UNITED STATES 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 March 31, 2010
or
o | 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 000-33351
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(Exact Name of Registrant as Specified in Its Charter)
Florida | 65-1147861 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
1301 SE Port St. Lucie Boulevard
Port St. Lucie, Florida 34952
(Address of Principal Executive Offices)
(772) 225-5930
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Indicate by checkmark 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 þ NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) YES o NO o *The registrant has not yet been phased into the interactive data requirements.
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act: (Check one):
Large accelerated filer o Accelerated filer o
Non-accelerated filer p Smaller reporting company x
(Do not check if a smaller reporting company)
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:
Common stock, par value $.01 per share | 2,058,047 shares | |
(class) | Outstanding at April 30, 2010 |
Transitional Small Business Disclosure Format (check one): YES o NO þ
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements | Page | |
March 31, 2010 (unaudited) and December 31, 2009 | 2 | |
Three months ended March 31, 2010 and 2009 (unaudited) | 3-4 | |
Three months ended March 31, 2010 and 2009 (unaudited) | 5-6 | |
Three months ended March 31, 2010 and 2009 (unaudited) | 7-8 | |
9-15 | ||
16 | ||
17 | ||
18-23 | ||
24 | ||
PART II. OTHER INFORMATION | ||
25 | ||
25 | ||
26 | ||
27 |
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PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
March 31, | December 31, | |||||
Assets | 2010 | 2009 | ||||
(unaudited) | ||||||
Cash and due from banks | $ | 2,937 | 2,889 | |||
Interest-bearing deposits with banks | 18,627 | 10,043 | ||||
Total cash and cash equivalents | 21,564 | 12,932 | ||||
Securities available for sale | 31,940 | 31,752 | ||||
Securities held to maturity (market value of $2,521) | 2,546 | - | ||||
Loans, net of allowance for loan losses of $5,595 and $4,730 | 183,067 | 184,312 | ||||
Premises and equipment, net | 5,323 | 5,432 | ||||
Federal Home Loan Bank stock, at cost | 1,087 | 1,087 | ||||
Foreclosed assets | 6,031 | 6,719 | ||||
Accrued interest receivable | 1,145 | 1,201 | ||||
Bank-owned life insurance | 3,047 | 3,017 | ||||
Other assets | 1,132 | 1,751 | ||||
Total assets | $ | 256,882 | 248,203 | |||
Liabilities and Stockholders’ Equity | ||||||
Liabilities: | ||||||
Non-interest bearing demand deposits | 19,790 | 18,925 | ||||
Savings, NOW and money-market deposits | 57,528 | 60,691 | ||||
Time deposits | 147,528 | 136,758 | ||||
Total deposits | 224,846 | 216,374 | ||||
Official checks | 1,268 | 960 | ||||
Federal Home Loan Bank advances | 14,600 | 14,600 | ||||
Other borrowings | 1,990 | - | ||||
Other liabilities | 1,591 | 1,630 | ||||
Total liabilities | 244,295 | 233,564 | ||||
Stockholders’ equity: | ||||||
Preferred stock, $.01 par value; 2,000,000 shares authorized, 5,800 shares of Series A issued and outstanding | - | - | ||||
Additional paid-in capital, preferred | 5,800 | 5,800 | ||||
Preferred stock discount | (406 | ) | (429 | ) | ||
Common stock, $.01 par value; 25,000,000 shares authorized, 2,058,047 shares issued and outstanding | 20 | 20 | ||||
Additional paid-in capital, common | 24,450 | 24,444 | ||||
Accumulated deficit | (17,085 | ) | (14,572 | ) | ||
Accumulated other comprehensive income | (192 | ) | (624 | ) | ||
Total stockholders’ equity | 12,587 | 14,639 | ||||
Total liabilities and stockholders’ equity | $ | 256,882 | 248,203 |
See Accompanying Notes to Condensed Consolidated Financial Statements.
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(Dollars in thousands, except per share amounts)
�� Three Months Ended | |||||||
March 31, | |||||||
2010 | 2009 | ||||||
Interest income: | |||||||
Loans | $ | 2,688 | 2,814 | ||||
Securities | 318 | 403 | |||||
Other | 6 | 2 | |||||
Total interest income | 3,012 | 3,219 | |||||
Interest expense: | |||||||
Deposits | 1,074 | 1,606 | |||||
Other borrowings | 66 | 58 | |||||
Total interest expense | 1,140 | 1,664 | |||||
Net interest income | 1,872 | 1,555 | |||||
Provision for loan losses | 1,890 | 1,069 | |||||
Net interest (expense) income after provision for loan losses | (18 | ) | 486 | ||||
Non-interest income: | |||||||
Service charges and fees on deposit accounts | 180 | 162 | |||||
Loan brokerage fees | 12 | 30 | |||||
Loss on sale of loans held for sale | - | (23 | ) | ||||
Gain on sale of securities available for sale | - | 87 | |||||
Income from bank-owned life insurance | 30 | 27 | |||||
Other fees | 13 | 13 | |||||
Total non-interest income | 235 | 296 | |||||
Non-interest expenses: | |||||||
Salaries and employee benefits | 930 | 896 | |||||
Occupancy and equipment | 377 | 393 | |||||
Advertising | 34 | 80 | |||||
Data processing | 155 | 141 | |||||
Supplies | 35 | 31 | |||||
Professional fees | 214 | 153 | |||||
Loss on sale of foreclosed assets | 73 | - | |||||
Write-down of foreclosed assets | 291 | - | |||||
Expenses on foreclosed assets | 82 | 37 | |||||
FDIC insurance | 218 | 36 | |||||
Other | 225 | 249 | |||||
Total non-interest expenses | 2,634 | 2,016 | |||||
Loss before income taxes | (2,417 | ) | (1,234 | ) | |||
Income tax benefit | - | (472 | ) | ||||
Net loss | $ | (2,417 | ) | (762 | ) | ||
Preferred stock dividend requirements and amortization of preferred stock discount | 96 | 95 | |||||
Net loss available to common shareholders | $ | (2,513 | ) | (857 | ) |
See Accompanying Notes to Condensed Consolidated Financial Statements.
