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, 1998
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: 0-2206
FCB FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1760287
(State or other jurisdiction of incorporation (IRS Employer Identification
or organization) No.)
420 South Koeller Street, Oshkosh, WI 54902
(Address of principal executive office) (Zip Code)
(920) 236-3680
(Registrant's telephone number, including area code)
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 of the latest practicable date.
Class: Common Stock, $.01 Par Value
Number of shares outstanding as of June 30, 1998: 3,857,280
<PAGE>
FCB FINANCIAL CORP.
INDEX -- FORM 10-Q
Part I--Financial Information Page No.
Item 1--Financial Statements (Unaudited)
Consolidated Statements of Financial Condition as of June 30,
1998 and March 31, 1998 1
Consolidated Statements of Income for the Three Months Ended
June 30, 1998 and 1997 3
Consolidated Statements of Shareholders' Equity for the
Three Months Ended June 30, 1998 and 1997 4
Consolidated Statements of Cash Flows for the Three Months
Ended June 30, 1998 and 1997 5
Notes to Consolidated Financial Statements 7
Item 2 --Management's Discussion and Analysis
Results of Operations 10
Changes in Financial Condition 11
Asset Quality 12
Liquidity & Capital Resources 14
Impact of Year 2000 15
Special Note Regarding Forward-Looking Statements 15
Item 3 --Quantitative and Qualitative Disclosures About Market Risk 16
Part II--Other Information
Item 5 --Other Information 16
Item 6 --Exhibits and Reports on Form 8-K 16
<PAGE>
Part I - Financial Information
Item 1--Financial Statements
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 1998 and March 31, 1998
(Unaudited)
ASSETS
June 30 March 31
1998 1998
(In thousands)
Cash and cash equivalents $ 37,174 $ 28,359
Investment securities available for
sale, at fair value 4,880 2,894
Investment securities held to maturity
(estimated fair value of $30,918
and $20,719 at June 30, 1998 and
March 31, 1998, respectively) 30,640 20,424
Mortgage-related securities available
for sale, at fair value 33,251 33,870
Mortgage-related securities held to
maturity (estimated fair value of
$19,873 and $26,124 at June 30, 1998
and March 31, 1998, respectively) 19,618 25,754
Investment in Federal Home Loan Bank
stock, at cost 5,468 6,028
Loans held for sale 12,932 16,692
Loans receivable - Net 358,514 370,934
Office properties and equipment 6,753 6,610
Other assets 6,286 6,207
------- --------
TOTAL ASSETS $ 515,516 $ 517,772
======= ========
See accompanying notes to the unaudited consolidated financial statements.
<PAGE>
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 1998 and March 31, 1998
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30 March 31
1998 1998
(In thousands)
Liabilities:
Deposit accounts $ 320,779 $ 318,508
Borrowed funds 103,850 109,350
Advance payments by borrowers for
taxes and insurance 6,706 4,644
Other liabilities 8,811 10,354
-------- --------
Total liabilities 440,146 442,856
-------- --------
Commitments and contingencies
Shareholders' Equity:
Common stock - $.01 par value 45 45
Additional paid-in capital 59,978 59,638
Retained earnings - Substantially
restricted 29,939 29,211
Accumulated other comprehensive income,
unrealized gain on securities
available for sale - Net of tax 335 502
Unearned compensation - ESOP (954) (1,036)
Treasury common stock, at cost (13,973) (13,444)
-------- ---------
Total shareholders' equity 75,370 74,916
-------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 515,516 $ 517,772
======== =========
See accompanying notes to the unaudited consolidated financial
statements.
<PAGE>
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30, 1998 and 1997
(Unaudited)
Three Months Ended
June 30
1998 1997
(In thousands except per
share numbers)
Interest and dividend income:
Mortgage loans $ 5,681 $ 5,537
Other loans 2,042 1,456
Investment securities 431 392
Mortgage-related securities 974 887
Dividends on stock in Federal Home
Loan Bank 93 87
Interest-bearing deposits 427 17
-------- --------
Total interest and dividend
income 9,648 8,376
-------- --------
Interest expense:
Deposit accounts 3,845 3,273
Borrowed funds 1,482 1,423
-------- --------
Total interest expense 5,327 4,696
-------- --------
Net interest income 4,321 3,680
Provision for loan losses 150 500
-------- --------
Net interest income after provision
for loan losses 4,171 3,180
-------- --------
Noninterest income:
Loan fees - Net 181 160
Gain on sale of loans - Net 501 140
Gain on sale of mortgage-related
securities available for sale 0 99
Deposit fees 235 137
Other income 164 97
-------- --------
Total noninterest income 1,081 633
-------- --------
Operating expenses:
Compensation, payroll taxes and
other employee benefits 1,423 1,083
Marketing 88 92
Occupancy 303 286
Data processing 122 155
Federal insurance premiums 50 44
Merger-related charges 0 827
Other 462 302
-------- --------
Total operating expenses 2,448 2,789
-------- ---------
Income before provision for income
taxes 2,804 1,024
Provision for income taxes 1,065 334
-------- --------
NET INCOME $ 1,739 $ 690
======== ========
BASIC EARNINGS PER SHARE - See
note 5 $ 0.46 $ 0.21
======== ========
DILUTED EARNINGS PER SHARE - See
note 5 $ 0.45 $ 0.20
======== ========
DIVIDENDS DECLARED PER SHARE $ 0.22 $ 0.18
======== ========
See accompanying notes to the unaudited consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
Accumulated
Additional Other Unearned Treasury
Common Paid-in Retained Comprensive Compensation- Common
Stock Capital Earnings Income ESOP Stock Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
March 31, 1997 $ 29 $ 28,911 $ 26,630 $ (72) $ (869) $ (7,197) $ 47,432
--------
Net income 690 690
Other comprehensive income,
change in unrealized
gain (loss) on securities
available for sale - Net
of tax 87 87
--------
Comprehensive Income 777
Cash dividends declared
($.18 per share) (707) (707)
Amortization of unearned
compensation - ESOP 108 74 182
Exercise of stock options-
32,666 treasury common
shares (149) 532 383
Purchase of treasury
common stock -
40,000 shares (947) (947)
Acquisition of OSB
Financial Corp. 16 29,907 (487) 29,436
------ ------- ------- ------- -------- ------- --------
Balance at June 30, 1997 45 58,926 26,464 15 (1,282) (7,612) 76,556
--------
Net income 5,154 5,154
Other comprehensive
income, change in
unrealized gain (loss) on
securities available
for sale - Net of tax 487 487
--------
Comprehensive Income 5,641
Cash dividends declared
($.60 per share) (2,239) (2,239)
Amortization of unearned
compensation - ESOP 422 246 668
Exercise of stock options-
21,549 treasury common
shares 290 (168) 406 528
Purchase of treasury
common stock -
229,806 shares (6,238) (6,238)
------ ------- ------- ------- -------- ------- --------
Balance at March 31, 1998 45 59,638 29,211 502 (1,036) (13,444) 74,916
--------
Net income 1,739 1,739
Other comprehensive
income, change in
unrealized gain (loss) on
securities available for
sale - Net of tax (167) (167)
-------
Comprehensive Income 1,572
Cash dividends declared
($.22 per share) (824) (824)
Amortization of unearned
compensation - ESOP 176 82 258
Exercise of stock options-
19,308 treasury common
shares 164 (187) 396 373
Purchase of treasury
common stock -
29,108 shares (925) (925)
------ ------- ------- ------- ------- -------- -------
Balance at June 30, 1998 $ 45 $ 59,978 $ 29,939 $ 335 $ (954) $ (13,973) $ 75,370
====== ======= ======= ======= ======= ======== =======
</TABLE>
See accompanying notes to the unaudited consolidated
financial statements.
