SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________ to ______________
Commission file number 0-21707
FORT BROOKE BANCORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Florida 59-3382314
------- ----------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
510 Vonderburg Drive, Brandon, Florida 33511
- -------------------------------------- --------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (813) 685-2000
--------------
- --------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report.
Indicate by check 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common stock, par value $8 per share
- ------------------------------------
990,553 shares outstanding at October 31, 1996
----------------------------------------------
CONFORMED COPY
<PAGE>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
INDEX
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets -
September 30, 1996 (unaudited) and December 31, 1995.....................2
Condensed Consolidated Statements of Earnings -
Three and Nine months ended September 30, 1996 and 1995 (unaudited)......3
Condensed Consolidated Statement of Stockholders' Equity -
For the Nine-Month Period Ended September 30, 1996 (unaudited)...........4
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1996 and 1995 (unaudited)................5
Notes to Condensed Consolidated Financial Statements (unaudited)...........6
Review By Independent Certified Public Accountants.........................7
Report on Review by Independent Certified Public Accountants...............8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...............................................9-15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K....................................16
SIGNATURES...................................................................16
1
<PAGE>
<TABLE>
<CAPTION>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(Dollars in thousands)
September 30, December 31,
------------- ------------
Assets 1996 1995
---- ----
(unaudited)
<S> <C> <C>
Cash and due from banks $ 11,300 11,997
------- -------
Investment securities:
Available for sale 21,228 24,077
Held to maturity 18,387 19,642
------- -------
Total investment securities 39,615 43,719
------- -------
Loans, net of allowance for credit losses of $1,877 and $1,614 131,764 122,511
Other real estate owned 1,398 1,147
Property and equipment, net 5,201 4,723
Federal Home Loan Bank stock 809 809
Accrued interest receivable 1,306 1,266
Deferred tax asset 376 211
Other assets 827 733
------- -------
Total $ 192,596 187,116
========= =======
Liabilities and Stockholders' Equity
Deposits:
Demand deposits 32,883 35,181
Savings and NOW deposits 33,318 31,334
Money market deposits 18,326 21,551
Other time deposits 88,570 80,231
------- -------
Total deposits 173,097 168,297
Advances by borrowers for taxes and insurance 506 128
Short term borrowings 707 1,965
Accrued interest payable 483 490
Current income taxes - 158
Other liabilities 1,688 278
------- -------
Total liabilities 176,481 171,316
------- -------
Stockholders' equity:
Common stock 7,924 8,047
Additional paid-in capital 4,501 4,571
Retained earnings 4,041 3,298
Unrealized loss on investment securities (351) (116)
------- -------
Total stockholders' equity 16,115 15,800
------- -------
Total $ 192,596 187,116
========= =======
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Earnings
(Dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ --------------------
1996 1995 1996 1995
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $ 3,018 2,728 8,859 8,152
Interest on investment securities 649 668 1,897 1,870
Other interest 61 150 241 357
-------- --------- ----------- ----------
Total interest income 3,728 3,546 10,997 10,379
-------- --------- ---------- ---------
Interest expense:
Interest on deposits 1,439 1,468 4,253 4,016
Interest on other borrowings 19 18 71 89
-------- ---------- ----------- ----------
Total interest expense 1,458 1,486 4,324 4,105
-------- --------- ---------- ----------
Net interest income 2,270 2,060 6,673 6,274
Provision (credit) for credit losses 9 304 (30) 478
--------- ---------- ----------- ---------
Net interest income after provision
(credit) for credit losses 2,261 1,756 6,703 5,796
-------- --------- ---------- ---------
Noninterest income:
Other fees and service charges 358 286 1,007 849
Loss on sale of investment securities (23) - (22) (24)
Other income 56 39 146 103
-------- ---------- ---------- ---------
Total noninterest income 391 325 1,131 928
-------- --------- ---------- ---------
Noninterest expense:
Employee compensation and benefits 834 747 2,469 2,198
Occupancy 355 288 1,019 882
Data processing 89 83 276 245
Federal insurance premium 59 81 179 253
SAIF recapitalization assessment 648 - 648 -
Advertising 37 21 120 87
Real estate expense 15 17 131 52
Professional fees 70 35 216 108
Other 285 298 951 931
----- --- --- --- ---
Total noninterest expense 2,392 1,570 6,009 4,756
