1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended Commission File Number
MARCH 31, 1997 0-29132
TIB FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
FLORIDA 65-0655973
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
99451 OVERSEAS HIGHWAY, KEY LARGO, FLORIDA 33037-7808
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 305-451-4660
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock, $0.10 Par Value 4,356,054
- ----------------------------- ------------------------------
Class Outstanding as of May 31, 1997
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
TIB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITIONS
(Unaudited)
March 31, 1997 December 31, 1996
-------------- -----------------
ASSETS
Cash and due from banks $ 13,094,240 $ 12,109,935
Federal funds sold 15,381,000 1,810,000
Investment securities held to maturity
(market value of $20,506,333
and $14,691,930, respectively) 20,364,560 14,387,276
Investment securities available for sale 33,424,193 36,490,481
Loans, net of deferred loan fees 173,471,397 164,544,622
Less: Allowance for loan losses 2,001,115 1,929,719
------------ ------------
Loans, net 171,470,282 162,614,903
Premises and equipment, net 8,175,703 8,221,676
Accrued interest receivable 1,954,389 1,680,743
Intangible assets, net 376,377 343,796
Other assets 1,661,718 3,391,743
------------ ------------
TOTAL ASSETS $265,902,462 $241,050,553
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing demand $ 49,927,404 $ 42,929,774
Interest-bearing demand and money market 96,382,187 66,340,839
Savings 16,273,644 16,220,162
Time deposits of $100,000 or more 26,602,159 28,370,281
Other time deposits 48,579,333 51,122,524
------------ ------------
Total Deposits 237,764,727 204,983,580
Short-term borrowings 2,126,302 11,091,426
Accrued interest payable 1,795,066 1,743,654
Other liabilities 1,117,761 610,976
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TOTAL LIABILITIES 242,803,856 218,429,636
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STOCKHOLDERS' EQUITY
Common stock - $.10 par value:
5,000,000 shares authorized,
4,350,054 and 4,322,364 shares
issued and outstanding 435,005 432,236
Surplus 6,289,511 6,140,199
Retained earnings 16,558,090 16,207,233
Market valuation reserve on investment
securities available for sale (184,000) (158,751)
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TOTAL STOCKHOLDERS' EQUITY 23,098,606 22,620,917
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $265,902,462 $241,050,553
============ ============
(See notes to consolidated financial statements)
3
TIB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the three month period ended March 31,
INTEREST INCOME 1997 1996
---------- ----------
Loans, including fees $4,011,215 $3,558,439
Investment securities:
U.S. Treasury securities 425,288 479,350
U.S. Government agencies and corporations 232,923 302,223
States and political subdivisions 86,699 99,573
Other investments 11,031 11,031
Federal funds sold 131,278 38,585
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TOTAL INTEREST INCOME 4,898,434 4,489,201
---------- ----------
INTEREST EXPENSE
Interest-bearing demand and money market 500,043 208,929
Savings 247,239 312,758
Time deposits of $100,000 or more 373,808 343,233
Other time deposits 663,325 689,530
Short-term borrowings 17,814 20,494
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TOTAL INTEREST EXPENSE 1,802,229 1,574,944
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NET INTEREST INCOME 3,096,205 2,914,257
PROVISION FOR LOAN LOSSES 75,000 60,000
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NET INTEREST INCOME AFTER PROVISION FOR 3,021,205 2,854,257
LOAN LOSSES
OTHER INCOME
Service charges on deposit accounts 377,982 294,589
Investment securities gains, net - 8,772
Merchant bank card processing income 161,270 147,794
Gain on sale of SBA loans 15,669 9,326
Fees on mortgage loans sold at origination 64,900 89,547
Other income 44,679 40,106
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TOTAL OTHER INCOME 664,500 590,134
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OTHER EXPENSE
Salaries and employee benefits 1,494,954 1,345,016
Net occupancy expense 443,837 408,422
Other expense 596,140 551,770
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TOTAL OTHER EXPENSE 2,534.931 2,305,208
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INCOME BEFORE INCOME TAX EXPENSE 1,150,774 1,139,183
INCOME TAX EXPENSE 364,912 394,725
