio
to risk-weighted assets 11.91% $ 5,100 -- -- 6.0% $ 4,776
-------- =======
Allowance for loan losses -- 535 -- -- -- --
Tier 2 capital -- -- -- -- -- --
--------
Total risk-based capital,
and ratio to risk
weighted assets 13.12% $ 5,635 8.0% $ 3,426 10.0% $ 4,282
======== ======== =======
Total assets $ 79,607
========
Adjusted total assets $ 79,607
========
Risk-weighted assets $ 42,824
========
</TABLE>
(15) SAIF RECAPITALIZATION ASSESSMENT
On September 30, 1996, a one-time SAIF recapitalization assessment was
enacted. The rate was 65.7 cents per $100 on domestic deposits held as of
March 31, 1995. The effect on the Bank is a pretax charge of $447,855.
This amount was paid in November, 1996.
19
<PAGE>
<TABLE>
<CAPTION>
ITEM 7 (a) (2)
SEABOARD SAVINGS BANK, F.S.B.
BALANCE SHEET
UNAUDITED
March 31,
ASSETS 1997
-----------
Cash and due from banks $ 1,179,946
Securities available for sale 19,577,036
Loans receivables, net of allowance for loan losses
of $440,327 52,681,892
Federal Home Loan Bank of Atlanta stock, at cost 473,200
Accrued interest receivable 551,656
Premises and equipment 252,642
Foreclosed real estate 164,375
Refundable income taxes 130,000
Other Assets 333,157
-----------
Total $75,343,904
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Demand deposits $ 1,564,934
Savings and NOW deposits 6,368,207
Money market deposits 3,815,958
Time deposits 57,664,663
-----------
Total Deposits 69,413,762
Advance payments by borrowers for taxes and insurance 242,480
Accounts payable and accrued expenses 168,449
Current income taxes 102,000
Official Checks 82,490
-----------
Total Liabilities 70,009,181
Stockholders' equity:
Common stock, $1 par value; 3,000,000 shares
authorized; issued and outstanding 925,099 925,099
Additional paid-in capital 4,151,472
Retained earnings 628,521
Unrealized depreciation on securities available for sale,
net of taxes (370,369)
-----------
Total stockholders' equity 5,334,723
-----------
Total $75,343,904
===========
See accompanying notes to financial statements.
1
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
STATEMENT OF EARNINGS
UNAUDITED
Period Ended
March 31,
1997 1996
----------- -----------
<S> <C> <C>
Interest Income:
Loans receivable $ 1,108,456 $ 1,189,834
Securities available for sale 311,217 253,446
Interest-bearing deposits 4,924 9,530
Other interest earnings assets 8.459 7.996
----------- -----------
Total interest income 1,433,056 1,460,806
----------- -----------
Interest expense:
Deposits 829,473 874,610
Federal Home Loan Bank advance 17,620 28,737
----------- -----------
Total interest expense 847,093 903,347
----------- -----------
Net interest income 585,963 557,459
Provision for loan losses -- 25,000
----------- -----------
Net interest income after provision for loan losses 585,963 532,459
----------- -----------
Noninterest income:
Fees and service charges on deposits 12,220 17,777
Gain on sale of mortgage loans 9,269 13,483
Other 8,099 17,932
----------- -----------
Total noninterest income 29,588 49,192
Noninterest expenses:
Salaries and employee benefits 190,492 186,903
Occupancy expense 47,883 51,404
Deposit insurance premiums 6,657 45,398
Professional fees 15,763 8,734
Data processing services 20,915 20,245
Other 62,913 84,802
----------- -----------
Total noninterest expenses 344,623 397,486
----------- -----------
Earnings before income taxes 270,928 184,165
Income taxes 102,000 69,300
----------- -----------
Net Earnings $ 168,928 $ 114,865
=========== ===========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF STOCKHOLDERS' EQUITY
UNAUDITED
NET
UNREALIZED
DEPRECIATION
ON
ADDITIONAL SECURITIES TOTAL
COMMON PAID-IN RETAINED AVAILABLE STOCKHOLDERS'
STOCK CAPITAL EARNINGS FOR SALE EQUITY
-------- ---------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $889,099 $3,993,072 $217,514 ($30,156) $5,069,529
Net Earnings 242,079 242,079
Exercise of stock options 36,000 158,400 194,400
Net change in unrealized
depreciation on securities
available for sale, net of taxes (200,796) (200,796)
-------- ---------- -------- --------- ----------
Balance at December 31, 1996 925,099 4,151,472 459,593 (230,952) 5,305,212
Net Earnings (unaudited) 168,928 168,928
Net change in unrealized
depreciation on securities
available for sale, net of
taxes (unaudited) (139,417) (139,417)
-------- ---------- -------- --------- ----------
Balance at March 31, 1997
(unaudited) $925,099 $4,151,472 $628,521 ($370,369) $5,334,723
======== ========== ======== ========= ==========
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
<TABLE>
<CAPTION>
SEABOARD SAVINGS BANK, F.S.B.
