SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission File Number: 0-22066
FCB FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1760287
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
108 E. Wisconsin Avenue, Neenah, WI 54956
(Address of principal executive office) (Zip Code)
(414) 727-3400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class: Common Stock, $.01 Par Value
Number of shares outstanding as of June 30, 1996: 2,459,614
FCB FINANCIAL CORP.
INDEX -- FORM 10-Q
Part I--Financial Information Page No.
Item 1--Financial Statements (Unaudited)
Consolidated Statements of Financial Condition as of
June 30, 1996 and March 31, 1996 1
Consolidated Statements of Income for the Three Months Ended
June 30, 1996 and 1995 3
Consolidated Statements of Shareholders' Equity for the
Three Months Ended June 30, 1996 and 1995 4
Consolidated Statements of Cash Flows for the Three
Months Ended June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 7
Item 2 --Management's Discussion and Analysis
Results of Operations 9
Changes in Financial Condition 9
Asset Quality 11
Liquidity & Capital Resources 13
Other Matters 14
Part II--Other Information
Item 6 --Exhibits and Reports on Form 8-K 15
Part I - Financial Information
Item 1--Financial Statements
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 1996 and March 31, 1996
(Unaudited)
ASSETS
June 30 March 31
1996 1996
(In thousands)
Cash and cash equivalents $4,669 $4,792
Investment securities held to maturity
(estimated fair value of $6,957
and $6,965 at June 30, 1996 and
March 31, 1996, respectively) 6,988 6,986
Mortgage-related securities available
for sale, at fair value 6,730 6,906
Mortgage-related securities held to
maturity (estimated fair value of
$17,465 and $17,986 at June 30, 1996
and March 31, 1996, respectively) 17,369 17,850
Investment in Federal Home Loan Bank
stock, at cost 2,863 2,595
Loans held for sale - Net of unrealized
loss of $160 and $101 at
June 30, 1996 and March 31,
1996, respectively 5,998 5,161
Loans receivable - Net 214,101 204,897
Real estate held for investment 191 196
Interest receivable on loans 1,233 1,167
Interest receivable - Other 146 228
Office properties and equipment 4,199 4,211
Prepaid expenses and other assets 271 267
Deferred income taxes 414 404
------- -------
TOTAL ASSETS $265,172 $255,660
======= =======
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 1996 and March 31, 1996
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30 March 31
1996 1996
Liabilities:
Deposit accounts $153,431 $151,115
Borrowed funds 57,255 51,900
Advance payments by borrowers for taxes
and insurance 3,875 2,410
Accrued interest 765 949
Other liabilities 2,193 1,545
Dividends payable 422 360
Accrued income taxes 576 189
-------- -------
Total liabilities 218,517 208,468
-------- --------
Commitments and contingencies
Shareholders' Equity:
Common stock - $.01 par value 29 29
Additional paid-in capital 28,741 28,693
Retained earnings - Substantially
restricted 26,247 25,930
Unrealized loss on securities
available for sale - Net of tax (43) (26)
Unearned compensation - ESOP (1,054) (1,118)
Treasury common stock, at cost (7,265) (6,316)
-------- -------
Total shareholders' equity 46,655 47,192
-------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $265,172 $255,660
======= =======
See accompanying notes to the unaudited consolidated financial statements.
