<PAGE> 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
JUNE 30, 1998 0-29132
TIB FINANCIAL CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 65-0655973
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
99451 OVERSEAS HIGHWAY, KEY LARGO, FLORIDA 33037-7808
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 305-451-4660
Not Applicable
- --------------------------------------------------------------------------------
(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
----------- ------------
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 4,442,145
- ---------------------------------------- -------------------------------
Class Outstanding as of July 31, 1998
<PAGE> 2
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
TIB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 16,623,913 $ 12,554,285
Federal funds sold 10,832,000 12,275,000
Investment securities held to maturity (market value of $64,560,080 and
$36,674,391, respectively) 63,949,340 36,218,073
Investment securities available for sale 17,117,123 18,471,445
Loans, net of deferred loan fees 201,342,543 185,746,103
Less: Allowance for loan losses 2,365,588 2,201,974
------------ -----------
Loans, net 198,976,955 183,544,129
Premises and equipment, net 9,941,395 10,034,088
Accrued interest receivable 2,067,788 1,750,703
Intangible assets 429,452 425,497
Other assets 4,726,182 2,685,600
============ ============
TOTAL ASSETS $324,664,148 $277,958,820
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing demand $ 62,254,560 $ 52,060,404
Interest-bearing demand and money market 143,354,546 116,679,922
Savings 14,637,313 13,092,101
Time deposits of $100,000 or more 22,725,621 22,358,564
Other time deposits 50,244,137 44,630,828
------------ ------------
Total Deposits 293,216,177 248,821,819
Short-term borrowings 1,990,967 2,007,178
Accrued interest payable 2,001,073 1,747,904
Other liabilities 1,385,623 818,362
------------ ------------
TOTAL LIABILITIES 298,593,840 253,395,263
------------ ------------
STOCKHOLDERS' EQUITY
Common stock - $.10 par value: 7,500,000 shares authorized, 4,442,145
and 4,371,954 shares issued and outstanding 444,215 437,195
Surplus 7,138,153 6,507,072
Retained earnings 18,478,540 17,668,290
Accumulated other comprehensive income - market valuation reserve on
investment securities 9,400 (49,000)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 26,070,308 24,563,557
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $324,664,148 $277,958,820
============ ============
</TABLE>
(See notes to consolidated financial statements)
<PAGE> 3
TIB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
INTEREST INCOME 1998 1997 1998 1997
--------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
Loans, including fees $ 4,496,399 $ 4,165,034 $ 8,822,185 $ 8,176,249
Investment securities:
U.S. Treasury securities 335,061 494,223 693,154 919,511
U.S. Government agencies and corporations 629,012 217,854 990,705 450,777
States and political subdivisions 160,533 90,661 278,230 177,360
Other investments 26,000 11,031 51,343 22,062
Federal funds sold 274,039 170,927 619,711 302,205
--------------- -------------- ------------- -------------
TOTAL INTEREST INCOME 5,921,044 5,149,730 11,455,328 10,048,164
--------------- -------------- ------------- -------------
INTEREST EXPENSE
Interest-bearing demand and money market 1,305,592 737,242 2,453,998 1,237,285
Savings 138,987 202,227 283,799 449,466
Time deposits of $100,000 or more 412,083 353,968 724,093 727,776
Other time deposits 616,098 640,804 1,232,976 1,304,129
Short-term borrowings 9,741 16,020 23,077 33,834
--------------- ------------- ------------- -------------
TOTAL INTEREST EXPENSE 2,482,501 1,950,261 4,717,943 3,752,490
--------------- -------------- ------------- -------------
NET INTEREST INCOME 3,438,543 3,199,469 6,737,385 6,295,674
--------------- -------------- ------------- -------------
PROVISION FOR LOAN LOSSES 90,000 75,000 180,000 150,000
--------------- -------------- ------------- -------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,348,543 3,124,469 6,557,385 6,145,674
OTHER INCOME
Service charges on deposit accounts 397,807 401,648 827,650 759,847
Merchant bank card processing income 571,578 573,883 1,226,440 1,093,457
Gain on sale of government guaranteed loans 106,698 109,237 455,987 124,906
Fees on mortgage loans sold at origination 168,276 86,557 262,732 151,457
Retail investment services 196,512 97,317 277,401 102,628
Other income 116,671 77,145 221,900 139,503
--------------- -------------- ------------- -------------
TOTAL OTHER INCOME 1,557,542 1,345,787 3,272,110 2,371,798
--------------- -------------- ------------- -------------
OTHER EXPENSE
Salaries and employee benefits 1,703,805 1,573,376 3,604,411 3,070,986
Net occupancy expense 529,886 440,639 1,045,860 884,476