-------- --------- ---------- ----------
Earnings before income tax provision 260 511 1,825 1,968
Income tax provision 92 204 624 787
-------- --------- ---------- ----------
Net earnings $ 168 307 1,201 1,181
======== ========== ========== ==========
Earnings per share $ .17 .31 1.20 1.17
======== ========== ========== ==========
Weighted average number of shares
outstanding 992,223 1,005,920 1,001,305 1,005,920
======== ========== ========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
Condensed Consolidated Statement of Stockholders' Equity
For the Nine Month Period Ended September 30, 1996
(Dollars in thousands)
Unrealized
Additional Loss on Total
Number of Common Paid-in Retained Investment Stockholders'
Shares Stock Capital Earnings Securities Equity
------ ----- ------- -------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 1,005,920 $ 8,047 4,571 3,298 (116) 15,800
Net earnings (unaudited) - - - 1,201 - 1,201
Cash dividend (unaudited) - - - (251) - (251)
Purchase and retirement of
shares from dissenting
stockholders upon formation
of holding company (unaudited) (15,367) (123) (70) (207) - (400)
Unrealized loss on investment
securities (unaudited) - - - - (235) (235)
---------- ------ ------- ------ --- ------
Balance at September 30, 1996
(unaudited) 990,553 $ 7,924 4,501 4,041 (351) 16,115
========= ===== ===== ===== === ======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
<TABLE>
<CAPTION>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
Nine Months Ended
September 30,
-------------
1996 1995
---- ----
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,201 1,181
Adjustments to reconcile net earnings to net
Cash provided by operating activities:
Depreciation 412 355
Provision (credit) for credit losses (30) 478
Loss from sale of investment securities 22 24
Net amortization of fees, premiums and discounts (10) (107)
Write down on other real estate owned 73 -
(Increase) decrease in other assets (94) 100
Increase in accrued interest receivable (40) (190)
(Decrease) Increase in accrued interest payable (7) 130
Decrease in current income taxes (158) (46)
Increase in other liabilities 1,010 305
Gain on sale of other real estate owned (1) (9)
Provision for deferred taxes - 18
------- ------
Net cash flow provided by operating activities 2,378 2,239
------- -----
Cash flows from investing activities:
Purchase of investment securities (14,218) (16,270)
Proceeds from sales and maturities of investment securities 15,026 14,555
Principal repayments on investment securities 2,874 1,656
Net increase in loans (9,837) (3,805)
Proceeds from sales of other real estate owned 301 234
Purchase of property and equipment (890) (316)
------- -------
Net cash used in investing activities (6,744) (3,946)
------ ------
Cash flows from financing activities:
Net increase in deposits 4,800 5,550
Net increase in advance payments by borrowers for taxes and insurance 378 302
Cash dividend (251) (3)
Decrease in short term borrowings (1,258) (1,991)
------- ------
Net cash provided by financing activities 3,669 3,858
------- ------
Net (decrease) increase in cash and due from banks (697) 2,151
Cash and due from banks at beginning of period 11,997 8,436
------- -----
Cash and due from banks at end of period $ 11,300 10,587
====== ======
Cash paid during the period for:
Interest $ 4,331 3,886
====== ======
Income taxes $ 865 814
====== ======
Noncash transactions:
Reclassification of loans to other real estate $ 624 47
====== ======
Increase (decrease) in unrealized loss on investment
securities available-for-sale $ (235) 650
====== ======
Liability incurred to purchase shares from dissenting stockholders $ 400 -
====== ======
Stock dividend $ - 1,357
======= ======
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
5
<PAGE>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited)
1.General. Effective July 10, 1996 the common shareholders of Fort Brooke Bank
(the "Bank") exchanged their common shares for common shares of Fort Brooke
Bancorporation (the "Holding Company"), and at that time the Bank became a
wholly-owned subsidiary of the Holding Company. The only business of the
Holding Company is the ownership and operation of the Bank. The Holding
Company and the Bank are collectively referred to as the "Company". The
formation of the Holding Company and exchange of shares has been accounted
for as a pooling of interests. In the opinion of the management of the
Company, the accompanying condensed consolidated financial statements
contain all adjustments (consisting principally of normal recurring
accruals) necessary to present fairly the financial position at September
30, 1996, the results of operations and cash flows for the nine month
period ended September 30, 1996 and 1995, for the three-month and
nine-month periods ended September 30, 1996 and 1995. The results of
operations for the three and nine months ended September 30, 1996 are not
necessarily indicative of the results to be expected for the full year.
