Florida Savings Bancorp 10QSB Quarterly report (small business)

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, 2002

[ ] Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from to

Commission File Number 333-84082

FLORIDA SAVINGS BANCORP, INC.

(Exact Name of Small Business Issuer as Specified in Its Charter)


Florida		65-0815375

(State or Other Jurisdiction		(I.R.S. Employer
of Incorporation or Organization)		Identification No.)

8181 Southwest 117^th Street
Pinecrest, Florida 33156
(Address of Principal Executive Offices)

(305) 235-1750
(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		757,000 shares

(class)		Outstanding at October 22, 2002

Transitional Small Business Format (check one): YES x NO o

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Operations (Unaudited)
		Condensed Consolidated Statements of Stockholders’ Equity
		Condensed Consolidated Statements of Cash Flows (Unaudited)
		Notes to Condensed Consolidated Financial Statements (unaudited)
		Review by Independent Certified Public Accountants
		Report on Review by Independent Certified Public Accountants
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Use of Proceeds and Changes in Securities
	Item 3. Defaults Upon Senior Securities
	Item 4. Submission and Matters to a Vote of Security Holders
	Item 5. Other Information
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
CERTIFICATIONS
CEO Certification
CFO Certification

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

INDEX


			Page

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		Condensed Consolidated Balance Sheets - September 30, 2002 (unaudited) and December 31, 2001		2
		Condensed Consolidated Statements of Operations - Three and Nine Months ended September 30, 2002 and 2001 (unaudited)		3
		Condensed Consolidated Statements of Stockholders’ Equity - Nine Months ended September 30, 2002 and 2001 (unaudited)		4
		Condensed Consolidated Statements of Cash Flows - Nine Months ended September 30, 2002 and 2001 (unaudited)		5
		Notes to Condensed Consolidated Financial Statements (unaudited)		6-7
		Review By Independent Certified Public Accountants		8
		Report on Review by Independent Certified Public Accountants		9
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			10-15
	Item 3. Controls and Procedures			16
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings			16
	Item 2. Use of Proceeds and Changes in Securities			16
	Item 3. Defaults Upon Senior Securities			17
	Item 4. Submission and Matters to a Vote of Security Holders			17
	Item 5. Other Information			17
	Item 6. Exhibits and Reports on Form 8-K			17
SIGNATURES				18
CERTIFICATIONS				19-20

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets

($ in thousands except share amounts)


			September 30,			December 31,

Assets			2002			2001

			(unaudited)
Cash and due from banks			$	2,884			1,381
Interest-bearing deposits with banks				3,444			1,872

		Total cash and cash equivalents		6,328			3,253
Time deposits				903			1,182
Securities available for sale				20,508			3,767
Loans, net of allowance for loan losses of $705 and $599				48,706			51,202
Loans held for sale				908			—
Real estate under development				2,449			1,579
Premises and equipment, net				1,156			808
Federal Home Loan Bank stock, at cost				375			295
Accrued interest receivable				402			341
Deferred tax asset				620			700
Other assets				436			219

		Total assets	$	82,791			63,346

	Liabilities and Stockholders’ Equity
Liabilities:
	Noninterest-bearing demand deposits			5,013			2,853
	Savings and NOW deposits			23,503			15,244
	Money-market deposits			3,530			3,447
	Time deposits			35,979			31,319

		Total deposits		68,025			52,863
	Federal Home Loan Bank advance			2,000			2,000
	4% convertible debentures, due March 31, 2009			3,167			—
	Other borrowings			1,364			1,292
	Advance payments by borrowers for taxes and insurance			461			146
	Official checks			1,047			472
	Other liabilities			159			133

		Total liabilities		76,223			56,906

Stockholders’ equity:
	Preferred stock, $.01 par value, 1,500,000 shares authorized, none outstanding			—			—
	Common stock, $.01 par value 3,500,000 shares authorized, 757,000 shares issued and outstanding			7			7
	Additional paid-in capital			7,567			7,567
	Accumulated deficit			(1,058	)		(1,133	)
	Accumulated other comprehensive gain (loss)			52			(1	)

		Total stockholders’ equity		6,568			6,440

		Total liabilities and stockholders’ equity	$	82,791			63,346

See Accompanying Notes to Condensed Consolidated Financial Statements.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except share amounts)


