SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
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 0-22608
FFLC BANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 59-3204891
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
800 North Boulevard West, Post Office Box 490420,
Leesburg, Florida 34749-0420
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (352) 787-3311
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common stock, 2,250,499 shares outstanding
par value $.01 per share at October 23, 1997
FFLC BANCORP, INC.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
at September 30, 1997 (unaudited) and at December 31, 1996..............
Condensed Consolidated Statements of Income -
Three and Nine months ended September 30, 1997 and 1996 (unaudited).....
Condensed Consolidated Statement of Stockholders' Equity -
Nine months ended September 30, 1997 (unaudited)........................
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1997 and 1996 (unaudited)...............
Notes to Condensed Consolidated Financial Statements (unaudited)..........
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................
Part II. OTHER INFORMATION
Item 1. Legal Proceedings..................................................
Item 2. Changes in Securities..............................................
Item 3. Default upon Senior Securities.....................................
Item 4. Submission of Matters to a Vote of Security Holders................
Item 5. Other Information..................................................
Item 6. Exhibits and Reports on Form 8-K...................................
SIGNATURES.....................................................................
FFLC BANCORP, INC.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
($ in thousands)
At At
September 30, December 31,
1997 1996
--------- ---------
Assets (unaudited)
Cash and due from banks ............................................ $ 5,274 6,080
Interest-bearing deposits .......................................... 3,398 4,077
--------- ---------
Cash and cash equivalents .............................. 8,672 10,157
Investment securities held to maturity, at cost
(market value of $3,114 in 1997 and $3,271 in 1996) ............ 3,073 3,239
Investment securities available for sale, at market ................ 20,165 29,593
Mortgage-backed and related securities held to maturity, at cost
(market value of $34,349 in 1997 and $47,396 in 1996) .......... 33,912 46,892
Mortgage-backed and related securities available for sale, at market 12,654 18,844
Loans receivable, net of allowance for loan losses of $1,549 in 1997
and $1,063 in 1996 ............................................. 294,143 227,948
Accrued interest receivable:
Investment securities .......................................... 344 577
Mortgage-backed securities ..................................... 208 243
Loans receivable ............................................... 1,606 1,199
Premises and equipment, net ........................................ 5,337 5,144
Foreclosed real estate ............................................. 245 361
Real estate held for development ................................... 122 122
Restricted securities - Federal Home Loan Bank stock, at cost ...... 2,304 1,939
Other assets ....................................................... 597 184
--------- ---------
Total .................................................. $ 383,382 346,442
========= =========
Condensed Consolidated Balance Sheets
($ in thousands)
(continued)
At At
September 30, December 31,
1997 1996
--------- ---------
(unaudited)
Liabilities and Stockholders' Equity
Liabilities:
NOW and money market accounts .................................. 47,657 43,306
Passbook and statement savings accounts ........................ 24,404 27,412
Certificates ................................................... 235,295 211,946
--------- ---------
Total deposits ......................................... 307,356 282,664
Advances from Federal Home Loan Bank ........................... 20,000 150
Securities sold under agreements to repurchase ................. -- 8,048
Deferred income taxes .......................................... 748 930
Accrued expenses and other liabilities ......................... 2,629 1,024
--------- ---------
Total liabilities ...................................... 330,733 292,816
--------- ---------
Stockholders' equity:
Preferred stock ................................................ -- --
Common stock ................................................... 28 28
Additional paid-in-capital ..................................... 27,957 27,386
Retained income ................................................ 35,959 33,962
Unrealized loss on securities available for sale, net of tax
of $72 in 1997 and $116 in 1996 ............................ (119) (193)
Treasury stock, at cost ........................................ (10,151) (6,295)
Stock held by Incentive Plan Trusts ............................ (1,025) (1,262)
--------- ---------
Total stockholders' equity ............................. 52,649 53,626
--------- ---------
Total .................................................. $ 383,382 346,442
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements.
FFLC BANCORP, INC.
