<PAGE> 1
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2000
Transition report under Section 13 or 15 (d) of the Exchange Act
For the transition period from __________________ to ______________
Commission file number 333-95087
CENTERSTATE BANKS OF FLORIDA, INC.
-----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 59-3606741
--------------------------------- -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
7722 State Road 544 East
Winter Haven, Florida 33881
----------------------------------------
(Address of Principal Executive Offices)
(863) 419-0833
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by Section
12, 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days:
YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
Equity, as of the latest practicable date:
Common stock, par value $.01 per share 2,815,907
-------------------------------------- ----------------------------
(class) Outstanding at June 30, 2000
<PAGE> 2
CENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Page
----
Condensed Consolidated Balance Sheet - June 30, 2000 (unaudited) 2
Condensed Consolidated Statements of Earnings for the Three and Six
Months ended June 30, 2000 and 1999 (unaudited) 3
Condensed Consolidated Statements of Cash Flows - Six Months ended
June 30, 2000 and 1999 (unaudited) 4
Notes to Condensed Consolidated Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities and Use of Proceeds 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Shareholders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
1
<PAGE> 3
Centerstate Banks of Florida, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands of dollars)
<TABLE>
<CAPTION>
As of
ASSETS June 30, 2000
------------------------------------------------------------- -------------
<S> <C>
Cash and due from banks $15,630
Federal funds sold 17,265
Securities:
Available-for-sale (at market value) 53,307
Held-to-maturity (market value of $3,451) 3,521
Loans 193,194
Less allowance for loan losses (2,582)
-------------
Net loans 190,612
Premises and equipment 13,530
Accrued interest receivable 1,874
Other assets 1,426
----------------------------------------------------------------------------------------
TOTAL ASSETS $297,165
----------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------------------------------
Deposits:
Demand - non-interest bearing $46,132
Demand - interest bearing 36,644
Savings and money market accounts 59,665
Time Deposits 125,804
-------------
Total deposits 268,245
Securities sold under agreements to repurchase 3,258
Other borrowed funds 480
Accrued expenses and other liabilities 1,113
-------------
Total Liabilities 273,096
Shareholders' Equity:
Preferred Stock, $.01 par value; 5,000,000 shares
authorized no shares issued or outstanding 0
Common Stock, $.01 par value; 20,000,000 shares
authorized 2,815,907 shares issued 28
Additional paid-in capital 15,426
Net unrealized holding losses on available-for-sale
securities, net of tax (235)
Retained earnings 8,850
-------------
Total Shareholders' Equity 24,069
----------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $297,165
----------------------------------------------------------------------------------------
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE> 4
Centerstate Banks of Florida, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (unaudited)
(in thousands of dollars, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
------------------------------------------------------
Loans $4,381 $3,520 $8,453 $6,909
Securities 846 1,130 1,704 2,269
Federal funds sold 256 105 455 300
----------------------------- -----------------------------
Total Interest Income 5,483 4,755 10,612 9,478
----------------------------- -----------------------------
INTEREST EXPENSE
------------------------------------------------------
Deposits 2,268 2,004 4,342 4,154
Securities sold under agreements to repurchase 53 44 102 93
Other borrowed funds 0 0 8 0
----------------------------- -----------------------------
Total Interest Expense 2,321 2,048 4,452 4,247
----------------------------- -----------------------------
NET INTEREST INCOME 3,162 2,707 6,160 5,231
Provision for loan losses 136 84 273 129
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,026 2,623 5,887 5,102
----------------------------- -----------------------------
NON-INTEREST INCOME
------------------------------------------------------
Service charges on deposit accounts 453 380 863 741
Security losses (1) 0 (1) 0
Other service charges and fees 120 90 249 171
----------------------------- -----------------------------
Total Non-Interest Income 572 470 1,111 912
----------------------------- -----------------------------
NON-INTEREST EXPENSE
------------------------------------------------------
Salaries and employee benefits 1,216 1,010 2,408 1,997
Occupancy expenses 343 309 655 589
Depreciation of premises and equipment 229 193 449 381
Stationary & printing supplies 84 96 188 164
