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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
x | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2004
¨ | Transition report under Section 13 or 15(d) of the Exchange Act |
For the transition period from to
Commission File Number 000-33351
FPB BANCORP, INC.
(Exact Name of Small Business Issuer 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) 398-1388
(Issuer’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES x NO ¨
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
Common stock, par value $.01 per share | 818,120 shares | |
(class) | Outstanding at September 30, 2004 |
Transitional Small Business Format (check one): YES ¨ NO x
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FPB BANCORP, INC. AND SUBSIDIARY
INDEX
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FPB BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(Dollars in thousands)
September 30, 2004 | December 31, 2003 | ||||||
(unaudited) | |||||||
Assets | |||||||
Cash and due from banks | $ | 1,480 | 2,827 | ||||
Interest-bearing deposits with banks | 117 | 2,546 | |||||
Federal funds sold | 10,672 | 1,845 | |||||
Total cash and cash equivalents | 12,269 | 7,218 | |||||
Securities available for sale | 5,043 | 8,285 | |||||
Securities held to maturity | 3,042 | 3,090 | |||||
Loans, net of allowance for loan losses of $1,164 and $852 | 64,242 | 48,244 | |||||
Premises and equipment, net | 3,593 | 2,437 | |||||
Federal Home Loan Bank stock, at cost | 125 | 122 | |||||
Accrued interest receivable | 302 | 249 | |||||
Deferred income taxes | 268 | 280 | |||||
Other assets | 197 | 130 | |||||
Total assets | $ | 89,081 | 70,055 | ||||
Liabilities and Stockholders’ Equity | |||||||
Liabilities: | |||||||
Noninterest-bearing demand deposits | 16,042 | 11,371 | |||||
Savings, NOW and money-market deposits | 30,071 | 24,609 | |||||
Time deposits | 32,384 | 25,084 | |||||
Total deposits | 78,497 | 61,064 | |||||
Official checks | 539 | 1,446 | |||||
Federal Home Loan Bank advance | 2,500 | — | |||||
Other liabilities | 172 | 173 | |||||
Total liabilities | 81,708 | 62,683 | |||||
Stockholders’ equity: | |||||||
Preferred stock, $.01 par value; 1,000,000 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock, $.01 par value; 5,000,000 shares authorized, 818,120 shares issued and outstanding | 8 | 8 | |||||
Additional paid-in capital | 7,910 | 7,918 | |||||
Accumulated deficit | (546 | ) | (567 | ) | |||
Accumulated other comprehensive income | 1 | 13 | |||||
Total stockholders’ equity | 7,373 | 7,372 | |||||
Total liabilities and stockholders’ equity | $ | 89,081 | 70,055 | ||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
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FPB BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Earnings (Unaudited)
(Dollars in thousands, except share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||
2004 | 2003 | 2004 | 2003 | ||||||
Interest income: | |||||||||
Loans | $ | 1,011 | 786 | 2,724 | 2,296 | ||||
Securities | 69 | 50 | 227 | 158 | |||||
Other | 27 | 22 | 53 | 61 | |||||
Total interest income | 1,107 | 858 | 3,004 | 2,515 | |||||
Interest expense: | |||||||||
Deposits | 267 | 246 | 734 | 751 | |||||
Federal Home Loan Bank advance | 5 | — | 5 | — | |||||
Total interest expense | 272 | 246 | 739 | 751 | |||||
Net interest income | 835 | 612 | 2,265 | 1,764 | |||||
Provision for loan losses | 85 | 106 | 325 | 278 | |||||
Net interest income after provision for loan losses | 750 | 506 | 1,940 | 1,486 | |||||
Noninterest income: | |||||||||
Service charges and fees on deposits | 70 | 68 | 226 | 177 | |||||
Gain on sale of a securities available for sale | — | — | 20 | 33 | |||||
Other fees | 15 | 7 | 40 | 22 | |||||
Loan brokerage fees | 37 | — | 137 | 99 | |||||
Other | 35 | 21 | 157 | 86 | |||||
Total noninterest income | 157 | 96 | 580 | 417 | |||||
Noninterest expenses: | |||||||||
Salaries and employee benefits | 461 | 256 | 1,194 | 703 | |||||
Occupancy and equipment | 131 | 88 | 361 | 221 | |||||
Advertising | 62 | 37 | 194 | 123 | |||||
Professional fees | 11 | 26 | 73 | 124 | |||||
Data processing | 75 | 53 | 201 | 156 | |||||
Other | 68 | 118 | 457 | 329 | |||||