Condensed Consolidated Statements of Income
($ in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(unaudited) (unaudited)
Interest income:
Loans receivable ............................ $ 5,843 4,277 16,014 12,257
Mortgage-backed securities .................. 818 1,223 2,738 3,930
Investment securities and time
deposits ................................ 603 586 1,875 1,784
---------- ---------- ---------- ----------
Total interest income ............... 7,264 6,086 20,627 17,971
---------- ---------- ---------- ----------
Interest expense:
Deposits .................................... 3,693 3,237 10,514 9,615
Borrowed funds .............................. 358 3 717 8
---------- ---------- ---------- ----------
Total interest expense .............. 4,051 3,240 11,231 9,623
---------- ---------- ---------- ----------
Net interest income ............................. 3,213 2,846 9,396 8,348
Provision for loan losses ....................... 364 34 502 63
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses ................. 2,849 2,812 8,894 8,285
---------- ---------- ---------- ----------
Noninterest income:
Deposit account fees ........................ 130 128 355 355
Other service charges and fees .............. 92 75 255 204
Gain on sale of securities available for sale 11 -- 11 --
Gain on sale of other assets ................ 302 -- 302 --
Other ....................................... 6 5 32 26
---------- ---------- ---------- ----------
Total noninterest income ............ 541 208 955 585
---------- ---------- ---------- ----------
FFLC BANCORP, INC.
Condensed Consolidated Statements of Income
($ in thousands, except per share amounts)
(continued)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(unaudited) (unaudited)
Noninterest expense:
Salaries and employee benefits .............. 1,205 932 3,367 2,753
Occupancy expense ........................... 244 215 689 613
Deposit insurance premium ................... 37 160 109 466
SAIF recapitalization assessment ............ -- 1,655 -- 1,655
Data processing expense ..................... 104 99 324 284
Professional services ....................... 64 73 181 188
Advertising and promotion ................... 60 34 159 80
Other ....................................... 203 166 602 494
---------- ---------- ---------- ----------
Total noninterest expense ........... 1,917 3,334 5,431 6,533
---------- ---------- ---------- ----------
Income (loss) before income taxes ............... 1,473 (314) 4,418 2,337
Income taxes (credit) ........................... 547 (91) 1,617 953
---------- ---------- ---------- ----------
Net income (loss) ............................... $ 926 (223) 2,801 1,384
========== ========== ========== ==========
Net income (loss) per share of common stock ..... $ .40 (.09) 1.19 .54
========== ========== ========== ==========
Dividends per share of common stock ............. $ .12 .10 .36 .28
========== ========== ========== ==========
Weighted average number of shares outstanding ... 2,324,859 2,572,459 2,363,331 2,586,901
========== ========== ========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements.
FFLC BANCORP, INC.
Condensed Consolidated Statement of Stockholders' Equity
Nine Months Ended September 30, 1997
($ in thousands, except per share amounts)
Unrealized Stock
Loss on Held by
Additional Securities Incentive Total
Common Paid-In Retained Available Treasury Plan Stockholders'
Stock Capital Income For Sale Stock Trusts Equity
----- ------- ------ -------- ----- ------ ------
Balance at December 31,
1996 $ 28 27,386 33,962 (193) (6,295) (1,262) 53,626
Net proceeds from the issuance
of 17,140 shares of common
stock (unaudited) - 177 - - - - 177
Net income (unaudited) - - 2,801 - - - 2,801
Dividends paid, net of $46 of
dividends on ESOP shares
recorded as compensation
expense (unaudited) - - (804) - - - (804)
Purchase of treasury stock,
154,102 shares (unaudited) - - - - (3,856) - (3,856)
Shares committed to
participants in
incentive plans
(unaudited) - 394 - - - 237 631
Change in unrealized
loss on securities
available for sale,
net of income
taxes of $44
(unaudited) - - - 74 - - 74
--- ------ ------ ---- ------- ------ ------
Balance at September 30, 1997
(unaudited) $ 28 27,957 35,959 (119) (10,151) (1,025) 52,649
==== ====== ====== ==== ======= ====== ======
See accompanying Notes to Condensed Consolidated Financial Statements.