Marketing expenses 62 57 125 122
Data processing expenses 219 185 447 370
Legal and accounting fees 63 58 127 117
Merger/SEC related expenses 262 0 358 0
Other operating expenses 519 414 1,065 797
----------------------------- -----------------------------
Total Non-Interest Expenses 2,997 2,322 5,822 4,537
----------------------------- ------------------------------
Income before income taxes 601 771 1,176 1,477
Provision for income tax expense 328 289 579 554
----------------------------- -----------------------------
NET INCOME $273 $482 $597 $923
============================= =============================
NET INCOME PER COMMON SHARE:
Basic $0.10 $0.19 $0.21 $0.35
Diluted $0.10 $0.18 $0.21 $0.33
Weighted average common shares outstanding:
Basic 2,814,888 2,606,048 2,807,380 2,615,383
Diluted 2,828,938 2,742,313 2,823,839 2,758,661
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE> 5
Centerstate Banks of Florida, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands of dollars)
<TABLE>
<CAPTION>
Six months ended June 30,
2000 1999
-----------------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $597 $923
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 273 129
Depreciation of premises and equipment 448 381
Net accretion of discounts on securities 118 93
Net deferred origination fees 30 25
Gain on sale of other real estate owned 6 0
Write down of other real estate owned 0 25
Capitalization of OREO expenses 0 (72)
Deferred income taxes 3 0
Realized loss on sale of available for sale securities 1 8
Cash provided by (used in) changes in:
Net changes in accrued interest receivable (61) 105
Net change in prepaids and other assets 3 (50)
Net change in accrued interest payable 35 (65)
Net change in accounts payable and accrued expenses 563 241
-------------- -------------
Net cash provided by operating activities 2,016 1,743
-------------- -------------
Cash flows from investing activities:
Proceeds from maturities of investment securities available for sale 14,908 7,519
Proceeds from callable investment securities available for sale 0 4,500
Proceeds from sales of investment securities available for sale 4,500 5,518
Purchases of investment securities available for sale (12,949) (13,634)
Purchases of investment securities held to maturity 0 (1,500)
Proceeds from maturities of investment securities held to maturity 0 500
Increase in loans, net of repayments (15,818) (5,434)
Purchases of premises and equipment (904) (1,230)
Proceeds from sale of other real estate owned 40 162
-------------- -------------
Net cash used in investing activities (10,223) (3,599)
-------------- -------------
Cash flows from financing activities:
Net increase (decrease) in demand and savings deposits 20,268 (1,154)
Net (decrease) in other borrowings (3,341) (1,400)
Stock options exercised 130 487
Dividends paid 0 (86)
-------------- -------------
Net cash provided by (used in) financing activities 17,057 (2,153)
-------------- -------------
Net increase (decrease) in cash and cash equivalents 8,850 (4,009)
Cash and cash equivalents, beginning of period 24,045 25,526
-------------- -------------
Cash and cash equivalents, end of period $32,895 $21,517
============== =============
</TABLE>
4
<PAGE> 6
Centerstate Banks of Florida, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands of dollars)
(continued)
<TABLE>
<CAPTION>
Six months ended June 30,
2000 1999
------------------------------
<S> <C> <C>
Supplemental schedule of noncash transactions:
Market value adjustment- securities available-for-sale
Market value adjustments- securities ($377,440) ($191,545)
Deferred income tax liability 142,243 70,765
-------------- -------------
Unrealized gain (loss) on securities available-for-sale ($235,197) ($120,780)
============= =============
Transfer of loan to other real estate owned $64 $120
============= =============
Cash paid during the period for:
Interest $4,417 $4,007
============= =============
Income taxes $397 $488
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
Centerstate Banks of Florida, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1: Holding Company and Subsidiaries Background Information
Centerstate Banks of Florida, Inc (the "Company") is a multi bank holding
company that was formed as of the close of business June 30, 2000 as part of a
merger of three independent commercial banks in central Florida (First National
Bank of Osceola County, Community National Bank of Pasco County and First
National Bank of Polk County). The business combination was accounted for using
the pooling-of-interest accounting method. The outstanding shares of the three
banks were converted into Company common stock at agreed upon exchange ratios
described in the merger agreements. All of the shareholders of the three banks
are now the shareholders of the Company, which owns all of the outstanding
shares of the three banks. The three banks will maintain their separate
identities as wholly owned subsidiaries of the Company.
