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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 September 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)
(772) 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 [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 813,517 shares
- -------------------------------------- -------------------------------
(class) Outstanding at October 21, 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 -
September 30, 2002 (unaudited) and December 31, 2001.....................................................2
Condensed Consolidated Statements of Operations -
Three and Nine Months ended September 30, 2002 and 2001 (unaudited)......................................3
Condensed Consolidated Statements of Stockholders' Equity -
Nine Months ended September 30, 2002 and 2001 (unaudited)................................................4
Condensed Consolidated Statements of Cash Flows -
Nine Months ended September 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
Item 3. Controls and Procedures............................................................................15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..................................................................................15
Item 6. Exhibits and Reports on Form 8-K...................................................................15
SIGNATURES.....................................................................................................16
CERTIFICATIONS..............................................................................................16-18
1
FPB BANCORP, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(Dollars in thousands)
September 30, December 31,
------------- ------------
Assets 2002 2001
---- ----
(unaudited)
Cash and due from banks .................................................................. $ 2,688 2,095
Federal funds sold ....................................................................... 5,475 353
-------- --------
Total cash and cash equivalents ............................................ 8,163 2,448
Time deposit ............................................................................. -- 100
Securities available for sale ............................................................ 6,362 4,496
Securities held to maturity .............................................................. 629 983
Loans, net of allowance for loan losses of $495 and $359 ................................ 38,900 32,215
Premises and equipment, net .............................................................. 642 616
Federal Home Loan Bank stock, at cost .................................................... 80 80
Accrued interest receivable .............................................................. 224 211
Deferred income taxes .................................................................... 384 444
Other assets ............................................................................. 183 113
-------- --------
Total assets ............................................................... $ 55,567 41,706
======== ========
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits .................................................. 9,416 6,825
Savings, NOW and money-market deposits ............................................... 14,650 11,256
Time deposits ........................................................................ 23,385 15,912
-------- --------
Total deposits ............................................................. 47,451 33,993
Federal funds purchased .............................................................. -- 1,500
Federal Home Loan Bank advance ....................................................... -- 1,000
Notes payable ........................................................................ -- 342
Official checks ...................................................................... 732 742
Other liabilities .................................................................... 91 39
-------- --------
Total liabilities .......................................................... 48,274 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,
813,517 and 489,410 shares issued and outstanding ............................... 8 5
Additional paid-in capital ........................................................... 7,955 4,846
Accumulated deficit .................................................................. (707) (761)
Accumulated other comprehensive income ............................................... 37 --
-------- --------
Total stockholders' equity ................................................. 7,293 4,090
-------- --------
Total liabilities and stockholders' equity ................................. $ 55,567 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 Nine Months Ended
September 30, September 30,
---------------------- ------------------------
2002 2001 2002 2001
---- ---- ---- ----
Interest income:
Loans ................................................................ $ 727 547 2,067 1,510
Securities ........................................................... 75 67 214 220
Other ................................................................ 29 16 62 112
-------- -------- -------- --------
Total interest income ...................................... 831 630 2,343 1,842
-------- -------- -------- --------
Interest expense:
Deposits ............................................................. 292 255 845 786
Other ................................................................ -- -- 2 --
-------- -------- -------- --------
Total interest expense ..................................... 292 255 847 786
-------- -------- -------- --------
Net interest income ...................................................... 539 375 1,496 1,056
Provision for loan losses .................................. 159 55 265 152
-------- -------- -------- --------
Net interest income after provision for loan losses ...................... 380 320 1,231 904
-------- -------- -------- --------
Noninterest income:
Service charges and fees ............................................. 53 46 152 137
Gain on sale of a security available for sale ........................ 13 -- 13 --
Other fees ........................................................... 10 4 18 17
Other ................................................................ 10 1 13 3
-------- -------- -------- --------
Total noninterest income ................................... 86 51 196 157
-------- -------- -------- --------
Noninterest expenses:
Salaries and employee benefits ....................................... 185 158 581 481
