U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the Quarterly period ended JUNE 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: 0-20254
1ST UNITED BANCORP
- -------------------------------------------------------------------------------
(Exact name of Registrant)
FLORIDA 65-0178023
- -------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
980 N. FEDERAL HIGHWAY, BOCA RATON, FL 33432
- ---------------------------------------------------
(Address of principal executive offices)
(561) 392-4000
- -------------------------------------------------------------------------------
(Registrant's telephone number)
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
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as June 30, 1996.
7,449,704
- -----------------------------
<PAGE>
1ST UNITED BANCORP AND SUBSIDIARIES
INDEX
PAGE
Part I. FINANCIAL INFORMATION NUMBERS
--------------------- -------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of
Income - six months ended June 30, 1996
and 1995. 4
Condensed Consolidated Statement of Income -
three months ended June 30, 1996 and 1995 5
Condensed Consolidated Statements of Cash
Flows - six months ended June 30, 1996
and 1995. 6
Condensed Consolidated Statement of
Shareholders' Equity - six months ended
June 30, 1996 7
Notes to Condensed Consolidated Financial
Statements 8-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11-17
Part II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security 18
Holders
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Exhibit 11
Exhibit 27
Signatures 22
This Form 10-Q contains forward-looking statements that involve risks
and uncertainties, and there are certain important factors that could cause
actual results to differ materially from those anticipated. These important
factors include, but are not limited to, economic conditions (both generally and
more specifically in the markets in which Bancorp and 1st United operate),
competition for Bancorp's and 1st United's customers from other providers of
financial services, government legislation and regulation (which changes from
time to time and over which Bancorp and 1st United have no control), changes in
interest rates, the impact of Bancorp's rapid growth, and other risks detailed
in the Annual Report on Form 10-KSB and in Bancorp's other filings with the
Securities and Exchange Commission, all of which are difficult to predict and
many of which are beyond the control of Bancorp.
-2-
<PAGE>
ITEM 1
1ST UNITED BANCORP AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
JUNE 30, DECEMBER 31,
1996 1995
( UNAUDITED ) ( NOTE )
----------- ---------
(in thousands)
ASSETS
Cash and due from banks $ 22,064 $ 18,256
Federal funds sold 14,257 8,370
-------- -------
Cash and cash equivalents 36,321 26,626
Investment securities available for
sale 17,492 7,599
Investment securities held to maturity
(market value of $35,187 and $25,793
at 1996 and 1995) 36,003 25,735
Loans, net of allowance for loan
losses of $8,908 in 1996 and
$6,299 in 1995, respectively 319,746 228,240
Premises and equipment, net 14,049 5,636
Accrued interest receivable 2,171 1,640
Other real estate owned 6,258 1,552
Goodwill, net 7,533 4,229
Other assets 6,562 5,458
-------- --------
$446,135 $306,715
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand deposits, non-interest
bearing $114,486 $ 79,538
NOW and Money Market accounts 147,839 101,401
Savings deposits 47,026 32,434
Time deposits of $100,000 or more 17,023 15,345
Time deposits less than $100,000 72,072 41,038
-------- --------
Total deposits 398,446 269,756
Long-term debt 0 39
Federal funds purchased and
repurchase agreements 0 700
Accrued interest and
Other liabilities 4,375 2,251
-------- --------
Total liabilities 402,821 272,746
Shareholders' equity:
Common Stock, par value $.01 per
share - authorized 20,000,000
shares, issued and outstanding
7,449,704 shares in 1996 and
6,629,804 in 1995 74 66
Additional paid-in capital 30,680 24,317
Retained earnings 12,635 9,655
Unrealized losses on available
for sale securities (75) (69)
-------- --------
43,314 33,969
-------- --------
$446,135 $306,715
======== ========
NOTE: The balance sheet at December 31, 1995
has been derived from the audited
financial statements
See Accompanying Notes
-3-
<PAGE>
1ST UNITED BANCORP AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
Six Months
Ended
June 30,
1996 1995
---- ----
(in thousands except per-share data)
Interest income:
Loans, including fees $ 14,452 $ 10,397
Due from banks 318 53
Federal funds sold 713 40
Investment securities 1,880 1,333
------- ------
17,363 11,823
Interest expense:
Interest expense on deposits 4,370 2,749
Interest expense on federal funds
and borrowings 107 252
------- ------
4,477 3,001
------- ------
Net interest income 12,886 8,822
Provision for loan losses 60 93
------- ------
Net interest income after provision
for loan losses 12,826 8,729
Other income:
Service charges on deposit accounts 1,861 759
Gain on sale of loans 322 109
Gain on sale of asset 385 0
Credit card discount 82 67
