OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended | Commission File Number | |
June 30, 2005 | 000-21329 |
FLORIDA | 65-0655973 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
o
o
Common Stock, $0.10 Par Value | ||
Class | Outstanding as of |
1
September 30, 2004 | December 31, 2003 | June 30, 2005 | December 31, 2004 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
ASSETS | ||||||||||||||||
Cash and due from banks | $ | 17,363 | $ | 17,197 | $ | 20,488 | $ | 27,410 | ||||||||
Federal funds sold | — | 16,484 | 77,550 | 15,528 | ||||||||||||
Cash and cash equivalents | 17,363 | 33,681 | 98,038 | 42,938 | ||||||||||||
Investment securities available for sale | 78,697 | 52,557 | 86,992 | 77,807 | ||||||||||||
Loans, net of deferred loan costs and fees | 620,333 | 540,413 | 775,759 | 655,678 | ||||||||||||
Less: allowance for loan losses | 6,089 | 5,216 | 7,013 | 6,243 | ||||||||||||
Loans, net | 614,244 | 535,197 | 768,746 | 649,435 | ||||||||||||
Premises and equipment, net | 26,898 | 21,073 | 25,810 | 27,559 | ||||||||||||
Goodwill | 155 | 155 | 155 | 155 | ||||||||||||
Intangible assets, net | 1,465 | 1,687 | 1,247 | 1,392 | ||||||||||||
Accrued interest receivable and other assets | 26,864 | 24,948 | 31,897 | 30,039 | ||||||||||||
TOTAL ASSETS | $ | 765,686 | $ | 669,298 | $ | 1,012,885 | $ | 829,325 | ||||||||
LIABILITIES | ||||||||||||||||
Deposits: | ||||||||||||||||
Noninterest-bearing demand | $ | 133,888 | $ | 121,728 | $ | 213,328 | $ | 152,035 | ||||||||
Interest-bearing | 504,411 | 432,085 | 656,881 | 535,824 | ||||||||||||
Total Deposits | 638,299 | 553,813 | 870,209 | 687,859 | ||||||||||||
Federal Home Loan Bank (FHLB) advances | 25,000 | 45,000 | 25,000 | 35,000 | ||||||||||||
Short-term borrowings | 9,353 | 4,041 | 17,593 | 12,157 | ||||||||||||
Long-term borrowings | 18,250 | 18,250 | 17,000 | 18,250 | ||||||||||||
Accrued interest payable and other liabilities | 7,257 | 6,948 | 12,343 | 7,945 | ||||||||||||
TOTAL LIABILITIES | 698,159 | 628,052 | 942,145 | 761,211 | ||||||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||||||
Preferred stock - no par value: 5,000,000 and 0 shares authorized, 0 and 0 shares issued | — | — | ||||||||||||||
Common stock - - $.10 par value: 20,000,000 and 7,500,000 shares authorized, 5,672,202 and 4,431,328 shares issued | 567 | 443 | ||||||||||||||
Preferred stock — no par value: 5,000,000 shares authorized, 0 and 0 shares issued | — | — | ||||||||||||||
Common stock — $.10 par value: 20,000,000 and 7,500,000 shares authorized, 5,712,264 and 5,679,239 shares issued | 571 | 568 | ||||||||||||||
Additional paid in capital | 38,237 | 14,255 | 38,715 | 38,284 | ||||||||||||
Retained earnings | 28,291 | 26,203 | 31,386 | 28,968 | ||||||||||||
Accumulated other comprehensive income | 432 | 345 | 68 | 294 | ||||||||||||
TOTAL SHAREHOLDERS’ EQUITY | 67,527 | 41,246 | 70,740 | 68,114 | ||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 765,686 | $ | 669,298 | $ | 1,012,885 | $ | 829,325 | ||||||||
2
Three months ended | Six months ended | |||||||||||||||||||||||||||||||
Three months ended | Nine months ended | June 30, | June 30, | |||||||||||||||||||||||||||||
September 30, | September 30, | 2005 | 2004 | 2005 | 2004 | |||||||||||||||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||||||||||||||||||
INTEREST AND DIVIDEND INCOME | ||||||||||||||||||||||||||||||||
Loans, including fees | $ | 9,648 | $ | 7,974 | $ | 27,208 | $ | 23,250 | $ | 12,934 | $ | 8,960 | $ | 24,244 | $ | 17,560 | ||||||||||||||||
Investment securities: | ||||||||||||||||||||||||||||||||
U.S. Treasury securities | 43 | 2 | 81 | 6 | ||||||||||||||||||||||||||||
U.S. Government agencies and corporations | 573 | 577 | 1,475 | 1,546 | ||||||||||||||||||||||||||||
States and political subdivisions, tax-exempt | 107 | 92 | 312 | 236 | ||||||||||||||||||||||||||||
States and political subdivisions, taxable | 48 | 60 | 152 | 184 | ||||||||||||||||||||||||||||
Marketable equity securities | 66 | — | 186 | — | ||||||||||||||||||||||||||||
Taxable | 708 | 633 | 1,344 | 1,044 | ||||||||||||||||||||||||||||
Tax exempt | 161 | 172 | 321 | 325 | ||||||||||||||||||||||||||||
Interest bearing deposits in other bank | 4 | 1 | 9 | 2 | 2 | 4 | 6 | 5 | ||||||||||||||||||||||||
Federal Home Loan Bank Stock | 16 | 10 | 40 | 40 | 31 | 9 | 58 | 24 | ||||||||||||||||||||||||
Federal funds sold | 23 | 34 | 102 | 227 | 389 | 41 | 598 | 79 | ||||||||||||||||||||||||
TOTAL INTEREST AND DIVIDEND INCOME | 10,528 | 8,750 | 29,565 | 25,491 | 14,225 | 9,819 | 26,571 | 19,037 | ||||||||||||||||||||||||
INTEREST EXPENSE | ||||||||||||||||||||||||||||||||
Deposits | 2,231 | 1,952 | 6,103 | 6,056 | 3,895 | 1,980 | 6,996 | 3,872 | ||||||||||||||||||||||||
Federal Home Loan Bank advances | 95 | 44 | 259 | 146 | 193 | 70 | 368 | 164 | ||||||||||||||||||||||||
Short-term borrowings | 19 | 9 | 40 | 30 | 110 | 12 | 183 | 21 | ||||||||||||||||||||||||
Long term borrowings | 402 | 398 | 1,193 | 1,193 | 391 | 396 | 774 | 791 | ||||||||||||||||||||||||
TOTAL INTEREST EXPENSE | 2,747 | 2,403 | 7,595 | 7,425 | 4,589 | 2,458 | 8,321 | 4,848 | ||||||||||||||||||||||||
NET INTEREST INCOME | 7,781 | 6,347 | 21,970 | 18,066 | 9,636 | 7,361 | 18,250 | 14,189 | ||||||||||||||||||||||||
PROVISION FOR LOAN LOSSES | 471 | 447 | 1,489 | 1,035 | 730 | 649 | 1,316 | 1,018 | ||||||||||||||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 7,310 | 5,900 | 20,481 | 17,031 | 8,906 | 6,712 | 16,934 | 13,171 | ||||||||||||||||||||||||
NON-INTEREST INCOME | ||||||||||||||||||||||||||||||||
Service charges on deposit accounts | 619 | 632 | 1,900 | 1,790 | 567 | 637 | 1,175 | 1,281 | ||||||||||||||||||||||||
Investment securities gains, net | 7 | 3 | 103 | 8 | — | 52 | — | 96 | ||||||||||||||||||||||||
Merchant bankcard processing income | 1,221 | 1,213 | 4,515 | 3,812 | 1,762 | 1,534 | 3,658 | 3,294 | ||||||||||||||||||||||||
Gain on sale of government guaranteed loans | — | — | — | 87 | ||||||||||||||||||||||||||||
Fees on mortgage loans sold | 363 | 589 | 1,406 | 1,800 | 582 | 645 | 1,074 | 1,043 | ||||||||||||||||||||||||
Retail investment services | 89 | 112 | 290 | 299 | ||||||||||||||||||||||||||||
Gain on sale of investment in ERAS Joint Venture | — | — | — | 202 | ||||||||||||||||||||||||||||
Other income | 344 | 347 | 1,033 | 1,065 | 668 | 463 | 1,066 | 890 | ||||||||||||||||||||||||
TOTAL NON-INTEREST INCOME | 2,643 | 2,896 | 9,247 | 9,063 | 3,579 | 3,331 | 6,973 | 6,604 | ||||||||||||||||||||||||
NON-INTEREST EXPENSE | ||||||||||||||||||||||||||||||||
Salaries and employee benefits | 3,699 | 3,271 | 10,755 | 9,512 | 4,410 | 3,614 | 8,622 | 7,056 | ||||||||||||||||||||||||
Net occupancy expense | 1,212 | 1,088 | 3,525 | 3,197 | 1,349 | 1,191 | 2,625 | 2,313 | ||||||||||||||||||||||||
Other expense | 3,013 | 2,681 | 9,591 | 7,983 | 3,311 | 3,348 | 6,876 | 6,578 | ||||||||||||||||||||||||
TOTAL NON-INTEREST EXPENSE | 7,924 | 7,040 | 23,871 | 20,692 | 9,070 | 8,153 | 18,123 | 15,947 | ||||||||||||||||||||||||
INCOME BEFORE INCOME TAX EXPENSE | 2,029 | 1,756 | 5,857 | 5,402 | 3,415 | 1,890 | 5,784 | 3,828 | ||||||||||||||||||||||||
INCOME TAX EXPENSE | 692 | 615 | 1,990 | 1,890 | 1,231 | 633 | 2,053 | 1,298 | ||||||||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | $ | 1,337 | $ | 1,141 | $ | 3,867 | $ | 3,512 | ||||||||||||||||||||||||
DISCONTINUED OPERATIONS | ||||||||||||||||||||||||||||||||
Income from Keys Insurance Agency, Inc. operations | — | 36 | — | 201 | ||||||||||||||||||||||||||||
Income tax expense | — | 14 | — | 75 | ||||||||||||||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS | — | 22 | — | 126 | ||||||||||||||||||||||||||||
NET INCOME | $ | 1,337 | $ | 1,163 | $ | 3,867 | $ | 3,638 | $ | 2,184 | $ | 1,257 | $ | 3,731 | $ | 2,530 | ||||||||||||||||
BASIC EARNINGS PER SHARE: | $ | 0.38 | $ | 0.23 | $ | 0.66 | $ | 0.51 | ||||||||||||||||||||||||
Continuing operations | $ | 0.24 | $ | 0.26 | $ | 0.75 | $ | 0.84 | ||||||||||||||||||||||||