Other expense 1,326,130 1,189,922 2,553,304 2,144,917
--------------- -------------- ------------- -------------
TOTAL OTHER EXPENSE 3,559,821 3,203,937 7,203,575 6,100,379
--------------- -------------- ------------- -------------
INCOME BEFORE INCOME TAX EXPENSE 1,346,264 1,266,319 2,625,920 2,417,093
INCOME TAX EXPENSE 475,000 420,488 929,600 785,400
--------------- -------------- ------------- -------------
NET INCOME $ 871,264 $ 845,831 $ 1,696,320 $ 1,631,693
=============== ============== ============= =============
BASIC EARNINGS PER SHARE $0.20 $0.19 $0.39 $0.38
DILUTED EARNINGS PER SHARE $0.19 $0.18 $0.37 $0.36
</TABLE>
(See notes to consolidated financial statements)
<PAGE> 4
TIB FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive
Income -
Market
Comprehensive Retained Valuation Common
Total Income Earnings Reserve Stock Surplus
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 $24,563,557 $17,668,290 $(49,000) $437,195 $6,507,072
Comprehensive Income
Net Income 1,696,320 1,696,320 1,696,320
Other comprehensive income, net of tax:
Unrealized gains on securities,
net of tax expense of $35,600 58,400 58,400 58,400
-------------
Comprehensive income 1,754,720
-------------
Common stock issued 638,101 7,020 631,081
Dividends declared on common stock, $.20 per
share (886,070) (886,070)
----------- ----------------------------------------------------
Balance at June 30, 1998 $26,070,308 $18,478,540 $9,400 $444,215 $7,138,153
=========== ====================================================
----------------------------------------------------------------------------------
Balance at December 31, 1996 $22,620,917 $16,207,233 $(158,751) $432,236 $6,140,199
Comprehensive Income
Net Income 1,631,693 1,631,693 1,631,693
Other comprehensive income, net of tax:
Unrealized gains on securities,
net of tax expense of $26,158 43,251 43,251 43,251
-------------
Comprehensive income 1,674,944
-------------
Common stock issued 190,563 3,469 187,094
Dividends declared on common stock, $.20 per
share (870,711) (870,711)
----------- ----------------------------------------------------
Balance at June 30, 1997 $23,615,713 $16,968,215 $(115,500) $435,705 $6,327,293
=========== ====================================================
</TABLE>
<PAGE> 5
TIB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Unaudited)
<TABLE>
<CAPTION>
For the six month period ended June 30,
1998 1997
--------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,696,320 $ 1,631,693
Adjustments to reconcile net income to net cash provided by operating
activities:
Net amortization of investments 5,842 73,559
Amortization of intangible assets 30,344 31,305
Depreciation of premises and equipment 490,495 389,984
Compensation paid thru issuance of common stock 214,575 -
Provision for loan losses 180,000 150,000
Deferred income tax provision (benefit) (29,070) (49,000)
Deferred net loan fees (30,009) (64,488)
Gain on sales of premises and equipment (999) (2,217)
Gain on sales of government guaranteed loans, net (455,987) (124,906)
Increase in interest receivable (317,085) (30,544)
Increase (decrease) in interest payable 253,169 (110,815)
Increase in intangible assets (34,299) (180,305)
(Increase) decrease in other assets (2,041,512) 31,588
Increase in other liabilities 675,300 515,225
--------------- ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 637,084 2,261,079
--------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities held to maturity (34,716,116) (17,081,135)
Repayments of principal and maturities of investment securities
available for sale 1,427,329 8,952,478
Maturities of investment securities held to maturity 7,000,000 2,000,000
Proceeds from sales of government guaranteed loans 1,823,197 4,308,555
Loans originated or acquired, net of principal repayments (16,950,027) (17,233,470)
Purchase of Small Business Consultants Inc. - (275,000)
Purchases of premises and equipment (399,003) (473,926)
Sales/conversion of premises and equipment 2,200 32,520
--------------- ------------
NET CASH USED BY INVESTING ACTIVITIES (41,812,420) (19,769,978)
--------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in federal funds purchased and securities sold under
agreements to repurchase (16,211) (9,152,716)
Net increase in demand, money market and savings accounts 38,413,992 39,801,182
Time deposits accepted, net of repayments 5,980,366 (9,632,421)
Proceeds from exercise of stock options 302,867 190,563
Cash dividends paid (879,050) (867,242)
--------------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 43,801,964 20,339,366
--------------- -----------
NET INCREASE
IN CASH AND CASH EQUIVALENTS 2,626,628 2,830,467
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 24,829,285 13,919,935
--------------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 27,455,913 $16,750,402