STATEMENTS OF CASH FLOWS
UNAUDITED
Three months ended
March 31
1997 1996
----------- -----------
<S> <C> <C>
Operating Activities:
Net income $ 168,928 $ 114,865
Adjustment to reconcile net income to net cash
provided by operating activities 116,990 12,041
----------- -----------
Net cash provided by operating activities 285,918 126,906
Investing Activities:
Purchase of investments available for sale (1,219,019) (2,677,574)
Decrease (increase) in loans 2,372,287 2,887,771
Purchases of premises and equipment -- (14,136)
(Increase) decrease in other assets (418,063) (12,891)
----------- -----------
Net cash (used in) provided by investing activities 735,205 183,170
Financing Activities:
Net increase (decrease) in deposits 2,309,569 (4,898,260)
(Decrease) increase in short term borrowings (6,700,000) 2,400,000
Increase (decrease) in other liabilities 141,930 (924,067)
Proceeds from exercise of stock options -- 194,400
----------- -----------
Net cash provided by (used in) financing activities (4,248,501) (3,227,927)
----------- -----------
Increase in cash and cash equivalents (3,227,378) (2,917,851)
Cash and cash equivalents at beginning of period 4,407,324 4,177,462
----------- -----------
Cash and cash equivalents at end of period $ 1,179,946 $ 1,259,611
=========== ===========
</TABLE>
4
<PAGE>
SEABOARD SAVINGS BANK, F.S.B.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments, (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three months
ended March 31, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. For further information, refer
to the audited financial statements and footnotes thereto, included in the
Seaboard Savings Bank, F.S.B. audited financial statements for the year ended
December 31, 1996.
5
<PAGE>
ITEM 7 (b)
1ST UNITED BANCORP/ISLAND NATIONAL BANK
AND TRUST COMPANY AND SEABOARD SAVINGS BANK, F.S.B.
PRO FORMA FINANCIAL STATEMENTS
The following Pro Forma Combined Condensed Balance Sheet as of March
31, 1997 gives effect to the acquisitions by Bancorp of Seaboard and Island on
such date. The Pro Forma Combined Condensed Statements of Income for the quarter
ended March 31, 1997 and year ended December 31, 1996 give effect to the
acquisitions of Island and Seaboard as if they had been consummated at the
beginning of such periods.
The pro forma financial statements (and the assumptions and adjustments
in the accompanying notes to Pro Form Combined Condensed Financial Statements)
have been prepared by management of Bancorp based upon the historical financial
statements of Bancorp, Seaboard and Island, giving effect to the Seaboard
acquisition as a purchase. On April 1, 1997, Bancorp completed its merger with
Island in a transaction accounted for as a pooling of interests.
The Pro Forma Combined Condensed Financial Statements give effect to
the merger of Island by the issuance of approximately 1,365,000 shares of
Bancorp Common Stock for all of the issued and outstanding shares of Island. The
Pro Forma Combined Condensed Financial Statements give effect to the acquisition
of Seaboard by the issuance of approximately 285,000 shares of Bancorp Common
Stock and the payment of $4.125 million for all of the issued and outstanding
shares of Seaboard.
These pro forma financial statements may not be indicative of the
results that actually would have occurred if the transaction had been in effect
on the dates indicated or which may be obtained in the future. The pro forma
financial statements should be read in conjunction with the financial statements
of Bancorp, Seaboard and Island included elsewhere herein or incorporated by
reference herein.