Total noninterest expenses | 808 | 578 | 2,480 | 1,656 | |||||
Earnings before income taxes | 99 | 24 | 40 | 247 | |||||
Income taxes | 41 | 8 | 19 | 94 | |||||
Net earnings | $ | 58 | 16 | 21 | 153 | ||||
Earnings per share, basic and diluted | $ | .07 | .02 | .03 | .19 | ||||
Weighted-average number of shares, basic and diluted | 818,120 | 817,775 | 818,120 | 817,775 | |||||
Dividends per share | $ | — | — | — | — | ||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
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FPB BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Stockholders’ Equity
Nine Months Ended September 30, 2004 and 2003
(Dollars in thousands)
Common Stock | Additional Capital | Accumulated Deficit | Accumulated Income (Loss) | Total Equity | ||||||||||||||
Shares | Amount | |||||||||||||||||
Balance at December 31, 2002 | 817,775 | $ | 8 | 7,932 | (687 | ) | 60 | 7,313 | ||||||||||
Comprehensive income: | ||||||||||||||||||
Net earnings for the nine months ended September 30, 2003 (unaudited) | — | — | — | 153 | — | 153 | ||||||||||||
Net change in unrealized gain on securities available for sale, net of tax benefit of $40 (unaudited) | — | — | — | — | (65 | ) | (65 | ) | ||||||||||
Comprehensive income (unaudited) | 88 | |||||||||||||||||
Stock offering costs (unaudited) | — | — | (2 | ) | — | — | (2 | ) | ||||||||||
Balance at September 30, 2003 (unaudited) | 817,775 | $ | 8 | 7,930 | (534 | ) | (5 | ) | 7,399 | |||||||||
Balance at December 31, 2003 | 818,120 | $ | 8 | 7,918 | (567 | ) | 13 | 7,372 | ||||||||||
Comprehensive income: | ||||||||||||||||||
Net earnings for the nine months ended September 30, 2004 (unaudited) | — | — | — | 21 | — | 21 | ||||||||||||
Net change in unrealized gain on securities available for sale, net of tax benefit of $7 (unaudited) | — | — | — | — | (12 | ) | (12 | ) | ||||||||||
Comprehensive income (unaudited) | 9 | |||||||||||||||||
Issuance of common stock from exercise of warrants (unaudited) | 8,000 | — | 80 | — | — | 80 | ||||||||||||
Repurchase and retirement of common stock (unaudited) | (8,000 | ) | — | (88 | ) | — | — | (88 | ) | |||||||||
Balance at September 30, 2004 (unaudited) | 818,120 | $ | 8 | 7,910 | (546 | ) | 1 | 7,373 | ||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
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FPB BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended September 30, | |||||||
2004 | 2003 | ||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 21 | 153 | ||||
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: | |||||||
Depreciation | 128 | 52 | |||||
Provision for loan losses | 325 | 278 | |||||
Provision for deferred income taxes | 19 | 94 | |||||
Net amortization of deferred loan fees | (12 | ) | (13 | ) | |||
Net amortization of securities | 6 | 68 | |||||
Gain on sale of a securities available for sale | (20 | ) | (33 | ) | |||
Increase in accrued interest receivable | (53 | ) | (21 | ) | |||
Increase in other assets | (67 | ) | (47 | ) | |||
Decrease in official checks and other liabilities | (908 | ) | (175 | ) | |||
Net cash (used in) provided by operating activities | (561 | ) | 356 | ||||
Cash flows from investing activities: | |||||||
Purchase of securities available for sale | — | (6,594 | ) | ||||
Purchase of securities held to maturity | — | (3,488 | ) | ||||
Principal payments on securities available for sale | 1,236 | 1,887 | |||||
Proceeds from the sale of a securities available for sale | 2,000 | 2,251 | |||||
Proceeds from calls of securities available for sale | — | 2,000 | |||||
Principal payments on securities held to maturity | 49 | 287 | |||||
Net increase in loans | (16,311 | ) | (5,667 | ) | |||
Purchase of Federal Home Loan Bank stock | (3 | ) | (42 | ) | |||
Purchase of premises and equipment | (1,284 | ) | (208 | ) | |||
Net cash used in investing activities | (14,313 | ) | (9,574 | ) | |||
Cash flows from financing activities: | |||||||
Net increase in deposits | 17,433 | 9,837 | |||||
Proceeds from Federal Home Loan Bank advance | 2,500 | — | |||||
Proceeds from the issuance of common stock | 80 | — | |||||
Repurchase and retirement of common stock | (88 | ) | — | ||||
Stock offering costs | — | (2 | ) | ||||