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Condensed Consolidated Statements of Operations (Unaudited), continued
(Dollars in thousands, except per share amounts)
Three Months Ended | |||||||
March 31, | |||||||
2010 | 2009 | ||||||
Net loss per common share: | |||||||
Basic | $ | (1.22 | ) | $ | (.42 | ) | |
Diluted | $ | (1.22 | ) | $ | (.42 | ) | |
Weighted-average number of common shares, basic | 2,058,047 | 2,058,047 | |||||
Weighted-average number of common shares, diluted | 2,058,047 | 2,058,047 |
See Accompanying Notes to Condensed Consolidated Financial Statements.
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Three Months Ended March 31, 2010 and 2009
(Dollars in thousands)
Accumulated | ||||||||||||
Preferred Stock | Common Stock | Other | ||||||||||
Additional | Additional | Compre- | Total | |||||||||
Paid-In | Paid-In | Accumulated | hensive | Stockholders’ | ||||||||
Shares | Amount | Capital | Discount | Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||
Balance at December 31, 2008 | 5,800 | $ - | 5,800 | (521) | 2,058,047 | $ 20 | 24,393 | (4,982) | 186 | 24,896 | ||
Comprehensive loss: | ||||||||||||
Net loss for the three months ended March 31, 2009 (unaudited) | - | - | - | - | - | - | - | (762) | - | (762) | ||
Net change in unrealized gain on securities available for sale, net of tax of $162 (unaudited) | - | - | - | - | - | - | - | - | 268 | 268 | ||
Comprehensive Loss (unaudited) | (494) | |||||||||||
Preferred stock dividend requirements and amortization of preferred stock discount (unaudited) | - | - | - | 23 | - | - | - | (95) | - | (72) | ||
Share-based compensation (unaudited) | - | - | - | - | - | - | 13 | - | - | 13 | ||
Balance at March 31, 2009 (unaudited) | 5,800 | $ - | 5,800 | (498) | 2,058,047 | $20 | 24,406 | (5,839) | 454 | 24,343 |
See Accompanying Notes to Consolidated Financial Statements.
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Consolidated Statements of Stockholders' Equity
Three Months Ended March 31, 2010 and 2009, Continued
(Dollars in thousands)
Accumulated | ||||||||||||
Preferred Stock | Common Stock | Other | ||||||||||
Additional | Additional | Compre- | Total | |||||||||
Paid-In | Paid-In | Accumulated | hensive | Stockholders’ | ||||||||
Shares | Amount | Capital | Discount | Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||
Balance at December 31, 2009 | 5,800 | $ - | 5,800 | (429) | 2,058,047 | $ 20 | 24,444 | (14,572) | (624) | 14,639 | ||
Comprehensive loss: | ||||||||||||
Net loss for the three months ended March 31, 2010 (unaudited) | - | - | - | - | - | - | - | (2,417) | - | (2,417) | ||
Net change in unrealized loss on securities available for sale (unaudited) | - | - | - | - | - | - | - | - | 432 | 432 | ||
Comprehensive Loss (unaudited) | (1,985) | |||||||||||
Preferred stock dividend requirements and amortization of preferred stock discount (unaudited) | - | - | - | 23 | - | - | - | (96) | - | (73) | ||
Share-based compensation (unaudited) | - | - | - | - | - | - | 6 | - | - | 6 | ||
Balance at March 31, 2010 (unaudited) | 5,800 | $ - | 5,800 | (406) | 2,058,047 | $20 | 24,450 | (17,085) | (192) | 12,587 |
See Accompanying Notes to Consolidated Financial Statements.
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(In thousands)
Three months ended March 31, | ||||||
2010 | 2009 | |||||
Cash flows from operating activities: | ||||||
Net loss | $ | (2,417 | ) | (762 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||
Depreciation and amortization | 112 | 122 | ||||
Provision for loan losses | 1,890 | 1,069 | ||||
Amortization of loan fees, net | (61 | ) | (28 | ) | ||
Deferred income taxes | - | (453 | ) | |||
Net amortization of premiums and discounts on securities | 40 | 30 | ||||
Loss on sale of loans held for sale | - | 23 | ||||
Gain on sale of securities available for sale | - | (87 | ) | |||
Proceeds from sale of loans held for sale | - | (23 | ) | |||
Write-down of foreclosed assets | 291 | - | ||||
Loss on sale of foreclosed assets | 73 | - | ||||
Decrease in accrued interest receivable | 56 | 6 | ||||
Decrease (increase) in other assets | 619 | (52 | ) | |||
Increase (decrease) in official checks and other liabilities | 196 | (205 | ) | |||
Income from bank-owned life insurance | (30 | ) | (27 | ) | ||
Share-based compensation | 6 | 13 | ||||
Net cash provided by (used in) operating activities | 775 | (374 | ) | |||
Cash flows from investing activities: | ||||||
Maturities and calls of securities available for sale | 2,250 | 4,500 | ||||
Purchase of securities available for sale | (2,466 | ) | (8,276 | ) | ||
Principal payments on securities available for sale | 421 | 659 | ||||
Proceeds from sale of securities available for sale | - | 2,907 | ||||
Purchase of securities held to maturity | (2,553 | ) | - | |||
Principal payments on securities held to maturity | 6 | 1 | ||||
Net increase in loans | (584 | ) | (4,112 | ) | ||
Purchase of premises and equipment | (3 | ) | (5 | ) | ||
Purchase of Federal Home Loan Bank stock | - | (77 | ) | |||
Purchase of bank-owned life insurance | - | (108 | ) | |||
Proceeds from the sale of foreclosed assets | 324 | - | ||||
Net cash used in investing activities | (2,605 | ) | (4,511 | ) | ||
Cash flows from financing activities: | ||||||
Net increase in deposits | 8,472 | 12,897 | ||||
Cash paid to preferred stockholder | - | (56 | ) | |||
Repayment of Federal Home Loan Bank advances | - | (500 | ) | |||
Proceeds from other borrowings | 1,990 | - | ||||
Net cash provided by financing activities | 10,462 | 12,341 | ||||
Net increase in cash and cash equivalents | 8,632 | 7,456 | ||||
Cash and cash equivalents at beginning of period | 12,932 | 5,457 | ||||
Cash and cash equivalents at end of period | $ | 21,564 | 12,913 | |||
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Condensed Consolidated Statements of Cash Flows, Continued
(In thousands)
Three months ended March 31 | ||||||
2010 | 2009 | |||||
Supplemental disclosure of cash flow information: | ||||||
Cash paid during the period for: | ||||||
Interest | $ | 1,106 | 1,689 | |||
Non-cash transactions: | ||||||
Accumulated other comprehensive loss, net change in unrealized (loss) gain on securities available for sale, net of tax benefit | $ | 432 | 268 | |||
Transfer of loans to foreclosed assets | $ | - | 2,222 | |||
Preferred dividends payable at beginning of period | $ | 37 | 21 | |||
Preferred dividends payable at end of period | $ | 110 | 37 | |||
Amortization of preferred stock discount | $ | 23 | 23 |
See Accompanying Notes to Condensed Consolidated Financial Statements.