Discontinued operations | — | — | — | 0.03 | ||||||||||||||||||||||||||||
Basic earnings per share | $ | 0.24 | $ | 0.26 | $ | 0.75 | $ | 0.87 | ||||||||||||||||||||||||
DILUTED EARNINGS PER SHARE: | $ | 0.37 | $ | 0.22 | $ | 0.64 | $ | 0.49 | ||||||||||||||||||||||||
Continuing operations | $ | 0.23 | $ | 0.25 | $ | 0.72 | $ | 0.80 | ||||||||||||||||||||||||
Discontinued operations | — | — | — | 0.03 | ||||||||||||||||||||||||||||
Diluted earnings per share | $ | 0.23 | $ | 0.25 | $ | 0.72 | $ | 0.83 | ||||||||||||||||||||||||
3
Additional | Accumulated Other | Total | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||
Common | Paid in | Retained | Comprehensive | Shareholders’ | Additional | Other | Total | |||||||||||||||||||||||||||||||||||||||||
Shares | Stock | Capital | Earnings | Income (Loss) | Equity | Common | Paid in | Retained | Comprehensive | Shareholders’ | ||||||||||||||||||||||||||||||||||||||
Balance,July 1, 2004 | 5,657,957 | $ | 566 | $ | 38,090 | $ | 27,591 | ($ | 1,081 | ) | $ | 65,166 | ||||||||||||||||||||||||||||||||||||
Shares | Stock | Capital | Earnings | Income (Loss) | Equity | |||||||||||||||||||||||||||||||||||||||||||
Balance,April 1, 2005 | 5,706,939 | $ | 571 | $ | 38,629 | $ | 29,859 | $ | (780 | ) | $ | 68,279 | ||||||||||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | 1,337 | — | 1,337 | 2,184 | 2,184 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax expense of $913: | ||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax expense of $509: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net market valuation adjustment on securities available for sale | — | — | — | 1,517 | 848 | |||||||||||||||||||||||||||||||||||||||||||
Less: reclassification adjustment for gains included in net income | — | — | — | (4 | ) | |||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | 1,513 | 848 | ||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | 2,850 | 3,032 | ||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | 14,245 | 1 | 98 | — | — | 99 | 5,325 | — | 58 | 58 | ||||||||||||||||||||||||||||||||||||||
Income tax benefit from stock options exercised | — | 49 | — | — | 49 | 28 | 28 | |||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $.1125 per share | — | — | (637 | ) | — | (637 | ) | |||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $.115 per share | (657 | ) | (657 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Balance,September 30, 2004 | 5,672,202 | $ | 567 | $ | 38,237 | $ | 28,291 | $ | 432 | $ | 67,527 | |||||||||||||||||||||||||||||||||||||
Balance,June 30, 2005 | 5,712,264 | $ | 571 | $ | 38,715 | $ | 31,386 | $ | 68 | $ | 70,740 | |||||||||||||||||||||||||||||||||||||
Additional | Accumulated Other | Total | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||
Common | Paid in | Retained | Comprehensive | Shareholders’ | Additional | Other | Total | |||||||||||||||||||||||||||||||||||||||||
Shares | Stock | Capital | Earnings | Income (Loss) | Equity | Common | Paid in | Retained | Comprehensive | Shareholders’ | ||||||||||||||||||||||||||||||||||||||
Balance,July 1, 2003 | 4,407,578 | $ | 441 | $ | 13,843 | $ | 24,559 | $ | 1,511 | $ | 40,354 | |||||||||||||||||||||||||||||||||||||
Shares | Stock | Capital | Earnings | Income (Loss) | Equity | |||||||||||||||||||||||||||||||||||||||||||
Balance,April 1, 2004 | 4,489,064 | $ | 449 | $ | 14,797 | $ | 26,971 | $ | 1,058 | $ | 43,275 | |||||||||||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | 1,163 | — | 1,163 | 1,257 | 1,257 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax benefit of $647: | ||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax benefit of $1,290: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net market valuation adjustment on securities available for sale | — | — | — | (1,072 | ) | (2,106 | ) | |||||||||||||||||||||||||||||||||||||||||
Less: reclassification adjustment for gains included in net income | — | — | — | (2 | ) | |||||||||||||||||||||||||||||||||||||||||||
Less: reclassification adjustment for gains | ||||||||||||||||||||||||||||||||||||||||||||||||
included in net income | (33 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | (1,074 | ) | (2,139 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | 89 | (882 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Public offering of 1,150,000 shares | 1,150,000 | 115 | 23,115 | 23,230 | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | 500 | — | 7 | — | — | 7 | 18,893 | 2 | 105 | 107 | ||||||||||||||||||||||||||||||||||||||
Private Placement of 280,653 common shares | — | (1 | ) | — | — | (1 | ) | |||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $.11 per share | — | — | (485 | ) | — | (485 | ) | |||||||||||||||||||||||||||||||||||||||||
Income tax benefit from stock options exercised | 73 | 73 | ||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $.1125 per share | (637 | ) | (637 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Balance,September 30, 2003 | 4,408,078 | $ | 441 | $ | 13,849 | $ | 25,237 | $ | 437 | $ | 39,964 | |||||||||||||||||||||||||||||||||||||
Balance,June 30, 2004 | 5,657,957 | $ | 566 | $ | 38,090 | $ | 27,591 | $ | (1,081 | ) | $ | 65,166 | ||||||||||||||||||||||||||||||||||||
4
Additional | Accumulated Other | Total | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||
Common | Paid in | Retained | Comprehensive | Shareholders’ | Additional | Other | Total | |||||||||||||||||||||||||||||||||||||||||
Shares | Stock | Capital | Earnings | Income (Loss) | Equity | Common | Paid in | Retained | Comprehensive | Shareholders’ | ||||||||||||||||||||||||||||||||||||||
Balance,January 1, 2004 | 4,431,328 | $ | 443 | $ | 14,255 | $ | 26,203 | $ | 345 | $ | 41,246 | |||||||||||||||||||||||||||||||||||||
Shares | Stock | Capital | Earnings | Income (Loss) | Equity | |||||||||||||||||||||||||||||||||||||||||||
Balance,January 1, 2005 | 5,679,239 | $ | 568 | $ | 38,284 | $ | 28,968 | $ | 294 | $ | 68,114 | |||||||||||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | 3,867 | — | 3,867 | 3,731 | 3,731 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax expense of $54: | ||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax benefit of $136: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net market valuation adjustment on securities available for sale | — | — | — | 151 | (226 | ) | ||||||||||||||||||||||||||||||||||||||||||
Less: reclassification adjustment for gains included in net income | — | — | — | (64 | ) | |||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | 87 | (226 | ) | ||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | 3,954 | 3,505 | ||||||||||||||||||||||||||||||||||||||||||||||
Public offering of 1,150,000 shares | 1,150,000 | 115 | 23,115 | 23,230 | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | 90,874 | 9 | 624 | — | — | 633 | 33,025 | 3 | 338 | 341 | ||||||||||||||||||||||||||||||||||||||
Income tax benefit from stock options exercised | — | — | 243 | 243 | 93 | 93 | ||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $.3375 per share | — | — | (1,779 | ) | — | (1,779 | ) | |||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $.23 per share | (1,313 | ) | (1,313 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Balance,September 30, 2004 | 5,672,202 | $ | 567 | $ | 38,237 | $ | 28,291 | $ | 432 | $ | 67,527 | |||||||||||||||||||||||||||||||||||||
Balance,June 30, 2005 | 5,712,264 | $ | 571 | $ | 38,715 | $ | 31,386 | $ | 68 | $ | 70,740 | |||||||||||||||||||||||||||||||||||||
Additional | Accumulated Other | Total | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||
Common | Paid in | Retained | Comprehensive | Shareholders’ | Additional | Other | Total | |||||||||||||||||||||||||||||||||||||||||
Shares | Stock | Capital | Earnings | Income (Loss) | Equity | Common | Paid in | Retained | Comprehensive | Shareholders’ | ||||||||||||||||||||||||||||||||||||||