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1996 and 1995
(Unaudited)
Three Months Ended
June 30
1996 1995
(In thousands except
per share numbers)
Interest and dividend income:
Mortgage loans $3,677 $3,302
Other loans 621 466
Investment securities 96 127
Mortgage-related securities 400 430
Dividends on stock in Federal
Home Loan Bank 45 37
Interest-bearing deposits 13 8
------- -------
Total interest and dividend income 4,852 4,370
------- -------
Interest expense:
Deposit accounts 1,916 1,881
Borrowed funds 701 596
------- -------
Total interest expense 2,617 2,477
------- -------
Net interest income 2,235 1,893
Provision for loan losses 50 50
------- -------
Net interest income after provision
for loan losses 2,185 1,843
------- -------
Noninterest income:
Loan fees and charges 91 92
Savings fees and charges - Net 30 29
Gain on sale of loans - Net 5 19
Other income 49 51
------- -------
Total noninterest income 175 191
------- -------
Operating expenses:
Compensation, payroll taxes and other
employee benefits 567 546
Marketing 51 67
Occupancy 171 174
Data processing 61 59
Federal insurance premiums 89 84
Other 183 164
------- -------
Total operating expenses 1,122 1,094
------- -------
Income before provision for
income taxes 1,238 940
Provision for income taxes 481 371
------- -------
NET INCOME $757 $569
======= =======
EARNINGS PER SHARE - See note 4 $0.31 $0.22
======= =======
DIVIDENDS DECLARED PER SHARE $0.18 $0.15
======= =======
See accompanying notes to the unaudited consolidated financial statements.
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Months Ended June 30, 1996 and 1995
(Unaudited-in thousands)
Unrealized
Loss on
Securities
Additional Available Unearned Treasury
Common Paid-in Retained for Sale, Compensation Common
Stock Capital Earnings Net of Tax ESOP Stock Total
Balance at March 31, 1995 $ 29 $ 28,526 $ 24,916 $ 0 $ (1,361) $ (4,093) $ 48,017
Net income for three months
ended June 30, 1995 569 569
Cash dividends declared
($.15 per share) (374) (374)
Amortization of unearned
compensation - ESOP 34 63 97
------- ------- ------- ------- ------- ------- -------
Balance at June 30, 1995 29 28,560 25,111 0 (1,298) (4,093) 48,309
Net income for nine months
ended March 31, 1996 1,988 1,988
Cash dividends declared
($.45 per share) (1,110) (1,110)
Amortization of unearned
compensation - ESOP 133 180 313
Increase in unrealized losses
on securities available for
sale - Net of tax (26) (26)
Exercise of stock options -
12,500 treasury common
shares (59) 184 125
Purchase of treasury common
stock - 131,530 shares (2,407) (2,407)
-------- ------- ------- ------- ------- ------- -------
Balance at March 31, 1996 29 28,693 25,930 (26) (1,118) (6,316) 47,192
Net income for three months
ended June 30, 1996 757 757
Cash dividends declared
($.18 per share) (422) (422)
Amortization of unearned
compensation - ESOP 48 64 112
Increase in unrealized
losses on securities
available for sale -
Net of tax (17) (17)
Exercise of stock options -
3,000 treasury common
shares (18) 48 30
Purchase of treasury
common stock - 56,000
shares (997) (997)
------- ------- ------- ------- ------- ------- -------
Balance at June 30, 1996 $ 29 $ 28,741 $ 26,247 $ (43) $ (1,054) $ (7,265) $ 46,655
======= ======= ======= ======= ======= ======= =======
See accompanying notes to the unaudited consolidated financial statements.
