U.S SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to ________________________
Commission file number 0-22608
FFLC BANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 59-3204891
--------------------------------- -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
800 North Boulevard West, Post Office Box 490420, Leesburg, Florida 34749-0420
------------------------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (352) 787-3311
--------------
--------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common stock, par value $.01 per share
--------------------------------------
3,561,166 shares outstanding at October 23, 2001
------------------------------------------------
FFLC BANCORP, INC.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
----
Condensed Consolidated Balance Sheets -
at September 30, 2001 (unaudited) and at December 31, 2000.............................2
Condensed Consolidated Statements of Income -
Three and Nine Months ended September 30, 2001 and 2000 (unaudited)....................3
Condensed Consolidated Statement of Changes in Stockholders' Equity -
Nine Months ended September 30, 2001 (unaudited).......................................4
Condensed Consolidated Statements of Cash Flows -
Nine Months ended September 30, 2001 and 2000 (unaudited)............................5-6
Notes to Condensed Consolidated Financial Statements (unaudited).......................7-9
Review by Independent Certified Public Accountants......................................10
Report on Review by Independent Certified Public Accountants............................11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................................12-19
Item 3. Quantitative and Qualitative Disclosures about Market Risk........................20
Part II. OTHER INFORMATION
Item 1. Legal Proceedings................................................................20
Item 2. Changes in Securities............................................................20
Item 3. Default upon Senior Securities...................................................20
Item 5. Other Information................................................................20
Item 6. Exhibits and Reports on Form 8-K.................................................21
SIGNATURES...................................................................................22
1
FFLC BANCORP, INC.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
($ in thousands, except share amounts)
At At
September 30, December 31,
2001 2000
---- ----
Assets (unaudited)
Cash and due from banks $ 18,396 16,036
Interest-bearing deposits 24,453 14,445
--------- ---------
Cash and cash equivalents 42,849 30,481
Securities available for sale 56,172 42,717
Loans, net of allowance for loan losses of $4,210 in 2001
and $3,552 in 2000 675,526 615,484
Accrued interest receivable 4,114 3,750
Premises and equipment, net 13,887 11,490
Foreclosed real estate 163 276
Federal Home Loan Bank stock, at cost 7,450 6,150
Other assets 1,079 1,145
--------- ---------
Total $ 801,240 711,493
========= =========
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits 14,419 13,335
NOW and money-market accounts 104,857 86,509
Savings accounts 19,961 19,143
Certificates 431,001 399,898
--------- ---------
Total deposits 570,238 518,885
Advances from Federal Home Loan Bank 149,000 123,000
Other borrowed funds 14,522 6,376
Accrued expenses and other liabilities 4,538 3,949
--------- ---------
Total liabilities 738,298 652,210
--------- ---------
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none outstanding -- --
Common stock, $.01 par value, 9,000,000 shares authorized,
4,539,332 in 2001 and 4,491,646 in 2000 shares issued 45 45
Additional paid-in-capital 31,328 31,010
Retained income 50,219 47,132
Accumulated other comprehensive income 685 81
Treasury stock, at cost (978,421 shares in 2001 and
959,085 shares in 2000) (19,335) (18,985)
--------- ---------
Total stockholders' equity 62,942 59,283
--------- ---------
Total $ 801,240 711,493
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements.
2
FFLC BANCORP, INC.
Condensed Consolidated Statements of Income (Unaudited)
($ in thousands, except share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
2001 2000 2001 2000
---- ---- ---- ----
Interest income:
Loans $ 13,348 11,894 39,643 33,204
Securities available for sale 739 580 2,180 1,711
Other interest-earning assets 342 359 929 900
---------- ---------- ---------- ----------
Total interest income 14,429 12,833 42,752 35,815
---------- ---------- ---------- ----------
Interest expense:
Deposits 6,747 6,198 20,725 16,582
Borrowed funds 2,315 1,815 6,407 4,842
---------- ---------- ---------- ----------
Total interest expense 9,062 8,013 27,132 21,424
---------- ---------- ---------- ----------
Net interest income 5,367 4,820 15,620 14,391
Provision for loan losses 225 210 825 670
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses 5,142 4,610 14,795 13,721
---------- ---------- ---------- ----------
Noninterest income:
Deposit account fees 214 224 635 596
Other service charges and fees 282 179 764 538
Other 64 10 169 124
---------- ---------- ---------- ----------
Total noninterest income 560 413 1,568 1,258
---------- ---------- ---------- ----------
Noninterest expense:
Salaries and employee benefits 1,847 1,666 5,344 4,966
Occupancy 533 499 1,503 1,368
Deposit insurance premiums 25 23 74 66
Data processing 241 225 735 659
Professional services 152 77 286 224
Advertising and promotion 112 77 320 229
Other 291 321 954 923
---------- ---------- ---------- ----------
Total noninterest expense 3,201 2,888 9,216 8,435
---------- ---------- ---------- ----------
Income before income taxes 2,501 2,135 7,147 6,544
Income taxes 936 828 2,677 2,543
---------- ---------- ---------- ----------
Net income $ 1,565 1,307 4,470 4,001
========== ========== ========== ==========
Basic income per share of common stock $ .44 .37 1.26 1.13
========== ========== ========== ==========
Weighted-average number of shares outstanding
for basic 3,557,820 3,540,284 3,544,119 3,543,708
========== ========== ========== ==========
Diluted income per share of common stock $ .43 .36 1.23 1.10
---------- ========== ========== ==========
Weighted-average number of shares outstanding
for diluted 3,635,164 3,613,869 3,627,263 3,618,768
========== ========== ========== ==========
Dividends per share $ .13 .12 .39 .36
========== ========== ========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements
3
FFLC BANCORP, INC.