First National Bank of Osceola County is a national bank chartered in September
1989. It operates from three full service locations and one remote location
within Osceola County and two full service locations in Orange County, which is
contiguous with Osceola County.
Community National Bank of Pasco County is a national bank chartered in November
1989. It operates from seven full service locations within Pasco and contiguous
counties.
First National Bank of Polk County is a national bank chartered in February
1992. It operates from three full service locations within Polk County.
The Company, through its subsidiary banks, provides traditional deposit and
lending products and services to its commercial and retail customers.
5
<PAGE> 7
NOTE 2: Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. For further
information, refer to the Company's Form S4 registration statement (file numbers
333-95087, 333-95089 and 333-95091). In the opinion of management, all
adjustments, consisting primarily of normal recurring adjustments, necessary for
a fair presentation of the results for the interim periods have been made to
fairly state the results for the interim periods. The results of operations of
the three and six months ended June 30, 2000 are not necessarily indicative of
the results expected for the full year.
NOTE 3: Business Combination
The Company was formed to serve as a bank holding company for the three
subsidiary banks. The formation of the holding company was recorded on a
pooling-of-interests accounting basis, and, therefore, all historical financial
presentations have been restated to reflect the merger.
NOTE 4: Common Stock Outstanding and Earnings Per Share Data
As of July 31, 2000, all of the shareholders had not yet exchanged their bank
stock for Company stock. Fractional shares will be paid out in cash according to
the terms of the merger agreements. Since the exact number of fractional shares
will not be known until substantially all shares have been exchanged, the exact
number of the Company's shares will not be known until such time. However, the
total number of potential shares outstanding will not exceed (and will
approximate) 2,815,907.
Basic earnings per share are based on the weighted average number of common
shares outstanding during the periods. Diluted earnings per share includes the
weighted average number of common shares outstanding during the periods and the
further dilution from stock options using the treasury method. The following is
a reconciliation of the numerators and denominators of the basic and diluted
earnings per share computations for the periods presented (dollars are in
thousands, except per share data).
<TABLE>
<CAPTION>
For the three months ended June 30,
-------------------------------------------------
2000 1999
-----------------------------------------------------------------------
Weighted Per Weighted Per
Average Share Average Share
Earnings Shares Amount Earnings Shares Amount
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Net earnings available
to common
shareholders $273 2,814,888 $0.10 $482 2,606,048 $0.19
======= ========
Effect of dilutive securities:
Incremental shares from
assumed exercise of stock
options $0 14,050 $0 136,265
--------------------- -----------------------
Diluted EPS
Net earnings available to Common
Stockholders and assumed
conversions $273 2,828,938 $0.10 $482 2,742,313 $0.18
================================ ====================================
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
For the six months ended June 30,
-------------------------------------------------
2000 1999
-----------------------------------------------------------------------
Weighted Per Weighted Per
Average Share Average Share
Earnings Shares Amount Earnings Shares Amount
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Net earnings available
to common
shareholders $597 2,807,380 $0.21 $923 2,615,383 $0.35
======= =======
Effect of dilutive securities:
Incremental shares from
assumed exercise of stock
options $0 16,459 $0 143,278
--------------------- --------------------
Diluted EPS
Net earnings available to Common
Stockholders and assumed
conversions $597 2,823,839 $0.21 $923 2,758,661 $0.33
================================ ================================
</TABLE>
NOTE 5: Comprehensive Income
Under Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," certain transactions and other economic events that
bypass the income statement must be displayed as other comprehensive income. The
Company's comprehensive income consists of net earnings and unrealized gains and
losses on securities available-for-sale, net of income taxes.
The table below sets forth the Company's comprehensive income for the periods
indicated below (in thousands of dollars).
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Net income $273 $482 $597 $923
Other comprehensive income, net of tax
change in unrealized market value adjustment
on securities available for sale, net of tax 54 (225) 30 (432)
------------------------- -------------------------
Comprehensive income $327 $257 $627 $491
========================= =========================
</TABLE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
COMPARISON OF BALANCE SHEETS AT JUNE 30, 2000 AND DECEMBER 31, 1999
Overview
The Company is a multi-bank holding company that was formed as a result
of a merger of three independent commercial banks as of the close of business on
June 30, 2000. The merger and organization of the Company was recorded using the
pooling-of-interests accounting method. Therefore, all historical financial
presentations have been restated to reflect the merger.