Rental income 48 73
Miscellaneous 1,101 456
------- ------
3,799 1,464
Other expenses:
Salaries and employee benefits 5,230 3,096
Occupancy and furniture
and equipment 2,180 1,409
Insurance 140 94
Other real estate 260 230
Stationery, printing and supplies 263 142
Professional fees 350 323
FDIC insurance 53 297
Miscellaneous taxes 109 65
Telephone 271 144
Postage 185 85
Goodwill amortization 310 103
Advertising 293 72
Miscellaneous 1,434 1,017
------- ------
11,078 7,077
------- ------
Income before income taxes 5,547 3,116
Income taxes 2,050 1,131
------- ------
Net Income $ 3,497 $ 1,985
======= ======
Income per common share:
Net income $ .45 $ .30
======= ======
Dividends per share $ .07 $ .11
======= ======
See Accompanying Notes
-4-
<PAGE>
1ST UNITED BANCORP AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
Three Months
Ended
June 30,
1996 1995
---- ----
(in thousands except per share data)
Interest income:
Loans, including fees $ 7,130 $ 5,712
Due from banks 318 53
Federal funds sold 232 22
Investment securities 851 658
------- -------
8,531 6,445
Interest expense:
Interest expense on deposits 2,130 1,571
Interest expense on federal funds
and borrowings 33 115
------- -------
2,163 1,686
------- -------
Net interest income 6,368 4,759
Provision for loan losses 20 53
------- -------
Net interest income after provision
for loan losses 6,348 4,706
Other income:
Service charges on deposit accounts 876 438
Gain on sale of loans 157 65
Gain on sale of asset 385 0
Credit card discount 41 36
Rental income 23 36
Miscellaneous 570 302
------- -------
2,052 877
Other expenses:
Salaries and employee benefits 2,636 1,640
Occupancy and furniture
and equipment 1,097 748
Insurance 84 58
Other real estate 106 115
Stationery, printing and supplies 146 78
Professional fees 153 196
FDIC insurance 0 148
Miscellaneous taxes 62 33
Telephone 170 76
Postage 88 38
Goodwill amortization 155 72
Advertising 155 42
Miscellaneous 543 641
------- -------
5,395 3,885
------- -------
Income before income taxes 3,005 1,698
Income taxes 1,088 621
------- -------
Net Income $ 1,917 $ 1,077
======= =======
Income per common share:
Net income $ .25 $ .16
======= =======
Dividends per share $ .04 $ .03
======= =======
See Accompanying Notes
-5-
<PAGE>
1ST UNITED BANCORP AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months
Ended
June 30,
1996 1995
---- ----
(in thousands)
Operating Activities:
Net income $ 3,497 $ 1,985
Adjustments to reconcile net
income to net cash provided
by operating activities, net
of effect of acquisition 1,262 335
------- -------
Net cash provided by
operating activities 4,759 2,320
Investing Activities:
Net cash received (paid) in
acquisition 26,298 (316)
Purchases of investment securities
held to maturity (1,741) (150)
Maturities of investment securities
held to maturity 4,025 21,286
Purchases of securities available
for sale (1,700) 0
Maturities and sales of securities
available for sale 27,707 0
Increase in loans, net (18,437) (11,573)
Other 1,363 3,237
------- -------
Net cash provided by investing
activities 37,515 12,484
Financing Activities:
Payment of dividends (517) (693)
(Decrease) increase in short term
borrowings (700) 6,947
Payments on long-term debt (2,782) (2,044)
Notes payable, related party 2,168 0
Repayment of notes payable,
related parties (2,168) 0
Repurchase of common stock 0 (1,302)
Decrease in deposits, net (29,174) (25,150)
Other 594 (1,325)
------- -------
Net cash used in financing
activities (32,579) (23,567)
Increase (decrease) in cash and
cash equivalents 9,695 (8,763)
Cash and cash equivalents at
beginning of period 26,626 27,695
------- -------
Cash and cash equivalents at end
of period $36,321 $18,932
======= =======
See Accompanying Notes
-6-
<PAGE>
1ST UNITED BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Dollars in thousands)
Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
UNREALIZED LOSSES TOTAL
COMMON STOCK ADDITIONAL RETAINED ON AVAILABLE FOR SHAREHOLDERS'
SHARES AMOUNT PAID-IN-CAPITAL EARNINGS SALE SECURITIES EQUITY
------ ------ --------------- -------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1995 6,629,804 $66 $24,317 $ 9,655 $ (69) $33,969
Stock issued
for acquisition
of The American
Bancorporation
of the South 819,900 8 6,363 6,371
Adjustment to
unrealized
losses on
available for
sale securities,
net of tax (6) (6)
Cash dividends
- $.07 per share (517) (517)
Net income through
June 30, 1996 3,497 3,497
--------- --- ------- ------- ------- -------
Balance at
June 30, 1996 7,449,704 $74 $30,680 $12,635 $ (75) $43,314
========= === ======= ======= ======= =======
</TABLE>
See Accompanying Notes
-7-
<PAGE>
1ST UNITED BANCORP AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information, the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six months ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1996. For further information, refer to the consolidated financial
statements and footnotes thereto included in 1st United Bancorp's ("Bancorp")
annual report on FORM 10-KSB for the year ended December 31, 1995.