Net cash provided by financing activities | 19,925 | 9,835 | |||||
Net increase in cash and cash equivalents | 5,051 | 617 | |||||
Cash and cash equivalents at beginning of period | 7,218 | 7,825 | |||||
Cash and cash equivalents at end of period | $ | 12,269 | 8,442 | ||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for: | |||||||
Interest, net of amount capitalized of $16 and $8 | $ | 732 | 756 | ||||
Income taxes | $ | — | — | ||||
Noncash transaction- | |||||||
Accumulated other comprehensive income, change in unrealized gain on securities available for sale, net of tax | $ | (12 | ) | (65 | ) | ||
See Accompanying Notes to Condensed Consolidated Financial Statements.
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FPB BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited)
(1) | General. FPB Bancorp, Inc. is a one-bank holding company and owns 100% of the outstanding common stock of First Peoples Bank (the “Bank”), a Florida-chartered commercial bank (collectively, the “Company”). The Holding Company’s only business activity is the operation of the Bank. The Bank’s deposits are insured, up to the limit of the law, by the Federal Deposit Insurance Corporation. The Bank offers a variety of community banking services to individual and corporate customers through its banking offices located in Port St. Lucie, Fort Pierce and Stuart, Florida. |
In the opinion of management, the accompanying condensed consolidated financial statements of the Company contain all adjustments (consisting principally of normal recurring accruals) necessary to present fairly the financial position at September 30, 2004, and the results of operations for the three- and nine-month periods ended September 30, 2004 and 2003, and cash flows for the nine month periods ended September 30, 2004 and 2003. The results of operations for the three and nine months ended September 30, 2004 are not necessarily indicative of the results to be expected for the full year.
(2) | Loan Impairment and Credit Losses. Loans identified as impaired are as follows (in thousands): |
At | |||||
September 30, 2004 | December 31, 2003 | ||||
Loans identified as impaired: | |||||
Gross loans with related allowance for losses recorded | $ | 538 | 1,448 | ||
Less allowance for losses on these loans | 38 | 238 | |||
Net investment in impaired loans | $ | 500 | 1,210 | ||
The average net investment in impaired loans and interest income recognized and received on impaired loans is as follows (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||
2004 | 2003 | 2004 | 2003 | ||||||
Average net investment in impaired loans | $ | 807 | 319 | 986 | 126 | ||||
Interest income recognized on impaired loans | $ | — | — | — | — | ||||
Interest income received on impaired loans | $ | — | — | — | — | ||||
The activity in the allowance for loan losses was as follows (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
Balance at beginning of period | $ | 1,083 | 654 | 852 | 553 | ||||||||
Provision charged to earnings | 85 | 106 | 325 | 278 | |||||||||
Charge-offs, net | (4 | ) | (16 | ) | (13 | ) | (57 | ) | |||||
Balance at end of period | $ | 1,164 | 744 | 1,164 | 774 | ||||||||
(continued)
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FPB BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited), Continued
(2) | Loan Impairment and Credit Losses, Continued. Nonaccrual and past due loans were as follows (in thousands): |
At September 30, 2004 | At December 31, 2003 | ||||
Nonaccrual loans | $ | 586 | 1,448 | ||
Past due ninety days or more, but still accruing | — | ��� | |||
$ | 586 | 1,448 | |||
(3) | Regulatory Capital.The Bank is required to maintain certain minimum regulatory capital requirements. The following is a summary at September 30, 2004 of the regulatory capital requirements and the Bank’s capital on a percentage basis: |
Ratios of the Bank | Regulatory Requirement | |||||
Tier I capital to total average assets | 7.73 | % | 4.00 | % | ||
Tier I capital to risk-weighted assets | 11.26 | % | 4.00 | % | ||
Total capital to risk-weighted assets | 12.52 | % | 8.00 | % |
(4) | Earnings Per Share. Basic and diluted earnings per share are computed on the basis of the weighted-average number of shares of common stock outstanding. Outstanding stock options are not dilutive. |