<PAGE>
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended June 30, 1998 and 1997
(Unaudited)
1998 1997
(In thousands)
Operating activities:
Net income $ 1,739 $ 690
------ ------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and net amortization
accretion 20 45
Provision for loan losses 150 500
Gain on sale of assets (536) (239)
Loans originated for sale (32,512) (7,177)
Proceeds from loan sales 36,773 6,250
Changes in operating assets and
liabilities (1,478) 1,477
Unearned compensation - ESOP 258 182
------- --------
Total adjustments 2,675 1,038
------- --------
Net cash provided by operating
activities 4,414 1,728
------- --------
Cash flows from investing activities:
Purchases of investment securities
held to maturity (12,183) (1,968)
Maturities of investment securities
held to maturity 2,000 0
Purchases of investment securities
available for sale (1,997) 0
Principal repayments on mortgage-related
securities available for sale 381 575
Sale of mortgage-related securities
available for sale 0 3,426
Principal repayments on mortgage-related
securities held to maturity 6,169 500
Redemption of Federal Home Loan Bank
stock 560 175
Purchase of Federal Home Loan Bank
stock 0 (40)
Proceeds from sale of foreclosed
property 152 0
Net (increase) decrease in loans 12,197 (1,933)
Capital expenditures (245) (3)
Net cash received in acquisition 3,104
------- --------
Net cash provided by investing
activities 7,034 3,836
------- --------
Cash flows from financing activities:
Net increase in deposit accounts 2,271 2,190
Net decrease in borrowed funds (5,500) (6,100)
Net increase in advance payments by
borrowers
for taxes and insurance 2,062 1,894
Proceeds from exercise of stock
options 209 383
Purchase of treasury common stock (925) (947)
Dividends paid (750) (427)
------- --------
Net cash used in financing activities (2,633) (3,007)
------- --------
Net increase in cash and cash
equivalents 8,815 2,557
Cash and cash equivalents at beginning
of period 28,359 4,628
------- --------
Cash and cash equivalents at end of
period $ 37,174 $ 7,185
======= ========
<PAGE>
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Three Months Ended June 30, 1998 and 1997
(Unaudited)
1998 1997
(In thousands)
Supplemental cash flow information:
Cash paid during the period for:
Interest on deposit accounts $ 3,973 $ 3,258
Interest on borrowed funds 1,535 1,429
Income taxes 803 (127)
Supplemental schedule of non-cash
investing activities:
Loans transferred to foreclosed
property $ 73 $ 63
See accompanying notes to the unaudited consolidated
financial statements.
<PAGE>
FCB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1-PRINCIPLES OF CONSOLIDATION
FCB Financial Corp. (the "Corporation") is the holding company for Fox
Cities Bank (the "Bank"). The accompanying unaudited consolidated
financial statements include the accounts of the Corporation, the Bank and
the Bank's wholly-owned subsidiaries, Fox Cities Financial Services, Inc.
("FCFS") and Fox Cities Investments, Inc. ("FCI"), after elimination of
significant intercompany accounts and transactions. FCFS sells
tax-deferred annuities and investment securities. In addition, FCFS has a
50% ownership in a low/moderate income apartment building partnership.
The partnership qualifies for federal low income housing tax credits.
FCI, a Nevada corporation, owns and manages a portfolio of investment
securities, all of which are permissible investments of the Bank itself.
NOTE 2-BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosure
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes that
the disclosures are adequate to prevent the information presented from
being misleading. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair
presentation of the consolidated financial statements have been included.
The results of operations and other data for the three months ended June
30, 1998 are not necessarily indicative of results that may be expected
for the fiscal year ending March 31, 1999. The unaudited consolidated
financial statements presented herein should be read in conjunction with
the audited consolidated financial statements and related notes thereto
for the fiscal year ended March 31, 1998 included in the Corporation's
Annual Report on Form 10-K (Commission File Number 0-22066) as filed with
the Securities and Exchange Commission.
NOTE 3-BUSINESS COMBINATION
Effective May 1, 1997, OSB Financial Corp. ("OSB"), a Wisconsin
corporation, was merged (the "Merger") with and into the Corporation. The
Corporation was the surviving corporation in the Merger. The Merger was
consummated in accordance with the terms of an Agreement and Plan of
Merger, dated November 13, 1996 (the "Merger Agreement"), between the
Corporation and OSB.
The Merger was accounted for as a purchase. Accordingly, the related
accounts and results of operations of OSB are included in Corporation's
consolidated financial statements from the date of acquisition. There was
no goodwill recorded as a result of the transaction.
NOTE 4-ACCOUNTING CHANGES
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities." This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative investments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities. The
Statement requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial condition, and measure
those instruments at fair value. If certain conditions are met, a
derivative may be specifically designated as (a) a hedge of the exposure
to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment, (b) a hedge of the exposure to variable cash
flows of a forecasted transaction, or a hedge of the foreign currency
exposure of a net investment in a foreign operation, an unrecognized firm
commitment, an available-for-sale security, or a foreign-currency-
denominated forecasted transaction. The accounting for changes in the
fair value of a derivative depends on the intended use of the derivative
and the resulting designation. Generally, for a derivative designated as
a hedge, the gain or loss resulting from the ineffective portion of the
hedge is reported in earnings in the period in which the change in value
has occurred. The effective portion of the hedge either offsets the
change in value of the item being hedged on the statement of financial
condition or is reported as a component of other comprehensive income.
For a derivative not designated as a hedging instrument, the gain or loss
is recognized in earnings in the period of the change in value. The
Statement amends SFAS No. 52, "Foreign Currency Translation" and SFAS No.
107, "Disclosures about Fair Value of Financial Instruments." It
supersedes SFAS No. 80, "Accounting for Futures Contracts," SFAS No. 105,
"Disclosure of Information about Financial Instruments with Off-Balance-
Sheet Risk and Financial Instruments with Concentrations of Credit Risk,"
and SFAS No. 119, "Disclosure about Derivative Financial Instruments and
Fair Value of Financial Instruments." The Statement also nullifies or
modifies the consensuses reached on a number of issues addressed by the
Emerging Issues Task Force. The Statement is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. Early adoption is
encouraged and retroactive application is prohibited. Management
anticipates that adoption of this Statement will not have a material
effect on the financial statements of the Corporation.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This Statement establishes standards for reporting and display
of comprehensive income in a full set of general-purpose financial
statements. This Statement requires that all items that are required to
be recognized under accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the
same prominence as other financial statements. This Statement requires
that an enterprise display an amount representing total comprehensive
income for the period in a financial statement, but does not require a
specific format for that financial statement. This Statement also
requires that an enterprise (a) classify items of other comprehensive
income by their nature in a financial statement and (b) display the
accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of the
statement of financial position. The Corporation adopted this Statement
on April 1, 1998. As required by the Statement, the Corporation has
reclassified its financial statements for earlier periods which are
provided for comparative purposes.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." This Statement establishes
standards for the way that public business enterprises report information
about operating segments in annual financial statements and requires that
those enterprises report selected information about operating segments in
interim financial reports issued to shareholders. This Statement
supersedes SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise," but retains the requirement to report information about major
customers. It also amends SFAS No. 94, "Consolidation of All Majority-
Owned Subsidiaries," to remove the special disclosure requirements for
previously unconsolidated subsidiaries. The Statement is effective for
financial statements for periods beginning after December 15, 1997. In
the initial year of application, comparative information for earlier years
is to be restated. This Statement need not be applied to interim
financial statements in the initial year of its application, but
comparative information for interim periods in the initial year of
application is to be reported in financial statements for interim periods
in the second year of application. The Statement is not expected to have
an effect on the financial position or operating results of the
Corporation, but may require additional disclosures in the financial
statements at March 31, 1999.
NOTE 5-EARNINGS PER SHARE
The following table reflects a reconciliation for the three months ended
June 30, 1998 and 1997 of basic earnings per share and diluted earnings
per share:
Three Months Ended June 30,
1998 1997
(In thousands, except share and per-share amounts)
Basic EPS:
Income available to common
shareholders $ 1,739 $ 690
Average common shares
outstanding 3,748,282 3,423,949
Earnings per share - basic $ 0.46 $ 0.21
========= =========
Diluted EPS:
Income available to common
shareholders $ 1,739 $ 690
Average common shares
outstanding 3,748,282 3,423,949
Effect of options - net 93,614 58,858
Average common shares
outstanding - diluted 3,841,896 3,482,807
Earnings per share - diluted $ 0.45 $ 0.20
========= =========
NOTE 6-STOCK REPURCHASE PROGRAMS
On September 23, 1997, the Corporation announced an additional stock
repurchase program. Under this program, the Corporation is authorized to
purchase an additional 5% of its outstanding common stock, or 193,000
shares, over the twelve-month period beginning with the date of the
announcement. At June 30, 1998, 22,500 shares had been repurchased. This
is the sixth 5% stock repurchase programs adopted by the Corporation since
it became a public company in September, 1993.