NOTE B - ALLOWANCE FOR LOAN LOSSES
At June 30, 1996, Bancorp's allowance for loan losses was approximately
$8.9 million. Although management believes the allowance for possible losses is
adequate, their evaluation of possible losses is a continuing process which may
necessitate adjustments to the allowance in future periods.
The following summarizes the activity in the allowance for loan losses for
the period ended June 30, 1996 and the year ended December 31, 1995:
(in 000's)
SIX MONTHS YEAR ENDED
ENDED JUNE 30, 1996 DECEMBER 31, 1995
------------------- -----------------
Balance at
beginning of
period $6,299 $6,339
Charge-offs (241) (795)
Recoveries 222 260
------ ------
Net charge-offs (19) (535)
Provision for loan losses 60 162
Allowance of purchased banks
at date acquired 2,568 333
------ ------
Balance at end of period $8,908 $6,299
====== ======
-8-
<PAGE>
NOTE C - INCOME PER COMMON SHARE
Income per common share is calculated by dividing net income by the
weighted average number of shares of common stock and common stock equivalents
outstanding during each period. Common stock equivalents represent the
potentially dilutive effect of the assumed exercise of certain outstanding stock
options. Average shares outstanding after the dilutive effect of common stock
equivalents for the six months ended June 30, 1996 and 1995 were 7,729,000 and
6,705,000, respectively and for the quarter ended June 30, 1996 and 1995 were
7,770,000 and 6,812,000, respectively.
NOTE D - ACQUISITION
On January 5, 1996, Bancorp acquired The American Bancorporation of the
South ("American") and merged its wholly-owned subsidiary, The American Bank of
the South, into 1st United (the "Acquisition"). Consideration paid by Bancorp to
the shareholders of American was $10,017,000 and was paid in the form of 30%
cash and 70% stock. Approximately 820,000 shares of Bancorp common stock were
issued in the Acquisition. The Acquisition was accounted for using the purchase
method of accounting and approximately $3.5 million in goodwill was recorded and
is being amortized over 15 years under the straight-line method.
Approximately $160 million in total assets were acquired. Included in
this total was approximately $20 million, $48 million, $77 million, $8 million
and $5 million in fed funds, investments, gross loans, bank premises and
equipment and other real estate, respectively. Included in net loans were
approximately $11 million in nonaccrual loans. Approximately $158 million in
deposits, which includes approximately 30% in non interest bearing demand
deposits, were assumed and sixteen (16) bank-owned branch locations throughout
Brevard County were acquired.
To facilitate the acquisition of American, certain of the directors of
Bancorp and senior management of 1st United committed to loan Bancorp $2.5
million. On January 4, 1996 Bancorp borrowed approximately $2.1 million from
these individuals at a 10% annual interest rate, payable quarterly, with the
entire outstanding principal balance due in one year. Bancorp paid a 1%
commitment fee and 1% funding fee to these individuals and also and the option
of extending the maturity of these notes for five one-year terms. Bancorp repaid
these borrowings in full on May 1, 1996.