2. Loan Impairment and Losses. The Company has identified loans totaling
$67,000 and $184,000 as impaired at September 30, 1996 and 1995. The
activity in the allowance for credit losses is as follows:
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
(Unaudited)
(In thousands)
<S> <C> <C> <C> <C>
Balance, beginning of period $ 1,857 1,606 1,702 1,562
Provision (credit) charged to earnings 9 304 (30) 478
Recoveries, net of charge-offs 11 (296) 205 (426)
------ ----- ------ -----
Balance, end of period $ 1,877 1,614 1,877 1,614
===== ===== ===== =====
</TABLE>
3.Earnings Per Common Share. Earnings per common share were computed by
dividing the net earnings for the period by the weighted average number of
shares outstanding. The effect of the outstanding options was not material.
4. Pending Acquisition of the Company. On September 23, 1996, the Company
signed a letter of intent to merge with Colonial BancGroup ("Colonial").
Colonial will exchange sufficient common stock to equal $31.50 per share
for 990,553 shares of the Company. This transaction is subject to the
approval of stockholders and various regulatory authorities.
6
<PAGE>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
Review by Independent Certified Public Accountants
Hacker, Johnson, Cohen & Grieb, the Company's independent certified public
accountants, have made a limited review of the financial data as of September
30, 1996, and for the three-month and nine-month periods ended September 30,
1996 and 1995 presented in this document, in accordance with standards
established by the American Institute of Certified Public Accountants.
Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.
7
<PAGE>
Report on Review by Independent Certified Public Accountants
The Audit Committee of the Board of Directors
of Fort Brooke Bancorporation
Brandon, Florida:
We have reviewed the condensed consolidated balance sheet of Fort Brooke
Bancorporation and Subsidiary (the "Company") as of September 30, 1996, and the
related condensed consolidated statements of earnings for the three-month and
nine-month periods ended September 30, 1996 and 1995, the condensed consolidated
statements of cash flows for the nine-month periods ended September 30, 1996 and
1995 and the condensed consolidated statement of stockholders' equity for the
nine-month period ended September 30, 1996. These financial statements are the
responsibility of the Company's management.
We conducted our review 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 generally accepted auditing standards, 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 review, 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 generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1995, and the
related consolidated statements of earnings, stockholders' equity and cash flows
for the year then ended (not presented herein); and in our report dated February
9, 1996, 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, 1995, is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
HACKER, JOHNSON, COHEN & GRIEB
Tampa, Florida
October 4, 1996
8
<PAGE>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Comparison of September 30, 1996 and December 31, 1995
General
Fort Brooke Bancorporation (the "Holding Company") is a one-bank holding
company and its only current business is the ownership and operation of
Fort Brooke Bank (the "Bank"). The Holding Company and the Bank are
collectively referred to as the "Company". On July 10, 1996 the common
stockholders of the Bank exchanged their common shares for common shares of
the Holding Company, and at that time the Bank became a wholly-owned
subsidiary of the Holding Company. The formation of the Holding Company and
exchange of shares has been accounted for as a pooling of interests. Shares
held by dissenting shareholders were retired prior to the exchange and that
liability will be settled for cash.
Pending Acquisition of the Company
On September 23, 1996, the Company signed a letter of intent to merge with
Colonial Bancgroup ("Colonial"). Colonial will exchange sufficient common
stock to equal $31.50 per share for 990,553 shares of the Company. This
transaction is subject to the approval of stockholders and various
regulatory authorities.
Liquidity and Capital Resources
As a Florida chartered commercial bank, the Bank is required to maintain a
liquidity reserve of at least 15% of its total transaction accounts and 8%
of its total nontransaction accounts less those deposits of certain public
funds. The liquidity reserve may consist of cash on hand, cash on demand
with other correspondent banks and other investments and short-term
marketable securities as defined, such as federal funds sold and United
States securities or securities guaranteed by the United States. As of
September 30, 1996, the Bank has liquidity of approximately $49.7 million,
or approximately 29% of total deposits and is in compliance with this
requirement.