7
<PAGE> 9
Total assets of the Company were $297.2 million as of June 30, 2000,
compared to $278.9 million at December 31, 1999, an increase of $18.3 million or
6.6%. This increase was primarily the result of the Company's internal generated
loan growth funded by an increase in deposits.
Federal Funds Sold
Federal funds sold was $17.3 million at June 30, 2000 as compared to
$4.1 million at December 31, 1999, an increase of $13.2 million or 322%. The
increase was due primarily to the favorable interest rates on overnight federal
funds sold relative to short-term Treasury securities
Investment Securities
Securities available-for-sale, consisting primarily of U.S. Treasury
and government agency securities, were $53.3 million at June 30, 2000 compared
to $59.8 million at December 31, 1999, a decrease of $6.5 million or 10.9%.
These securities have been recorded at market value. The Company classifies the
majority of its securities as "available-for-sale" to provide for greater
flexibility to respond to changes in interest rates.
Securities held-to-maturity, consisting of U.S. governmental agency
securities, were $3.5 million at June 30, 2000 and $3.5 million at December 31,
1999. These securities have been recorded at cost net of unamortized premiums
and discounts. The estimated market value of these securities was $3.5 million
at June 30, 2000 and $3.5 million at December 31, 1999.
Loans
Total gross loans were $193.5 million at June 30, 2000, compared to
$177.8 million at December 31, 1999, an increase of $15.7 million or 8.8%. For
the same period, real estate loans increased by $12.6 million or 9.5%,
commercial loans increased by $0.8 million or 2.7%, and all other loans
including consumer loans increased by $2.4 million or 14.5%. Total loans net of
unearned fees and allowance for loan losses were $190.6 million at June 30,
2000, compared to $175.2 million at December 31, 1999, an increase of $15.4
million or 8.8%.
The following table sets forth information concerning the loan
portfolio by collateral types as of the dates indicated (dollars are in
thousands).
June 30, Dec 31,
2000 1999
--------- ---------
Real Estate Loans
Residential $ 62,933 $ 60,538
Commercial 69,262 59,759
Construction 12,565 11,912
--------- ---------
Total Real Estate 144,760 132,209
Commercial 29,442 28,680
Other 19,325 16,876
--------- ---------
Gross Loans 193,527 177,765
Unearned fees (333) (302)
Allowance for loan losses (2,582) (2,303)
--------- ---------
Total loans net of unearned fees
and allowance for loan losses $ 190,612 $ 175,160
========= =========
8
<PAGE> 10
Credit Quality and Allowance for Loan Losses
The Company's allowance for loan losses represents management's
estimate of an amount adequate to provide for potential losses within the
existing loan portfolio. Loans are charged against the allowance when management
believes collection of the principal is unlikely. The allowance consists of
amounts established for specific loans and is also based on historical loan loss
experience. The specific reserve element is the result of a regular analysis of
all loans and commitments based on credit rating classifications and other
factors. Management also weighs general economic conditions based on knowledge
of specific factors that may affect the collectibility of loans. At June 30,
2000, the allowance for loan losses was $2.6 million or 1.33% of total gross
loans outstanding, compared to $2.3 million or 1.30%, at December 31, 1999.
The following table sets forth information concerning the activity in
the allowance for loan losses during the periods indicated (in thousands of
dollars).
<TABLE>
<CAPTION>
Six Month Period end June 30,
2000 1999
------- ------
<S> <C> <C>
Allowance at beginning of period $ 2,303 $2,335
Charge-offs
Commercial Loans 31 86
Real Estate Loans 26 25
Consumer Loans 26 12
------- ------
Total charge-offs 83 123
Recoveries
Commercial Loans 34 41
Real Estate Loans 50 4
Consumer Loans 5 15
------- ------
Total Recoveries 89 60
Net charge-offs (6) 63
Provision for loan losses 273 129
------- ------
Allowance at end of period $ 2,582 $2,401
======= ======
</TABLE>
Nonperforming Assets
Nonperforming assets include (1) non-accrual loans; (2) accruing loans
that are 90 days or more delinquent that are deemed by management to be
adequately secured and in the process of collection; and (3) OREO (i.e. real
estate acquired through foreclosure or deed in lieu of foreclosure). All
delinquent loans are reviewed on a regular basis and are placed on non-accrual
status when, in the opinion of management, the possibility of collecting
additional interest is deemed insufficient to warrant further accrual. As a
matter of policy, interest is not accrued on loans past due 90 days or more
unless the loan is both well secured and in the process of collection. When a
loan is placed on non-accrual status, interest accruals cease and uncollected
accrued interest is reversed and charged against current income. Additional
interest income on such loans is recognized only when received.