The following summarizes (in thousands) the approximate fair value of the assets
of American acquired and the liabilities assumed:
Cash $ 31,028
Investment securities 48,452
Net loans 72,807
Other assets 17,297
Total deposits (157,864)
Borrowings ( 2,742)
Accrued interest and
other liabilities (1,530)
--------
Net assets $ 7,448
========
-9-
<PAGE>
Pro forma financial information for Bancorp, as if the American acquisition had
taken place as of January 1, 1996 and 1995 for income and per share data is as
follows:
SIX MONTHS ENDED JUNE 30,
(in thousands except per share data)
1996 1995
------ ------
Total interest income $17,363 $17,523
Provision for loan losses 60 272
Net interest income after
provision for loan losses 12,826 12,179
Income before taxes 5,547 1,971
Net income 3,497 1,261
Net income per share .45 .16
NON-PERFORMING ASSETS
American had approximately $5.1 million in other real estate owned ("ORE")
and $11 million in non-performing loans. Included in ORE is a condominium
project in Cocoa Beach, Florida with a carrying value of approximately $3.0
million, representing 33 completed units and undeveloped land. Since the
Acquisition, 1st United has sold approximately $3.8 million in former American
ORE and has contracts to sell various other former American ORE properties for
approximately $2.9 million. Of the approximately $11 million in non-performing
loans, approximately $4.3 million was converted to ORE, approximately $2.0
million was returned to accruing status and approximately $2.7 million was paid
off in the first six months of 1996. Substantially all of the non-performing
loans are secured by real estate. Both the other real estate and non-performing
loans are carried at the lower of cost or fair value less costs of disposal. No
significant writedowns affecting ongoing earnings are anticipated by management
in 1996 on American nonaccrual loans or ORE.
In addition to gross loans, 1st United added on January 5, 1996
approximately $2.6 million to its allowance for loan losses representing the
historical allowance for loan losses acquired from American. The allowance
represents approximately 3.3% of total loans acquired.
-10-
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
The significant variances noted below are substantially a result of
Bancorp's acquisitions (the "Acquisitions") of Jupiter Tequesta National Bank
("JTNB") in April, 1995 and The American Bancorporation of the South
("American") on January 5, 1996. Due to the Acquisitions, average assets for the
second quarter of 1996 increased $154 million to $458 million as compared to the
first quarter of 1995, the number of branches increased from 11 to 27, and
personnel increased from 160 full time equivalents to 270 full time equivalents.
On April 14, 1995, Bancorp acquired JTNB, a one location national bank
headquartered in Tequesta, Florida, had total assets, deposits and capital of
approximately $57 million, $53 million and $4 million, respectively. Bancorp
issued approximately 486,000 shares (value per share of $6.77 net of issuance
costs) of common stock and paid $3.4 million cash to the shareholders of JTNB
representing 50% in stock and 50% in cash. The acquisition was accounted for
using the purchase method of accounting and approximately $3.6 million in
goodwill was recorded which is being amortized over 15 years under the
straight-line method.
On January 5, 1996, Bancorp acquired American and merged its wholly-owned
subsidiary, The American Bank of the South, into 1st United. Consideration paid
by Bancorp to the shareholders of American was $10,017,000 and was paid in the
form of 30% cash and 70% stock. Approximately 820,000 shares of Bancorp common
stock were issued in this Acquisition. This Acquisition was accounted for using
the purchase method of accounting and approximately $3.5 million in goodwill was
recorded and is being amortized over 15 years under the straight-line method.
Approximately $160 million in total assets were acquired from American
including $20 million, $48 million, $77 million, $8 million and $5 million in
fed funds, investments, gross loans, bank premises and equipment and other real
estate, respectively. Included in loans were approximately $11 million in
nonaccrual loans. Approximately $157 million in deposits, which includes
approximately 30% in non interest bearing demand deposits, were acquired along
with sixteen(16) bank-owned branch locations throughout Brevard County.
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
Bancorp's results of operations depend, to a large extent, on the level of
its net interest income, which is the difference between the interest income it
receives on its interest-earning assets and the interest expense it pays on its
interest-bearing liabilities.
For the three month periods ended June 30, 1996 and 1995, $20 thousand and
$53 thousand, respectively was charged against normal operations for the
provision for loan losses.
-11-
<PAGE>
Net interest income after provision for loan losses in the quarter ended
June 30, 1996 increased to $6.348 million from $4.706 million for the same
period in 1995. This 35% increase is primarily due to the Acquisitions which
resulted in average earning assets increasing from $280 million in 1995 to $394
million in 1996. The net interest margin on earning assets for the quarter ended
June 30, 1996 decreased to 6.49% as compared to 6.83% for the quarter ended June
30, 1995. This difference was primarily a result of the difference in the asset
mix between these quarters. During the second quarter of 1995 the loan to
deposit ratio was 90% and due to the Acquisitions, this ratio decreased to 75%
during the quarter ended June 30, 1996.
