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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 June 30, 2002
___ Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ___________ to _____________
Commission File Number 000-33351
---------
FPB BANCORP, INC.
-----------------
(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
-----------------------------
(Address of Principal Executive Offices)
(561) 398-1388
--------------
(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 XX 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 801,670 shares
- -------------------------------------- --------------
(class) Outstanding at July 30, 2002
Transitional Small Business Format (check one): YES __ NO XX
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12
FPB BANCORP, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
----
Condensed Consolidated Balance Sheets -
June 30, 2002 (unaudited) and December 31, 2001.........................2
Condensed Consolidated Statements of Operations -
Three and Six Months ended June 30, 2002 and 2001 (unaudited)...........3
Condensed Consolidated Statement of Stockholders' Equity -
Six Months ended June 30, 2002 (unaudited)..............................4
Condensed Consolidated Statements of Cash Flows -
Six Months ended June 30, 2002 and 2001 (unaudited).....................5
Notes to Condensed Consolidated Financial Statements (unaudited)........6-7
Review By Independent Certified Public Accountants........................8
Report on Review by Independent Certified Public Accountants..............9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................10-14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................15
Item 4. Submission of Matters to a Vote of Security Holders...............15
Item 6. Exhibits and Reports on Form 8-K..................................16
SIGNATURES....................................................................17
1
FPB BANCORP, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(Dollars in thousands)
June 30, December 31,
-------- ------------
Assets 2002 2001
---- ----
(unaudited)
Cash and due from banks .................................................................. $ 1,545 2,095
Federal funds sold ....................................................................... 3,924 353
-------- -----
Total cash and cash equivalents ............................................ 5,469 2,448
Time deposit ............................................................................. - 100
Securities available for sale ............................................................ 3,919 4,496
Securities held to maturity .............................................................. 755 983
Loans, net of allowance for loan losses of $462 and $359 ................................ 38,373 32,215
Premises and equipment, net .............................................................. 610 616
Federal Home Loan Bank stock, at cost .................................................... 80 80
Accrued interest receivable .............................................................. 243 211
Deferred income taxes .................................................................... 397 444
Other assets ............................................................................. 129 113
-------- -----
Total assets ............................................................... $ 49,975 41,706
======== ======
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits .................................................. 8,050 6,825
Savings, NOW and money-market deposits ............................................... 13,170 11,256
Time deposits ........................................................................ 22,790 15,912
-------- -----
Total deposits ............................................................. 44,010 33,993
Federal funds purchased .............................................................. - 1,500
Federal Home Loan Bank advance ....................................................... - 1,000
Notes payable ........................................................................ 405 342
Official checks ...................................................................... 509 742
Other liabilities .................................................................... 79 39
-------- -----
Total liabilities .......................................................... 45,003 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,
573,645 and 489,410 shares issued and outstanding ............................... 6 5
Additional paid-in capital ........................................................... 5,657 4,846
Accumulated deficit .................................................................. (716) (761)
Accumulated other comprehensive income ............................................... 25 -
-------- -----
Total stockholders' equity ................................................. 4,972 4,090
-------- -----
Total liabilities and stockholders' equity ................................. $ 49,975 41,706
======== ======
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
FPB BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2002 2001 2002 2001
---- ---- ---- ----
Interest income:
Loans..................................................... $ 696 509 1,340 963
Securities................................................ 73 50 139 153
Other..................................................... 16 52 33 96
------- ------- ------- -------
Total interest income........................... 785 611 1,512 1,212
Interest expense:
Deposits ................................................ 281 263 553 531
Other..................................................... 1 - 2 -
------- ------- ------- -------
Total interest expense.......................... 282 263 555 531
Net interest income........................................... 503 348 957 681
Provision for loan losses....................... 51 56 106 97
------- ------- ------- -------
Net interest income after provision for loan losses........... 452 292 851 584
------- ------- ------- -------
Noninterest income:
Service charges and fees.................................. 50 39 99 91
Other fees................................................ 5 13 8 13
Other..................................................... 1 (1) 3 2
------- ------- ------- -------
Total noninterest income........................ 56 51 110 106
------- ------- ------- -------
Noninterest expenses:
Salaries and employee benefits............................ 200 174 396 323
