U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended March 31, 1998.
[_] Transition report under Section 13 or 15(d) of the Exchange Act
of 1934.
For the transition period from to .
------------ ------------
Commission file number 000-22925
AMERICASBANK CORP.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Maryland 52-1948980
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3621 East Lombard Street, Baltimore, Maryland 21224
(Address of Principal Executive Offices)
(410) 342-8303
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: As of May 13, 1998, there
were 300,000 shares of Issuer's $.01 par value common stock outstanding.
Transitional Small Business Disclosure Format (check one):
Yes X No
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICASBANK CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998 AND DECEMBER 31, 1997
March 31, December 31,
1998 1997
----------- ------------
Assets (unaudited)
Cash and cash equivalents:
On-hand and due from banks $ 82,000 $ 155,000
Interest-bearing accounts 15,000 31,000
Federal funds sold 2,582,000 3,151,000
Investment securities, available for sale 540,000 569,000
Loans receivable, net 6,510,000 6,251,000
Investment in Federal Home Loan Bank stock, at cost 54,000 54,000
Accrued interest receivable 57,000 51,000
Property and equipment, net 742,000 746,000
Organizational costs, net 125,000 133,000
Other assets, net 307,000 279,000
----------- -----------
Total assets $11,014,000 $11,420,000
=========== ===========
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing $ 374,000 $ 952,000
Interest-bearing 7,622,000 7,444,000
Mortgage escrow deposits 162,000 119,000
Accrued interest on deposits - 32,000
Accounts payable and accrued expenses 85,000 62,000
---------- ----------
Total liabilities $8,243,000 $8,609,000
---------- ----------
Stockholders' Equity:
Preferred stock, par value $0.01 per share,
5,000,000 shares authorized, 0 shares issued
and outstanding
Common stock, par value $0.01 per share,
5,000,000 shares authorized, 300,000 shares
issued and outstanding 3,000 3,000
Additional paid-in capital 2,847,000 2,847,000
Accumulated deficit (79,000) (39,000)
----------- -----------
Total stockholders' equity 2,771,000 2,811,000
----------- -----------
Total liabilities and stockholders' equity $11,014,000 $11,420,000
=========== ===========
The accompanying notes are an integral part of this consolidated balance sheet.
2
AMERICASBANK CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATION
(UNAUDITED)
Three Months Ended March 31,
1998 1997
---- ----
Interest Income:
Interest income on loans $ 151,000 $ -
Interest income on investment securities 39,000 2,000
--------- -------
Total interest income 190,000 2,000
Interest expense on deposits 87,000 -
--------- -------
Net interest income 103,000 2,000
Provision for loan losses 10,000 -
--------- -------
Net interest income after provision for
loan losses 93,000 2,000
Non-Interest Income:
Loan fees and service charges 2,000 -
--------- -------
Total non-interest income 2,000 -
--------- -------
Other operating expenses:
Salaries and benefits 32,000 -
Depreciation and amortization 34,000 -
Occupancy expense 6,000 -
Data processing 16,000 -
Professional fees 19,000 -
Office supplies 5,000 -
Other operating expenses 23,000 -
--------- -------
Total other operating expenses 135,000 -
--------- -------
(Loss) income before provision for
income taxes (40,000) 2,000
Provision for Income Taxes - -
--------- -------
Net (loss) income $(40,000) $ 2,000
========= =======
Loss Per Common Share - Basic and Diluted $ (.13) $ -
========= =======
Weighted Average Shares Outstanding 300,000 -
========= =======
The accompanying notes are an integral part of these consolidated statements.
3
AMERICASBANK CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
1998 1997
---- ----
Cash Flows from Operating Activities:
Net (loss) income $ (40,000) $ 2,000
Adjustments to reconcile net (loss) income
to net cash provided by operating activities-
Provision for loan losses 10,000
Depreciation and amortization 34,000
Increase in accrued interest receivable (6,000)
Increase in other assets (42,000) (23,000)
Decrease in accrued interest on deposits (32,000)
Increase in accounts payable and accrued expenses 23,000 23,000
---------- ---------
Net cash provided by (used in) operating
activities (53,000) 2,000
---------- ---------
Cash Flows from Investing Activities:
Sale of investment securities 29,000
Loan principal disbursements (601,000)
Principal repayments on loans receivable 332,000
Purchase of property and equipment (8,000)
---------- ---------
Net cash used in investing activities (248,000) 0
---------- ---------
Cash Flows from Financing Activities:
Decrease in savings deposits (400,000)
Increase in mortgage escrow deposits 43,000
Advances from related parties - 228,000
---------- ---------
Net cash (used in) provided from financing
activities (357,000) 228,000
---------- ---------
(Decrease) Increase In Cash and Cash Equivalents (658,000) 230,000
Cash and Cash Equivalents, beginning of period 3,337,000 298,000
---------- ---------
Cash and Cash Equivalents, end of period $2,679,000 $ 528,000
========== =========
The accompanying notes are an integral part of these consolidated statements.