OTHER INCOME
Non-interest income for the three months ended June 30, 1996 was $2.052
million - an increase of $1.175 million or 134%, over non-interest income for
the same period in 1995. This increase was primarily a result of service charges
on deposits which increased $438 thousand (100%) to $876 thousand in 1996, and
miscellaneous other service charges increased $268 thousand (89%) to $570
thousand. These increases were primarily due to the Acquisitions, resulting in
average deposits of $145 million more in 1996 compared to 1995. Gain on sale of
loans increased $92 thousand (142%) to $157 thousand due to an increase in total
SBA guaranteed loans sold.
During the second quarter of 1996, Bancorp sold its merchant credit card
accounts to the company that has processed these accounts for the prior two
years. A gain resulting from this sale of approximately $385 thousand was
recorded in this period. The effect of this sale on the ongoing operations of
Bancorp is to reduce future earnings by less than $10 thousand per quarter.
OTHER EXPENSES
Non-interest expenses increased $1.510 million (39%) to $5.395 million in
1996. Due to the Acquisitions, Bancorp grew approximately 80% in assets and
added 17 branches resulting in these increases. Specifically, Bancorp had the
following increases in individual expense categories: salaries and employee
benefits $996 thousand (61%), occupancy and furniture and equipment $349
thousand (47%), stationary, printing and supplies $68 thousand (87%), insurance
$26 thousand (45%), miscellaneous taxes $29 thousand (88%), telephone $94
thousand (123%), postage $88 thousand (132%), goodwill amortization $83 thousand
(115%), and advertising $113 thousand (269%). Goodwill amortization in 1996
includes amortization of the American Acquisition ($75 thousand) not present in
1995. Other miscellaneous expenses decreased $98 thousand (15%) from 1995. This
decrease resulted primarily from one-time expenses in 1995 of approximately
$120 thousand related to a branch closing during the quarter ended June 30,
1995. In addition, the Company settled litigation resulting in approximately $60
thousand in expenses during the quarter ended June 30, 1995.
Bancorp experienced a reduction in FDIC insurance expense of $148
thousand (100%) from the prior period as a result of new assessment rates set by
the Federal Deposit Insurance Corporation.
-12-
<PAGE>
INCOME TAXES
Total provision for income taxes of $1.088 million and $621 thousand for
the three months ended June 30, 1996 and 1995, respectively, was computed using
the statutory federal and state income tax rates.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
During the six month period ended June 30, 1996 and 1995, $60 thousand and
$93 thousand, respectively, were charged against operations for the provision
for loan losses.
Net interest income after provision for loan losses in the six months ended
June 30, 1996 increased to $12.826 million from $8.729 million for the same
period in 1995. This 48% increase is primarily due to the increase in average
earning assets in 1996 compared to 1995. Average earning assets increased from
$259 million to $401 million or 55% due to the Acquisitions.
OTHER INCOME
Non-interest income for the six months ended June 30, 1996 was $3.799
million - an increase of $2.335 million or 159%, over non-interest income for
the same period in 1995. Service charges on deposit accounts increased $1.102
million (145%) to $1.861 million in 1996. Miscellaneous other income increased
$714 thousand (184%) to $1.101 million in 1996. These increases are primarily
attributable to the Acquisitions, which substantially increased the deposit and
loan base of Bancorp. Gain on sale of loans increased $213 thousand (195%) to
$322 thousand due to an increase in the volume of SBA loans being originated and
sold during the period ended June 30, 1996. During the second quarter of 1996,
Bancorp sold its merchant credit card accounts to the company that has processed
these accounts for the prior two years. A gain of approximately $385 thousand
was recorded in this period. The effect of this sale on the ongoing operations
of the Company is to reduce future net earnings by less than $10 thousand per
quarter.