Occupancy and equipment................................... 82 73 163 152
Advertising............................................... 10 18 29 30
Professional fees......................................... 23 19 51 39
Data processing........................................... 41 23 80 41
Insurance expense......................................... 5 6 11 13
Supplies ................................................ 15 12 25 21
Other..................................................... 71 49 130 108
------- ------- ------- -------
Total noninterest expenses...................... 447 374 885 727
------- ------- ------- -------
Earnings (loss) before income taxes........................... 61 (31) 76 (37)
Income taxes (benefit).................................... 24 (9) 31 (11)
------- ------- ------- -------
Net earnings (loss)........................................... $ 37 (22) 45 (26)
======= ======= ======= =======
Earnings (loss) per share, basic and diluted.................. $ .07 (.04) .09 (.05)
======= ======= ======= =======
Weighted-average number of shares, basic and diluted.......... 502,971 489,410 496,191 489,410
======= ======= ======= =======
Dividends per share........................................... $ - - - -
======= ======= ======= =======
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
FPB BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statement of Stockholders' Equity
Six Months Ended June 30, 2002
(Dollars in thousands)
Accumulated
Other
Common Stock Additional Compre- Total
-------------------- Paid-In Accumulated hensive Stockholders'
Shares Amount Capital Deficit Income Equity
------ ------ ------- ------- ------ ------
Balance at December 31, 2001................. 489,410 $ 5 4,846 (761) - 4,090
-----
Comprehensive income:
Net earnings for the six months ended
June 30, 2002 (unaudited)........... - - - 45 - 45
Net change in unrealized gain on
securities available for sale,
net of taxes of
$16 (unaudited)..................... - - - - 25 25
-----
Comprehensive income(unaudited)......... 70
-----
Proceeds from the issuance of common
stock (unaudited)....................... 84,235 1 811 - - 812
------- --- ----- ---- --- -----
Balance at June 30, 2002 (unaudited)......... 573,645 $ 6 5,657 (716) 25 4,972
======= === ===== ==== === =====
See Accompanying Notes to Condensed Consolidated Financial Statements.
4
FPB BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Six Months Ended
June 30,
-----------------------
2002 2001
---- ----
Cash flows from operating activities:
Net earnings (loss) .......................................................................... $ 45 (26)
Adjustments to reconcile net earnings (loss) to net cash (used in) provided by
operating activities:
Depreciation ............................................................................ 47 44
Provision for loan losses ............................................................... 106 97
Provision (credit) for deferred income taxes ............................................ 31 (11)
Net amortization of loan fees ........................................................... 2 12
Net amortization of securities .......................................................... 3 (18)
(Increase) decrease in accrued interest receivable ...................................... (32) 48
Increase in other assets ................................................................ (16) (74)
(Decrease) increase in official checks and other liabilities ............................ (193) 274
-------- ------
Net cash (used in) provided by operating activities ............................ (7) 346
-------- ------
Cash flows from investing activities:
Purchase of securities available for sale .................................................... (2,500) (3,503)
Principal payments on securities available for sale .......................................... 118 -
Proceeds from calls of securities available for sale ......................................... 3,000 5,997
Principal payments on securities held to maturity ............................................ 225 -
Maturity of time deposit ..................................................................... 100 -
Net increase in loans ........................................................................ (6,266) (6,079)
Purchase of premises and equipment ........................................................... (41) (8)
-------- ------
Net cash used in investing activities .......................................... (5,364) (3,593)
-------- ------
Cash flows from financing activities:
Net increase in deposits ..................................................................... 10,017 3,328
Decrease in federal funds purchased .......................................................... (1,500) -
Decrease in Federal Home Loan Bank advance ................................................... (1,000) -
Net increase in notes payable ................................................................ 63 -
Proceeds from the issuance of common stock ................................................... 812 -
-------- ------
Net cash provided by financing activities ...................................... 8,392 3,328
-------- ------
Net increase in cash and cash equivalents ........................................................ 3,021 81
Cash and cash equivalents at beginning of period ................................................. 2,448 4,380
-------- ------
Cash and cash equivalents at end of period ....................................................... $ 5,469 4,461
======== ======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest, net of amount capitalized of $12 in 2002 ...................................... $ 550 525
======== ======
Income taxes ............................................................................ $ - -
======== ======
Noncash transaction-
Accumulated other comprehensive income, change in
unrealized gain on securities available for sale ................................... $ 25 10
======== ======
See Accompanying Notes to Condensed Consolidated 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 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 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 June 30, 2002, and the
results of operations for the three- and six-month periods ended June
30, 2002 and 2001, and cash flows for the six month periods ended
June 30, 2002 and 2001. The results of operations for the three and
six months ended June 30, 2002 are not necessarily indicative of the
results to be expected for the full year.