The following table sets forth information regarding the components of
nonperforming assets at the dates indicated (in thousands of dollars).
9
<PAGE> 11
June 30 Dec 31
2000 1999
------- ------
Non-Accrual Loans $ 265 $ 474
Accruing Loans Past Due 90 days+ 117 58
Other Real Estate Owned 209 191
------ ------
Total Non-Performing Assets $ 591 $ 723
====== ======
As a Percent of Total Assets 0.20% 0.26%
====== ======
Allowance for Loan Losses $2,582 $2,303
====== ======
Management is continually analyzing its loan portfolio in an effort to
recognize and resolve its problem assets as quickly and efficiently as possible.
As of June 30, 2000, management believes that it had adequately reserved for
such problem assets. However, management recognizes that many factors can
adversely impact various segments of its market. Accordingly, there is no
assurance that losses in excess of such reserves will not be incurred.
Bank Premises and Equipment
Bank premises and equipment was $13.5 million at June 30, 2000,
compared to $13.1 million at December 31, 1999, an increase of $0.4 million or
3.1%. This increase was primarily due to the construction of a new branch
building and acquisition of related equipment, which opened for business during
March 2000, and partially offset by depreciation and amortization of existing
premises and equipment.
Deposits
Total deposits were $268.2 million at June 30, 2000, compared to $248.0
million at December 31, 1999, an increase of $20.2 million or 8.1%. During the
six month period ended June 30, 2000, demand deposits increased by $3.6 million
(8.3%), NOW deposits increased by $3.5 million (10.6%), savings and money market
accounts increased by $9.5 million (18.9%), and time deposits increased by $3.7
million (3.1%).
Repurchase Agreements, Federal Reserve Bank Advances and other Borrowings
The Company enters into agreements to repurchase ("repurchase
agreements") under which the Company pledges investment securities owned and
under its control as collateral against borrowed funds. The Company also borrows
short-term funding through Federal Reserve Bank advances and other borrowings.
Collectively these short-term borrowings totaled $3.7 million at June 30, 2000,
as compared to $7.1 million at December 31, 1999, a decrease of $3.4 million or
48%.
Stockholders' Equity
Shareholders' equity at June 30, 2000, was $24.1 million, or 8.1% of
total assets, compared to $23.3 million, or 8.4% of total assets at December 31,
1999. The increase in stockholders' equity was due to year-to-date net income,
stock options exercised, and changes in the market value of securities available
for sale, net of deferred taxes.
The Comptroller of the Currency has established risk-based capital
requirements for national banks. These guidelines are intended to provide an
additional measure of a bank's capital adequacy by assigning weighted levels of
risk to asset categories. Banks are also required to systematically maintain
10
<PAGE> 12
capital against such "off- balance sheet" activities as loans sold with
recourse, loan commitments, guarantees and standby letters of credit. These
guidelines are intended to strengthen the quality of capital by increasing the
emphasis on common equity and restricting the amount of loan loss reserves and
other forms of equity such as preferred stock that may be included in capital.
As of June 30, 2000, all three of the Company's subsidiary banks have exceeded
the minimum capital levels to be considered "Well Capitalized" under the terms
of the guidelines, and have done so consistently in the past.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED JUNE 30,
2000 AND 1999
Overview
Net income for the three months ended June 30, 2000 was $273 thousand
or $0.10 per share diluted, compared to $482 thousand or $0.18 per share diluted
for the same period in 1999. The merger, SEC registration, and related cost
recognized during the three month period ended June 30, 2000 was approximately
$262 thousand or $0.09 per share diluted. As such, net income for the three
months ended June 30, 2000, excluding the merger/SEC and related expenses
recognized during this period, would have been approximately $535 thousand or
$0.19 per share diluted, compared to $482 thousand or $0.18 per share diluted
for the same period in 1999.