Balance,January 1, 2003 | 4,035,625 | $ | 403 | $ | 8,966 | $ | 23,022 | $ | 1,115 | $ | 33,506 | |||||||||||||||||||||||||||||||||||||
Shares | Stock | Capital | Earnings | Income (Loss) | Equity | |||||||||||||||||||||||||||||||||||||||||||
Balance,January 1, 2004 | 4,431,328 | $ | 443 | $ | 14,255 | $ | 26,203 | $ | 345 | $ | 41,246 | |||||||||||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | 3,638 | — | 3,638 | 2,530 | 2,530 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax benefit of $408: | ||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax benefit of $859: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net market valuation adjustment on securities available for sale | — | — | — | (673 | ) | (1,366 | ) | |||||||||||||||||||||||||||||||||||||||||
Less: reclassification adjustment for gains included in net income | — | — | — | (5 | ) | |||||||||||||||||||||||||||||||||||||||||||
Less: reclassification adjustment for gains | ||||||||||||||||||||||||||||||||||||||||||||||||
included in net income | (60 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | (678 | ) | (1,426 | ) | |||||||||||||||||||||||||||||||||||||||||
Comprehensive income | 2,960 | 1,104 | ||||||||||||||||||||||||||||||||||||||||||||||
Public offering of 1,150,000 shares | 1,150,000 | 115 | 23,115 | 23,230 | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | 91,800 | 10 | 568 | — | — | 578 | 76,629 | 8 | 526 | 534 | ||||||||||||||||||||||||||||||||||||||
Private Placement of 280,653 common shares | 280,653 | 28 | 4,315 | 4,343 | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $.33 per share | — | — | (1,423 | ) | — | (1,423 | ) | |||||||||||||||||||||||||||||||||||||||||
Income tax benefit from stock options exercised | 194 | 194 | ||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $.225 per share | (1,142 | ) | (1,142 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Balance,September 30, 2003 | 4,408,078 | $ | 441 | $ | 13,849 | $ | 25,237 | $ | 437 | $ | 39,964 | |||||||||||||||||||||||||||||||||||||
Balance,June 30, 2004 | 5,657,957 | $ | 566 | $ | 38,090 | $ | 27,591 | $ | (1,081 | ) | $ | 65,166 | ||||||||||||||||||||||||||||||||||||
5
For the nine month period ended | For the six month period ended | |||||||||||||||
September 30, | June 30, | |||||||||||||||
2004 | 2003 | 2005 | 2004 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||
Net Income | $ | 3,867 | $ | 3,638 | $ | 3,731 | $ | 2,530 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Net amortization of investments | 42 | 45 | ||||||||||||||
Amortization of intangible assets | 222 | 219 | ||||||||||||||
Depreciation of premises and equipment | 1,393 | 1,307 | ||||||||||||||
Depreciation and amortization | 1,235 | 1,072 | ||||||||||||||
Provision for loan losses | 1,489 | 1,035 | 1,316 | 1,018 | ||||||||||||
Provision for losses on unfunded loan commitments | 18 | — | ||||||||||||||
Deferred income tax benefit | (98 | ) | (571 | ) | (402 | ) | (360 | ) | ||||||||
Deferred net loan costs and fees | (224 | ) | (840 | ) | ||||||||||||
Investment securities net gains | (103 | ) | (8 | ) | — | (96 | ) | |||||||||
Net (gain) loss on sale/disposal of premises and equipment | — | (2 | ) | (312 | ) | 6 | ||||||||||
Loss on sale of assets of Keys Insurance Agency, Inc. | — | 15 | ||||||||||||||
Gain on sale of investment in ERAS JV | — | (202 | ) | |||||||||||||
Gain on sales of government guaranteed loans, net | — | (87 | ) | |||||||||||||
Mortgage loans originated for sale | (83,534 | ) | (90,336 | ) | (66,210 | ) | (62,472 | ) | ||||||||
Proceeds from sale of mortgage loans | 83,117 | 92,136 | 66,645 | 60,150 | ||||||||||||
Fees on mortgage loans sold | (1,406 | ) | (1,800 | ) | (1,074 | ) | (1,043 | ) | ||||||||
(Increase) decrease in accrued interest receivable and other assets | (349 | ) | 3,774 | |||||||||||||
Increase (decrease) in accrued interest payable and other liabilities | 346 | (1,390 | ) | |||||||||||||
Increase in accrued interest receivable and other assets | (522 | ) | (628 | ) | ||||||||||||
Increase in accrued interest payable and other liabilities | 4,488 | 444 | ||||||||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 4,780 | 6,933 | 8,895 | 621 | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||
Purchases of investment securities available for sale | (38,368 | ) | (24,846 | ) | (10,000 | ) | (38,368 | ) | ||||||||
Repayments of principal and maturities of investment securities available for sale | 3,149 | 13,101 | 411 | 1,960 | ||||||||||||
Sales of investment securities available for sale | 9,281 | — | — | 5,099 | ||||||||||||
Net sale (purchase) of FHLB stock | 1,000 | (390 | ) | |||||||||||||
Purchase of life insurance policies | (700 | ) | (250 | ) | ||||||||||||
Net sale of FHLB stock | 129 | 325 | ||||||||||||||
Proceeds from sales of government guaranteed loans | 569 | 2,241 | — | 569 | ||||||||||||
Proceeds from sales assets of Keys Insurance Agency, Inc. | — | 184 | ||||||||||||||
Loans originated or acquired, net of principal repayments | (79,872 | ) | (69,294 | ) | (119,774 | ) | (52,751 | ) | ||||||||
Proceeds from the sale of investment in ERAS JV | — | 327 | ||||||||||||||
Purchases of premises and equipment | (8,276 | ) | (2,944 | ) | (738 | ) | (4,317 | ) | ||||||||
Sales of premises and equipment | 98 | 4 | 609 | 4 | ||||||||||||
NET CASH USED BY INVESTING ACTIVITIES | (113,119 | ) | (81,867 | ) | (129,363 | ) | (87,479 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||
Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase | 5,312 | (1,507 | ) | |||||||||||||
Net increase in FHLB short-term advances | 10,000 | 15,000 | ||||||||||||||
Net increase in federal funds purchased and securities sold under agreements to repurchase | 5,436 | 2,832 | ||||||||||||||
Net increase (repayment) of FHLB short-term advances | (10,000 | ) | 3,500 | |||||||||||||
Repayments of FHLB long-term advances | (30,000 | ) | — | — | (10,000 | ) | ||||||||||
Repayments of notes payable | (1,250 | ) | — | |||||||||||||
Net increase in demand, money market and savings accounts | 43,562 | 17,265 | 91,829 | 49,120 | ||||||||||||
Net increase in time deposits | 40,924 | 42,934 | 90,521 | 21,461 | ||||||||||||
Proceeds from exercise of stock options | 633 | 578 | 341 | 534 | ||||||||||||
Proceeds from private placement of common stock | — | 4,343 | ||||||||||||||
Proceeds from public offering of common stock | 23,230 | — | — | 23,230 | ||||||||||||
Cash dividends paid | (1,640 | ) | (1,381 | ) | (1,309 | ) | (1,004 | ) | ||||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 92,021 | 77,232 | 175,568 | 89,673 | ||||||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | (16,318 | ) | 2,298 | 55,100 | 2,815 | |||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 33,681 | 24,070 | 42,938 | 33,681 | ||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 17,363 | $ | 26,368 | $ | 98,038 | $ | 36,496 | ||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS: | ||||||||||||||||
Cash paid for: | ||||||||||||||||
Interest | $ | 7,259 | $ | 5,993 | ||||||||||||
Income taxes | 1,737 | 1,135 |
6
For the nine month period ended | ||||||||
September 30, | ||||||||
2004 | 2003 | |||||||
Cash paid for: | ||||||||
Interest | $ | 8,276 | $ | 7,357 | ||||
Income taxes | 2,265 | 2,900 |
(See notes to consolidated financial statements)
7
TIB FINANCIAL CORP.
2004.
On August 15, 2003, Consistent with prior period disclosures regarding segments, the Company closeddoes not consider the saledivestiture of the assets of Keys Insurance Agency, Inc.,investment center operations a wholly owned subsidiary of the Company. See Note 10 – “Discontinued Operations” for details on the transaction. In March 2004, the Company filed Articles of Dissolution dissolving Keys Insurance Agency, Inc.
In March 2004, the Company filed Articles of Dissolution dissolving TIB Government Loan Specialists, Inc. Activities performed through this corporation are now performed through TIB Bank.