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
Nine Months Ended
September 30,
-------------------------
1997 1996
--------- ---------
(unaudited)
Cash flows from operating activities:
Net income ................................................................ $ 2,801 1,384
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses ......................................... 502 63
Depreciation ...................................................... 192 244
(Gain) loss on sale of foreclosed real estate ..................... (11) 2
Credit for deferred income taxes .................................. (226) (124)
Shares committed and dividends to incentive plan participants ..... 677 702
Amortization of premiums or discounts
on investment and mortgage-backed securities .................. (38) (58)
Accretion of deferred loan fees and unearned interest ............. 1 (53)
Deferral of loan fees collected, net of costs deferred ............ 172 99
(Increase) decrease in accrued interest receivable ................ (139) 53
Increase in current income taxes receivable ....................... -- (616)
Increase in other assets .......................................... (413) (62)
Increase in accrued expenses and other liabilities ................ 1,605 2,278
--------- ---------
Net cash provided by operating activities ................. 5,123 3,912
--------- ---------
Cash flows from investing activities:
Proceeds from maturities of investment securities held to maturity ........ 165 169
Purchase of investment securities available for sale ...................... (7,354) (12,811)
Proceeds from maturities of investment securities available for sale ...... 16,859 10,857
Principal repayments on mortgage-backed securities
held to maturity ...................................................... 12,999 22,595
Purchase of mortgage-backed securities available for sale ................. -- (7,577)
Principal repayments on mortgage-backed securities
available for sale .................................................... 6,251 5,881
Loan disbursements ........................................................ (104,157) (64,158)
Principal repayments on loans ............................................. 37,159 33,746
Purchase of premises and equipment, net ................................... (385) (534)
Purchase of Federal Home Loan Bank stock .................................. (365) (11)
Proceeds from sales of foreclosed real estate ............................. 255 57
--------- ---------
Net cash used in investing activities ..................... (38,573) (11,786)
--------- ---------
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows, Continued
($ in thousands)
Nine Months Ended
September 30,
-------------------------
1997 1996
-------- --------
(unaudited)
Cash flows from financing activities:
Net increase in noninterest bearing demand, savings, NOW and
money market accounts ............................................... 1,343 316
Net increase in certificate accounts .................................... 23,349 8,658
Increase in advances from Federal Home Loan Bank ........................ 19,850 --
Net decrease in securities sold under agreements to repurchase .......... (8,048) --
Stock options exercised ................................................. 177 50
Purchase of treasury stock .............................................. (3,856) (2,140)
Cash dividends paid ..................................................... (850) (692)
-------- --------
Net cash provided by financing activities ................... 31,965 6,192
-------- --------
Net decrease in cash and cash equivalents ................................... (1,485) (1,682)
Cash and cash equivalents at beginning of period ............................ 10,157 13,929
-------- --------
Cash and cash equivalents at end of period .................................. $ 8,672 12,247
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ............................................................ $ 11,084 9,563
======== ========
Income taxes ........................................................ $ 1,534 1,430
======== ========
Noncash investing and financing activities:
Increase (decrease) in equity valuation allowance
for market value of investment and mortgage-
backed securities available for sale ............................ $ 74 (169)
======== ========
Transfers from loans to foreclosed real estate ...................... $ 182 76
======== ========
Loans originated on sales of foreclosed real estate ................. $ 54 21
======== ========
Loans funded by and sold to correspondent ........................... $ 1,275 2,749
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements.
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Basis of Presentation. In the opinion of the management of FFLC Bancorp,
Inc., the accompanying condensed consolidated financial statements
contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position at September 30, 1997
and the results of operations for the three and nine months ended
September 30, 1997 and 1996 and cash flows for the nine months ended
September 30, 1997 and 1996. The results of operations and other data
for the three and nine months ended September 30, 1997, are not
necessarily indicative of results that may be expected for the year
ending December 31, 1997.
The condensed consolidated financial statements include the accounts of
FFLC Bancorp, Inc. (the "Holding Company") and its wholly-owned
subsidiary, First Federal Savings Bank of Lake County (the "Savings
Bank") (together, the "Company"). All significant intercompany accounts
and transactions have been eliminated in consolidation.
2. Loan Impairment and Loan Losses. The Company prepares a quarterly review
of the adequacy of the allowance for loan losses to also identify and
value impaired loans in accordance with guidance in the Statements of
Financial Accounting Standards No. 114 and 118. No impaired loans were
identified by the Company during the nine months ended September 30,
1997 or 1996.
An analysis of the change in the allowance for loan losses was as
follows (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- -------------------
1997 1996 1997 1996
------- ------ ------ ------
Beginning balance $ 1,193 1,003 1,063 977
Provision for loan losses 364 34 502 63
Loans charged-off (8) (14) (16) (17)
------- ------ ------ ------
Ending balance $ 1,549 1,023 1,549 1,023
===== ===== ===== =====
3. Impact of New Accounting Issues. In June 1996, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS No. 125"). That Statement
provides accounting and reporting standards for transfers and servicing
of financial assets and extinguishments of liabilities. That Statement
also provides consistent standards for distinguishing transfers of
financial assets that are sales from transfers that are secured
borrowings. SFAS No. 125 is effective for transfers and servicing of
financial assets as well as extinguishments of liabilities occurring in
1997. The adoption of SFAS No. 125 had no significant effect on the
Company's financial position at September 30, 1997 or result of
operations for the nine months then ended.
