UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
Commission file number 0-21942
FIRST PALM BEACH BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 65-0418027
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
450 South Australian Avenue, West Palm Beach, Florida
(Address of principal executive offices)
33401
(Zip Code)
561-655-8511
(Registrant's telephone number, including area code)
-------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
The number of shares outstanding of the issuer's common stock, par value
$.01 per share, was 5,145,859 at July 31, 1998.
<PAGE>
FIRST PALM BEACH BANCORP, INC.
FORM 10-Q
Index
<TABLE>
<CAPTION>
Page
<S> <C>
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995 for Forward-Looking Information.........................................................................2
Part I. Financial Information
Item 1 Financial Statements
Consolidated Statements of Financial Condition as of
September 30, 1997 and June 30, 1998 (unaudited)...........................................................3
Consolidated Statements of Operations for the Three and Nine
Months ended June 30, 1997 and 1998 (unaudited)............................................................4
Consolidated Statements of Changes in Stockholders' Equity
for the Nine Months ended June 30, 1997 and 1998 (unaudited)...............................................5
Consolidated Statements of Cash Flows for the Nine Months
ended June 30, 1997 and 1998 (unaudited)...................................................................7
Notes to Unaudited Consolidated Financial Statements.......................................................9
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................................................................12
Item 3 Quantitative and Qualitative Disclosures about Market Risk................................................19
Part II. Other Information
Item 1 Legal Proceedings.........................................................................................20
Item 2 Changes in Securities and Use of Proceeds.................................................................20
Item 3 Defaults Upon Senior Securities...........................................................................20
Item 4 Submission of Matters to a Vote of Security Holders.......................................................20
Item 5 Other Information.........................................................................................20
Item 6 Exhibits and Reports on Form 8-K..........................................................................20
Signature Page............................................................................................................21
Exhibit Index.............................................................................................................22
</TABLE>
<PAGE>
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
for Forward-Looking Information
Information in this report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that are subject
to risks and uncertainties that could cause the Company's actual results to
differ materially from those projected in forward-looking statements. The use of
forward-looking statements can be identified by statements that express or
involve discussions as to expectations, beliefs, plans, objectives, assumptions
or future events or performance (often, but not always, through the use of words
or phrases such as "will likely result," "are expected to," "will continue," "is
anticipated," "estimated," "projection," or "outlook"), are not historical facts
and may be forward-looking. Such statements involve estimates, assumptions, and
uncertainties which include, but are not limited to, overall business
conditions, particularly in the business markets in which First Palm Beach
Bancorp, Inc. and its wholly owned subsidiary, First Bank of Florida operate;
general economic conditions, changes in interest rates, deposit flows, loan
demand, real estate values, and competition; changes in accounting principles,
policies, or guidelines; changes in legislation or regulation; and other
economic, competitive, governmental, regulatory, and technological factors that
affect the Company's operations, pricing, products, and services. Other factors,
such as the general state of the economy, could also cause actual results to
vary materially from the future results covered in such forward-looking
statements. Accordingly, any such statements are qualified in their entirety by
reference to, and are accompanied by, the above mentioned important factors that
could cause the Company's actual results to differ materially from those
contained in the forward-looking statements of the Company made by or on behalf
of the Company.
All such factors are difficult to predict, contain uncertainties which may
materially affect actual results and are beyond the control of the Company.
2
<PAGE>
PART I - FINANCIAL INFORMATION
FIRST PALM BEACH BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, June 30,
1997 1998
--------------- ---------------
(Unaudited)
<S> <C> <C>
Assets
Cash and amounts due from depository institutions............................................. $ 21,123 $ 28,673
Interest earning deposits..................................................................... 78,806 73,529
--------------- ---------------
Total cash and cash equivalents.......................................................... 99,929 102,202
Securities available-for-sale................................................................. 59,468 72,528
Securities held-to-maturity................................................................... 14,988 --
Mortgage-backed and related securities available-for-sale..................................... 208,342 465,271
Mortgage-backed and related securities held-to-maturity....................................... 213,303 --
Loans receivable - net of allowance for loan losses........................................... 1,144,100 1,058,983
Real estate owned, at fair value.............................................................. 1,795 2,648
Repossessed automobiles, at estimated fair value.............................................. 474 318
Office properties and equipment, net.......................................................... 28,313 28,404
Federal Home Loan Bank stock, at cost......................................................... 18,296 14,044
Accrued interest receivable................................................................... 9,879 9,210
Goodwill...................................................................................... 2,631 2,485
Other assets.................................................................................. 6,902 7,933
--------------- ---------------
Total assets............................................................................. $ 1,808,420 $ 1,764,026
=============== ===============
Liabilities and Stockholders' Equity
Deposit accounts.............................................................................. $ 1,229,279 $ 1,299,323
Advances from Federal Home Loan Bank.......................................................... 365,925 270,850
Securities sold under agreements to repurchase................................................ 28,946 --
Senior debentures - net of unamortized issuance costs......................................... 33,839 33,942
Advances by borrowers for taxes and insurance................................................. 17,866 12,490
Deferred income taxes......................................................................... (3) 1,259
Other liabilities............................................................................. 19,538 25,334
--------------- ---------------
Total liabilities........................................................................ $ 1,695,390 $ 1,643,198
Stockholders' equity:
Preferred stock ($.01 par value) authorized 1,000,000 shares; none outstanding................ -- --
Common stock ($.01 par value) authorized 10,000,000 shares; issued 5,496,375 shares;
outstanding 5,047,746 and 5,136,459 (net of treasury stock) at September 30, 1997
and June 30, 1998, respectively............................................................ 55 55
Additional paid-in capital.................................................................... 53,521 53,912
Retained earnings, substantially restricted................................................... 71,397 74,291
Treasury stock, at cost (448,629 shares at September 30, 1997 and 359,916 shares at
June 30, 1998)............................................................................. (9,825) (7,882)
Common stock purchased by:
Employee stock ownership plan................................................................. (955) (315)
Recognition and retention plans............................................................... (117) (141)
Unrealized increase (decrease) in fair value on available-for-sale securities (net of
applicable income taxes)................................................................... (1,046) 908
--------------- ---------------
Total stockholders' equity.................................................................... 113,030 120,828
--------------- ---------------
Total liabilities and stockholders' equity.................................................... $ 1,808,420 $ 1,764,026
=============== ===============
</TABLE>
These financial statements should be read in conjunction with the Notes to
Unaudited Consolidated Financial Statements herein and the Notes to Consolidated
Financial Statements appearing in First Palm Beach Bancorp, Inc.'s 1997 Annual
Report to Stockholders.