The return on average equity ("ROE") for the three month period ended
June 30, 2000 was 4.54% (approximately 8.87% excluding the merger/SEC related
expenses), as compared to 8.83% for the same period in 1999.
Net Interest Income/Margin
Net interest income increased $455 thousand or 16.9% to $3.2 million
during the three month period ended June 30, 2000 compared to $2.7 million for
the same period in 1999. The $455 thousand increase was the result of a $728
thousand increase in interest income which was partially offset by a $273
thousand increase in interest expense.
Interest earning assets averaged $266.9 million during the three month
period ended June 30, 2000 as compared to $253.5 million for the same period in
1999, an increase of $13.4 million, or 5.3%. The yield on average interest
earning assets increased 0.72% to 8.22% during the three month period ended June
30, 2000, compared to 7.50% for the same period in 1999. The combined effects of
the $13.4 million increase in average interest earning assets and the 0.72%
increase in yield on average interest earning assets resulted in the $728
thousand increase in interest income between the two periods.
Interest bearing liabilities averaged $223.7 million during the three
month period ended June 30, 2000 as compared to $215.0 million for the same
period in 1999, an increase of $8.7 million, or 4.0%. The cost of average
interest bearing liabilities increased 0.34% to 4.15% during the three month
period ended June 30, 2000, compared to 3.81% for the same period in 1999. The
combined effects of the $8.7 million increase in average interest bearing
liabilities and the 0.34% increase in the cost of the average interest bearing
liabilities resulted in the $273 thousand increase in interest expense between
the two periods.
The table below summarizes, the analysis of changes in interest income
and interest expense for the three month periods ended June 30, 2000 and 1999
(in thousands of dollars).
11
<PAGE> 13
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------------------------------------------------
2000 1999
---------------------------------------------------------------------
Average Interest Average Average Interest Average
Balance Inc / Exp Rate Balance Inc / Exp Rate
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans (1) (2) $190,617 $4,381 9.19% $159,992 $3,520 8.80%
Securities (3) 76,245 1,102 5.78% 93,458 1,235 5.29%
---------------------------------------------------------------------
Total Earning Assets 266,862 5,483 8.22% 253,450 4,755 7.50%
All Other Assets 27,907 24,315
-------- --------
Total Assets $294,769 $277,765
======== ========
Deposits (4) 219,678 2,268 4.13% 210,488 2,004 3.81%
Borrowings 4,039 53 5.25% 4,513 44 3.90%
Total Interest Bearing
Liabilities 223,717 2,321 4.15% 215,001 2,048 3.81%
---------------------------------------------------------------------
Demand Deposits 46,367 40,406
Other Liabilities 568 543
Shareholders' Equity 24,117 21,815
-------- --------
Total Liabilities and
Shareholders' Equity $294,769 $277,765
======== ========
Net Interest Spread (5) 4.07% 3.69%
===== =====
Net Interest Income $3,162 $2,707
====== ======
Net Interest Margin (6) 4.74% 4.27%
===== =====
</TABLE>
Note 1: Loan balances are net of deferred origination fees and costs, and
allowance for loan losses.
Note 2: Interest income on average loans include loan fee recognition of $166
thousand and $155 thousand for the three month periods ended June 30,
2000 and 1999.
Note 3: Includes securities available-for-sale, securities held-to-maturity,
and federal funds sold.
Note 4: Includes interest bearing deposits only. Non-interest bearing
checking accounts are included in the demand deposits listed above.
Note 5: Represents the average rate earned on interest earning assets minus
the average rate paid on interest bearing liabilities.
Note 6: Represents net interest income divided by total interest earning assets.
Provision for Loan Losses
The provision for loan 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 Company,
industry standards, the amount of nonperforming loans, general economic
conditions, particularly as they relate to the Company's market areas, and other
factors related to the collectibility of the Company's loan portfolio. As these
factors change, the level of loan loss provision changes. The provision was $136
thousand for the three month period ended June 30, 2000 compared to $84 thousand
for the same period in 1999. The addition was deemed appropriate by management
due to the growth of the loan portfolio.