87
September 30, 2004 | ||||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||||
(dollars in thousands) | Cost | Gains | Losses | Fair Value | ||||||||||||
U.S. Treasury securities | $ | 5,177 | $ | 33 | $ | — | $ | 5,210 | ||||||||
U.S. Government agencies and corporations | 54,248 | 264 | 556 | 53,956 | ||||||||||||
States and political subdivisions-tax-exempt | 9,826 | 347 | 4 | 10,169 | ||||||||||||
States and political subdivisions-taxable | 2,862 | 23 | 11 | 2,874 | ||||||||||||
Marketable equity securities | 3,000 | 533 | — | 3,533 | ||||||||||||
Mortgage-backed securities | 2,889 | 66 | — | 2,955 | ||||||||||||
$ | 78,002 | $ | 1,266 | $ | 571 | $ | 78,697 | |||||||||
December 31, 2003 | June 30, 2005 | |||||||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | Amortized | Unrealized | Unrealized | Estimated | |||||||||||||||||||||||||
(dollars in thousands) | Cost | Gains | Losses | Fair Value | Cost | Gains | Losses | Fair Value | ||||||||||||||||||||||||
U.S. Treasury securities | $ | 209 | $ | 9 | $ | — | $ | 218 | $ | 5,180 | $ | 3 | $ | 55 | $ | 5,128 | ||||||||||||||||
U.S. Government agencies and corporations | 31,357 | 425 | 663 | 31,119 | 64,187 | 80 | 768 | 63,499 | ||||||||||||||||||||||||
States and political subdivisions-tax-exempt | 8,838 | 378 | 59 | 9,157 | 9,595 | 216 | 3 | 9,808 | ||||||||||||||||||||||||
States and political subdivisions-taxable | 3,559 | 42 | 101 | 3,500 | 2,690 | 78 | — | 2,768 | ||||||||||||||||||||||||
Marketable equity securities | 3,000 | 395 | — | 3,395 | 3,000 | 490 | — | 3,490 | ||||||||||||||||||||||||
Mortgage-backed securities | 5,041 | 128 | 1 | 5,168 | 2,232 | 67 | — | 2,299 | ||||||||||||||||||||||||
$ | 52,004 | $ | 1,377 | $ | 824 | $ | 52,557 | $ | 86,884 | $ | 934 | $ | 826 | $ | 86,992 | |||||||||||||||||
December 31, 2004 | ||||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||||
(dollars in thousands) | Cost | Gains | Losses | Fair Value | ||||||||||||
U.S. Treasury securities | $ | 5,178 | $ | 5 | $ | 29 | $ | 5,154 | ||||||||
U.S. Government agencies and corporations | 54,228 | 104 | 869 | 53,463 | ||||||||||||
States and political subdivisions-tax-exempt | 9,596 | 246 | 26 | 9,816 | ||||||||||||
States and political subdivisions-taxable | 2,862 | 17 | 23 | 2,856 | ||||||||||||
Marketable equity securities | 3,000 | 987 | — | 3,987 | ||||||||||||
Mortgage-backed securities | 2,473 | 58 | — | 2,531 | ||||||||||||
$ | 77,337 | $ | 1,417 | $ | 947 | $ | 77,807 | |||||||||
(dollars in thousands) | September 30, 2004 | December 31, 2003 | June 30, 2005 | December 31, 2004 | ||||||||||||
Real estate mortgage loans: | ||||||||||||||||
Commercial | $ | 338,198 | $ | 297,221 | $ | 411,504 | $ | 351,346 | ||||||||
Residential | 64,624 | 60,104 | 75,540 | 67,204 | ||||||||||||
Farmland | 4,924 | 2,317 | 4,550 | 4,971 | ||||||||||||
Construction and vacant land | 41,510 | 32,089 | 85,134 | 49,815 | ||||||||||||
Commercial and agricultural loans | 62,851 | 63,624 | 62,864 | 64,622 | ||||||||||||
Indirect auto dealer loans | 83,680 | 59,437 | 108,178 | 91,890 | ||||||||||||
Home equity loans | 12,259 | 12,574 | 16,056 | 13,856 | ||||||||||||
Other consumer loans | 10,248 | 11,232 | 10,022 | 9,817 | ||||||||||||
Total loans | 618,294 | 538,598 | 773,848 | 653,521 | ||||||||||||
Net deferred loan costs | 2,039 | 1,815 | 1,911 | 2,157 | ||||||||||||
Loans, net of deferred loan costs | $ | 620,333 | $ | 540,413 | $ | 775,759 | $ | 655,678 | ||||||||
(dollars in thousands) | 2004 | 2003 | 2005 | 2004 | ||||||||||||
Balance, January 1 | $ | 5,216 | $ | 4,272 | $ | 6,243 | $ | 5,216 | ||||||||
Provision for loan losses charged to expense | 1,489 | 1,035 | 1,316 | 1,018 | ||||||||||||
Loans charged off | (654 | ) | (470 | ) | (604 | ) | (436 | ) | ||||||||
Recoveries of loans previously charged off | 38 | 17 | 58 | 8 | ||||||||||||
Balance, September 30 | $ | 6,089 | $ | 4,854 | ||||||||||||
Balance, June 30 | $ | 7,013 | $ | 5,806 | ||||||||||||
98
2004 | 2003 | 2005 | 2004 | |||||||||||||
For the three months ended September 30: | ||||||||||||||||
For the three months ended June 30: | ||||||||||||||||
Basic | 5,660,075 | 4,407,920 | 5,708,745 | 5,434,532 | ||||||||||||
Dilutive effect of options outstanding | 146,658 | 173,639 | 176,850 | 163,310 | ||||||||||||
Diluted | 5,806,733 | 4,581,559 | 5,885,595 | 5,597,842 | ||||||||||||
For the nine months ended September 30: | ||||||||||||||||
For the six months ended June 30: | ||||||||||||||||
Basic | 5,187,456 | 4,204,840 | 5,693,090 | 4,948,550 | ||||||||||||
Dilutive effect of options outstanding | 168,830 | 171,573 | 178,405 | 180,072 | ||||||||||||
Diluted | 5,356,286 | 4,376,413 | 5,871,495 | 5,128,622 | ||||||||||||
For the three months ended September 30, | ||||||||
(dollars in thousands, except per share amounts) | 2004 | 2003 | ||||||
Net income, as reported | $ | 1,337 | $ | 1,163 | ||||
Stock-based compensation expense determined under fair value based method, net of tax | 48 | 37 | ||||||
Pro forma net income | $ | 1,289 | $ | 1,126 | ||||
Basic earnings per share as reported | $ | 0.24 | $ | 0.26 | ||||
Pro forma basic earnings per share | 0.23 | 0.26 | ||||||
Diluted earnings per share as reported | 0.23 | 0.25 | ||||||
Pro forma diluted earnings per share | 0.22 | 0.25 |
For the nine months ended September 30, | ||||||||||||||||
For the three months ended June 30, | ||||||||||||||||
(dollars in thousands, except per share amounts) | 2004 | 2003 | 2005 | 2004 | ||||||||||||
Net income, as reported | $ | 3,867 | $ | 3,638 | $ | 2,184 | $ | 1,257 | ||||||||
Stock-based compensation expense determined under fair value based method, net of tax | 166 | 134 | 64 | 47 | ||||||||||||
Pro forma net income | $ | 3,701 | $ | 3,504 | $ | 2,120 | $ | 1,210 | ||||||||
Basic earnings per share as reported | $ | 0.38 | $ | 0.23 | ||||||||||||
Pro forma basic earnings per share | 0.37 | 0.22 | ||||||||||||||
Diluted earnings per share as reported | 0.37 | 0.22 | ||||||||||||||
Pro forma diluted earnings per share | 0.36 | 0.22 |
For the six months ended June 30, | ||||||||
(dollars in thousands, except per share amounts) | 2005 | 2004 | ||||||
Net income, as reported | $ | 3,731 | $ | 2,530 | ||||
Stock-based compensation expense determined under fair value based method, net of tax | 126 | 119 | ||||||
Pro forma net income | $ | 3,605 | $ | 2,411 | ||||
Basic earnings per share as reported | $ | 0.66 | $ | 0.51 | ||||
Pro forma basic earnings per share | 0.63 | 0.49 | ||||||
Diluted earnings per share as reported | 0.64 | 0.49 | ||||||
Pro forma diluted earnings per share | 0.61 | 0.47 |
109
For the nine months ended September 30, | ||||||||
(dollars in thousands, except per share amounts) | 2004 | 2003 | ||||||
Basic earnings per share as reported | $ | 0.75 | $ | 0.87 | ||||
Pro forma basic earnings per share | 0.71 | 0.83 | ||||||
Diluted earnings per share as reported | 0.72 | 0.83 | ||||||
Pro forma diluted earnings per share | 0.69 | 0.80 |
On February 24,In December 2004, the BoardFASB issued FAS 123 (revised 2004), Share-Based Payment. Under this promulgation, companies are required to reflect costs associated with employee stock options in their income statements at fair value. In April 2005, the SEC amended the date for compliance with FAS 123 (revised 2004) so that each registrant that is not a small business issuer will be required to prepare financial statements in accordance with statement 123 (revised 2004) beginning with the first interim or annual reporting period of Directors approved the 2004 Equity Incentive Plan for directors and employees, which was also approved by the shareholders at their annual meeting heldregistrant’s first fiscal year beginning on May 25, 2004. The Plan allowsor after June 15, 2005. Accordingly, the Company to continue to provide equity compensation to employees and directors in order to enablewill begin reflecting stock option costs under the Company to attract and retain qualified persons to serve as directors and employees, to enhance their equity interestfair value method commencing in the Company, and thereby to solidify their common interest with shareholders in enhancing the value and growth of the Company. Refer to the Company’s 2004 Proxy statement for additional information regarding the 2004 Equity Incentive Plan.
quarter beginning January 1, 2006 as required.
Well | Adequately | |||||||||||||||||||||||||||||||
Well | Adequately | Capitalized | Capitalized | June 30, 2005 | December 31, 2004 | |||||||||||||||||||||||||||
Capitalized | Capitalized | September 30, 2004 | December 31, 2003 | Requirement | Requirement | Actual | Actual | |||||||||||||||||||||||||
Requirement | Requirement | Actual | Actual | |||||||||||||||||||||||||||||
Tier 1 Capital (to Average Assets) | ||||||||||||||||||||||||||||||||
Consolidated | ³5 | % | ³4 | % | 10.4 | % | 7.8 | % | ³5 | % | ³4 | % | 8.5 | % | 10.0 | % | ||||||||||||||||
Bank | ³5 | % | ³4 | % | 11.0 | % | 8.5 | % | ³5 | % | ³4 | % | 8.9 | % | 10.5 | % | ||||||||||||||||
Tier 1 Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||||||||||
Consolidated | ³6 | % | ³4 | % | 11.5 | % | 8.8 | % | ³6 | % | ³4 | % | 9.8 | % | 10.9 | % | ||||||||||||||||
Bank | ³6 | % | ³4 | % | 12.2 | % | 9.6 | % | ³6 | % | ³4 | % | 10.3 | % | 11.4 | % | ||||||||||||||||
Total Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||||||||||
Consolidated | ³10 | % | ³8 | % | 13.2 | % | 10.6 | % | ³10 | % | ³8 | % | 11.2 | % | 12.6 | % | ||||||||||||||||
Bank | ³10 | % | ³8 | % | 13.2 | % | 10.5 | % | ³10 | % | ³8 | % | 11.2 | % | 12.4 | % |
We completed an offering of 1,150,000 shares of our common stock during the second quarter of 2004.
The results of Keys Insurance Agency, Inc. are not included in the segment reporting as they are classified separately as discontinued operations in our consolidated financial statements (see Note 10).
Intercompany transactions have been eliminated in preparing the segment reporting amounts below.
