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U.S. 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 March 31, 2002
Transition report under Section 13 or 15(d) of the Exchange Act
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For the transition period from to
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Commission File Number 000-33351
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FPB BANCORP, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 65-1147861
- --------------------------------- -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1301 SE Port St. Lucie Boulevard
Port St. Lucie, Florida 34952
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(Address of Principal Executive Offices)
(561) 398-1388
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(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 489,410
- -------------------------------------- -----------------------------
(class) Outstanding at April 26, 2002
Transitional Small Business Format (check one): YES [ ] NO [X]
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FPB BANCORP, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
----
Condensed Consolidated Balance Sheets -
March 31, 2002 (unaudited) and December 31, 2001........................... 2
Condensed Consolidated Statements of Operations -
Three Months ended March 31, 2002 and 2001 (unaudited)..................... 3
Condensed Consolidated Statement of Stockholders' Equity -
Three Months ended March 31, 2002 (unaudited).............................. 4
Condensed Consolidated Statements of Cash Flows -
Three Months ended March 31, 2002 and 2001 (unaudited)..................... 5
Notes to Condensed Consolidated Financial Statements (unaudited)............ 6
Review By Independent Certified Public Accountants.......................... 7
Report on Review by Independent Certified Public Accountants................ 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................... 9-11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................. 12
Item 6. Exhibits and Reports on Form 8-K................................... 12
SIGNATURES................................................................... 13
1
FPB BANCORP, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(Dollars in thousands)
March 31, December 31,
--------- ------------
Assets 2002 2001
---- ----
(unaudited)
Cash and due from banks.............................................................. $ 1,562 2,095
Federal funds sold................................................................... 3,955 353
----- ---
Total cash and cash equivalents........................................ 5,517 2,448
Time deposit ....................................................................... 100 100
Securities available for sale........................................................ 4,878 4,496
Securities held to maturity.......................................................... 852 983
Loans, net of allowance for loan losses of $409 and $359............................ 35,091 32,215
Premises and equipment, net.......................................................... 615 616
Federal Home Loan Bank stock, at cost................................................ 80 80
Accrued interest receivable.......................................................... 221 211
Deferred income taxes................................................................ 457 444
Other assets ....................................................................... 119 113
--- ---
Total assets........................................................... $ 47,930 41,706
========= ======
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits.............................................. 8,528 6,825
Savings, NOW and money-market deposits........................................... 12,424 11,256
Time deposits ................................................................... 22,028 15,912
------ ------
Total deposits......................................................... 42,980 33,993
Federal funds purchased.......................................................... - 1,500
Federal Home Loan Bank advance................................................... - 1,000
Notes payable .................................................................. 353 342
Official checks.................................................................. 496 742
Other liabilities................................................................ 36 39
-- --
Total liabilities...................................................... 43,865 37,616
------ ------
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized,
no shares issued or outstanding............................................. - -
Common stock, $.01 par value; 5,000,000 shares authorized,
489,410 shares issued and outstanding....................................... 5 5
Additional paid-in capital....................................................... 4,846 4,846
Accumulated deficit.............................................................. (753) (761)
Accumulated other comprehensive loss............................................. (33) -
---
Total stockholders' equity............................................. 4,065 4,090
----- -----
Total liabilities and stockholders' equity............................. $ 47,930 41,706
========= ======
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
FPB BANCORP, INC. AND SUBSIDIARY
Condensed Statements of Operations (Unaudited)
(Dollars in thousands, except share amounts)
Three Months Ended
March 31,
------------------
2002 2001
---- ----
Interest income:
Loans............................................................................ $ 644 454
Securities....................................................................... 66 103
Other............................................................................ 17 44
-- --
Total interest income.................................................. 727 601
--- ---
Interest expense:
Deposits ....................................................................... 272 268
Other............................................................................ 1 -
--- ---
Total interest expense................................................. 273 268
--- ---
Net interest income.............................................................. 454 333
Provision for loan losses.............................................. 55 41
--- ---
Net interest income after provision for loan losses.................................. 399 292
--- ---
Noninterest income:
Service charges and fees......................................................... 49 52
Other fees....................................................................... 3 -