(5) | Stock Options. The Company established an Incentive Stock Option Plan for officers and employees of the Company. The Plan as amended provides for 122,666 shares of common stock available for grant. The exercise price of the stock options is the greater of $10 or the fair market value of the common stock on the date of grant. The options vest 33.3% each year, after grant and are fully exercisable during the fourth year after the grant date. The options expire in ten years from the date of grant. A summary of stock option follows ($in thousands, except share amounts): |
Number of Shares | Range of Per Share Option Price | Weighted- Average Per Share Price | Aggregate Option Price | ||||||
Outstanding at December 31, 2003 | 107,552 | $ | 10.00-10.75 | 10.13 | 1,090 | ||||
Granted | 1,500 | 10.50 | 10.50 | 16 | |||||
Outstanding at September 30, 2004 | 109,052 | $ | 10.00-10.75 | 10.14 | 1,106 | ||||
(continued)
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FPB BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited), Continued
(5) | Stock Options, Continued. The Company accounts for their stock option plans under the recognition and measurement principles of APB No. 25. No stock-based employee compensation cost is reflected in net earnings, as all options granted under those plans had an exercise price which approximated the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net earnings and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123,Accounting for Stock-Based Compensation, as amended by SFAS No. 148,Accounting for Stock-Based Compensation Transition and Disclosure (collectively “SFAS No. 123”) to stock-based employee compensation ($in thousands, except per share amounts). |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2004 | 2003 | 2004 | 2003 | |||||||
Net earnings as reported | $ | 58 | 16 | 21 | 153 | |||||
Deduct: Total stock-based employee compensation determined under the fair value based method for all awards, net of related tax effect | 8 | 3 | 25 | 9 | ||||||
Proforma net earnings (loss) | $ | 50 | 13 | (4 | ) | 144 | ||||
Earnings per share: | ||||||||||
Basic and diluted, as reported | $ | .07 | .02 | .03 | .19 | |||||
Basic and diluted, proforma | $ | .06 | .02 | — | .18 | |||||
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FPB BANCORP, INC. AND SUBSIDIARY
Review by Independent Registered Public Accounting Firm
Hacker, Johnson & Smith PA, the Company’s independent registered public accounting firm, have made a limited review of the financial data as of September 30, 2004, and for the three- and nine- month periods ended September 30, 2004 and 2003 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.
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Report of Independent Registered Public Accounting Firm
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 September 30, 2004, and the related condensed consolidated statements of earnings for the three- and nine-month periods ended September 30, 2004 and 2003 and the related condensed consolidated statements of stockholders equity and cash flows for the nine-month periods ended September 30, 2004 and 2003. 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, 2003, and the related consolidated statements of earnings, stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated January 23, 2004, 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, 2003, 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
October 29, 2004
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FPB BANCORP, INC. AND SUBSIDIARY
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations
General
FPB Bancorp, Inc. is a one-bank holding company and owns 100% of the outstanding common stock of First Peoples Bank (the “Bank”), a Florida-chartered commercial bank (collectively, the “Company”). The Holding Company’s only business activity is the operation of the Bank. The Bank’s deposits are insured, up to the limit of the law, by the Federal Deposit Insurance Corporation. The Bank offers a variety of community banking services to individual and corporate customers through its banking offices located in Port St. Lucie, Fort Pierce and Stuart, Florida.