Condensed Consolidated Statement of Changes in Stockholders' Equity
Nine Months Ended September 30, 2001 (Unaudited)
($ in thousands)
Accumulated
Other
Additional Compre- Total
Common Paid-In Treasury Retained hensive Stockholders'
Stock Capital Stock Income Income Equity
-------- -------- -------- ------ -------- ------------
Balance at December 31, 2000 $ 45 31,010 (18,985) 47,132 81 59,283
-------
Comprehensive income:
Net income (unaudited) -- -- -- 4,470 -- 4,470
Net change in unrealized gain on securities
available for sale, net of income taxes
of $365 (unaudited) -- -- -- -- 604 604
-------
Comprehensive income (unaudited) 5,074
-------
Net proceeds from the issuance of 47,686 shares of
common stock, stock options exercised
(unaudited) -- 318 -- -- -- 318
Dividends paid (unaudited) -- -- -- (1,383) -- (1,383)
Purchase of treasury stock, 19,336 shares (unaudited) -- -- (350) -- -- (350)
------- ------- ------- ------- ------- -------
Balance at September 30, 2001 (unaudited) $ 45 31,328 (19,335) 50,219 685 62,942
======= ======= ======= ======= ======= -------
See accompanying Notes to Condensed Consolidated Financial Statements.
4
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended
September 30,
2001 2000
---- ----
Cash flows from operating activities:
Net income $ 4,470 4,001
Adjustments to reconcile net income to net cash provided by operations:
Provision for loan losses 825 670
Depreciation 605 557
Credit for deferred income taxes 145 (345)
Shares committed and dividends to incentive plan participants -- 524
Net amortization of premiums or discounts on securities (72) 25
Net deferral of loan fees and costs 104 (78)
Gain on sale of foreclosed real estate (28) (10)
Increase in accrued interest receivable (364) (869)
Decrease (increase) in other assets 66 (549)
Increase in accrued expenses and other liabilities 369 2,335
--------- ---------
Net cash provided by operating activities 5,830 6,261
--------- ---------
Cash flows from investing activities:
Proceeds from maturities and principal repayments on securities available for sale 8,750 3,443
Purchase of securities available for sale (21,164) (4,383)
Loan disbursements (148,283) (153,568)
Principal repayments on loans 87,006 57,079
Purchase of premises and equipment, net (3,002) (2,054)
Purchase of Federal Home Loan Bank stock (1,300) (800)
Proceeds from sales of foreclosed real estate 447 553
--------- ---------
Net cash used in investing activities (77,546) (99,730)
--------- ---------
(continued)
5
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited), Continued
(In thousands)
Nine Months Ended
September 30,
2001 2000
---- ----
Cash flows from financing activities:
Net increase in deposits $ 51,353 74,090
Net increase in advances from Federal Home Loan Bank 26,000 16,000
Net increase in other borrowed funds 8,146 2,987
Issuance of common stock 318 254
Purchase of treasury stock (350) (1,038)
Dividends paid on common stock (1,383) (1,291)
-------- --------
Net cash provided by financing activities 84,084 91,002
-------- --------
Net increase (decrease) in cash and cash equivalents 12,368 (2,467)
Cash and cash equivalents at beginning of period 30,481 34,339
-------- --------
Cash and cash equivalents at end of period $ 42,849 31,872
======== ========
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Interest $ 26,957 20,831
-------- --------
Income taxes $ 2,823 2,745
======== ========
Noncash investing and financing activities:
Accumulated other comprehensive income, net change in unrealized
gain on securities available for sale, net of tax $ 604 42
======== ========
Transfers from loans to foreclosed real estate $ 395 707
======== ========
Loans originated on sales of foreclosed real estate $ 89 208
======== ========
Loans funded by and sold to correspondent $ 11,542 555
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements.