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
4. Future Accounting Requirements. The FASB has issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). This Statement specifies the computation, presentation and
disclosure requirements for net income per share for entities with
publicly-held common stock. SFAS 128 is effective for both interim and
annual periods ending after December 15, 1997 and upon adoption, all
prior period net income per share data presented will be restated to
conform with SFAS 128.
5. Per Share Amounts. Income (loss) per share of common stock has been
determined by dividing net income (loss) for the period by the weighted
average number of shares outstanding. Shares of common stock purchased
by the ESOP and RRP incentive plans are only considered outstanding when
the shares are released for allocation to participants. Stock options
are regarded as common stock equivalents and are therefore considered in
both primary and fully diluted income per share calculations. Common
stock equivalents are computed using the treasury stock method. The
following table presents the calculation of income (loss) per share:
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Weighted average shares of common stock issued
and outstanding before adjustments for ESOP,
RRP and common stock options ................... 2,312,016 2,597,562 2,355,990 2,622,743
Adjustment to reflect the effect of unallocated
ESOP and RRP shares ............................ (110,490) (144,751) (117,855) (152,793)
---------- ---------- ---------- ----------
Weighted average shares outstanding before
adjustments for common stock options ........... 2,201,526 2,452,811 2,238,135 2,469,950
Shares assumed outstanding to reflect the dilutive
effect of common stock options ................. 123,333 119,648 125,196 116,951
---------- ---------- ---------- ----------
Weighted average shares, including common stock
equivalents for primary income (loss) per share 2,324,859 2,572,459 2,363,331 2,586,901
========== ========== ========== ==========
Primary income (loss) per share .................. $ .40 (.09) 1.19 .54
========== ========== ========== ==========
Total weighted average common shares and
equivalents outstanding for primary income
(loss) per share computation ................... 2,324,859 2,572,459 2,363,331 2,586,901
Additional dilutive shares using the higher
of the end of period market value versus average
market value for the period utilizing the
treasury stock method regarding stock options .. 11,358 575 11,528 3,197
---------- ---------- ---------- ----------
Weighted average common shares and equivalents
outstanding for fully diluted income (loss) per
share............................................ 2,336,217 2,573,034 2,374,859 2,590,098
========== ========== ========== ==========
Fully diluted income (loss) per share ............ $ .40 (.09) 1.18 .53
========== ========== ========== ==========
FFLC BANCORP, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
General
FFLC Bancorp, Inc. (the "Holding Company") was formed as the holding
company for First Federal Savings Bank of Lake County (the "Savings Bank")
(together the "Company") in connection with the Savings Bank's conversion
from a federally chartered mutual savings and loan association to a
federally chartered stock savings bank on January 4, 1994. The Company's
consolidated results of operations are primarily those of the Savings
Bank.
The Savings Bank's principal business continues to be attracting retail
deposits from the general public and investing those deposits, together
with principal repayments on loans and investments and funds generated
from operations, primarily in mortgage loans secured by one-to-four-family
owner-occupied homes and, to a lesser extent, mortgage-backed securities,
construction loans, commercial loans, consumer and other loans, and
multi-family residential mortgage loans. In addition, the Savings Bank
holds investments permitted by federal laws and regulations including
securities issued by the U.S. Government and agencies thereof. The Savings
Bank's revenues are derived principally from interest on its mortgage loan
and mortgage-backed securities portfolios and interest and dividends on
its investment securities. The Savings Bank is a member of the Federal
Home Loan Bank ("FHLB") system and its deposits are insured to the
applicable limits by the Savings Association Insurance Fund ("SAIF") of
the Federal Deposit Insurance Corporation (the "FDIC"). The Savings Bank
is subject to regulation by the Office of Thrift Supervision (the "OTS")
as its chartering agency, and the FDIC as its deposit insurer.
The Savings Bank has 9 full-service locations in Lake and Sumter Counties,
Florida.
The Savings Bank's results of operations are dependent primarily on net
interest income, which is the difference between the interest income
earned primarily on its loans and investment and mortgage-backed
securities portfolios, and its cost of funds, consisting of the interest
paid on its deposits and borrowings. The Savings Bank's operating results
are also affected, to a lesser extent, by fee income and by gains or
losses on the sale of loans, investment and mortgage-backed securities
available for sale and foreclosed real estate. The Savings Bank's
operating expenses consist primarily of salaries and employee benefits,
occupancy expenses, deposit insurance premiums and other general and
administrative expenses. The Savings Bank's results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government policies, and
actions of regulatory authorities.