(2) Loan Impairment and Credit Losses. The average net investment in collateral
dependent impaired loans and interest income recognized and received
on these loans is as follows:
At
------------------------
June 30, December 31,
-------- ------------
2002 2001
---- ----
Loans identified as impaired:
Gross loans with related allowances for losses recorded............. $ 259 -
Less allowance on these loans....................................... (13) -
----- ----
Net investment in impaired loans....................................... $ 246 -
===== ====
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ----------------
2002 2001 2002 2001
---- ---- ---- ----
Average net investment in impaired loans............ $ 3 - 1 -
=== === === ===
Interest income recognized on impaired loans........ $ 8 - 11 -
=== === === ===
Interest income received on impaired loans.......... $ 8 - 13 -
=== === === ===
The activity in the allowance for loan losses was as follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ----------------
2002 2001 2002 2001
Balance at beginning of period.................. $ 409 242 359 201
Provision charged to earnings................... 51 56 106 97
Recoveries (charge-offs), net................... 2 - (3) -
----- --- --- ---
Balance at end of period........................ $ 462 298 462 298
===== === === ===
(continued)
6
FPB BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited), Continued
(3) Regulatory Capital. The Bank is required to maintain certain minimum
regulatory capital requirements. The following is a summary at June
30, 2002 of the regulatory capital requirements and the Bank's
capital on a percentage basis:
Ratios of Regulatory
the Bank Requirement
-------- -----------
Tier I capital to total average assets.................................. 8.08% 4.00%
Tier I capital to risk-weighted assets.................................. 11.30% 4.00%
Total capital to risk-weighted assets................................... 12.55% 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.
7
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 June 30, 2002, and for
the three- and six-month periods ended June 30, 2002 and 2001 presented in this
document, in accordance with standards established by the American Institute of
Certified Public Accountants.
Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.
8
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 June 30, 2002, and the
related condensed consolidated statements of operations for the three- and
six-month periods ended June 30, 2002 and 2001, the related condensed
consolidated statements of cash flows for the six-month periods ended June 30,
2002 and 2001 and the related condensed consolidated statement of stockholders'
equity for the six months ended June 30, 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
July 19, 2002
9
FPB BANCORP, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Comparison of June 30, 2002 and December 31, 2001
Liquidity and Capital Resources
The Company's primary sources of cash during the six months ended June 30,
2002 were from calls of securities available for sale of approximately $3.0
million, net deposit inflow of approximately $10.0 million and proceeds from
the issuance of common stock of $812,000. Cash was used primarily for net
loan originations of $6.3 million and purchase of securities available for
sale of $2.5 million. At June 30, 2002, the Company had outstanding
commitments to fund existing and new loans of $5.3 million and time deposits
of $18.5 million that mature in one year or less. It is expected that these
requirements will be funded from the sources described above. At June 30,
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:
Six Months Six Months
Ended Year Ended Ended
June 30, December 31, June 30,
2002 2001 2001
---- ---- ----
Average equity as a percentage
of average assets....................................... 8.95% 12.36% 13.14%
Equity to total assets at end of period.................... 9.95% 9.81% 12.10%
Return on average assets (1)............................... .19% (.14)% (.16)%
Return on average equity (1)............................... 2.12% (1.17)% (1.25)%
Noninterest expenses to average assets (1)................. 3.72% 4.60% 4.59%
Nonperforming loans and foreclosed real estate to
total assets at end of period.......................... .13% NIL NIL
- ----------
<FN>
(1) Annualized for the six months ended June 30, 2002 and 2001.
</FN>
10
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; (v) net
interest margin; and (vi) ratio of average interest-earning assets to average
interest-bearing liabilities.