<PAGE>
<TABLE>
<CAPTION>
1ST UNITED BANCORP AND SUBSIDIARIES/
ISLAND NATIONAL BANK AND TRUST COMPANY
AND SUBSIDIARY AND SEABOARD SAVINGS BANK, F.S.B.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
For the Quarter Ended March 31, 1997
(in thousands, except per share data)
(unaudited)
Island
National Seaboard Bancorp/
1st United Bank Bancorp and Savings Bank, Island and
Bancorp and Trust Co. Island F.S.B. Seaboard
(Bancorp) (Island) Adjustments Combined (Seaboard) Adjustments Combined
---------- ------------- ----------- ----------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Income
Loans, including fees $ 9,296 $ 1,732 $ -- $ 11,028 $ 1,108 $ -- $ 12,136
Investment securities 900 132 -- 1,032 325 1,357
Other 806 407 -- 1,213 -- (60)B 1,153
-------- -------- -------- --------- -------- -------- ---------
11,002 2,271 -- 13,273 1,433 (60) 14,646
Interest Expense:
Interest on deposits 2,918 876 -- 3,794 829 -- 4,623
Other 15 -- -- 15 18 -- 33
-------- -------- -------- --------- -------- -------- ---------
2,933 876 -- 3,809 847 -- 4,656
Net interest Income 8,069 1,395 -- 9,464 586 (60) 9,990
Provision for loan losses 40 -- -- 40 -- -- 40
-------- -------- -------- --------- -------- -------- ---------
8,029 1,395 -- 9,424 586 (60) 9,950
Other Income:
Service charges on
deposits 962 67 -- 1,029 16 -- 1,045
Net losses on securities -- -- -- -- -- -- --
Gain on sale of loans 421 -- -- 421 9 -- 430
Investment services -- 241 -- 241 -- -- 241
Trust services -- 251 -- 251 -- -- 251
Other 356 27 -- 383 5 -- 388
-------- -------- -------- --------- -------- -------- ---------
1,739 586 -- 2,325 30 -- 2,355
Other Expense:
Salaries and benefits 2,933 754 -- 3,687 191 -- 3,878
Occupancy, furniture and
equipment 1,185 411 -- 1,596 48 -- 1,644
Other real estate expense 198 -- -- 198 -- -- 198
Professional fees 232 40 -- 272 16 -- 288
Amortization of intangible
assets 155 29 -- 184 -- -- 184
Merger expenses -- -- -- -- -- -- --
Other 1,368 364 -- 1,732 90 30 B 1,852
-------- -------- -------- --------- -------- -------- ---------
6,071 1,598 -- 7,669 345 30 8,044
-------- -------- -------- --------- -------- -------- ---------
Income Before Income
Taxes (Benefit) 3,697 383 4,080 271 (90) 4,261
Income Taxes (Benefit) 1,406 140 -- 1,546 102 (33) 1,615
-------- -------- -------- --------- -------- -------- ---------
Net Income $ 2,291 $ 243 $ -- $ 2,534 $ 169 $ (57) $ 2,646
======== ======== ======== ========= ======== ======== =========
Net Income Per Common
Share $ O.27 $ 0.40 $ -- $ 0.25 $ 0.18 $ -- $ 0.26
======== ======== ======== ========= ======== ======== =========
Weighted average common
shares and common stock
equivalents outstanding 8,638 615 -- 10,003 925 -- 10,288
======== ======== ======== ========= ======== ======== =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1ST UNITED BANCORP AND SUBSIDIARIES/
ISLAND NATIONAL BANK AND TRUST COMPANY
AND SUBSIDIARY AND SEABOARD SAVINGS BANK, F.S.B.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
March 31, 1997
(in thousands)
(unaudited)
Island
National Bancorp Seaboard Bancorp/
1st United Bank and Savings Island and
Bancorp and Trust Co. Island Bank, F.S.B. Seaboard
(Bancorp) (Island) Adjustments Combined (Seaboard) Adjustments Combined
---------- ------------- ----------- --------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Cash and due from banks $ 31,877 $ 4,658 $ -- $ 36,535 $ 1,180 $ $ 37,715
Interest bearing deposits 67,846 938 -- 68,784 -- (250)A 68,534