Occupancy and equipment .............................................. 68 79 231 231
Advertising .......................................................... 14 18 43 48
Professional fees .................................................... 43 29 94 68
Data processing ...................................................... 47 34 127 75
Insurance expense .................................................... 6 5 17 18
Supplies ............................................................. 7 9 32 30
Other ................................................................ 80 51 210 159
-------- -------- -------- --------
Total noninterest expenses ................................. 450 383 1,335 1,110
-------- -------- -------- --------
Earnings (loss) before income taxes ...................................... 16 (12) 92 (49)
Income taxes (benefit) ............................................... 7 (4) 38 (15)
-------- -------- -------- --------
Net earnings (loss) ...................................................... $ 9 (8) 54 (34)
======== ======== ======== ========
Earnings (loss) per share, basic and diluted ............................. $ .01 (.02) .09 (.07)
======== ======== ======== ========
Weighted-average number of shares, basic and diluted ..................... 788,305 489,410 593,562 489,410
======== ======== ======== ========
Dividends per share....................................................... $ -- -- -- --
======== ======== ======== ========
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
FPB BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Stockholders' Equity
Nine Months Ended September 30, 2001 and 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, 2000 ............................. 489,410 $ 5 4,846 (712) 5 4,144
-------
Comprehensive income:
Net loss for the nine months
ended September 30, 2001
(unaudited) ..................................... -- -- -- (34) -- (34)
Net change in unrealized gain on
securities available for sale,
net of taxes of $22 (unaudited) ................ -- -- -- -- 36 36
Comprehensive income
(unaudited) ..................................... 2
------- ------- ------- ------- ------- -------
Balance at September 30, 2001 (unaudited) ................ 489,410 $ 5 4,846 (746) 41 4,146
======= ======= ======= ======= ======= =======
Balance at December 31, 2001 ............................. 489,410 $ 5 4,846 (761) -- 4,090
-------
Comprehensive income:
Net earnings for the nine months ended
September 30, 2002 (unaudited) .................. -- -- -- 54 -- 54
Net change in unrealized gain on
securities available for sale,
net of taxes of $22 (unaudited) ................. -- -- -- -- 37 37
-------
Comprehensive income(unaudited) ..................... 91
-------
Proceeds from the issuance of common
stock (unaudited) ................................... 324,107 3 3,109 -- -- 3,112
------- ------- ------- ------- ------- -------
Balance at September 30, 2002 (unaudited) ................ 813,517 $ 8 7,955 (707) 37 7,293
======= ======= ======= ======= ======= =======
See Accompanying Notes to Condensed Consolidated Financial Statements.
4
FPB BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended
September 30,
---------------------------
2002 2001
---- ----
Cash flows from operating activities:
Net earnings (loss) ........................................................................ $ 54 (34)
Adjustments to reconcile net earnings (loss) to net cash provided by
operating activities:
Depreciation .......................................................................... 67 68
Provision for loan losses ............................................................. 265 152
Provision (credit) for deferred income taxes .......................................... 38 (15)
Net amortization of fees, premiums and discounts ...................................... 6 (4)
Gain on sale of a security available for sale ......................................... (13) --
Increase in accrued interest receivable ............................................... (13) (14)
Increase in other assets .............................................................. (70) (45)
Increase in official checks and other liabilities ..................................... 42 9
-------- --------
Net cash provided by operating activities .................................... 376 117
-------- --------
Cash flows from investing activities:
Purchase of securities available for sale .................................................. (6,578) (4,144)
Principal payments on securities available for sale ........................................ 272 55
Proceeds from the sale of a security available for sale .................................... 1,013 --
Proceeds from calls of securities available for sale ....................................... 3,500 5,997
Principal payments on securities held to maturity .......................................... 349 --
Maturity of time deposit ................................................................... 100 --
Net increase in loans ...................................................................... (6,952) (9,448)
Purchase of Federal Home Loan Bank stock ................................................... -- (1)
Purchase of premises and equipment ......................................................... (93) (26)
-------- --------
Net cash used in investing activities ........................................ (8,389) (7,567)
-------- --------
Cash flows from financing activities:
Net increase in deposits ................................................................... 13,458 3,960
Decrease in federal funds purchased ........................................................ (1,500) --
(Decrease) increase in Federal Home Loan Bank advance ...................................... (1,000) 600
Net decrease in notes payable .............................................................. (342) --
Proceeds from the issuance of common stock ................................................. 3,112 --
-------- --------
Net cash provided by financing activities .................................... 13,728 4,560
-------- --------
Net increase (decrease) in cash and cash equivalents ........................................... 5,715 (2,890)
Cash and cash equivalents at beginning of period ............................................... 2,448 4,380
-------- --------
Cash and cash equivalents at end of period ..................................................... $ 8,163 1,490
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest, net of amount capitalized of $8 in 2002 ..................................... $ 833 772
======== ========