			Three Months Ended					Nine Months Ended
			September 30,					September 30,

			2002		2001			2002		2001

Interest income:
	Loans		$	825		946			2,530		2,718
	Securities available for sale			129		92			281		274
	Other interest-earning assets			41		29			95		165

		Total interest income		995		1,067			2,906		3,157

Interest expense:
	Deposits			427		599			1,274		1,955
	Federal Home Loan Bank advances			30		41			90		101
	Other			23		—			35		—

		Total interest expense		480		640			1,399		2,056

	Net interest income			515		427			1,507		1,101
		Provision for loan losses		30		183			80		296

Net interest income after provision for loan losses				485		244			1,427		805

Noninterest income:
	Service charges and fees on deposit accounts			69		37			171		103
	Gain on sale of loans			22		—			22		—
	Prepayment fees collected			9		20			118		50
	Other			24		15			56		40

		Total noninterest income		124		72			367		193

Noninterest expenses:
	Salaries and employee benefits			210		218			650		617
	Occupancy and equipment			155		96			394		281
	Advertising			25		14			68		51
	Data processing			46		33			128		101
	Other			168		100			430		300

		Total noninterest expenses		604		461			1,670		1,350

Earnings (loss) before income taxes				5		(145	)		124		(352	)
	Income taxes (benefit)			2		(53	)		49		(131	)

Net earnings (loss)			$	3		(92	)		75		(221	)

Earnings (loss) per share, basic and diluted			$	.01		(.12	)		.10		(.29	)

Weighted-average number of shares, basic and diluted				757,000		757,000			757,000		749,667

See Accompanying Notes to Condensed Consolidated Financial Statements.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

Nine Months Ended September 30, 2001 and 2002
( In thousands, except share amounts)


											Accumulated
											Other
											Compre-
		Common Stock				Additional					hensive			Total
						Paid-In		Accumulated			Income			Stockholders'
		Shares		Amount		Capital		Deficit			(Loss)			Equity

Balance at December 31, 2000			735,000	$	7		7,332		(979	)		(3	)		6,357

Comprehensive income:
	Net loss for the nine months ended September 30, 2002 (unaudited)		—		—		—		(221	)		—			(221	)
	Net change in unrealized loss on securities available for sale, net of taxes of $22 (unaudited)		—		—		—		—			36			36

	Comprehensive income (unaudited)														(185	)
	Issuance of common stock		22,000		—		235		—			—			235

Balance at September 30, 2001 (unaudited)			757,000	$	7		7,567		(1,200	)		33			6,407

Balance at December 31, 2001			757,000	$	7		7,567		(1,133	)		(1	)		6,440

Comprehensive income:
	Net earnings for the nine months ended September 30, 2002 (unaudited)		—		—		—		75			—			75
	Net change in unrealized loss on securities available for sale, net of taxes of $31 (unaudited)		—		—		—		—			53			53

	Comprehensive income (unaudited)														128

Balance at September 30, 2002 (unaudited)			757,000	$	7		7,567		(1,058	)		52			6,568

See Accompanying Notes to Condensed Consolidated Financial Statements.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


				Nine Months Ended
				September 30,

				2002			2001

Cash flows from operating activities:
	Net earnings (loss)			$	75			(221	)
	Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
		Depreciation and amortization			104			75
		Provision for loan losses			80			296
		Deferred income tax provision (benefit)			49			(131	)
		Net amortization of fees, premiums and discounts			44			91
		Proceeds from sale of loans held for sale			3,655			—
		Originations of loans held for sale			(4,541	)		—
		Gain on sale of loans			(22	)		—
		Increase in accrued interest receivable and other assets			(278	)		(1,298	)
		Increase in official checks and other liabilities			601			1,390

			Net cash provided by operating activities		233			202

Cash flows from investing activities:
	Purchase of securities available for sale				(17,483	)		(2,879	)
	Proceeds from the calls and maturities of securities available for sale				—			2,375
	Proceeds from the sale of securities available for sale				125			880
	Proceeds from repayments of securities available for sale				689			466
	Purchase of Federal Home Loan Bank stock				(80	)		(20	)
	Net decrease (increase) in loans				2,384			(8,798	)
	Net decrease (increase) in time deposits				279			(1,072	)
	Net increase in real estate under development				(870	)		—
	Purchase of premises and equipment				(452	)		(46	)