Other............................................................................ 2 3
--- ---
Total noninterest income............................................... 54 55
--- ---
Noninterest expenses:
Salaries and employee benefits................................................... 196 149
Occupancy and equipment.......................................................... 81 79
Advertising...................................................................... 19 12
Professional fees................................................................ 28 20
Data processing.................................................................. 39 18
Insurance expense................................................................ 6 7
Supplies ....................................................................... 10 9
Other............................................................................ 59 59
--- ---
Total noninterest expenses............................................. 438 353
--- ---
Earnings (loss) before income taxes.................................................. 15 (6)
Income taxes (benefit)........................................................... 7 (2)
--- ---
Net earnings (loss).................................................................. $ 8 (4)
======= =======
Earnings (loss) per share, basic and diluted......................................... $ .02 (.01)
======= =======
Weighted-average number of shares, basic and diluted................................. 489,410 489,410
======= =======
Dividends per share.................................................................. $ - -
======= =======
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
FPB BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statement of Stockholders' Equity
Three Months Ended March 31, 2002
(Dollars in thousands)
Accumulated
Other
Common Stock Additional Compre- Total
----------------------- Paid-In Accumulated hensive Stockholders'
Shares Amount Capital Deficit Loss Equity
---------- ------ -------------- ------------ ----------- ---------------
Balance at December 31, 2001............ 489,410 $ 5 4,846 (761) - 4,090
-----
Comprehensive loss:
Net earnings for the three months
ended March 31, 2002
(unaudited).................... - - - 8 - 8
Net change in unrealized loss on
securities available for sale
(unaudited), net of taxes of
$20............................ - - - - (33) (33)
-------
Comprehensive loss
(unaudited).................... (25)
------------ --- --------- ------ ---- -------
Balance at March 31, 2002
(unaudited) ...................... 489,410 $ 5 4,846 (753) (33) 4,065
======= = ===== ===== ==== =======
See Accompanying Notes to Condensed Consolidated Financial Statements.
4
FPB BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Three Months Ended
March 31,
--------------------------
2002 2001
---- ----
Cash flows from operating activities:
Net earnings (loss).............................................................. $ 8 (4)
Adjustments to reconcile net earnings (loss) to net cash (used in) provided by
operating activities:
Depreciation................................................................ 25 22
Provision for loan losses................................................... 55 41
Provision (credit) for deferred income taxes............................... 7 (2)
Amortization of loan fees................................................... 2 10
Net amortization of securities.............................................. 2 (18)
(Increase) decrease in accrued interest receivable......................... (10) 5
Increase in other assets.................................................... (6) (28)
(Decrease) increase in official checks and other liabilities................ (249) 32
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Net cash (used in) provided by operating activities................ (166) 58
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Cash flows from investing activities:
Purchase of securities available for sale........................................ (2,000) -
Principal payments on securities available for sale.............................. 65 -
Principal payments on securities held to maturity................................ 129 -
Proceeds from calls of securities available for sale............................. 1,500 3,500
Net increase in loans............................................................ (2,933) (3,247)
Purchase of premises and equipment............................................... (24) (5)
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Net cash provided by (used in) investing activities................ (3,263) 248
------ ------
Cash flows from financing activity-
Net increase in deposits......................................................... 8,987 766
Decrease in federal funds purchased.............................................. (1,500) -
Decrease in Federal Home Loan Bank advance....................................... (1,000) -
Net increase in notes payable.................................................... 11 -
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Net cash provided by financing activities.......................... 6,498 766
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Net increase in cash and cash equivalents............................................ 3,069 1,072
Cash and cash equivalents at beginning of period..................................... 2,448 4,380
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Cash and cash equivalents at end of period........................................... $ 5,517 5,452
====== ======
Supplemental disclosure of cash flow information: Cash paid during the period
for:
Interest ................................................................... $ 271 267
====== ======
Income taxes................................................................ $ - -
======= =======
Noncash transactions:
Accumulated other comprehensive (loss) income, change in unrealized
(loss) gain on securities available for sale........................... $ (33) 7
======= =======
See Accompanying Notes to Condensed Financial Statements.
5
FPB BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited)
(1) General. FPB Bancorp, Inc. operates as a one-bank holding company and
owns 100% of First Peoples Bank (the "Bank"), a state (Florida)
chartered commercial bank (collectively, the "Company"). The Holding
Company's only business activity is the operation of the Bank. The
Bank's deposits are insured by the Federal Deposit Insurance
Corporation. The Bank offers a variety of community banking services to
individual and corporate customers through its banking office located in
Port St. Lucie, Florida.