<PAGE>
Item 2--
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF FCB FINANCIAL CORP.
Results of Operations
The Corporation's results of operations are dependent primarily on the
Bank's net interest income, which is the difference between the interest
income earned on loans, mortgage-related securities and investments and
the cost of funds, consisting of interest paid on deposits and borrowings.
Operating results are also affected to a lesser extent by loan servicing
fees, commissions on insurance sales, service charges for customer
services and gains or losses on the sale of investment securities and
loans. Operating expenses principally consist of employee compensation
and benefits, occupancy expenses, federal deposit insurance premiums and
other general and administrative expenses. Results of operations are
significantly affected by general economic and competitive conditions,
particularly changes in interest rates, government policies and actions of
regulatory authorities.
Comparison of Operating Results for the Three Months Ended June 30, 1998
and 1997
Net income was $1.7 million and $690,000 for the quarters ended June 30,
1998 and 1997, respectively. The increase in earnings for the quarter
ended June 30, 1998 was primarily the result of charges related to the
Merger which were recorded in the quarter ended June 30, 1997 (see Note 3
of Notes to Consolidated Financial Statements) and a decrease in the
provision for loan losses in the quarter ended June 30, 1998, also related
to the Merger. Net income was also enhanced by increases in net interest
income and noninterest income for the quarter ended June 30, 1998. These
revenue increases were primarily due to a full quarter effect of the
addition of the operating results of OSB. In the quarter ended June 30,
1997, the operations of OSB were included from May 1, 1997 only, in
accordance with generally accepted accounting principles.
Net interest income increased to $4.3 million for the quarter ended June
30, 1998 from $3.7 million for the quarter ended June 30, 1997. The
increase was due to growth in average earning assets to $503.9 million for
the quarter ended June 30, 1998 from $429.4 million for the quarter ended
June 30, 1997. The major factor contributing to this average earning
asset growth was the addition of approximately $244.0 million of earning
assets as a result of the Merger. Complimenting the effect of the
earning asset growth on net income was an increase in the net interest
spread to 2.80% for the quarter ended June 30, 1998 from 2.65% for the
comparable quarter in the prior year. The net interest margin also
improved to 3.48% for the quarter ended June 30, 1998 from 3.43% for the
quarter ended June 30, 1997. Interest spread and net interest margin
improvements were primarily driven by a decrease in the overall cost of
funds. Since the direction and magnitude of future interest rate changes
are not known, it is not possible for management to estimate how such
changes may impact the Corporation's results of operations in the future.
The provision for loan losses decreased from $500,000 for the quarter
ended June 30, 1997 to $150,000 for the same quarter of 1998. The
decrease was primarily a result of a provision of $350,000 made in the
quarter ended June 30, 1997 to equalize the loan loss allowance
percentages historically maintained by the Bank and the former Oshkosh
Savings Bank, F.S.B. There was no such charge in the quarter ended June
30, 1998. The remaining increase for the quarter ended June 30, 1998 was
due to a change in the mix of loans post-Merger. For more information on
the allowance for loan losses, see the "Asset Quality" section below.
Noninterest income increased from $633,000 for the three months ended June
30, 1997 to $1.1 million for the quarter ended June 30, 1998. The
largest component of the increase was an increase in gain on sale of
loans, which escalated from $140,000 for the quarter ended June 30, 1997
to $501,000 for the same quarter of 1998. The increase was due to an
increase in loan sales of $30.5 million to $36.8 million when comparing
the quarter just ended to the same quarter last year. The increase in
noninterest income was somewhat offset by the sale of a mortgage-related
security held for sale at a gain of $99,000 in the quarter ended June 30,
1997. There was no such sale in the quarter ended June 30, 1998. The
increase in noninterest income also resulted from the inclusion of a full
quarter of the operating results of OSB for the quarter ended June 30,
1998, whereas the same quarter in the previous year only included OSB
results from the date of the Merger.
Operating expenses decreased to $2.4 million for the quarter ended June
30, 1998 from $2.8 million for the quarter ended June 30, 1997. Included
in this amount for 1997 was a charge of $827,000 for costs related to the
Merger. There were no such merger-related charges in the quarter ended
June 30, 1998. Without the effect of the merger-related charges,
operating expenses would actually have increased $486,000 comparing the
1997 quarter to the 1998 quarter. This increase was primarily due to
including a full quarter of operating expenses relating to OSB.
Changes in Financial Condition
Total Assets. Total assets were $515.5 million at June 30, 1998 compared
to $517.8 million at March 31, 1998. The largest components of the
slight decrease in assets were reductions in net loans receivable and
mortgage-related securities held to maturity, which were somewhat offset
by increases in cash and cash equivalents and investment securities held
to maturity.
Cash and Cash Equivalents. Cash and cash equivalents increased from $28.4
million at March 31, 1998 to $37.2 million at June 30, 1998. The increase
was the result of the receipt of proceeds from loan sales and loan
principal repayments, as well as principal repayments on mortgage-related
securities held to maturity. Loan and mortgage-related security principal
repayments increased as customers refinanced into lower rate mortgages
during the low interest rate environment experienced during 1998. Many of
the mortgage loans originated by the Bank were long-term, fixed rate loans
which were sold in the secondary market.
Investment Securities. Total investment securities increased from $23.3
million at March 31, 1998 to $35.5 million at June 30, 1998. During the
quarter, the Corporation purchased $14.2 million in U.S. Agency securities
to deploy excess cash and had securities totaling $2.0 million mature.
Mortgage-related Securities. Total mortgage-related securities decreased
to $52.9 million from $59.6 million primarily as a result of principal
repayments. During the quarter, long-term interest rates were at or near
historic lows. During low interest rate environments, prepayments of
loans which underlie the securities generally increase as refinancings
occur, causing similar principal reduction on the related security.
Net Loans Receivable. Net loans receivable totaled $358.5 million at June
30, 1998 compared to $370.9 million at March 31, 1998. The decrease is
primarily attributable to loan paydowns, payoffs, and a high volume of
loan sales, all of which are accelerated due to the low interest rate
environment referred to above. The low interest rate environment causes
borrowers to refinance existing loans at lower rates, as well as to
convert adjustable-rate loans to fixed-rate. As a matter of practice, the
Bank sells a large portion of its fixed-rate loans, rather than hold them
in its portfolio.
Deposit Accounts. Deposit accounts increased to $320.8 at June 30, 1998
from $318.5 million at March 31, 1998. The primary reason for the
increase in deposit accounts was an advertising campaign for checking
accounts.
Borrowed Funds. Borrowed funds decreased $5.5 million to $103.9 million
at June 30, 1998 from $109.4 million at March 31, 1998. The decrease
resulted from the scheduled maturity of advances from the Federal Home
Loan Bank of Chicago which were paid off from excess liquidity.
Asset Quality
Loans are placed on nonaccrual status when either principal or interest is
more than 90 days past due. Interest accrued and unpaid at the time a
loan is placed on non-accrual status is charged against interest income.
Subsequent payments are either applied to the outstanding principal
balance or recorded as interest income, depending on the assessment of the
ultimate collectibility of the loan.
The following table sets forth the amounts and categories of
non-performing assets in the Bank's loan portfolio at the dates indicated.
For all dates presented, the Bank had no troubled debt restructurings
(which involve forgiving a portion of interest or principal on any loans
or making loans at terms materially more favorable than those which would
be provided to other borrowers). Foreclosed properties include assets
acquired in settlement of loans.