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(1) | General. FPB Bancorp, Inc. (the "Holding Company") owns 100% of the outstanding common stock of First Peoples Bank (the "Bank") and the Bank owns 100% of the outstanding common stock of Treasure Coast Holdings, Inc., (collectively referred to as the "Company"). The Holding Company operates as a one-bank holding company and its only business activity is the operation of the Bank. The Bank is a state (Florida)-chartered commercial bank and its deposits are insured up to the maximum amounts by the Federal Deposit Insurance Corporation, which are currently $250,000 for all qualified accounts through December 31, 2013, and unlimited for non-interest bearing transaction accounts through June 30, 2010, unless extended. The Bank offers a variety of community banking services to individual and corporate customers through its six banking offices located in Port St. Lucie, Stuart, Fort Pierce, Vero Beach and Palm City, Florida. Treasure Coast Holdings, Inc. was incorporated in June 2008 for the sole purpose of managing foreclosed assets. |
In the opinion of management, the accompanying condensed consolidated financial statements of the Company contain all adjustments (consisting primarily of normal recurring accruals) necessary to present fairly the financial position at March 31, 2010, and the results of operations for the three-month periods ended March 31, 2010 and 2009 and cash flows for the three-month periods ended March 31, 2010 and 2009. The results of operations for the three months ended March 31, 2010 are not necessarily indicative of the results to be expected for the full year. |
(2) | Securities. Securities have been classified according to management's intention. The carrying amount of securities and their fair values are as follows (in thousands): |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||
At March 31, 2010: Securities available for sale: | ||||||||||||
U.S. Government agency securities | $ | 12,364 | 14 | (138 | ) | 12,240 | ||||||
Mortgage-backed securities | 5,020 | 6 | (38 | ) | 4,988 | |||||||
Asset-backed securities | 5,997 | - | (77 | ) | 5,920 | |||||||
CMO securities | 8,751 | 57 | (16 | ) | 8,792 | |||||||
Total securities available for sale | $ | 32,132 | 77 | (269 | ) | 31,940 | ||||||
Securities held to maturity: | ||||||||||||
Mortgage-backed securities | $ | 2,546 | - | (25 | ) | 2,521 | ||||||
At December 31, 2009: Securities available for sale: | ||||||||||||
U.S. Government agency securities | $ | 14,620 | 2 | (290 | ) | 14,332 | ||||||
Mortgage-backed securities | 5,182 | 4 | (99 | ) | 5,087 | |||||||
Asset-backed securities | 6,282 | - | (185 | ) | 6,097 | |||||||
CMO securities | 6,292 | - | (56 | ) | 6,236 | |||||||
Total securities available for sale | $ | 32,376 | 6 | (630 | ) | 31,752 | ||||||
(continued)
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Notes to Condensed Consolidated Financial Statements (unaudited)
(2) | Securities, continued. There were no sales of securities classified as available for sale during the three months ended March 31, 2010. |
Information pertaining to securities with gross unrealized losses at March 31, 2010, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows (in thousands): |
As of March 31, 2010 Less Than Twelve Months | ||||||
Securities Available for Sale: | Gross Unrealized Losses | Fair Value | ||||
U.S. Government agency securities | $ | (138 | ) | $ | 8,737 | |
Mortgage-backed securities | $ | (38 | ) | $ | 4,822 | |
Asset-backed securities | $ | (77 | ) | $ | 5,920 | |
CMO securities | $ | (16 | ) | $ | 2,450 | |
Total | $ | (269 | ) | $ | 21,929 | |
Securities Held to Maturity: | ||||||
Mortgage-backed securities | $ | (25 | ) | $ | 2,521 | |
The scheduled maturities of securities at March 31, 2010 are as follows (in thousands):
Available for Sale | |||||||
Amortized Cost | Fair Value | ||||||
Due from five to ten years | $ | 5,864 | $ | 5,834 | |||
Due in more than ten years | 6,500 | 6,406 | |||||
Asset-backed securities | 5,997 | 5,920 | |||||
CMO securities | 8,751 | 8,792 | |||||
Mortgage-backed securities | 5,020 | 4,988 | |||||
$ | 32,132 | $ | 31,940 |
Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.
The unrealized losses on thirteen investment securities available for sale were caused by market conditions. It is expected that the securities would not be settled at a price less than the par value of the investments. Because the decline in fair value is attributable to market conditions and not credit quality, and because the Company has the ability and intent to hold these investments until a market price recovery or maturity, these investments are not considered other-than-temporarily impaired.