Liquidity and Capital Resources
The Company's most liquid assets are cash, amounts due from banks and
interest-bearing deposits. The levels of these assets are dependent on the
Company's lending, investing, operating, and deposit and borrowing
activities during any given period. At September 30, 1997, cash, amounts
due from banks and interest-bearing deposits, totaled $8.7 million.
FFLC BANCORP, INC.
The Savings Bank is required to maintain an average daily balance of
specified liquid assets equal to a monthly average of not less than a
specified percentage of its net withdrawable deposit accounts plus
short-term borrowings. This liquidity requirement is currently 5% but may
be changed from time to time by the OTS to any amount within the range of
4% to 10% depending upon economic conditions and the savings flows of
member institutions. OTS regulations also require each member savings
institution to maintain an average daily balance of short-term liquid
assets at a specified percentage (currently 1%) of the total of its net
withdrawable deposits and borrowed funds payable in one year or less.
Monetary penalties may be imposed for failure to meet these liquidity
requirements. The Savings Bank's liquidity and short-term liquidity ratios
for September 30, 1997 were 9.6% and 4.5%, respectively, which exceeded
the requirements. The Savings Bank has never been subject to monetary
penalties for failure to meet its liquidity requirements.
The Savings Bank's primary sources of funds include proceeds from payments
and prepayments on loans and mortgage-backed securities, proceeds from
maturities of investment securities, and increases in deposits and
borrowings. While maturities and scheduled amortization of loans,
mortgage-backed securities and investment securities are predictable
sources of funds, deposit inflows and mortgage and mortgage-backed
securities prepayments are greatly influenced by local conditions, general
interest rates, and regulatory changes.
At September 30, 1997, the Savings Bank had outstanding commitments to
originate $9.9 million of loans and to fund the undisbursed portion of
loans in process of approximately $12.5 million and undisbursed commercial
lines of credit of approximately $5.1 million. The Savings Bank believes
that it will have sufficient funds available to meet its commitments. At
September 30, 1997, certificates of deposit which were scheduled to mature
in one year or less totaled $152.0 million. Management believes, based on
past experience, that a significant portion of those funds will remain
with the Savings Bank.
The Savings Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory-and possibly
additional discretionary-actions by regulators that, if undertaken, could
have a direct material effect on the Company's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Savings Bank must meet specific capital guidelines
that involve quantitative measures of the Savings Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Savings Bank's capital amounts and
classification are also subject to qualitative judgements by the
regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Savings Bank to maintain minimum amounts (set forth in the
table below) of total and Tier I capital (as defined in the regulations)
to risk-weighted assets (as defined). Management believes, as of September
30, 1997, that the Savings Bank meets all capital adequacy requirements to
which it is subject.
FFLC BANCORP, INC.
As of September 30, 1997, the most recent notification from the OTS
categorized the Savings Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well
capitalized, the Savings Bank must maintain minimum tangible, Tier I
(core), Tier I (risk-based) and total risk-based capital ratios as set
forth in the table. There are no conditions or events since that
notification that management believes have changed the institution's
category.
The Savings Bank's actual capital amounts and ratios at September 30, 1997
are also presented in the table.
To Be Well
Minimum Capitalized
For Capital For Prompt
Adequacy Corrective Action
Actual Purposes Provisions
----------------- ----------------- -------------------
Ratio Amount Ratio Amount Ratio Amount
----- ------ ----- ------ ----- ------
($ in thousands)
Stockholders' equity,
and ratio to total
assets 11.3% $ 43,273
Less: investment in
nonincludable
subsidiary (202)
Add back: unrealized loss on
securities available for
sale 79
Tangible capital,
and ratio to adjusted
total assets 11.3% $ 43,150 1.5% $ 5,750
======= ======
Tier 1 (core) capital, and
ratio to adjusted total
assets 11.3% $ 43,150 3.0% $ 11,499 5.0% $ 19,165
======= ====== ======
Tier 1 capital, and ratio
to risk-weighted assets 21.8% 43,150 4.0% $ 7,907 6.0% $ 11,861
====== ======
Tier 2 capital (allowance for
loan losses) 1,549
Total risk-based capital,
and ratio to risk-
weighted assets 22.6% $ 44,699 8.0% $ 15,815 10.0% $ 19,768
======= ====== ======
Total assets $ 383,426
=======
Adjusted total assets $ 383,303
=======
Risk-weighted assets $ 197,684
=======
FFLC BANCORP, INC.