6
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Basis of Presentation. In the opinion of the management of FFLC Bancorp,
Inc., the accompanying condensed consolidated financial statements contain
all adjustments (consisting of normal recurring accruals) necessary to
present fairly the financial position at September 30, 2001 and the results
of operations for the three- and nine-month periods ended September 30,
2001 and 2000 and cash flows for the nine month periods ended September 30,
2001 and 2000. The results of operations for the three- and nine-month
periods ended September 30, 2001 are not necessarily indicative of results
that may be expected for the year ending December 31, 2001.
The condensed consolidated financial statements include the accounts of
FFLC Bancorp, Inc. (the "Holding Company"), its wholly-owned subsidiary,
First Federal Savings Bank of Lake County (the "Bank"), its 90% owned
subsidiary, First Alliance Title, LLC ("First Alliance") and the Bank's
wholly-owned subsidiary, Lake County Service Corporation (together, the
"Company"). During the third quarter of 2001, First Alliance was organized
to facilitate the sale of title insurance. All significant intercompany
accounts and transactions have been eliminated in consolidation.
2. Loans. The following table sets forth the composition of the Bank's loan
portfolio in dollar amounts and percentages at the dates indicated ($ in
thousands):
At September 30, 2001 At December 31, 2000
----------------------- -------------------------
% of % of
Amount Total Amount Total
------ ----- ------ -----
Mortgage loans:
One-to-four-family $ 415,598 59.90% $ 409,600 64.97%
Construction and land 21,912 3.16 13,006 2.06
Multi-family 20,118 2.90 17,602 2.79
Commercial real estate 103,734 14.95 79,729 12.65
------- ------- ------- ------
Total mortgage loans 561,362 80.91 519,937 82.47
Consumer loans 114,448 16.49 95,824 15.20
Commercial loans 18,050 2.60 14,677 2.33
------- ------- ------- -------
Total loans (1) 693,860 100.00% 630,438 100.00%
====== ======
Less:
Loans in process (14,745) (12,128)
Unearned discounts, premiums and deferred loan
fees, net (includes dealer prepaid fees) 621 726
Allowance for loan losses (4,210) (3,552)
------- -------
Loans, net $ 675,526 $ 615,484
======= =======
(continued)
7
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
2. Loans, Continued.
(1) Total loans outstanding by department consists of the following ($ in
thousands):
At
-----------------------------------------------
September 30, 2001 December 31, 2000
---------------------- ---------------------
% of % of
Amount Total Amount Total
------ ----- ------ -----
Residential $ 408,869 58.93% $ 404,494 64.16%
Commercial 170,543 24.58 130,120 20.64
Consumer 114,448 16.49 95,824 15.20
------- ------- -------- ------
$ 693,860 100.00% $ 630,438 100.00%
======= ====== ======= ======
3. Loan Impairment and Loan Losses. The Company prepares a quarterly review of
the adequacy of the allowance for loan losses to also identify and value
impaired loans in accordance with guidance in the Statements of Financial
Accounting Standards Nos. 114 and 118.
An analysis of the change in the allowance for loan losses was as follows
(in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ---------------------
2001 2000 2001 2000
---- ---- ---- ----
Beginning balance $ 4,054 3,182 3,552 2,811
Provision for loan losses 225 210 825 670
Net loans charged-off (69) (15) (167) (104)
------ ------- ------ ------
Ending balance $ 4,210 3,377 4,210 3,377
===== ===== ===== =====
The following summarizes the amount of impaired loans, all of which are
collateral dependent (in thousands):
At
-----------------------------
September 30, December 31,
2001 2000
---- ----
Loans identified as impaired:
Gross loans with no related allowance for losses $ -- --
Gross loans with related allowance for losses recorded 597 1,280
Less: Allowances on these loans (240) (192)
------ ------
Net investment in impaired loans $ 357 1,088
====== ======
(continued)
8
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
3. Loan Impairment and Loan Losses, Continued. The average net investment in
impaired loans and interest income recognized and received on impaired
loans was as follows (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2001 2000 2001 2000
---- ---- ---- ----
Average net investment in impaired loans $ 364 1,088 723 1,117
===== ===== ===== =====
Interest income recognized on impaired loans $ -- 12 81 26
===== ===== ===== =====
Interest income received on impaired loans $ -- 12 81 26
===== ===== ===== =====
During the second quarter of 2001, an impaired loan in the amount of $1.3
million was repaid.
