-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gb81OHRDQpkTiTpI17r28IhaoyLWOWBQ9wsdFjqqF8B7a15ehbUPmnP1Vq2dwb3b ZBkxDaAdIujj5G1aQJ/iSw== 0001051622-98-000003.txt : 19980211 0001051622-98-000003.hdr.sgml : 19980211 ACCESSION NUMBER: 0001051622-98-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980204 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980210 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SURETY CAPITAL CORP /DE/ CENTRAL INDEX KEY: 0000784932 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 752065607 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12818 FILM NUMBER: 98527779 BUSINESS ADDRESS: STREET 1: 1845 PRECINCT LINE RD STE 100 CITY: HURST STATE: TX ZIP: 76054 BUSINESS PHONE: 8174982749 MAIL ADDRESS: STREET 1: 1845 PRECINCT LINE RD STE 100 CITY: HURST STATE: TX ZIP: 76054 FORMER COMPANY: FORMER CONFORMED NAME: K CAPITAL INC DATE OF NAME CHANGE: 19870407 8-K 1 FORM 8-K FORM 8-K Securities and Exchange Commission Washington, D.C. 20549 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): February 4, 1998 Surety Capital Corporation ------------------------------------------------------ (exact name of registrant as specified in its charter) Delaware 33-1983 75-2065607 - --------------- ------------ -------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation) Number) 1845 Precinct Line Road, Suite 100, Hurst, Texas 76054 ------------------------------------------------------- (address of principal executive offices) Registrant's telephone number, including area code: 817-498-2749 Not applicable ------------------------------------------------------------- (Former name or former address, if changed since last report) PAGE Item 5. Other Events On February 4, 1998 Surety Capital Corporation (the "Company") announced the results for its year ended December 31, 1997. The net loss for the twelve months ended December 31, 1997 was ($3,476,304), or ($0.58) per diluted share, compared to net income of $1,697,987, or $0.31 per diluted share, for the comparable period in 1996. The net loss for the fourth quarter of 1997 was ($5,007,393), or ($0.84) per diluted share, compared to net income of $564,770, or $0.10 per diluted share, for the fourth quarter of 1996. A copy of the press release is attached hereto as Exhibit 1. The net loss in the fourth quarter of 1997 was the result of a decision by the Company's management to charge off certain medical claims receivables and to make provision for other receivables outstanding over 120 days, due to concerns regarding the collect- ibility of such receivables. Management's fourth quarter and year- end evaluations of the Company's medical claims factoring portfolio indicated that as of December 31, 1997 approximately $6,266,711 in medical claims receivables were outstanding over 120 days. As a result, management determined that charge offs of approximately $2,033,587 were warranted in the fourth quarter, as well as a provision for an additional $3,686,409 in such receivables. Manage- ment also determined to write off goodwill of $1,151,111 relating to the medical claims factoring division during the fourth quarter. New management of the medical claims factoring division is concentrating its efforts on collecting the current portfolio of outstanding receivables, rather than acquiring receivables from new customers. While the Company's management will vigorously pursue collection of the outstanding receivables of $6,266,711, the Company cannot predict at this time the likely amount of any such recoveries. The Company's core business of community banking and insurance premium financing loans remains sound and profitable, and the Company expects that business to continue to expand in the future. The Company's previously announced intention to acquire TexStar National Bank will proceed, subject to the Company obtaining satisfactory financing to consummate the transaction. However, in light of the fourth quarter charge offs and provision for other receivables outstanding over 120 days, the Company withdrew its pending Registra- tion Statement on Form S-1, and will pursue other options for financing the acquisition of TexStar. Item 7. Exhibits 1 Press Release. 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 hereunto duly authorized. SURETY CAPITAL CORPORATION DATE: February 9, 1998 /s/ B. J. Curley ---------------- B. J. Curley, Chief Accounting Officer EX-1 2 PRESS RELEASE **News Release** EXHIBIT 1 SURETY CAPITAL CORPORATION 4th Quarter Operating Results Unaudited Financial Highlights For Release: Immediately Contact: C. Jack Bean Date: February 4, 1998 Chairman of the Board AMEX Symbol: SRY 1 (800) SRY-5995
