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Annual Report
2004 Annual Report: March 22, 2004 Dear Shareholders, Clients, Employees and Friends: We are pleased to report that 2003 was another very successful year. Your team was able to deliver some great financial results, strategic initiatives and made great strides in our vision of "Florida's Business Bank"SM, as summarized below. 2003 Highlights
Financial Results Following are highlights of our 2003 financial results. We have on file audited consolidated financial statements for the year 2003 and will be happy to send you a copy upon request. Consolidated Balance Sheet Highlights (unaudited)
Consolidated Income Statement (unaudited)
Total assets increased
by over 25% and finished the year at $206,000,000. Our
relationship banking approach continues to drive growth
in both loans and deposits. Total loans increased by over
$41,000,000, or 33% from year-end 2002. Likewise, deposits
increased by 23%, growing from $136,000,000 at year-end
2002 to $168,000,000. Sincerely, Richard G. Jacobus John E. Tranter Chairman of the Board President & CEO MANAGEMENT DISCUSSION 2003 marked our
fourth full year of operation as we continued to move closer
to our goal as "Florida's Business Bank"SM.
Strong growth in new relationships in 2003 contributed
to the increase in deposits of over $32,000,000, and increase
in outstanding loans of over $41,000,000. As of the end
of 2003, Gulfstream Business Bank had over 2,600 deposit
accounts and almost 1,000 loan accounts and serving over
400 business, professional and investor relationships. Management In 2003,
we added 19 associates to our team of banking professionals,
including the addition of the Delray Beach banking center team
and staff to expand and support the existing sales functions
in Martin and St. Lucie Counties. Lee Waring III, CEO Palm Beach
County, was joined by Kerri Burke, VP/Banking Center Manager
and Jeffery Silkworth, VP/Senior Commercial Banking Officer in
our Delray Beach Banking Center. In 2003, we also added Cerise
Semrinec, VP/Credit Officer, and Jane Palmer, VP/Investment Executive
to manage Gulfstream Investment Management Services. For 2004,
nine new positions will be added to expand the residential mortgage
department, the Palm Beach County and St. Lucie County sales
functions, as well as service support in Martin County. We consider
our employees to be our most valuable resource. Hiring extraordinary
individuals who share our values and can deliver our goals is
our top priority in order to continue our success and position
the Bank for the future. Extended Markets In
2003 we extended "Florida's Business Bank"SM into
Palm Beach County and celebrated our one-year anniversary
of the Banking Center in Delray Beach on January 28, 2004.
The Delray Beach Banking Center ended the year with over
$16,000,000 in loans and over $18,000,000 in deposits. The
current Delray Beach office is located at 777 E. Atlantic
Avenue, Suite 100, Delray Beach in the Atlantic Plaza and
can be reached at 561-276-0707. In 2003, we hired
Jane Palmer as Investment Executive manager of Gulfstream
Investment Management Services. As of the end of the year,
we had $18,500,000 in assets under management, an increase
of 120% over last year. In 2004 we will continue to focus
on new client relationships and offer a selection of investment
products, including asset management, insurance, mutual
funds and cash management. Capital In June of 2003,
we went back to our original shareholders and offered a
first right of refusal on 320,030 shares at $17.00 per
share. Except for a few shares allocated to our extended
market clients, our existing shareholders purchased the
entire 320,030 shares. This new capital, in addition to
our earnings for 2003, enabled Gulfstream Business Bank
to continue to execute extended market strategies. Residential Mortgage Lending In our second full year of offering residential mortgage services, we originated over 115 residential loans totaling $35,000,000 in production and generating fee income of approximately $330,000. Although in 2003 we experienced a good percentage of our residential loan volume due to the interest rate environment and the refinance market, we saw a great opportunity within our existing client base to sell the product. We expect the business unit to continue to grow and become a core product. In the next 6-12 months, we expect to add two additional Mortgage Loan Officers for St. Lucie County and Palm Beach County. During the year, we added a mortgage processor and additional mortgage investors to provide greater product flexibility and pricing options. Deposit Growth Gulfstream Business Bank added almost 1,000 new business and professional accounts in 2003. The new relationship growth enabled your bank to grow deposits by over 23%, from $136,000,000 at year-end 2002, to over $168,000,000 at year-end 2003. In addition to our overall deposit growth, we were able to grow our all-important DDA deposits and kept the ratio of DDA to total deposits above goal, at 26.5%. Our aggressive deposit growth will need to continue in 2004 to fund anticipated loan growth. This deposit growth will be accomplished by continuing to pursue our business banking and niche strategies in Martin, St. Lucie and Palm Beach County markets. Loan Growth As a locally owned
and managed community bank, meeting the credit needs of
our local businesses and professionals continues to be
one of the most critical pieces of our mission. With historically
low interest rates and the competition's willingness to
compete on interest rate (offering low long-term fixed
rates), it has been a challenge to build our loan balances
and customer base. Despite these challenges, our continued
focus on niche business banking has added over $41,000,000
in loans during 2003, ending the year in excess of $165,000,000.
This increase was the result of closing over 380 loans
and total new loan commitments of $99,000,000. This was
a 46% increase in new commitments compared to last year,
and 33% in loan outstandings. Credit Quality As noted above, our loan growth in 2003 was again very strong. We closed over 380 new loans and added over $41,000,000 to loan outstandings. During 2003 we had our first problem loan that required a foreclosure and a commensurate asset write-down of the real estate. Our aggressive reserve policy enabled the bank to write down the assets and take the property into "other real estate owned" with minimal impact on earnings. During 2003, the bank increased the allowance for loan losses by over $400,000 with reserves ending the year at $2,305,000, or 1.39% of total outstanding loans. Our overall loan quality remains excellent with only 3 out of 980 loans classified. 2004 GOALS AND STRATEGIES Extended Markets 2004 and 2005 will
require concentration on our market build-out of St. Lucie
County and Palm Beach County. The Delray Banking Center
will be under construction for most of 2004, with a move-in
date early 2005. In addition to growing the organization
through our temporary location, we will begin to add employees
in preparation for the opening of the new facility. Residential Real Estate We had very good results during the year. Although the refinance craze of 2002/2003 took our revenue above goal, we also had very good success outside of those customers just refinancing for lower interest rates. Our goal for 2004 is to repeat our success in 2003 by adding Mortgage Loan Officers to our Palm Beach County and St Lucie County markets, in addition to backroom support. The cross-sales from the business unit are very good and efficiently falling into our relationship driver model. Asset Management/Brokerage Gulfstream Investment Management Services (GIMS) just finished its first full year of operation. We established over 62 Investment Services relationships and will continue to leverage this momentum. We will be adding a sales assistant and several additional money mangers in 2004, with the goal of essentially doubling our client relationships and assets under management. Earnings/Capital Our earnings have been increasing year-over-year at a fairly good rate. Adding this to the capital offering in 2003, we have been able to grow the bank assets to over $230,000,000 with limited dilution. Our goal in 2004 and 2005 is to grow earnings at a rate to support our growth targets, including our projected growth in St. Lucie County and Palm Beach County. As the extended market opportunities become clearer (growth continues) we will reassess our capital needs in early to mid 2005. Balance Sheet Growth Our increase in capital
allows us to continue to build on and develop new business
and professional relationships. Most of these relationships
are acquired through our marketing efforts and generally
entail lending money. As we grow these numbers of relationships,
our loan balance should continue to grow at a pretty good
pace. |
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