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 March 31, 2002, and the results of operations
and cash flows for the three-month periods ended March 31, 2002 and
2001. The results of operations for the three months ended March 31,
2002, are not necessarily indicative of the results to be expected for
the full year
(2) Loan Impairment and Credit Losses. No loans were identified as impaired
during the three months ended March 31, 2002 or 2001. The activity in
the allowance for loan losses was as follows (in thousands):
Three Months Ended
March 31,
--------------------------
2002 2001
---- ----
Balance at beginning of period....................................... $ 359 201
Provision for loan losses............................................ 55 41
Charge-offs.......................................................... (5) -
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Balance at end of period............................................. $ 409 242
==== ====
(3) Regulatory Capital. The Bank is required to maintain certain minimum
regulatory capital requirements. The following is a summary at March 31,
2002, of the regulatory capital requirements and the Bank's capital on a
percentage basis:
Ratios of Regulatory
the Bank Requirement
-------- -----------
(1) Tier I capital to total average assets............................... 8.49% 4.00%
(2) Tier I capital to risk-weighted assets............................... 11.55% 4.00%
(3) Total capital to risk-weighted assets................................ 12.70% 8.00%
(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.
6
FPB BANCORP, INC. AND SUBSIDIARY
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 March 31, 2002, and for
the three-month periods ended March 31, 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.
7
Report on Review by Independent Certified Public Accountants
The Board of Directors
FPB Bancorp, Inc.
Port St. Lucie, Florida:
We have reviewed the accompanying condensed consolidated balance sheet of
FPB Bancorp, Inc. and Subsidiary (the "Company") as of March 31, 2002, and the
related condensed consolidated statements of operations and cash flows for the
three-month periods ended March 31, 2002 and 2001, and the condensed
consolidated statement of stockholders' equity for the three-month period ended
March 31, 2002. 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 ended December 31, 2001 (not
presented herein); and in our report dated February 4, 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
April 22, 2002
8
FPB BANCORP, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Comparison of March 31, 2002 and December 31, 2001
Liquidity and Capital Resources
The Company's primary sources of cash during the three months ended March
31, 2002 were from net deposit inflow of approximately $9.0 million. Cash
was used primarily for net loan originations of $2.9 million. At March 31,
2002, the Company had outstanding commitments to fund existing and new
loans of $5.8 million. It is expected that these requirements will be
funded from the source described above. At March 31, 2002, the Bank
exceeded its regulatory liquidity requirements. Management believes that,
if so desired, it can adjust the rates on time deposits to retain or
attract deposits in a changing interest-rate environment.
The following table shows selected information for the periods ended or at
the dates indicated:
Three Months Three Months
Ended Year Ended Ended
March 31, December 31, March 31,
2002 2001 2001
---- ---- ----
Average equity as a percentage
of average assets..................................... 8.96% 12.36% 13.71%
Equity to total assets at end of period.................. 8.48% 9.81% 13.24%
Return on average assets (1)............................. .07% (.14)% (0.05)%
Return on average equity (1)............................. .78% (1.17)% (0.38)%
Noninterest expenses to average assets (1)............... 3.84% 4.60% 4.64%
Nonperforming loans and foreclosed real estate to
total assets at end of period......................... NIL NIL NIL
-----------------------------
(1) Annualized for the three months ended March 31, 2002 and 2001.
9
FPB BANCORP, INC. AND SUBSIDIARY
Results of Operations
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest income; (iv) interest-rate spread; and (v) net
interest margin.
Three Months Ended March 31,
----------------------------------------------------------------------------
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 ...................................... $ 33,873 644 7.60% $ 19,599 454 9.27%
Securities.................................. 5,264 66 5.02 5,827 103 7.07
Other (1)................................... 4,173 17 1.63 3,248 44 5.42
------ ---- ------- ----
Total interest-earning assets............. 43,310 727 6.71 28,674 601 8.38
--- ---
Noninterest-earning assets..................... 2,325 1,777
------- -------
Total assets.............................. $ 45,635 $ 30,451
======= =======
Interest-bearing liabilities:
Savings, NOW and money-market deposit
accounts.................................. 11,897 62 2.08 7,033 63 3.58
Time deposits............................... 20,954 210 4.01 12,901 205 6.36
Other (2)................................... 503 1 .80 - - -
-------- ---- -------- -----
Total interest-bearing liabilities........ 33,354 273 3.27 19,934 268 5.38
--- ---
Demand deposits................................ 7,545 5,812
Noninterest-bearing liabilities................ 648 530
Stockholders' equity........................... 4,088 4,175
------ ------
Total liabilities and stockholders' equity $ 45,635 $ 30,451
====== =======
Net interest income............................ $ 454 $ 333
=== ===
Interest-rate spread (3)....................... 3.44% 3.00%
===== =====
Net interest margin (4)........................ 4.19% 4.65%
===== =====
Ratio of average interest-earning assets to
average interest-bearing liabilities........ 1.30 1.44
==== =====
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<FN>
(1) Includes federal funds sold, dividends from Federal Home Loan Bank stock,
time deposit and interest-bearing deposits with banks.