The results of the Company’s segments are as follows (dollars in thousands):
Merchant | Parent | |||||||||||||||
Six months ended | Community | Bankcard | And | |||||||||||||
June 30, 2005 | Banking | Processing | Other | Totals | ||||||||||||
Interest and dividend income | $ | 26,571 | $ | — | $ | — | $ | 26,571 | ||||||||
Interest expense | 7,547 | — | 774 | 8,321 | ||||||||||||
Net interest and dividend income | 19,024 | — | (774 | ) | 18,250 | |||||||||||
Other income | 3,295 | 3,658 | 20 | 6,973 | ||||||||||||
Depreciation and amortization | 1,231 | 4 | — | 1,235 | ||||||||||||
Other expense | 14,944 | 3,035 | 225 | 18,204 | ||||||||||||
Pretax segment profit (loss) | $ | 6,144 | $ | 619 | $ | (979 | ) | $ | 5,784 | |||||||
Segment Assets | $ | 1,012,233 | $ | 242 | $ | 410 | $ | 1,012,885 | ||||||||
10
Merchant | Parent | |||||||||||||||
Six months ended | Community | Bankcard | and | |||||||||||||
June 30, 2004 | Banking | Processing | Other | Totals | ||||||||||||
Interest and dividend income | $ | 19,037 | $ | — | $ | — | $ | 19,037 | ||||||||
Interest expense | 4,057 | — | 791 | 4,848 | ||||||||||||
Net interest and dividend income | 14,980 | — | (791 | ) | 14,189 | |||||||||||
Other income | 3,104 | 3,294 | 206 | 6,604 | ||||||||||||
Depreciation and amortization | 1,049 | 21 | 2 | 1,072 | ||||||||||||
Other expense | 12,595 | 2,745 | 553 | 15,893 | ||||||||||||
Pretax segment profit (loss) | $ | 4,440 | $ | 528 | $ | (1,140 | ) | $ | 3,828 | |||||||
Segment Assets | $ | 760,068 | $ | 30 | $ | 422 | $ | 760,520 | ||||||||
Merchant | Parent | |||||||||||||||
Three months ended | Community | Bankcard | And | |||||||||||||
June 30, 2005 | Banking | Processing | Other | Totals | ||||||||||||
Interest and dividend income | $ | 14,225 | $ | — | $ | — | $ | 14,225 | ||||||||
Interest expense | 4,198 | — | 391 | 4,589 | ||||||||||||
Net interest and dividend income | 10,027 | — | (391 | ) | 9,636 | |||||||||||
Other income | 1,807 | 1,762 | 10 | 3,579 | ||||||||||||
Depreciation and amortization | 616 | 2 | — | 618 | ||||||||||||
Other expense | 7,649 | 1,460 | 73 | 9,182 | ||||||||||||
Pretax segment profit (loss) | $ | 3,569 | $ | 300 | $ | (454 | ) | $ | 3,415 | |||||||
Merchant | Parent | |||||||||||||||
Three months ended | Community | Bankcard | and | |||||||||||||
June 30, 2004 | Banking | Processing | Other | Totals | ||||||||||||
Interest and dividend income | $ | 9,819 | $ | — | $ | — | $ | 9,819 | ||||||||
Interest expense | 2,062 | — | 396 | 2,458 | ||||||||||||
Net interest and dividend income | 7,757 | — | (396 | ) | 7,361 | |||||||||||
Other income | 1,690 | 1,534 | 107 | 3,331 | ||||||||||||
Depreciation and amortization | 534 | 10 | 1 | 545 | ||||||||||||
Other expense | 6,586 | 1,312 | 359 | 8,257 | ||||||||||||
Pretax segment profit (loss) | $ | 2,327 | $ | 212 | $ | (649 | ) | $ | 1,890 | |||||||
11
Merchant | Parent | |||||||||||||||
Nine months ended | Community | Bankcard | And | |||||||||||||
September 30, 2004 | Banking | Processing | Other | Totals | ||||||||||||
Interest and dividend income | $ | 29,565 | $ | — | $ | — | $ | 29,565 | ||||||||
Interest expense | 6,402 | — | 1,193 | 7,595 | ||||||||||||
Net interest and dividend income (expense) | 23,163 | — | (1,193 | ) | 21,970 | |||||||||||
Other income | 4,435 | 4,515 | 297 | 9,247 | ||||||||||||
Depreciation and amortization | 1,580 | 32 | 3 | 1,615 | ||||||||||||
Other expense | 19,235 | 3,766 | 744 | 23,745 | ||||||||||||
Pretax segment profit (loss) | $ | 6,783 | $ | 717 | $ | (1,643 | ) | $ | 5,857 | |||||||
Segment Assets | $ | 765,241 | $ | 20 | $ | 425 | $ | 765,686 |
Merchant | Parent | |||||||||||||||
Nine months ended | Community | Bankcard | and | |||||||||||||
September 30, 2003 | Banking | Processing | Other | Totals | ||||||||||||
Interest and dividend income | $ | 25,491 | $ | — | $ | — | $ | 25,491 | ||||||||
Interest expense | 6,232 | — | 1,193 | 7,425 | ||||||||||||
Net interest and dividend income (expense) | 19,259 | — | (1,193 | ) | 18,066 | |||||||||||
Other income | 4,750 | 3,812 | 501 | 9,063 | ||||||||||||
Depreciation and amortization | 1,454 | 35 | 3 | 1,492 | ||||||||||||
Other expense | 16,591 | 3,076 | 568 | 20,235 | ||||||||||||
Pretax segment profit (loss) | $ | 5,964 | $ | 701 | $ | (1,263 | ) | $ | 5,402 | |||||||
Segment Assets | $ | 645,231 | $ | 46 | $ | 440 | $ | 645,717 |
Merchant | Parent | |||||||||||||||
Three months ended | Community | Bankcard | And | |||||||||||||
September 30, 2004 | Banking | Processing | Other | Totals | ||||||||||||
Interest and dividend income | $ | 10,528 | $ | — | $ | — | $ | 10,528 | ||||||||
Interest expense | 2,345 | — | 402 | 2,747 | ||||||||||||
Net interest and dividend income (expense) | 8,183 | — | (402 | ) | 7,781 | |||||||||||
Other income | 1,331 | 1,221 | 91 | 2,643 | ||||||||||||
Depreciation and amortization | 531 | 11 | 1 | 543 | ||||||||||||
Other expense | 6,640 | 1,021 | 191 | 7,852 | ||||||||||||
Pretax segment profit (loss) | $ | 2,343 | $ | 189 | $ | (503 | ) | $ | 2,029 | |||||||
Merchant | Parent | |||||||||||||||
Three months ended | Community | Bankcard | and | |||||||||||||
September 30, 2003 | Banking | Processing | Other | Totals | ||||||||||||
Interest and dividend income | $ | 8,750 | $ | — | $ | — | $ | 8,750 | ||||||||
Interest expense | 2,005 | — | 398 | 2,403 | ||||||||||||
Net interest and dividend income (expense) | 6,745 | — | (398 | ) | 6,347 | |||||||||||
Other income | 1,571 | 1,213 | 112 | 2,896 | ||||||||||||
Depreciation and amortization | 499 | 12 | 1 | 512 | ||||||||||||
Other expense | 5,808 | 972 | 195 | 6,975 | ||||||||||||
Pretax segment profit (loss) | $ | 2,009 | $ | 229 | $ | (482 | ) | $ | 1,756 | |||||||
12
NOTE 10 – DISCONTINUED OPERATIONS
On August 15, 2003, we closed the sale of Keys Insurance Agency, Inc., a wholly owned subsidiary of the Company, to a former director of the Company and TIB Bank, and his partner. The transaction was structured as a sale of the agency assets. The buyer paid $2.2 million in cash at the closing. Of the cash payment at closing, proceeds of $2.0 million were pursuant to a loan from TIB Bank to the buyer. We recognized a loss of $15,000 on the transaction.
The results of Keys Insurance Agency, Inc. operations, which have been classified as discontinued operations in the accompanying consolidated financial statements, are summarized as follows:
(dollars in thousands) | 2004 | 2003 | ||||||
For the three months ended September 30: | ||||||||
Other income | $ | — | $ | 277 | ||||
Depreciation and amortization | — | 7 | ||||||
Other expense | — | 234 | ||||||
Pretax income from discontinued operations | $ | — | $ | 36 | ||||
For the nine months ended September 30: | ||||||||
Other income | $ | — | $ | 1,255 | ||||
Depreciation and amortization | — | 34 | ||||||
Other expense | — | 1,020 | ||||||
Pretax income from discontinued operations | $ | — | $ | 201 | ||||
12
2004
Basic and diluted earnings per share for continuing operations for the thirdsecond quarter of 20042005 were $0.24$0.38 and $0.23,$0.37, respectively, as compared to $0.26$0.23 and $0.25$0.22 per share in the previous year’s quarter. Basic weighted average common equivalent shares outstanding for the three months ended September 30, 2004 were 5,660,075 compared to 4,407,920 for the three months ended
13
September 30, 2003. This 28.4% increase in shares outstanding resulted from the exercise of stock options and the issuance of 1,150,000 shares in the second quarter of 2004 in connection with a public offering of our shares.
Annualized return on average assets was 0.72%0.91% and 0.74%0.69% for the thirdsecond quarter of 2005 and 2004, and 2003,respectively, while the annualized return on average shareholders’ equity was 8.06%12.62% and 11.64%8.31% for the same period. The decline in the return on average shareholders’ equity in the current year is primarily attributable to the 69.0% increase in shareholders’ equity from September 30, 2003 to September 30, 2004 due to the stock offering in the second quarter of 2004 and exercises of stock options.
periods.
mix of assets in excess of our average cost of liabilities.
13
NON-INTEREST EXPENSE
Non-interest expense for the third quarter of 2004 was $7,924,000. This represents an $884,000, or 12.6%,7.4% increase over the prior year quarter which totaled $7,040,000.$3.33 million. The increase in non-interest income is primarily attributable to an increase in merchant bankcard processing income and a gain of $267,000 on the sale of vacant land in Homestead, Florida.
14
At September 30, 2004second quarter of 2005 increased less than 3% over the Bank had 303 full-time employees, compared to 253 at September 30, 2003. second quarter of 2004.