3
<PAGE>
FIRST PALM BEACH BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------- -----------------------------------
June 30, 1997 June 30, 1998 June 30, 1997 June 30, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Interest Income:
Loans..................................................... $ 22,327 $ 20,135 $ 65,006 $ 66,108
Securities available-for-sale............................. 876 1,662 3,967 4,159
Securities held-to-maturity............................... 260 92 873 347
Mortgage-backed and related securities available-for-sale. 3,119 6,034 6,431 14,350
Mortgage-backed and related securities held-to-maturity... 3,583 2,235 8,021 9,534
Trading securities........................................ -- -- -- 239
Other..................................................... 277 308 639 1,021
---------------- ---------------- ---------------- ----------------
Total interest income................................ 30,442 30,466 84,937 95,758
---------------- ---------------- ---------------- ----------------
Interest Expense:
Deposits.................................................. 14,665 15,620 42,506 46,008
Advances from Federal Home Loan Bank...................... 3,752 4,099 8,746 14,880
Securities sold under agreements to repurchase............ 294 -- 589 279
Senior debentures......................................... -- 967 -- 2,901
---------------- ---------------- ---------------- ----------------
Total interest expense................................. 18,711 20,686 51,841 64,068
---------------- ---------------- ---------------- ----------------
Net interest income.................................... 11,731 9,780 33,096 31,690
Provision for loan losses................................. 831 211 2,200 4,062
---------------- ---------------- ---------------- ----------------
Net interest income after provision for loan losses.... 10,900 9,569 30,896 27,628
---------------- ---------------- ---------------- ----------------
Other Income:
Servicing income and other fees........................... 1,042 1,096 2,997 3,307
Net gain on sale of loans and mortgage-backed and related
securities............................................. 207 1,235 1,134 4,692
Net gain on sale of securities available-for-sale......... 85 5 277 400
Net realized and unrealized gain on trading securities.... 94 -- 231 204
Miscellaneous............................................. 524 736 1,354 2,481
---------------- ---------------- ---------------- ----------------
Total other income..................................... 1,952 3,072 5,993 11,084
---------------- ---------------- ---------------- ----------------
Other Expenses:
Employee compensation and benefits........................ 4,693 5,686 13,535 16,489
Occupancy and equipment................................... 1,839 1,906 4,796 5,529
Federal deposit insurance premium......................... 191 288 785 774
Provision for losses and net losses on sale of real estate
owned.................................................. 214 36 266 228
Advertising and promotion................................. 179 566 861 1,137
Miscellaneous............................................. 1,781 2,213 5,108 5,304
---------------- ---------------- ---------------- ----------------
Total other expenses................................... 8,897 10,695 25,351 29,461
---------------- ---------------- ---------------- ----------------
Income before provision for income taxes.................. 3,955 1,946 11,538 9,251
Provision for income taxes................................ 1,603 783 4,637 3,688
---------------- ---------------- ---------------- ----------------
Net income............................................. $ 2,352 $ 1,163 $ 6,901 $ 5,563
================ ================ ================ ================
Earnings per share:
Basic.................................................. $ 0.48 $ 0.23 $ 1.41 $ 1.12
Diluted................................................ $ 0.47 $ 0.23 $ 1.38 $ 1.09
</TABLE>
These financial statements should be read in conjunction with the Notes to
Unaudited Consolidated Financial Statements herein and the Notes to Consolidated
Financial Statements appearing in First Palm Beach Bancorp, Inc.'s 1997 Annual
Report to Stockholders.
4
<PAGE>
FIRST PALM BEACH BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Unrealized
Common Common Gain (Loss) In
Additional Stock Stock Fair Value on Total
Common Paid-in Retained Treasury Purchased Purchased Available-for- Stockholders'
Stock Capital Earnings Stock by ESOP by RRP Sale Securities Equity
------ ---------- -------- --------- --------- --------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nine months ended June 30, 1997
Balance at September 30, 1996........ $ 55 $ 52,891 $ 65,064 $ (8,660) $ (1,769) $ (161) $ (1,995) $ 105,425
Net income........................... -- -- 6,901 -- -- -- -- 6,901
Accretion of unrealized gain
on securities and mortgage-
backed and related securities
transferred from available-
for-sale to held-to-maturity,
net of income taxes................ -- -- -- -- -- -- (22) (22)
Change in unrealized losses on
securities available-for-sale
and mortgage-backed and related
securities available-for-sale,
net of income taxes................ -- -- -- -- -- -- 42 42
Amortization of deferred
compensation, Employee Stock
Ownership Plan and Recognition
and Retention Plans................ -- 945 -- -- 607 14 -- 1,566
Purchase of Treasury Stock at
cost (114,000 shares).............. -- -- -- (2,668) -- -- -- (2,668)
Exercise of stock options by
certain directors and employees.... -- (615) -- 1,133 -- -- -- 518
Declaration of dividends of
$0.45 per share.................... -- -- (2,267) -- -- -- -- (2,267)
------ ---------- -------- --------- --------- --------- -------------- -------------
Balance at June 30, 1997............. $ 55 $ 53,221 $ 69,698 $(10,195) $ (1,162) $ (147) $ (1,975) $ 109,495
====== ========== ======== ========= ========= ========= ============== =============
</TABLE>
(Continued)
5
<PAGE>
FIRST PALM BEACH BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Unrealized
Common Common Gain (Loss) In
Additional Stock Stock Fair Value on Total
Common Paid-in Retained Treasury Purchased Purchased Available-for- Stockholders'
Stock Capital Earnings Stock by ESOP by RRP Sale Securities Equity
------ ---------- -------- --------- --------- --------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nine months ended June 30, 1998
Balance at September 30, 1997........ $ 55 $ 53,521 $ 71,397 $ (9,825) $ (955) $ (117) $ (1,046) $ 113,030
Net income........................... -- -- 5,563 -- -- -- -- 5,563
Accretion of unrealized gain
on securities and mortgage-
backed and related securities
transferred from available-
for-sale to held-to-maturity,
net of income taxes................ -- -- -- -- -- -- 11 11
Change in unrealized gain on
securities available-for-sale
and mortgage-backed and related
securities available-for-sale,
net of income taxes................ -- -- -- -- -- -- 1,943 1,943
Amortization of deferred
compensation, Employee Stock
Ownership Plan and Recognition
and Retention Plans................ -- 1,106 -- -- 640 (24) -- 1,722
Exercise of stock options by
certain directors and employees.... -- (715) -- 1,943 -- -- -- 1,228
Declaration of dividends of
$0.525 per share................... -- -- (2,669) -- -- -- -- (2,669)
------ ---------- -------- --------- --------- -------- --------------- ------------
Balance at June 30, 1998............. $ 55 $ 53,912 $ 74,291 $ (7,882) $ (315) $ (141) $ 908 $ 120,828
====== ========== ======== ========= ========= ======== =============== ============
</TABLE>
These financial statements should be read in conjunction with the Notes to
Unaudited Consolidated Financial Statements herein and the Notes to Consolidated
Financial Statements appearing in First Palm Beach Bancorp, Inc.'s 1997 Annual
Report to Stockholders.