Income taxes .......................................................................... $ -- --
======== ========
Noncash transactions:
Accumulated other comprehensive income (loss), change in
unrealized loss on securities available for sale, net of tax ..................... $ 37 36
======== ========
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. is 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 September 30, 2002, and the
results of operations for the three- and nine-month periods ended
September 30, 2002 and 2001, and cash flows for the nine month periods
ended September 30, 2002 and 2001. The results of operations for the
three and nine months ended September 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 are as follows (in thousands):
At
----------------------------
September 30, December 31,
------------- -------------
2002 2001
---- ----
Loans identified as impaired:
Gross loans with related allowances for losses recorded ................................... $ 27 -
Less allowance on these loans ............................................................. (13) -
---- ------
Net investment in impaired loans ............................................................. $ 14 -
==== ======
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- --------------------
2002 2001 2002 2001
---- ---- ---- ----
Average net investment in impaired loans ...................................... $ 130 - 66 --
===== ===== ===== =====
Interest income recognized on impaired loans................................... $ -- - 11 --
===== ===== ===== =====
Interest income received on impaired loans..................................... $ -- - 13 --
===== ===== ===== =====
The activity in the allowance for loan losses was as follows (in
thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -------------------------
2002 2001 2002 2001
---- ---- ---- ----
Balance at beginning of period ......................... $ 462 298 359 201
Provision charged to earnings .......................... 159 55 265 152
Charge-offs net of recoveries .......................... (126) (7) (129) (7)
----- ----- ----- -----
Balance at end of period ............................... $ 495 346 495 346
===== ===== ===== =====
(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
September 30, 2002 of the regulatory capital requirements and the
Bank's capital on a percentage basis:
Percentage
of Regulatory
the Bank Requirement
-------- -----------
Tier I capital to total average assets .............. 7.34% 4.00%
Tier I capital to risk-weighted assets .............. 10.71% 4.00%
Total capital to risk-weighted assets ............... 11.96% 8.00%
(4) Earnings (Loss) Per Share. Basic and diluted earnings (loss) per share are
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 September 30, 2002, and
for the three- and nine-month periods ended September 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 September 30, 2002, and
the related condensed consolidated statements of operations for the three- and
nine-month periods ended September 30, 2002 and 2001, the related condensed
consolidated statements of cash flows and stockholders' equity for the
nine-month periods ended September 30, 2002 and 2001. 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
October 25, 2002
9
FPB BANCORP, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Comparison of September 30, 2002 and December 31, 2001
Liquidity and Capital Resources
The Company's primary sources of cash during the nine months ended
September 30, 2002 were from net deposit inflow of approximately $13.5
million, proceeds from sales, prepayments and calls of securities available
for sale totaling $4.8 million and proceeds from the issuance of common
stock of $3.1 million. Cash was used primarily for net loan originations of
$7.0 million, purchase of securities available for sale of $6.6 million and
net repayment of borrowings of $2.8 million. At September 30, 2002, the
Company had outstanding commitments to fund existing and new loans of $7.7
million and time deposits of $19.2 million that mature in one year or less.
It is expected that these requirements will be funded from the sources
described above. At September 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:
Nine Months Nine Months
Ended Year Ended Ended
September 30, December 31, September 30,
2002 2001 2001
-------------- --------------- ----------------
Average equity as a percentage
of average assets....................................... 10.52% 12.36% 12.87%
Equity to total assets at end of period.................... 13.12% 9.81% 11.81%
Return on average assets (1)............................... .14% (.14)% (.14)%
Return on average equity (1)............................... 1.38% (1.17)% (1.09)%
Noninterest expenses to average assets (1)................. 3.58% 4.60% 4.58%
Nonperforming loans to total assets at end
of period.............................................. .25% NIL NIL
- ----------
<FN>
(1) Annualized for the nine months ended September 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 September 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....................................... $ 38,609 727 7.53% $ 25,424 547 8.61%
Securities.................................. 5,978 75 5.02 4,531 67 5.91
Other (1)................................... 7,053 29 1.64 1,975 16 3.24
-------- ---- ------- ----
Total interest-earning assets........... 51,640 831 6.44 31,930 630 7.89
---- ----
Noninterest-earning assets..................... 2,730 1,651
-------- -------
Total assets............................ $ 54,370 $ 33,581
======== =======
Interest-bearing liabilities:
Savings, NOW and money-market deposit
accounts................................ 14,975 79 2.11 7,277 47 2.58
Time deposits............................... 22,759 213 3.74 15,385 208 5.41
Federal Home Loan Bank advance.............. - - - 33 - -
-------- ---- -------- ----
Total interest-bearing liabilities...... 37,734 292 3.10 22,695 255 4.49
---- ----
Demand deposits................................ 8,758
Noninterest-bearing liabilities................ 669 6,736
Stockholders' equity........................... 7,209 4,150
-------- --------
Total liabilities and stockholders'
equity.............................. $ 54,370 $ 33,581
======== ========
Net interest income............................ $539 $375
==== ====
Interest-rate spread (2)....................... 3.34% 3.40%
==== ====
Net interest margin (3)........................ 4.18% 4.70%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities........ 1.37 1.41
==== ====
- ----------
<FN>
(1) Includes federal funds sold, Federal Home Loan Bank stock and time deposit.