During the nine months ended September 30, 1996, the Bank's primarily
sources of funds consisted of principal payments on loans and investment
securities, proceeds from sales and maturities of investment securities,
net deposit inflows and cash flows from operating activities. The Bank used
its capital resources principally to purchase investment securities, repay
short-term borrowings and to fund existing and continuing loan commitments.
At September 30, 1996, the Bank had commitments to originate loans
totalling $8.6 million. Management believes the Bank has adequate resources
to fund all its commitments, that substantially all of its existing
commitments will be funded within one year and, if so desired, that it can
adjust the rates on certificates of deposit to retain deposits in a
changing interest rate environment.
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Year Ended Ended
September 30, December 31, September 30,
1996 1995 1995
-------- ---------- ------
<S> <C> <C> <C>
Average equity as a percentage
of average assets 8.53% 8.27% 8.23%
Equity to total assets at end of period 8.37% 8.44% 8.47%
Return on average assets (1) .84% .93% .89%
Return on average equity (1) 9.84% 11.18% 10.76%
Noninterest expenses to average assets (1) 4.20% 3.41% 3.57%
Nonperforming loans and real estate owned as
a percentage of total assets at end of period 1.02% 1.10% 1.30%
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
At At At
September 30, December 31, September 30,
1996 1995 1995
--------- ---------- ------
<S> <C> <C> <C>
Weighted-average interest rates:
Interest-earning assets:
Loans 8.94% 9.23% 9.19%
Investment securities 6.30% 6.30% 6.19%
Total interest-earning assets 8.33% 8.44% 8.35%
Interest-bearing liabilities:
Savings and NOW accounts 1.97% 2.08% 2.30%
Money market accounts 2.72% 2.78% 2.84%
Certificates of deposit 5.48% 5.64% 5.74%
Total interest-bearing liabilities 4.28% 4.30% 4.42%
Interest-rate spread 4.05% 4.14% 3.93%
==== ==== ====
(1) Annualized for the nine months ended September 30, 1996 and 1995.
</TABLE>
10
<PAGE>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Bank from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest/dividend income; (iv) interest-rate spread; (v)
net interest margin.
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1996 1995
-------------------------------- -------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Rate Balance Dividends Rate
------- --------- ---- ------- --------- ----
(Dollars in thousands)
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C>
Loans (1) $ 130,540 3,018 9.25% $ 114,770 2,728 9.51%
Investment securities 41,088 649 6.32% 44,219 668 6.04%
Other interest-earning assets (2) 11,532 61 2.12% 9,169 150 6.54%
------- ----- ------- -----
Total interest-earning assets 183,160 3,728 8.14% 168,158 3,546 8.43%
----- -----
Noninterest-earning assets 9,499 14,934
------- --------
Total assets $ 192,659 $ 183,092
======= =======
Interest-bearing liabilities:
Savings and NOW accounts 32,784 196 2.39% 30,642 180 2.35%
Money market deposits 19,376 114 2.35% 21,127 164 3.11%
Certificate of deposit 82,997 1,129 5.44% 79,157 1,124 5.68%
Borrowings 1,988 19 3.82% 1,800 18 4.00%
------- ----- -------- ------
Total interest-bearing liabilities 137,145 1,458 4.25% 132,726 1,486 4.48%
----- -----
Noninterest-bearing liabilities 39,081 35,185
Stockholders' equity 16,433 15,181
------- --------
Total liabilities and stockholders' equity $ 192,659 $ 183,092
======= =======
Net interest/dividend income $ 2,270 $ 2,060
===== =====
Interest-rate spread (3) 3.89% 3.95%
==== ====
Net average interest-earning assets,
net interest margin (4) $ 46,015 4.96% $ 35,432 4.90%
======= ==== ======= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.34 1.27
==== ====
(1) Includes loans on nonaccrual status.
(2) Includes interest-bearing deposits and FHLB and FRB stock.
(3) Interest-rate spread represents the difference between the average
yield on interest-earning assets and the average cost of
interest-bearing liabilities.
(4) Net interest margin is net interest income divided by average
interest-earning assets.
</TABLE>
11
<PAGE>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Bank from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest/dividend income; (iv) interest-rate spread; (v)
net interest margin.