At June 30, At March 31,
1998 1998 1997 1996
(In thousands)
Non-accruing loans:
One- to four-family $849 $941 $379 $212
Five or more family - - - -
Commercial real estate - - - -
Consumer and other 179 188 25 -
Commercial 38 96 - -
------ ------ ----- -----
Total 1,066 1,225 404 212
------ ------ ----- -----
Foreclosed assets:
One- to four-family 41 113 - -
Five or more family - - - -
Commercial real estate - - - -
Repossessed assets 20 - - 22
------ ------ ----- -----
Total 61 113 0 22
------ ------ ----- -----
Total non-performing
assets $1,127 $1,338 $404 $234
====== ====== ===== =====
Total non-performing
assets as a percentage
of total assets 0.22% 0.26% 0.15% 0.09%
====== ====== ===== =====
Allowance for loan losses
to loans and foreclosed
properties 1.02% 0.96% 0.63% 0.51%
===== ===== ====== ======
The allowance for loan losses includes specific allowances related to
commercial loans which have been judged to be impaired. The Corporation
generally considers credit card, residential mortgage, and consumer
installment loans to be large groups of smaller-balance homogeneous loans.
These loans are collectively evaluated in the analysis of the adequacy of
the allowance for loan losses.
A loan is impaired when, based on current information, it is probable the
Corporation will not collect all amounts due in accordance with the
contractual terms of the loan agreement. Management considers, on a loan
by loan basis, the conditions which may constitute a minimum delay or
shortfall in payment, as well as the factors which may influence its
decision in determining when a loan is impaired. These specific
allowances are based on discounted cash flows of expected future payments
using the loan's initial effective interest rate or the fair value of the
collateral if the loan is collateral dependent. Subsequent changes in the
estimated value of impaired loans are accounted for as bad debt expense.
The Corporation continues to maintain a general allowance for loans and
foreclosed properties not considered impaired. The allowance for loan and
foreclosed property losses is maintained at a level which management
believes is adequate to provide for possible losses. Management
periodically evaluates the adequacy of the allowance using the
Corporation's past loss experience, known and inherent risks in the
portfolio, composition of the portfolio, current economic conditions, and
other relevant factors. This evaluation is inherently subjective since it
requires material estimates that may be susceptible to significant change.
Real estate properties acquired through or in lieu of loan foreclosure are
initially recorded at fair value at the date of foreclosure.
Subsequently, the foreclosed properties are carried at the lower of the
newly established cost or fair value less estimated selling costs. Costs
related to the development and improvement of property are capitalized,
whereas costs relating to the holding of property are expensed.
Federal regulations require that each savings institution classify its own
assets on a regular basis. On the basis of management's review of its
assets, at June 30, 1998, on a net basis, the Bank classified $652,000 of
its assets as special mention, $799,000 as substandard, and $21,000 as
doubtful. There were no loans classified as loss at June 30, 1998. As of
June 30, 1998, management believes that these asset classifications were
consistent with those of the Office of Thrift Supervision (the "OTS").
During the quarter ended June 30, 1998, the Corporation added $150,000 to
its allowance for loan losses. Based on management's evaluation at June
30, 1998, $150,000 in general loan loss provisions were deemed appropriate
for the quarter ended June 30, 1998 and the aggregate allowance for loan
losses of $3.7 million as of such date was determined to be adequate.
The following table sets forth an analysis of the Bank's allowance for
loan losses for the periods indicated.
Three months
Ended June 30,
1998 1997
(In thousands)
Allowance at beginning of
period $3,567 $1,405
Provision for losses on loans
and real estate owned: 150 500
------ ------
Charge-offs:
Residential real estate loans (15) -
Consumer loans (12) (2)
Commercial loans - -
------ ------
Total Charge-offs (27) (2)
------ ------
Recoveries:
Residential real estate loans 2 -
Consumer loans - -
Commercial loans 1 -
------ ------
Total recoveries 3 0
------ ------
Net charge-offs (24) (2)
------ ------
Allowance acquired through
acquisition: - 1,419
------ ------
Allowance at end of period $3,693 $3,322
====== ======
While management believes that the allowances are adequate and that it
uses the best information available to determine the allowance for losses
on loans, unforeseen market conditions could result in adjustments and net
earnings could be significantly affected if circumstances differ
substantially from the assumptions used in making the final determination.
Liquidity & Capital Resources
The Bank is required to maintain minimum levels of liquid assets as
defined by OTS regulations. These requirements, which may be varied at
the direction of the OTS depending upon economic conditions and deposit
flows, are based upon a percentage of the average daily balance of an
institution's net withdrawable deposit accounts and short-term borrowings.
The required ratio is currently 4.0%. On June 30, 1998, the Bank's
liquidity ratio, calculated in accordance with OTS requirements, was
28.4%.
At June 30, 1998, the Bank had outstanding commitments to originate loans
of $17.3 million, with varying interest rates. At June 30, 1998, the Bank
had outstanding commitments to sell mortgage loans of $10.7 million, and
had no commitments to purchase loans. In addition, the Bank had
commitments to fund unused lines of credit of $8.7 million at June 30,
1998. Management does not believe the Bank will suffer any adverse
consequences as a result of fulfilling these commitments.
The following table summarizes the Bank's capital ratios and the ratios
required by Federal laws and regulations at June 30, 1998:
Total
Risk-
Tangible Leverage Based
Equity Capital Capital
(Dollars in thousands)
Bank's regulatory percentage 11.79 % 11.79 % 19.31 %
Required regulatory percentage 2.00 4.00 8.00
----- ----- ------
Excess regulatory percentage 9.79 % 7.79 % 11.31 %
===== ===== ======
Bank's regulatory capital $60,081 $60,081 $63,774
Required regulatory capital 10,194 20,388 26,422
------- ------- -------
Excess regulatory capital $49,887 $39,693 $37,352
======= ======= =======
Impact of Year 2000
Historically, computer programs generally abbreviated dates by eliminating
the century digits of the year. Many resources, such as software,
hardware, telephones, alarms, heating, ventilating and air conditioning
("Systems") were affected. These Systems were designed to assume a
century value of "19" to save memory and disk space within their programs.
In addition, many Systems used a value of "99" in a year or "99/99/99" in
a date to indicate "no date" or "any date" or even a default expiration
date.
As the year 2000 approaches, this abbreviated date mechanism with Systems
threatens to disrupt the function of computer software at nearly every
business, including the Bank, which relies heavily on computer systems for
account and other recordkeeping functions. If the millennium issue is
ignored, system failures or miscalculations could occur, causing
disruptions of operations, including among other things, a temporary
inability to process transactions or engage in similar normal business
activities.
The Bank outsources a majority of its computer functions to Fiserv, Inc.
("Fiserv") of Milwaukee, Wisconsin. Because year 2000 problems could
affect Fiserv, and hence the Bank through its relationship with Fiserv,
the Bank has discussed potential year 2000 problems with Fiserv. These
discussions have kept the Bank abreast of Fiserv's progress in
anticipating and avoiding year 2000 problems that could affect the Bank's
operations.
Based on recent assessments, the Bank has determined that it will be
required to modify or replace certain portions of its internal software
and hardware so that its Systems will function properly with respect to
dates on or after September 9, 1999 ("9/9/99"). It is currently
anticipated that the cost of these modifications will not exceed a total
of $200,000. The Bank presently believes that with these modifications,
the year 2000 will not pose significant operational problems for its
Systems. However, if such modifications and conversions are not made, or
are not completed on a timely manner, the year 2000 could have an adverse
impact on the operations of the Bank.
The Bank has currently completed approximately 90% of the awareness and
assessment phases of its year 2000 project. These phases, along with the
renovation, validation and implementation phases are expected to be
completed by the fourth quarter of calendar 1998. The Bank expects to use
internal resources to reprogram, upgrade or replace and test its Systems.
The costs of the year 2000 project and the date on which the Bank believes
it will complete the year 2000 modifications are based on management's
best estimates, which were derived using numerous assumptions of future
events, including the continued availability of certain resources, third
party modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved and actual results could
differ from those anticipated.
Special Note Regarding Forward-Looking Statements
The statements which are not historical facts contained in this Quarterly
Report on Form 10-Q are forward-looking statements intended to qualify for
the safe harbors from liability established by the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain
risks and uncertainties which could cause actual results to differ
materially from those currently anticipated. These factors include,
without limitation, interest rate trends, the general economic climate in
the Corporation's market area, loan delinquency rates, regulatory
treatment and unanticipated issues associated with achieving year 2000
compliance. These factors should be considered in evaluating the forward-
looking statements, and undue reliance should not be placed on such
statements. The forward-looking statements included herein are made as of
the date hereof and the Corporation undertakes no obligation to update
publicly such statements to reflect subsequent events or circumstances.