4. Per Share Amounts. Basic income per share of common stock has been
determined by dividing net income for the period by the weighted-average
number of shares outstanding. Shares of common stock purchased by the ESOP
and RRP incentive plans are only considered outstanding when the shares are
released for allocation to participants. Dilutive income per share is
computed by dividing net income by the weighted-average number of shares
outstanding including the dilutive effect of stock options computed using
the treasury stock method. The following table presents the calculation of
basic and diluted weighted-average number of shares:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- ----------------------------
2001 2000 2001 2000
---- ---- ---- ----
Weighted-average shares of common stock issued
and outstanding before adjustments for ESOP,
RRP and common stock options 3,560,555 3,564,592 3,546,854 3,581,168
Adjustment to reflect the effect of unallocated
ESOP and RRP shares (2,735) (24,308) (2,735) (37,460)
---------- ---------- ---------- ----------
Weighted-average common shares for basic
income per share 3,557,820 3,540,284 3,544,119 3,543,708
========== ========== ========== ==========
Basic income per share $ .44 .37 1.26 1.13
========== ========== ========== ==========
Total weighted-average common shares and
equivalents outstanding for basic income
per share computation 3,557,820 3,540,284 3,544,119 3,543,708
Additional dilutive shares using the average market
value for the period utilizing the treasury stock
method regarding stock options 77,344 73,585 83,144 75,060
---------- ---------- ---------- ----------
Weighted-average common shares and equivalents
outstanding for diluted income per share 3,635,164 3,613,869 3,627,263 3,618,768
========== ========== ========== ==========
Diluted income per share $ .43 .36 1.23 1.10
========== ========== ========== ==========
9
FFLC BANCORP, INC.
Review by Independent Certified Public Accountants
Hacker, Johnson & Smith PA, the Company's independent certified public
accountants, have made a limited review of the financial data as of September
30, 2001, and for the three- and nine-month periods ended September 30, 2001 and
2000 presented in this document, in accordance with standards established by the
American Institute of Certified Public Accountants.
Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.
10
Report on Review by Independent Certified Public Accountants
The Board of Directors
FFLC Bancorp, Inc.
Leesburg, Florida:
We have reviewed the accompanying condensed consolidated balance sheet of
FFLC Bancorp, Inc. and Subsidiary (the "Company") as of September 30, 2001, the
related condensed consolidated statements of income for the three- and
nine-month periods ended September 30, 2001 and 2000, the related condensed
consolidated statement of changes in stockholders' equity for the nine-month
period ended September 30, 2001 and the related condensed consolidated
statements of cash flows for the nine-month periods ended September 30, 2001 and
2000. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with accounting principles generally accepted
in the United States of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet as of
December 31, 2000, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the year then ended (not presented
herein); and in our report dated January 12, 2001 we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 2000, is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
HACKER, JOHNSON & SMITH PA
Tampa, Florida
October 5, 2001
11
FFLC BANCORP, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
General
FFLC Bancorp, Inc. (the "Holding Company") is the holding company for its
wholly-owned subsidiary, First Federal Savings Bank of Lake County (the
"Bank"), its 90% owned subsidiary, First Alliance Title, LLC and the Bank's
wholly-owned subsidiary, Lake County Service Corporation (together, the
"Company"). During the third quarter of 2001, First Alliance Title, LLC was
created to facilitate the sale of title insurance. The Company's
consolidated results of operations are primarily those of the Bank.
The Bank's principal business continues to be attracting retail deposits
from the general public and investing those deposits, together with
principal repayments on loans and investments and funds generated from
operations, primarily in mortgage loans secured by one-to-four-family
owner-occupied homes, commercial loans, securities and, to a lesser extent,
construction loans, consumer and other loans, and multi-family residential
mortgage loans. In addition, the Bank holds investments permitted by
federal laws and regulations including securities issued by the U.S.
Government and agencies thereof. The Company's revenues are derived
principally from interest on its loan and mortgage-backed securities
portfolios and interest and dividends on its investment securities. The
Bank is a member of the Federal Home Loan Bank ("FHLB") system and its
deposits are insured to the applicable limits by the Savings Association
Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation (the
"FDIC"). The Bank is subject to regulation by the Office of Thrift
Supervision (the "OTS") as its chartering agency, and the FDIC as its
deposit insurer.
The Bank has 12 full-service banking locations in Lake, Sumter and Citrus
Counties, Florida.
The Company's results of operations are dependent primarily on net interest
income, which is the difference between the interest income earned
primarily on its loan and securities portfolios, and its cost of funds,
consisting of the interest paid on its deposits and borrowings. The
Company's operating results are also affected, to a lesser extent, by fee
income. The Company's operating expenses consist primarily of salaries and
employee benefits, occupancy expenses, deposit insurance premiums and other
general and administrative expenses. The Company's results of operations
are also significantly affected by general economic and competitive
conditions, particularly changes in market interest rates, government
policies, and actions of regulatory authorities.