Twelve Months Ended Quarter Ended December 31, December 31, 1997 1996 1997 1996 ----------- ----------- ----------- ---------- Total interest income $15,282,686 $14,390,362 $ 3,275,273 $3,914,604 Total interest expense 5,749,798 5,361,689 1,459,744 1,400,051 ----------- ----------- ----------- ---------- Net interest income 9,532,888 9,028,673 1,815,529 2,514,553 Provision for credit losses 6,234,996 135,000 5,939,996 45,000 ----------- ----------- ----------- ---------- Income after provision for credit losses 3,297,892 8,893,673 (4,124,467) 2,469,553 Total non-interest income 2,538,918 1,877,454 774,213 522,678 Total non-interest expense 11,113,184 8,135,012 4,332,126 2,083,304 ----------- ----------- ----------- ---------- Income (loss) before income taxes (5,276,374) 2,636,115 (7,682,380) 908,927 Income tax expense (benefit) (1,800,070) 938,128 (2,674,987) 344,157 ----------- ----------- ----------- ---------- Net Income (loss) $(3,476,304) $ 1,697,987 $(5,007,393) $ 564,770 =========== =========== =========== ========== Weighted-average common stock outstanding 5,751,847 5,389,366 5,753,793 5,747,243 Basic income (loss) per common share $(0.60) $0.32 $(0.87) $0.10 Weighted-average common stock outstanding and common stock equivalents 5,990,815 5,437,661 5,991,740 5,759,503 Diluted income (loss) per share $(0.58) $0.31 $(0.84) $0.10
December 31, 1997 1996 ------------- ------------- Total Assets $170,846,049 $176,439,310 Loans, net 96,761,742 95,750,642 Medical claims factoring receivables, net 3,073,155 6,116,271 Deposits 154,541,492 155,690,341 Shareholders' equity 15,877,339 19,230,552 Book value per share $2.74 $3.34 Allowance for credit losses to total loans 0.8% 1.10% Allowance for credit losses to medical claims factoring receivables 58.4% 3.4% Nonperforming loans to total loans 0.2% 0.2% Nonperforming assets to total assets 3.2% 0.6% Capital ratios Leverage ratio 6.1% 7.0% Tier I risk-based capital 9.2% 11.1% Total risk-based capital 10.5% 12.3% Loans to deposit 62.0% 62.2% Page 1 of 2 PAGE **News Release** SURETY CAPITAL CORPORATION 4th Quarter Operating Results Unaudited Financial Highlights Hurst, Texas, February 4, 1998 - Surety Capital Corporation ("Surety Capital"), a bank holding company located in Hurst, Texas, announced today results for its year ended 1997. For the twelve months ended December 31, 1997, total interest income increased 6.2% to $15,282,686 from $14,390,362 in the comparable period in 1996. Net loss for the twelve months ended December 31, 1997, was ($3,476,304), or ($0.58) per diluted share, compared to net income of $1,697,987, or $0.31 per diluted share for the comparable period in 1996. For the quarter ended December 31, 1997, total interest income was $3,275,273 vs. $3,914,604 in the comparable period in 1996. The net loss for the fourth quarter was ($5,007,393), or ($0.84) per diluted share, compared to net income of $564,770, or $0.10 per diluted share in the fourth quarter of 1996. Surety Capital experienced growth within its insurance premium finance division during 1997, with the average balance of insurance premium finance loans outstanding during 1997 increasing by 51.1% to $45,255,998 from $29,949,099 in 1996. The interest income generated by the insurance premium finance loans grew by 34.3% to $4,785,717 in 1997 from $3,563,467 in 1996. The reported net loss in the fourth quarter was a result of a decision by Surety Capital's management to charge-off certain medical claims receivables and to make provision for other receivables outstanding over 120 days, due to management's concerns regarding the collectibility of such receivables. Management's fourth quarter and year-end evaluation of Surety Capital's medical claims factoring portfolio, indicated that at December 31, 1997, approximately $6,267,000 in medical claims receivables were outstanding over 120 days. Consequently, management determined that charge-offs of approximately $2,034,000 of the $6,267,000 were warranted in the fourth quarter as well as a provision for an additional $3,686,409 of such receivables. Due to the above, management decided to write-off all goodwill of $1,151,111 relating to medical claims factoring division during the fourth quarter. New management within the medical claims factoring division will vigorously pursue collecting the portfolio of the outstanding receivables over 120 days old, as opposed to acquiring receivables from new customers. At this time, however, the Company cannot predict the likely amount of any such recoveries. Surety Capital's core business of community banking and insurance premium financing loans remains sound and profitable, and the Company expects that business to continue to expand in the future. In light of the fourth quarter operating results, Surety Capital intends to ask permission from the Securities and Exchange Commission to withdraw its pending Registration Statement on Form S-1, the proceeds of which would have been used for its acquisition of TexStar National Bank. Surety Capital's acquisition of TexStar National Bank will proceed subject to the Company obtaining satisfactory financing to consummate the transaction. This press release contains forward-looking statements. All forward-looking statements involve risks and uncertainties, including, without limitation, the risks detailed in Surety Capital's filings and reports with the Securities and Exchange Commission. Such statements are only predictions and actual events or results may differ materially. www.sry.com Email cjbean@sry.com Page 2 of 2 -----END PRIVACY-ENHANCED MESSAGE-----