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NET INCOME $ 785,862 $ 744,458
========== ==========
EARNINGS PER SHARE $ 0.17 $ 0.17
========== ==========
(See notes to consolidated financial statements)
4
TIB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Unaudited)
For the three month period ended March 31,
1997 1996
----------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 785,862 $ 744,458
Adjustments to reconcile net income
to net cash provided by operating activities:
Net amortization of investments 43,897 55,689
Amortization of intangible assets 15,762 12,637
Depreciation of premises and equipment 194,864 178,452
Provision for loan losses 75,000 60,000
Deferred income tax provision (benefit) - (65,200)
Deferred net loan fees (9,719) (21,713)
Investment securities (gains), net - (8,772)
(Gain) loss on sales of premises and equipment (485) 63
Gains on sales of SBA loans, net (15,669) (9,326)
Increase in interest receivable (273,646) (377,025)
Increase (decrease) in interest payable 51,412 (7,287)
Increase in intangible assets (48,343) (6,331)
Decrease in other assets 1,745,367 347,912
Increase in other liabilities 504,016 320,647
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NET CASH PROVIDED BY OPERATING ACTIVITIES 3,068,318 1,224,204
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities held to maturity (7,971,562) (5,951,250)
Repayments of principal and maturities of investment
securities available for sale 2,976,078 3,127,116
Maturities of investment securities held to maturity 2,000,000 1,000,000
Proceeds from sales of SBA loans 824,555 214,500
Loans originated or acquired, net of principal repayments (9,729,546) (5,647,029)
Purchases of premises and equipment (149,356) (95,612)
Sales of premises and equipment 950 1,410
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NET CASH USED BY INVESTING ACTIVITIES (12,048,881) (7,350,865)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in federal funds purchased and securities
sold under agreements to repurchase (8,965,124) (2,385,253)
Net increase in demand, money market and savings accounts 37,092,460 12,727,749
Time deposits accepted, net of repayments (4,311,313) 775,514
Proceeds from exercise of stock options and warrants 152,081 62,604
Cash dividends paid (432,236) (8,768)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 23,535,868 11,171,846
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NET INCREASE
IN CASH AND CASH EQUIVALENTS 14,555,305 5,045,185
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 13,919,935 9,129,945
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CASH AND CASH EQUIVALENTS
END OF YEAR $28,475,240 $14,175,130
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH PAID:
Interest $ 1,750,817 $ 1,582,231
=========== ===========
Income taxes $ - $ 31,000
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(See notes to consolidated financial statements)
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TIB FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements for TIB Financial
Corporation (the "Company) have been prepared in accordance with generally
accepted accounting principles for interim financial information and Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statement presentation. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months ended
March 31, 1997 are not necessarily indicative of trends or results to be
expected for the year ended December 31, 1997. For further information, refer
to the Company's consolidated financial statements and footnotes thereto for
the year ended December 31, 1996.
The consolidated statements include the accounts of TIB Financial Corporation
and its wholly-owned subsidiary, TIB Bank of the Keys, collectively known as
the Company. All significant intercompany accounts and transactions have been
eliminated in consolidation.
Certain amounts previously reported on have been reclassified to conform with
current period presentation.
NOTE 2 - LOANS
Loans are reported at the gross amount outstanding, reduced by net deferred
loan fees and a valuation allowance for loan losses. Interest income on loans
is recognized over the terms of the loans based on the unpaid daily principal
amount outstanding. If the collectibility of interest appears doubtful, the
accrual thereof is discontinued. Loan origination fees, net of direct loan
origination costs, are deferred and recognized as income over the life of the
related loan on a level-yield basis. Gains on sales of SBA loans are
recognized as income when the sale occurs.