=============== ===========
SUPPLEMENTAL DISCLOSURES OF CASH PAID:
Interest $ 4,464,774 $ 3,863,305
=============== ===========
Income taxes $ 960,000 $ 825,000
=============== ===========
</TABLE>
(See notes to consolidated financial statements)
<PAGE> 6
TIB FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(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 six months ended June
30, 1998 are not necessarily indicative of trends or results to be expected for
the year ended December 31, 1998. For further information, refer to the
Company's consolidated financial statements and footnotes thereto for the year
ended December 31, 1997.
The consolidated statements include the accounts of TIB Financial Corporation
and its wholly-owned subsidiary, TIB Bank of the Keys, and the Bank's two
subsidiaries, TIB Government Loan Specialists, Inc. and TIB Investment &
Insurance Center Inc., 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 government guaranteed
loans are recognized as income when the sale occurs.
Major classifications of loans are as follows:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Commercial, financial and agricultural $ 129,237,954 $ 123,787,065
Real estate - construction 8,433,064 10,010,565
Real estate - individual 53,171,799 42,598,799
Installment and simple interest dividend 10,888,630 9,695,260
Other 113,579 186,905
------------- -----------------
Total loans 201,845,026 186,278,594
Net deferred loan fees 502,483 532,491
------------- -----------------
Loans, net of deferred loan fees $ 201,342,543 $ 185,746,103
============= =================
</TABLE>
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
<PAGE> 7
known. Recognized losses are charged to the allowance for loan losses, while
subsequent recoveries are added to the allowance.
Activity in the allowance for loan losses for the six months ended June 30, 1998
and June 30, 1997 follows:
<TABLE>
<CAPTION>
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
Balance, January 1 $ 2,201,974 $ 1,929,719
Provision charged to expense 180,000 150,000
Loans charged off (21,897) (16,692)
Recoveries of loans previously charged off 5,511 152
------------- -------------
Balance, June 30 $ 2,365,588 $ 2,063,179
============= =============
</TABLE>
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 June 30, 1998 and December 31, 1997 are presented below:
<TABLE>
<CAPTION>
June 30, 1998
---------------------------------------------------------------------
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 13,981,355 $ 166,147 $ - $ 14,147,502
States and political subdivisions 11,898,816 290,685 8,208 12,181,293
U.S. Government agencies and corporations 37,161,069 169,943 7,827 37,323,185
Other investments 908,100 - - 908,100
---------------------------------------------------------------------
$ 63,949,340 $ 626,775 $ 16,035 $ 64,560,080
=====================================================================
December 31, 1997
---------------------------------------------------------------------
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 15,978,285 $ 157,355 $ - $ 16,135,640
States and political subdivisions 7,373,701 293,750 - 7,667,451
U.S. Government agencies and corporations 12,001,487 20,693 15,480 12,006,700
Other investments 864,600 - - 864,600
---------------------------------------------------------------------
$ 36,218,073 $ 471,798 $ 15,480 $ 36,674,391
=====================================================================
</TABLE>
The amortized cost and estimated market value of investment securities available
for sale at June 30, 1998 and December 31, 1997 are presented below:
<TABLE>
<CAPTION>
June 30, 1998
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---------------------------------------------------------------------
U.S. Treasury Securities $ 9,032,840 $ - $ 11,275 $ 9,021,565
Mortgage-backed securities 7,619,498 23,144 29,337 7,613,305
Other debt securities 449,785 32,468 - 482,253
=====================================================================
$ 17,102,123 $ 55,612 $ 40,612 $17,117,123
=====================================================================
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
December 31, 1997
----------------------------------------------------
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-----------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 9,044,333 $ $ 33,753 $ 9,010,580
Mortgage-backed securities 9,056,448 20,064 88,253 8,988,259
Other debt securities 449,664 22,942 -- 472,606
=====================================================
$18,550,445 $ 43,006 $ 122,006 $18,471,445
=====================================================
</TABLE>
Other investments at June 30, 1998 and December 31, 1997 consist of stock in the
Independent Bankers Bank of Florida and the Federal Home Loan Bank of Atlanta.
