<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 September 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 2,815,879
-------------------------------------- ---------------------------------
(class) Outstanding at September 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 - September 30, 2000 (unaudited) 2
Condensed Consolidated Statements of Earnings for the Three and Nine Months
ended September 30, 2000 and 1999 (unaudited) 3
Condensed Consolidated Statements of Cash Flows - Nine Months ended
September 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 Sept 30, 2000
--------------------------------------------------------------- ------------------
<S> <C>
Cash and due from banks $ 11,989
Federal funds sold 14,257
Securities:
Available-for-sale (at market value) 52,945
Held-to-maturity (market value of $3,473) 3,515
Loans 199,882
Less allowance for loan losses (2,647)
------------------
Net Loans 197,235
Premises and equipment 13,343
Accrued interest receivable 1,941
Other assets 1,423
--------------------------------------------------------------------------------------
TOTAL ASSETS $296,648
--------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------------------------
Deposits:
Demand - non-interest bearing $ 42,661
Demand - interest bearing 33,555
Savings and money market accounts 60,061
Time deposits 131,321
------------------
Total deposits 267,598
Securities sold under agreements to repurchase 3,094
Accrued expenses and other liabilities 1,128
------------------
Total Liabilities 271,820
Shareholders' Equity:
Preferred stock, $.01 par value; 5,000,000 shares
authorized 0 shares issued and 0 shares outstanding 0
Common stock, $.01 par value; 20,000,000 shares
authorized, 2,815,879 shares issued 28
Additional paid-in capital 15,426
Net unrealized holding losses on available-for-sale
securities, net of tax (82)
Retained earnings 9,456
------------------
Total Shareholders' Equity 24,828
--------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $296,648
--------------------------------------------------------------------------------------
</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 Nine Months Ended
INTEREST INCOME Sept 30, 2000 Sept 30, 1999 Sept 30, 2000 Sept 30, 1999
--------------- ------------------------------- ------------------------------
<S> <C> <C> <C> <C>
Loans $ 4,575 $ 3,545 $ 13,029 $ 10,453
Securities 824 1,028 2,528 3,298
Federal funds sold 268 156 723 456
------------------------------- ------------------------------
Total Interest Income 5,667 4,729 16,280 14,207
------------------------------- ------------------------------
INTEREST EXPENSE
----------------
Deposits 2,466 1,967 6,808 6,121
Securities sold under agreements to 43 45 145 138
repurchase
Other borrowed funds 0 0 8 0
------------------------------- ------------------------------
Total Interest Expense 2,509 2,012 6,961 6,259
------------------------------- ------------------------------
NET INTEREST INCOME 3,158 2,717 9,319 7,948
Provision for loan losses 129 42 402 171
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,029 2,675 8,917 7,777
------------------------------- ------------------------------
NON-INTEREST INCOME
-------------------
Service charges on deposit accounts 503 384 1,366 1,124
Securities (losses) gains (10) 0 (11) 8
Other service charges and fees 124 98 372 261
------------------------------- ------------------------------
Total Non-Interest Income 617 482 1,727 1,393
------------------------------- ------------------------------
NON-INTEREST EXPENSE
--------------------
Salaries and employee benefits 1,284 1,068 3,692 3,065
Occupancy expenses 342 324 997 913
Depreciation of premises and equipment 228 204 678 585
Stationary & printing supplies 64 80 252 244
Marketing expenses 45 40 170 162
Data processing expenses 229 191 676 561
Legal and accounting fees 43 85 170 202
Merger/SEC related expenses 3 0 361 0
Other operating expenses 451 404 1,514 1,201
------------------------------- ------------------------------
Total Non-Interest Expenses 2,689 2,396 8,510 6,933
------------------------------- ------------------------------
Income before income taxes 957 761 2,134 2,237
Provision for income tax expense 351 266 931 819
=============================== ==============================
NET INCOME $ 606 $ 495 $ 1,203 $ 1,418
=============================== ==============================
NET INCOME PER COMMON SHARE:
Basic $ 0.22 $ 0.18 $ 0.43 $ 0.54
Diluted $ 0.21 $ 0.18 $ 0.43 $ 0.51
Weighted Average Common Shares outstanding:
Basic 2,815,879 2,709,654 2,810,243 2,647,152
Diluted 2,829,489 2,818,011 2,825,746 2,779,053
</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>
Nine months ended Sept 30,
2000 1999
---------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 1,203 $ 1,418
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan losses 402 171
Depreciation of premises and equipment 677 640
Net accretion of discounts on investments securities 117 211
Net deferred origination fees 41 36
Gain/Loss on sale of other real estate owned 7 (8)
Deferred income taxes (102) 12