(continued)
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Notes to Condensed Consolidated Financial Statements (unaudited)
(3) | Loan Impairment and Credit Losses. Information about impaired loans as of March 31, 2010 and December 31, 2009, and for the three months ended March 31, 2010 and 2009, is as follows (in thousands): |
As Of | ||||||
March 31, 2010 | December 31, 2009 | |||||
Collateral dependent loans identified as impaired: | ||||||
Gross loans with no related allowance for losses (1) | $ | 6,341 | 7,197 | |||
Gross loans with related allowance for losses recorded | 10,009 | 8,443 | ||||
Less allowances on these loans | (2,022 | ) | (2,007 | ) | ||
Net loans with related allowance | 7,987 | 6,436 | ||||
Net investment in collateral dependent impaired loans | 14,328 | 13,633 | ||||
Non-collateral dependent loans identified as impaired: | ||||||
Gross loans with no related allowance for losses | 2,406 | 1,945 | ||||
Gross loans with related allowance for losses recorded | 3,640 | 3,645 | ||||
Less allowance on these loans | (79 | ) | (79 | ) | ||
Net loans with related allowance | 3,561 | 3,566 | ||||
Net investment in non-collateral dependent impaired loans | 5,967 | 5,511 | ||||
Net investment in impaired loans | $ | 20,295 | 19,144 |
(1) | At March 31, 2010 and December 31, 2009, includes loans with partial charge-offs of $1.4 million and $734,000 relating to loans with a net carrying value of $1.8 million and $915,000. |
Three Months Ended March 31, | ||||||
2010 | 2009 | |||||
Average investment in impaired loans | $ | 19,336 | $ | 23,663 | ||
Interest income recognized on impaired loans | $ | 91 | $ | 226 | ||
Interest income received on impaired loans | $ | 83 | $ | 124 |
During the quarter ending March 31, 2010, there was a net increase in impaired loans of $1.2 million, primarily due to the addition of eight loans to impaired status, totaling $2.6 million, partially offset by the additional specific reserves taken during the quarter. Management continues to evaluate the collateral position on its impaired loans for any deterioration in value on a regular basis. At this time, due to the collateral value associated with these impaired loans, no material losses are expected to be incurred above those already reserved or charged-off. However, if the economy continues to deteriorate, or property values decline further, additional adjustments may be necessary in the future.
(continued)
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Notes to Condensed Consolidated Financial Statements (unaudited)
(3) | Loan Impairment and Credit Losses, continued. |
The activity in the allowance for loan losses was as follows (in thousands):
Three Months Ended | ||||||
March 31, | ||||||
2010 | 2009 | |||||
Balance at beginning of period | $ | 4,730 | $ | 2,552 | ||
Provision for loan losses | 1,890 | 1,069 | ||||
(Charge-offs), net of recoveries | (1,025 | ) | (987 | ) | ||
Balance at end of period | $ | 5,595 | $ | 2,634 |
Non-accrual and past due loans were as follows (in thousands): |
At March 31, | At December 31, | |||||
2010 | 2009 | |||||
Non-accrual loans | $ | 16,632 | $ | 15,083 | ||
Past due ninety days or more, but still accruing | - | 907 | ||||
$ | 16,632 | $ | 15,990 | |||
(4) | Regulatory Capital. The Bank is required to maintain certain minimum regulatory capital requirements, pursuant to a Consent Order (see page 18). The following is a summary at March 31, 2010 of the regulatory capital requirements and the Bank's capital on a percentage basis: |
Percentage of | Minimum for Capital Adequacy Purposes | Requirements of Consent Order | ||||
Tier I capital to total average assets | 4.99 | % | 4.00 | % | 8.00 | % |
Tier I capital to risk-weighted assets | 6.57 | % | 4.00 | % | N/A | |
Total capital to risk-weighted assets | 7.84 | % | 8.00 | % | 11.00 | % |
(5) | Loss Per Common Share. Basic loss per common share has been computed on the basis of the weighted-average number of shares of common stock outstanding during the period. For the three months ended March 31, 2010 and 2009, outstanding stock options and warrants are not considered dilutive due to the losses incurred by the Company. |
(continued)
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Notes to Condensed Consolidated Financial Statements (unaudited)
(6) | Share-Based Compensation. The Company established a Stock Option Plan in 1998 (“1998 Plan”) for directors, officers and employees of the Company. The 1998 Plan as amended provides for 131,553 shares of common stock to be available for grant. The exercise price of the stock options is the fair market value of the common stock on the date of grant. The options expire ten years from the date of grant. At March 31, 2010, no shares remain available for grant, as the Plan Agreement terminated on December 8, 2008. A summary of stock option information follows ($ in thousands, except per share amounts): |
Number of Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate IntrinsicValue | |||||||||
Outstanding at December 31, 2008 | 36,761 | $ | 11.68 | |||||||||
Options forfeited | (2,755 | ) | 11.88 | |||||||||
Options expired | (3,306 | ) | 9.07 | |||||||||
Outstanding at December 31, 2009 and March 31, 2010 | 30,700 | $ | 11.94 | 1.05 years | $ | - | ||||||
Options exercisable at March 31, 2010 | 30,353 | $ | 11.98 | .97 years | $ | - | ||||||
In 2005, the Company established a new option plan (“2005 Plan”) for directors, officers and employees of the Company. The 2005 Plan provides for 158,743 shares of common stock to be available for grant. The exercise price of the stock options is the fair market value of the common stock on the date of grant. The 2005 Plan allows for various vesting periods. All options expire ten years from the date of grant. At March 31, 2010, 41,627 shares remain available for grant.
A summary of stock option information follows: |
Number of Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate IntrinsicValue | |||||||||
Outstanding at December 31, 2008 | 123,049 | $ | 14.27 | |||||||||
Options forfeited | (6,433 | ) | (15.91 | ) | ||||||||
Options granted | 500 | 8.85 | ||||||||||
Options outstanding at December 31, 2009 and March 31, 2010 | 117,116 | $ | 14.16 | 6.51 years | $ | - | ||||||
Options exercisable at March 31, 2010 | 104,824 | $ | 14.74 | 6.33 years | $ | - | ||||||
There were no options granted during the three months ended March 31, 2010 or 2009.