(2) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average rate of interest-bearing
liabilities.
(3) 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 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.
Nine Months Ended September 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....................................... $ 36,727 2,067 7.50% $ 22,720 1,510 8.86%
Securities.................................. 5,745 214 4.97 4,570 220 6.42
Other (1)................................... 5,075 62 1.63 3,306 112 4.52
-------- ----- -------- -----
Total interest-earning assets........... 47,547 2,343 6.57 30,596 1,842 8.03
----- -----
Noninterest-earning assets..................... 2,239 1,722
-------- --------
Total assets............................ $ 49,786 $ 32,318
======== ========
Interest-bearing liabilities:
Savings, NOW and money-market deposit
accounts................................ 13,230 208 2.10 7,282 161 2.95
Time deposits............................... 22,054 637 3.85 14,313 625 5.82
Other (2)................................... 296 2 .90 11 - -
-------- ----- -------- -----
Total interest-bearing liabilities...... 35,580 847 3.17 21,606 786 4.85
-------- ----- -------- -----
Demand deposits................................ 8,293
Noninterest-bearing liabilities................ 678 6,554
Stockholders' equity........................... 5,235 4,158
-------- --------
Total liabilities and stockholders'
equity.............................. $ 49,786 $ 32,318
======== ========
Net interest income............................ $1,496 $1,056
====== ======
Interest-rate spread (3)....................... 3.40% 3.18%
==== ====
Net interest margin (4)........................ 4.20% 4.60%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities........ 1.34 1.42
==== ====
- ----------
<FN>
(1) Includes federal funds sold, Federal Home Loan Bank stock and time deposit.
(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 September 30, 2002 and 2001
General. Net earnings for the three months ended September 30, 2002, were $9,000
or $.01 per basic and diluted share compared to net losses of $8,000 or
$.02 per basic and diluted share for the period ended September 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 the provision for loan losses and noninterest expense, all of which were
due to the overall growth of the Company.
Interest Income. Interest income increased to $831,000 for the three months
ended September 30, 2002 from $630,000 for the three months ended September
30, 2001. Interest income on loans increased to $727,000 due primarily to
an increase in the average loan portfolio balance for the three months
ended September 30, 2002, partially offset by a decrease in the average
yield earned from 8.61% for the three months ended September 30, 2001 to
7.53% for the three months ended September 30, 2002. Interest on securities
increased to $75,000 due primarily to an increase in the average securities
portfolio, partially offset by a decrease in the average yield earned
during the three months ended September 30, 2002.
Interest Expense. Interest expense on deposit accounts increased to $292,000 for
the three months ended September 30, 2002, from $255,000 for the three
months ended September 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 September 30, 2002, was $159,000 compared to $55,000
for the same period in 2001. The increase in the provision was due to
charge-offs during the three months ended September 30, 2002. Management
believes the balance in the allowance for loan losses of $495,000 at
September 30, 2002, is adequate.
Noninterest Income. Total noninterest income increased by $35,000 from $51,000
for the three months ended September 30, 2001, to $86,000 for the three
months ended September 30, 2002.
Noninterest Expenses. Total noninterest expenses increased to $450,000 for the
three months ended September 30, 2002 from $383,000 for the three months
ended September 30, 2001, primarily due to an increase in employee
compensation and benefits of $27,000, an increase in professional fees of
$14,000, an increase in data processing expense of $13,000 and an increase
in other expenses of $13,000 all due to the continued growth of the
Company.