-- -- -- (4,125)A (4,125)
Federal funds sold 4,077 47,835 -- 51,912 -- -- 51,912
--------- --------- -------- --------- -------- -------- ---------
Total cash and cash equivalents 103,800 53,431 157,231 1,180 (4,375) 154,036
Investment securities available for
sale 17,799 3,348 -- 21,147 20,050 -- 41,197
Investment securities held to
maturity 38,S30 4,494 -- 43,024 -- 43,024
Loans, net of allowance for loan
losses 383,837 79,593 -- 463,430 52,681 -- 516,111
Bank premises and equipment 14,954 1,257 -- 16,211 252 -- 16,463
Accrued interest receivable 2,711 631 -- 3,342 551 -- 3,893
Other real estate owned 3,004 733 -- 3,737 164 -- 3,901
Goodwill 6,941 907 -- 7,848 -- 2,975 A 10,823
Other assets 7,839 1,021 -- 8,860 466 -- 9,326
--------- --------- -------- --------- -------- -------- ---------
$ 579,415 $ 145,415 $ -- $ 724,830 $ 75,344 $ (1,400) $ 798,774
========= ========= ======== ========= ======== ======== =========
Liabilities and Shareholders'
Equity
Liabilities:
Deposits 517,263 132,381 -- 649,644 69,415 -- 719,059
Long term debt -- -- -- -- -- -- --
Securities sold under agreements to
repurchase 3,452 -- -- 3,452 -- -- 3,452
Accrued interest and other
liabilities 6,212 1,770 -- 7,982 594 8,576
--------- --------- -------- --------- -------- -------- ---------
Total Liabilities 526,927 134,151 -- 661,078 70,009 731,087
Shareholders' Equity:
Common stock, par value S0.01 per
share-authorized 20,000,000 shares 84 3,075 (3,061)1 98 925 (925)A 101
3 A
Additional paid in capital 33,863 8,767 3,061 1 45,691 3,781 (3,781)A 49,623
3,932 A 18,089
Retained earnings 18,640 (551) -- 18,089 999 (999)A --
Unrealized gains (losses) on
securities available for sale,
net of income taxes (99) (27) -- (126) (370) 370 (126)
--------- --------- -------- --------- -------- -------- ---------
Total Shareholders Equity 52,488 11,264 -- 63,752 5,335 (1,400) 67,687
--------- --------- -------- --------- -------- -------- ---------
$ 579,415 $ 145,415 $ -- $ 724,830 $ 75,344 $ (1,400) $ 798,774
========= ========= ======== ========= ======== ======== =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1ST UNITED BANCORP AND SUBSIDIARIES/
ISLAND NATIONAL BANK AND TRUST COMPANY
AND SUBSIDIARY AND SEABOARD SAVINGS BANK, F.S.B.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
For the Year Ended December 31, 1996
(in thousands, except per share data)
(unaudited)
Island
National Seaboard Bancorp/
1st United Bank Bancorp and Savings Bank, Island and
Bancorp and Trust Co. Island F.S.B. Seaboard
(Bancorp) (Island) Adjustments Combined (Seaboard) Adjustments Combined
---------- ------------- ----------- ----------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Income:
Loans, including fees $ 33,799 $ 6,955 $ -- $ 40,754 $ 4,737 $ $ 45,491
investment securities 4,611 675 -- 5,286 1,031 -- 6,317
Other 1,961 420 -- 2,381 61 (241)B 2,201
-------- ------- ----- -------- ------- ------ --------
40,371 8,050 -- 48,421 5,829 (241) 54,009
Interest Expense:
Interest on deposits 10,738 2,773 -- 13,511 3,363 -- 16,874
Other 139 7 -- 146 114 -- 260
-------- ------- ----- -------- ------- ------ --------
10,877 2,780 -- 13,657 3,477 -- 17,134
Net Interest Income 29,494 5,270 -- 34,764 2,352 (241) 36,875
Provision for loan losses 170 85 -- 255 215 -- 470
-------- ------- ----- -------- ------- ------ --------
29,324 5,185 -- 34,509 2,137 (241) 36,405
Other Income:
Service charges on
deposits 4,249 258 -- 4,507 121 -- 4,628