Item 3 -- Quantitative and Qualitative Disclosures About Market Risk
The Corporation has not experienced any material changes to its
market risk position from that disclosed in the Corporation's Annual
Report on Form 10-K for the year ended March 31, 1998.
Part II - Other Information
Item 5--Other Information
Proposals of shareholders pursuant to Rule 14a-8 under the
Securities and Exchange Act of 1934, as amended ("Rule 14a-8"), that
are intended to be presented at the 1999 annual meeting must be
received by the Corporation no later than February 26, 1999 to be
included in the Corporation's proxy materials for that meeting.
Further, a shareholder who otherwise intends to present business at
the 1999 annual meeting must comply with the requirements set forth
in the Corporation's By-Laws. Among other things, to bring business
before an annual meeting, a shareholder must give written notice
thereof, complying with the By-Laws, to the Secretary of the
Corporation not less than 60 days and not more than 90 days prior to
the fourth Monday in the month of July. Under the By-Laws for
purposes of the 1999 annual meeting of shareholders, if the
Corporation does not receive notice of a shareholder proposal
submitted otherwise than pursuant Rule 14a-8 on or prior to May 27,
1999, then the notice will be considered untimely and the Corporation
will not be required to present such proposal at the 1999 annual
meeting. If the Board of Directors nontheless chooses to present
such proposal at the 1999 annual meeting, then the persons named in
proxies solicited by the Board of Directors for the 1999 annual
meeting may exercise discretionary voting power with respect to such
proposal.
Item 6--Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 FCB Financial Corp. 1998 Incentive Stock Plan
27.1 Financial Data Schedule at and for the period
ended June 30, 1998 (EDGAR version only)
27.2 Restated Financial Data Schedule at and for the period
ended June 30, 1997 (EDGAR version only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 1998.
<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.
FCB FINANCIAL CORP.
Date: August 11, 1998 By: /s/ James J. Rothenbach
James J. Rothenbach
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 11, 1998 By: /s/ Phillip J. Schoofs
Phillip J. Schoofs
Vice President, Treasurer and Chief
Financial Officer (Principal
Financial and Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
10.1 FCB Financial Corp. 1998 Incentive Stock Plan
27.1 Financial Data Schedule at and for the period
ended June 30, 1998 (EDGAR version only)
27.2 Restated Financial Data Schedule at and for the period
ended June 30, 1997 (EDGAR version only)
FCB FINANCIAL CORP.
1998 INCENTIVE STOCK PLAN
Section 1. Purpose
The purpose of the FCB Financial Corp. 1998 Incentive Stock Plan
(the "Plan") is to promote the best interests of FCB Financial Corp.
(together with any successor thereto (the "Company")), its holders and its
Subsidiaries as defined in the Internal Revenue Code of 1986, as amended
(the "Code"), and any entities of which at least 20% of the equity
interest is held directly or indirectly by the Company (together
"Affiliates"), by encouraging and providing for the acquisition of an
equity interest in the success of the Company by directors, officers and
key employees and by enabling the Company and its Affiliates to attract
and retain the services of directors, officers and key employees upon
whose judgment, interest, skills, and special effort the successful
conduct of their operations is largely dependent.
Section 2. Effective Date
The Plan shall become effective on April 27, 1998, subject,
however, to the approval of the Plan by the shareholders of the Company at
the next annual meeting of shareholders within twelve months following the
date of adoption of the Plan by the Board of Directors of the Company (the
"Board").
Section 3. Administration
The Plan shall be administered by a committee (the "Committee")
of the Board, consisting of not less than two directors, each of whom
shall qualify as a "non-employee director" within the meaning of
Rule 16b-3 ("Rule 16b-3") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and as an "outside director" under
Section 162(m)(4)(C) of the Code or any successor provisions thereto. If
at any time the Committee shall not be in existence, the Board shall
administer the Plan and all references to the Committee herein shall
include the Board. To the extent permitted by applicable law, the Board
may delegate to another committee of the Board or to one or more senior
officers of the Company any or all of the authority and responsibility of
the Committee with respect to the Plan, other than with respect to
participants who are subject to Section 16 of the Exchange Act
("Section 16 participants"). To the extent that the Board has delegated
to such other committee or one or more officers the authority and
responsibility of the Committee, all references to the Committee herein
shall include such other committee or one or more officers.
Subject to the terms of the Plan and applicable law, the
Committee shall have full power and authority to interpret and administer
the Plan and any instrument or agreement relating to, or made under, the
Plan; establish, amend, suspend, or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and make any other determination, including
factual determinations, and take any other action that the Committee deems
necessary or desirable for the administration of the Plan. The
Committee's decisions and determinations under the Plan need not be
uniform and may be made selectively among participants, whether or not
they are similarly situated. A majority of the members of the Committee
shall constitute a quorum and all determinations of the Committee shall be
made by a majority of its members. Any determination of the Committee
under the Plan may be made without notice or meeting of the Committee by a
writing signed by a majority of the Committee members. The Committee's
interpretation of the Plan and all determinations made by the Committee
pursuant to the powers vested in it hereunder shall be conclusive and
binding on all persons having any interests in the Plan or in any awards
granted hereunder.
Section 4. Eligibility and Participation
Participants in the Plan shall be selected by the Committee from
among those directors, officers and key employees of the Company and its
Affiliates, as the Committee may designate from time to time. The
Committee shall consider such factors as it deems appropriate in selecting
participants and in determining the type and amount of their respective
awards. The Committee's designation of a participant in any year shall
not require the Committee to designate such person to receive an award in
any other year.
Section 5. Stock Subject to Plan
5.1 Number. Subject to adjustment as provided in Section 5.3,
the total number of shares of Common Stock of the Company, par value of
$.01 per share (the "Stock"), which may be issued under the Plan shall be
250,000. No participant shall be granted benefits under the Plan that
could result in such participant (i) receiving in any single fiscal year
of the Company options for, and/or stock appreciation rights with respect
to, more than 25,000 shares of Stock; (ii) receiving benefits in any
single fiscal year of the Company relating to more than 25,000 shares of
Stock as restricted stock; (iii) receiving more than 25,000 performance
shares in any single fiscal year of the Company; or (iv) receiving
performance units exceeding $25,000 in value in any single fiscal year of
the Company. Such number of shares of Stock as specified in the preceding
sentence shall be subject to adjustment in accordance with the terms of
Section 5.3 hereof. It is intended that all determinations under this
Section 5 shall be made in a manner that is consistent with the exemption
for performance-based compensation provided by Section 162(m) of the Code
(or any successor provision thereto) and any regulations promulgated
thereunder, unless otherwise determined by the Committee. The shares to
be delivered under the Plan may consist, in whole or in part, of
authorized but unissued Stock or treasury Stock.
5.2 Unused Stock: Unexercised Rights. If, after the effective
date of the Plan, any shares of Stock covered by an award granted under
the Plan, or to which any award relates, are forfeited or if an award
otherwise terminates, expires or is canceled prior to the delivery of all
of the shares of Stock or of other consideration issuable or payable
pursuant to such award, then the number of shares of Stock counted against
the number of shares available under the Plan in connection with the grant
of such award shall again be available for the granting of additional
awards under the Plan to the extent determined to be appropriate by the
Committee.
5.3 Adjustment in Capitalization. In the event that the
Committee shall determine that any dividend or other distribution (whether
in the form of cash, Stock, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or
exchange of Stock or other securities of the Company, issuance of warrants
or other rights to purchase Stock or other securities of the Company, or
other similar corporate transaction or event affects the Stock such that
an adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee may, in
such manner as it may deem equitable, adjust any or all of (i) the number
and type of shares of Stock subject to the Plan and which thereafter may
be made the subject of awards under the Plan; (ii) the number and type of
shares of Stock subject to outstanding awards; and (iii) the grant,
purchase or exercise price with respect to any award, or, if deemed
appropriate, make provision for a cash payment to the holder of an
outstanding award; provided, however, in each case, that with respect to
awards of incentive stock options no such adjustment shall be authorized
to the extent that such authority would cause such options to cease to be
treated as incentive stock options; and provided further, that the number
of shares of Stock subject to any award payable or denominated in Stock
shall always be a whole number. Any fractional shares resulting from such
adjustment shall be eliminated.
