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 June 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, 34749-0420
Post Office Box 490420, Leesburg, Florida
----------------------------------------------------------- ----------
(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 $.01 per share 3,566,785 shares outstanding at
-------------------------------------- July 23, 2001
-------------------------------
FFLC BANCORP, INC.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
----
Condensed Consolidated Balance Sheets -
at June 30, 2001 (unaudited) and at December 31, 2000...................2
Condensed Consolidated Statements of Income -
Three and Six Months ended June 30, 2001 and 2000 (unaudited)...........3
Condensed Consolidated Statement of Changes in Stockholders' Equity -
Six Months ended June 30, 2001 (unaudited)..............................4
Condensed Consolidated Statements of Cash Flows -
Six Months ended June 30, 2001 and 2000 (unaudited)...................5-6
Notes to Condensed Consolidated Financial Statements (unaudited)........7-9
Review by Independent Certified Public Accountants.......................10
Report on Review by Independent Certified Public Accountants.............11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................12-19
Item 3. Quantitative and Qualitative Disclosures about Market Risk.........20
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................20
Item 2. Changes in Securities.............................................20
Item 3. Default upon Senior Securities....................................20
Item 4. Submission of Matters to a Vote of Security Holders............20-21
Item 5. Other Information.................................................21
Item 6. Exhibits and Reports on Form 8-K..................................21
SIGNATURES....................................................................22
1
FFLC BANCORP, INC.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
($ in thousands, except share amounts)
At At
June 30, December 31,
2001 2000
---- ----
(unaudited)
Assets
Cash and due from banks $ 18,336 16,036
Interest-bearing deposits 10,735 14,445
--------- ---------
Cash and cash equivalents 29,071 30,481
Securities available for sale 51,501 42,717
Loans, net of allowance for loan losses of $4,054 in 2001
and $3,552 in 2000 656,708 615,484
Accrued interest receivable 3,908 3,750
Premises and equipment, net 12,642 11,490
Foreclosed real estate 133 276
Federal Home Loan Bank stock, at cost 6,950 6,150
Other assets 1,121 1,145
--------- ---------
Total $ 762,034 711,493
========= =========
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits 13,308 13,335
NOW and money-market accounts 98,253 86,509
Savings accounts 19,878 19,143
Certificates 416,327 399,898
--------- ---------
Total deposits 547,766 518,885
--------- ---------
Advances from Federal Home Loan Bank 139,000 123,000
Other borrowed funds 12,501 6,376
Accrued expenses and other liabilities 1,277 3,949
--------- ---------
Total liabilities 700,544 652,210
--------- ---------
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none outstanding -- --
Common stock, $.01 par value, 9,000,000 shares authorized,
4,519,072 in 2001 and 4,491,646 in 2000 shares issued 45 45
Additional paid-in-capital 31,207 31,010
Retained income 49,118 47,132
Accumulated other comprehensive income 342 81
Treasury stock, at cost (972,547 shares in 2001 and
959,085 shares in 2000) (19,222) (18,985)
--------- ---------
Total stockholders' equity 61,490 59,283
--------- ---------
Total $ 762,034 711,493
========= =========
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 Six Months Ended
June 30, June 30,
--------------------------- --------------------------
2001 2000 2001 2000
---- ---- ---- ----
Interest income:
Loans $ 13,346 11,055 26,295 21,310
Securities available for sale 727 559 1,441 1,131
Other interest-earning assets 271 248 587 541
---------- ---------- ---------- ----------
Total interest income 14,344 11,862 28,323 22,982
---------- ---------- ---------- ----------
Interest expense:
Deposits 7,045 5,419 13,978 10,384
Borrowed funds 2,104 1,597 4,092 3,027
---------- ---------- ---------- ----------