(continued)
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Notes to Condensed Consolidated Financial Statements (unaudited)
(6) | Share-Based Compensation, continued. The total fair value of shares vested and recognized as compensation expense was $6,000 and $13,000 for the three-month periods ended March 31, 2010 and 2009, respectively, and there was $1,000 in related tax benefit in 2009. As of March 31, 2010, the Company had 12,639 stock options not fully vested and there was $31,000 of total unrecognized compensation cost related to these non-vested options. This cost is expected to be recognized monthly over a weighted-average period of 1.24 years on a straight-line basis. |
The total fair value of shares vested and recognized as compensation expense was $6,000 and $13,000 for 2010 and 2009, respectively, and there was $1,000 in related tax benefit in 2009. As of March 31, 2010, the Company had 12,639 stock options not fully vested and there was $31,000 of total unrecognized compensation cost related to these non-vested options. This cost is expected to be recognized monthly over a weighted-average period of 1.24 years on a straight-line basis.
In addition, as discussed in more detail in Note 6, the Company sold on December 5, 2008 to the U.S. Treasury a ten year warrant to purchase at any time up to 183,158 shares of the Company’s common stock for $4.75 per share.
(7) | Other Borrowings. At March 31, 2010, other borrowings consist of amounts received from other financial institutions to purchase participations in certain loans. At March 31, 2010, the requirements had not yet been satisfied to recognize the sales, and thus the amounts are recorded as other borrowings. It is expected that the requirement for sale accounting will be satisfied during the subsequent quarter, at which time the sales will be recognized. |
(8) | Stockholders’ Equity. On December 5, 2008, the Company issued and sold to the United States Department of the Treasury (the “Treasury”) 5,800 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the “Preferred Shares”), along with a ten year warrant (the “Warrant”) to purchase at any time up to 183,158 shares of the Company’s common stock for $4.75 per share, for a total cash investment of $5.8 million from the Treasury (the “Transaction”). |
The Transaction proceeds of $5.8 million were allocated between the Preferred Shares and Warrant based on the ratio of the estimated fair value of the Warrant to the aggregate estimated fair value of both the Preferred Shares and the Warrant. The value of the Warrant was computed to be $394,000 using the Black Scholes model with the following inputs: expected stock volatility of 61.89%, risk-free interest rate of 4.11%, expected life of 5 years and no dividend yield. The value of the Preferred Shares was computed to be $3.9 million based on the net present value of the expected cash flows over five years using a discount rate of 14%, which represented what the Company believed to be its incremental borrowing rate for a similar transaction in the private sector. The allocation of proceeds to the Warrant was recorded as a “pr eferred stock discount” against the Preferred Shares, with a corresponding and equal entry to additional paid in common equity in the amount of $526,000. This discount is being amortized over five years on a straight-line basis and increases the loss available to common shareholders.
At a Special Meeting of the Shareholders, held on October 6, 2009, the number of authorized shares of common and preferred stock of the Company was increased from 5,000,000 to 25,000,000 and from 1,000,000 to 2,000,000 respectively.
(continued)
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Notes to Condensed Consolidated Financial Statements, Continued
(9) | Fair Value Measurements. Financial assets subject to fair value measurements on a recurring basis are as follows (in thousands): |
Fair Value Measurements at Reporting Date Using | |||||||||||
Quoted Prices In Active | Significant Other | Significant | |||||||||
Markets for Identical | Observable | Unobservable | |||||||||
Fair | Assets | Inputs | Inputs | ||||||||
Value | (Level 1) | (Level 2) | (Level 3) | ||||||||
As of March 31, 2010 - Available-for-sale securities | $ | 31,940 | - | $ | 31,940 | - |
Impaired collateral-dependent loans and foreclosed assets are carried at fair value when the current collateral value is lower than the carrying value of the loan or foreclosed asset. Those impaired collateral-dependent loans and foreclosed assets which are measured at fair value on a non-recurring basis are as follows (in thousands):
Losses Recorded in | ||||||||||||||||||||
Operations | ||||||||||||||||||||
For the Three | ||||||||||||||||||||
Fair | Total | Months Ended | ||||||||||||||||||
Value(1) | Level 1 | Level 2 | Level 3 | Losses | March 31, 2010 | |||||||||||||||
As of March 31, 2010: | ||||||||||||||||||||
Impaired loans | $ | 9,835 | - | - | $ | 9,835 | $ | 3,905 | $ | 1,025 | ||||||||||
Foreclosed assets | $ | 4,670 | - | - | $ | 4,670 | $ | 576 | $ | 291 | ||||||||||
Total | $ | 14,505 | - | - | $ | 14,505 | $ | 4,481 | $ | 1,316 | ||||||||||
(1) | In addition, impaired loans and foreclosed assets with a carrying value of $4.5 million and $1.4 million respectively, were measured for impairment using Level 3 inputs and had a fair value in excess of carrying value. |
The estimated fair values of the Company's financial instruments were as follows (in thousands): |
At March 31, 2010 | At December 31, 2009 | |||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||
Financial assets: | ||||||||||||
Cash and cash equivalents | $ | 21,564 | 21,564 | 12,932 | 12,932 | |||||||
Securities available for sale | 31,940 | 31,940 | 31,752 | 31,752 | ||||||||
Securities held to maturity | 2,546 | 2,521 | - | - | ||||||||
Loans, net | 183,067 | 185,046 | 184,312 | 184,701 | ||||||||
Federal Home Loan Bank stock | 1,087 | 1,087 | 1,087 | 1,087 | ||||||||
Accrued interest receivable | 1,145 | 1,145 | 1,201 | 1,201 | ||||||||
Financial liabilities: | ||||||||||||
Deposit liabilities | 224,846 | 225,528 | 216,374 | 218,124 | ||||||||
Federal Home Loan Bank advances | 14,600 | 14,805 | 14,600 | 14,618 | ||||||||
Other borrowings | 1,990 | 2,159 | - | - | ||||||||
Off-balance-sheet financial instruments | - | - | - | - |
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Hacker, Johnson & Smith PA, the Company's independent registered public accounting firm, has made a limited review of the financial data as of March 31, 2010, and for the three-month periods ended March 31, 2010 and 2009 presented in this document, in accordance with the standards established by the Public Company Accounting Oversight Board.
Their report furnished pursuant to Article 10 of Regulation S-X is included herein.
FPB Bancorp, Inc.