Non-interest Income
Non-interest income for the three months ended June 30, 2000 increased
$102 thousand, or 22%, to $572 thousand, compared to $470 thousand for the same
period in 1999. The majority of the increase ($73 thousand) was a result of
increase service charges on deposit accounts. The remainder of the
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<PAGE> 14
increase was related to other service charges and miscellaneous fees.
Non-interest income as a percentage of total assets (annualized) was 0.77% for
the three months ended June 30, 2000, compared to 0.68% for the same period in
1999.
Non-interest Expense
Non-interest expense for the three months ended June 30, 2000 increased
$675 thousand, or 29%, to $3.0 million, compared to $2.3 million for the same
period in 1999. The primary causes for the increase relate to the merger/SEC
related expenses, a new branch that opened in March 2000, and the cost of
additional personnel that were hired to prepare the three subsidiary banks for
the merger and SEC registration as well as enhance the Company's future
accounting and reporting functions. The merger/SEC related expenses recognized
in the three month period ended June 30, 2000 were $262 thousand. Salaries and
employee benefits increased by $206 thousand (20.4%), occupancy and depreciation
expenses increased by $70 thousand (13.9%), data processing expenses increased
by $34 thousand (18.4%), and all remaining expenses increased by $103 thousand
(16.4%).
Provision for Income Taxes
The income tax provision for the three months ended June 30, 2000 was
$328 thousand (an effective rate of 54.5%) compared to $289 thousand (an
effective rate of 37.5%) for the same period in 1999. The effective tax rate
increased primarily due to the amount of merger related expenses incurred that
were not allowable tax deductions.
COMPARISON OF RESULTS OF OPERATIONS FOR THE SIX MONTH PERIODS ENDED JUNE 30,
2000 AND 1999
Overview
Net income for the six months ended June 30, 2000 was $597 thousand or
$0.21 per share diluted, compared to $923 thousand or $0.33 per share diluted
for the same period in 1999. The merger, SEC registration, and related cost
recognized during the six month period ended June 30, 2000 was approximately
$358 thousand or $0.13 per share diluted. As such, net income for the six months
ended June 30, 2000, excluding the merger/SEC and related expenses recognized
during this period, would have been approximately $955 thousand or $0.34 per
share diluted, compared to $923 thousand or $0.33 per share diluted for the same
period in 1999.
The return on average equity ("ROE") for the six month period ended
June 30, 2000 was 5.01% (approximately 8.02% excluding the merger/SEC related
expenses), as compared to 8.59% for the same period in 1999.
Net Interest Income/Margin
Net interest income increased $929 thousand or 17.8% to $6.2 million
during the six month period ended June 30, 2000 compared to $5.2 million for the
same period in 1999. The $929 thousand increase was the result of a $1.134
million increase in interest income which was partially offset by a $205
thousand increase in interest expense.
Interest earning assets averaged $262.9 million during the six month
period ended June 30, 2000 as compared to $255.1 million for the same period in
1999, an increase of $7.8 million, or 3.1%. The
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<PAGE> 15
yield on average interest earning assets increased 0.64% to 8.07% during the six
month period ended June 30, 2000, compared to 7.43% for the same period in 1999.
The combined effects of the $7.8 million increase in average interest earning
assets and the 0.64% increase in yield on average interest earning assets
resulted in the $1.134 million increase in interest income between the two
periods.
Interest bearing liabilities averaged $220.2 million during the six
month period ended June 30, 2000 as compared to $217.0 million for the same
period in 1999, an increase of $3.2 million, or 1.5%. The cost of average
interest bearing liabilities increased 0.13% to 4.04% during the six month
period ended June 30, 2000, compared to 3.91% for the same period in 1999. The
combined effects of the $3.2 million increase in average interest bearing
liabilities and the 0.13% increase in the cost of the average interest bearing
liabilities resulted in the $205 thousand increase in interest expense between
the two periods.
The table below summarizes, the analysis of changes in interest income
and interest expense for the six month periods ended June 30, 2000 and 1999 (in
thousands of dollars).