OTHER EXPENSE
Non-interest expenses increased $4.001 million (56%) to $11.078 million in
1996. Due to the Acquisitions, Bancorp grew approximately 80% in assets and
added 17 branches resulting in these increases. Specifically, Bancorp had the
following increases in individual expense categories: salaries and employee
benefits $2.134 million (69%), occupancy and furniture and equipment $771
thousand (55%), stationary, printing and supplies $121 thousand (85%),
professional fees $27 thousand (8%), insurance $46 thousand (49%), other real
estate $30 thousand (13%), miscellaneous taxes $44 thousand (68%), telephone
$127 thousand (88%), postage $100 thousand (118%), goodwill amortization $207
thousand (201%), advertising $221 thousand (307%) and miscellaneous other
expenses $417 thousand (41%). Goodwill amortization in 1996 includes
amortization of the JTNB ($59 thousand) and American ($148 thousand)
acquisitions not present in 1995. The major components of the increase in
miscellaneous expenses are advertising and public relations of $127 thousand and
one time merger related costs of $154 thousand. The other miscellaneous expense
increase
-13-
<PAGE>
of $417 thousand includes one time expenses in 1995 of approximately $160
thousand.
Bancorp experienced a reduction in FDIC insurance expense of $244
thousand (82%) in the quarter as a result of new assessment rates set by the
Federal Deposit Insurance Corporation.
INCOME TAXES
Total provision for income taxes of $2.050 million and $1.131 million for
the six months ended June 30, 1996 and 1995, respectively, was computed using
the statutory federal and state income tax rates.
-14-
<PAGE>
FINANCIAL CONDITION
Bancorp's total assets, deposits and capital increased $139.4 million
(45%), $128.7 million (48%) and $9.3 million (27%), respectively, during the six
months ended June 30, 1996. These increases are primarily the result of the
acquisition of American on January 5, 1996. On the acquisition date, American
had cash and federal funds sold of $31.0 million, securities of $48.5 million,
and deposits of $157.9 million. These increases were partially offset by the
maturing of approximately $7 million in public fund time deposits which the
Company elected not to renew.
LIQUIDITY
The total of cash and due from banks and federal funds sold, Bancorp's
primary source of liquidity, increased $9.7 million for the period - $36.3
million at June 30, 1996 compared to $26.6 million at December 31, 1995. This
increase was primarily due to the acquisition of American which had cash and due
from banks and federal funds sold of $27.8 million. Additionally, investment
securities maturities and paydowns provided an additional $20 million of liquid
funds. This additional liquidity was partially used to fund a net increase in
loans of approximately $20 million since December 31, 1995 and maturities of the
public funds. The second source of liquidity is Bancorp's investment securities
of $53.5 million at June 30, 1996 which increased $20.1 million during the
period as a result of the acquisition of American.
An additional external source of liquidity is two unsecured federal funds
lines of credit that 1st United Bank has established with two of its
correspondent banks totaling $12 million. In addition, 1st United Bank has
entered into a master repurchase agreement with the two financial institutions.
1st United Bank is also a member of the Federal Home Loan Bank and has a
borrowing capability of approximately $45 million under a blanket security
agreement.
At June 30, 1996, cash and due from banks, short-term investments (due
within one year), and federal funds sold totaled $44.0 million versus
potentially volatile liabilities (C.D.'s of $100,000 or more and public funds)
of $16.6 million.
CAPITAL RESOURCES
At June 30, 1996, Bancorp had total shareholders' equity of $43.3 million,
an increase of $9.345 million over that of December 31, 1995. This increase was
the result of net income through June 30, 1996 of $3.497 million, declaration of
a $517 thousand cash dividend, an increase in unrealized loss in available for
sale securities of $6 thousand and issuance of stock related to the American
purchase resulting in $6.371 million in additional equity.
-15-
<PAGE>
Dividends per share for the six months ended June 30, 1996 were $.07 per
share compared to $.11 per share in 1995. During the first quarter of 1995, the
Company paid an annual dividend of $.08 per share. Subsequent to March 31, 1995,
the Company began quarterly dividends. As a result, the six months ended June
30, 1995 include an annual dividend of $.08 and the Company's first quarter
dividend of $.03. Dividends for the period ended June 30, 1996 included the
first quarter and second quarter 1996 dividend of $.03 and $.04, respectively.