Net losses on securities (65) (7) -- (72) -- -- (72)
Gain on sale of loans 880 -- -- 880 29 -- 909
Investment services -- 956 -- 956 -- -- 956
Trust services -- 833 -- 833 -- -- 833
Other 2,846 179 -- 3,025 89 -- 3,114
-------- ------- ----- -------- ------- ------ --------
7,910 2,219 -- 10,129 239 -- 10,368
Other Expense:
Salaries and benefits 11,590 2,922 -- 14,512 742 -- 15,254
Occupancy, furniture and
equipment 4,783 1,676 -- 6,459 202 -- 6,661
Other real estate expense 612 40 -- 652 -- -- 652
Professional fees 910 364 -- 1,274 80 -- 1,354
Amortization of intangible
assets 620 115 -- 735 -- -- 735
Merger expenses 1,221 - -- 1,221 -- -- 1,221
Other 5,737 1,435 -- 7,172 1,020 119 B 8,311
-------- ------- ----- -------- ------- ------ --------
25,473 6,552 -- 32,025 2,044 119 34,188
-------- ------- ----- -------- ------- ------ --------
Income Before Income
Taxes (Benefit) 11,761 852 -- 12,613 332 (360) 12,585
Income Taxes (Benefit) 4,326 63 -- 4,389 90 (133) 4,346
-------- ------- ----- -------- ------- ------ --------
Net Income $ 7,435 $ 789 $ -- $ 8,224 $ 242 $ (227) $ 8,239
======== ======= ===== ======== ======= ====== ========
Net Income Per Common
Share $ 0.87 $ 1.28 $ -- $ 0.83 $ 0.26 $ -- $ 0.80
======== ======= ===== ======== ======= ====== ========
Weighted average common
shares and common stock
equivalents outstanding 8,587 615 -- 9,952 925 -- 10,237
======== ======= ===== ======== ======= ====== ========
</TABLE>
<PAGE>
1ST UNITED BANCORP AND SUBSIDIARIESI
ISLAND NATIONAL BANK AND TRUST COMPANY AND SUBSIDIARY
AND SEABOARD SAVINGS BANK, F.S.B.
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(unaudited)
(in thousands, except per share data)
ISLAND NATIONAL BANK AND TRUST COMPANY
1. Bancorp issued 1,365,000 shares of its common stock to acquire all the
outstanding shares of Island common stock on April 1, 1997.
The assets and liabilities of Island were recorded by Bancorp at their
book value in accordance with the pooling of interests method of
accounting. Island common stock in the amount of $3,061 is being
reclassified as additional paid in capital, net of $14, the par value
of Bancorp Common Stock issued to Island shareholders.
2. The Pro Forma Combined Condensed Statement of Income for each period
excludes the following non recurring charges directly attributable to
the transaction:
Severance/stay bonuses $ 283
Merger Costs 252
Other 65
--------
600
Tax effect (36%) 216
--------
$ 384
========
SEABOARD SAVINGS BANK, F.S.B.
A. Bancorp will issue approximately 285,000 shares (valued at $14.50 per
share) of its common stock and will pay approximately $4.125 million to
acquire all the outstanding shares of Seaboard Common Stock.
Seaboard will be merged into 1st United at the fair value of its assets
and liabilities in accordance with a "purchase" as defined in
Accounting Principles Board Statement 16 "Business Combination"
("APB16").
Consideration:
Stock consideration:
Common stock (285,000 shares at $.01 par) $ 3
-------
Additional paid in capital (less $200 in issue costs) 3,932
3,935
Cash:
Cash merger costs 250
Cash consideration 4,125
-------
Total Consideration 8,310
Less: Fair Value of net equity(1)
Common Stock 925
Surplus 3,781
Undivided Profits 999
Unrealized losses on
Available for Sale Securities (370)
-------
5,335
-------
Goodwill $ 2,975
=======
- ----------
(1) As all investment securities are classified as available for sale, this
analysis assumes the fair value of Seaboard approximates its book value.