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AMERICASBANK CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Organization and Business
AmericasBank Corp. (the Company) was incorporated under the laws of the State of
Maryland on June 4, 1996 primarily to hold all the outstanding shares of capital
stock of a federal stock savings bank.
Effective November 30, 1997, the Company completed an initial public offering
(the Offering) in which it sold 300,000 shares of stock for $10 per share, less
offering costs. On December 1, 1997, the Company acquired certain assets and
assumed certain deposit liabilities primarily related to the Baltimore Branch of
Rushmore Trust and Savings, FSB. Concurrent with the acquisition, the branch
commenced banking operations under the name AmericasBank (the Bank) as a
wholly-owned subsidiary of the Company. The Bank is a member of the Federal Home
Loan Bank System, and its deposits are insured by the Federal Deposit Insurance
Corporation.
As the Bank is a start-up operation, there can be no assurance that the Bank can
attract sufficient depositors or issue sufficient quality loans to operate at a
profit. The Bank is subject to other risks and uncertainties, including interest
rate risk. The interest rate risk related to interest rates is significant to
the Bank as its deposits have relatively short maturities, while the loans have
much longer maturities at fixed rates. Without a significant change in the
Bank's investment, deposit or loan portfolio, an increase in interest rates
could have a significant negative effect on the Bank's net interest income and
results of operations.
(2) Basis of Presentation
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. However, the Company believes that the disclosures are adequate to
make the information presented not misleading. These condensed financial
statements should be read in conjunction with the financial statements and notes
thereto for the year ended December 31, 1997, included in the Company's Annual
Report on Form 10-KSB.
5
The unaudited condensed financial statements included herein reflect all
adjustments (which include only normal, recurring adjustments) which are, in the
opinion of management, necessary to state fairly the results for the three
months ended March 31, 1998 and 1997. The results of the interim periods are not
necessarily indicative of the results expected for the full fiscal year.
6
Item 2. Plan of Operation
General
AmericasBank Corp. (the "Company") was incorporated under the laws of
the State of Maryland on June 4, 1996, primarily to own all of the outstanding
shares of capital stock of a federal stock savings bank to be named AmericasBank
(the "Bank"). On April 15, 1997, the Office of Thrift Supervision (the "OTS")
granted the Company the necessary approvals to acquire the capital stock of the
Bank and to become a savings and loan holding company of the Bank. The Bank
opened on December 1, 1997 and currently has one branch, in Eastern, Baltimore
City, Maryland.
Effective as of December 1, 1997, the Bank also consummated the
transactions contemplated by the Branch Purchase and Assumption Agreement dated
May 31, 1996, as amended, and the Loan Purchase and Assumption Agreement dated
May 31, 1996, as amended (collectively, the "Agreements"), between the Bank and
Rushmore Trust and Savings, FSB ("Rushmore"). The Agreements provided for the
purchase by the Bank of certain assets and the assumption of certain deposit
liabilities primarily related to Rushmore's Baltimore, Maryland branch office
located at 3621 East Lombard Street, Baltimore, Maryland 21224 (the "Baltimore
Branch"). The transactions contemplated by the Agreements are referred to herein
as the "Acquisition."
The Company is classified as a non-diversified unitary savings and loan
holding company and, as such, the Company may engage in certain non-banking
activities that the OTS has deemed to be closely related to banking. Although
the Company has no present intention of engaging in any activity other than
owning all of the outstanding shares of capital stock of the Bank and the
outstanding shares of capital stock of AmericasBank Holdings Corporation, a
subsidiary formed to hold certain real property, if circumstances should lead
the Company's management to determine that it would be beneficial for the
Company to engage in other business activities, management of the Company would
have the flexibility to do so.
As the Bank commenced operations as of December 1, 1997, the fiscal
quarter ended March 31, 1998 is the first full fiscal quarter for which the Bank
was in operation. Prior to December 1, 1997, the Company and the Bank were
engaged in the activities necessary to organize the Bank and the Company.
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Business Conducted by the Bank
The Bank is a community-oriented financial institution. Its business is
to attract retail deposits and to invest those deposits, together with funds
generated from operations and borrowings, primarily in one- to four-family
mortgage loans. To a lesser extent, the Bank invests or intends to invest in
home equity loans, multi-family loans, commercial real estate loans,
construction loans (primarily for one- to four-family home construction for the
borrower), commercial business loans and consumer loans. The Bank's deposit base
is comprised of traditional deposit products including checking accounts,
insured investment accounts, statement savings accounts, passbook deposit
accounts, money market accounts, certificates of deposit and individual
retirement accounts.