Port St. Lucie, Florida:
We have reviewed the accompanying condensed consolidated balance sheet of FPB Bancorp, Inc. and Subsidiary (the "Company") as of March 31, 2010, and the related condensed consolidated statements of operations for the three-month periods ended March 31, 2010 and 2009, and the related condensed consolidated statements of stockholders’ equity and cash flows for the three-month periods ended March 31, 2010 and 2009. These interim financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim condensed consolidated financial statements for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board, the consolidated balance sheet of the Company as of December 31, 2009, and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended (not presented herein); and in our report dated March 15, 2010, 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, 2009, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ Hacker, Johnson & Smith PA
HACKER, JOHNSON & SMITH PA
Fort Lauderdale, Florida
May 12, 2010
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General
FPB Bancorp, Inc. (the "Holding Company") owns 100% of the outstanding common stock of First Peoples Bank (the "Bank") and the Bank owns 100% of the outstanding common stock of Treasure Coast Holdings, Inc., (collectively referred to as the "Company"). The Holding Company operates as a one-bank holding company and its only business activity is the operation of the Bank. The Bank is a state (Florida)-chartered commercial bank and its deposits are insured up to the maximum amounts by the Federal Deposit Insurance Corporation, which are currently $250,000 for all qualified accounts through December 31, 2013. The Bank offers a variety of community banking services to individual and corporate customers through its six banking offices located in Port St. Lucie, Stuart, Fort Pierce, Vero Beach and Palm City, Florida. Treasure Coast Holdings, Inc. was incorporated in June 2008 for the sole purpose of managing foreclosed assets.
Consent Order. Effective March 18, 2010, the Bank entered into a Stipulation to the Issuance of a Consent Order (“Stipulation”) with the Federal Deposit Insurance Corporation (the “FDIC”) and the Florida Office of Financial Regulation (the “OFR”). Pursuant to the Stipulation, the Bank consented, without admitting or denying any charges of unsafe or unsound banking practices or violations of law or regulation, to the issuance of a Consent Order by the FDIC and the OFR, also effective as of March 18, 2010. |
The Consent Order represents an agreement among the Bank, the FDIC and the OFR as to areas of the Bank’s operations that warrant improvement and presents a plan for making those improvements. The Consent Order imposes no fines or penalties on the Bank.
Pursuant to the Consent Order:
Ø | The Bank’s Board of Directors is required to increase its participation in the affairs of the Bank. This participation shall include comprehensive, documented meetings to be held no less frequently than monthly. Prior to the entry of the Consent Order, the Board conducted such meetings, but now requires more detailed management reports. The Board has also established a committee to oversee the Bank’s compliance with the Consent Order. |
Ø | By June 16, 2010, and during the life of the Consent Order, the Bank shall achieve and maintain a Tier 1 leverage capital ratio of not less than 8% and a total risk-based capital ratio of not less than 11%. At March 31, 2010, the Bank’s Tier 1 leverage capital ratio was 4.99% and its total risk-based capital ratio was 7.84%. As of March 31, 2010, an additional $8.4 million in capital would be required by the Bank to attain the required capital levels. |
Ø | The Bank must maintain a fully funded Allowance for Loan and Lease Losses (“ALLL”), which must be satisfactory to the FDIC and the OFR. The Board of Directors shall quarterly review the adequacy of the ALLL. The Bank has always endeavored to maintain a fully funded, adequate ALLL and believes its ALLL is adequate. |
(continued)
Consent Order, continued.
Ø | The Bank shall also reduce the aggregate balance of assets classified “Substandard” by the FDIC in October 2009: (i) by June 16, 2010, to not more than 140% of Tier 1 capital plus the ALLL; (ii) by September 14, 2010, to not more than 120% of Tier 1 capital plus the ALLL; (iii) by December 13, 2010, to not more than 100% of Tier 1 capital plus the ALLL; (iv) by March 23, 2011, to not more than 80% of Tier 1 capital plus the ALLL; and (v) by September 19, 2011, to not more than 60% of Tier 1 capital plus the ALL. As of March 31, 2010, the Bank’s ratio was 160%. |
Ø | The Bank shall not extend any credit to, or for the benefit of, any borrower who has a loan that has been charged off or classified “Substandard” and is uncollected, unless the Bank documents that such extension of credit is in the Bank’s best interest. The Bank had, and has, no intention of extending credit to such borrowers in violation of these requirements. |
Ø | By May 2, 2010, the Bank shall perform a risk segmentation analysis with respect to any concentration cited by the FDIC, including commercial real estate loans. The Bank shall also develop a plan to reduce any segment of the portfolio deemed by the FDIC or OFR to be an undue concentration of credit. The Bank is in the process of performing this analysis. |
Ø | By June 16, 2010, the Bank shall formulate and implement a strategic plan and a plan to improve and sustain Bank earnings. Additionally, the Bank must prepare a budget and update the profit plan by November 30th of each year. All such items must be submitted to the FDIC and the OFR. The Bank has prepared a strategic plan and a profit plan and submitted them as required. |
Ø | By May 17, 2010, the Bank must review, revise and adopt its liquidity, contingency funding and funds management policy, including implementing any changes recommended by the FDIC or the OFR. The Bank is in the process of completing such reviews and revisions. |
Ø | Throughout the life of the Consent Order, the Bank shall not accept, renew, or rollover any brokered deposit, and shall comply with the restrictions on the effective yields on deposits exceeding national averages. In addition, by March 28, 2010, the Bank was required to submit to the FDIC and the OFR a plan to reduce reliance on brokered deposits, which it has done. The Bank has not accepted, renewed or rolled over any brokered deposits since July 2009. With respect to the yield limitations, it is possible that the Bank could experience a decrease in deposit inflows, or the migration of current deposits to competitor institutions, if other institutions offer higher interest rates than those permitted to be offered by the Bank. |
Ø | During the life of the Consent Order, the Bank shall limit its asset growth to 10% per year, unless the FDIC and the OFR consent to greater growth. Under the recently adopted strategic plan, the growth percentage will not exceed these growth parameters. |
Ø | While the Consent Order is in effect, the Bank shall not declare or pay dividends, or any other form of payment representing a reduction in capital without the prior written approval of the FDIC and the OFR. The Bank has never paid a dividend to FPB. |
Ø | Within 30 days of the end of each calendar quarter, the Bank shall furnish written progress reports to the FDIC and the OFR detailing the form, manner, and results of any actions taken to secure compliance. The Bank will prepare and submit such reports. |
Liquidity and Capital Resources
The Company's primary source of cash during the three months ended March 31, 2010 was from net deposit inflows of approximately $8.5 million and the sale, call or maturity of securities available for sale of approximately $2.3 million. Cash was used primarily for the purchase of securities available for sale of approximately $2.5 million and securities held to maturity of $2.6 million. At March 31, 2010, the Company had time deposits of $96.9 million that mature in one year or less. Management believes that, if so desired, it can adjust the rates on time deposits to retain or attract deposits in a changing interest-rate environment.