<PAGE>
B. Goodwill is amortized over 25 years. The $4.375 million in cash results
in a reduction in interest earnings assuming an interest rate of 5.5%.
Year Ended Quarter Ended
December 31, 1996 March 31, 1997
----------------- --------------
Amortization Expense $ 119 $ 30
Reduction in Interest 241 60
C. Net income per share is calculated using the weighted average number of
Bancorp Common Stock and stock equivalents for the periods adjusted as
follows (shares in thousands):
Quarter Ended Year Ended
March 31, 1997 December 31, 1996
-------------- -----------------
Bancorp historical $ 8,638 $ 8,587
Estimated shares issued to Seaboard
shareholders as of the beginning of period 285 285
Shares issued to Island shareholders as of
beginning period 1,365 1,365
-------- --------
$ 10,288 $ 1O,237
======== === ====
The following reconciles the outstanding Bancorp Common Stock at March 31, 1997
to Pro Forma outstanding Bancorp Common Stock (shares in thousands):
Bancorp shares at March 31, 1997 8,437
Estimated shares issued to
Seaboard shareholders 285
Shares issued to Island
shareholders 1,365
------
10,087
======
ITEM 7 (c) 2.2
AMENDMENT NO. 1
This Amendment No. 1 (the "Amendment"), dated May __, 1997, is hereby
made to the Merger Agreement dated April 22, 1997 (the "Agreement"), by and
between 1st United Bank, a Florida chartered bank ("1st United"), Seaboard
Savings Bank, F.S.B., a federal savings bank ("Seaboard") and 1st United
Bancorp, a Florida bank holding company ("Bancorp"), (1st United, Seaboard and
Bancorp are collectively referred to herein as the "Parties").
WHEREAS, the Parties have agreed that it is necessary to amend the
provisions in the Agreement dealing with the election of the composition of the
Merger Consideration to be delivered to the Seaboard Stockholders and to assure
that the aggregate Merger Consideration is allocated in a manner consistent with
the elections of the Seaboard Stockholders without causing either the Stock
Component or the Cash Component to exceed fifty percent (50%) of the Aggregate
Consideration.
WHEREAS, the Parties wish to modify the Agreement as provided herein;
NOW, THEREFORE, in consideration for the premises and mutual promises
contained therein, the Parties agree as follows:
(1) The foregoing recitations are incorporated into and comprise a part
of this Amendment.
(2) Unless otherwise defined herein, any capitalized term used herein
shall have the meaning ascribed to such term in the Agreement.
(3) Section 2.6(v) is hereby amended to read as follows:
(v) An election form ("Election Form") shall be prepared by
Bancorp and mailed by Seaboard to each of the Seaboard Stockholders
with the Definitive Seaboard Proxy Materials.
Each Election Form shall permit the holder to elect to receive
only Bancorp Purchase Stock with respect to such holder's Seaboard
Stock ("Stock Election Shares"), to elect to receive only cash with
respect to such holder's Seaboard Stock ("Cash Election Shares"), to
receive fifty percent (50%) cash and fifty percent (50%) Bancorp
Purchase Stock with respect to such holder's Seaboard Stock ("Equal
Election Shares") or to indicate that such holder makes no election
("No Election Shares").
Any Seaboard Stock with respect to which the holder shall not
have submitted to Bancorp an effective, properly completed Election
Form, on or before 5:00 p.m. on the date of the Special Seaboard
Meeting (or such other time
<PAGE>
and date as Bancorp and Seaboard may mutually agree) (the "Election
Deadline") shall be deemed to be "No Election Shares." Any such
election shall have been properly made only if Bancorp shall have
actually received a properly completed Election Form by the Election
Deadline. Any Election Form may be revoked or changed by the person
submitting such Election Form at or prior to the Election Oeadline.
Subject to the terms of this Agreement and of the Election Form,
Bancorp shall have reasonable discretion to determine whether any
election, revocation or change has been properly or timely made and to
disregard immaterial defects in the Election Forms, and any good faith
decisions of Bancorp regarding such matters shall be binding and
conclusive. Bancorp shall be under no obligation to notify any person
of any defect in an Election Form.