Income Taxes. The income tax expense for the three months ended September 30,
2002, was $7,000 (an effective rate of 43.8%) compared to an income tax
benefit of $4,000 (an effective rate of 33.3%) for the three months ended
September 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 Nine-Month Periods Ended September 30, 2002 and 2001
General. Net earnings for the nine months ended September 30, 2002, were $54,000
or $.09 per basic and diluted share compared to net losses of $34,000 or
$.07 per basic and diluted share for the period ended September 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, all due to the continued growth of the Company.
Interest Income. Interest income increased to $2.3 million for the nine months
ended September 30, 2002 from $1.8 million for the nine months ended
September 30, 2001. Interest income on loans increased to $2.1 million due
primarily to an increase in the average loan portfolio balance for the nine
months ended September 30, 2002, partially offset by a decrease in the
average yield earned from 8.86% for the nine months ended September 30,
2001 to 7.50% for the nine months ended September 30, 2002. Interest on
securities decreased to $214,000 due primarily to a decrease in the average
yield earned, partially offset by an increase in the average securities
portfolio during the nine months ended September 30, 2002.
Interest Expense. Interest expense on deposit accounts increased to $845,000 for
the nine months ended September 30, 2002, from $786,000 for the nine months
ended September 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 nine months ended September 30, 2002, was $265,000 compared to $152,000
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 as well as from
charge-offs made during the 2002 period. Management believes the balance in
the allowance for loan losses of $495,000 at September 30, 2002, is
adequate.
Noninterest Income. Total noninterest income increased by $39,000 from $157,000
for the nine months ended September 30, 2001, to $196,000 for the nine
months ended September 30, 2002 primarily due to an increase in service
charges and fees of $15,000 and a gain on the sale of a security available
for sale of $13,000 with no corresponding amount in 2001.
Noninterest Expenses. Total noninterest expenses increased to $1.3 million for
the nine months ended September 30, 2002 from $1.1 million for the nine
months ended September 30, 2001, primarily due to an increase in employee
compensation and benefits of $100,000, an increase in data processing
expense of $52,000 and an increase in other expenses of $73,000 all due to
the continued growth of the Company.
Income Taxes. The income tax expense for the nine months ended September 30,
2002, was $38,000 (an effective rate of 41.3%) compared to an income tax
benefit of $15,000 (an effective rate of 30.6%) for the nine months ended
September 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
Item 3. Controls and Procedures
a. Evaluation of disclosure controls and procedures. The Company maintains
---------------------------------------------------
controls and procedures designed to ensure that information required to be
disclosed in the reports that the Company files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission. Based upon their evaluation of those
controls and procedures performed within 90 days of the filing date of this
report, the chief executive and chief financial officers of the Company
concluded that the Company's disclosure controls and procedures were
adequate.
b. Changes in internal controls. The Company made no significant changes in
------------------------------
its internal controls or in other factors that could significantly affect
these controls subsequent to the date of the evaluation of those controls
by the Chief Executive and Chief Financial officers.
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 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 CEO Certification required under Section 906 of
Sarbanes-Oxley Act of 2002
99.2 CFO Certification required under Section 906 of
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K. There were no Form 8-K's filed during the three months
ended September 30, 2002.
15
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: November , 2002 By: /s/ David W. Skiles
------------------------------ ---------------------------------------------
David W. Skiles, President and Chief
Executive Officer
Date: November , 2002 By: /s/ Nancy E. Aumack
------------------------------- ---------------------------------------------
Nancy E. Aumack, Senior Vice President and
Chief Financial Officer
CERTIFICATIONS
--------------
I, David W. Skiles, certify, that:
1. I have reviewed this quarterly report on Form 10-QSB of FPB Bancorp, Inc.;
2. Based on my knowledge, the quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
16
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of the
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses
in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect the internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November , 2002 By: /s/ David W. Skiles
-------------------------------- --------------------------------
David W. Skiles, President
and Chief Executive Officer
I, Nancy E. Aumack, certify, that:
1. I have reviewed this quarterly report on Form 10-QSB of FPB Bancorp, Inc.;
2. Based on my knowledge, the quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
17
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of the
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses
in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect the internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November , 2002 By: /s/ Nancy E. Aumack
-------------------- ---------------------------------------------
Nancy E. Aumack, Senior Vice
President and Chief Financial Officer
18