Realized loss (gain) on sale of available for sale securities 10 (8)
Tax deduction in excess of book deduction on options exercised 0 210
Cash provided by (used in) changes in:
Net changes in accrued interest receivable (128) (17)
Net change in prepaids and other assets (70) (160)
Net change in accrued interest payable 59 (76)
Net change in accounts payable and accrued expenses 555 133
---------------- ----------------
Net cash provided by operating activities 2,771 2,562
---------------- ----------------
Cash flows from investing activities:
Proceeds from maturities of investment securities available for sale 22,469 21,069
Proceeds from callable investment securities available for sale 0 3,000
Proceeds from sales of investment securities available for sale 8,542 1,000
Purchases of investment securities for sale (23,920) (15,686)
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 (22,582) (10,618)
Purchases of premises and equipment (946) (1,936)
Proceeds from sale of other real estate owned 100 211
---------------- ----------------
Net cash used in investing activities (16,337) (3,960)
---------------- ----------------
Cash flows from financing activities:
Net increase (decrease) in demand and savings deposits 19,621 (3,356)
Net increase (decrease) in other borrowings (3,984) 481
Stock options exercised 130 1,197
Dividends paid 0 (232)
---------------- ----------------
Net cash provided by (used in) financing activities 15,767 (1,910)
---------------- ----------------
Net increase (decrease) in cash and cash equivalents 2,201 (3,308)
Cash and cash equivalents, beginning of period 24,045 25,526
---------------- ----------------
Cash and cash equivalents, end of period $ 26,246 $ 22,218
================ ================
</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>
<S> <C> <C>
Supplemental schedule of noncash transactions:
Market value adjustment- securities available-for-sale
Market value adjustments- securities $ (104) $ (214)
Deferred income tax liability 22 79
=============== ==============
Unrealized loss on securities available-for-sale $ (82) $ (135)
=============== ==============
Transfer of loan to other real estate owned $ 64 $ 175
=============== ==============
Cash paid during the period for:
Interest $6,902 $6,335
=============== ==============
Income taxes $ 752 $ 923
=============== ==============
</TABLE>
See accompanying notes to 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. The
results of operations of the three and nine months ended September 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
Basic earnings per share is 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 Sept 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 $606 2,815,879 $0.22 $495 2,709,654 $0.18
===== =====
Effect of dilutive securities:
Incremental shares from
assumed exercise of stock
Options $ 0 13,610 $ 0 108,357
------------------ -----------------
Diluted EPS
Net earnings available to Common
Stockholders and assumed
Conversions $606 2,829,489 $0.21 $495 2,818,011 $0.18
================= ===== ================= =====
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
For the nine months ended Sept 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 $1,203 2,810,243 $0.43 $1,418 2,647,152 $0.54
===== =====
Effect of dilutive securities:
Incremental shares from
assumed exercise of stock
options $ 0 15,503 $ 0 131,901
------------------- -------------------
Diluted EPS
Net earnings available to Common
Stockholders and assumed
conversions $1,203 2,825,746 $0.43 $1,418 2,779,053 $0.51
=================== ===== =================== =====
</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 Nine Months Ended
Sept 30, 2000 Sept 30, 1999 Sept 30, 2000 Sept 30, 1999
------------------------------- ------------------------------
<S> <C> <C> <C> <C>
Net income $606 $495 $1,203 $1,418
Other comprehensive income, net of tax
change in unrealized market value adjustment
on securities available for sale, net of tax 153 (14) 183 (446)
------------------------------- ------------------------------
Comprehensive income $759 $481 $1,386 $ 972
=============================== ==============================
</TABLE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARISON OF BALANCE SHEETS AT SEPTEMBER 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 $296.6 million as of September 30,
2000, compared to $278.9 million at December 31, 1999, an increase of $17.7
million or 6.3%. This increase was primarily the result of the Company's
internally generated loan growth funded by an increase in deposits.
Federal Funds Sold
Federal funds sold was $14.3 million at September 30, 2000 as compared
to $4.1 million at December 31, 1999, an increase of $10.2 million or 249%. 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 $52.9 million at September 30, 2000
compared to $59.8 million at December 31, 1999, a decrease of $6.9 million or
11.5%. 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 September 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 September 30, 2000 and $3.5 million at December 31, 1999.