The Bank offers direct deposit of payroll and social security checks
and automatic drafts for various accounts to its customers. Although it does not
currently do so, the Bank intends to offer its customers cash management
services, safe deposit boxes and travelers checks. The Bank also intends to
become associated with a network of automated teller machines that may be used
by customers of the Bank throughout Maryland and other regions.
Management intends to expand the business of the Bank by opening
branches, either through internal growth or through acquisitions of existing
banks. On December 31, 1997, the Company's wholly owned subsidiary, AmericasBank
Holdings Corporation, purchased from NationsBank, N.A. ("NationsBank"), a
building located at 500 York Road, Towson, Maryland 21286 (the "Towson
Property"). Until July 1997, the Towson Property had served as a branch of
NationsBank. Subject to, among other things, regulatory approval, the Company
intends to utilize the Towson Property as a branch of the Bank. At this time,
other than the Towson Property, management has not identified any specific
locations for branches of the Bank.
The Bank's success in expanding its business by opening branches,
either through internal growth or through acquisitions, including its ability to
open a branch at the Towson Property, will be dependent upon, among other
things, the Bank's access to capital, its ability to manage the growth, its
ability to attract and train qualified employees and its ability to obtain
regulatory approval. There can be no assurance that management will be
successful in implementing this expansion strategy or, if management is able to
implement the expansion strategy, that management will be able to manage the
resultant growth. In addition, management's inability to implement the expansion
strategy could negatively impact the Bank's ability to successfully compete in
the marketplace.
8
The Company's executive offices and the Bank's initial banking office
are located at 3621 East Lombard Street, Baltimore, Maryland 21224 (the "Banking
Office"). Prior to the Acquisition, the Banking Office was the location of the
Baltimore Branch of Rushmore. Management anticipates that the Bank will draw
most of its customer deposits and conduct most of its lending transactions from
within the area surrounding its Banking Office, as well as from within the
Baltimore metropolitan area.
Capital Resources
On August 7, 1997, the Company commenced an initial public offering
(the "Offering") of a maximum of 300,000 shares of its common stock, $0.01 par
value per share (the "Common Stock"), pursuant to the Company's Registration
Statement on Form SB-1 (No. 333-28881), primarily for the purpose of raising the
funds necessary to capitalize the Bank. The Offering was terminated by the
Company on November 30, 1997 when the Company sold the maximum number of shares
available in the Offering. The Company received gross Offering proceeds of
$3,000,000, and incurred Offering expenses of $150,000, resulting in net
Offering proceeds of $2,850,000. Effective as of December 1, 1997, the Company
purchased $2,150,000 of the capital stock of the Bank, and the Bank became a
wholly owned subsidiary of the Company.
Management believes that the $2,850,000 of net Offering proceeds will
satisfy the cash requirements of the Company and the Bank for their respective
first three years of operations, assuming no new branches are opened during this
period, but there can be no assurance that this will be the case. This estimate
is based on the level of expenses commensurate with the estimated number of
employees and estimated size of the operations of the Bank during this period
and the amount of capital normally required for a bank with total assets in the
range in which management expects the Bank's assets to be during this period.
The Company's and the Bank's future capital requirements, however, will depend
on many factors, including the Bank's ability to successfully originate loans
and attract deposits and the Bank's ability to implement its branch expansion
strategy. To the extent that the Company and the Bank's current capital is
insufficient to fund the Company and the Bank's future operating requirements or
to implement the branch expansion strategy, it may be necessary to raise
additional funds, through public or private financings.
The Company may determine that additional funds are required to finance
the opening of a branch at the Towson Property. If it is determined that
additional funds are required to finance a branch at the Towson Property, or if
an opportunity to open another branch
9
arises, whether through internal growth or through an acquisition, and it is
determined that additional funds are required to finance the transaction, the
Company will seek to raise additional funds. Any equity or debt financings, if
available at all, may be on terms which are not favorable to the Company or the
Bank and, in the case of equity financings, could result in dilution to the
Company's shareholders. If adequate capital is not available, the Bank may be
required to curtail significantly its expected operations and its expansion
strategy.
The Bank currently maintains a liquidity ratio and a level of
capitalization in excess of the minimum standards required by the Bank's primary
regulator, the OTS.
As of March 24, 1998, the Company's Common Stock became eligible to be
quoted on the OTC Bulletin Board and reported in the "pink sheets" under the
symbol AMBB.
Financial Condition and Results of Operations
The Bank commenced operations as of December 1, 1997, and its
activities have primarily consisted of accepting deposits, making loans and
servicing the deposits and loans acquired from Rushmore. Since banking
operations only commenced on December 1, 1997, a comparison of the March 31,
1998 results to those of March 31, 1997 are not meaningful. This discussion will
therefore concentrate on the March 31, 1998 results.