Other debt securities at June 30, 1998 and December 31, 1997 consist of
corporate debt securities.
NOTE 5 - EARNINGS PER SHARE AND COMMON STOCK
Basic earnings per share has been computed based on the weighted average number
of common equivalent shares outstanding during the period. Stock options are
considered to be common stock equivalents for purposes of calculating diluted
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, 1997, for earnings per
share computation purposes.
The reconciliation of basic earnings per share to diluted earnings per share is
as follows:
<TABLE>
<CAPTION>
Net Earnings Common Shares Per Share Amount
---------------------------------------------------
<S> <C> <C> <C>
For the three months ended June 30, 1998:
Basic earnings per common share $ 871,264 4,424,462 $ .20
Effect of dilutive stock options -- 225,744 (.01)
---------------------------------------------
Diluted earnings per common share $ 871,264 4,650,206 $ .19
=============================================
For the three months ended June 30, 1997:
Basic earnings per common share $ 845,831 4,353,397 $ .19
Effect of dilutive stock options -- 253,594 (.01)
=============================================
Diluted earnings per common share $ 845,831 4,606,991 $ .18
=============================================
For the six months ended June 30, 1998:
Basic earnings per common share $1,696,320 4,404,813 $ .39
Effect of dilutive stock options -- 232,818 (.02)
---------------------------------------------
Diluted earnings per common share $1,696,320 4,637,631 $ .37
=============================================
For the six months ended June 30, 1997:
Basic earnings per common share $1,631,693 4,343,374 $ .38
Effect of dilutive stock options -- 218,386 (.02)
=============================================
Diluted earnings per common share $1,631,693 4,561,760 $ .36
=============================================
</TABLE>
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 Company's Board of Directors 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
<PAGE> 9
Company common stock that may be optioned or sold is 978,000 shares. Such
shares may either be treasury or authorized, but unissued shares of common stock
of the Company.
Total options granted, exercised, and expired during the six months ended June
30, 1998 were 63,000, 53,525, and 22,800, respectively.
NOTE 7 - NEW ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 (SFAS 130), "Reporting Comprehensive Income." This statement
is effective for financial statements issued for periods ending after December
15, 1997. Under SFAS 130, a company is required to show changes in assets and
liabilities as comprehensive income in the statement of stockholders equity or
in alternative comprehensive income statement presentations. The adoption of
SFAS 130 did not have a significant impact on the financial condition or results
of operations of the Company.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 131 (SFAS 131), "Disclosures About Segments of an
Enterprise and Related Information." SFAS 131 is effective January 1, 1998 and
requires disclosures of certain financial information by segments of a company's
business. The adoption of SFAS 131 is not expected to have a significant impact
on the financial condition or results of operations of the Company.
