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Exhibit 99.1
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FFLC BANCORP, INC.
HOLDING COMPANY FOR
FIRST FEDERAL SAVINGS BANK OF LAKE COUNTY
P.O. BOX 490420 LEESBURG, FLORIDA 34749-0420
TELEPHONE: (352) 787-3311 - FAX: (352) 787-7206
FOR IMMEDIATE RELEASE CONTACT: STEPHEN T. KURTZ
OCTOBER 7, 1996 PRESIDENT & CEO
FFLC BANCORP, INC., RELEASES EFFECT OF ONE-TIME SAIF ASSESSMENT ON THIRD QUARTER
EARNINGS.
LEESBURG, FLORIDA. FFLC Bancorp, Inc., the holding company for First Federal
Savings Bank of Lake County, has released the following statement regarding the
recent developments concerning federal deposit insurance premiums.
Deposits at both savings institutions and commercial banks are insured up to
$100,000 by the Federal Deposit Insurance Corporation (FDIC). The FDIC maintains
two funds; the Savings Association Insurance Fund (SAIF) which insures deposits
in most savings institutions, and the Bank Insurance Fund (BIF) which insures
deposits in commercial banks. To provide deposit insurance, savings institutions
and commercial banks pay deposit insurance premiums into their respective funds
at the FDIC.
The annual premiums for the members of the two funds vary and are designed to
build each of the funds to the 1.25 reserve ratio designated in the Federal
Deposit Insurance Act. The BIF fund reached the designated reserve ratio in 1995
and, since June of last year, commercial banks have paid only minimal premiums.
Savings institutions have been required to continue paying high premiums in part
because a substantial portion of SAIF premiums are used to pay interest on
so-called FICO bonds issued in the government's first attempt to resolve the
savings and loan crisis in the late 1980s. Suffice it to say, savings
institutions have been working diligently to resolve the competitive
disadvantage resulting from the premium disparity.
On September 30, 1996, President Clinton signed into law a $389 billion
appropriations bill. Within that law are provisions that specifically address
the deposit insurance situation. The new law requires savings institutions
nationwide to pay a special one-time SAIF assessment of $4.7 billion to fully
capitalize the SAIF fund. First Federal's portion of that special assessment is
estimated at $1.65 million or $.64 per share, and that amount will be reflected
in the third quarter financial results for both First Federal and FFLC Bancorp.
While that one-time assessment results in a significant charge against the
company's third quarter earnings, approximately $1.0 million after-tax, or $.40
per share, the Company will gain substantial benefits over the long term.
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As a result of SAIF becoming fully capitalized, First Federal's deposit
insurance premiums in the future will be greatly reduced. The annual deposit
insurance premium currently paid by First Federal is $.23 per $100 of deposits.
Beginning in 1997, the premium will fall to $.064 per $100 of deposits, a
decline of 72%. Based upon First Federal's current level of deposits, the
deposit insurance premium will decline from approximately $640,000 annually to
about $180,000, a savings of $460,000 per year. Thus, in less than four years,
First Federal will recover the cost of the special one-time assessment in the
form of lower deposit insurance premiums.
As a result of the special one-time assessment, FFLC Bancorp will show a loss of
approximately $223,000, or $.09 per share, for the third quarter of 1996.
Without the special assessment, the company's quarterly profit would have been
$810,000, or $.31 per share. That amount would have represented an increase of
$42,000, or 5.5% above earnings for the same quarter of 1995. FFLC Bancorp's
year-to-date earnings total $1.4 million, or $.54 per share, despite the cost of
the special assessment.
The resolution of this situation results from the efforts of the Chairman of the
Federal Reserve, the Chairman of the FDIC, the Treasury Department, the Clinton
administration, and Congress. Banking trade groups have also been active
throughout, and a consensus was finally reached by all parties. It is
significant that this solution comes at no cost to taxpayers.
Even though savings institutions will still pay a deposit insurance rate nearly
five times higher than commercial banks, we are pleased to have our deposit
insurance premiums lowered substantially. It is our belief that this change will
provide long term benefit to both the Company's stockholders and the Savings
Bank's depositors.
First Federal Savings Bank of Lake County conducts business in Lake and Sumter
Counties, Florida, with a network of eight branch offices. The stock of FFLC
Bancorp, Inc. is quoted on the NASDAQ National Market System under the symbol
"FFLC". FFLC Bancorp expects to issue a press release for the full third quarter
results on Thursday, October 10, 1996.