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended June 30, 1996 and 1995
(Unaudited)
Three Months Ended
June 30
1996 1995
(In thousands)
Operating activities:
Net income $ 757 $ 569
------ ------
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation 66 69
Net amortization (accretion) of
premiums (discounts)
on investment and mortgage-
related securities (7) 1
Provision for loan losses 50 50
Gain on sale of loans - Net (5) (9)
Loss pass-through on real estate
held for investment 5 5
Loans originated for sale (5,368) (4,373)
Proceeds from loan sales 4,536 2,325
Changes in operating assets and
liabilities:
Interest receivable 16 21
Prepaid expenses and other assets (4) 35
Accrued interest and other
liabilities 464 868
Accrued income taxes 387 293
Unearned compensation - ESOP 112 97
------- -------
Total adjustments 252 (618)
------- -------
Net cash provided by (used in) operating
activities 1,009 (49)
------- -------
Cash flows from investing activities:
Purchases of investment securities held
to maturity (2,000) 0
Maturities of investment securities held
to maturity 2,000 2,000
Principal repayments on mortgage-related
securities available for sale 149 0
Principal repayments on mortgage-related
securities held to maturity 468 285
Purchase of Federal Home Loan Bank stock (268) 0
Net increase in loans (9,254) (6,780)
Capital expenditures (54) (2)
------- -------
Net cash used in investing activities (8,941) (3,497)
------- -------
Cash flows from financing activities:
Net increase in deposit accounts 2,316 6,311
Net increase (decrease) in borrowed
funds 5,355 (4,150)
Net increase in advance payments
by borrowers for taxes and insurance 1,465 1,510
Proceeds from exercise of stock options 30 0
Purchase of treasury common stock (997) 0
Dividends paid (360) (299)
------- -------
Net cash provided by financing activities 7,809 3,372
------- -------
Net decrease in cash and cash equivalents (123) (174)
Cash and cash equivalents at beginning 4,792 4,773
------- -------
Cash and cash equivalents at end $ 4,669 $ 4,599
======= =======
Supplemental cash flow information:
Cash paid during the quarter for:
Interest on deposit accounts $ 1,853 $ 1,692
Interest on borrowed funds 685 626
Income taxes 93 77
See accompanying notes to the unaudited consolidated financial statements.
FCB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1-PRINCIPLES OF CONSOLIDATION
FCB Financial Corp. (the "Corporation") is the holding company for Fox
Cities Bank, F.S.B. (the "Bank"). The accompanying unaudited consolidated
financial statements include the accounts of the Corporation, the Bank and
the Bank's wholly-owned subsidiaries, Fox Cities Financial Services, Inc.
("FCFS") and Fox Cities Investments, Inc. ("FCI"), after elimination of
significant intercompany accounts and transactions. FCFS sells
tax-deferred annuities and consumer credit life and disability insurance.
In addition, FCFS has a 50% ownership in a low/moderate income apartment
building partnership. The partnership qualifies for federal low income
housing tax credits. FCI, a Nevada corporation, owns and manages a
portfolio of investment securities, all of which are permissible
investments of the Bank itself.
NOTE 2-BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosure
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes that
the disclosures are adequate to prevent the information presented from
being misleading. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair
presentation of the consolidated financial statements have been included.
The results of operations and other data for the three months ended June
30, 1996 are not necessarily indicative of results that may be expected
for the fiscal year ending March 31, 1997. The unaudited consolidated
financial statements presented herein should be read in conjunction with
the audited consolidated financial statements and related notes thereto
for the fiscal year ended March 31, 1996 included in the Corporation's
Annual Report on Form 10-K (Commission File Number 0-22066) as filed with
the Securities and Exchange Commission.
NOTE 3-ACCOUNTING CHANGES
Effective April 1, 1996, the Corporation adopted Financial Accounting
Standards Board ("FASB") Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of," which requires long-lived assets and
certain intangibles to be held and used by an entity to be reviewed for
impairment whenever events or changes in circumstances indicate the
carrying amount of an asset may not be recoverable. The Statement also
requires long-lived assets and certain intangibles to be disposed of to be
reported at the lower of carrying amount or fair value less cost to sell.
Adoption of this Statement did not have a material impact on the
Corporation's financial condition at, or results of operations for the
three month period ended, June 30, 1996.
Effective April 1, 1996, the Corporation adopted FASB Statement of
Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing
Rights," which amends the previously issued Statement No. 65, "Accounting
for Certain Mortgage Banking Activities." Statement No. 122 requires
recognition of mortgage servicing rights as assets however the rights are
acquired. For loans which are subsequently sold or securitized, a portion
of the cost of the loans shall be allocated to the servicing rights based
on the relative fair values of the loans and the servicing rights. The
Statement further requires assessment of the value of the capitalized
mortgage servicing rights for impairment. As a result of adopting this
Statement, the Corporation recorded a mortgage servicing rights ("OMSR")
asset and an additional gain on sale of loans of approximately $45,000 in
the quarter ended June 30, 1996. There was no impairment of OMSRs in the
quarter.