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133
requires companies to recognize all derivatives contracts as either assets or
liabilities in the balance sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically designated as a hedge, the
objective of which is to match the timing of gain or loss recognition on the
hedging derivative with the recognition of (i) the changes in the fair value of
the hedged asset or liability that are attributable to the hedged risk or (ii)
the earnings effect of the hedged forecasted transaction. For a derivative not
designated as a hedging instrument, the gain or loss is recognized in income in
the period of change. SFAS 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999, however, early adoption is allowed.
Historically, the Company has not entered into derivatives contracts either to
hedge existing risks or for speculative purposes. The Company plans to adopt the
new standard as of July 1, 1998. The effect on the financial statements at July
1, 1998 which results from the transfer of certain investment securities from
the held to maturity category to the available for sale category is an increase
in other comprehensive income market valuation reserve of approximately
$176,000.
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 statement of condition as of June 30,
1998, and statements of income for the three months and six months ended June
30, 1998.
The Company's net income of $871,264 for the second quarter of 1998 was a 3.0%
increase compared to $845,831 for the same period last year. The increase in net
income is attributed to an increase of $239,074, or 7.5%, in net interest
income; an increase of $211,755, or 15.7%, in other income; offset by an
increase of $15,000 in the provision for loan losses; an increase in other
expense of $355,884, or 11.1%; and an increase in income tax expense of $54,512
or 13.0%. Net income for the six months ended June 30, 1998 was $1,696,320 up
4.0% from $1,631,693 for the comparable period in 1997. Basic and diluted
earnings per share for the first quarter of 1998 were $0.20 and $0.19
respectively as compared to $0.19 and $0.18 per share in the previous year's
quarter. Basic and diluted earnings per share for the six months ended June 30,
1998 were $0.39 and $0.37 respectively compared to $0.38 and $0.36 for the
corresponding period ended June 30, 1997. Book value per share increased to
$5.87 at June 30, 1998 from $5.62 at December 31, 1997. The Company paid a
quarterly dividend of $0.10 per share in both the first and second quarters of
1998 and 1997.
Performance of banks is often measured by various ratio analyses. Two widely
recognized indicators are return on average equity and return on average assets.
Annualized return on average equity for the six months ended June 30, 1998 was
13.4% on average equity of $25,257,338, compared to 14.0% on average equity of
$23,274,758 for the same period in 1997. Annualized return on average assets of
$302,701,479 for the six months ended June 30, 1998 was 1.12%, compared to 1.29%
on average assets of $252,259,913 for the same period in 1997.
<PAGE> 10
Net interest income is an effective measurement of how well management has
balanced the Company's interest rate sensitive assets and liabilities. The
Company's net interest income is its principal source of income. Interest
earning assets for the Company include loans, federal funds sold, and investment
securities. The Company's interest-bearing liabilities include its deposits,
federal funds purchased, and other short-term borrowings. Net interest income
increased 7.0% to $6.7 million, in the six months ended June 30, 1998 as
compared to the same period last year primarily as a result of a higher level of
earning assets. A decrease in net interest margins on a percentage basis is
currently being more than compensated for by volume increases. This decrease in
margins is partly due to a general trend in the banking industry but also is a
reflection of management's decision to be very competitive in both loan and
deposit pricing. The Company's ability to sell multiple products and services to
individuals and businesses allows the growth of overall profits in spite of
lower net interest margins. This is consistent with management's goal to
diversify and enhance non-interest bearing sources of income. Interest from
loans increased to $8.8 million for the first six months of 1998 compared to
$8.2 million for the comparable period last year. 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. The Company's net
interest margin declined to 4.91% in the first six months of 1998 compared to
5.41% in the first six months of 1997.
Provision for loan losses increased slightly to $180,000 from $150,000 for the
respective first six months of 1998 and 1997 due to increased loan growth. Gross
charged off loans for the first six months were $21,897 offset by recoveries of
$5,511, resulting in an annualized net charge-off rate of 0.02% of total loans.
This compares to net charge offs during the same period last year of $16,540. At
June 30, 1998, the Company had aggregate non-accrual loans of $459,246 compared
to $272,949 at December 31, 1997. The ratio of non-performing loans (including
loans 90 days or more past due and still accruing) to total outstanding loans
was 0.23% at June 30, 1998 compared to 0.15% at December 31, 1997.