At March 31, 1998, the Company had total assets of approximately
$11,000,000, total loans of approximately $6,500,000 and total deposits of
approximately $8,000,000. From December 31, 1997 to March 31, 1998, the
Company's loans increased from approximately $6,250,000 to $6,500,000, and its
deposits decreased from approximately $8,400,000 to $8,000,000. The deposits
decreased because the certified check that the Company delivered for payment for
the Towson Property, which had not been presented for payment as of December 31,
1998 and which was classified as a deposit liability on the Company's
consolidated balance sheet for the year ended December 31, 1997, was presented
for payment during January 1998. The Company experienced a loss of approximately
$40,000 for the quarter ended March 31, 1998, primarily as a result of operating
costs exceeding income.
Net interest income for the quarter ended March 31, 1998 was $93,000.
Net interest income, which is the difference between the interest expense
incurred in connection with the Company and the Bank's interest-bearing
liabilities, such as interest on deposit accounts, and the interest income
received from interest-earning
10
assets, such as loans and investment securities, is the most significant
component of the Company's earnings. Volatility in interest rates could cause
the Bank to pay increased interest rates to obtain deposits and, if the Bank is
not able to increase the interest rate on its loans and the rate of return on
its investment portfolio, net interest income will suffer.
Year 2000 Compliance
The much publicized Year 2000 Issue is the result of computer programs
being written using two digits rather than four to define an applicable year.
Computer programs with date-sensitive software may recognize a date using "00"
as the year 1900 rather than the year 2000. With respect to software used for
bank operations, mistakes of this nature could cause disruptions of operations,
including, among other things, the temporary inability to process transactions
or engage in similar normal business activities. In addition, the Year 2000
Issue increases transaction risk with third parties, including customers.
The Bank contracts with an outside firm to provide data processing
services. The Bank's contract with this firm is schedule to expire on December
1, 2000. The data processing firm has advised the Bank in writing that it
intends for its software to be Year 2000 compliant by December 31, 1998. In
other words, the data processing firm's software would not be impacted by any
date-sensitive calculations related to the Year 2000 Issue. The Bank does not
anticipate incurring any extra costs from the data processing firm in connection
with the Year 2000 Issue. The data processing firm provides the Bank with
periodic updates on its progress with regard to the Year 2000 Issue. The Bank
does not believe that its business will be materially impacted by the Year 2000
Issue, assuming that the data processing firm fulfills its representation to the
Bank that its software will be Year 2000 compliant by December 31, 1998.
11
IN ADDITION TO THE HISTORICAL INFORMATION CONTAINED IN PART I OF THIS
QUARTERLY REPORT ON FORM 10-QSB, THE DISCUSSION IN PART I OF THIS QUARTERLY
REPORT ON FORM 10-QSB CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS SUCH AS
STATEMENTS OF THE COMPANY'S PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS THAT
INVOLVE RISKS AND UNCERTAINTIES. THESE RISKS AND UNCERTAINTIES INCLUDE, AMONG
OTHERS, THE COMPANY'S LACK OF OPERATING HISTORY, GENERAL RISKS OF THE
ACQUISITION, INTEREST RATE AND LENDING RISKS ASSOCIATED WITH THE LOANS ACQUIRED
IN THE ACQUISITION, RISK OF LOAN LOSSES, DEPENDENCE ON KEY MANAGEMENT PERSONNEL,
IMPACT OF GOVERNMENT REGULATION ON OPERATING RESULTS, RISKS OF COMPETITIVE
MARKET, EFFECT OF INTEREST RATES ON NET INTEREST INCOME, DEPOSIT FLOWS, THE COST
OF FUNDS, DEMAND FOR LOAN PRODUCTS, IMPACT OF MONETARY POLICY AND OTHER ECONOMIC
FACTORS ON OPERATING RESULTS, RISKS OF EXPANSION STRATEGIES, NO ASSURANCE OF
ABILITY TO RAISE ADDITIONAL CAPITAL, UNCERTAINTY AS TO EFFECTS OF CHANGES IN
FEDERAL LEGISLATION AND REGULATION AND CHANGES IN TAX POLICIES. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN.
12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
The following exhibit is being filed herewith:
EXHIBIT 27 Financial Data Schedules
(b) Reports on Form 8-K.
None.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, as amended, the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
AMERICASBANK CORP.
Date: May 15, 1998 By: /s/ J. Clarence Jameson, III
________________________________
J. Clarence Jameson, III,
President and Chairman of the
Board of Directors
(Principal Executive Officer)
Date: May 15, 1998 By: /s/ Larry D. Ohler
________________________________
Larry D. Ohler, Treasurer
(Principal Financial and
Accounting Officer)
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