Liquidity and Capital Resources
The Company’s primary sources of cash during the nine months ended September 30, 2004 were from net deposit inflow of approximately $17.4 million, proceeds from a Federal Home Loan Bank advance of $2.5 million, and proceeds from sales and repayments of securities totaling $3.2 million. Cash was used primarily for net loan originations of $16.3 million and the purchase of premise and equipment of $1.3 million. At September 30, 2004, the Company had time deposits of $20.2 million that mature in one year or less. At September 30, 2004, the Bank exceeded its regulatory liquidity requirements. 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:
Nine Months Ended 2004 | Year Ended December 31, 2003 | Nine Months Ended 2003 | |||||||
Average equity as a percentage of average assets | 9.51 | % | 11.34 | % | 11.66 | % | |||
Equity to total assets at end of period | 8.28 | % | 10.52 | % | 10.80 | % | |||
Return on average assets (1) | .04 | % | .25 | % | .32 | % | |||
Return on average equity (1) | .38 | % | 2.19 | % | 2.77 | % | |||
Noninterest expenses to average assets (1) | 4.28 | % | 3.66 | % | 3.50 | % | |||
Nonperforming loans to total assets at end of period | .62 | % | 2.07 | % | 1.39 | % |
(1) | Annualized for the nine months ended September 30, 2004 and 2003. |
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FPB BANCORP, INC. AND SUBSIDIARY
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations, Continued
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
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 include commitments to extend credit, unused lines of credit and construction loans 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, unused lines of credit and construction loans 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.
A summary of the amounts of the Company’s financial instruments, with off-balance sheet risk at September 30, 2004, follows (in thousands):
Contract Amount | |||
Commitments to extend credit | $ | 6,408 | |
Unused lines of credit and construction loans | $ | 8,195 | |
Standby letters of credit | $ | 332 | |
Management believes that the Company has adequate resources to fund all of its commitments and that substantially all its existing commitments will be funded within the next twelve months.
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FPB BANCORP, INC. AND SUBSIDIARY
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 September 30, | ||||||||||||||||||
2004 | 2003 | |||||||||||||||||
Average Balance | Interest and Dividends | Average Yield/ Rate | Average Balance | Interest and Dividends | Average Yield/ Rate | |||||||||||||
(Dollars in thousands) | ||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||
Loans | $ | 61,774 | 1,011 | 6.55 | % | $ | 46,895 | 786 | 6.70 | % | ||||||||
Securities | 8,619 | 69 | 3.20 | 6,040 | 50 | 3.31 | ||||||||||||
Other (1) | 7,470 | 27 | 1.45 | 4,036 | 22 | 2.18 | ||||||||||||
Total interest-earning assets | 77,863 | 1,107 | 5.69 | 56,971 | 858 | 6.02 | ||||||||||||
Noninterest-earning assets | 5,553 | 11,110 | ||||||||||||||||
Total assets | $ | 83,416 | $ | 68,081 | ||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||
Savings, NOW and money-market deposit accounts | 28,576 | 88 | 1.23 | 24,199 | 69 | 1.14 | ||||||||||||
Time deposits | 27,944 | 179 | 2.56 | 24,427 | 177 | 2.90 | ||||||||||||
Federal Home Loan Bank advance | 2,106 | 5 | .95 | — | — | |||||||||||||
Total interest-bearing liabilities | 58,626 | 272 | 1.86 | 48,626 | 246 | 2.02 | ||||||||||||
Demand deposits | 16,224 | 10,985 | ||||||||||||||||
Noninterest-bearing liabilities | 1,211 | 1,078 | ||||||||||||||||
Stockholders’ equity | 7,355 | 7,392 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 83,416 | $ | 68,081 | ||||||||||||||
Net interest income | $ | 835 | $ | 612 | ||||||||||||||
Interest-rate spread (2) | 3.83 | % | 4.00 | % | ||||||||||||||
Net interest margin (3) | 4.29 | % | 4.30 | % | ||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 1.33 | 1.17 | ||||||||||||||||
(1) | Includes federal funds sold, Federal Home Loan Bank stock and interest-bearing 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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FPB BANCORP, INC. AND SUBSIDIARY
The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Bank 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.