6
<PAGE>
FIRST PALM BEACH BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months Ended
June 30, 1997 June 30, 1998
--------------- ---------------
<S> <C> <C>
Cash flow from (for) operating activities:
Net income................................................................................. $ 6,901 $ 5,563
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation............................................................................. 1,413 1,898
Employee Stock Ownership Plan and Recognition and Retention Plan compensation expense.... 1,566 1,722
Amortization of Senior Debentures' issuance cost......................................... -- 184
Accretion of discounts, amortization of premiums, and other deferred yield items......... (799) 947
Amortization of goodwill................................................................. 146 146
Provision for loan losses................................................................ 2,200 4,062
Provision for losses and net losses on sales of real estate owned........................ 266 228
Net realized and unrealized (gain) on trading securities................................. (231) (204)
Purchase of trading securities............................................................. (48,119) (148,431)
Sale of trading securities................................................................. 48,263 148,373
Net gain on sale of:
Loans.................................................................................. (402) (2,390)
Mortgage-backed and related securities available-for-sale.............................. (740) (2,344)
Securities available-for-sale.......................................................... (277) (400)
Property and equipment................................................................. -- (161)
(Increase) decrease in accrued interest receivable....................................... (1,182) 453
Increase in other assets................................................................. (475) (1,031)
Increase (decrease) in other liabilities - net of change in dividends payable and
deferred taxes......................................................................... (322) 5,654
--------------- ---------------
Net cash (used for) provided by operating activities................................. 8,208 14,269
--------------- ---------------
Cash flow from (for) investing activities:
Loan originations and principal payments on loans.......................................... (139,262) (70,480)
Principal payments received on mortgage-backed and related securities...................... 43,410 52,829
Purchases of:
Loans.................................................................................... (7,771) (11,754)
Mortgage-backed and related securities held-to-maturity.................................. (132,449) --
Mortgage-backed and related securities available-for-sale................................ (128,815) (290,414)
Securities held-to-maturity.............................................................. (15,413) --
Securities available-for-sale............................................................ (102,957) (65,961)
Office properties and equipment.......................................................... (8,159) (2,464)
Proceeds from sales of:
Loans.................................................................................... 27,747 161,012
Mortgage-backed and related securities available-for-sale................................ 82,070 199,573
Securities available-for-sale............................................................ 62,161 60,113
Repossessed automobiles.................................................................. 6,580 2,305
Real estate acquired in settlement of loans.............................................. 2,798 2,102
Office properties and equipment.......................................................... -- 636
(Purchase) Sale of Federal Home Loan Bank stock............................................ (2,996) 4,252
Proceeds from maturities of securities..................................................... 41,896 10,000
Other investing activities................................................................. (1,841) (3,093)
--------------- ---------------
Net cash (used for) provided by investing activities..................................... (273,001) 48,656
--------------- ---------------
(Continued)
</TABLE>
7
<PAGE>
FIRST PALM BEACH BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months Ended
June 30, 1997 June 30, 1998
--------------- ---------------
<S> <C> <C>
Cash flow from (for) financing activities:
Issuance of senior debentures.............................................................. 33,875 --
Purchase of treasury stock at cost......................................................... (2,668) --
Exercise of stock options.................................................................. 518 1,228
Net increase (decrease) in:
NOW accounts, demand deposits, and savings accounts...................................... 12,655 79,462
Certificates of deposit.................................................................. 77,900 (9,418)
Advances from Federal Home Loan Bank..................................................... 49,925 (95,075)
Securities sold under agreement to repurchase............................................ -- (28,946)
Advances by borrowers for taxes and insurance............................................ (1,986) (5,376)
Dividends paid on stock.................................................................. (2,021) (2,527)
--------------- ---------------
Net cash (used for) provided by financing activities................................... 168,198 (60,652)
--------------- ---------------
Net (decrease) increase in cash and cash equivalents.......................................... (96,595) 2,273
Cash and cash equivalents, beginning of period................................................ 161,413 99,929
--------------- ---------------
Cash and cash equivalents, end of period...................................................... $ 64,818 $ 102,202
=============== ===============
Supplemental disclosure of cash flows
Supplemental disclosure of cash flow information:
Cash paid for income taxes............................................................... $ 189 $ 2,650
=============== ===============
Cash paid for interest on deposits and other borrowings.................................. $ 52,933 $ 65,868
=============== ===============
Supplemental schedule of noncash investing and financing activities:
Repossessed automobiles acquired in settlement of loans.................................. $ 12,426 $ 6,103
=============== = ===============
Real estate acquired in settlement of loans.............................................. $ 1,947 $ 3,219
=============== = ===============
Changes in unrealized loss on available-for-sale securities, net of income taxes........... $ (20) $ (1,954)
=============== ===============
</TABLE>
These financial statements should be read in conjunction with the Notes to
Unaudited Consolidated Financial Statements herein and the Notes to Consolidated
Financial Statements appearing in First Palm Beach Bancorp, Inc.'s 1997 Annual
Report to Stockholders.
8
<PAGE>
FIRST PALM BEACH BANCORP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AT AND FOR THE THREE AND NINE MONTH PERIODS ENDED
JUNE 30, 1997 AND 1998
(1) Basis of Presentation
First Palm Beach Bancorp, Inc. (the "Company") was organized in May 1993 as
the holding company for First Bank of Florida (the "Bank"), formerly First
Federal Savings and Loan Association of the Palm Beaches, in connection
with the Bank's conversion from a federally chartered mutual savings and
loan association to a federally chartered stock savings and loan
association. The Bank changed its name from First Federal Savings and Loan
Association of the Palm Beaches to First Bank of Florida on October 15,
1996.
The unaudited consolidated financial statements include the accounts of
First Palm Beach Bancorp, Inc. (the "Company") and its wholly-owned
subsidiary, First Bank of Florida (the "Bank"), and the Bank's wholly-owned
subsidiaries - The Big First, Inc., Retail Investment Corporation, First
Corporate Center, Inc., and First Bank of Florida Mortgage Corporation.
Material intercompany accounts and transactions have been eliminated in
financial statement consolidation.
On May 28, 1998, the Company announced the execution of a definitive
agreement to be merged into Republic Security Financial Corporation
(NASDAQ: RSFC), the parent company of Republic Security Bank. Republic
Security Financial Corporation, with total assets of $1.0 billion, operates
thirty-four full service banking offices and is headquartered in Palm Beach
County, Florida. The merger is subject to various conditions, including the
receipt of regulatory approvals from the Federal Reserve and the Florida
Banking Department and the approval of the stockholders of each of the
Company and Republic Security Financial Corporation. During the quarter
ended June 30, 1998, the Company capitalized approximately $260,000 of
merger related expenses. The approval of the Federal Reserve was received
on July 29, 1998. The merger is expected to close in the fourth quarter of
calendar 1998.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Generally Accepted Accounting Principles (GAAP)
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes
required by GAAP for complete financial statements. In the opinion of
management, all material adjustments (consisting of only normal recurring
accruals) necessary for a fair presentation have been included. The results
of operations and other data for the nine months ended June 30, 1998 are
not necessarily indicative of results that may be expected for the entire
fiscal year ending September 30, 1998.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Areas in the accompanying
financial statements where estimates are significant include the allowance
for loan losses, and the carrying value of real estate owned.