Total interest expense 9,149 7,016 18,070 13,411
---------- ---------- ---------- ----------
Net interest income 5,195 4,846 10,253 9,571
Provision for loan losses 325 260 600 460
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses 4,870 4,586 9,653 9,111
---------- ---------- ---------- ----------
Noninterest income:
Deposit account fees 204 201 421 372
Other service charges and fees 279 178 482 360
Other 54 64 105 114
---------- ---------- ---------- ----------
Total noninterest income 537 443 1,008 846
---------- ---------- ---------- ----------
Noninterest expense:
Salaries and employee benefits 1,778 1,666 3,497 3,318
Occupancy 489 446 970 869
Deposit insurance premium 25 22 49 43
Data processing 248 210 494 434
Professional services 75 75 134 147
Advertising and promotion 102 76 208 152
Other 335 296 663 584
---------- ---------- ---------- ----------
Total noninterest expense 3,052 2,791 6,015 5,547
---------- ---------- ---------- ----------
Income before income taxes 2,355 2,238 4,646 4,410
Income taxes 882 861 1,741 1,716
---------- ---------- ---------- ----------
Net income $ 1,473 1,377 2,905 2,694
========== ========== ========== ==========
Basic income per share of common stock $ .41 .39 .82 .76
========== ========== ========== ==========
Weighted-average number of shares outstanding
for basic 3,537,364 3,556,124 3,536,243 3,547,389
========== ========== ========== ==========
Diluted income per share of common stock $ .40 .38 .80 .74
========== ========== ========== ==========
Weighted-average number of shares outstanding
for diluted 3,629,597 3,624,812 3,625,623 3,624,850
========== ========== ========== ==========
Dividends per share $ .13 .12 .26 .24
========== ========== ========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements
3
FFLC BANCORP, INC.
Condensed Consolidated Statement of Changes in Stockholders' Equity
Six Months Ended June 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) -- -- -- 2,905 -- 2,905
Net change in unrealized gain on securities
available for sale, net of income taxes
of $157 (unaudited) -- -- -- -- 261 261
-------
Comprehensive income (unaudited) 3,166
-------
Net proceeds from the issuance of 27,426 shares of
common stock, stock options exercised
(unaudited) -- 197 -- -- -- 197
Dividends paid (unaudited) -- -- -- (919) --
(919)
Purchase of treasury stock, 13,462 shares (unaudited) -- -- (237) -- -- (237)
------- ------- ------- ------- ------- -------
Balance at June 30, 2001(unaudited) $ 45 31,207 (19,222) 49,118 342 61,490
======= ======= ======= ======= ======= =======
See accompanying Notes to Condensed Consolidated Financial Statements.
4
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Six Months Ended
June 30,
2001 2000
---- ----
Cash flows from operating activities:
Net income $ 2,905 2,694
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses 600 460
Depreciation 383 358
Credit for deferred income taxes (58) (236)
Gain on sale of foreclosed real estate (28) (11)
Shares committed and dividends to incentive plan participants -- 348
Net amortization of premiums or discounts
on securities (75) 18
Net deferral of loan fees and costs 70 (74)
Increase in accrued interest receivable (158) (358)
Increase in other assets (76) (427)
(Decrease) increase in accrued expenses and other liabilities (2,672) 2,236
-------- --------
Net cash provided by operating activities 891 5,008
-------- --------
Cash flows from investing activities:
Proceeds from maturities and principal repayments on securities available for sale 6,603 2,808
Purchase of securities available for sale (14,893) (269)
Loan disbursements (92,759) (106,540)
Principal repayments on loans 50,744 36,238
Purchase of premises and equipment, net (1,535) (1,849)
Purchase of Federal Home Loan Bank stock (800) (450)
Proceeds from sales of foreclosed real estate 292 526
-------- --------
Net cash used in investing activities (52,348) (69,536)
-------- --------
Cash flows from financing activities:
Net increase in deposits 28,881 42,301
Net increase in advances from Federal Home Loan Bank 16,000 9,000
Net increase in other borrowed funds 6,125 1,027
Issuance of common stock 197 248
Purchase of treasury stock (237) (512)