Loans
Total gross loans were $200.2 million at September 30, 2000, compared
to $177.8 million at December 31, 1999, an increase of $22.4 million or 12.6%.
For the same period, real estate loans increased by $18.0 million or 13.6%,
commercial loans increased by $1.0 million or 3.5%, and all other loans
including consumer loans increased by $3.5 million or 20.4%. Total loans net of
unearned fees and allowance for loan losses were $197.2 million at September 30,
2000, compared to $175.2 million at December 31, 1999, an increase of $22.0
million or 12.6%.
The following table sets forth information concerning the loan
portfolio by collateral types as of the dates indicated (dollars are in
thousands).
Sept 30, Dec 31,
2000 1999
------------------ -----------------
Real Estate Loans
Residential $ 69,108 $ 60,538
Commercial 68,535 59,759
Construction 12,557 11,912
------------------ -----------------
Total Real Estate 150,200 132,209
Commercial 29,700 28,680
Other 20,326 16,876
------------------ -----------------
Gross Loans 200,226 177,765
Unearned fees (344) (302)
Allowance for loan losses (2,647) (2,303)
------------------ -----------------
Total loans net of unearned fees
and allowance for loan losses $197,235 $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 September
30, 2000, the allowance for loan losses was $2.6 million or 1.32% 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).
Nine Month Period end Sept 30,
2000 1999
----------- -------------
Allowance at beginning of period $2,303 $2,335
Charge-offs
Commercial Loans 55 142
Real Estate Loans 59 79
Consumer Loans 44 58
----------- -------------
Total charge-offs 158 279
Recoveries
Commercial Loans 37 49
Real Estate Loans 57 6
Consumer Loans 6 17
----------- -------------
Total Recoveries 100 72
Net charge-offs 58 207
Provision for loan losses 402 171
----------- -------------
Allowance at end of period $2,647 $2,299
=========== =============
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
Sept 30 Dec 31
2000 1999
--------- -----------
Non-Accrual Loans $ 556 $ 474
Accruing Loans Past Due 90 days+ 348 58
Other Real Estate Owned 148 191
--------- -----------
Total Non-Performing Assets $1,052 $723
========= ===========
As a Percent of Total Assets 0.35% 0.26%
========= ===========
Allowance for Loan Losses $2,647 $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 September 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 $13.3 million at September 30, 2000,
compared to $13.1 million at December 31, 1999, an increase of $0.2 million or
1.5%. 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 offset by depreciation and amortization of existing premises and
equipment.
Deposits
Total deposits were $267.6 million at September 30, 2000, compared to
$248.0 million at December 31, 1999, an increase of $19.6 million or 7.9%.
During the nine month period ended September 30, 2000, demand deposits increased
by $0.1 million (0.2%), NOW deposits increased by $0.5 million (1.5%), savings
and money market accounts increased by $9.9 million (2.0%), and time deposits
increased by $9.2 million (7.5%).
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 $3.1 million at September 30,
2000, as compared to $7.1 million at December 31, 1999, a decrease of $4.0
million or 56%.
Stockholders' Equity
Shareholders' equity at September 30, 2000, was $24.8 million, or 8.4%
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 September 30, 2000, all three of the Company's subsidiary banks exceeded
the minimum capital levels to be considered "Well Capitalized" under the terms
of the guidelines.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED SEPTEMBER
30, 2000 AND 1999
Overview
Net income for the three months ended September 30, 2000 was $606
thousand or $0.22 per share (basic) and $0.21 per share diluted, compared to
$495 thousand or $0.18 per share (basic) and $0.18 per share diluted for the
same period in 1999.
The return on average equity ("ROE"), calculated on an annualized
basis, for the three month period ended September 30, 2000 was 9.85%, as
compared to 8.89% for the same period in 1999.
Net Interest Income/Margin
Net interest income increased $441 thousand or 16.2% to $3.2 million
during the three month period ended September 30, 2000 compared to $2.7 million
for the same period in 1999. The $441 thousand increase was the result of a $938
thousand increase in interest income which was partially offset by a $497
thousand increase in interest expense.
Interest earning assets averaged $268.8 million during the three month
period ended September 30, 2000 as compared to $250.7 million for the same
period in 1999, an increase of $18.1 million, or 7.2%. The yield on average
interest earning assets increased 0.88% to 8.43% during the three month period
ended September 30, 2000, compared to 7.55% for the same period in 1999. The
combined effects of the $18.1 million increase in average interest earning
assets and the 0.88% increase in yield on average interest earning assets
resulted in the $938 thousand increase in interest income between the two
periods.