Certain amounts in the June 30, 1997 and September 30, 1997 consolidated
financial statements have been reclassified to conform to the presentation
for June 30, 1998.
9
<PAGE>
(2) New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130 "Reporting
Comprehensive Income," which requires that an enterprise report, by major
components and as a single total, the change in its net assets during the
period from nonowner sources; and SFAS No. 131 "Disclosures about Segments
of an Enterprise and Related Information," which establishes annual and
interim reporting standards for an enterprise's operating segments and
related disclosures about its products, services, geographic areas, and
major customers. In February 1998, FASB issued SFAS No. 132, "Employers'
Disclosure about Pensions and Other Post-retirement Benefits." SFAS No. 132
revises employers' disclosures about pension and other post-retirement
benefit plans, but does not change the measurement or recognition of those
plans. Adoption of these statements will not impact the Company's
consolidated financial position, results of operations or cash flows, and
any effect will be limited to the form and content of its disclosures.
These statements are effective for fiscal years beginning after December
15, 1997, with earlier application permitted.
In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 will require companies to
record all derivatives, except those derivatives used to hedge other
securities, on the balance sheet as assets or liabilities, measured at fair
value. The income statement generally will be required to reflect gains or
losses in the values of those derivatives as of the date of the income
statement. SFAS No. 133 is effective for fiscal years beginning after June
15, 1999. Adoption of this statement is not expected to have a material
impact on the Company's consolidated financial position, or results of
operations as the Company currently does not have any derivative financial
instruments.
(3) Earnings Per Share
The Company adopted the provisions of SFAS No. 128, "Earnings per Share" as
of December 31, 1997, and restated all prior periods presented. The
statement is designed to make the earnings per share computation comparable
to International Accounting Standards and is effective for financial
statements issued for periods ending after December 15, 1997. Basic
earnings per share were determined by dividing net income for the period by
the weighted average number of shares of common stock outstanding,
excluding unallocated shares held by the ESOP. Diluted earnings per share
reflects the potential dilutions that could occur if securities or other
contracts to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock that then shared in the
earnings of the Company. Diluted earnings per share were determined by
dividing net income for the period by the weighted average number of shares
of common stock outstanding and potential common stock outstanding
excluding unallocated shares held by the ESOP and Recognition and Retention
Plan shares.
The following is a reconciliation of the numerator and denominator of basic
and diluted earnings per share for the three month and nine month periods
ended June 30, 1998.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1997 1998 1997 1998
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Numerator:
Net Income (in thousands)................................ $ 2,352 $ 1,163 $ 6,901 $ 5,563
============== =============== =============== ===============
Denominator:
Average shares common stock outstanding utilized
in the calculation of basic earnings per share........... 4,886,886 5,003,645 4,878,050 4,969,132
Potential common stock due to the dilutive effect
of stock options......................................... 133,492 153,126 124,244 150,062
-------------- --------------- --------------- ---------------
Average shares outstanding utilized in the calculation
of diluted earnings per share............................ 5,020,378 5,156,771 5,002,294 5,119,194
============== =============== =============== ===============
</TABLE>
10
<PAGE>
(4) Commitments and Contingencies
Commitments to originate loans of $28.5 million at June 30, 1998 represent
the total principal amounts which the Bank plans to fund within the normal
commitment period of 60 to 90 days. As of June 30, 1998 the Bank had $50.0
million in commitments to fund undisbursed balances of loans previously
closed. As of June 30, 1998, the Bank had $64.0 million in commitments to
purchase securities and $2.6 million in commitments to purchase loans.
(5) Allowance for Loan Losses; Impaired Loans
An analysis of the changes in the allowance for loan losses for the nine
months ended June 30, 1998 and fiscal year ended September 30, 1997, is as
follows:
<TABLE>
<CAPTION>
Fiscal Year Ended Nine Months Ended
September 30, 1997 June 30, 1998
--------------------- ----------------------
(In thousands)
<S> <C> <C>
Balance at beginning of period.......... $ 11,855 $ 6,046
Current provision....................... 3,281 4,062
Charge-offs - net....................... (9,090) (4,745)
--------------------- ----------------------
Ending balance.......................... $ 6,046 $ 5,363
===================== ======================
</TABLE>
At June 30, 1998, and September 30, 1997 the Bank's impaired loans
consisted of the following:
<TABLE>
<CAPTION>
September 30, 1997 June 30, 1998
---------------------- ---------------------
(In thousands)
<S> <C> <C>
Impaired loan balances.......................................... $ 1,267 $ 1,490
Related allowance for loan losses............................... $ 349 $ 394
Average recorded investment in impaired loans................... $ 4,924 $ 1,495
Interest income recognized during impairment period............. $ 921 $ 32
</TABLE>
11
<PAGE>
FIRST PALM BEACH BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THIS DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS CONTAINED HEREIN AND WITH
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS APPEARING IN FIRST PALM BEACH BANCORP, INC.'S 1997 ANNUAL REPORT TO
STOCKHOLDERS.
General
First Palm Beach Bancorp, Inc. (the "Company") was organized in May 1993 as the
holding company for First Bank of Florida (the "Bank"), formerly First Federal
Savings and Loan Association of the Palm Beaches, in connection with the Bank's
conversion from a federally chartered mutual savings and loan association to a
federally chartered stock savings and loan association. The Bank changed its
name from First Federal Savings and Loan Association of the Palm Beaches to
First Bank of Florida on October 15, 1996. The Company is headquartered in West
Palm Beach, Florida.
On May 28, 1998, the Company announced the execution of a definitive agreement
to be merged into Republic Security Financial Corporation (NASDAQ: RSFC), the
parent company of Republic Security Bank. Republic Security Financial
Corporation, with total assets of $1.0 billion, operates thirty-four full
service banking offices and is headquartered in Palm Beach County, Florida. The
merger is subject to various conditions, including the receipt of regulatory
approvals from the Federal Reserve and the Florida Banking Department and the
approval of the stockholders of each of the Company and Republic Security
Financial Corporation. The approval of the Federal Reserve was received on July
29, 1998. The merger is expected to close in the fourth quarter of calendar
1998.
The Company's consolidated results of operation are primarily those of its
wholly owned subsidiary, the Bank.