Dividends paid on common stock (919) (862)
-------- --------
Net cash provided by financing activities 50,047 51,202
-------- --------
Net decrease in cash and cash equivalents (1,410) (13,326)
Cash and cash equivalents at beginning of period 30,481 34,339
-------- --------
Cash and cash equivalents at end of period $ 29,071 21,013
======== ========
(continued)
5
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited), Continued
(In thousands)
Six Months Ended
June 30,
2001 2000
---- ----
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Interest $18,019 12,898
======= =======
Income taxes $ 1,965 1,820
======= =======
Noncash investing and financing activities:
Accumulated other comprehensive income (loss), net change in unrealized
gain (loss) on securities available for sale, net of tax $ 261 (47)
======= =======
Transfer from loans to foreclosed real estate $ 205 673
======= =======
Loans originated on sales of foreclosed real estate $ 84 150
======= =======
Loans funded by and sold to correspondent $ 8,468 143
======= =======
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 June 30, 2001 and
the results of operations for the three- and six-month periods ended
June 30, 2001 and 2000 and cash flows for the six-month periods ended
June 30, 2001 and 2000. The results of operations for the three-and
six-month periods ended June 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") and the Bank's
wholly-owned subsidiary, Lake County Service Corporation (together, the
"Company"). 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 June 30, 2001 At December 31, 2000
------------------------ -----------------------
% of % of
Amount Total Amount Total
Mortgage loans:
One-to-four-family $ 412,805 61.50% $ 409,600 64.97%
Construction and land 22,050 3.29 13,006 2.06
Multi-family 19,923 2.97 17,602 2.79
Commercial real estate 92,586 13.79 79,729 12.65
------- ------ ------- ------
Total mortgage loans 547,364 81.55 519,937 82.47
Consumer loans 107,354 15.99 95,824 15.20
Commercial loans 16,502 2.46 14,677 2.33
------- ------- ------- -------
Total loans (1) 671,220 100.00% 630,438 100.00%
====== ======
Less:
Loans in process (11,114) (12,128)
Unearned discounts, premiums and deferred loan
fees, net (includes dealer prepaid fees) 656 726
Allowance for loan losses (4,054) (3,552)
-------- -------
Loans, net $ 656,708 $ 615,484
======= =======
(1) Total loans outstanding by department consists of the following
(in thousands):
At
---------------------------------------------
June 30, 2001 December 31, 2000
--------------------- --------------------
% of % of
Amount Total Amount Total
------ ----- ------ -----
Residential $ 406,724 60.60% $ 404,494 64.16%
Commercial 157,141 23.41 130,120 20.64
Consumer 107,354 15.99 95,824 15.20
------- ------ ------- ------
$ 671,220 100.00% $ 630,438 100.00%
======= ====== ======= ======
(continued)
7
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
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 Six Months Ended
June 30, June 30,
--------------------- --------------------
2001 2000 2001 2000
---- ---- ---- ----
Beginning balance $ 3,773 2,980 3,552 2,811
Provision for loan losses 325 260 600 460
Net loans charged-off (44) (58) (98) (89)
------ ------ ------ ------
Ending balance $ 4,054 3,182 4,054 3,182
===== ===== ===== =====
The following summarizes the amount of impaired loans, all of which are
collateral dependent (in thousands):
At
-------------------------
June 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 571 1,280
Less: Allowances on these loans (200) (192)
------ ------
Net investment in impaired loans $ 371 1,088
====== =====
The average net investment in impaired loans and interest income recognized
and received on impaired loans was as follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- -------------------
2001 2000 2001 2000
---- ---- ---- ----
Average net investment in impaired loans $ 857 1,093 730 1,117
====== ===== ===== =====
Interest income recognized on impaired loans $ 70 9 81 14
====== ===== ===== =====
Interest income received on impaired loans $ 70 9 81 14
====== ===== ===== =====
During the three months ended June 30, 2001, an impaired loan in the
amount of $1.3 million was repaid.