Interest bearing liabilities averaged $226.5 million during the three
month period ended September 30, 2000 as compared to $210.3 million for the same
period in 1999, an increase of $16.2 million, or 7.7%. The cost of average
interest bearing liabilities increased 0.60% to 4.43% during the three month
period ended September 30, 2000, compared to 3.83% for the same period in 1999.
The combined effects of the $16.2 million increase in average interest bearing
liabilities and the 0.60% increase in the cost of the average interest bearing
liabilities resulted in the $497 thousand increase in interest expense between
the two periods.
11
<PAGE> 13
The table below summarizes, the analysis of changes in interest income
and interest expense for the three month periods ended September 30, 2000 and
1999 (in thousands of dollars).
<TABLE>
<CAPTION>
Three Months Ended Sept 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) $195,315 $4,575 9.37% $161,709 $3,545 8.77%
Securities (3) 73,456 1,092 5.95% 88,952 1,184 5.32%
--------------------------------- ---------------------------------
Total Earning Assets 268,771 5,667 8.43% 250,661 4,729 7.55%
All Other Assets 26,283 25,285
-------- --------
Total Assets $295,054 $275,946
======== ========
Deposits (4) 223,535 2,466 4.41% 205,151 1,967 3.84%
Borrowings 2,985 43 5.76% 5,146 45 3.50%
--------------------------------- ---------------------------------
Total Interest Bearing
Liabilities 226,520 2,509 4.43% 210,297 2,012 3.83%
Demand Deposits 43,094 42,477
Other Liabilities 839 904
Shareholders' Equity 24,601 22,268
-------- --------
Total Liabilities and
Shareholders' Equity $295,054 $275,946
======== ========
Net Interest Spread (5) 4.00% 3.72%
===== ======
Net Interest Income $3,158 $2,717
====== ======
Net Interest Margin (6) 4.70% 4.34%
===== ======
</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 $171
thousand and $114 thousand for the three month periods ended September
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 $129
thousand for the three month period ended September 30, 2000 compared to $42
thousand for the same period in 1999. The addition was deemed appropriate by
management due to the growth of the loan portfolio.
12
<PAGE> 14
Non-interest Income
Non-interest income for the three months ended September 30, 2000
increased $135 thousand, or 28%, to $617 thousand, compared to $482 thousand for
the same period in 1999. The majority of the increase ($119 thousand) related to
deposit account service charges. The remainder of the increase was related to
other service charges and miscellaneous items. Non-interest income (annualized)
as a percentage of total average assets was 0.84% for the three months ended
September 30, 2000, compared to 0.70% for the same period in 1999.
Non-interest Expense
Non-interest expense for the three months ended September 30, 2000
increased $293 thousand, or 12%, to $2.7 million, compared to $2.4 million for
the same period in 1999. The primary causes for the increase relates to a new
branch that opened in March 2000, and the cost of additional personnel in the
accounting and internal audit / compliance areas. Salaries and employee benefits
increased by $216 thousand (20.2%), occupancy and depreciation expenses
increased by $42 thousand (8.0%), data processing expenses increased by $38
thousand (19.9%), and all remaining expenses together resulted in a net decrease
of $3 thousand (0.5%).
Provision for Income Taxes
The income tax provision for the three months ended September 30, 2000
was $351 thousand (an effective rate of 36.7%) compared to $266 thousand (an
effective rate of 35.0%) for the same period in 1999.
COMPARISON OF RESULTS OF OPERATIONS FOR THE NINE MONTH PERIODS ENDED SEPTEMBER
30, 2000 AND 1999
Overview
Net income for the nine months ended September 30, 2000 was $1.2
million or $0.43 per share (basic) and $0.43 per share diluted, compared to $1.4
million or $0.54 per share (basic) and $0.51 per share diluted for the same
period in 1999. The merger, SEC registration, and related cost recognized during
the nine month period ended September 30, 2000 was approximately $342 thousand
(net of tax) or $0.12 per share basic and diluted. As such, net income for the
nine months ended September 30, 2000, excluding the merger/SEC and related
expenses recognized during this period, would have been approximately $1.5
million or $0.55 per share (basic) and $0.55 per share diluted, compared to $1.4
million or $0.54 per share (basic) and $0.51 per share diluted for the same
period in 1999.
The return on average equity ("ROE") for the nine month period ended
September 30, 2000 was 6.71% (approximately 8.62% excluding the merger/SEC
related expenses), as compared to 8.69% for the same period in 1999.