Nine Months Ended September 30, | ||||||||||||||||||
2004 | 2003 | |||||||||||||||||
Average Balance | Interest and Dividends | Average Yield/ Rate | Average Balance | Interest and Dividends | Average Yield/ Rate | |||||||||||||
(Dollars in thousands) | ||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||
Loans | $ | 56,430 | 2,724 | 6.44 | % | $ | 43,873 | 2,296 | 6.98 | % | ||||||||
Securities | 9,454 | 227 | 3.20 | 7,082 | 158 | 2.97 | ||||||||||||
Other (1) | 4,718 | 53 | 1.50 | 3,320 | 61 | 2.45 | ||||||||||||
Total interest-earning assets | 70,602 | 3,004 | 5.67 | 54,275 | 2,515 | 6.18 | ||||||||||||
Noninterest-earning assets | 6,643 | 8,822 | ||||||||||||||||
Total assets | $ | 77,245 | $ | 63,097 | ||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||
Savings, NOW and money-market deposit accounts | 26,061 | 238 | 1.22 | 20,511 | 235 | 1.53 | ||||||||||||
Time deposits | 25,747 | 496 | 2.57 | 24,256 | 516 | 2.84 | ||||||||||||
Federal Home Loan Bank advance | 702 | 5 | .95 | — | — | |||||||||||||
Total interest-bearing liabilities | 52,510 | 739 | 1.88 | 44,767 | 751 | 2.24 | ||||||||||||
Demand deposits | 16,219 | 10,010 | ||||||||||||||||
Noninterest-bearing liabilities | 1,167 | 964 | ||||||||||||||||
Stockholders’ equity | 7,349 | 7,356 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 77,245 | $ | 63,097 | ||||||||||||||
Net interest income | $ | 2,265 | $ | 1,764 | ||||||||||||||
Interest-rate spread (2) | 3.79 | % | 3.94 | % | ||||||||||||||
Net interest margin (3) | 4.28 | % | 4.33 | % | ||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 1.34 | 1.21 | ||||||||||||||||
(1) | Includes federal funds sold, Federal Home Loan Bank stock and interest-bearing 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 September 30, 2004 and 2003
General. Net earnings for the three months ended September 30, 2004, were $58,000 or $.07 per basic and diluted share compared to net earnings of $16,000 or $.02 per basic and diluted share for the period ended September 30, 2003. This increase in the Company’s net earnings was primarily due to an increase in net interest income and noninterest income which was partially offset by an increase in noninterest expenses.
Interest Income. Interest income increased to $1.1 million for the three months ended September 30, 2004 from $858,000 for the three months ended September 30, 2003. Interest income on loans increased to $1.0 million due primarily to an increase in the average loan portfolio balance for the three months ended September 30, 2004, partially offset by a decrease in the average yield earned in 2004. Interest on securities increased to $69,000 due primarily to an increase in the average balance in the securities portfolio in 2004, partially offset by a decrease in the average yield earned during the three months ended September 30, 2004.
Interest Expense.Interest expense increased to $272,000 for the three months ended September 30, 2004, from $246,000 for the three months ended September 30, 2003. Interest expense increased primarily because of an increase in the average balance of deposits during 2004, partially offset by a decrease in the average rate paid on deposits during 2004.
Provision for Loan Losses. The provision for loan losses is charged to earnings 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 nonperforming 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 September 30, 2004, was $85,000 compared to $106,000 for the same period in 2003. The decrease in the provision was due to lower than budget loan growth resulting in reduced monthly reserve adjustments. Management believes the balance in the allowance for loan losses of $1.2 million at September 30, 2004, is adequate.
Noninterest Income. Total noninterest income increased to $157,000 for the three months ended September 30, 2004, from $96,000 for the three months ended September 30, 2003 primarily as a result of the increase in loan brokerage fees.
Noninterest Expenses. Total noninterest expenses increased to $808,000 for the three months ended September 30, 2004 from $578,000 for the three months ended September 30, 2003, primarily due to an increase in employee compensation and benefits of $205,000, an increase in occupancy and equipment of $43,000, and increase in advertising expense of $25,000 all due to the continued growth of the Company.
Income Taxes. Income taxes for the three months ended September 30, 2004, were $41,000 compared to an income taxes of $8,000 for the three months ended September 30, 2003.