			Net cash used in investing activities		(15,408	)		(9,094	)

Cash flows from financing activities:
	Net increase in deposits				15,162			7,381
	Proceeds from sale of subordinated debentures				3,167			—
	Net increase in other borrowings				72			992
	Proceeds from issuance of common stock				—			235
	Net increase in advance payments by borrowers for taxes and insurance				315			440

			Net cash provided by financing activities		18,716			9,048

Net increase in cash and cash equivalents					3,075			156
Cash and cash equivalents at beginning of period					3,253			2,616

Cash and cash equivalents at end of period				$	6,328			2,772

Supplemental disclosure of cash flow information:
	Cash paid during the period for:
		Interest, net of amounts capitalized of $95 and $89, respectively		$	1,381			2,061

		Income taxes		$	—			—

	Noncash transaction-
		Accumulated other comprehensive income, net change in unrealized gain on securities available for sale, net of tax		$	53			36

See Accompanying Notes to Condensed Consolidated Financial Statements.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)


(1)		*General.*Florida Savings Bancorp (the “Holding Company”) owns 100% of the outstanding common stock of Florida Savings Bank (the “Bank”). The Bank is a federally-chartered savings bank and its deposits are insured by the Federal Deposit Insurance Corporation. The Bank provides a variety of community banking services to businesses and individuals in Miami-Dade County, Florida. The Holding Company incorporated three additional subsidiaries, FSB Development Corp., FSB Properties, Inc. and FSB Insurance Agency, Inc. FSB Development Corp.’s primary business is the acquisition, construction, and sale of residential real estate, and is currently constructing two single-family residences. FSB Insurance Agency, Inc. had minimal activity during the nine months ended September 30, 2002. FSB Properties, Inc. was incorporated for the purpose of holding foreclosed assets and had minimal activity during the nine months ended September 30, 2002. Collectively the Holding Company and its subsidiaries are referred to as the “Company.”

		In the opinion of the 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, 2002, the results of operations for the three- and nine-month periods ended September 30, 2002 and 2001, and cash flows for the nine-month periods ended September 30, 2002 and 2001. The results of operations for the three and nine months ended September 30, 2002, are not necessarily indicative of the results to be expected for the year ending December 31, 2002.

(2)		*Loan Impairment and Loan Losses.*The activity in the allowance for loan losses is as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,

	2002		2001		2002		2001

Balance at beginning of period	$	655		393		599		280
Provision charged to earnings		30		183		80		296
Recoveries		20		—		26		—

Balance at end of period	$	705		576		705		576

The following summarizes the amount of collateral dependent impaired loans (in thousands):


		At

		September 30,			December 31,

		2002			2001

Loans identified as impaired:
	Gross loans with related allowance for losses recorded	$	450			450
	Less allowance on these loans		(225	)		(225	)

Net investment in impaired loans		$	225			225

(continued)

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)


(2)		*Loan Impairment and Loan Losses, Continued.*The average net investment in impaired loans and interest income recognized and received on impaired loans is a follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,

	2002		2001		2002		2001

Average net investment in impaired loans	$	225		250		225		448

Interest income recognized on impaired loans	$	—		—		—		4

Interest income received on impaired loans	$	—		—		—		4


(3)		*Regulatory Capital.* The Bank is required to maintain certain minimum regulatory capital requirements. The following is a summary at September 30, 2002, of the regulatory capital requirements and the Bank’s capital on a percentage basis:


	Ratios of			Regulatory
	the Bank			Requirement

Tier I capital to total assets		8.98	%		4.00	%
Total capital to risk-weighted assets		15.33	%		8.00	%
Tier I capital to risk-weighted assets		14.37	%		4.00	%


(4)		*Earnings (Loss) Per Share*. Basic and diluted earnings (loss) per share is computed on the basis of the weighted-average number of shares of common stock outstanding. Outstanding stock options are not dilutive.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

Review by Independent Certified Public Accountants

Hacker, Johnson & Smith PA, the Bank’s independent certified public accountants, have made a limited review of the financial data as of September 30, 2002, and for the three- and nine-month periods ended September 30, 2002 and 2001, presented in this document, in accordance with standards established by the American Institute of Certified Public Accountants.