NOTE 4-EARNINGS PER SHARE
Earnings per share of common stock for the three months ended June 30,
1996 and 1995 were computed based on consolidated net income and weighted
average outstanding shares. The weighted average number of shares
outstanding for the three months ended June 30, 1996 and 1995 were
2,422,348 and 2,539,276, respectively.
NOTE 5-STOCK REPURCHASE PROGRAMS
On January 23, 1996, the Corporation announced that it had adopted a stock
repurchase program. Under this program, the Corporation purchased 5% of
its outstanding common stock, or 131,530 shares, over the period beginning
January 31, 1996 and ending March 4, 1996. On March 8, 1996, the
Corporation announced that it had adopted an additional stock repurchase
program. Under this additional program, the Corporation is authorized to
purchase an additional 5% of its outstanding common stock, or 125,630
shares, over the twelve month period beginning with the date of the
announcement. At June 30, 1996, 56,000 shares had been repurchased.
These two programs were the third and fourth 5% stock repurchase programs
adopted by the Corporation since it became a public company in September,
1993. The Corporation received prior approval from the Office of Thrift
Supervision for each of the programs.
Item 2--
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF FCB FINANCIAL CORP.
Results of Operations
The Corporation's results of operations are dependent primarily on the
Bank's net interest income, which is the difference between the interest
income earned on loans, mortgage-related securities and investments and
the cost of funds, consisting of interest paid on deposits and borrowings.
Operating results are also affected to a lesser extent by loan servicing
fees, commissions on insurance sales, service charges for customer
services and gains or losses on the sale of investment securities and
loans. Operating expenses principally consist of employee compensation
and benefits, occupancy expenses, federal deposit insurance premiums and
other general and administrative expenses. Results of operations are
significantly affected by general economic and competitive conditions,
particularly changes in interest rates, government policies and actions of
regulatory authorities.
Comparison of Operating Results for the Three Months Ended June 30, 1996
and 1995
Net income was $757,000 and $569,000 for the quarters ended June 30, 1996
and 1995, respectively. The increase in earnings for the quarter ended
June 30, 1996 from the same period in the prior fiscal year was primarily
the result of an increase of $342,000 in net interest income. This
increase in net interest income was partially offset by an increase of
$28,000, or 2.6%, in operating expenses and an increase of $90,000, or
24.3%, in the provision for income taxes from the quarter ended June 30,
1995 to the same quarter in 1996.
Net interest income increased to $2.2 million for the quarter ended June
30, 1996 from $1.9 million for the quarter ended June 30, 1995. The
increase was spurred by growth in earning assets of $9.5 million to $258.4
million at June 30, 1996 from $248.9 million at March 31, 1996. The major
factor contributing to the earning asset growth was an increase in the
loan portfolio from $204.9 million at March 31, 1996 to $214.1 million at
June 30, 1996. When compared to levels from one year ago, earning assets
were up $17.5 million from $238.0 million at June 30, 1995. Loans
receivable increased $21.1 million during the same time period. Enhancing
the effect of the earning asset growth on net income was an increase in
the net interest spread to 2.72% for the quarter ended June 30, 1996 from
2.28% for the comparable quarter in the prior year. Net interest margin
improved from 3.28% for the quarter ended June 30, 1995 to 3.68% for the
quarter just ended. Interest spread and net interest margin improvements
were driven by a combination of greater yields on earning assets and a
lower cost of funds on deposit accounts and borrowed funds. Since the
direction and magnitude of future interest rate changes are not known, it
is not possible for management to estimate how such changes may impact the
Corporation's results of operations in the future.
The provision for income taxes increased from $371,000 for the quarter
ended June 30, 1995 to $481,000 for the quarter just ended. The increase
was primarily due to the increase in income before provision for income
taxes.