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1996 1995
-------------------------------- -------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Rate Balance Dividends Rate
------- --------- ---- ------- --------- ----
(Dollars in thousands)
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C>
Loans (1) $ 127,310 8,859 9.28% $ 113,267 8,152 9.60%
Investment securities 41,851 1,897 6.04% 42,280 1,870 5.90%
Other interest-earning assets (2) 12,005 241 2.68% 10,618 357 4.48%
------- ------ ------- ------
Total interest-earning assets 181,166 10,997 8.09% 166,165 10,379 8.33%
------ ------
Noninterest-earning assets 9,549 11,641
------- --------
Total assets $ 190,715 $ 177,806
======= =======
Interest-bearing liabilities:
Savings and NOW accounts 32,594 524 2.16% 31,076 553 2.37%
Money market deposits 20,620 424 2.74% 23,138 516 2.97%
Certificate of deposit 80,615 3,305 5.47% 73,616 2,947 5.34%
Borrowings 2,580 71 3.67% 2,538 89 4.67%
------- ------- -------- ------
Total interest-bearing liabilities 136,409 4,324 4.23% 130,368 4,105 4.20%
------ ------
Noninterest-bearing liabilities 38,038 32,802
Stockholders' equity 16,268 14,636
------- --------
Total liabilities and stockholders' equity $ 190,715 $ 177,806
======= =======
Net interest/dividend income $ 6,673 $ 6,274
====== ======
Interest-rate spread (3) 3.86% 4.13%
==== ====
Net average interest-earning assets,
net interest margin (4) $ 44,757 4.91% $ 35,797 5.03%
======= ==== ======= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.33 1.27
==== ====
(1) Includes loans on nonaccrual status.
(2) Includes interest-bearing deposits and FHLB and FRB stock.
(3) Interest-rate spread represents the difference between the average
yield on interest-earning assets and the average cost of
interest-bearing liabilities.
(4) Net interest margin is net interest income divided by average
interest-earning assets.
</TABLE>
12
<PAGE>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Regulatory Capital
Banking laws and regulations limit the amount of dividends that may be paid
by the Bank. The FDIC requires insured banks to maintain certain specified
levels of capital. A comparison of the required capital ratios to actual
capital ratios are as follows:
<TABLE>
<CAPTION>
Ratios of Regulatory
the Bank Requirement
-------- -----------
At September 30, 1996:
<S> <C> <C>
Total capital to risk-weighted assets 13.05% 8.00%
Tier I capital to risk-weighted assets 11.80% 4.00%
Tier I capital to total average assets - leverage ratio 8.59% 4.00%
</TABLE>
New Accounting Requirements
Statement of Financial Accounting Standards No. 125 "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities" ("SFAS 125") provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of
liabilities. This Statement also provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. SFAS 125 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996. Management of the Bank does not expect SFAS 125 to
have a material effect on the Bank's financial statements.
13
<PAGE>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
Results of Operations
Comparison of Three-Month Periods Ended September 30, 1996 and 1995
General. Net earnings for the three-months ended September 30, 1996 were
$168,000 or $.17 per share compared to $307,000 or $.31 per share for 1995.
The decrease in earnings was primarily due to the one-time SAIF
recapitalization assessment partially offset by the decrease in the
provision for credit losses and the increase in other fees and service
charges.
Interest Income and Expense. Interest income increased by $182,000 to $3.7
million for the three-month period ended September 30, 1996 from $3.5
million for 1995. Interest on loans increased $290,000 to $3.0 million due
to an increase in the average loan portfolio balance for the three months
ended September 30, 1996. The portfolio balance increased to $130.5 million
from $114.8 million during the 1995 period. The weighted average yield
decreased on the portfolio from 9.51% in 1995 to 9.25% in 1996. Interest on
investment securities decreased $19,000 to $649,000 for the three-months
ended September 30, 1996 due to a decrease in the average investment
securities portfolio from $44.2 million in 1995 to $41.1 million in 1996.
Interest on other interest-earning assets decreased from $150,000 for the
three-months ended September 30, 1995 to $61,000 for the three months ended
September 30, 1996 due to a decrease in the weighted average yield partially
offset by an increase in the weighted average balance of other
interest-earning assets from 1995 to 1996.
Interest expense on deposits decreased $28,000 to $1.4 million for the
three-months ended September 30, 1996. The decrease is due to a decrease in
the average rate paid on deposits, partially offset by an increase in
average deposits from 1995 to 1996.