Other income increased $900,312 to $3,272,110 for the six month period ended
June 30, 1998 from $2,371,798 in the comparable period last year. The
substantial improvement in this category is primarily attributable to the
establishment of two new subsidiaries of TIB Bank of the Keys in 1997 which are
now fully functioning: TIB Investment & Insurance Center, Inc. and TIB
Government Loan Specialists, Inc. Retail sales of investment products brought in
commissions to the Company of $277,401 during the first six months of 1998 as
compared to $102,628 for the first six months of 1997. Gains on sales of
government guaranteed loans went from $124,906 during the first six months of
1997 to $455,987 during the first six months of 1998. Mortgage loan origination
fees also increased $111,275. Other expense increased 18.1% in the first six
months of 1998 as compared to the prior year period, partly as a result of the
personnel and other costs associated with the two new subsidiaries of the Bank.
Also, other expense reflects increases in computer services, interchange fees,
commissions on mortgage loan originations and other general salary expense
increases in the first six months of 1998 as compared to the same period in
1997.
Total assets at June 30, 1998 were $324,664,148, up from total assets of
$277,958,820 at December 31, 1997. Loans net of deferred loan fees increased
$15,596,440 for the first six months of 1998 from year end 1997. Also, in the
same period, investment securities increased $26,376,945. This increase was
funded by a deposit increase of $44,394,358 and a decrease in federal funds sold
of $1,443,000. Other assets at June 30, 1998 were $4,726,182, an increase of
$2,040,582 from year end 1997. This increase is primarily the result of an
increase in receivables of $803,000 on the sale of mortgage loans and $736,000
of assets in the process of construction.
At June 30, 1998, the Company had $1,990,967 in short-term borrowings compared
to $2,007,178 at year ended December 31, 1997. Short-term borrowings include
$221,797 in securities sold under agreements to repurchase and $1,769,170 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.
The Company is currently addressing a universal situation commonly referred to
as the "Year 2000 Problem." The Year 2000 Problem relates to the inability of
certain computer software programs and equipment to properly recognize and
process date-sensitive information relative to the year 2000 and beyond. During
1997, the Company developed a plan to devote the necessary resources to identify
and modify systems impacted by the Year 2000 problem, or implement new systems
to become year 2000 compliant in a timely manner. The cost of executing this
plan is not expected to have a material impact on the Company's results of
operations or financial condition. Year 2000 efforts are progressing as
scheduled. All mission critical vendors and servicers have been identified.
Certifications/assurances have been received from major data processing and
item processing vendors. Independent testing of all mission critical systems
commenced in June 1998 and will be completed as scheduled no later than June
1999.
<PAGE> 11
TIB Bank has signed a definitive agreement to acquire the Homestead banking
facilities and Homestead deposit account base of Coconut Grove Bank, subject to
regulatory approval. The branch, which has deposits of roughly $12 million, is
located in South Dade County in the heart of Homestead at the corner of Campbell
and Krome Avenue. The acquisition will be TIB's second Homestead facility. An
office building was converted to a bank branch and opened on July 17, 1998. The
Company anticipates its extensive range of products and services will be well
received in Homestead and South Dade.
The Company's subsidiary TIB Software and Services, Inc. has entered into
purchase agreements with two unrelated parties to acquire an aggregate 30%
interest in ERAS Joint Venture (the "Venture") in exchange for a total cash
consideration of $757,605. These purchases are pending the approval of the Board
of Governors of the Federal Reserve System. The Venture's primary business is
item processing and the design, development, installation and maintenance of
accounting software for financial institutions.
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 June
30, 1998, the Company's tier I risk-based capital was 12.2% and total risk-based
capital was 13.3%, compared to 12.7% and 13.8% at year-ended December 31, 1997,
respectively. At June 30, 1998, the Company's leverage ratio was 8.5% compared
to 9.5% at December 31, 1997. 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 below 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.
In 1997, the Bank invested in Federal Home Loan Bank stock for the purpose of
establishing credit lines with the Federal Home Loan Bank. The credit
availability to the Bank is $27 million, and any advances are secured by the
Bank's one-to-four family residential mortgage loans. No advances were made on
the credit line in 1997 or 1998.