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------------------------------------------
2000 1999
---------------------------------------------------------------------
Average Interest Average Average Interest Average
Balance Inc / Exp Rate Balance Inc / Exp Rate
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans (1) (2) $186,407 $8,453 9.07% $157,570 $6,909 8.77%
Securities (3) 76,469 2,159 5.65% 97,483 2,569 5.27%
---------------------------------------------------------------------
Total Earning Assets 262,876 10,612 8.07% 255,053 9,478 7.43%
All Other Assets 27,547 23,665
-------- --------
Total Assets $290,423 $278,718
======== ========
Deposits (4) 215,953 4,342 4.02% 212,285 4,154 3.91%
Borrowings 4,287 110 5.13% 4,748 93 3.92%
Total Interest Bearing
Liabilities 220,240 4,452 4.04% 217,033 4,247 3.91%
---------------------------------------------------------------------
Demand Deposits 45,881 39,581
Other Liabilities 486 609
Shareholders' Equity 23,816 21,495
-------- --------
Total Liabilities and
Shareholders' Equity $290,423 $278,718
======== ========
Net Interest Spread (5) 4.03% 3.52%
===== =====
Net Interest Income $6,160 $5,231
====== ======
Net Interest Margin (6) 4.69% 4.10%
===== =====
</TABLE>
Note 1: Loan balances are net of deferred origination fees and costs, and
allowance for loan losses.
Note 2: Interest income on average loans include loan fee recognition of $315
thousand and $286 thousand for the six month periods ended June 30, 2000
and 1999.
Note 3: Includes securities available-for-sale, securities held-to-maturity,
and federal funds sold.
Note 4: Includes interest bearing deposits only. Non-interest bearing
checking accounts are included in the demand deposits listed above.
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<PAGE> 16
Note 5: Represents the average rate earned on interest earning assets minus
the average rate paid on interest bearing liabilities.
Note 6: Represents net interest income divided by total interest earning assets.
Provision for Loan Losses
The provision for loan 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 Company,
industry standards, the amount of nonperforming loans, general economic
conditions, particularly as they relate to the Company's market areas, and other
factors related to the collectibility of the Company's loan portfolio. As these
factors change, the level of loan loss provision changes. The provision was $273
thousand for the six month period ended June 30, 2000 compared to $129 thousand
for the same period in 1999. The addition was deemed appropriate by management
due to the growth of the loan portfolio.
Non-interest Income
Non-interest income for the six months ended June 30, 2000 increased
$199 thousand, or 22%, to $1.111 million, compared to $912 thousand for the same
period in 1999. Service charges on deposit accounts increased $122 thousand
(16.5%). Service charges and miscellaneous fees increased $78 thousand (45.6%).
Non-interest income as a percentage of total assets (annualized) was 0.75% for
the six months ended June 30, 2000, compared to 0.66% for the same period in
1999.
Non-interest Expense
Non-interest expense for the six months ended June 30, 2000 increased
$1.285 million, or 28%, to $5.8 million, compared to $4.5 million for the same
period in 1999. The primary causes for the increase related to the merger/SEC
related expenses, a new branch that opened in March 2000, and the cost of
additional personnel that were hired to prepare the three subsidiary banks for
the merger and SEC registration as well as enhance the Company's future
accounting and reporting functions. The merger/SEC related expenses recognized
in the six month period ended June 30, 2000 were $358 thousand. Salaries and
employee benefits increased by $411 thousand (20.6%), occupancy and depreciation
expenses increased by $134 thousand (13.8%), data processing expenses increased
by $77 thousand (20.8%), and all remaining expenses increased by $305 thousand
(25.4%).
Provision for Income Taxes
The income tax provision for the six months ended June 30, 2000 was
$579 thousand (an effective rate of 49.3%) compared to $554 thousand (an
effective rate of 37.5%) for the same period in 1999. The effective tax rate
increased primarily due to the amount of merger related expenses incurred that
were not allowable tax deductions.
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<PAGE> 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Shareholders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule (SEC use only)
(b) No reports on Form 8-K were filed during the quarter ended
June 30, 2000
16
<PAGE> 18
CENTERSTATE BANKS OF FLORIDA, INC AND SUBSIDIARIES
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CENTERSTATE BANKS OF FLORIDA, INC AND SUBSIDIARIES
(Registrant)
Date: August 10, 2000 By: /s/ JAMES H. WHITE
--------------- -----------------------------
James H. White
Chairman, President and Chief
Executive Officer
Date: August 10, 2000 By: /s/ JAMES J. ANTAL
--------------- -----------------------------
James J. Antal
Senior Vice President
and Chief Financial Officer
17