During the nine months ended September 30, 1997, the Savings Bank declared
and paid a cash dividend of $1.8 million to the Holding Company.
The following table shows selected ratios for the periods ended or at the
dates indicated:
Nine Months Nine Months
Ended Year Ended Ended
September 30, December 31, September 30,
1997 1996 1996
------------- ------------ -------------
Average equity as a percentage
of average assets .......................... 14.26% 16.62% 16.88%
Total equity to total assets at end of period . 13.73% 15.48% 16.22%
Return on average assets ...................... 1.01% .65% .56%
Return on average equity ...................... 7.11% 3.94% 3.30%
Noninterest expense to average assets ......... 1.96% 2.49% 2.63%
Nonperforming assets to total assets
at end of period ........................... .18% .30% .23%
Operating efficiency ratio .................... 52.47% 68.77% 73.13%
At At At
September 30, December 31, September 30,
1997 1996 1996
------------- ------------ -------------
Weighted average interest rates:
Interest-earning assets:
Loans receivable ........................ 8.19% 8.20% 8.19%
Mortgage-backed securities .............. 6.68% 6.45% 6.31%
Investment securities and other interest-
earning assets ........................ 6.14% 6.19% 5.94%
Total interest-earning assets ...... 7.84% 7.62% 7.51%
Interest-bearing liabilities:
Deposits ................................ 4.86% 4.72% 4.72%
Borrowed funds .......................... 6.14% 7.17% 7.17%
Total interest-bearing liabilities . 4.94% 4.74% 4.72%
Interest-rate spread ....................... 2.90% 2.87% 2.79%
FFLC BANCORP, INC.
Change in Financial Condition
Total assets increased $36.9 million or 10.7%, from $346.4 million at
December 31, 1996 to $383.4 million at September 30, 1997, primarily as a
result of an increase in loans receivable of $66.2 million, partially offset
by a decrease in investment and mortgage-backed securities of $28.8 million.
Customer deposits increased $24.7 million from $282.7 million at December 31,
1996 to $307.4 million at September 30, 1997. Advances from Federal Home Loan
Bank increased $19.8 million from $150,000 at December 31, 1996 to $20.0
million at September 30, 1997. The $977,000 net decrease in stockholders'
equity during the nine months ended September 30, 1997 resulted from the
repurchases of shares of the Company's stock of $3.9 million and dividends
paid of $804,000, partially offset by net income of $2.8 million, credits to
equity totaling $631,000 related to the stock incentive plans, proceeds of
$177,000 from stock options exercised and a $74,000 decrease in unrealized
loss on securities available for sale, net of tax effect.
The following table sets forth, for the periods indicated, information
regarding (i) the total dollar amount of interest and dividend income of the
Company from interest-earning assets and the resultant average yields; (ii)
the total dollar amount of interest expense on interest-bearing liabilities
and the resultant average cost; (iii) net interest income; (iv) interest-rate
spread; and (v) net interest margin.
Three Months Ended September 30,
---------------------------------------------------------------
1997 1996
----------------------------- ----------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
($ in Thousands)
Interest-earning assets:
Loans receivable (1) $ 281,439 5,843 8.30% $ 205,916 4,277 8.31%
Mortgage-backed securities 50,290 818 6.51 78,569 1,223 6.23
Investment securities and other
interest-earning assets (2) 39,232 603 6.15 38,570 586 6.08
--------- ----- --------- -----
Total interest-earning assets 370,961 7,264 7.83 323,055 6,086 7.53
----- -----
Noninterest - earning assets 13,507 11,489
--------- ---------
Total assets $ 384,468 $ 334,544
========= =========
Interest-bearing liabilities:
Deposit accounts 304,477 3,693 4.85 274,813 3,237 4.71
Borrowed funds 23,100 358 6.20 150 3 8.00
--------- ----- --------- -----
Total interest-bearing liabilities 327,577 4,051 4.95 274,963 3,240 4.71
----- -----
Noninterest-bearing liabilities 4,454 3,810
Stockholders' equity 52,437 55,771
--------- ---------
Total liabilities and stockholders' equity $ 384,468 $ 334,544
========= =========
Net interest income $ 3,213 $ 2,846
======= =======
Interest-rate spread (3) 2.88% 2.82%
==== ====
Net average interest-earning assets,
net interest margin (4) $ 43,384 3.46% $ 48,092 3.52%
========= ==== ========= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.13 1.17
==== ====
- ------------------
(1) Includes nonaccrual loans.