(continued)
8
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
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 Six Months Ended
June 30, June 30,
--------------------------- ----------------------------
2001 2000 2001 2000
---- ---- ---- ----
Weighted-average shares of common stock issued and
outstanding before adjustments for ESOP, RRP
and common stock options 3,540,099 3,593,584 3,538,978 3,591,425
Adjustment to reflect the effect of unallocated ESOP
and RRP shares (2,735) (37,460) (2,735) (44,036)
---------- ---------- ---------- ----------
Weighted-average shares for basic income per share 3,537,364 3,556,124 3,536,243 3,547,389
========== ========== ========== ==========
Basic income per share $ .41 .39 .82 .76
========== ========== ========== ==========
Total weighted-average common shares and
equivalents outstanding for basic income per
share computation 3,537,364 3,556,124 3,536,243 3,547,389
Additional dilutive shares using the average market
value for the period utilizing the treasury stock
method regarding stock options 92,233 68,688 89,380 77,461
---------- ---------- ---------- ----------
Weighted-average common shares and equivalents
outstanding for diluted income per share 3,629,597 3,624,812 3,625,623 3,624,850
========== ========== ========== ==========
Diluted income per share $ .40 .38 .80 .74
========== ========== ========== ==========
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 June 30,
2001, and for the three- and six-month periods ended June 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 June 30, 2001, the
related condensed consolidated statements of income for the three- and six-month
periods ended June 30, 2001 and 2000, the related condensed consolidated
statement of changes in stockholders' equity for the six-month period ended June
30, 2001 and the related condensed consolidated statements of cash flows for the
six-month periods ended June 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 review, 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
July 6, 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
First Federal Savings Bank of Lake County (the "Bank") and its
wholly-owned subsidiary, Lake County Service Corporation (together, the
"Company"). 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 June 30, 2001, cash, amounts due
from depository institutions and interest-bearing deposits, totaled $29.1
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 must be
well managed and operate on a safe and sound basis. As part of meeting
those requirements, each savings association and its service corporation
must maintain sufficient liquidity to ensure its safe and sound operation.
The Bank continued to maintain an adequate liquidity level at June 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 June 30, 2001, the Bank had outstanding commitments to originate $15.8
million of loans and to fund the undisbursed portion of loans in process
of approximately $11.1 million and undisbursed lines of credit of
approximately $43.5 million. The Bank believes that it will have
sufficient funds available to meet its commitments. At June 30, 2001,
certificates of deposit which were scheduled to mature in one year or less
totaled $326.6 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 June 30,
2001, that the Bank meets all capital adequacy requirements to which it is
subject.
13
FFLC BANCORP, INC.
As of June 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 June 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 7.6% $ 58,005
Less: investment in
nonincludable
subsidiary (483)
Less: unrealized gain on
securities available for sale (416)
---------
Tangible capital,
and ratio to adjusted
total assets 7.5% $ 57,106 1.5% $ 11,420
========= ========
Tier 1 (core) capital, and
ratio to adjusted total
assets 7.5% $ 57,106 3.0% $ 22,840 5.0% $ 38,067
========= ======== ========
Tier 1 capital, and ratio
to risk-weighted assets 11.6% 57,106 4.0% $ 19,651 6.0% $ 29,476
======== ========
Less: Nonincludable investment
in 80% land loans (318)
Tier 2 capital (allowance for
loan losses) 3,714
---------
Total risk-based capital,
and ratio to risk-
weighted assets 12.3% $ 60,502 8.0% $ 39,301 10.0% $ 49,127
========= ======== ========
Total assets $ 762,236
=========
Adjusted total assets $ 761,337
=========
Risk-weighted assets $ 491,265
=========
14
FFLC BANCORP, INC.
The following table shows selected ratios for the periods ended or at the
dates indicated:
Six Months Six Months
Ended Year Ended Ended
June 30, December 31, June 30,
2001 2000 2000
---- ---- ----
Average equity as a percentage
of average assets 8.22% 8.88% 9.24%
Total equity to total assets at end of period 8.07% 8.33% 8.89%
Return on average assets (1) .79% .82% .88%
Return on average equity (1) 9.62% 9.24% 9.52%
Noninterest expense to average assets (1) 1.64% 1.76% 1.81%
Nonperforming assets to total assets
at end of period .28% .39% .44%
Operating efficiency ratio (1) 53.41% 54.44% 53.25%
(1) Annualized for the six months ended June 30, 2001 and 2000.