Section 6. Term of the Plan
No award shall be granted under the Plan after April 26, 2008.
However, unless otherwise expressly provided in an applicable award
agreement, any award theretofore granted may extend beyond such date and,
to the extent set forth in the Plan, the termination of the Plan shall not
affect authority of the Committee with respect to any such award or the
authority of the Board to amend the Plan.
Section 7. Stock Options
7.1 Grant of Options. Options may be granted to participants
at any time and from time to time as shall be determined by the Committee.
The Committee shall have complete discretion in determining the number,
terms and conditions of options granted to a participant. The Committee
also shall determine whether an option is to be an incentive stock option
within the meaning of Section 422 of the Code or a nonqualified stock
option; provided, however, that an incentive stock option may only be
granted to employees of the Company or a "subsidiary corporation" within
the meaning of Section 424 of the Code.
7.2 Incentive Stock Options. Except as otherwise required by
the Code, incentive stock options will be exercisable at purchase prices
of not less than one hundred percent (100%) of the fair market value of
the Stock on the date of grant, as such fair market value is determined by
such methods or procedures as shall be established from time to time by
the Committee ("Fair Market Value"). In all other respects, the terms of
any incentive stock option granted under the Plan shall be as determined
by the Committee but shall comply with the provisions of Section 422 of
the Code (or any successor provision thereto) and any regulations
promulgated thereunder.
7.3 Nonqualified Stock Options. Nonqualified stock options
will be exercisable at purchase prices of not less than one hundred
percent (100%) of the Fair Market Value of the Stock on the date of grant,
unless otherwise determined by the Committee. Nonqualified stock options
will be exercisable at such times and subject to such terms and conditions
as determined by the Committee at the time of grant or thereafter.
7.4 Award Agreement. The award agreement evidencing each
option shall specify the type of option granted, the option price, the
duration of the option, the number of shares of Stock to which the option
pertains and such other provisions as the Committee shall determine.
7.5 Fair Market Value. The Fair Market Value of the Stock
shall be determined by such methods or procedures as shall be established
from time to time by the Committee; provided, however, that the Fair
Market Value shall not be less than the par value of the Stock.
7.6 Payment. The Committee shall determine the methods and the
forms for payment of the purchase price of options, including (a) by
delivery of cash or other shares or securities of the Company having a
then Fair Market Value equal to the purchase price of such shares; or
(b) by delivery (including by fax) to the Company or its designated agent
of an executed irrevocable option exercise form together with irrevocable
instructions to a broker-dealer to sell or margin a sufficient portion of
the Stock and deliver the sale or margin loan proceeds directly to the
Company to pay the purchase price.
7.7 Certain Replacement Options. Without in any way limiting
the authority of the Committee to make grants of options to participants
hereunder, and in order to induce participants to retain ownership of the
Stock acquired upon the exercise of options, the Committee shall have the
authority (but not an obligation) to include within any agreement setting
forth the terms of any options (or any amendment thereto) a provision
entitling a participant to further options ("Replacement Options") in the
event the participant exercises any options (including a Replacement
Option) under the Plan, in whole or in part, by surrendering previously
acquired shares of Stock. Any such Replacement Options shall (a) be
nonqualified stock options, exercisable at a purchase price, unless
otherwise determined by the Committee, of 100% of the Fair Market Value of
the shares of Stock on the date the Replacement Options are granted,
(b) be for a number of shares of Stock equal to the number of shares
surrendered, (c) only become exercisable on the terms specified by the
Committee in the event the participant holds, for a minimum period of time
prescribed by the Committee, the shares of Stock the participant acquired
upon the exercise in connection with which the Replacement Options were
issued, and (d) be subject to such other terms and conditions as the
Committee may determine.
Section 8. Stock Appreciation Rights
8.1 Grant of Stock Appreciation Rights. Stock appreciation
rights may be granted to participants. A stock appreciation right may
relate to a specific option granted under the Plan and may, in such case,
relate to all or part of the option shares covered by the related option,
or may be granted independently of any option granted under the Plan.
Notwithstanding the foregoing, stock appreciation rights related to an
incentive stock option may only be granted at the same time as the grant
of such option. Subject to the terms of the Plan, the grant price, term,
calculation of Fair Market Value, methods of exercise, methods of
settlement and any other terms and conditions of any stock appreciation
right shall be as determined by the Committee.
8.2 Exercise or Maturity of Stock Appreciation Rights. The
Committee may impose such conditions or restrictions on the exercise of
any stock appreciation right as it may deem appropriate. Unless otherwise
determined by the Committee, stock appreciation rights that relate to a
specific option granted under the Plan shall be exercisable or shall
mature at such time or times, on the conditions and to the extent and in
the proportion that any related option is exercisable, and may be
exercised or mature for all or part of the shares of Stock subject to the
related option.
8.3 Effect of Exercise. Upon exercise of any number of stock
appreciation rights, the number of option shares subject to any related
option shall be reduced accordingly and such option shares may not again
be available for delivery under the Plan. The exercise of any number of
options shall result in an equivalent reduction in the number of option
shares covered by the related stock appreciation right and such shares may
not again be available for delivery under the Plan; provided, however,
that if a stock appreciation right was granted for less than all of the
option shares covered by any related option, any such reduction shall be
made at such time as, and only to the extent that, the number of shares
exercised under the related option exceeds the number of option shares not
covered by the stock appreciation right.
8.4 Payment of Stock Appreciation Right Amount. Subject to the
terms of the Plan and any applicable agreement with a participant, upon
exercise or maturity of a stock appreciation right, the holder shall be
entitled to receive payment of an amount determined by multiplying:
(a) The difference between the Fair Market Value of a
share of Stock at the date of exercise over the grant price of
the stock appreciation right as determined by the Committee, by
(b) The number of shares of Stock with respect to which
the stock appreciation right is exercised.
Section 9. Restricted Stock
9.1 Awards. The Committee is hereby authorized to issue
restricted stock to participants, with or without payment therefor, as
additional compensation, or in lieu of other compensation, for their
services to the Company and/or any Affiliate; provided, however, that the
aggregate number of shares of restricted stock granted to all participants
under the Plan as a group shall not exceed 50,000 (such number of shares
subject to adjustment in accordance with the terms of Section 5.3 hereof).
Restricted stock shall be subject to such terms and conditions as the
Committee determines appropriate, including, without limitation,
restrictions on sale or other disposition and rights of the Company to
reacquire such restricted stock upon termination of the participant's
employment within specified periods, as prescribed by the Committee.
9.2 Other Restrictions. Without limitation, such terms and
conditions may provide that restricted stock shall be subject to
forfeiture if the Company or the participant fails to achieve certain
goals established by the Committee over a designated period of time. The
goals established by the Committee may relate to any one or more of the
following: interest income, earnings per share, return on shareholder
equity, share price, economic value added and/or, in the case of
participants other than Section 16 participants, such other goals as may
be established by the Committee in its discretion. In the event the
minimum goal established by the Committee is not achieved at the
conclusion of a period, all shares of restricted stock shall be forfeited.
In the event the maximum goal is achieved, no shares of restricted stock
shall be forfeited. Partial achievement of the maximum goal may result in
forfeiture corresponding to the degree of nonachievement to the extent
specified in writing by the Committee when the grant is made. The
Committee shall certify in writing as to the degree of achievement after
completion of the performance period.
9.3 Registration. Any restricted stock granted under the Plan
to a participant may be evidenced in such manner as the Committee may deem
appropriate, including, without limitation, book-entry registration or
issuance of a stock certificate or certificates. In the event any stock
certificate is issued in respect of shares of restricted stock granted
under the Plan to a participant, such certificate shall be registered in
the name of the participant and shall bear an appropriate legend (as
determined by the Committee) referring to the terms, conditions and
restrictions applicable to such restricted stock.