Three Months Ended June 30,
-----------------------------------------------------------------------
2002 2001
--------------------------------- -------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Rate Balance Dividends Rate
------- --------- ---- ------- --------- ----
(Dollars in thousands)
Interest-earning assets:
Loans....................................... $ 37,090 696 7.51% $ 23,136 509 8.80%
Securities.................................. 5,987 73 4.88 3,351 50 5.97
Other (1)................................... 3,966 16 1.61 4,696 52 4.43
-------- --- -------- ---
Total interest-earning assets........... 47,043 785 6.67 31,183 611 7.84
Noninterest-earning assets..................... 2,357 1,740
-------- --------
Total assets............................ $ 49,400 $ 32,923
======== ========
Interest-bearing liabilities:
Savings, NOW and money-market deposit
accounts................................ 12,781 67 2.10 7,537 51 2.71
Time deposits............................... 22,429 214 3.82 14,651 212 5.79
Other (2)................................... 385 1 1.04 - - -
-------- --- -------- ---
Total interest-bearing liabilities...... 35,595 282 3.17 22,188 263 4.74
--- ---
Demand deposits................................ 8,673 5,932
Noninterest-bearing liabilities................ 725 653
Stockholders' equity........................... 4,407 4,150
-------- --------
Total liabilities and stockholders'
equity.............................. $ 49,400 $ 32,923
======== ========
Net interest income............................ $ 503 $ 348
===== =====
Interest-rate spread (3)....................... 3.50% 3.10%
==== ====
Net interest margin (4)........................ 4.28% 4.46%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities........ 1.32 1.41
==== ====
- ----------
<FN>
(1) Includes federal funds sold, 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>
11
FPB BANCORP, INC. AND SUBSIDIARY
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Bank from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest income; (iv) interest-rate spread; (v) net
interest margin; and (vi) ratio of average interest-earning assets to average
interest-bearing liabilities.
Six Months Ended June 30,
---------------------------------------------------------------------
2002 2001
--------------------------------- ------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balanc Dividends Rate Balance Dividends Rate
(Dollars in thousands)
Interest-earning assets:
Loans........................................ $ 35,490 1,340 7.55% $ 21,368 963 9.01%
Securities................................... 5,627 139 4.94 4,589 153 6.67
Other (1).................................... 4,069 33 1.62 3,972 96 4.83
-------- -------- -------- -------
Total interest-earning assets............ 45,186 1,512 6.69 29,929 1,212 8.10
-------- -------
Noninterest-earning assets...................... 2,273 1,758
-------- --------
Total assets............................. $ 47,459 $ 31,687
======== ========
Interest-bearing liabilities:
Savings, NOW and money-market deposit
accounts................................. 12,343 129 2.09 7,285 114 3.13
Time deposits................................ 21,696 424 3.91 13,776 417 6.05
Other (2).................................... 443 2 .90 - - -
-------- -------- -------- -------
Total interest-bearing liabilities....... 34,482 555 3.22 21,061 531 5.04
-------- -------
Demand deposits................................. 8,042 5,872
Noninterest-bearing liabilities................. 687 591
Stockholders' equity............................ 4,248 4,163
-------- --------
Total liabilities and stockholders' equity $ 47,459 $ 31,687
Net interest income............................. $ 957 $ 681
======== =======
Interest-rate spread (3)........................ 3.47% 3.06%
==== ====
Net interest margin (4)......................... 4.24% 4.55%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities......... 1.31 1.42
==== ====
- ----------
<FN>
(1) Includes federal funds sold, 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>
12
FPB BANCORP, INC. AND SUBSIDIARY
Comparison of the Three-Month Periods Ended June 30, 2002 and 2001
General. Net earnings for the three months ended June 30, 2002, were $37,000 or
$.07 per basic and diluted share compared to net losses of $22,000 or $.04
per basic and diluted share for the period ended June 30, 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 $785,000 for the three months
ended June 30, 2002 from $611,000 for the three months ended June 30, 2001.
Interest income on loans increased to $696,000 due primarily to an increase
in the average loan portfolio balance for the three months ended June 30,
2002, partially offset by a decrease in the average yield from 8.80% for
the three months ended June 30, 2001 to 7.51% for the three months ended
June 30, 2002. Interest on securities increased to $73,000 due primarily to
an increase in the average securities portfolio, partially offset by a
decrease in the average yield during the three months ended June 30, 2002.
Interest Expense. Interest expense on deposit accounts increased to $281,000 for
the three months ended June 30, 2002, from $263,000 for the three months
ended June 30, 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 June 30, 2002, was $51,000 compared to $56,000 for
the same period in 2001. Management believes the balance in the allowance
for loan losses of $462,000 at June 30, 2002, is adequate.
Noninterest Income. Total noninterest income increased by $5,000 from $51,000
for the three months ended June 30, 2001, to $56,000 for the three months
ended June 30, 2002.
Noninterest Expenses. Total noninterest expenses increased to $447,000 for the
three months ended June 30, 2002 from $374,000 for the three months ended
June 30, 2001, primarily due to an increase in employee compensation and
benefits of $26,000, an increase in data processing expense of $18,000 and
an increase in other expenses of $22,000 all due to the continued growth of
the Company.