Their report furnished pursuant to Article 10 of Regulation S-X is included herein.

Report on Review by Independent Certified Public Accountants

The Board of Directors
Florida Savings Bancorp, Inc.
Pinecrest, Florida:

We have reviewed the accompanying condensed consolidated balance sheets of Florida Savings Bancorp, Inc. and Subsidiaries (the “Company”) as of September 30, 2002, the related condensed consolidated statements of operations for the three- and nine-month periods ended September 30, 2002 and 2001 and the related condensed consolidated stockholders’ equity and cash flows for the nine-month periods ended September 30, 2002 and 2001. These financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 2001, 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 February 6, 2002, 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, 2001, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

HACKER, JOHNSON & SMITH PA
Fort Lauderdale, Florida
October 18, 2002

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

			This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995 as amended, and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on the operations and future prospects of the Company and its wholly-owned subsidiaries include, but are not limited to, changes in: interest rates; general economic conditions; legislative/regulatory provisions; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of the loan or investment portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company’s market area; and accounting principles, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

			The following discussion compares the financial condition of Florida Savings Bancorp, Inc. and its subsidiaries, at September 30, 2002 to its financial condition at December 31, 2001 and the results of its operations for the three- and nine-month periods ended September 30, 2002 to the same period in 2001. This discussion should be read in conjunction with the interim financial statements and footnotes included herein.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

Comparison of Financial Condition at September 30, 2002 and December 31, 2001

Liquidity and Capital Resources

			The Company’s primary sources of cash during the nine months ended September 30, 2002 were from proceeds on loans sold of $3.7 million, net deposit inflows of approximately $15.2 million, the sale of approximately $3.2 million in 4% convertible debentures, due March 31, 2009, and a net repayment of loans of $2.4 million. Interest on the convertible debentures will be paid semi-annually in arrears beginning on August 5, 2003. Cash was used primarily for the purchase of securities available for sale of $17.5 million and originations of loans held for sale of $4.5 million. At September 30, 2002, the Company had outstanding commitments to fund existing and new loans of $10.0 million and time deposits of $29.7 million that mature in one year or less. It is expected that these requirements will be funded from the sources described above. 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						Nine Months
	Ended			Year Ended			Ended
	September 30,			December 31,			September 30,
	2002			2001			2001

Average equity as a percentage of average assets		9.31	%		10.45	%		10.68	%
Equity to total assets at end of period		7.93	%		10.17	%		9.77	%
Return on average assets (1)		.14	%		(.25	)%		(.48	)%
Return on average equity (1)		1.53	%		(2.38	)%		(4.53	)%
Noninterest expenses to average assets (1)		3.17	%		2.96	%		2.96	%
Nonperforming loans and foreclosed real estate to total assets at end of period		1.88	%		.98	%	NIL%

(1)

Annualized for the nine months ended September 30, 2002 and 2001.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

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,

				2002							2001

						Interest		Average					Interest		Average
				Average		and		Yield/			Average		and		Yield/
				Balance		Dividends		Rate			Balance		Dividends		Rate

				(Dollars in thousands)
Interest-earning assets:
	Loans			$	48,752		825		6.77	%	$	49,503		946		7.64	%
	Securities				10,762		129		4.79			6,014		92		6.12
	Other (1)				8,647		41		1.90			2,369		29		4.90

		Total interest-earning assets			68,161		995		5.84			57,886		1,067		7.37

Noninterest-earning assets					8,171							5,336

		Total assets		$	76,332						$	63,222

Interest-bearing liabilities:
	Savings, NOW and money-market deposit accounts				24,722		137		2.22			16,811		125		2.97
	Time deposits				32,955		290		3.52			31,819		474		5.96
	Other (2)				5,668		53		3.74			4,099		41		4.00

			Total interest-bearing liabilities		63,345		480		3.03			52,729		640		4.86

Demand deposits					4,996							2,485
Noninterest-bearing liabilities					1,407							1,502
Stockholders’ equity					6,584							6,506

		Total liabilities and stockholders’ equity		$	76,332						$	63,222

Net interest income						$	515						$	427

Interest-rate spread (3)									2.81	%						2.51	%

Net interest margin (4)									3.02	%						2.95	%

Ratio of average interest-earning assets to average interest-bearing liabilities					1.08							1.10

(1)		Includes dividends from Federal Home Loan Bank stock, time deposits and interest-bearing deposits with banks.