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FPB BANCORP, INC. AND SUBSIDIARY
Comparison of the Nine-Month Periods Ended September 30, 2004 and 2003
General. Net earnings for the nine months ended September 30, 2004, were $21,000 or $.03 per basic and diluted share compared to net earnings of $153,000 or $.19 per basic and diluted share for the period ended September 30, 2003. This decrease in the Company’s net earnings was primarily due to an increase in the provision for loan losses and noninterest expenses related to startup and ongoing operating costs of the Stuart and Fort Pierce branches, which was partially offset by an increase in net interest income and noninterest income.
Interest Income. Interest income increased to $3.0 million for the nine months ended September 30, 2004 from $2.5 million for the nine months ended September 30, 2003. Interest income on loans increased to $2.7 million due primarily to an increase in the average loan portfolio balance for the nine months ended September 30, 2004, partially offset by a decrease in the average yield earned in 2004. Interest on securities increased to $227,000 due primarily to an increase in the average balance in the securities portfolio in 2004 and an increase in the average yield earned during the nine months ended September 30, 2004.
Interest Expense.Interest expense decreased to $739,000 for the nine months ended September 30, 2004, from $751,000 for the nine months ended September 30, 2003. Interest expense decreased primarily because of a decrease in the average rate paid on deposits during 2004, partially offset by an increase in the average balance of deposits during 2004.
Provision for Loan Losses. The provision for loan losses is charged to earnings 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 nonperforming 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 nine months ended September 30, 2004, was $325,000 compared to $278,000 for the same period in 2003. Management believes the balance in the allowance for loan losses of $1.2 million at September 30, 2004, is adequate.
Noninterest Income. Total noninterest income increased to $580,000 for the nine months ended September 30, 2004, from $417,000 for the nine months ended September 30, 2003 primarily as a result of an increase in loan brokerage fees and an increase in other noninterest income.
Noninterest Expenses. Total noninterest expenses increased to $2.5 million for the nine months ended September 30, 2004 from $1.7 million for the nine months ended September 30, 2003, primarily due to an increase in employee compensation and benefits of $491,000 and an increase in occupancy and equipment of $140,000 all due to the continued growth of the Company.
Income Taxes. Income taxes for the nine months ended September 30, 2004, were $19,000 compared to an income taxes of $94,000 for the nine months ended September 30, 2003.
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Item 3. Controls and Procedures
a. | Evaluation of Disclosure Controls and Procedures. 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 within 90 days of the filing date of this report, the chief executive and chief financial officers of the Company concluded that the Company’s disclosure controls and procedures were adequate. |
b. | Changes in Internal Controls. The Company made no significant changes in its internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation of those controls by the Chief Executive and Chief Financial officers. |
There are no material pending legal proceeding to which the Company is a party or to which any of their property is subject.
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits. The following exhibits are filed with or incorporated by reference into this report. The exhibits marked with an asterisk (*) 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, and those marked with a double asterisk (**) were filed with the Company’s 2003 Proxy Statement filed with the Security and Exchange Commission.
Exhibit No. | Description of Exhibit | |
* 3.1 | Articles of Incorporation | |
* 3.2 | Bylaws | |
* 4.1 | Specimen copy of certificate evidencing shares of the Company’s common capital stock, $0.01 par value | |
* 4.2 | First Peoples Bank Stock Option Plan dated January 14, 1999 | |
* 4.3 | Warrant Agreement | |
* 4.4 | Non-Qualified Stock Option Agreement | |
** 4.5 | Amendment to First Peoples Bank Stock Option Plan | |
* 10.1 | First Peoples Bank Qualified 401(k) Profit Sharing Plan, dated May 1, 1999 | |
* 10.2 | Employment Agreement for David W. Skiles | |
31.1 | Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act | |
31.2 | Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act | |
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002 | |
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002 |
(b) | Reports on Form 8-K.There were no Form 8-K’s filed during the three months ended September 30, 2004. |
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PART II. OTHER INFORMATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FPB BANCORP, INC. | ||||
(Registrant) | ||||
Date: November 15, 2004 | By: | /s/ David W. Skiles | ||
David W. Skiles, President and Chief | ||||
Executive Officer | ||||
Date: November 15, 2004 | By: | /s/ Nancy E. Aumack | ||
Nancy E. Aumack, Senior Vice President and | ||||
Chief Financial Officer |
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