The Bank has unsecured lines of credit for federal funds purchased from other
banks totaling $5,000,000. Securities sold under agreements to repurchase
(wholesale) represent a wholesale agreement with a correspondent bank which is
collateralized by a U.S. Treasury note. The Bank also has several securities
sold under repurchase agreements (retail) with commercial account holders
whereby the Bank sweeps the customer's accounts on a daily basis and pays
interest on these amounts. These agreements are collateralized by investment
securities chosen by the Bank.
<PAGE> 12
Part II. OTHER INFORMATION
Item 4. MATTERS SUBMITTED TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Shareholders held on May 26, 1998, the following
directors were elected to hold office for the coming three years: B.G. Carter,
Armando J. Henriquez and James R. Lawson III. Also, the following directors term
of office continued after the meeting: Gretchen K. Holland, Edward V. Lett,
Scott A. Marr, Derek D. Martin-Vegue, Joseph H. Roth, Jr., Marvin F. Schindler
and Richard J. Williams.
Further, the shareholders ratified the selection of BDO Seidman, LLP as
independent Certified Public Accountants for the Company.
A detail of the voting for each matter is summarized below:
Proposal 1. Election of Directors B.G. Carter, Armando J. Henriquez and James R.
Lawson III to serve three-year terms:
<TABLE>
<S> <C> <C>
B.G. Carter
Voting for 3,564,747 81%
Withhold Authority 13,562 0%
--------- --
Total 3,578,309 81%
Armando Henriquez
Voting for 3,541,949 80%
Withhold Authority 36,360 1%
--------- --
Total 3,578,309 81%
James R. Lawson III
Voting for 3,576,785 81%
Withhold Authority 1,524 0%
--------- --
Total 3,578,309 81%
</TABLE>
Proposal 2. To ratify the selection of BDO Seidman, LLP as independent Certified
Public Accountants for the Company:
<TABLE>
<S> <C> <C>
Voting for 3,520,879 80%
Voting Against 4,794 0%
Abstain from Voting 52,636 1%
--------- --
Total 3,578,309 81%
</TABLE>
<PAGE> 13
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule (SEC use only)
(b) There were no reports filed on Form 8-K for the quarter ended June
30, 1998
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: August 10, 1998 Edward V. Lett
President and Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF TIB FINANCIAL CORP. FOR THE SIX MONTHS ENDED JUNE 30,
1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 16,608,669
<INT-BEARING-DEPOSITS> 15,244
<FED-FUNDS-SOLD> 10,832,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 17,117,123
<INVESTMENTS-CARRYING> 63,949,340
<INVESTMENTS-MARKET> 64,560,080
<LOANS> 201,342,543
<ALLOWANCE> 2,365,588
<TOTAL-ASSETS> 324,664,148
<DEPOSITS> 293,216,177
<SHORT-TERM> 1,990,967
<LIABILITIES-OTHER> 3,386,696
<LONG-TERM> 0
0
0
<COMMON> 444,215
<OTHER-SE> 25,626,093
<TOTAL-LIABILITIES-AND-EQUITY> 324,664,148
<INTEREST-LOAN> 8,822,185
<INTEREST-INVEST> 2,013,432
<INTEREST-OTHER> 619,711
<INTEREST-TOTAL> 11,455,328
<INTEREST-DEPOSIT> 4,694,866
<INTEREST-EXPENSE> 4,717,943
<INTEREST-INCOME-NET> 6,737,385
<LOAN-LOSSES> 180,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 7,203,575
<INCOME-PRETAX> 2,625,920
<INCOME-PRE-EXTRAORDINARY> 1,696,320
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,696,320
<EPS-PRIMARY> .39
<EPS-DILUTED> .37
<YIELD-ACTUAL> 4.91
<LOANS-NON> 459,246
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,201,974
<CHARGE-OFFS> 21,897
<RECOVERIES> 5,511
<ALLOWANCE-CLOSE> 2,365,588
<ALLOWANCE-DOMESTIC> 2,365,588
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