Credit Losses. A provision for credit losses is charged to earnings 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
Bank, industry standards, the amount of nonperforming loans, general
economic conditions, particularly as they relate to the Bank's market areas,
and other factors related to the collectibility of the Bank's loan
portfolio. The provision for loan losses decreased from $304,000 in the 1995
period to $9,000 for the three-month period ended September 30, 1996. The
allowance for credit losses is $1.9 million at September 30, 1996. While
management believes the allowance for credit losses is adequate as of
September 30, 1996, future adjustments may be necessary if economic
conditions differ substantially from the assumptions used in making the
initial determination.
Noninterest Expense. Total noninterest expense increased $822,000 to $2.4
million for the three- months ended September 30, 1996 from $1.6 million in
1995. The increase resulted primarily from a one-time SAIF assessment as
well as the increases in employee compensation and occupancy as a result of
opening a new branch in 1996.
Income Tax Provision. The income tax provision for the three months ended
September 30, 1996 and September 30, 1995 was $92,000 and $204,000,
respectively.
14
<PAGE>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
Comparison of Nine-Month Periods Ended September 30, 1996 and 1995
General. Net earnings for the nine months ended September 30, 1996 were
$1,201,000 or $1.20 per share compared to $1,181,000 or $1.17 per share for
1995. The increase in earnings was primarily due to increased net interest
income partially offset by the increase in noninterest expense during 1996.
The increase in noninterest expense resulted from the one-time SAIF
recapitalization assessment.
Interest Income and Expense. Interest income increased by $618,000 to $11.0
million for the nine-month period ended September 30, 1996 compared to $10.4
million for the nine months ended September 30, 1995. Interest on loans
increased $707,000 to $8.9 million due to an increase in the average loan
portfolio balance for the nine months ended September 30, 1996 to $127.3
million compared to $113.3 million during the 1995 period. This was
partially offset by a decrease in the weighted average yield from 9.60% in
1995 to 9.28% in 1996. Interest on investment securities increased $27,000
to $1.9 million for the nine-months ended September 30, 1996 due to an
increase in the average yield from 5.90% in 1995 to 6.04% in 1996 which was
partially offset by a decrease in the average investment securities
portfolio from $42.3 million in 1995 to $41.9 million in 1996. Interest on
other interest-earning assets decreased from $357,000 for the nine months
ended September 30, 1995 to $241,000 for the nine months ended September 30,
1996 due to a decrease in the weighted average yield partially offset by an
increase in the average balance of other interest-earning assets from 1995
to 1996.
Interest expense on deposit accounts increased $219,000 to $4.3 million for
the nine-months ended September 30, 1996 from $4.0 million in 1995. The
increase is due to an increase in the average rate paid on deposits, and an
increase in average interest-bearing deposits from 1995 to 1996.
(Credit) Provision for Credit Losses. The (credit) provision for credit losses
is (credited) charged to earnings 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 Bank, industry standards,
the amount of nonperforming loans, general economic conditions, particularly
as they relate to the Bank's market areas, and other factors related to the
collectibility of the Bank's loan portfolio. The provision for loan losses
decreased $508,000 for the nine-month period ended September 30, 1996
compared to the same period for 1995. The allowance for loan losses is $1.9
million at September 30, 1996. While management believes the allowance for
credit losses is adequate as of September 30, 1996, future adjustments may
be necessary if economic conditions differ substantially from the
assumptions used in making the initial determination.
Noninterest Expense. Total noninterest expense increased $1.3 million to $6.0
million for the nine-months ended September 30, 1996 from $4.8 million in
1995. The increase was primarily due to a one-time SAIF assessment on
September 30, 1996. There were also increases in employee compensation,
occupancy expense, real estate expense and professional fees. These were due
to the opening of a new branch, merit salary raises and the formation of a
bank holding company.
Income Tax Provision. The income tax provision for the nine months ended
September 30, 1996 and September 30, 1995 was $624,000 and $787,000,
respectively.
15
<PAGE>
FORT BROOKE BANCORPORATION AND SUBSIDIARY
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended September 30,
1996.
SIGNATURES
Under the requirements of the Securities Exchange Act of 1934, the Company has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
FORT BROOKE BANCORPORATION
Date: November 13, 1996 By: /s/ Richard H. Eatman
---------------------- ----------------------
Richard H. Eatman, President and
Treasurer
(Chief Financial Officer)
16
<PAGE>
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