The following table shows selected information for the periods ended or at the dates indicated:
Three months | Three months | ||||||||||
Ended | Year Ended | Ended | |||||||||
March 31, | December 31, | March 31, | |||||||||
2010 | 2009 | 2009 | |||||||||
Average equity as a percentage of average assets | 5.65 | % | 8.50 | % | 10.09 | % | |||||
Equity to total assets at end of period | 4.90 | % | 5.90 | % | 9.71 | % | |||||
Return on average assets (1) | (3.86 | %) | (3.55 | %) | (1.24 | %) | |||||
Return on average equity (1) | (68.29 | %) | (41.74 | %) | (12.34 | %) | |||||
Noninterest expenses to average assets (1) | 4.21 | % | 4.04 | % | 3.31 | % | |||||
Nonperforming loans and foreclosed assets to total assets at end of period | 8.82 | % | 9.15 | % | 6.55 | % |
(1) | Annualized for the three months ended March 31, 2010 and 2009. |
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued
Off-Balance Sheet Arrangements
The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are commitments to extend credit, available lines of credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amounts recognized in the condensed consolidated balance sheet. The contract amounts of those instruments reflect the extent of the Company's involvement in particular classes of financial instruments.
The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, available lines of credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed-expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total committed amounts do not necessarily represent future cash requirements. The Company evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the counter party.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company generally holds collateral supporting these commitments and management does not anticipate any potential losses if these letters of credit are funded.
A summary of the amounts of the Company's financial instruments, with off-balance sheet risk at March 31, 2010, follows (in thousands):
Contract Amount | |||
Commitments to extend credit | $ | 210 | |
Available lines of credit | $ | 13,726 | |
Standby letters of credit | $ | 86 |
Management believes that the Company has adequate resources to fund all of its commitments.
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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 income; (iv) interest-rate spread; (v) net interest margin; and (vi) ratio of average interest-earning assets to average interest-bearing liabilities.
Three Months Ended March 31, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Interest | Average | Interest | Average | |||||||||||||||||||||
Average | and | Yield/ | Average | and | Yield/ | |||||||||||||||||||
Balance | Dividends | Rate | Balance | Dividends | Rate | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans | $ | 184,613 | 2,688 | 5.82 | % | $ | 186,478 | 2,814 | 6.04 | % | ||||||||||||||
Securities | 33,175 | 318 | 3.83 | 33,618 | 403 | 4.80 | ||||||||||||||||||
Other (1) | 12,873 | 6 | .19 | 4,303 | 2 | .19 | ||||||||||||||||||
Total interest-earning assets | 230,661 | 3,012 | 5.22 | 224,399 | 3,219 | 5.74 | ||||||||||||||||||
Noninterest-earning assets | 19,840 | 20,510 | ||||||||||||||||||||||
Total assets | $ | 250,501 | $ | 244,909 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Savings, NOW and money-market deposit accounts | 59,257 | 147 | .99 | 43,174 | 221 | 2.05 | ||||||||||||||||||
Time deposits | 138,794 | 927 | 2.67 | 143,969 | 1,385 | 3.85 | ||||||||||||||||||
Borrowings | 15,492 | 66 | 1.70 | 10,822 | 58 | 2.14 | ||||||||||||||||||
Total interest-bearing liabilities | 213,543 | 1,140 | 2.14 | 197,965 | 1,664 | 3.36 | ||||||||||||||||||
Demand deposits | 19,583 | 20,532 | ||||||||||||||||||||||
Noninterest-bearing liabilities | 3,217 | 1,702 | ||||||||||||||||||||||
Stockholders' equity | 14,158 | 24,710 | ||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 250,501 | $ | 244,909 | ||||||||||||||||||||
Net interest income | $ | 1,872 | $ | 1,555 | ||||||||||||||||||||
Interest-rate spread (2) | 3.08 | % | 2.38 | % | ||||||||||||||||||||
Net interest margin (3) | 3.25 | % | 2.77 | % | ||||||||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 1.08 | 1.13 |
___________________________________________________________
(1) | Includes federal funds sold, dividends from Federal Home Loan Bank stock and interest-earning deposits with banks. |
(2) | Interest-rate spread represents the difference between the average yield on interest-earning assets and the average rate of interest-bearing liabilities. |
(3) | Net interest margin is net interest income divided by average interest-earning assets. |
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Comparison of the Three-Month Periods Ended March 31, 2010 and 2009
General. Net loss available to common shareholders for the three months ended March 31, 2010, was $2.5 million or $(1.22) per basic and diluted common share compared to net losses of $857,000 or $(.42) per basic and diluted common share for the three-month period ended March 31, 2009. This increase in the Company's net losses was primarily due to a decrease in interest income and non-interest income, and increases in the provision for loan losses and other non-interest expenses, partially offset by a decrease in interest expense. |
Interest Income. Interest income decreased to $3.0 million for the three months ended March 31, 2010 from $3.2 million for the three months ended March 31, 2009. Interest income on loans decreased to $2.7 million due to a decrease in the average yield earned and an increase in the level of nonperforming loans, partially offset by an increase in the average loan portfolio balance for the three months ended March 31, 2010. |
Interest Expense. Interest expense decreased by $524,000 for the three months ended March 31, 2010, from the three months ended March 31, 2009. Interest expense decreased due to a decrease in the average yield paid on deposits as well as a decrease in the average balance of time deposits, partially offset by an increase in the average balance of lower-cost savings, NOW and money market deposit accounts for the three months ended March 31, 2010. In addition, the cost of average borrowings from the Federal Home Loan Bank decreased for the three months ended March 31, 2010 as compared to the same period in 2009 partially offset by an in crease in the average balance of those advances. |