In general, as we continue to renovate facilitiesprovision for income taxes includes federal and add branches, the net occupancy expense category will grow overall. In December 2003, we leased a new operations facility in Homestead, Florida. Building rent expense on this propertystate income taxes. The effective tax rates were 36.0% and 33.5% for the three months ended SeptemberJune 30, 2005 and 2004, totaled $35,000. Pursuant to the opening of the Metro Parkway and Prospect Ave locations in Southwest Florida, the third quarter of 2004 included approximately $70,000 in occupancy expenses associated with the operations of these newly opened branches.
In the category of other expense, professional fees increased approximately $112,000 due primarily to increased internal control documentation and testing costs related to the implementation of the Sarbanes Oxley Act of 2002.
INCOME TAXES
The provision for income taxes related to continuing operations totaled $692,000, for an effective tax rate of 34.1%, for the three months ended September 30, 2004, and $615,000, for an effective tax rate of 35.0%, for the three months ended September 30, 2003.
NINErespectively.
2004
Basic and diluted earnings per share for the first ninesix months of 20042005 were $0.75$0.66 and $0.72$0.64, respectively, as compared to $0.87$0.51 and $0.83$0.49 per share in the previous year’s period. Basic weighted average common equivalent shares outstanding for the ninesix months ended SeptemberJune 30, 20042005 were 5,187,4565,693,090 compared to 4,204,8404,948,550 for the nine months ended September 30, 2003.same period in 2004. This 23.4%15.0% increase in shares outstanding resulted from the issuance of an additional 1,150,000 shares in the second quarter of 2004 in connection with a public offering of our common stock that raised $23.2 million in new capital, the issuance of 280,653 shares in June 2003 in connection with a private placement of our stock that raised $4.3 million in new capital, and the exercise of stock options.
periods.
Net interest income represents the amount by which interest income on interest-earning assets exceeds interest expense incurred on interest-bearing liabilities. Net interest income is the largest component of our income, and is affected by the interest rate environment, and the volume and the composition of interest-earning assets and interest-bearing liabilities. Our interest earning assets include loans, federal funds sold, interest bearing deposits in other banks, and investment securities. Our interest-bearing liabilities include deposits, federal funds purchased, notes payable related to Company shares repurchased, subordinated debentures, advances from the Federal Home Loan Bank, and other short term borrowings.
With short-term The higher level of prime rate in the first half of 2005 compared to the comparable 2004 period is apparent in the positive impact on yields in the loan portfolio as the higher rates are reflected in variable loan re-pricings and new loan production.
1514
1615
2004 | 2003 | 2005 | 2004 | |||||||||||||||||||||||||||||||||||||||||||||
Average | Income/ | Yields/ | Average | Income/ | Yields/ | Average | Income/ | Yields/ | Average | Income/ | Yields/ | |||||||||||||||||||||||||||||||||||||
(dollars in thousands) | Balances | Expense | Rates | Balances | Expense | Rates | Balances | Expense | Rates | Balances | Expense | Rates | ||||||||||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||||||||||||
Loans (1)(2) | $ | 574,003 | $ | 27,212 | 6.33 | % | $ | 469,225 | $ | 23,254 | 6.63 | % | $ | 716,103 | $ | 24,246 | 6.83 | % | $ | 558,197 | $ | 17,562 | 6.33 | % | ||||||||||||||||||||||||
Investment securities (2) | 66,172 | 2,180 | 4.40 | % | 55,080 | 2,094 | 5.08 | % | 77,381 | 1,630 | 4.25 | % | 60,830 | 1,355 | 4.48 | % | ||||||||||||||||||||||||||||||||
Marketable equity securities – 90% tax exempt (2) | 3,395 | 272 | 10.70 | % | — | — | — | 3,562 | 193 | 10.93 | % | 3,448 | 175 | 10.23 | % | |||||||||||||||||||||||||||||||||
Interest-bearing deposits in other banks | 970 | 9 | 1.18 | % | 327 | 2 | 0.71 | % | 463 | 6 | 2.53 | % | 948 | 5 | 0.98 | % | ||||||||||||||||||||||||||||||||
Federal Home Loan Bank stock | 1,445 | 40 | 3.70 | % | 1,476 | 40 | 3.62 | % | 2,669 | 58 | 4.38 | % | 1,518 | 24 | 3.21 | % | ||||||||||||||||||||||||||||||||
Federal funds sold | 13,635 | 102 | 1.00 | % | 26,132 | 227 | 1.16 | % | 43,732 | 598 | 2.76 | % | 17,038 | 79 | 0.94 | % | ||||||||||||||||||||||||||||||||
Total interest-earning assets | 659,620 | 29,815 | 6.04 | % | 552,240 | 25,617 | 6.20 | % | 843,910 | 26,731 | 6.39 | % | 641,979 | 19,200 | 6.01 | % | ||||||||||||||||||||||||||||||||
Non-interest-earning assets: | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash and due from banks | 18,803 | 15,463 | 22,263 | 19,781 | ||||||||||||||||||||||||||||||||||||||||||||
Investment in ERAS | — | 69 | ||||||||||||||||||||||||||||||||||||||||||||||
Premises and equipment, net | 21,209 | 19,247 | 27,272 | 20,776 | ||||||||||||||||||||||||||||||||||||||||||||
Allowances for loan losses | (5,564 | ) | (4,561 | ) | (6,531 | ) | (5,405 | ) | ||||||||||||||||||||||||||||||||||||||||
Other assets | 28,622 | 28,786 | 30,879 | 28,504 | ||||||||||||||||||||||||||||||||||||||||||||
Total non-interest-earning assets | 63,070 | 59,004 | 73,883 | 63,656 | ||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 722,690 | $ | 611,244 | $ | 917,793 | $ | 705,635 | ||||||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||||||||||||||||||||||||||||
NOW accounts | $ | 75,193 | 214 | 0.38 | % | $ | 57,636 | 170 | 0.39 | % | $ | 92,846 | 385 | 0.84 | % | $ | 74,269 | 120 | 0.32 | % | ||||||||||||||||||||||||||||
Money market | 128,056 | 793 | 0.83 | % | 127,772 | 891 | 0.93 | % | 167,087 | 1,560 | 1.88 | % | 126,115 | 494 | 0.79 | % | ||||||||||||||||||||||||||||||||
Savings deposits | 43,738 | 127 | 0.39 | % | 34,677 | 133 | 0.51 | % | 48,079 | 115 | 0.48 | % | 42,860 | 82 | 0.39 | % | ||||||||||||||||||||||||||||||||
Time deposits | 221,498 | 4,969 | 3.00 | % | 196,239 | 4,862 | 3.31 | % | 303,483 | 4,937 | 3.28 | % | 213,760 | 3,176 | 2.99 | % | ||||||||||||||||||||||||||||||||
Total interest-bearing deposits | 468,485 | 6,103 | 1.74 | % | 416,324 | 6,056 | 1.94 | % | 611,495 | 6,997 | 2.31 | % | 457,004 | 3,872 | 1.70 | % | ||||||||||||||||||||||||||||||||
Other interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||
Short-term borrowings and FHLB advances | 31,258 | 299 | 1.28 | % | 18,319 | 176 | 1.28 | % | ||||||||||||||||||||||||||||||||||||||||
Short-term borrowings & FHLB advances | 40,431 | 551 | 2.75 | % | 32,052 | 185 | 1.16 | % | ||||||||||||||||||||||||||||||||||||||||
Long-term borrowings | 18,250 | 1,193 | 8.73 | % | 18,250 | 1,193 | 8.74 | % | 17,104 | 774 | 9.13 | % | 18,250 | 791 | 8.71 | % | ||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 517,993 | 7,595 | 1.96 | % | 452,893 | 7,425 | 2.19 | % | 669,030 | 8,322 | 2.51 | % | 507,306 | 4,848 | 1.92 | % | ||||||||||||||||||||||||||||||||
Non-interest-bearing liabilities and shareholders’ equity: | �� | |||||||||||||||||||||||||||||||||||||||||||||||
Demand deposits | 139,733 | 114,214 | 168,787 | 138,656 | ||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 8,586 | 7,420 | 11,166 | 8,265 | ||||||||||||||||||||||||||||||||||||||||||||
Shareholders’ equity | 56,378 | 36,717 | 68,810 | 51,408 | ||||||||||||||||||||||||||||||||||||||||||||
Total non-interest-bearing liabilities and shareholders’ equity | 204,697 | 158,351 | 248,763 | 198,329 | ||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 722,690 | $ | 611,244 | $ | 917,793 | $ | 705,635 | ||||||||||||||||||||||||||||||||||||||||
Interest rate spread (tax equivalent basis) | 4.08 | % | 4.01 | % | 3.88 | % | 4.09 | % | ||||||||||||||||||||||||||||||||||||||||
Net interest income (tax equivalent basis) | $ | 22,220 | $ | 18,192 | $ | 18,409 | $ | 14,352 | ||||||||||||||||||||||||||||||||||||||||
Net interest margin (3) (tax equivalent basis) | 4.50 | % | 4.40 | % | 4.40 | % | 4.50 | % | ||||||||||||||||||||||||||||||||||||||||
(1) | Average loans include non-performing loans. | |
(2) | Interest income and rates include the effects of a tax equivalent adjustment using a Federal tax rate of 34% in adjusting tax exempt interest on tax exempt investment securities and loans to a fully taxable basis. | |
(3) | Net interest margin is net interest income divided by average total interest-earning assets. |
1716
2004 compared to 2003 (1) | ||||||||||||||||||||||||
Due to changes in | 2005 compared to 2004 (1) | |||||||||||||||||||||||
Net | Due to changes in | |||||||||||||||||||||||
Average | Average | Increase | Net | |||||||||||||||||||||
(dollars in thousands) | Volume | Rate | (Decrease) | Average | Average | Increase | ||||||||||||||||||
Volume | Rate | (Decrease) | ||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||
Loans (2) | $ | 5,004 | $ | (1,046 | ) | $ | 3,958 | $ | 5,266 | $ | 1,418 | $ | 6,684 | |||||||||||
Investment securities (2) | 387 | (301 | ) | 86 | 352 | (77 | ) | 275 | ||||||||||||||||
Marketable equity securities (2) | 272 | — | 272 | 6 | 12 | 18 | ||||||||||||||||||
Interest-bearing deposits in other banks | 5 | 2 | 7 | (4 | ) | 5 | 1 | |||||||||||||||||
Federal Home Loan Bank Stock | (1 | ) | 1 | — | 23 | 11 | 34 | |||||||||||||||||
Federal funds sold | (97 | ) | (28 | ) | (125 | ) | 231 | 288 | 519 | |||||||||||||||
Total interest income | 5,570 | (1,372 | ) | 4,198 | 5,874 | 1,657 | 7,531 | |||||||||||||||||
Interest expense | ||||||||||||||||||||||||
NOW accounts | 50 | (6 | ) | 44 | 36 | 229 | 265 | |||||||||||||||||
Money market | 2 | (100 | ) | (98 | ) | 203 | 863 | 1,066 | ||||||||||||||||
Savings deposits | 31 | (37 | ) | (6 | ) | 11 | 22 | 33 | ||||||||||||||||
Time deposits | 592 | (485 | ) | 107 | 1,436 | 325 | 1,761 | |||||||||||||||||
Short-term borrowings and FHLB advances | 123 | — | 123 | 60 | 306 | 366 | ||||||||||||||||||
Long-term borrowings | — | — | — | (59 | ) | 42 | (17 | ) | ||||||||||||||||
Total interest expense | 798 | (628 | ) | 170 | 1,687 | 1,787 | 3,474 | |||||||||||||||||
Change in net interest income | $ | 4,772 | $ | (744 | ) | $ | 4,028 | $ | 4,187 | $ | (130 | ) | $ | 4,057 | ||||||||||
(1) | The change in interest due to both rate and volume has been allocated to the volume and rate components in proportion to the relationship of the dollar amounts of the absolute change in each. | |
(2) | Interest income includes the effects of a tax equivalent adjustment using a federal tax rate of 34% in adjusting tax exempt interest on tax exempt investment securities and loans to a fully taxable basis. |
The provision for loan losses represents the charge to income necessary to adjust the allowance for loan losses to an amount that represents management’s assessment of the estimated probable credit losses inherent in our loan portfolio which have been incurred at each balance sheet date.