Changes in Financial Condition
Total Assets. Total assets increased $9.5 million to $265.2 million at
June 30, 1996 from $255.7 million at March 31, 1996. The principal reason
for the increase in total assets was an increase in net loans receivable
of $9.2 million. The growth in total assets was funded primarily by a
$5.4 million increase in the level of borrowed funds, a $2.3 million
increase in deposit accounts, and a $1.5 million increase in advance
payments by borrowers for taxes and insurance.
Net Loans Receivable. Net loans receivable increased $9.2 million to
$214.1 million at June 30, 1996 from $204.9 million at March 31, 1996.
This increase resulted from a combination of continued strength in the
demand for adjustable rate loans, which are held to maturity by the Bank,
and increases in the commercial real estate and indirect auto loan
portfolios. The commercial real estate portfolio increased $1.5 million
from $35.9 million at March 31, 1996 to $37.4 million at June 30, 1996.
Total indirect auto loans increased from $10.5 million at March 31, 1996
to $11.5 million at June 30, 1996. For the first three months of the 1997
fiscal year, $1.8 million of commercial real estate loans and $2.7 million
of indirect auto loans were originated. Additionally, the Bank continues
to hold some marketable fixed-rate loans to maturity. It is currently the
policy of the Bank to sell marketable fixed-rate loans if portfolio loan
balances exceed $31.0 million, $9.3 million, and $17.2 million for 15, 20,
and 30 year fixed-rate loans, respectively. These amounts have been
established by management in conjunction with the Corporation's
asset/liability management strategy.
Borrowed Funds. Borrowed funds increased $5.4 million to $57.3 million at
June 30, 1996 from $51.9 million at March 31, 1996. All of the increase
was in the Bank's overnight borrowings which were at interest rates that
adjust daily. The proceeds were used to fund loan growth.
Deposit Accounts. Deposit accounts grew to $153.4 million at June 30,
1996 from $151.1 million at March 31, 1996, and were used to fund loan
growth. Deposit levels have shown slight growth despite the Bank holding
rates on deposit products relatively stable. The Bank's cost of deposits
for the three month period ended June 30, 1996 was 4.98% compared to 5.04%
for the same three month period ended one year ago.
Advance Payments by Borrowers for Taxes and Insurance. Advance payments
by borrowers for taxes and insurance increased from $2.4 million at March
31, 1996 to $3.9 million at June 30, 1996. The increase was attributable
to a normal accumulation of customer escrow funds for property taxes which
occurs ratably before calendar year end.
Shareholders' Equity. Total shareholders' equity decreased from $47.2
million at March 31, 1996 to $46.7 million at June 30, 1996. The decrease
was primarily due to the purchase of treasury stock in connection with the
stock repurchase programs referred to in Note 5 to the Notes to
Consolidated Financial Statements.
Asset Quality
Loans are placed on nonaccrual status when either principal or interest is
more than 90 days past due. Interest accrued and unpaid at the time a
loan is placed on non-accrual status is charged against interest income.
Subsequent payments are either applied to the outstanding principal
balance or recorded as interest income, depending on the assessment of the
ultimate collectibility of the loan.
Impaired loans are measured at the fair value of the expected future cash
flows at the loan's effective interest rate, the loan's observable market
price or the fair value of the collateral for loans which are collateral
dependent. Subsequent changes in the estimated value of impaired loans
are accounted for as bad debt expense.
Real estate properties acquired through or in lieu of loan foreclosure
are initially recorded at fair value at the date of foreclosure.
Subsequently, the foreclosed properties are carried at the lower of the
newly established cost or fair value less estimated selling costs. Costs
related to the development and improvement of property are capitalized,
whereas costs relating to the holding of property are expensed.
The following table sets forth the amounts and categories of
non-performing assets in the Bank's loan portfolio at the dates indicated.
For all dates presented, the Bank had no troubled debt restructurings
(which involve forgiving a portion of interest or principal on any loans
or making loans at terms materially more favorable than those which would
be provided to other borrowers) or accruing loans more than 90 days
delinquent. Foreclosed properties include assets acquired in settlement
of loans.