The Bank's principal business has been, and continues to be, attracting retail
deposits from the general public and investing those deposits, together with
funds generated from operations and borrowings, primarily in one-to-four family,
owner-occupied, residential mortgage loans, consumer loans, and to a lesser
extent, construction loans, commercial real estate loans, multi-family
residential mortgage loans, and other commercial loans. In addition, the Bank
invests in mortgage-backed securities, securities issued by the U.S. Government
and government agencies, and other investments permitted by federal laws and
regulations. The Bank is a member of the FHLB system and its deposits are
insured to the applicable limits by the Federal Deposit Insurance Corporation
(the "FDIC"). The Bank is subject to regulation by the Office of Thrift
Supervision (the "OTS") as its chartering agency and the FDIC as its deposit
insurer.
At June 30, 1998, the Bank had 51 full-service branches in Palm Beach, Martin,
Broward, Dade and Lee Counties, Florida. Two loan production offices are located
in Palm Beach County and one loan production office is in Lee County. As of June
30, 1998, the Bank operated four of its full-service branches inside Winn-Dixie
supermarkets and twenty inside Albertson's supermarkets. During the quarter
ended June 30, 1998, the Bank opened one full-service branch, which is a
supermarket branch. The Bank has under construction two additional Albertson's
branches. The Bank may open additional supermarket branches at Albertson's in
the future.
The Company's results of operations depend primarily on net interest income,
which is the difference between the interest income earned on its loan and
investment portfolio, and its cost of funds, consisting of the interest paid on
deposits and borrowings. Net interest income is impacted by the provision for
loan losses. The Company's operating results are also affected, to a lesser
extent, by fee income and by gains or losses on the sale of loans, trading
securities, securities and mortgage-backed securities available-for-sale, and
real estate owned, as well as operating expenses. The Company's operating
expenses consist primarily of employee compensation and benefits, occupancy and
equipment expenses, FDIC insurance premiums, advertising and promotional
expenses and other general and administrative
12
<PAGE>
expenses. The Company's results of operations are also significantly affected by
general economic and competitive conditions, particularly changes in market
interest rates and U.S. Treasury yield curves, and to a lesser extent by
government policies and actions of regulatory authorities.
Liquidity and Capital Resources
The Bank's most liquid assets are cash, amounts due from depository institutions
and interest-bearing deposits. The levels of these assets depend on the Bank's
lending, investing, operating and deposit activities during any given period. At
June 30, 1998, cash and amounts due from depository institutions and
interest-earning deposits totaled $102.2 million.
The Bank's primary sources of funds are deposits, proceeds from principal and
interest payments on loans, proceeds from the amortization, maturing and sales
of securities, advances from the FHLB and securities sold under agreements to
repurchase ("reverse repurchase agreements"). On June 30, 1997, the Company
issued $35 million of 10.35% Series A Senior Debentures Due 2002 ("Series A
Debentures"). The net proceeds of the debenture issuance are being used for
general corporate purposes, including a contribution of $25 million of the net
proceeds to the Bank. On December 23, 1997 the Company completed an exchange of
all of the outstanding Series A Debentures for Series B Debentures, which are
registered under the Securities Act of 1933, as amended, and are otherwise
identical to the Series A Debentures. Liquidated damages provided for in the
Series A Debentures for failure to so register the Series B Debentures are
therefore not applicable. While maturity and scheduled amortization of loans and
securities are predictable sources of funds, deposit inflows and mortgage
prepayments are greatly influenced by local market conditions, general interest
rates and regulatory changes.
The primary investing activities of the Bank are the origination of
single-family mortgage loans and the purchase of mortgage-backed and other
securities. A primary component of the Bank's current strategic plan is to
increase its originations of mortgage and consumer loans, excluding indirect
automobile loans. At September 30, 1996, the Bank discontinued its indirect
automobile lending program, which produced delinquency rates and a level of
repossessed assets which management deemed unacceptable and which resulted in
increased loan loss provisions. During the nine months ended June 30, 1998, the
Bank's loan originations totaled $307.3 million, compared to $303.4 million for
the nine months ended June 30, 1997. Purchases of mortgage-backed and other
securities totaled $356.4 million for the nine months ended June 30, 1998,
compared to $379.6 million for the nine months ended June 30, 1997. These
activities were funded primarily by principal repayments on loans and
mortgage-backed securities, maturities of investment securities, and increases
in deposits. Principal repayments on loans and mortgage-backed securities
totaled $278.4 million during the nine months ended June 30, 1998, compared to
$204.8 million for the nine months ended June 30, 1997. Maturities and calls of
investment securities totaled $10.0 million and $41.9 million, respectively,
during the nine months ended June 30, 1998 and 1997. Loan and securities sales,
which totaled $420.7 million and $172.0 million, respectively, during the nine
months ended June 30, 1998 and 1997, provided additional cash flows.
Deposits increased $70.0 million during the nine months ended June 30, 1998,
compared to an increase of $90.6 million during the nine months ended June 30,
1997. Deposit flows are affected by, among other things, the level of interest
rates, and the interest rates and products offered by local competitors.
Certificates of deposit which are scheduled to mature in one year or less from
June 30, 1998 totaled $780.0 million. Based upon the Bank's current pricing
strategy and deposit retention experience, management believes that a
significant portion of such deposits will remain with the Bank. Net borrowings
decreased by $123.9 million during the nine months ended June 30, 1998, which
decrease was comprised of decreases of $95.0 million and $28.9 million in FHLB
advances and reverse repurchase agreements, respectively.
OTS regulations require a savings institution to maintain an average daily
balance of liquid assets (generally cash; certain time deposits; bankers'
acceptances; specified United States Government, state or federal agency
obligations; shares of certain mutual funds and certain corporate debt
securities and commercial paper) equal to a specified percentage (determined as
of the end of the preceding calendar quarter or as an average daily balance
during the
13
<PAGE>
preceding quarter) of its net withdrawable deposit accounts plus short-term
borrowings. The computation of the average liquidity ratio and the minimum
liquidity requirement was revised by OTS regulations in January 1998. The
minimum liquidity requirement was 5.0% and 4.0% as of September 30, 1997 and
June 30, 1998, respectively. The Bank historically has maintained a level of
liquid assets in excess of this regulatory requirement. The Bank's average
liquidity ratio was 7.0% and 36.1% (the latter as computed under the revised
regulatory requirements) at September 30, 1997 and June 30, 1998, respectively.
Liquidity management is a daily and long-term function of the Bank's management
strategy. If the Bank requires liquid funds beyond its ability to generate them
internally, additional sources of funds are available through the use of FHLB
advances and reverse repurchase agreements.
The Bank also invests in U.S. Treasury and agency securities, collateralized
mortgage obligations, municipal bonds and FHLB overnight funds. During periods
when the Bank's loan demand is lower, the Bank may purchase short-term
investment securities to obtain a higher yield than otherwise would be
available.