On or before the Closing Date, Bancorp shall compute the
allocation among the holders of Seaboard Stock of rights to receive
Bancorp Purchase Stock or cash in the Merger in accordance with the
Election Forms, communicate that computation to Seaboard and thereafter
cause the Transfer Agent to effecl the distribution of the Merger
Consideration as follows:
(a) CALCULATION OF EQUAL ELECTION CONSIDERATION. Bancorp shall
calculate the value of the Merger Consideration to be delivered to the
holders of Equal Election Shares in accordance with their elections
(the "Equal Election Consideration") and the value of the Merger
Consideration minus the Equal Election Consideration (the "Remaining
Consideration").
(b) STOCK ELECTIONS LESS THAN STOCK COMPONENT. If the number
of shares of Bancorp Purchase Stock that would be issued upon
conversion of the Stock Election Shares and the Equal Election Shares
is less than the Stock Component, then:
1. All of the Equal Election Shares shall be
converted into the right to receive fifty percent (50%) Bancorp
Purchase Stock and fifty percent (50%)cash;
2. Then, to the extent necessary to assure thatfifty
percent (50%) of the value of the Remaining Consideration is comprised
of Bancorp Purchase Stock:
A. first, all Stock Election Shares shall be
converted, pro rata, into the right to receive Bancorp Purchase Stock;
B. second, all of the No Election Shares
shall be converted, pro rata, into the right to receive Bancorp
Purchase Stock; and
-2-
<PAGE>
C. third, all of the Cash Election Shares
shall be converted, pro rata, into the right to receive Bancorp
Purchase Stock.
3. The balance of the Seaboard Shares shall be
converted into the right to receive cash.
4. Notwithstanding anything to the contrary contained
herein, the Seaboard Stock shall be allocated in the order provided
above to the extent necessary to assure that the value of the Bancorp
Purchase Stock equals fifty percent (50%) of the Merger Consideration.
In no event shall the value of the Bancorp Purchase Stock be less than
fifty percent (50%) of the Merger Consideration.
c) STOCK ELECTIONS MORE THAN STOCK COMPONENT. If the number of
shares of Bancorp Purchase Stock that would be issued upon the
conversion of the Stock Election Shares and the Equal Election Shares
into Bancorp Purchase Stock is greater than the Stock Component, then:
1. All of the Equal Election Shares shall be
converted into the right to receive fifty percent (50%) Bancorp
Purchase Stock and fifty percent (50%) cash;
2. Then, to the extent necessary to assure thatfifty
percent (50%) of the Remaining Consideration is comprised of cash:
A. first, all Cash Election Shares shall be
converted, pro rata, into the right to receive cash;
B. second, all of the No Election Shares
shall be converted, pro rata, into the right to receive cash; and
C. third, all of the Stock Election Shares
shall be converted, pro rata, into the right to receive cash.
3. The balance of the Seaboard Shares shall be
converted into the right to receive Bancorp Purchase Stock.
4. Notwithstanding anything to the contrary herein,
the Seaboard Stock shall be allocated in the order provided above to
the extent necessary to assure that the value of the Cash Component
equals fifty percent (50%) of the Merger Consideration. In no event
shall the value of the Cash Component be less than fifty percent (50%)
of the Merger Consideration.
- 3 -
<PAGE>
(4) Except as expressly provided herein, nothing in this Amendment
shall be construed to modify or supersede any of the Partiesi rights and
obligations previously set forth in tile Agreement. In the event the terms of
the Agreenient and this Amendment conflict, the terms of this Amendment shall
control. The Agreement, in conjunction with this Amendment, shall represent the
Parties complete understanding on the subject matters contained therein.
(5) This Agreement may be executed in any number of counterparts, each
of which, when so executed, shall constitute an original copy hereof, but all
of which together shall constitute but one and the same document.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first provided above.
1ST UNITED BANCORP
By: /s/ Warren S. Orlando
Title: _________________________________
Date: __________________________________
1ST UNITED BANK
By: /s/ Warren S. Orlando
Title: _________________________________
Date: __________________________________
SEABOARD SAVINGS BANK, F.S.B.
By: /s/ Howaard Shields
Title: _________________________________
Date: __________________________________
- 4 -