12
FFLC BANCORP, INC.
Liquidity and Capital Resources
The Company's most liquid assets are cash, amounts due from depository
institutions and interest-bearing deposits. The levels of these assets are
dependent on the Company's lending, investing, operating, and deposit
activities during any given period. At September 30, 2001, cash, amounts
due from depository institutions and interest-bearing deposits, totaled
$42.8 million.
The OTS has issued an interim final rule that removes the regulatory
provisions establishing the required liquidity level and containing the
definitions needed to calculate the level. The repeal of Section 6 of HOLA,
and the removal of the regulatory section, places savings associations on
the same basis as other insured depositories that do not have statutorily
mandated liquidity requirements. Instead of a specific regulation, the OTS
has amended its management and financial policies to provide that savings
associations and their service corporations be well managed and operate on
a safe and sound basis. To meet those requirements, each savings
association and its service corporation maintain sufficient liquidity to
ensure its safe and sound operation. The Bank continued to maintain an
adequate liquidity level at September 30, 2001.
The Bank's primary sources of funds include proceeds from payments and
prepayments on mortgage loans and mortgage-backed securities, proceeds from
maturities of investment securities, and increases in deposits and Federal
Home Loan Bank advances. While maturities and scheduled amortization of
loans and investment securities are predictable sources of funds, deposit
inflows and mortgage prepayments are greatly influenced by local
conditions, general interest rates, and regulatory changes.
At September 30, 2001, the Bank had outstanding commitments to originate
$12.5 million of loans and to fund the undisbursed portion of loans in
process of approximately $14.7 million and undisbursed lines of credit of
approximately $40.5 million. The Bank believes that it will have sufficient
funds available to meet its commitments. At September 30, 2001,
certificates of deposit which were scheduled to mature in one year or less
totaled $323.2 million. Management believes, based on past experience, that
a significant portion of those funds will remain with the Bank.
The Bank is subject to various regulatory capital requirements administered
by the Federal banking agencies. Failure to meet minimum capital
requirements can require regulators to initiate certain mandatory-and
possibly additional discretionary-actions that, if undertaken, could have a
direct material effect on the Company'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 (set forth in the table below)
of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined). Management believes, as of September 30,
2001, that the Bank meets all capital adequacy requirements to which it is
subject.
13
FFLC BANCORP, INC.
As of September 30, 2001, the most recent notification from the OTS
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Bank
must maintain minimum tangible, Tier I (core), Tier I (risk-based) and
total risk-based capital percentages as set forth in the table. There are
no conditions or events since that notification that management believes
have changed the institution's category.
The Bank's actual capital amounts and percentages at September 30, 2001 are
also presented in the table.
To Be Well
Minimum Capitalized
For Capital For Prompt
Adequacy Corrective Action
Actual Purposes Provisions
------ -------- ----------
% Amount % Amount % Amount
- ------ - ------ - ------
($ in thousands)
Stockholders' equity,
and ratio to total
assets 7.30% $ 58,525
Less: investment in
nonincludable
subsidiary (455)
Less: unrealized gain on
securities available for sale (726)
--------
Tangible capital,
and ratio to adjusted
total assets 7.17% $ 57,344 1.5% $ 12,002
======== ======
Tier 1 (core) capital, and
ratio to adjusted total
assets 7.17% $ 57,344 3.0% $ 24,004 5.0% $ 40,007
======== ====== =======
Tier 1 capital, and ratio
to risk-weighted assets 11.16% 57,344 4.0% $ 20,558 6.0% $ 30,837
====== =======
Less: Nonincludable investment
in 80% land loans (434)
Tier 2 capital (allowance for
loan losses) 3,840
--------
Total risk-based capital,
and ratio to risk-
weighted assets 11.82% $ 60,750 8.0% $ 41,116 10.0% $ 51,396
======== ====== =======
Total assets $ 801,329
========
Adjusted total assets $ 800,148
========
Risk-weighted assets $ 513,955
========
14
FFLC BANCORP, INC.
The following table shows selected ratios for the periods ended or at the
dates indicated:
Nine Months Nine Months
Ended Year Ended Ended
September 30, December 31, September 30,
2001 2000 2000
------------- ------------ -------------
Average equity as a percentage
of average assets 8.11% 8.88% 9.03%
Total equity to total assets at end of period 7.86% 8.33% 8.45%
Return on average assets (1) .79% .82% .85%
Return on average equity (1) 9.77% 9.24% 9.36%
Noninterest expense to average assets (1) 1.63% 1.76% 1.78%
Nonperforming assets to total assets
at end of period .28% .39% .42%
Operating efficiency ratio (1) 53.62% 54.44% 53.90%
(1) Annualized for the nine months ended September 30, 2001 and 2000.