At June 30, 1998, the Bank had outstanding commitments to originate $28.5
million of loans and $50.0 million in commitments to fund undisbursed balances
of loans previously closed. At June 30, 1998, the Bank had $2.6 million in
commitments to purchase loans and $64.0 million in commitments to purchase
securities. Management is of the opinion that the Bank will have sufficient
funds available to meet all of these commitments.
At June 30, 1998, the Bank exceeded each of the OTS capital requirements and was
considered a "well capitalized" institution for regulatory purposes. The
following tables present the capital of the Bank at June 30, 1998:
<TABLE>
<CAPTION>
To Be Considered Well
Capitalized Under
For Capital Adequacy Prompt Corrective
Actual Purposes Action Provisions
----------------------- ---------------------- --------------------------
Ratio Ratio Ratio
----------------------- ---------------------- --------------------------
<S> <C> <C> <C>
As of June 30, 1998:
Total Capital (to Risk-weighted Assets) 16.38% 8.00% 10.00%
Core (Tier 1) Capital (to Adjusted Tangible Assets) 7.81% 4.00% 5.00%
Tangible Capital (to Tangible Assets) 7.81% 1.50% N/A
Core (Tier 1) Capital (to Risk-weighted Assets) 15.80% N/A 6.00%
</TABLE>
Changes in Financial Condition
Total assets decreased $44.4 million to $1.764 billion at June 30, 1998 from
$1.808 billion at September 30, 1997. Cash and cash equivalents, securities
held-to-maturity, securities available-for-sale, mortgage-backed and related
securities held-to-maturity and mortgage-backed and related securities
available-for-sale increased $44.0 million to $640.0 million at June 30, 1998
from $596.0 million at September 30, 1997. During the quarter ended June 30,
1998, the Bank transferred $192.0 million of securities "held-to-maturity" and
mortgage backed and related securities "held-to-maturity" to
"available-for-sale." Loans receivable decreased by $85.1 million to $1.059
billion at June 30, 1998 from $1.144 billion at September 30, 1997. Loans
originated amounted to $307.3 million (which included $248.9 million of one- to
four-family residential mortgage loans, $9.9 million of commercial mortgage
loans and $48.5 million of consumer loans) during the nine months ended June 30,
1998 compared to $303.4 million (which included $240.4 million of one- to
four-family residential mortgage loans, $13.9 million of commercial mortgage
loans and $49.1 million of consumer loans) during the nine months ended June 30,
1997. Indirect automobile loan balances decreased to $55.6 million at June 30,
1998 from $88.4 million at September 30, 1997 primarily as a result of the
repayment of such loans and repossession activity. On March 31, 1998, as part of
the Bank's interest rate risk management strategy and to take advantage of a
market opportunity to capture additional income which might not have been
available at a later time, the Bank sold $117.0 million principal balance of
fixed rate and $43.7 million of adjustable rate residential loans at a premium
resulting in net loan sale proceeds of $165.5 million. The Bank used such net
loan sale proceeds to repay
14
<PAGE>
$100.0 million of FHLB advances and reinvested the remaining loan sale proceeds
of $65.5 million in loans and other investments.
Deposit accounts increased $70.0 million to $1.299 billion at June 30, 1998 from
$1.229 billion at September 30, 1997. The average interest rate paid on deposits
was 4.99% as of June 30, 1998 and September 30, 1997.
Advances from the FHLB decreased $95.0 million to $270.9 million at June 30,
1998 from $365.9 million at September 30, 1997 as a result of the previously
discussed $100.0 million FHLB repayment. There are no reverse repurchase
agreements at June 30, 1998 compared to $28.9 million at September 30, 1997. All
reverse repurchase agreements existing at September 30, 1997 matured and were
paid off during the nine months ended June 30, 1998. Advances from borrowers for
taxes and insurance decreased by $5.4 million to $12.5 million at June 30, 1998
from $17.9 million at September 30, 1997 due to the remittance of escrowed real
estate taxes in November 1997.
Stockholders' equity increased $7.8 million to $120.8 million at June 30, 1998
from $113.0 million at September 30, 1997. The increase to stockholders' equity
during the nine month period ended June 30, 1998 was due to net income of $5.6
million and increases in additional paid in capital and employee stock ownership
plan accounts of $1.7 million due to the amortization of related compensation
expense. During the quarter ended June 30, 1998, the Bank transferred $192.0
million of securities held-to-maturity and mortgage backed and related
securities held-to-maturity to "available- for-sale" resulting in an increase to
stockholders' equity of approximately $1.2 million, net of applicable taxes. The
increase in fair market value of securities which were classified as
"available-for-sale" increased stockholders' equity by an additional $0.7 net of
applicable income taxes. Dividends declared during the nine months ended June
30, 1998 reduced stockholders' equity by $2.7 million.
Interest Rate Sensitivity
The matching of assets and liabilities may be analyzed by examining the extent
to which assets and liabilities are "interest rate sensitive" and by monitoring
an institution's interest rate sensitivity "gap." An asset or liability is
"interest rate sensitive" within a specific time period if it will mature or
reprice within that time period. The interest rate sensitivity gap is defined as
the difference between the aggregate amount of interest-earning assets maturing
or anticipated to reprice, based upon certain assumptions, within a specified
time period and the aggregate amount of interest-bearing liabilities maturing or
anticipated to reprice, based upon certain assumptions, within the same time
period. A gap is considered negative when the amount of interest rate sensitive
liabilities maturing or repricing within a specified time frame exceeds the
amount of interest rate sensitive assets maturing or repricing within that same
time frame.
During a period of rising interest rates, a company with a negative gap position
would tend to experience a decrease in net interest income while a company with
a positive gap position would tend to experience an increase in net interest
income. During a period of declining interest rates a company with a negative
gap position would generally be expected, absent the effect of other factors, to
experience a greater decrease in the cost of liabilities relative to yield on
assets and thus an increase in the net interest income.
The Bank's one year interest rate sensitivity gap as a percentage of total
assets was a negative 34.8% at June 30, 1998 as compared to a negative 15.4% at
September 30, 1997. During the quarter ended March 31, 1998, the Bank
reevaluated the methods and assumptions used for evaluating interest rate risk.
As part of this evaluation the Bank implemented a new asset liability software
modeling program. This new modeling program computes interest rate sensitivity
on an individual asset and liability cash flow basis rather than on an aggregate
cash flow basis, as was the case under the previous model. The increase in the
Bank's negative interest rate sensitivity gap is primarily attributable to this
change in interest rate sensitive asset and liability valuation methodology
together with the impact of the sale of $117.0 million principal balance of
fixed rate and $43.7 million of adjustable rate residential loans, the sale of
$93.5 million adjustable rate mortgage backed securities and the subsequent
reinvestment in fixed rate securities and the further deleveraging of the
balance sheet through the repayment of FHLB advances. The software model
utilized to
15
<PAGE>
compute the Bank's interest rate sensitivity gap makes various estimates
regarding cash flows from principal repayments on loans and mortgage-backed
securities and/or call activity on investment securities. Actual results could
differ significantly from these estimates, which may result in material
variances in the calculated interest rate sensitivity gap.