(2) Includes interest-bearing deposits and FHLB stock.
(3) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest- bearing
liabilities.
(4) Net interest margin is net interest income divided by average
interest-earning assets.
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of FFLC Bancorp 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/dividend income; (iv) interest rate spread; and
(v) net interest margin.
Nine Months Ended September 30,
---------------------------------------------------------------
1997 1996
----------------------------- ----------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
($ in Thousands)
Interest-earning assets:
Loans receivable (1) $ 256,678 16,014 8.32% $ 195,653 12,257 8.35%
Mortgage-backed securities 56,650 2,738 6.44 84,041 3,930 6.24
Investment securities and other
interest-earning assets (2) 41,559 1,875 6.02 40,000 1,784 5.95
--------- ------ -------- ------
Total interest-earning assets 354,887 20,627 7.75 319,694 17,971 7.50
------ ------
Noninterest - earning assets 13,643 11,514
--------- ---------
Total assets $ 368,530 $ 331,208
========= =========
Interest-bearing liabilities:
Deposit accounts 295,205 10,514 4.75 271,620 9,615 4.72
Borrowed funds 16,045 717 5.96 150 8 7.11
--------- ------ -------- ------
Total interest-bearing liabilities 311,250 11,231 4.81 271,770 9,623 4.72
------ ------
Noninterest - bearing liabilities 4,739 3,531
Stockholders' equity 52,541 55,907
--------- ---------
Total liabilities and stockholders' equity $ 368,530 $ 331,208
========= =========
Net interest income $ 9,396 $ 8,348
======== ========
Interest-rate spread (3) 2.94% 2.78%
==== ====
Net average interest-earning assets,
net interest margin (4) $ 43,637 3.53% $ 47,924 3.48%
======== ==== ========= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.14 1.18
==== ====
- ----------------------
(1) Includes nonaccrual loans.
(2) Includes interest-bearing deposits and FHLB stock.
(3) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest- bearing
liabilities.
(4) Net interest margin is net interest income divided by average
interest-earning assets.
FFLC BANCORP, INC.
Comparison of the Three Months Ended September 30, 1997 and 1996
Results of Operations
General Operating Results. Net income for the three months ended September 30,
1997 was $926,000 compared to a net loss of ($223,000) for the three months
ended September 30, 1996. The increase in net income for the 1997 period was
primarily due to the effect of the one-time SAIF assessment of $1.7 million
included in noninterest expense in the 1996 period and the $302,000 pretax
gain on the sale of the Savings Bank's investment in its computer service
bureau during the 1997 period, partially offset by a $330,000 increase in
provision for loan losses during the 1997 period.
Interest Income. Interest income increased $1.2 million, or 19.4% from $6.1
million for the three months ended September 30, 1996 to $7.3 million for
the three months ended September 30, 1997. The increase was due to a $47.9
million increase in average interest-earning assets outstanding and an
increase in the average yield on interest-earning assets from 7.53% for the
three months ended September 30, 1996 to 7.83% for the comparable period in
1997.
Interest Expense. Interest expense increased $811,000 for the three months ended
September 30, 1997 when compared to the 1996 period. The increase was the
result of a $52.6 million increase in the average interest-bearing
liabilities outstanding during the 1997 period compared to the 1996 period
as well as an increase in the weighted average rate paid on interest-bearing
liabilities from 4.71% for the three months ended September 30, 1996 to
4.95% for the comparable period in 1997.
Provision for Loan Losses. The Savings Bank's provision for loan losses
increased $330,000 from $34,000 for the three months ended September 30,
1996 to $364,000 for the comparable period in 1997. The increase reflects
the overall growth within the loan portfolio and the Savings Bank's
continuing policy of evaluating the adequacy of its allowance for loan
losses and prevailing standards within the thrift industry. Generally, such
evaluation includes consideration of the level of nonperforming loans and
the level and composition of the Savings Bank's loan portfolio.
Noninterest Income. Noninterest income increased $333,000 from $208,000 for the
three months ended September 30, 1996 to $541,000 for the 1997 period. The
increase was primarily due to a $302,000 pretax gain recognized on the sale
of the Savings Bank's investment in its computer service bureau in September
1997.
Noninterest Expense. Noninterest expense consists primarily of salaries and
employee benefits, occupancy expense and FDIC insurance premiums.