Major classifications of loans are as follows:
March 31, 1997 December 31, 1996
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Commercial, financial and agricultural $113,575,682 $109,371,570
Construction loans 9,436,091 7,391,050
Residential real estate 42,928,571 40,834,718
Consumer loans 8,127,849 7,553,799
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Total loans 174,068,193 165,151,137
Net deferred loan fees 596,796 606,515
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Loans, net of deferred loan fees $173,471,397 $164,544,622
============ ============
NOTE 3 - ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through a provision for loan
losses charged to expense. The allowance represents an amount which, in
management's judgment, will be adequate to absorb probable losses on existing
loans that may become uncollectible. Management's judgment in determining the
adequacy of the allowance is based on evaluations of the collectibility of loans
and takes into consideration such factors as changes in the nature and volume of
the loan portfolio, current economic conditions that may affect the borrower's
ability to pay, overall portfolio quality and review of specific problem loans.
Periodic revisions are made to the allowance when circumstances which
necessitate such revisions become
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known. Recognized losses are charged to the allowance for loan losses, while
subsequent recoveries are added to the allowance.
Activity in the allowance of loan losses for the three months ended March 31,
1997 and March 31, 1996 follows:
March 31, 1997 March 31, 1996
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Balance, January 1 $1,929,719 $1,700,823
Provision charged to expense 75,000 60,000
Loans charged off (3,756) -
Recoveries of loans previously charged off 152 200
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Balance, March 31 $2,001,115 $1,761,023
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NOTE 4 - INVESTMENT SECURITIES
Securities available-for-sale are securities which management believes may be
sold prior to maturity for liquidity or other reasons and are reported at fair
value, with unrealized gains and losses, net of related income taxes, reported
as a separate component of stockholders' equity. Securities held-to-maturity
are those securities for which management has both the ability and intent to
hold to maturity and are carried at amortized cost.
The amortized cost and estimated market value of investment securities
held-to-maturity at March 31, 1997 and December 31, 1996 are presented below:
1997
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Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------ ---------- ---------- -----------
U.S. Treasury Securities $13,939,985 $ - $ 90,305 $13,849,680
States and political subdivisions 5,356,402 246,066 16,285 5,586,183
U.S. Government agencies and
corporations 993,173 2,297 - 995,470
Other investments 75,000 - - 75,000
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$20,364,560 $248,363 $106,590 $20,506,333
=========== ======== ======== ===========
1996
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Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ---------- --------- -----------
U.S. Treasury Securities $ 7,964,622 $ 1,017 $ 6,579 $ 7,959,060
States and political subdivisions 5,354,837 303,029 776 5,657,090
U.S. Government agencies and
corporations 992,817 7,963 - 1,000,780
Other investments 75,000 - - 75,000
----------- -------- -------- -----------
$14,387,276 $312,009 $ 7,355 $14,691,930
=========== ======== ======== ===========
The amortized cost and estimated market value of investment securities
available for sale at March 31, 1997 and December 31, 1996 are presented below:
1997
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Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------ ---------- ---------- -----------
U.S. Treasury Securities $20,174,666 $ 9,652 $202,593 $19,981,725
Mortgage-backed securities 13,095,036 13,552 144,078 12,964,510
Other debt securities 449,491 28,467 - 477,958
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$33,719,193 $51,671 $346,671 $33,424,193
=========== ======= ======== ===========
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1996
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Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---------- ---------- ----------- -----------
U.S. Treasury Securities $21,219,561 $22,458 $129,679 $21,112,340
Mortgage-backed securities 15,075,896 25,846 207,688 14,894,054
Other debt securities 449,433 34,654 - 484,087
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$36,744,890 $82,958 $337,367 $36,490,481
=========== ======= ======== ===========
Other investments at March 31, 1997 and December 31, 1996 consists of stock in
the Independent Bankers Bank of Florida. Other debt securities at March 31,
1997 and December 31, 1996 consists of corporate debt securities.