18
NON-INTEREST INCOME
17
The increase in merchant bankcard processing income is primarily a result of volume increases. Fees on mortgage loans sold result from the immediate sale of various residential mortgages (primarily fixed rate loans) in the secondary market. The lower fees earned in the first nine months of 2004 compared to the prior year period are attributable to reduced refinancing activity, lower new sales activity, and thinner margins. On May 29, 2003, we sold our remaining interest in ERAS Joint Venture and recognized a pretax gain of $202,000 on this transaction.
At September 30, 2004, the Bank had 303 full-time employees, compared to 253 at September 30, 2003. The increase in staff was required to manage the growth of the organization.
In the category of other expense, interchange and other bankcard expense increased approximately $648,000 over the prior year amount. These expenses are primarily tied to volume, and are consistent with the increase in merchant bankcard processing income we experienced. We did, however, experience an increase in the rates charged by our card associations in April 2004 that also contributed to this increase. Also, in the first nine months of 2004, we incurred $196,000 in employee relocation costs. These costs were incurred to relocate various employees, including the Company’s Chief Executive Officer, in connection with the relocation of our corporate headquarters from the Florida Keys to the Southwest Florida area. Another factor contributing to the increase in other expense was the increase in professional fees of approximately $184,000 over the prior year period due primarily to increased internal control documentation and testing costs related to the implementation of the Sarbanes Oxley Act of 2002.
business.
The change in income tax expense is primarily attributable to the growth in income before income taxes.
2004.
$9.2 million.
2004.
On April 15, 2004, we closed the sale of 1,000,000sold 1,150,000 shares of our common stock at a price of $22.00 per share before commissions and expenses. The shares were sold on a firm commitment basis through Advest, Inc. Advest, Inc. also purchased an additional 150,000 shares from the Company on May 6, 2004, at $22.00 per share before commissions and expenses. Theresulting in net proceeds of the offering, totaling $23.2 million which provided capital necessary to support continued loan and deposit growth throughout our South Florida markets.
19
NON-PERFORMING ASSETS
(dollars in thousands) | September 30, 2004 | December 31, 2003 | June 30, 2005 | December 31, 2004 | ||||||||||||
Total nonaccrual loans | $ | 1,174 | $ | 390 | $ | 482 | $ | 704 | ||||||||
Accruing loans delinquent 90 days or more (a) | — | — | — | — | ||||||||||||
Total non-performing loans | $ | 1,174 | $ | 390 | $ | 482 | $ | 704 | ||||||||
Repossessed personal property (indirect auto dealer loans) | 720 | 598 | 673 | 688 | ||||||||||||
Other real estate owned (b) | 190 | 193 | 190 | 882 | ||||||||||||
Other assets (b) | 2,528 | 2,472 | 2,705 | 2,665 | ||||||||||||
Total non-performing assets | $ | 4,612 | $ | 3,653 | $ | 4,050 | $ | 4,939 | ||||||||
Allowance for loan losses | $ | 6,089 | $ | 5,216 | $ | 7,013 | $ | 6,243 | ||||||||
Non-performing assets as a percent of total assets | 0.60 | % | 0.55 | % | 0.40 | % | 0.60 | % | ||||||||
Non-performing loans as a percent of gross loans | 0.19 | % | 0.07 | % | 0.06 | % | 0.11 | % | ||||||||
Allowance for loan losses as a percent of non-performing loans | 518.65 | % | 1,336.33 | % | 1,455.0 | % | 886.8 | % | ||||||||
(a) Excludes the $1.6 million loan discussed below that is guaranteed for both principal and interest by the U.S. Department of Agriculture (USDA).
(b) The Bank made a $10,000,000 loan to construct a lumber mill in northern Florida. Of this amount, $6,400,000 had been sold by the Bank to other lenders. The loan was partially guaranteed as to principal and interest by the USDA. In addition to business real estate and equipment, the loan was collateralized by the business owner’s interest in a trust. Under provisions of the trust agreement, beneficiaries cannot receive trust assets until November 2010.
During 2001, upon completion of foreclosure on the underlying collateral, the non-guaranteed portion of this loan and interest accrued through the foreclosure date was reclassified into other real estate ($550,000) and other assets (approximately $1,886,000) based on the fair value of the underlying-collateral. The portion of this loan guaranteed by the USDA was approximately $1.6 million at September 30, 2004 and December 31, 2003, and is accruing interest. Accrued interest on this loan totals approximately $654,000 and $590,000 at September 30, 2004 and December 31, 2003, respectively.
The Bank is pursuing a sale of the property and equipment and has incurred various expenditures. The Bank capitalized the liquidation costs and a portion of the protective advances which it expects will be fully reimbursed by the USDA. Other real estate recorded on the Bank’s books totaled $190,000 and $193,000 at September 30, 2004 and December 31, 2003, respectively. The non-guaranteed principal and interest ($1,961,000 at September 30, 2004 and December 31, 2003) and the reimbursable capitalized liquidation costs and protective advance costs totaling approximately $567,000 and $511,000 at September 30, 2004 and December 31, 2003, respectively, are included as “other assets” in the financial statements.
The Bank sold certain pieces of equipment associated with the lumber mill property. Proceeds from the sales were used to reduce the other real estate amount and liquidation cost amounts recorded on the Bank’s books. In 2003, the Bank wrote down the carrying amount of the other real estate by $262,000 based upon anticipated proceeds from the sale of the property and remaining equipment.
Florida law requires a bank to liquidate or charge off repossessed real property within five years, and repossessed personal property within six months. The Bank was awarded title to the real property on June 12, 2001, and an adjudicated interest in the owner’s trust proceeds. The time constraints imposed by Florida law required that the personal property be disposed of or charged off by December 2001. The Bank applied to the State of Florida for an extension to carry the personal property on the Bank’s books and was granted an extension to carry the personal property on its books until June 11, 2003. Since the property had not been liquidated as of such date, the Bank
2018
charged-off the non guaranteed principal and interest totaling $1,961,000 at June 30, 2003, for regulatory purposes. Since we believe this amount is ultimately realizable, we did not write off this amount for financial statement purposes under generally accepted accounting principles.