At June 30, At March 31,
1996 1996 1995 1994
(In thousands)
Non-accruing loans:
One- to four-family $309 $212 $243 $178
Five or more family - - - -
Commercial real estate - - - -
Consumer and other 4 - 27 8
---- ---- ---- ----
Total 313 212 270 186
---- ---- ---- ----
Foreclosed assets:
One- to four-family - - - -
Five or more family - - - -
Commercial real estate - - - -
Repossessed assets 5 22 - -
---- ---- ---- ----
Total 5 22 0 0
---- ---- ---- ----
Total non-performing assets $318 $234 $270 $186
==== ==== ==== ====
Total non-performing assets
as a percentage of total
assets 0.12% 0.09% 0.11% 0.09%
==== ==== ==== ====
Allowance for loan losses
to loans and foreclosed
properties 0.51% 0.51% 0.47% 0.59%
==== ==== ==== ====
Federal regulations require that each savings institution classify its own
assets on a regular basis. On the basis of management's review of its
assets, at June 30, 1996, on a net basis, the Bank classified $279,000 of
its assets as special mention, $83,000 as substandard, $99,000 as
doubtful and $2,000 as loss. As of June 30, 1996, management believes
that these asset classifications were consistent with those of the Office
of Thrift Supervision (the "OTS").
The Bank's loan portfolios are evaluated on a continuing basis to
determine the additions to the allowances for losses and the related
balance in the allowances. These evaluations consider several factors
including, but not limited to, general economic conditions, loan portfolio
compositions, loan delinquencies, prior loss experience, and management's
estimation of future potential losses. The evaluation of allowances for
loan losses includes a review of both known loan problems as well as a
review of potential problems based upon historical trends and ratios.
Based on management's evaluation at June 30, 1996, $50,000 in loan loss
provisions were deemed appropriate for the quarter ended June 30, 1996 and
the aggregate allowance for loan losses of $1,118,000 as of such date was
determined to be adequate.
The following table sets forth an analysis of the Bank's allowance for
loan losses for the periods indicated.
Three months
Ended June 30,
1996 1995
(In thousands)
Allowance at beginning of period $1,075 $875
Provision for losses on loans and
real estate owned: 50 50
------ -----
Charge-offs:
Residential real estate - -
Consumer (7) -
------ -----
Total Charge-offs (7) 0
------ -----
Recoveries:
Residential real estate - -
Consumer - -
------ -----
Total recoveries 0 0
------ -----
Net charge-offs (7) 0
------ -----
Allowance at end of period $1,118 $925
====== =====
While management believes that the allowances are adequate and that it
uses the best information available to determine the allowance for losses
on loans, unforeseen market conditions could result in adjustments and net
earnings could be significantly affected if circumstances differ
substantially from the assumptions used in making the final determination.
Liquidity & Capital Resources
The Bank is required to maintain minimum levels of liquid assets as
defined by OTS regulations. These requirements, which may be varied at
the direction of the OTS depending upon economic conditions and deposit
flows, are based upon a percentage of the average daily balance of an
institution's net withdrawable deposit accounts and short-term borrowings.
The required ratio is currently 5.0%. On June 30, 1996, the Bank's
liquidity ratio, calculated in accordance with OTS requirements, was
5.22%. In addition, according to current OTS regulations, short-term
liquid assets must constitute l.0% of the average daily balance of net
withdrawable deposit accounts and short-term borrowings. On June 30,
1996, the Bank's short-term liquidity ratio was 3.88%.
At June 30, 1996, the Bank had outstanding commitments to originate
mortgage loans of $7.0 million, with varying interest rates. At June 30,
1996, the Bank had outstanding commitments to sell mortgage loans of $1.7
million, and commitments to purchase loans of $500,000. In addition, the
Bank had commitments to fund unused lines of credit of $1.3 million at
June 30, 1996. Management does not believe the Bank will suffer any
adverse consequences as a result of fulfilling these commitments.