At At At
September 30, December 31, September 30,
2001 2000 2000
------------ ------------ -------------
Weighted-average interest rates:
Interest-earning assets:
Loans 7.82% 8.17% 8.10%
Securities 5.63% 6.50% 6.62%
Other interest-earning assets 4.08% 6.55% 6.89%
Total interest-earning assets 7.51% 8.02% 7.97%
Interest-bearing liabilities:
Interest-bearing deposits 4.50% 5.29% 5.21%
Borrowed funds 5.60% 6.13% 6.14%
Total interest-bearing liabilities 4.75% 5.51% 5.39%
Interest-rate spread 2.76% 2.51% 2.58%
Change in Financial Condition
Total assets increased $89.7 million or 12.6%, from $711.5 million at December
31, 2000 to $801.2 million at September 30, 2001, primarily as a result of an
increase in net loans of $60.0 million. Deposits increased $51.4 million from
$518.9 million at December 31, 2000 to $570.2 million at September 30, 2001. The
$3.7 million net increase in stockholders equity during the nine months ended
September 30, 2001 resulted from net income of $4.5 million, proceeds of $.3
million from stock options exercised and an increase of $.6 million in
accumulated other comprehensive income, partially offset by repurchases of the
Company's stock of $.4 million and dividends paid of $1.4 million.
15
FFLC BANCORP, INC.
Results of Operations
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest and dividend income; (iv) interest-rate spread;
and (v) net interest margin. Yields and costs were derived by dividing income or
expense by the average balance of assets or liabilities, respectively, for the
periods shown. The average balance of loans includes loans on which the Company
has discontinued accruing interest. The yields and costs include fees which are
considered to constitute adjustments to yields.
Three Months Ended September 30,
--------------------------------------------------------------
2001 2000
----------------------------- -------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
($ in Thousands)
Interest-earning assets:
Loans $ 664,371 13,348 8.04% $ 580,948 11,894 8.19%
Securities 53,351 739 5.54 35,673 580 6.50
Other interest-earning assets (1) 32,033 342 4.27 20,656 359 6.95
-------- ------ ------- ------
Total interest-earning assets 749,755 14,429 7.70 637,277 12,833 8.05
------ ------
Noninterest-earning assets 34,629 28,994
-------- -------
Total assets $ 784,384 $ 666,271
======= =======
Interest-bearing liabilities:
NOW and money-market accounts 100,664 574 2.28 82,315 546 2.65
Savings accounts 19,617 95 1.94 19,722 107 2.17
Certificates 425,005 6,078 5.72 369,952 5,545 6.00
Advances from Federal Home Loan Bank 144,054 2,177 6.04 109,902 1,736 6.32
Other borrowed funds 13,160 138 4.19 6,052 79 5.22
------- ------ ------- ------
Total interest-bearing liabilities 702,500 9,062 5.16 587,943 8,013 5.45
------ ------
Noninterest-bearing deposits 13,837 14,011
Noninterest-bearing liabilities 5,853 6,491
Stockholders' equity 62,194 57,826
-------- -------
Total liabilities and stockholders' equity $ 784,384 $ 666,271
======= =======
Net interest income $ 5,367 $ 4,820
====== ======
Interest-rate spread (2) 2.54% 2.60%
==== ====
Net average interest-earning assets, net interest margin (3) $ 47,255 2.86% $ 49,334 3.03%
======= ==== ======= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.07 1.08
==== ====
(1) Includes interest-bearing deposits, federal funds sold and Federal Home
Loan Bank stock.
(2) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin is net interest income divided by average
interest-earning assets.
16
FFLC BANCORP, INC.
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest and dividend income; (iv) interest-rate spread;
and (v) net interest margin. Yields and costs were derived by dividing income or
expense by the average balance of assets or liabilities, respectively, for the
periods shown. The average balance of loans includes loans on which the Company
has discontinued accruing interest. The yields and costs include fees which are
considered to constitute adjustments to yields.