9.4 Other Rights. Unless otherwise determined by the
Committee, during the period of restriction, participants holding shares
of restricted stock granted hereunder may exercise full voting rights with
respect to those shares and shall be entitled to receive all dividends and
other distributions paid or made with respect to those shares while they
are so held; provided, however, that the Committee may provide in any
grant of shares of restricted stock that payment of dividends thereon may
be deferred until termination of the period of restriction and may be made
subject to the same restrictions regarding forfeiture as apply to such
shares of restricted stock. If any such dividends or distributions are
paid in shares of Stock, the shares shall be subject to the same
restrictions on transferability as the shares of restricted stock with
respect to which they were paid.
9.5 Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment of a participant with the
Company or an Affiliate (as determined under criteria established by the
Committee) for any reason during the applicable period of restriction, all
shares of restricted stock still subject to restriction shall be forfeited
by the participant to the Company; provided, however, that the Committee
may, when it finds that a waiver would be in the best interests of the
Company, waive in whole or in part any or all remaining restrictions with
respect to shares of restricted stock held by a participant.
Section 10. Performance Shares and Performance Units
10.1 Issuance. The Committee is hereby authorized to grant
performance shares and performance units to participants. Subject to
Section 5.1, the Committee shall have complete discretion in determining
the number of performance units and performance shares granted to a
participant.
10.2 Performance Shares. The Committee may grant performance
shares that the participant may earn in whole or in part if the Company or
the participant achieves certain goals established by the Committee over a
designated period of time consisting of one or more full fiscal years of
the Company, but not in any event more than ten (10) years. The goals
established by the Committee may relate to any one or more of the
following: interest income, earnings per share, return on shareholder
equity, share price, economic value added and/or, in the case of
participants other than Section 16 participants, such other goals as may
be established by the Committee in its discretion. In the event the
minimum goal established by the Committee is not achieved at the
conclusion of a period, no delivery of performance shares shall be made to
the participant. In the event the maximum goal is achieved, one hundred
percent (100%) of the performance shares shall be delivered to the
participant. Partial achievement of the maximum goal may result in a
delivery corresponding to the degree of achievement to the extent
specified in writing by the Committee when the grant is made. The
Committee shall certify in writing as to the degree of achievement after
completion of the performance period. The Committee shall have the
discretion to satisfy an obligation to deliver a participant's performance
shares by delivery of less than the number of performance shares earned
together with a cash payment equal to the then Fair Market Value of the
shares not delivered. The number of shares of Stock reserved for issuance
under the Plan shall be reduced only by the number of shares delivered in
respect of earned performance shares. Subject to Section 15(a)(iii), at
the time of making an award of performance shares, the Committee shall set
forth the consequences of the termination of a participant's employment
with the Company or an Affiliate prior to the expiration of the designated
performance period in respect of which the performance shares are awarded.
10.3 Performance Units. The Committee may grant performance
units to a participant that consist of monetary units and that the
participant may earn in whole or in part if the Company or the participant
achieves certain goals established by the Committee over a designated
period of time consisting of one or more full fiscal years of the Company,
but not in any event more than ten (10) years. The goals established by
the Committee may relate to any one or more of the following: interest
income, earnings per share, return on shareholder equity, economic value
added, share price and/or, in the case of participants other than
Section 16 participants, such other goals as may be established by the
Committee in its discretion. In the event the minimum goal established by
the Committee is not achieved at the conclusion of a period, no payment
shall be made to the participant. In the event the maximum goal is
achieved, one hundred percent (100%) of the monetary value of the
performance units shall be paid to the participant. Partial achievement
of the maximum goals may result in a payment corresponding to the degree
of achievement to the extent specified in writing by the Committee when
the grant is made. The Committee shall certify in writing as to the
degree of achievement after completion of the performance period. Payment
of a performance unit earned may be in cash or in shares of Stock or in a
combination of both, as the Committee in its sole discretion determines.
The number of shares of Stock reserved for issuance under this Plan shall
be reduced only by the number of shares delivered in payment of
performance units. Subject to Section 15(a)(iii), at the time of making
an award of performance units, the Committee shall set forth the
consequences of the termination of a participant's employment with the
Company or an Affiliate prior to the expiration of the designated
performance period in respect of which the performance units are awarded.
Section 11. Bonus Shares
The Committee is authorized to provide participants the
opportunity to elect to receive shares of Stock in lieu of a portion or
all of any cash bonuses under the Company's incentive compensation
programs and/or increases in base compensation. Bonus shares shall be
issued in an amount equal to (a) the equivalent dollar amount of bonus a
participant has elected to receive in Stock (subject to limits prescribed
by the Committee) divided by (b) the Fair Market Value of a share of Stock
(as determined by the Committee in advance or on the date the cash
compensation to which the bonus shares relate would otherwise be payable)
and shall be subject to such terms and conditions as the Committee deems
appropriate, including, without limitation, restrictions on sale or other
disposition.
Section 12. Other Awards
12.1 Other Stock-Based Awards. Other awards, valued in whole or
in part by reference to, or otherwise based on, shares of Stock, may be
granted either alone or in addition to or in conjunction with other awards
for such consideration, if any, and in such amounts and having such terms
and conditions as the Committee may determine.
12.2 Other Benefits. The Committee shall have the right to
provide types of benefits under the Plan in addition to those specifically
listed, if the Committee believes that such benefits would further the
purposes for which the Plan was established.
Section 13. Transferability
Each award granted under the Plan shall not be transferable
other than by will or the laws of descent and distribution, except that a
participant may, to the extent allowed by the Committee and in a manner
specified by the Committee, (a) designate in writing a beneficiary to
exercise the award after the participant's death; or (b) transfer any
award to the extent permitted by the Code.
Section 14. Rights of Participants
Nothing in the Plan shall interfere with or limit in any way the
right of the Company or any Affiliate to terminate any participant's
employment or service at any time nor confer upon any participant any
right to continue in the employ or as a director of the Company or any
Affiliate.
Section 15. Change of Control
(a) In the event of a "Change of Control" (as hereinafter
defined):
(i) each holder of an option or stock appreciation right
shall have the right at any time thereafter to exercise the
option or stock appreciation right in full whether or not the
option or stock appreciation right was theretofore exercisable;
(ii) all restrictions imposed upon restricted stock shall
lapse upon the date of the Change of Control;
(iii) each holder of a performance share and/or
performance unit for which the performance period has not
expired shall have the right, exercisable by written notice to
the Company within 60 days after the Change of Control, to
receive, in exchange for the surrender of the performance share
and/or performance unit, an amount of cash equal to the product
of the value of the performance share and/or performance unit
and a fraction, the numerator of which is the number of whole
months which have elapsed from the beginning of the performance
period to the date of the Change of Control and the denominator
of which is the number of whole months in the performance
period; and
(iv) each holder of a performance share and/or performance
unit that has been earned but not yet paid shall receive an
amount of cash equal to the value of the performance share
and/or performance unit.
For purposes of this Section 15, the "value" of a performance share shall
be equal to the highest of (1) the Fair Market Value of a share of Stock
on the date of the Change of Control, (2) the highest price per share of
Stock paid in the transaction giving rise to the Change of Control, or
(3) the Fair Market Value of a share of Stock calculated on the date of
surrender or payment, as the case may be.
(b) A "Change of Control" of the Company shall be deemed to
have occurred for purposes of this Section 15 if the event set forth in
any one of the following paragraphs shall have occurred:
(i) any "Person" (as such term is defined in
Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that for purposes of
this Section 15, the term "Person" shall not include (1) the
Company or any of its subsidiaries, (2) a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (3) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or indirectly,
by the shareholders of the Company in substantially the same
proportions as their ownership of stock in the Company) is or
becomes the "Beneficial Owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or
its affiliates) representing 20% or more of either the then
outstanding shares of Stock of the Company or the combined
voting power of the Company's then outstanding voting
securities; notwithstanding the foregoing, a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security under this subparagraph (i) as a result of an
agreement, arrangement or understanding to vote such security if
the agreement, arrangement or understanding (A) arises solely
from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
under the Exchange Act and (B) is not also then reportable on a
Schedule 13D or 13G under the Exchange Act (or any comparable or
successor report);
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on April 27, 1998, constitute the Board and any
new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A under the
Exchange Act) whose appointment or election by the Board or
nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on April 27, 1998
or whose appointment, election or nomination for election was
previously so approved; or
(iii) the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation or
approve the issuance of voting securities of the Company in
connection with a merger or consolidation of the Company (or any
direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than (1) a merger
or consolidation which would result in the voting securities of
the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof) at least 51% of the
combined voting power of the voting securities of the Company or
such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (2) a merger
or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates) representing 20% or
more of either the then outstanding shares of Stock of the
Company or the combined voting power of the Company's then
outstanding voting securities; or
(iv) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets (in one transaction or
a series of related transactions within any period of
24 consecutive months), other than a sale or disposition by the
Company of all or substantially all of the Company's assets to
an entity, at least 75% of the combined voting power of the
voting securities of which are owned by Persons in substantially
the same proportions as their ownership of the Company
immediately prior to such sale.