The Bank's policy is to manage its exposure to interest rate risk by attempting
to match the maturities of its interest rate sensitive assets and liabilities,
in part, by emphasizing, when market conditions permit, the origination of
adjustable rate mortgages ("ARM") and short term residential construction loans.
As of June 30, 1998, these loans constituted approximately 43% of outstanding
mortgage loans. Approximately 7% of outstanding mortgage loans with seven year
and ten year fixed rates which become one year adjustable loans thereafter are
classified as ARM loans. The Bank also manages its exposure by purchasing short
average life and adjustable-rate collateralized mortgage obligations and
mortgage-backed securities.
Asset Quality
The Company and the Bank regularly review interest earning assets to determine
proper valuation of those assets. Management monitors the asset portfolio by
reviewing historical loss experience, known and inherent risks in the portfolio,
the value of any underlying collateral, prospective economic conditions and the
regulatory environment. During the nine months ended June 30, 1998,
non-performing assets decreased $1.4 million to $9.0 million from $10.4 million
at September 30, 1997. Non-performing loans decreased by $2.0 million to $6.1
million at June 30, 1998 from $8.1 million at September 30, 1997. Real estate
owned increased $0.8 million to $2.6 million at June 30, 1998 from $1.8 million
at September 30, 1997. Repossessed assets, carried at fair value, decreased
$156,000 to $318,000 at June 30, 1998 from $474,000 at September 30, 1997.
During the quarter ended March 31, 1998, an additional loan loss provision of
$2.2 million with respect to the Bank's discontinued indirect automobile lending
business was recorded. At June 30, 1998 and September 30, 1997, the allowance
for loan losses related to the indirect automobile loan portfolio was 4.80% and
3.68% (as a percentage of the outstanding balance of such portfolio)
respectively on outstanding balances of $55.6 million and $88.4 million,
respectively. Indirect automobile loan delinquencies as a percentage of the
total outstanding indirect automobile loan portfolio were 9.81% at June 30,
1998. During the nine months ended June 30, 1998 management continued to monitor
and evaluate the performance of the remaining indirect automobile loan portfolio
and recorded net charge-offs related to indirect automobile loans for the three
months and nine months ended June 30, 1998 of $908,000 and $3.6 million,
respectively. Prior to the quarter ended March 31, 1998, management estimated
that the rate of repossessed collateral and loan delinquencies related to
indirect automobile loans would significantly improve in the future as the
indirect automobile loan portfolio matured. During the quarter ended March 31,
1998, repossessions decreased, but not as quickly as anticipated. Additionally,
delinquencies remained at 7.55% (as a percentage of the outstanding balance of
the indirect automobile loan portfolio) at March 31, 1998 as compared to 8.77%
at September 30, 1997. The combination of the net charge-offs on indirect loans
being higher than expected and no significant improvement of the delinquency
rate on indirect loans during the six month period caused management to revise
its estimate related to the Company's loan loss provision with respect to the
indirect automobile loan portfolio. The additional provision was based on
management's evaluation of the portfolio's remaining term to maturity,
historical loss experience, related delinquency rates and the value of the
underlying collateral. Management will continue to monitor the performance of
the remaining indirect automobile loan portfolio, and will adjust the loan loss
provision if current estimates of collectibility change.
The following table sets forth information regarding the Bank's non-performing
loans, repossessed assets and real estate owned at the dates indicated. The Bank
generally discontinues accruing interest on loans that are 90 days or more past
due, or when management determines that a loan is impaired, or not performing,
at which time the accrued but uncollected interest is excluded from interest
income.
16
<PAGE>
ASSET QUALITY
(In thousands)
<TABLE>
<CAPTION>
September 30, 1997 June 30, 1998
--------------------- ---------------------
<S> <C> <C>
Non-performing mortgage loans delinquent more than 90 days.. $ 6,824 $ 5,261
Non-performing other loans delinquent more than 90 days..... 1,262 800
--------------------- ---------------------
Total non-performing loans.................................. 8,086 6,061
Real estate owned, at fair value............................ 1,795 2,648
Repossessed assets, at estimated fair value................. 474 318
--------------------- ---------------------
Total non-performing assets................................. $ 10,355 $ 9,027
===================== =====================
Non-performing loans to total loans......................... 0.68% 0.55%
Non-performing assets to total assets....................... 0.57% 0.51%
Allowance for loan losses to non-performing loans........... 74.77% 88.48%
</TABLE>
RESULTS OF OPERATIONS
Comparison of results in this section are for the three month periods ended June
30, 1998 and June 30, 1997, and the nine month periods then ended.
General
Net income for the quarter ended June 30, 1998 was $1.2 million as compared to
$2.4 million for the quarter ended June 30, 1997, a decrease of $1.2 million.
Earnings for the quarter ended June 30, 1998 as compared to the same quarter
last year were primarily impacted by a $2.0 million increase in interest expense
which, together with a $1.8 million increase in non-interest expense, was offset
in part by a $1.1 million increase in non-interest income, primarily from gains
on security sales. Net income for the nine months ended June 30, 1998 was $5.6
million as compared to $6.9 million for the nine months ended June 30, 1997, a
decrease of $1.3 million.
Net Interest Income
Net interest income before provision for loan losses was $9.8 million for the
quarter ended June 30, 1998 as compared to $11.7 million for the quarter ended
June 30, 1997. For the nine months ended June 30, 1998, net interest income
before provision for loan losses was $31.7 million as compared to $33.1 million
for the nine months ended June 30, 1997.
The decrease in net interest income for the nine months ended June 30, 1998 was
in part due to the negative impact of the recent declining interest rate
environment. The declining rate environment has led to an increase in
residential loan refinancings at lower interest rates without a corresponding
decrease in the Bank's cost of funds. Net interest margin declined from 3.02% on
June 30, 1997 to 2.32% on June 30, 1998. On June 30, 1997, the Company issued
$35.0 million of 10.35% Senior Debentures Due 2002 ("Senior Debentures"). The
Company's interest expense, increased $2.7 million for the nine months ended
June 30, 1998, primarily due to the interest paid on the Senior Debentures. The
Company infused $25.0 million of capital into the Bank following the issuance of
the Senior Debentures, which was leveraged on a wholesale basis at lower
margins, further reducing the percentage net interest margin. Interest earning
assets increased $88.0 million to $1.684 billion at June 30, 1998 from $1.596
billion at June 30, 1997. The average balance of interest earning deposits,
securities and mortgage-backed and related securities available-for-sale and
held-to- maturity and FHLB stock increased by $193 million from $407 million for
the nine months period ended June 30, 1997 to $600 million for the nine month
period ended June 30, 1998. During these same periods the average balance of
loans increased by $69 million from $1.054 billion to $1.123 billion.