The following table summarizes the Bank's capital ratios and the ratios
required by the Financial Institution Reform, Recovery and Enforcement Act
of 1989 and implementing regulations relating thereto at June 30, 1996:
Risk-
Tangible Core Based
Capital Capital Capital
(Dollars in thousands)
Bank's regulatory percentage 14.30% 14.30% 24.87%
Required regulatory percentage 1.50 3.00 8.00
----- ----- -----
Excess regulatory percentage 12.80% 11.30% 16.87%
===== ===== =====
Bank's regulatory capital $37,734 $37,734 $38,852
Required regulatory capital 3,959 7,918 12,497
------ ------ ------
Excess regulatory capital $33,775 $29,816 $26,355
====== ====== ======
Other Matters
Deposits of the Bank are currently insured by the Savings Association
Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation
("FDIC"). Deposit insurance premiums to both the SAIF and Bank Insurance
Fund ("BIF") of the FDIC were identical when both funds were created in
1989, with an eight cent (per $100 of insured deposits) differential
between the premiums paid by well-capitalized institutions and the
premiums paid by undercapitalized institutions. Deposit insurance
premiums for the SAIF and the BIF, which insures deposits in national and
state-chartered banks, are set to facilitate each fund achieving its
designated reserve ratio. The BIF recently achieved its designated
reserve ratio and the FDIC lowered BIF deposit insurance premium rates for
all but the riskiest institutions. Based on this reduction, the BIF
deposit insurance premium rate for well-capitalized banks was lowered to
the statutory minimum of $2,000 per institution per year. Because the
SAIF remains significantly below its designated reserve ratio, SAIF
deposit insurance premiums were not reduced and remain at .23% to .31% of
insured deposits, based upon an institution's supervisory evaluations and
capital levels. The current disparity in deposit insurance premiums
between the BIF and the SAIF could place the Bank at a competitive
disadvantage to BIF insured institutions.
The current financial condition of the SAIF has resulted in proposed
legislation to recapitalize the SAIF through a one-time special assessment
of approximately $0.85 to $0.90 per $100 of insured deposits. If this
legislation is enacted into law, the Corporation could be required to pay
a special assessment of approximately $1.5 million based on June 30, 1996
insured deposits. This special assessment, if imposed, could reduce net
income in the quarter in which it is paid. Management cannot currently
predict whether or when such legislation may become law.
Legislation has also been proposed that would require a recapture of
previously allowed tax bad debt provisions. If this legislation is
enacted into law, the Corporation could be required to recapture its post
1987 reserves of approximately $1,067,000. The recapture would require
additional tax payments over an anticipated six-year period. If enacted,
the repayments are anticipated to have an immaterial impact on the income
statement due to the current deferred tax implications of the allowance
for loan losses. Management cannot currently predict whether or when such
legislation may become law.
The Bank has entered into a trust referral agreement with a third party
provider of trust services. The arrangement has been made to provide
additional services to customers of the Bank and to generate supplemental
fee income. Under the agreement, the Bank will receive fees based on a
percentage of business referred by Bank personnel to the trust service
provider. The income derived from the program is not anticipated to have
a significant effect on the results of operations in the near term.
Management believes that as assets under trust management grow, the fees
generated could favorably enhance total fee income. However, as the
income derived is dependent on trust customer growth, no assurances as to
the effect of the agreement on the future earnings of the Corporation can
be made.
Part II - Other Information
Item 6--Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 1996
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.
FCB FINANCIAL CORP.
Date: July 30, 1996 By:/s/ Donald D. Parker
Donald D. Parker
President/CEO and Chairman of the
Board
Date: July 30, 1996 By:/s/ Phillip J. Schoofs
Phillip J. Schoofs
Vice President and Treasurer
(Principal Financial and Accounting
Officer)
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
27 Financial Data Schedule (EDGAR version only) 18