Net Interest Income/Margin
Net interest income increased $1.4 million or 17.7% to $9.3 million
during the nine month period ended September 30, 2000 compared to $7.9 million
for the same period in 1999. The $1.4 million
13
<PAGE> 15
increase was the result of a $2.1 million increase in interest income which was
partially offset by a $0.7 million increase in interest expense.
Interest earning assets averaged $265.0 million during the nine month
period ended September 30, 2000 as compared to $253.9 million for the same
period in 1999, an increase of $11.1 million, or 4.4%. The yield on average
interest earning assets increased 0.73% to 8.19% during the nine month period
ended September 30, 2000, compared to 7.46% for the same period in 1999. The
combined effects of the $11.1 million increase in average interest earning
assets and the 0.73% increase in yield on average interest earning assets
resulted in the $2.1 million increase in interest income between the two
periods.
Interest bearing liabilities averaged $222.3 million during the nine
month period ended September 30, 2000 as compared to $214.2 million for the same
period in 1999, an increase of $8.1 million, or 3.8%. The cost of average
interest bearing liabilities increased 0.27% to 4.17% during the nine month
period ended September 30, 2000, compared to 3.90% for the same period in 1999.
The combined effects of the $8.1 million increase in average interest bearing
liabilities and the 0.27% increase in the cost of the average interest bearing
liabilities resulted in the $0.7 million increase in interest expense between
the two periods.
The table below summarizes, the analysis of changes in interest income
and interest expense for the nine month periods ended September 30, 2000 and
1999 (in thousands of dollars).
<TABLE>
<CAPTION>
Nine Months Ended Sept 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) $189,536 $13,029 9.17% $159,006 $10,453 8.77%
Securities (3) 75,462 3,251 5.74% 94,850 3,754 5.28%
-------------------------------- --------------------------------
Total Earning Assets 264,998 16,280 8.19% 253,856 14,207 7.46%
All Other Assets 26,781 23,929
-------- --------
Total Assets $291,779 $277,785
======== ========
Deposits (4) 218,485 6,808 4.15% 209,337 6,121 3.90%
Borrowings 3,849 153 5.30% 4,876 138 3.77%
-------------------------------- --------------------------------
Total Interest Bearing
Liabilities 222,334 6,961 4.17% 214,213 6,259 3.90%
Demand Deposits 44,952 41,115
Other Liabilities 604 702
Shareholders' Equity 23,889 21,755
-------- --------
Total Liabilities and
Shareholders' Equity $291,779 $277,785
======== ========
Net Interest Spread (5) 4.02% 3.56%
======= =====
Net Interest Income $ 9,319 $ 7,948
======= =======
Net Interest Margin (6) 4.69% 4.17%
======= =====
</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 $486
thousand and $400 thousand for the nine month periods ended September
30, 2000 and 1999.
14
<PAGE> 16
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 $402
thousand for the nine month period ended September 30, 2000 compared to $171
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 nine months ended September 30, 2000
increased $0.3 million, or 21%, to $1.7 million, compared to $1.4 million for
the same period in 1999. Service charges on deposit accounts increased $0.2
million (18%). Service charges and miscellaneous fees increased $0.1 million
(38%). Non-interest income (annualized) as a percentage of total average assets
was 0.79% for the nine months ended September 30, 2000, compared to 0.67% for
the same period in 1999.
Non-interest Expense
Non-interest expense for the nine months ended September 30, 2000
increased $1.6 million, or 23%, to $8.5 million, compared to $6.9 million for
the same period in 1999. The primary causes for the increase relates to a new
branch that opened in March 2000, and the cost of additional personnel in the
accounting and internal audit / compliance areas. The merger/SEC related
expenses recognized in the nine month period ended September 30, 2000 were $361
thousand. Salaries and employee benefits increased by $627 thousand (20.5%),
occupancy and depreciation expenses increased by $177 thousand (11.8%), data
processing expenses increased by $115 thousand (20.5%), and the total of all
remaining expenses increased by $297 thousand (16.4%).
Provision for Income Taxes
The income tax provision for the nine months ended September 30, 2000
was $931 thousand (an effective rate of 43.6%) compared to $819 thousand (an
effective rate of 36.6%) 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.
15
<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
September 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: November 6, 2000 By: /s/ JAMES H. WHITE
---------------- -------------------
James H. White
Chairman, President and Chief
Executive Officer
Date: November 6, 2000 By: /s/ JAMES J. ANTAL
---------------- -------------------
James J. Antal
Senior Vice President
and Chief Financial Officer
17