The components of capital resources are as follows:
(in thousands)
MARCH 31, DECEMBER 31,
1996 1995
------------- ------------
Long term debt $ 0 $ 39
------- -------
Risk adjusted assets 341,273 276,276
------- -------
Total assets 446,135 306,715
------- -------
Tier 1 Capital
Common shareholders' equity $43,314 $33,969
Unrealized losses on available
for sale securities, net of tax 75 69
Goodwill and other excludable
intangibles (7,754) (4,424)
------ ------
35,635 29,614
Tier 2 Capital
Includable portion of allowance
for loan losses 4,567 3,453
------- -------
Total regulatory capital $40,202 $33,067
======= =======
Tier 1 risk adjusted capital
ratio 10.44% 10.72%
Total risk adjusted capital
ratio 11.78% 11.97%
Leverage ratio 7.99% 9.66%
Long-term debt to common equity
ratio N/A .1%
The Federal Reserve Board has adopted supervisory risk based capital ratios
of capital to risk weighted assets which require Bancorp and its subsidiary to
maintain a minimum 8.00% total risk based capital ratio at least half of which
must be Tier I capital. Bancorp's total risk based capital ratio was 11.78% at
June 30, 1996.
-16-
<PAGE>
June 30, December 31,
1996 1995
-------- ------------
Loans 90 days or more past
due and still accruing interest $ 0 $ 951
Non-accrual loans 12,699 2,459
------ ------
Total non-performing loans $12,699 $ 3,410
====== ======
Restructured loans $ 614 $ 242
====== ======
Other real estate owned $ 6,258 $ 1,552
====== ======
Ratio of non-performing loans
to total loans 3.86% 1.45%
Ratio of allowance for loan
losses to total loans 2.71% 2.68%
Ratio of allowance for loan
losses to non-performing loans 70% 185%
Approximately $6.9 million in non-performing loans and $5.6 million in
other real estate owned at June 30, 1996 was acquired in the American
acquisition on January 5, 1996. Since the acquisition of American, approximately
$1 million in non-performing loans and other real estate was sold, returned to
earning status or repaid. Offsetting this decrease was approximately $2.3
million in FHA/VA government guaranteed loans which were repurchased in the
second quarter of 1996. These loans are 100% guaranteed by the U.S. Government
and no future losses are anticipated. The repurchase resulted from the sale of
the mortgage servicing portfolio acquired from American which occurred in May,
1996.
Management has developed an internal system for evaluating and grading
loans on a quarterly basis. Watch list assets are those loans that have been
graded substandard or worse by management, regulators, or the independent loan
review consultant, due to potential weaknesses in the borrowers' ability to
repay the loans, weaknesses in collateral, the borrowers' financial condition or
other factors. Loans included in the watch list are reviewed and evaluated
bi-weekly by senior management. At June 30, 1996, $26.5 million in loans were
included on 1st United's internal watch list of which $13.8 million are
performing loans. Watch list loans totalled approximately $12.9 million at
December 31, 1995 of which $9.5 million were performing loans. Substantially all
of the $13.6 million increase in watch list loans from December 31, 1995 was a
result of loans acquired in the American acquisition. Correspondingly,
approximately $2.6 million in allowance for loan losses or 3.6% of the total
loans acquired was recorded upon the acquisition of American.
-17-
<PAGE>
PART II - OTHER INFORMATION
ITEM 4 Submission of Matters to a Vote of Security Holders.
An Annual Meeting of shareholders of 1st United Bancorp was held on April
23, 1996. Proxies for the meeting were solicited pursuant to Regulation 14A
under the Securities and Exchange Act of 1934. The following summarizes all
items voted on at this meeting:
1. The following Directors were elected for a one year (1) term by a majority
of the 5,151,668 shares voted at the annual meeting. There was no solicitation
in opposition to any nominee listed in the proxy statement. Such Directors
constitute the entire Board of Directors continuing immediately after the annual
meeting.
FOR AGAINST/WITHELD
--- ---------------
Anthony Andreozzi 5,146,882 4,786
James B. Baer 5,146,882 4,786
James D. Beaty 5,146,882 4,786
Roger G. Bond 5,146,882 4,786
Anthony Comparato 5,146,882 4,786
Robert Comparato 5,146,882 4,786
J. Herman Dance 5,146,882 4,786
Ronald A. David 5,146,882 4,786
Thomas L. Delaney 5,146,882 4,786
David B. Dickenson 5,146,882 4,786
Mario A. DiFederico 5,146,882 4,786
Thomas Hanford 5,146,882 4,786
Herman M. Jeffer 5,146,882 4,786
Maxwell King 5,146,882 4,786
Harvey S. Klein 5,146,882 4,786
Billie H. McCutchen 5,146,882 4,786
Warren S. Orlando 5,146,882 4,786
Lindsey R. Perry, Sr. 5,146,882 4,786
Edward A. Sasso 5,146,882 4,786
Harold Toppel 5,146,882 4,786
Dean Vegosen 5,146,882 4,786
Donald Vinik 5,146,882 4,786
Frank J. Zappala, Jr. 5,146,882 4,786
2. The shareholders approved an amendment to Bancorp's Articles of
Incorporation increasing the authorized shares of Bancorp common
stock from 10,000,000 shares to 20,000,000 shares.