(2)		Includes Federal Home Loan Bank advances, convertible debentures and other borrowings.

(3)		Interest-rate spread represents the difference between the average yield on interest-earning assets and the average rate of interest-bearing liabilities.

(4)		Net interest margin is net interest income divided by average interest-earning assets.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES


				Nine Months Ended September 30,

				2002							2001

						Interest		Average					Interest		Average
				Average		and		Yield/			Average		and		Yield/
				Balance		Dividends		Rate			Balance		Dividends		Rate

				(Dollars in thousands)
Interest-earning assets:
	Loans			$	50,304		2,530		6.71	%	$	45,654		2,718		7.94	%
	Securities				7,474		281		5.01			5,817		274		6.28
	Other (1)				5,628		95		2.25			4,385		165		5.02

		Total interest-earning assets			63,406		2,906		6.11			55,856		3,157		7.54

Noninterest-earning assets					6,771							5,043

		Total assets		$	70,177						$	60,899

Interest-bearing liabilities:
	Savings, NOW and money-market deposit accounts				23,508		397		2.25			14,051		359		3.41
	Time deposits				30,495		877		3.83			33,847		1,596		6.29
	Other (2)				4,393		125		3.79			3,338		101		4.03

			Total interest-bearing liabilities		58,396		1,399		3.19			51,236		2,056		5.35

Demand deposits					3,919							2,271
Noninterest-bearing liabilities					1,326							888
Stockholders’ equity					6,536							6,504

		Total liabilities and stockholders’ equity		$	70,177						$	60,899

Net interest income						$	1,507						$	1,101

Interest-rate spread (3)									2.92	%						2.19	%

Net interest margin (4)									3.17	%						2.63	%

Ratio of average interest-earning assets to average interest-bearing liabilities					1.09							1.09

(1)		Includes dividends from Federal Home Loan Bank stock, time deposits and interest-bearing deposits with banks.

(2)		Includes Federal Home Loan Bank advances, convertible debentures and other borrowings.

(3)		Interest-rate spread represents the difference between the average yield on interest-earning assets and the average rate of interest-bearing liabilities.

(4)		Net interest margin is net interest income divided by average interest-earning assets.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

Comparison of Operating Results for the Three-Month Periods Ended
September 30, 2002 and 2001

General. Net earnings for the three months ended September 30, 2002, were $3,000 or $.01 per basic and diluted share compared to net losses of $92,000 or $.12 per basic and diluted share for the period ended September 30, 2001. This increase in the Company’s net earnings was primarily due to an increase in net interest income and noninterest income and a decrease in the provision for loan losses which was partially offset by an increase in noninterest expense, due to the overall growth of the Company.

Interest Income. Interest income decreased to $1.0 million for the three months ended September 30, 2002 from $1.1 million for the three months ended September 30, 2001. Interest income on loans decreased to $825,000 due primarily to a decrease in the average yield from 7.64% for the three months ended September 30, 2001 to 6.77% for the three months ended September 30, 2002, and a decrease in the average loan portfolio balance for the three months ended September 30, 2002. Interest on securities increased to $129,000 due primarily to an increase in the average securities portfolio which was partially offset by a decrease in the average yield earned during the three months ended September 30, 2002.

Interest Expense. Interest expense on deposit accounts decreased to $427,000 for the three months ended September 30, 2002, from $599,000 for the three months ended September 30, 2001. Interest expense decreased primarily because of a decrease in the average rate paid on deposits partially offset by an increase in the average balance of deposits during 2002.

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 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, 2002, was $30,000 compared to $183,000 for the same period in 2001. The 2001 period included an additional charge of $161,000 relating to a nonperforming loan. Management believes the balance in the allowance for loan losses of $705,000 at September 30, 2002, is adequate.