At At At
June 30, December 31, June 30,
2001 2000 2000
---- ---- ----
Weighted-average interest rates:
Interest-earning assets:
Loans 7.96% 8.17% 8.04%
Securities 5.86% 6.50% 6.55%
Other interest-earning assets 5.05% 6.55% 7.40%
Total interest-earning assets 7.74% 8.02% 7.94%
Interest-bearing liabilities:
Interest-bearing deposits 5.12% 5.29% 4.94%
Borrowed funds 5.85% 6.13% 6.13%
Total interest-bearing liabilities 5.28% 5.51% 5.17%
Interest-rate spread 2.46% 2.51% 2.77%
Change in Financial Condition
Total assets increased $50.5 million or 7.1%, from $711.5 million at December
31, 2000 to $762.0 million at June 30, 2001, primarily as a result of an
increase in net loans of $41.2 million. Deposits increased $28.9 million from
$518.9 million at December 31, 2000 to $547.8 million at June 30, 2001. The $2.2
million net increase in stockholders equity during the six months ended June 30,
2001 resulted from net income of $2.9 million, proceeds of $.2 million from
stock options exercised and an increase of $.3 million in accumulated other
comprehensive income, partially offset by repurchases of the Company's stock of
$.2 million and dividends paid of $.9 million.
15
FFLC BANCORP, INC.
Results of Operations
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest and dividend income; (iv) interest-rate spread;
and (v) net interest margin. Yields and costs were derived by dividing income or
expense by the average balance of assets or liabilities, respectively, for the
periods shown. The average balance of loans includes loans on which the Company
has discontinued accruing interest. The yields and costs include fees which are
considered to constitute adjustments to yields.
Three Months Ended June 30,
--------------------------------------------------------------
2001 2000
----------------------------- --------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
($ in Thousands)
Interest-earning assets:
Loans $ 646,382 13,346 8.26% $ 549,077 11,055 8.05%
Securities 47,352 727 6.14 35,317 559 6.33
Other interest-earning assets (1) 21,326 271 5.08 14,518 248 6.83
-------- ------- -------- -------
Total interest-earning assets 715,060 14,344 8.02 598,912 11,862 7.92
------ ------
Noninterest-earning assets 32,239 28,926
-------- -------
Total assets $ 747,299 $ 627,838
======== ========
Interest-bearing liabilities:
NOW and money-market accounts 92,137 586 2.54 83,281 545 2.62
Savings accounts 19,592 106 2.16 20,540 106 2.06
Certificates 416,786 6,353 6.10 341,003 4,768 5.59
Advances from Federal Home Loan Bank 127,022 1,966 6.19 99,313 1,523 6.13
Other borrowed funds 10,716 138 5.15 5,659 74 5.23
-------- ------- -------- --------
Total interest-bearing liabilities 666,253 9,149 5.49 549,796 7,016 5.10
------- ------
Noninterest-bearing deposits 13,588 13,629
Noninterest-bearing liabilities 6,545 7,338
Stockholders' equity 60,913 57,075
-------- --------
Total liabilities and
stockholders' equity $ 747,299 $ 627,838
======== ========
Net interest income $ 5,195 $ 4,846
======= ======
Interest-rate spread (2) 2.53% 2.82%
==== ====
Net average interest-earning assets,
net interest margin (3) $ 48,807 2.91% $ 49,116 3.24%
======= ==== ======= ====
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 annualized 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.