NOTE 5 - EARNINGS PER SHARE AND COMMON STOCK
Earnings per share has been computed based on the weighted average number of
common shares outstanding during the period, which totaled 4,520,255 and
4,468,002 shares in 1997 and 1996, respectively. Stock options and warrants
are considered to be common stock equivalents for purposes of calculating
earnings per share. A 3 for 1 stock split was declared on February 25, 1997
and has been treated retroactively as occurring on January 1, 1996, for
earnings per share computation purposes and has been reflected in the balance
sheet as of December 31, 1996.
NOTE 6 - STOCK BASED COMPENSATION
Under the Bank's 1994 Incentive Stock Option and Nonstatutory Stock Option Plan
("the Plan"), the Company may grant stock options to persons who are now or who
during the term of the Plan become directors, officers, or key executives as
defined by the Plan. Stock options granted under the Plan may either be
incentive stock options or nonqualified stock options for federal income tax
purposes. The Board of Directors of the company may grant nonqualified stock
options to any director, and incentive stock options or nonqualified stock
options to any officer, key executive, administrative, or other employee
including an employee who is a director of the Company. Subject to the
provisions of the Plan, the maximum number of shares of common stock of the
Company that may be optioned or sold is 978,000 shares. Such shares may be
treasury, or authorized, but unissued, shares of common stock of the Company.
Total options issued and exercised during the three months ended March 31, 1997
were 32,000 and 27,690, respectively.
NOTE 7 - NEW ACCOUNTING PRONOUNCEMENTS
In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS
125"), which prescribes accounting standards to be followed when the Company
transfers control over financial assets to third parties. SFAS 125 is effective
for the Company for transactions occurring after December 31, 1996; however, the
FASB has delayed implementation of certain of the provisions of SFAS 125 for one
year. The Company does not believe this Statement will have a significant
impact on its financial statements based upon the current scope of the Company's
operations.
On March 3, 1997, FASB issued SFAS 128, "Earnings per Share" and SFAS 129,
"Disclosure of Information about Capital Structure." SFAS 128 changes the
methods for calculation of earnings per share and is effective for financial
statements issued for both interim and annual periods ending after December 15,
1997. If this pronouncement had been adopted, the earnings per share for the
first quarter of 1997 and 1996 would have been $0.18 and $0.17, respectively.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion addresses the factors that have affected the financial
condition and results of operations of TIB Financial Corporation (the
"Company") as reflected in the unaudited consolidated financial statements for
the three months ended March 31, 1997 and 1996. The Company's operating
subsidiary is TIB Bank of the Keys.
The Company's net income of $785,862 for the first quarter of 1997 was a 5.6%
increase compared to $744,458 for the same period last year. The increase in
net income is attributed to an increase of $181,948, or 6.2%, in net interest
income; an increase of $74,366, or 12.6%, in other income; a decrease in income
tax expense of $29,813; offset by an increase of $15,000 in the provision for
loan losses and an increase in other expense of $229,723, or 10.0%. Earnings
per share remained at $0.17 in the first quarter of 1997 compared to the first
quarter of 1996. Book value per share increased to $5.31 at March 31, 1997
from $5.23 at December 31, 1996.
Annualized return on average equity for the three months ended March 31, 1997
was 13.7% on average equity of $22,978,000, compared to 13.2% on average equity
of $22,601,132 for the same period in 1996. Annualized return on average
assets of $253,476,508 for the three months ended March 31, 1997 was 1.24%,
compared to 1.32% on average assets of $225,520,485 for the same period in
1996, due to strong asset growth in the first quarter of 1997 exceeding a more
moderate increase in earnings.