Noninterest Income. Total noninterest income increased by $52,000 from $72,000 for the three months ended September 30, 2001, to $124,000 for the three months ended September 30, 2002, primarily due to an increase in service charges and fees on deposit accounts of $32,000 due to growth in deposit accounts and gain on sale of loans of $22,000 partially offset by a decrease in prepayment fees collected of $11,000 due to fewer prepayments occurring.

Noninterest Expenses. Total noninterest expenses increased to $604,000 for the three months ended September 30, 2002 from $461,000 for the three months ended September 30, 2001, primarily due to an increase in occupancy and equipment expense of $59,000 and other expenses of $68,000, all due to the continued growth of the Company including the opening of a second banking office in 2002.

Income Taxes. The income tax expense for the three months ended September 30, 2002, was $2,000 (an effective rate of 40.0%) compared to an income tax benefit of $53,000 (an effective rate of 36.6%) for the three months ended September 30, 2001. The Company has recognized a deferred tax asset because management believes it will realize the deferred tax asset in future periods.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

Comparison of Operating Results for the Nine-Month Periods Ended
September 30, 2002 and 2001

General. Net earnings for the nine months ended September 30, 2002, were $75,000 or $.10 per basic and diluted share compared to net losses of $221,000 or $.29 per basic and diluted share for the nine month period ended September 30, 2001. This increase in the Company’s net earnings was primarily due to an increase in net interest income and noninterest income and a decrease in the provision for loan losses which was partially offset by an increase in noninterest expense, due to the overall growth of the Company.

Interest Income. Interest income decreased to $2.9 million for the nine months ended September 30, 2002 from $3.2 million for the nine months ended September 30, 2001. Interest income on loans decreased to $2.5 million due primarily to a decrease in the average yield from 7.94% for the nine months ended September 30, 2001 to 6.71% for the nine months ended September 30, 2002, partially offset by an increase in the average loan portfolio balance for the nine months ended September 30, 2002. Interest on securities increased to $281,000 due primarily to an increase in the average securities portfolio which was partially offset by a decrease in the average yield during the nine months ended September 30, 2002.

Interest Expense. Interest expense on deposits decreased to $1.3 million for the nine months ended September 30, 2002, from $2.0 million for the nine months ended September 30, 2001. Interest expense decreased primarily because of a decrease in the average rate paid on deposits during 2002, partially offset by an increase in the average balance of deposits.

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 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, 2002, was $80,000 compared to $296,000 for the same period in 2001. The 2001 period included an additional charge of $236,000 relating to a nonperforming loan. Management believes the balance in the allowance for loan losses of $705,000 at September 30, 2002, is adequate.

Noninterest Income. Total noninterest income increased to $367,000 from $193,000 for the nine months ended September 30, 2001, primarily due to an increase in service charges and fees on deposit accounts of $68,000 due to growth in deposit accounts, gain on sale of loans of $22,000 and an increase in prepayment fees collected of $68,000 due to prepayments occurring due to declining interest rates.

Noninterest Expenses. Total noninterest expenses increased to $1.7 million for the nine months ended September 30, 2002 from $1.4 million for the nine months ended September 30, 2001, primarily due to an increase in employee compensation and benefits of $33,000, occupancy and equipment expense of $113,000 and other expenses of $130,000, all due to the continued growth of the Company including the opening of a second bank office in 2002.

Income Taxes. The income tax expense for the nine months ended September 30, 2002, was $49,000 (an effective rate of 39.5%) compared to an income tax benefit of $131,000 (an effective rate of 37.2%) for the nine months ended September 30, 2001. The Company has recognized a deferred tax asset because management believes it will realize the deferred tax asset in future periods.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

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.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceeding to which the Company is a party or to which any of their property is subject.

Item 2. Use of Proceeds and Changes in Securities

			*Use of Proceeds.*On August 5, 2002 and September 24, 2002, the Company issued $3.17 million in the aggregate of convertible debentures due March 31, 2009 (principal amount of $1,000 per debenture). The convertible debentures are convertible into the Company’s common stock. The convertible debentures were issued pursuant a registration statement (Registration No. 333-84082) initially filed with the Securities and Exchange Commission on March 8, 2002 and declared effective on May 2, 2002, registering 5,000 convertible debentures ($5,000,000 aggregate offering amount). The offering commenced on May 6, 2002 and terminated on September 3, 2002. Kendrick Pierce Securities, Inc. served as sales agent for the offering.