Nine Months Ended September 30,
---------------------------------------------------------------------
2001 2000
--------------------------------- --------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
($ in Thousands)
Interest-earning assets:
Loans $ 646,659 39,643 8.17% $ 547,992 33,204 8.08%
Securities 48,141 2,180 6.04 35,861 1,711 6.36
Other interest-earning assets (1) 24,774 929 5.00 18,092 900 6.63
-------- -------- -------- --------
Total interest-earning assets 719,574 42,752 7.92 601,945 35,815 7.93
0 ------ ------
Noninterest-earning assets 32,412 28,958
-------- -------
Total assets $ 751,986 $ 630,903
======== =======
Interest-bearing liabilities:
NOW and money-market accounts 93,539 1,740 2.48 81,464 1,619 2.65
Savings accounts 19,545 298 2.03 20,476 315 2.05
Certificates 416,563 18,687 5.98 344,940 14,648 5.66
Advances from Federal Home Loan Bank 131,436 6,039 6.13 100,850 4,644 6.14
Borrowed funds 10,749 368 4.56 5,141 198 5.14
-------- -------- -------- -------
Total interest-bearing liabilities 671,832 27,132 5.38 552,871 21,424 5.17
------ ------
Noninterest-bearing deposits 13,343 13,354
Noninterest-bearing liabilities 5,818 7,678
Stockholders' equity 60,993 57,000
-------- --------
Total liabilities and stockholders' equity $ 751,986 $ 630,903
======= =======
Net interest income $ 15,620 $ 14,391
====== ======
Interest-rate spread (2) 2.54% 2.76%
==== ====
Net average interest-earning assets, net interest margin (3) $ 47,742 2.89% $ 49,074 3.19%
======= ==== ======= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.07 1.09
==== ====
(1) Includes interest-bearing deposits, federal funds sold and Federal Home
Loan Bank stock.
(2) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin is net interest income divided by average
interest-earning assets.
17
FFLC BANCORP, INC.
Comparison of the Three Months Ended September 30, 2001 and 2000
General Operating Results. Net income for the three-month period ended September
30, 2001 was $1.6 million, or $.44 per basic and $.43 per diluted share,
respectively, compared to $1.3 million, or $.37 per basic and $.36 per
diluted share, respectively, for the comparable period in 2000. The
increase in net income was primarily a result of an increase of $1.6
million in interest income, partially offset by increases of $1.0 million
in interest expense and $313,000 in noninterest expense.
Interest Income. Interest income increased $1.6 million or 12.4%, from $12.8
million for the three-month period ended September 30, 2000 to $14.4
million for the three-month period ended September 30, 2001. The increase
was due to a $112.5 million or 17.6% increase in average interest-earning
assets outstanding for the three months ended September 30, 2001 compared
to the 2000 period, partially offset by an decrease in the average yield
earned on interest-earning assets from 8.05% for the three months ended
September 30, 2000 to 7.70% for the three months ended September 30, 2001.
Interest Expense. Interest expense increased $1.0 million or 13.1%, from $8.0
million for the three-month period ended September 30, 2000 to $9.1 million
for the three-month period ended September 30, 2001. The increase was due
to increases of $73.3 million and $41.3 million in average interest-bearing
deposits and borrowings outstanding, respectively. Average interest-bearing
deposits increased from $472.0 million outstanding during the three months
ended September 30, 2000 to $545.3 million outstanding during the
comparable period for 2001. Average borrowings increased from $116.0
million during the three months ended September 30, 2000 to $157.2 million
for the comparable 2001 period. The average yield paid on interest-bearing
liabilities decreased from 5.45% for the three months ended September 30,
2000 to 5.16% for the comparable 2001 period.
Noninterest Income. Noninterest income increased $147,000 or 35.6% from $413,000
during the 2000 period to $560,000 during the 2001 period. The increase was
mainly due to a $103,000 increase in other service charges and fees.
Noninterest Expense. Noninterest expense increased by $313,000 or 10.8% from
$2.9 million for the three-month period ended September 30, 2000 to $3.2
million for the three-month period ended September 30, 2001. The increase
was primarily due to increases of $181,000 in salaries and employee
benefits, $34,000 in occupancy expense and $75,000 in professional services
related to the overall growth of the Company.
Income Tax Provision. The income tax provision increased from $828,000 for the
three-month period ended September 30, 2000 (an effective tax rate of
38.8%) to $936,000 (an effective tax rate of 37.4%) for the corresponding
period in 2001.
18
FFLC BANCORP, INC.
Comparison of the Nine-Month Periods Ended September 30, 2001 and 2000
General Operating Results. Net income for the nine-month period ended September
30, 2001 was $4.5 million, or $1.26 per basic and $1.23 per diluted share,
respectively, compared to $4.0 million, or $1.13 per basic and $1.10 per
diluted share, respectively, for the comparable period in 2000. The increase
was primarily due to an increase in interest income of $6.9 million,
partially offset by increases in interest expense of $5.7 million and
noninterest expense of $781,000.