(a) | Non-performing loans exclude the $1.6 million loan discussed below that is guaranteed for both principal and interest by the U.S. Department of Agriculture (USDA). | |
(b) | The Bank made a $10.0 million loan to construct a lumber mill in northern Florida. Of this amount, $6.4 million had been sold by the Bank to other lenders. The loan was partially guaranteed as to principal and interest by the USDA. In addition to business real estate and equipment, the loan was collateralized by the business owner’s interest in a trust. Under provisions of the trust agreement, beneficiaries cannot receive trust assets until November 2010. | |
During 2001, upon completion of foreclosure on the underlying collateral, the non-guaranteed portion of this loan and interest accrued through the foreclosure date was reclassified into other real estate ($550,000) and other assets (approximately $1.9 million) based on the fair value of the underlying-collateral. The portion of this loan guaranteed by the USDA was approximately $1.6 million at June 30, 2005 and December 31, 2004, and is accruing interest. Accrued interest on this loan totals approximately $731,000 and $677,000 at June 30, 2005 and December 31, 2004, respectively. | ||
The Bank is pursuing a sale of the property and equipment and has incurred various expenditures. The Bank capitalized the liquidation costs and a portion of the protective advances which it expects will be fully reimbursed by the USDA. Other real estate recorded on the Bank’s books related to this property totaled $190,000 at June 30, 2005 and December 31, 2004. The non-guaranteed principal and interest ($2.0 million at June 30, 2005 and December 31, 2004) and the reimbursable capitalized liquidation costs and protective advance costs totaling approximately $744,000 and $704,000 at June 30, 2005 and December 31, 2004, respectively, are included as “other assets” in the financial statements. | ||
The Bank sold certain pieces of equipment associated with the lumber mill property. Proceeds from the sales were used to reduce the other real estate amount and liquidation cost amounts recorded on the Bank’s books. In 2003, the Bank wrote down the carrying amount of the other real estate by $262,000 based upon anticipated proceeds from the sale of the property and remaining equipment. | ||
Florida law requires a bank to liquidate or charge off repossessed real property within five years, and repossessed personal property within six months. The Bank was awarded title to the real property on June 12, 2001, and an adjudicated interest in the owner’s trust proceeds. The time constraints imposed by Florida law required that the personal property be disposed of or charged off by December 2001. The Bank applied to the State of Florida for an extension to carry the personal property on the Bank’s books and was granted an extension to carry the personal property on its books until June 11, 2003. Since the property had not been liquidated as of such date, the Bank charged-off the non guaranteed principal and interest totaling $2.0 million at June 30, 2003, for regulatory purposes. Since we believe this amount is ultimately realizable, we did not write off this amount for financial statement purposes under generally accepted accounting principles. |
19
2120
3 months | 4 to 6 | 7 to 12 | 1 to 5 | Over 5 | 3 Months | 4 to 6 | 7 to 12 | 1 to 5 | Over 5 | |||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | or less | Months | Months | years | Years | Total | or Less | Months | Months | Years | Years | Total | ||||||||||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||||||||||||
Loans | $ | 245,829 | $ | 42,286 | $ | 36,794 | $ | 226,579 | $ | 66,806 | $ | 618,294 | $ | 350,509 | $ | 27,327 | $ | 43,434 | $ | 284,072 | $ | 68,507 | $ | 773,849 | ||||||||||||||||||||||||
Investment securities-taxable | 1,311 | — | — | 38,265 | 25,419 | 64,995 | 1,072 | — | 10,180 | 38,578 | 23,864 | 73,694 | ||||||||||||||||||||||||||||||||||||
Investment securities-tax exempt | 232 | — | — | 2,875 | 7,062 | 10,169 | — | — | — | 4,617 | 5,191 | 9,808 | ||||||||||||||||||||||||||||||||||||
Marketable equity securities | 3,533 | — | — | — | — | 3,533 | 3,490 | — | — | — | — | 3,490 | ||||||||||||||||||||||||||||||||||||
Federal Home Loan Bank stock | 1,250 | — | — | — | — | 1,250 | 2,781 | — | — | — | — | 2,781 | ||||||||||||||||||||||||||||||||||||
Federal funds sold | 77,550 | — | — | — | — | 77,550 | ||||||||||||||||||||||||||||||||||||||||||
Interest bearing deposit in other bank | 519 | — | — | — | — | 519 | 201 | — | — | — | — | 201 | ||||||||||||||||||||||||||||||||||||
Total interest-bearing assets | 252,674 | 42,286 | 36,794 | 267,719 | 99,287 | 698,760 | 435,603 | 27,327 | 53,614 | 327,267 | 97,562 | 941,373 | ||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||
NOW accounts | 83,835 | — | — | — | — | 83,835 | 85,479 | — | — | — | — | 85,479 | ||||||||||||||||||||||||||||||||||||
Money Market | 127,376 | — | — | — | — | 127,376 | 179,815 | — | — | — | — | 179,815 | ||||||||||||||||||||||||||||||||||||
Savings Deposits | 47,247 | — | — | — | — | 47,247 | 49,884 | — | — | — | — | 49,884 | ||||||||||||||||||||||||||||||||||||
Time deposits | 29,160 | 38,999 | 48,875 | 128,915 | 5 | 245,954 | 35,143 | 92,673 | 114,991 | 98,891 | 5 | 341,703 | ||||||||||||||||||||||||||||||||||||
Notes payable | — | — | — | — | 5,250 | 5,250 | — | — | — | — | 4,000 | 4,000 | ||||||||||||||||||||||||||||||||||||
Subordinated debentures | 5,000 | — | — | — | 8,000 | 13,000 | 5,000 | — | — | — | 8,000 | 13,000 | ||||||||||||||||||||||||||||||||||||
Other borrowings | 34,353 | — | — | — | — | 34,353 | 42,593 | — | — | — | — | 42,593 | ||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 326,971 | 38,999 | 48,875 | 128,915 | 13,255 | 557,015 | 397,914 | 92,673 | 114,991 | 98,891 | 12,005 | 716,474 | ||||||||||||||||||||||||||||||||||||
Interest sensitivity gap | $ | (74,297 | ) | $ | 3,287 | $ | (12,081 | ) | $ | 138,804 | $ | 86,032 | $ | 141,745 | $ | 37,689 | $ | (65,346 | ) | $ | (61,377 | ) | $ | 228,376 | $ | 85,557 | $ | 224,899 | ||||||||||||||||||||
Cumulative interest sensitivity gap | $ | (74,297 | ) | $ | (71,010 | ) | $ | (83,091 | ) | $ | 55,713 | $ | 141,745 | $ | 141,745 | $ | 37,689 | $ | (27,657 | ) | $ | (89,034 | ) | $ | 139,342 | $ | 224,899 | $ | 224,899 | |||||||||||||||||||
Cumulative sensitivity ratio | (10.6 | )% | (10.2 | )% | (11.9 | )% | 8.0 | % | 20.3 | % | 20.3 | % | 4.0 | % | (2.9 | )% | (9.5 | )% | 14.8 | % | 23.9 | % | 23.9 | % | ||||||||||||||||||||||||
22
credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets.
21
The following interest
These ratecurve. Rate changes are matched with known repricing intervals andintervals. The bank uses standardized assumptions for new growth netrun against bank data by an outsourced provider of expected prepayments.Asset Liability reporting. The assumptions are based primarily on experience in the Company’s market under varying rate environments. The imbedded optionsanalysis indicates that the Company’s loan customers possessbank is benefited in an increasing rate environment more than it is harmed by a decreasing rate environment. This is primarily due to refinance are considered for purposes of this analysis along with scheduled and unscheduled principal reductions offset by anticipated loan orginations.
This analysis intentionally exaggerates interest sensitivity. For the sake of simplicity and comparability, an immediate change in rates is assumed. However, any significant change in actual market rates would probably be phased in over an extended period of time. This phase in would reduce the net interest income effects for any absolute change in rates. Also,fact that the Company has been originating adjustable rate commercial loans with interest rate floors that are currently at rates higher than the index and margin on the loans would indicate. An example would be a loan at Prime plus 1% but with a 7.0% floor. The Company currently has in excess of $214 million of these types of loans where the loan rates are at the floors. The effects of this are twofold. First, this has benefited our margins in the recent past and currently since we have had assets earning yields higher than would behave been the case absent the floor rates. Second, in a declining rate environment and in a limited rising rate environment, those “adjustable” rate loans act like fixed rate loans. This limits the Company’s loss of interest income when rates decline but does not constrain income gains in a rising rate market. As rates increase beyond approximately 150 basis points from their current level the effect on net interest income turns around and begins to expand positively due to an increasing percentage ofmarket once these loans goinghave moved past their floors. Also, the passage of time moderates the negative near term impact of rising rates as new loans are by definition originated at the current, now higher, rate levels. In general, having this significant amount of loans at their floors reduces the Company’s overall rate sensitivity.
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Projections for the next twelve months are as follows:
Interest Rates Decrease | Interest Rates | Interest Rates Increase | ||||||||||||||||||
(dollars in thousands) | 200 BP | 100 BP | Remain Constant | 100 BP | 200BP | |||||||||||||||
Interest Income | $ | 40,739 | $ | 43,284 | $ | 45,882 | $ | 48,254 | $ | 51,077 | ||||||||||
Interest Expense | 8,604 | 10,423 | 13,023 | 15,993 | 18,962 | |||||||||||||||
Net Interest Income | $ | 32,135 | $ | 32,861 | $ | 32,859 | $ | 32,261 | $ | 32,115 | ||||||||||
Change in net income after tax vs. constant rates | $ | (452 | ) | $ | 1 | $ | (373 | ) | $ | (464 | ) |
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The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, the Chief Executive Officer and Chief Financial Officer of the Companyreport. Based upon that evaluation, they have concluded that the Company’sCorporation’s disclosure controls and procedures were adequate. No significant deficiencies orare effective in ensuring that material weaknesses in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize, and report financial data have been identified.
No fraud that involves management or other employees who have a significant role in the Company’s internal controls has been discovered.
Changes in internal controls
The Company made no significant changes in its internal controls or in other factors that could significantly affect these controls subsequentinformation related to the date of the evaluation of those controlsCompany is made known to them by the Chief Executive Officer and Chief Financial Officer; including any corrective actions with regard to significant deficiencies and material weaknesses.
Limitations on the Effectiveness of Controls
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures and internal controls over financial reporting will prevent all errors and all improper conduct. A control system, no matter how well conceived and operated can provide only reasonable, not absolute, assurance that the objectives of the controls system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of improper conduct, if any,others within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
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Not applicable
DIRECTORS | FOR | AGAINST | ABSTAIN | |||||||||
Edward V. Lett | 4,955,687 | 21,130 | — |
FOR | AGAINST | ABSTAIN | ||||||||||
4,925,154 | 38,307 | 13,356 |
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(a) Exhibits
(a) | Exhibits |
(b) Reports on Form 8-K
On August 3, 2004, the Company issued a press release announcing certain financial results and additional information related to its second quarter 2004 earnings.
On November 4, 2004, the Company issued a press release announcing certain financial results and additional information related to its third quarter 2004 earnings.
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TIB FINANCIAL CORP. | ||||
Date: August 9, 2005 | Edward V. Lett | |||
President and Chief Executive Officer | ||||
David P. Johnson | ||||
Executive Vice President and Chief Financial Officer | ||||
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