			At September 30, 2002, the aggregate offering proceeds of the convertible debentures were $3.17 million, aggregate offering expenses were $259,000 and net offering proceeds were $2.91 million. At September 30, 2002, the Company had repaid the outstanding balance on a line of credit of $650,000 and retained approximately $360,000 of the proceeds for general corporate purposes, investing the retained funds in short-term investments. At September 30, 2002, $1.5 million of the proceeds were invested in the Bank to increase its capital position. These funds were invested in investment securities. And, $405,000 of the proceeds were invested in FSB Development which was primarily used to repay the outstanding balance of notes payable of $250,000. None of the expenses or the proceeds of the offering were paid to directors, officers, general partners of the issuer or their associates, to persons owning 10% or more of the Company’s common stock or to affiliates of the Company.

			*Changes in Securities.*Pursuant to the convertible debentures, if an event of default has occurred, a holder may elect to accelerate the principal amount of each debenture, together with accrued but unpaid interest, so that the debentures will become immediately due and payable. An event of default is generally defined to include any default on the payment of the principal of or interest on any debenture, bankruptcy, default on indebtedness of more than $1.0 million and failure to comply with a convertible debenture holder’s conversion request. If an event of default has occurred or is continuing, the Company will be prohibited from declaring or paying any dividends on its common stock.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

PART II. OTHER INFORMATION

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission and Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

(a)

Exhibits.The following exhibits are filed with or incorporated by reference into this report.


Exhibit No.		Description of Exhibit

2.1		Articles of Incorporation of Florida Savings Bancorp, Inc. *
2.2		Bylaws of Florida Savings Bancorp, Inc.*
3.1		Form of Common Stock Certificate *
3.2		Form of Debenture *
6.1		Employment Agreement between Florida Savings Bank and Robert L. Bonnet *
6.2		Employment Agreement between Florida Savings Bancorp and Robert L. Bonnet *
6.3		Amended and Restated Shopping Center Space Lease by and between Florida Savings Bank and Jack’s Suniland Center, Ltd *
6.4		Amended and Restated Shopping Center Space Lease by and between Florida Savings Bancorp, Inc. and Jack’s Suniland Center, Ltd *
99.1		CEO Certification pursuant to 18 U.S.C. § 1350, dated November 7, 2002
99.2		CFO Certification pursuant to 18 U.S.C. § 1350, dated November 7, 2002

* Incorporated herein by reference from the exhibits to Form SB-1 registration statement as amended, Registration No. 333-84082.

(b)

Reports on Form 8-K.There were no Form 8-K’s filed during the three months ended September 30, 2002.

FLORIDA SAVINGS BANCORP, INC. AND SUBSIDIARIES

PART II. OTHER INFORMATION

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		FLORIDA SAVINGS BANCORP, INC. (Registrant)


Date:	November 7, 2002	By:	/s/ Bernard Janis

			Bernard Janis, Chief Executive Officer


Date:	November 7, 2002	By:	/s/ David P. Stark

			David P. Stark, Senior Vice President and Chief Financial Officer

CERTIFICATIONS

I, Bernard Janis, certify, that:

1.		I have reviewed this quarterly report on Form 10-QSB of Florida Savings Bancorp, Inc.;

2.		Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.		Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

	(a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	(b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	(c)		presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors:

	(a)		all significant deficiencies in the design or operation of the internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	(b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect the internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.




Date:	November 7, 2002	By:	/s/ Bernard Janis
			Bernard Janis, Chief Executive Officer

I, David P. Stark, certify, that:

1.		I have reviewed this quarterly report on Form 10-QSB of Florida Savings Bancorp, Inc.;

2.		Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.		Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

	(a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	(b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	(c)		presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors:

	(a)		all significant deficiencies in the design or operation of the internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	(b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and




Date:	November 7, 2002	By:	/s/ David P. Stark
			David P. Stark, Senior Vice President and Chief Financial Officer

Florida Savings Bancorp Inactive 10QSBQuarterly report (small business)

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