Interest Income. Interest income increased $6.9 million or 19.4%, from $35.8
million for the nine-month period ended September 30, 2000 to $42.8 million
for the comparable period in 2001. The increase was due to a $117.6 million
or 19.5% increase in average interest-earning assets outstanding for the nine
months ended September 30, 2001 compared to the 2000 period, partially offset
by a decrease in the average yield earned on interest-earning assets from
7.93% for the nine months ended September 30, 2000 to 7.92% for the nine
months ended September 30, 2001.
Interest Expense. Interest expense increased $5.7 million or 26.6%, from $21.4
million for the nine-month period ended September 30, 2000 to $27.1 million
for the nine-month period ended September 30, 2001. The increase was due to
increases of $82.8 million and $36.2 million in average interest-bearing
deposits and borrowings outstanding, respectively. Average interest-bearing
deposits increased from $446.9 million outstanding during the nine months
ended September 30, 2000 to $529.6 million outstanding during the comparable
period for 2001. Average borrowings increased from $106.0 million outstanding
during the nine months ended September 30, 2000 to $142.2 million for the
comparable 2001 period. The average yield paid on interest-bearing
liabilities increased from 5.17% for the nine months ended September 30, 2000
to 5.38% for the comparable 2001 period.
Noninterest Income. Noninterest income increased $310,000 or 24.6% from $1.3
million for the nine-months ended September 30, 2000 to $1.6 million for the
comparable 2001 period. This increase was primarily due to an increase of
$226,000 in other service charges and fees.
Noninterest Expense. Noninterest expense increased by $781,000 or 9.26%, from
$8.4 million for the nine-month period ended September 30, 2000 to $9.2
million for the nine-month period ended September 30, 2001. The increase was
primarily due to increases in salaries and employee benefits of $378,000,
occupancy expense of $135,000 and advertising and promotion expense of
$91,000 related to the overall growth of the Company.
Income Tax Provision. The income tax provision increased from $2.5 million for
the nine-month period ended September 30, 2000 (an effective tax rate of
38.9%) to $2.7 million (an effective tax rate of 37.5%) for the corresponding
period for 2001.
19
FFLC BANCORP, INC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss from adverse changes in market prices and rates.
The Company's market risk arises primarily from interest-rate risk inherent in
its lending and deposit taking activities. The Company has little or no risk
related to trading accounts, commodities or foreign exchange.
Management actively monitors and manages its interest-rate risk exposure. The
primary objective in managing interest-rate risk is to limit, within established
guidelines, the adverse impact of changes in interest rates on the Company's net
interest income and capital, while adjusting the Company's asset-liability
structure to obtain the maximum yield-cost spread on that structure. Management
relies primarily on its asset-liability structure to control interest rate risk.
However, a sudden and substantial increase in interest rates could adversely
impact the Company's earnings, to the extent that the interest rates borne by
assets and liabilities do not change at the same speed, to the same extent, or
on the same basis. There has been no significant change in the Company's market
risk exposure since December 31, 2000.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceeding to which FFLC Bancorp, Inc.,
or any of its subsidiaries is a party or to which any of their property is
subject.
Item 2. Changes in Securities
Not applicable
Item 3. Default upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
20
FFLC BANCORP, INC.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report.
3.1 Certificate of Incorporation of FFLC Bancorp, Inc.*
3.2 Bylaws of FFLC Bancorp, Inc. ***
4.0 Stock Certificate of FFLC Bancorp, Inc.*
10.1 First Federal Savings Bank of Lake County Recognition and
Retention Plan**
10.2 First Federal Savings Bank of Lake County Recognition and
Retention Plan for Outside Directors**
10.3 FFLC Bancorp, Inc. Incentive Stock Option Plans for Officers and
Employees**
10.4 FFLC Bancorp, Inc. Stock Option Plan for Outside Directors**
* Incorporated herein by reference into this document from the Exhibits
to Form S-1, Registration Statement, initially filed on September 27,
1993, Registration No. 33-69466.
** Incorporated herein by reference into this document from the Proxy
Statement for the Annual Meeting of Stockholders held on May 12, 1994.
*** Incorporated herein by reference into this document from the 2000 FFLC
Bancorp, Inc. Form 10-K filed March 22, 2001.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the three months ended
September 30, 2001.
21
FFLC BANCORP, INC.
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.
FFLC BANCORP, INC.
(Registrant)
Date: October 25, 2001 By: /s/ Stephen T. Kurtz
---------------- ---------------------------------
Stephen T. Kurtz, President and
Chief Executive Officer
Date: October 25, 2001 By: /s/ Paul K. Mueller
---------------- ---------------------------------
Paul K. Mueller, Executive Vice
President and Treasurer
22