Notwithstanding the foregoing, no "Change of Control" shall be deemed to
have occurred if there is consummated any transaction or series of
integrated transactions immediately following which the record holders of
the Stock of the Company immediately prior to such transaction or series
of transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the assets
of the Company immediately following such transaction or series of
transactions.
(c) The Committee may, in its sole and absolute discretion,
amend, modify or rescind the provisions of this Section 15 if it
determines that the operation of this Section 15 may prevent a transaction
in which the Company or any Affiliate is a party from being accounted for
on a pooling-of-interests basis.
Section 16. Amendment, Modification and Termination of Plan
16.1 Amendments and Termination. The Board may at any time
amend, alter, suspend, discontinue or terminate the Plan; provided,
however, that shareholder approval of any amendment of the Plan shall be
obtained if otherwise required by (i) the Code or any rules promulgated
thereunder (in order to allow for incentive stock options to be granted
under the Plan or to enable the Company to comply with the provisions of
Section 162(m) of the Code so that the Company can deduct compensation in
excess of the limitation set forth therein), or (ii) the listing
requirements of the principal securities exchange or market on which the
Stock is then traded (in order to maintain the listing or quotation of the
Stock thereon). To the extent permitted by applicable law, the Committee
may also amend the Plan, provided that any such amendments shall be
reported to the Board. Termination of the Plan shall not affect the
rights of participants with respect to awards previously granted to them,
and all unexpired awards shall continue in force and effect after
termination of the Plan except as they may lapse or be terminated by their
own terms and conditions.
16.2 Waiver of Conditions. The Committee may, in whole or in
part, waive any conditions or other restrictions with respect to any award
granted under the Plan.
Section 17. Taxes
The Company shall be entitled to withhold the amount of any tax
attributable to any amount payable or shares of Stock deliverable under
the Plan after giving the person entitled to receive such amount or shares
of Stock notice as far in advance as practicable, and the Company may
defer making payment or delivery if any such tax may be pending unless and
until indemnified to its satisfaction. The Committee may, in its
discretion and subject to such rules as it may adopt, permit a participant
to pay all or a portion of the federal, state and local withholding taxes
arising in connection with (a) the exercise of a nonqualified stock
option, (b) a disqualifying disposition of Stock received upon the
exercise of an incentive stock option, (c) the lapse of restrictions on
restricted stock, or (d) the receipt of performance shares, by electing to
(i) have the Company withhold shares of Stock, (ii) tender back shares of
Stock received in connection with such benefit, or (iii) deliver other
previously owned shares of Stock, having a Fair Market Value equal to the
amount to be withheld; provided, however, that the amount to be withheld
shall not exceed the participant's estimated total federal, state and
local tax obligations associated with the transaction. The election must
be made on or before the date as of which the amount of tax to be withheld
is determined and otherwise as required by the Committee. The Fair Market
Value of fractional shares of Stock remaining after payment of the
withholding taxes shall be paid to the participant in cash.
The Committee may, in its discretion, grant a cash bonus to a
participant who holds restricted stock or performance shares to enable the
participant to pay all or a portion of the federal, state or local tax
liability incurred by the participant upon the vesting of restricted stock
or performance shares. The Company shall deduct from any cash bonus such
amount as may be required for the purpose of satisfying the Company's
obligation to withhold federal, state or local taxes.
Section 18. Miscellaneous
18.1 Other Provisions. The grant of any award under the Plan
may also be subject to other provisions (whether or not applicable to the
benefit awarded to any other participant) as the Committee determines
appropriate, including, without limitation, provisions for (a) one or more
means to enable participants to defer recognition of taxable income
relating to awards or cash payments derived therefrom, which means may
provide for a return to a participant on amounts deferred as determined by
the Committee (provided that no such deferral means may result in an
increase in the number of shares of Stock issuable hereunder); (b) the
purchase of Stock under options in installments; (c) the financing of the
purchase of Stock under the options in the form of a promissory note
issued to the Company by a participant on such terms and conditions as the
Committee determines; (d) restrictions on resale or other disposition; and
(e) compliance with federal or state securities laws and stock exchange or
market requirements.
18.2 Award Agreement. No person shall have any rights under any
award granted under the Plan unless and until the Company and the
participant to whom the award was granted shall have executed an award
agreement in such form as shall have been approved by the Committee.
Section 19. Legal Construction
19.1 Requirements of Law. The granting of awards under the Plan
and the issuance of shares of Stock in connection with an award shall be
subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as
may be required.
19.2 Governing Law. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the
State of Wisconsin.
19.3 Severability. If any provision of the Plan or any award
agreement or any award is or becomes or is deemed to be invalid, illegal
or unenforceable in any jurisdiction, or as to any person or award, or
would disqualify the Plan, any award agreement or any award under any law
deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan, any award agreement
or the award, such provision shall be stricken as to such jurisdiction,
person or award, and the remainder of the Plan, any such award agreement
and any such award shall remain in full force and effect.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FCB FINANCIAL CORP. AS OF AND FOR THE THREE MONTHS
ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 245
<INT-BEARING-DEPOSITS> 36929
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 38131
<INVESTMENTS-CARRYING> 50258
<INVESTMENTS-MARKET> 50791
<LOANS> 358514
<ALLOWANCE> 3393
<TOTAL-ASSETS> 515516
<DEPOSITS> 320779
<SHORT-TERM> 32500
<LIABILITIES-OTHER> 15517
<LONG-TERM> 71350
0
0
<COMMON> 45
<OTHER-SE> 75325
<TOTAL-LIABILITIES-AND-EQUITY> 515516
<INTEREST-LOAN> 7723
<INTEREST-INVEST> 1498
<INTEREST-OTHER> 427
<INTEREST-TOTAL> 9648
<INTEREST-DEPOSIT> 3845
<INTEREST-EXPENSE> 5327
<INTEREST-INCOME-NET> 4321
<LOAN-LOSSES> 150
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2448
<INCOME-PRETAX> 2804
<INCOME-PRE-EXTRAORDINARY> 2804
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1739
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.45
<YIELD-ACTUAL> 3.48
<LOANS-NON> 1066
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3567
<CHARGE-OFFS> 27
<RECOVERIES> 3
<ALLOWANCE-CLOSE> 3693
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3693
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FCB FINANCIAL CORP. AS OF AND FOR THE THREE MONTHS
ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 7185
<INT-BEARING-DEPOSITS> 4786
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 34459
<INVESTMENTS-CARRYING> 62887
<INVESTMENTS-MARKET> 64238
<LOANS> 398630
<ALLOWANCE> 3322
<TOTAL-ASSETS> 526203
<DEPOSITS> 317629
<SHORT-TERM> 74810
<LIABILITIES-OTHER> 8583
<LONG-TERM> 42350
0
0
<COMMON> 45
<OTHER-SE> 76511
<TOTAL-LIABILITIES-AND-EQUITY> 526203
<INTEREST-LOAN> 7153
<INTEREST-INVEST> 1366
<INTEREST-OTHER> 17
<INTEREST-TOTAL> 8376
<INTEREST-DEPOSIT> 3273
<INTEREST-EXPENSE> 4696
<INTEREST-INCOME-NET> 3680
<LOAN-LOSSES> 500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2789
<INCOME-PRETAX> 1024
<INCOME-PRE-EXTRAORDINARY> 1024
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 690
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.20
<YIELD-ACTUAL> 3.43
<LOANS-NON> 794
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1405
<CHARGE-OFFS> 2
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 3322
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3322
</TABLE>