Provision for Loan Losses. The provision for loan losses is charged to operations to bring the total allowance to a level deemed appropriate by management and is based upon historical experience, the volume and type of lending conducted by the Company, industry standards, the amount of impaired loans, general economic conditions, particularly as they relate to the Company's market areas, and other factors related to the estimated collectibility of the Company's loan portfolio. The provision for the three months ended March 31, 2010, was $1.9 million compared to $1.1 million for the same period in 2009. Management believes the balance in the allowance for loan losses of $5.6 million at March 31, 2010 is adequate. |
Non-interest Income. Total non-interest income decreased to $235,000 for the three months ended March 31, 2010, from $296,000 for the three months ended March 31, 2009 primarily as a result of a decrease in loan brokerage fees, partially offset by an increase in service charges on deposit accounts. In addition, the 2009 period included a gain on the sale of investments and a loss on the sale of loans which did not occur in 2010. |
Non-interest Expenses. Total non-interest expenses increased to $2.6 million for the three months ended March 31, 2010 from $2.0 million for the three months ended March 31, 2009, primarily due to increases in write-downs, loss on sale and expenses associated with foreclosed assets of $409,000 and in FDIC insurance expense of $182,000, as well as employee compensation, supplies, professional fees and data processing, totaling $113,000, partially offset by decreases in advertising, and occupancy and equipment , and other expenses totaling $86,000. |
Income Taxes. The income tax benefit was $472,000 for the three months ended March 31, 2009. There was no benefit recognized for the three months ended March 31, 2010. |
(continued)
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Item 4. |
(a) | Evaluation of Disclosure Controls and Procedures |
We maintain 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 within the 90 days preceding the filing of this Report, our Principal Executive Officer and Principal Financial Officer concluded that, subject to the limitations noted below, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reporte d within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. |
(b) | Changes in Internal Controls |
We have made no significant changes in its internal controls over financial reporting during the quarter ended March 31, 2010 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. |
(c) | 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 internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control 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 fraud, if any, 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. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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Part II. Other Information
Item 1. |
There are no material pending legal proceedings to which the Company is a party or to which any of its property is subject.
Beginning with the dividend payment due on February 15, 2010, we have suspended paying dividends on our Series A Preferred Stock. The total arrearage as of March 31, 2010, was $110,000.
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Part II. Other Information, continued
Item 6. |
Exhibits. The following exhibits are filed with or incorporated by reference into this report. The exhibits marked with an (a) were previously filed as a part of the Company’s Registration Statement on Form SB-1, filed with the Federal Deposit Insurance Corporation on April 30, 2000; those marked with a (b) were filed with the Company’s 2003 Proxy Statement filed with the Security and Exchange Commission (“SEC”) on March 28, 2003; those marked with a (c) were filed with the Company’s Definitive Schedule 14A filed with the SEC on October 26, 2005; those marked with a (d) were filed with the Company’s Form 8-A with the SEC on November 16, 2001; those mark ed with an (e) were filed with the Company’s Form 10-QSB with the SEC on August 2, 2008; those marked with an (f) were filed with the Company’s Form 10-QSB with the SEC on November 6, 2008; and those marked with an (h) were filed with the Company’s Form 8-K on December 5, 2008.
Exhibit No. | Description of Exhibit | |
(d)3.1 | Articles of Incorporation | |
(d)3.2 | Bylaws | |
(e)3.3 | Amendment to the Bylaws, Adopted August 15, 2008 | |
(h)3.4 | Articles of Amendment to the Articles of Incorporation authorizing the Preferred Shares | |
(a)4.1 | Specimen copy of certificate evidencing shares of the Company’s common capital stock, $0.01 par value | |
(a)4.2 | First Peoples Bank Stock Option Plan dated January 14, 1999 | |
(h)4.3 | Form of Certificate for Fixed Rate Cumulative Perpetual Preferred Stock, Series A | |
(h)4.4 | Warrant to Purchase Up to 183,158 Shares of Common Stock | |
(b)4.5 | Amendment to First Peoples Bank Stock Option Plan | |
(c)4.6 | 2005 Stock Compensation Plan | |
(a)10.1 | First Peoples Bank Qualified 401(k) Profit Sharing Plan, dated May 1, 1999 | |
(f)10.2 | Amended and Restated Employment Agreement for David W. Skiles | |
(e)10.3 | Amended and Restated Change in Control Agreement for Nancy E. Aumack | |
(e)10.4 | Amended and Restated Change in Control Agreement for Stephen J. Krumfolz | |
(e)10.5 | Amended and Restated Change in Control Agreement for Marge Riley | |
(h)10.6 | Letter Agreement, dated December 5, 2008 between the Company and the United States Department of the Treasury | |
(h)10.7 | Form of Waiver, executed by each of David W. Skiles, Nancy E. Aumack and Marge Riley | |
(h)10.8 | Form of Compliance Agreement, executed by each of David W. Skiles, Nancy E. Aumack and Marge Riley | |
(h)10.9 | Securities Purchase Agreement – Standard Terms between the Company and the United States Department of the Treasury | |
31.1 | ||
31.2 | ||
32.1 | ||
32.2 |
![Logo Heading](https://capedge.com/proxy/10-Q/0001162245-10-000017/logosmall.jpg)
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.
FPB BANCORP, INC. | ||||
(Registrant) | ||||
Date: | May 12, 2010 | By: | /s/David W. Skiles | |
David W. Skiles, Principal Executive Officer, President and Chief Executive Officer | ||||
Date: | May 12, 2010 | By: | /s/Nancy E. Aumack | |
Nancy E. Aumack, Principal Financial Officer, Senior Vice President and Chief Financial Officer |
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