Six Months Ended June 30,
------------------------------------------------------------------
2001 2000
------------------------------- ------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
($ in Thousands)
Interest-earning assets:
Loans $ 637,656 26,295 8.25% $ 531,334 21,310 8.02%
Securities 45,493 1,441 6.34 35,956 1,131 6.29
Other interest-earning assets (1) 21,084 587 5.57 16,795 541 6.44
------- ------- -------- -------
Total interest-earning assets 704,233 28,323 8.04 584,085 22,982 7.87
------ ------
Noninterest-earning assets 30,675 28,850
------- --------
Total assets $ 734,908 $ 612,935
======= =======
Interest-bearing liabilities:
NOW and money-market accounts 89,943 1,166 2.59 81,066 1,073 2.65
Savings accounts 19,509 203 2.08 20,856 208 1.99
Certificates 412,272 12,609 6.12 332,297 9,103 5.48
Advances from Federal Home Loan Bank 125,022 3,862 6.18 96,275 2,908 6.04
Other borrowed funds 9,524 230 4.83 4,681 119 5.08
--------- -------- -------- -------
Total interest-bearing liabilities 656,270 18,070 5.51 535,175 13,411 5.01
------ ------
Noninterest-bearing deposits 13,072 12,996
Noninterest-bearing liabilities 5,187 8,158
Stockholders' equity 60,379 56,606
------- --------
Total liabilities and stockholders' equity $ 734,908 $ 612,935
======= =======
Net interest income $ 10,253 $ 9,571
====== ======
Interest-rate spread (2) 2.53% 2.86%
==== ====
Net average interest-earning assets,
net interest margin (3) $ 47,963 2.91% $ 48,910 3.28%
======= ==== ======= ====
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 annualized net interest income divided by average
interest-earning assets.
17
FFLC BANCORP, INC.
Comparison of the Three-Month Periods Ended June 30, 2001 and 2000
General Operating Results. Net income for the three-month period ended June 30,
2001 was $1.5 million, or $.41 per basic share and $.40 per diluted share,
compared to $1.4 million, or $.39 per basic share and $.38 per diluted share,
for the comparable period in 2000. The increase in net income was primarily a
result of an increase of $2.5 million in interest income, partially offset by
increases of $2.1 million in interest expense and $261,000 in noninterest
expense.
Interest Income. Interest income increased $2.5 million or 20.9%, from $11.9
million for the three-month period ended June 30, 2000 to $14.3 million for
the three-month period ended June 30, 2001. The increase was due to a $116.1
million or 19.4% increase in average interest-earning assets outstanding for
the three months ended June 30, 2001 compared to the 2000 period and an
increase in the average yield on interest-earning assets from 7.92% for the
three months ended June 30, 2000 to 8.02% for the three months ended June 30,
2001.
Interest Expense. Interest expense increased $2.1 million or 30.4%, from $7.0
million for the three-month period ended June 30, 2000 to $9.1 million for
the three-month period ended June 30, 2001. The increase was due primarily to
increases of $83.7 million and $32.8 million in average interest-bearing
deposits and borrowings outstanding, respectively. Average interest-bearing
deposits increased from $444.8 million outstanding during the three months
ended June 30, 2000 to $528.5 million outstanding during the comparable
period for 2001. Average borrowings increased from $105.0 million during the
three months ended June 30, 2000 to $137.7 million for the comparable 2001
period. The average cost of interest-bearing liabilities increased from 5.10%
for the three months ended June 30, 2000 to 5.49% for the comparable 2001
period.
Noninterest Income. Noninterest income increased $94,000 or 21.2% from $443,000
during the 2000 period to $537,000 during the 2001 period. The increase was
mainly due to a $101,000 increase in other service charges and fees.
Noninterest Expense. Noninterest expense increased by $261,000 or 9.4% from $2.8
million for the three-month period ended June 30, 2000 to $3.1 million for
the three-month period ended June 30, 2001. The increase was primarily due to
increases of $112,000 in salaries and employee benefits, $43,000 in occupancy
expense and $38,000 in data processing expense related to the overall growth
of the Company.
Income Tax Provision. The income tax provision increased from $861,000 for the
three-month period ended June 30, 2000 (an effective tax rate of 38.5%) to
$882,000 (an effective tax rate of 37.5%) for the corresponding period in
2001.
18
FFLC BANCORP, INC.
Comparison of the Six-Month Periods Ended June 30, 2001 and 2000
General Operating Results. Net income for the six-month period ended June 30,
2001 was $2.9 million, or $.82 per basic share and $.80 per diluted share,
compared to $2.7 million, or $.76 per basic share and $.74 per diluted share,
for the comparable period in 2000. That increase was mainly due to an
increase in interest income of $5.3 million, partially offset by increases in
interest expense of $4.7 million and noninterest expense of $468,000.