Noninterest expenses decreased by $1.4 million, from $3.3 million for the
three months ended September 30, 1996 to $1.9 million for the 1997 period.
The decrease was primarily due to the one-time SAIF recapitalization
assessment of $1.7 million recorded in the 1996 period and a $123,000
decrease in deposit insurance premiums for the 1997 period, all of which was
partially offset by an increase in salaries and employee benefits of
$273,000.
Income Taxes. Income taxes increased from a ($91,000) tax credit for the three
months ended September 30, 1996 (an effective rate of 29.0%) to $547,000 (an
effective tax rate of 37.1%) for the corresponding period in 1997.
FFLC BANCORP, INC.
Comparison of the Nine Months Ended September 30, 1997 and 1996
General Operating Results. Net income for the nine months ended September 30,
1997, was $2.8 million, compared to $1.4 million earned for the nine months
ended September 30, 1996. The increase in net income for the 1997 period was
primarily due to the effect of the one-time SAIF assessment of $1.7 million,
included in noninterest expense in the 1996 period, the $302,000 pretax gain
from the sale of the Savings Bank's investment in its computer service
bureau during September 1997 and an increase in net interest income of $1.0
million.
Interest Income. Interest income increased $2.7 million or 14.8% from $18.0
million for the nine months ended September 30, 1996 to $20.6 million for
the nine months ended September 30, 1997. The increase in interest income
was due to a $35.2 million increase in average interest-earning assets
outstanding and an increase in the average yield on interest-earning assets
from 7.50% for the nine months ended September 30, 1996 to 7.75% for nine
months ended September 30, 1997.
Interest Expense. Interest expense increased $1.6 million, or 16.7% from $9.6
million for the nine months ended September 30, 1996 to $11.2 million for
the same period in 1997. The increase was due to an increase of $39.5
million in average interest-bearing liabilities outstanding and an increase
in the weighted average rate paid on interest-bearing liabilities from 4.72%
for the nine months ended September 30, 1996 to 4.81% for the same period in
1997.
Provision for Loan Losses. The Savings Bank's provision for loan losses
increased $439,000 from $63,000 for the nine months ended September 30, 1996
to $502,000 for the same period in 1997. The increase reflects the overall
growth within the loan portfolio and the Savings Bank's continuing policy of
evaluating the adequacy of its allowance for loan losses and prevailing
standards within the thrift industry. Generally, such evaluation includes
consideration of the level of nonperforming loans and the level and
composition of the Savings Bank's loan portfolio.
Noninterest Income. Noninterest income increased $370,000 from $585,000 for the
nine months ended September 30, 1996 to $955,000 for the 1997 period. The
increase was primarily due to a $302,000 pretax gain recognized on the sale
of the Savings Bank's investment in its computer service bureau in September
1997.
Noninterest Expense. Noninterest expense consists primarily of salaries and
employee benefits, occupancy expense and FDIC insurance premiums.
Noninterest expense decreased by $1.1 million, or 16.9%, from $6.5 million
for the nine months ended September 30, 1996 to $5.4 million for the 1997
period. That decrease was primarily due to the one-time SAIF
recapitalization assessment of $1.7 million in the 1996 period and a
$357,000 decrease in deposit insurance premiums for the 1997 period, all of
which was partially offset by an increase in salaries and employee benefits
of $614,000.
Income Taxes. Income taxes increased from $953,000 for the nine months ended
September 30, 1996 (an effective rate of 40.8%) to $1.6 million (an
effective tax rate of 36.6%) for the corresponding period in 1997.
FFLC BANCORP, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings to which FFLC Bancorp, Inc.
or its subsidiary is a party or to which any of their property is subject.
Item 2. Changes in Securities
Not applicable
Item 3. Default upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
On October 9, 1997, the Board of Directors authorized a 5-for-3 stock split.
Shareholders will receive two additional shares for every three shares held
of record as of the close of business on October 31, 1997. The purpose of
the split is to enhance the value of the shareholders' investment and
increase the liquidity of the Company's stock.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit 27 Financial Data Schedule (for SEC use only)
b. There were no reports on Form 8-K filed for the three months ended
September 30, 1997.
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.
FFLC BANCORP, INC.
(Registrant)
Date: October 30, 1997 By: /s/ Stephen T. Kurtz
---------------- ---------------------
Stephen T. Kurtz, President and
Chief Executive Officer
Date: October 30, 1997 By: /s/ Paul K. Mueller
---------------- --------------------
Paul K. Mueller, Executive Vice President,
Chief Operating Officer and Treasurer