(2) Includes Federal Home Loan Bank advances and notes payable.
(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.
</FN>
10
FPB BANCORP, INC. AND SUBSIDIARY
Comparison of the Three-Month Periods Ended March 31, 2002 and 2001
General. Net earnings for the three months ended March 31, 2002, were $8,000 or
$.02 per basic and diluted share compared to net losses of $4,000 or $.01 per
basic and diluted share for the period ended March 31, 2001. This increase in
the Company's net earnings was primarily due to an increase in net interest
income which was partially offset by an increase in noninterest expense, both
due to the overall growth of the Company.
Interest Income. Interest income increased to $727,000 for the three months
ended March 31, 2002 from $601,000 for the three months ended March 31, 2001.
Interest income on loans increased $644,000 due primarily to an increase in
the average loan portfolio balance for the three months ended March 31, 2002,
partially offset by a decrease in the average yield from 9.27% for the three
months ended March 31, 2001 to 7.60% for the three months ended March 31,
2002. Interest on securities decreased to $66,000 due primarily to a decrease
in the average securities portfolio as well as a decrease in the average yield
during the three months ended March 31, 2002.
Interest Expense. Interest expense on deposit accounts increased to $272,000 for
the three months ended March 31, 2002, from $268,000 for the three months
ended March 31, 2001. Interest expense increased primarily because of an
increase in the average balance, partially offset by a decrease in the average
rate paid on 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 March 31, 2002, was $55,000 compared to $41,000 for the same
period in 2001. The increase in the provision for loan losses in 2002 is
primarily due to the increased portfolio balance in 2002. Management believes
the balance in the allowance for loan losses of $409,000 at March 31, 2002, is
adequate.
Noninterest Income. Total noninterest income decreased by $1,000 from $55,000
for the three months ended March 31, 2001, to $54,000 for the three months
ended March 31, 2002.
Noninterest Expenses. Total noninterest expenses increased to $438,000 for the
three months ended March 31, 2002 from $353,000 for the three months ended
March 31, 2001, primarily due to an increase in employee compensation and
benefits of $47,000 and an increase in data processing expense of $21,000 all
due to the continued growth of the Company.
Income Taxes. The income tax expense for the three months ended March 31, 2002,
was $7,000 (an effective rate of 46.7%) compared to an income tax benefit of
$2,000 (an effective rate of 33.3%) for the three months ended March 31, 2001.
The Company has recognized a deferred tax asset because management believes it
will realize the deferred tax asset in future periods.
11
FPB BANCORP, INC. AND SUBSIDIARY
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 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed with or incorporated by reference
into this report. The exhibits were previously filed as a part of the Company's
Registration Statement on Form SB-1, filed with the Federal Deposit Insurance
Corporation on April 30, 2000.
Exhibit No. Description of Exhibit
----------- ----------------------
* 3.1 Articles of Incorporation
* 3.2 Bylaws
* 4.1 Specimen copy of certificate evidencing shares of the
Company's common capital stock, $0.01 par value
* 4.2 First Peoples Bank Stock Option Plan dated January 14, 1999
* 4.3 Warrant Agreement
4.4 Non-Qualified Stock Option Agreement
* 10.1 First Peoples Bank Qualified 401(k) Profit Sharing Plan,
dated May 1, 1999
10.2 Employment Agreement for David W. Skiles
(b) Reports on Form 8-K. There were no Form 8-K's filed during the three months
ended March 31, 2002.
12
FPB BANCORP, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FPB BANCORP, INC.
(Registrant)
Date: May 2002 By: /s/ David W. Skiles
-------------------- ----------------------------------------
David W. Skiles, President and Chief
Executive Officer
/s/ Nancy E. Aumack
----------------------------------------
Senior Vice President and
Chief Financial Officer
13