Interest Income. Interest income increased $5.3 million or 23.2%, from $23.0
million for the six-month period ended June 30, 2000 to $28.3 million for the
comparable period in 2001. The increase was due to a $120.1 million or 20.6%
increase in average interest-earning assets outstanding for the six months
ended June 30, 2001 compared to the 2000 period and an increase in the
average yield earned on interest-earning assets from 7.87% for the six months
ended June 30, 2000 to 8.04% for the six months ended June 30, 2001.
Interest Expense. Interest expense increased $4.7 million or 34.7%, from $13.4
million for the six-month period ended June 30, 2000 to $18.1 million for the
six-month period ended June 30, 2001. The increase was due primarily to
increases of $87.5 million and $33.6 million in average interest-bearing
deposits and borrowings outstanding, respectively. Average interest-bearing
deposits increased from $434.2 million outstanding during the six months
ended June 30, 2000 to $521.7 million outstanding during the comparable
period for 2001. Average borrowings increased from $101.0 million outstanding
during the six months ended June 30, 2000 to $134.5 million for the
comparable 2001 period. The average cost of interest-bearing liabilities
increased from 5.01% for the six months ended June 30, 2000 to 5.51% for the
comparable 2001 period.
Noninterest Income. Nonininterest income increased $162,000, or 19.1% from
$846,000 for the six months ended June 30, 2000 to $1.0 million for the
comparable period in 2001. This was mainly due to an increase of $122,000 in
other service charges and fees.
Noninterest Expense. Noninterest expense increased by $468,000 or 8.4%, from
$5.5 million for the six-month period ended June 30, 2000 to $6.0 million for
the six-month period ended June 30, 2001. The increase was primarily due to
increases in salaries and employee benefits of $179,000, occupancy expense of
$101,000 and data processing expense of $60,000 related to the overall growth
of the Company.
Income Tax Provision. The income tax provision was $1.7 million for the
six-month period ended June 30, 2001 (an effective tax rate of 37.5%)
compared to $1.7 million (an effective tax rate of 38.9%) for the
corresponding period for 2000.
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
The Annual Meeting of Shareholders (the "Annual Meeting") of FFLC Bancorp,
Inc. was held on May 10, 2001, to consider the election of three directors
each for a term of three years and the ratification of the appointment of the
Company's independent auditors for the year ending December 31, 2001. At the
Annual Meeting, incumbent Directors Howard H. Hewitt, H.D. Robuck, Jr., and
Stephen T. Kurtz were reelected. The terms of Directors James P. Logan, Ted
R. Ostrander, Jr., Joseph J. Junod, Claron D. Wagner and Paul K. Mueller
continued after the Annual Meeting.
At the Annual Meeting, 3,017,859 shares were present in person or by proxy.
The following is a summary and tabulation of the matters that were voted upon
at the Annual Meeting:
Proposal I.
The election of three directors, each for a term of three years:
Abstentions
and Broker
For Withheld Against Nonvotes
--- -------- ------- --------
Howard H. Hewitt 2,977,038 40,821 -- --
========= ====== ======= ========
H.D. Robuck, Jr. 2,974,149 43,710 -- --
========= ====== ======= ========
Stephen T. Kurtz 2,978,633 39,226 -- --
========= ====== ======= ========
20
FFLC BANCORP, INC.
Item 4. Submission of Matters to a Vote of Security Holders, Continued
Proposal II:
To ratify the appointment of Hacker, Johnson & Smith PA as the Company's
independent auditors for the year ending December 31, 2001
Abstentions
and Broker
For Withheld Against Nonvotes
--- -------- ------- --------
3,001,497 -- 11,133 5,229
========= ======= ====== =====
Item 5. Other Information
Not applicable
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
June 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: July 27, 2001 By: /s/ Stephen T. Kurtz
--------------- -----------------------------------------------
Stephen T. Kurtz, President and Chief Executive
Officer
Date: July 27, 2001 By: /s/ Paul K. Mueller
--------------- -----------------------------------------------
Paul K. Mueller, Executive Vice President and
Treasurer