Net interest income increased 6.2% to $3.1 million, in the quarter ended March
31, 1997 as compared to the same period last year primarily as a result of a
higher level of earning assets. Interest from loans increased to $4.0 million
for the first quarter of 1997 compared to $3.6 million for the comparable
period last year. Loan growth was achieved in all major classifications during
the first quarter of 1997 reflecting a strong local economy. The establishment
of a very competitive money market account at the end of 1996 has continued to
attract substantial deposits and has increased interest expense. This has led
to the Company's net interest margin declining slightly to 5.45% in the first
quarter 1997 compared to 5.81% in the first quarter 1996.
Provision for loan losses increased slightly to $75,000 from $60,000 for the
respective first quarters of 1997 and 1996. Gross charged off loans for the
first quarter were $3,756 offset by recoveries of $152, resulting in an
annualized net charge-off rate of .01% of total loans. This compares to a net
recovery during the same period last year of $200. At March 31, 1997, the
Company had aggregate non-accrual loans of $356,386 compared to $430,367 at
December 31, 1996. The ratio of non-performing loans (including loans 90 days
or more past due and still accruing) to total outstanding loans was 0.20% at
March 31, 1997 compared to 0.26% at December 31, 1996.
Other income increased $74,366 to $664,500 for the three month period ended
March 31, 1997 from $590,134 in the comparable period last year. Increased
service charges on deposit accounts accounted for $83,393 of this increase
offset by a reduction of $24,647 in mortgage loan origination fees. Other
expense increased 10.0% in the first three months of 1997 as compared to the
prior year period, mostly as a result of increased personnel expenses. Growth
during the latter half of 1996 and early 1997 prompted some staffing additions.
Total assets at March 31, 1997 were $265,902,462, up from total assets of
$241,050,553 at December 31, 1996. Loans net of deferred loan fees increased
$8,926,775 for the first quarter of 1997 from year end 1996. Also, in the same
period, federal funds sold increased $13,571,000 and investment securities
increased $2,910,996. These increases were funded by a deposit increase of
$32,781,147 offset by a decrease in short-term borrowings of $8,965,124.
At March 31, 1997, the Company had $2,126,302 in short-term borrowings compared
to $11,091,426 at year ended December 31, 1996. Short-term borrowings include
$691,921 in securities sold under
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agreements to repurchase and $1,434,381 in Treasury tax deposits. This decrease
in short-term borrowings reflects the effects of seasonal inflows of deposits
along with strong growth in new accounts.
CAPITAL ADEQUACY
Federal banking regulators have established certain capital adequacy standards
required to be maintained by banks and bank holding companies. These
regulations establish minimum requirements for risk-based capital of 4% for
core capital (tier I), 8% for total risk-based capital and 3% for the leverage
ratio. At March 31, 1997, the Company's tier I risk-based capital was 13.6%
and total risk-based capital was 14.7%, compared to 13.5% and 14.7% at
year-ended December 31, 1996, respectively. At March 31, 1997 the Company's
leverage ratio was 9.1% compared to 9.7% at December 31, 1996. This change is
due to strong asset growth exceeding a smaller increase in retained earnings.
The Company does not have any commitments which it believes would reduce its
capital to levels inconsistent with the regulatory definition of a 'well
capitalized' financial institution.
LIQUIDITY
The goal of liquidity management is to ensure the availability of an adequate
level of funds to meet the loan demand and deposit withdrawal needs of the
Company's customers. The Company does not anticipate any events which would
require liquidity beyond that which is available through deposit growth,
federal funds balances, or investment portfolio maturities. The Company
actively manages the levels, types and maturities of earning assets in relation
to the sources available to fund current and future needs to ensure that
adequate funding will be available at all times.
10
Part II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11 - Computation of Earnings Per Share (SEC use only)
Exhibit 27 - Financial Data Schedule (SEC use only)
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 1997
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TIB FINANCIAL CORP.
/s/ Edward V. Lett
-------------------------------
Date: July 1, 1997 Edward V. Lett
------------- President and Chief Executive Officer