FOR AGAINST ABSTAIN
--------- -------- -------
5,114,651 31,012 6,005
3. The shareholders approved Bancorp's 1996 Senior Management Long Term
Performance Incentive Plan.
FOR AGAINST ABSTAIN
--------- -------- -------
5,070,495 67,715 13,458
-18-
<PAGE>
PART II - Other Information
ITEM 5 Other Information
None
ITEM 6 Exhibits and Reports on Form 8-K
a. 1. Exhibit 11 Computations of per share earnings*
2. Exhibit 27 Financial Data Schedules
b. No reports on Form 8-K were filed during the second quarter
of 1996.
* Filed herewith
-19-
<PAGE>
Exhibit 11 - Statements Re: computation of per share earnings
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
----------------------
1996 1995
(Amounts in thousands, except per share amounts)
Primary:
Average shares outstanding 7,427 6,449
Net effect of the assumed
exercise of stock options
based on the treasury stock
method using average market
price 302 256
------ ------
Total 7,729 6,705
====== ======
Net income $3,497 $1,985
====== ======
Income per common share:
Net income $ .45 $ .30
====== ======
Fully Diluted:
Average shares outstanding 7,427 6,449
Net effect of the assumed
exercise of stock options
based on the treasury stock
method using average market
price or period ended market
price, whichever is higher 323 262
------ ------
Total 7,750 6,711
====== ======
Net income $3,497 $1,985
====== ======
Income per common share:
Net income $ .45 $ .30
====== ======
-20-
<PAGE>
(UNAUDITED)
QUARTER ENDED
JUNE 30,
----------------------
1996 1995
(Amounts in thousands, except per share amounts)
Primary:
Average shares outstanding 7,450 6,576
Net effect of the assumed
exercise of stock options
based on the treasury stock
method using average market
price 320 236
----- ------
Total 7,770 6,812
====== ======
Net income $1,917 $1,077
====== ======
Income per common share:
Net income $ .25 $ .16
====== ======
Fully Diluted:
Average shares outstanding 7,450 6,576
Net effect of the assumed
exercise of stock options
based on the treasury stock
method using average market
price or period ended market
price, whichever is higher 323 262
------ ------
Total 7,773 6,838
====== ======
Net income $1,917 $1,077
====== ======
Income per common share:
Net income $ .25 $ .16
====== ======
-21-
<PAGE>
SIGNATURES
Pursuant to 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.
1ST UNITED BANCORP
-------------------------------
Date: July 30, 1996 /s/ WARREN S. ORLANDO
---------------- -------------------------------
Warren S. Orlando, President
and Chief Executive Officer
Date: July 30, 1996 /s/ JOHN MARINO
---------------- -------------------------------
John Marino, Treasurer
(Principal Financial Officer)
-22-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 22,064
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 14,257
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 17,492
<INVESTMENTS-CARRYING> 36,003
<INVESTMENTS-MARKET> 35,187
<LOANS> 328,654
<ALLOWANCE> 8,908
<TOTAL-ASSETS> 446,135
<DEPOSITS> 398,446
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,375
<LONG-TERM> 0
0
0
<COMMON> 74
<OTHER-SE> 43,240
<TOTAL-LIABILITIES-AND-EQUITY> 446,135
<INTEREST-LOAN> 14,452
<INTEREST-INVEST> 1,880
<INTEREST-OTHER> 1,031
<INTEREST-TOTAL> 17,363
<INTEREST-DEPOSIT> 4,370
<INTEREST-EXPENSE> 4,477
<INTEREST-INCOME-NET> 12,886
<LOAN-LOSSES> 60
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 11,078
<INCOME-PRETAX> 5,547
<INCOME-PRE-EXTRAORDINARY> 5,547
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,497
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
<YIELD-ACTUAL> 6.46
<LOANS-NON> 12,699
<LOANS-PAST> 0
<LOANS-TROUBLED> 614
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,299
<CHARGE-OFFS> 241
<RECOVERIES> 222
<ALLOWANCE-CLOSE> 8,908
<ALLOWANCE-DOMESTIC> 8,908
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