Income Taxes. The income tax expense for the three months ended June 30, 2002,
was $24,000 (an effective rate of 39.3%) compared to an income tax benefit
of $9,000 (an effective rate of 29.0%) for the three months ended June 30,
2001. The Company has recognized a deferred tax asset because management
believes it will realize the deferred tax asset in future periods.
13
FPB BANCORP, INC. AND SUBSIDIARY
Comparison of the Six-Month Periods Ended June 30, 2002 and 2001
General. Net earnings for the six months ended June 30, 2002, were $45,000 or
$.09 per basic and diluted share compared to net losses of $26,000 or $.05
per basic and diluted share for the period ended June 30, 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 $1.5 million for the six months
ended June 30, 2002 from $1.2 million for the six months ended June 30,
2001. Interest income on loans increased to $1.3 million due primarily to
an increase in the average loan portfolio balance for the six months ended
June 30, 2002, partially offset by a decrease in the average yield from
9.01% for the six months ended June 30, 2001 to 7.55% for the six months
ended June 30, 2002. Interest on securities decreased to $139,000 due
primarily to a decrease in the average yield, partially offset by an
increase in the average securities portfolio during the six months ended
June 30, 2002.
Interest Expense. Interest expense on deposit accounts increased to $553,000 for
the six months ended June 30, 2002, from $531,000 for the six months ended
June 30, 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 six months ended June 30, 2002, was $106,000 compared to $97,000 for
the same period in 2001. The increase in the provision for loan losses in
2002 is due to the increased portfolio balance in 2002. Management believes
the balance in the allowance for loan losses of $462,000 at June 30, 2002,
is adequate.
Noninterest Income. Total noninterest income increased by $4,000 from $106,000
for the six months ended June 30, 2001, to $110,000 for the six months
ended June 30, 2002.
Noninterest Expenses. Total noninterest expenses increased to $885,000 for the
six months ended June 30, 2002 from $727,000 for the six months ended June
30, 2001, primarily due to an increase in employee compensation and
benefits of $73,000 and an increase in data processing expense of $39,000
all due to the continued growth of the Company.
Income Taxes. The income tax expense for the six months ended June 30, 2002, was
$31,000 (an effective rate of 40.8%) compared to an income tax benefit of
$11,000 (an effective rate of 29.7%) for the six months ended June 30,
2001. The Company has recognized a deferred tax asset because management
believes it will realize the deferred tax asset in future periods.
14
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 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders (the "Annual Meeting") of FPB Bancorp, Inc.
was held on April 24, 2002 to consider the election of three Class II directors
each for a term of three years and to approve the appointment of Hacker, Johnson
& Smith PA as the Company's independent auditors for the fiscal year 2002. At
the Annual Meeting, incumbent directors Gary A. Berger, Robert L. Schweiger, and
David W. Skiles were reelected. The terms of Directors James L. Autin M.D., John
R. Baker, Donald J. Cuozzo, Ann L. Decker, Paul J. Miret, Robert L. Seeley,
Thomas Warner and Paul A. Zinter continued after the Annual Meeting. Also,
Hacker, Johnson & Smith PA was appointed as the Company's independent auditors
for the fiscal year 2002.
At the Annual Meeting, 284,634 shares were present in person or by proxy. The
following is a summary and tabulation of the matters that were voted upon at the
Annual Meeting:
Proposal I.
The election of three Class II directors, each for a term of three years:
For Withheld Against
--- -------- -------
Gary A. Berger 284,605 29 -
======= ===== ===
Robert L. Schweiger 275,905 8,729 -
======= ===== ===
David W. Skiles 284,580 54 -
======= ===== ===
Proposal II.
The appointment of Hacker, Johnson & Smith PA as the Company's independent
auditors for the fiscal year 2002:
For Withheld Against
--- -------- -------
282,934 1,400 300
15
FPB BANCORP, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
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 marked with an asterisk (*) 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
99.1 Certification of CEO and CFO pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K. There were no Form 8-K's filed during the three
months ended June 30, 2002.
16
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: August 8, 2002 By: /s/ David W. Skiles
- --------------------- --------------------------------------
David W. Skiles, President and Chief
Executive Officer
Date: August 8, 2002 By: /s/ Nancy E. Aumack
- --------------------- --------------------------------------
Nancy E. Aumack, Senior Vice President and
Chief Financial Officer
17