17
<PAGE>
The increase in interest bearing liabilities was $82.0 million from $1.522
billion at June 30, 1997 to $1.604 billion at June 30, 1998. The average balance
of deposits increased by $61 million from $1.140 billion for the nine month
period ended June 30, 1997 to $1.201 billion for the nine month period ended
June 30, 1998. During these same periods the average balance of FHLB advances
increased $138 million from $197 million to $335 million. For the nine months
ended June 30, 1997 and 1998 the average balance of interest-earning assets
exceeded the average balance of interest- bearing liabilities by $109 million
and $147 million, respectively. The average yield on interest earning assets
decreased from 7.77% to 7.43%; however, the average cost of funds increased from
5.12% to 5.43% from June 30, 1997 to June 30, 1998, respectively.
Provision for Loan Losses
During the quarter ended June 30, 1998, the provision for loan losses decreased
to $211,000 from $831,000 for the comparable period ended June 30, 1997. For the
nine months ended June 30, 1998 the provision for loan losses increased to $4.1
million as compared to $2.2 million for the nine months ended June 30, 1997. The
decrease for the quarter, and the increase for the nine month period, are
primarily attributable to an additional loan loss provision of $2.2 million with
respect to the Company's indirect automobile loan portfolio recorded during the
quarter ended March 31, 1998. The additional provision was based upon
management's evaluation of such factors as the portfolio's remaining term to
maturity, historical loss experience and value of the underlying collateral. The
balance of the indirect automobile loan portfolio at June 30, 1998 was $55.6
million as compared to $101.7 million at June 30, 1997. See "Asset Quality."
Other Income
Other income increased to $3.1 million for the quarter ended June 30, 1998 from
$2.0 million for the quarter ended June 30, 1997. For the nine months ended June
30, 1998 other income increased to $11.1 million from $6.0 million for the nine
months ended June 30, 1997. The increase in other income for the quarter ended
June 30, 1998 is primarily the result of a $1.2 million gain on the Bank's sale
of $93.5 million principal balance of adjustable rate mortgage-backed
securities. The increase in other income for the nine months ended June 30, 1998
was primarily the result of the aforementioned sale and an additional $2.4
million gain on the sale of $160.7 million principal balance of fixed and
adjustable rate residential loans, and gains of $2.7 million on the sale of
securities. Miscellaneous income increased from $1.35 million for the nine
months ended June 30, 1997 to $2.48 million during the nine months ended June
30, 1998 primarily due to fees related to the increased refinancing of mortgages
during the period and increased fees collected from use of the Bank's ATM
network by non-customers.
Other Expenses
Other expenses increased to $10.7 million for the quarter ended June 30, 1998 as
compared to $8.9 million for the quarter ended June 30, 1997. For the nine
months ended June 30, 1998, other expenses increased to $29.5 million as
compared to $25.4 million for the nine months ended June 30, 1997. The increase
of $1.8 million in other expenses for the quarter ended June 30, 1998 as
compared to the quarter ended June 30, 1997 includes increases in compensation
of approximately $1.0 million, increases in advertising and promotion of
approximately $0.4 million, and increases in miscellaneous expenses of
approximately $0.4 million. The increase of $4.1 million in other expenses for
the nine months ended June 30, 1998 as compared to the nine months ended June
30, 1997 includes increases in compensation of $3.0 million, primarily due to an
increase of approximately $0.7 million in ESOP expense attributed to the
increased market value of the Company's stock, as well as an increase in
employees from 415 to 468 from June 30, 1997 to June 30, 1998 in order to staff
seven additional branch locations, continue strengthening the credit review
department, add a commercial loan department and expand loan servicing. For the
nine months ended June 30, 1998 as compared to the nine months ended June 30,
1997 the Bank also experienced increases in occupancy and equipment of
approximately $0.7 million and advertising and promotion of approximately $0.3
million. The increases for both the quarter and the nine month periods are
primarily due to the growth of the Bank and an aggressive advertising campaign.
Between June 30, 1997 and June 30, 1998 the Bank increased its branch network by
16% with the addition of seven full-service
18
<PAGE>
branches. Since June 30, 1997 the Bank has also added a loan production office
and a commercial loan department, and has expanded the credit review and loan
servicing functions and related staff.
The Company utilizes and is dependent upon data processing systems and software
to conduct its business. The data processing systems and software include a
mainframe processing system licensed to the Company by an outside vendor and
various purchased software packages which are run on in-house computer networks.
In 1997, the Company initiated a review and assessment of all hardware and
software to confirm that it will function properly in the year 2000. The
Company's mainframe software vendor and the majority of the other vendors which
have been contacted have indicated that their hardware and/or software will be
Year 2000 compliant. The Company has started to test certain software for Year
2000 compliance. The Company, at present, is unable to determine the financial
effect of Year 2000 noncompliance by all outside parties with whom the Company
may transact business. As the Bank principally originates one-to-four family
residential mortgage loans, and other loans which are collateralized by real
property, management believes that the Bank's credit risk related to Year 2000
issues with respect to their loan portfolio is not material. While some expenses
will be incurred during the next eighteen months, Year 2000 compliance is not
expected to have a material effect on the Company's consolidated financial
statements. Costs of a non-capital nature, of addressing the Year 2000 issues
will be charged to earnings as they are incurred.
Quantitative and Qualitative Disclosures about Market Risk
As a financial institution holding company, the Company's primary component of
market risk is interest rate volatility. Fluctuations in interest rates will
ultimately impact both the level of income and expense recorded on a large
portion of the Bank's assets and liabilities, and the market value of all
interest-earning assets, other than those with short term maturities. All of the
Company's interest rate risk exposure lies at the Bank level. Accordingly,
interest rate risk management procedures are performed at the Bank level. Based
on the nature of the Bank's operations, the Bank is not subject to foreign
currency exchange or commodity price risk. The Bank's real estate portfolio,
concentrated primarily within Palm Beach, Martin, Broward, Dade and Lee counties
of Florida, is subject to risks associated with the local economy. See "Interest
Rate Sensitivity."
19
<PAGE>
PART II - OTHER INFORMATION
FIRST PALM BEACH BANCORP, INC.
Item 1 Legal Proceedings
Neither the Company nor its subsidiaries are involved in any pending
legal proceedings, other than routine legal matters occurring in the
ordinary course of business which in the aggregate involve amounts
which in management's opinion are not material to the consolidated
financial condition or results of operations of the Company.
Item 2 Changes in Securities and Use of Proceeds.
Not applicable.
Item 3 Defaults upon Senior Securities
Not applicable.
Item 4 Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5 Other Information
Not applicable.
Item 6 Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed as part of this report:
11 Statement Re: Computation of Per Share Earnings.
27 Financial Data Schedule (for SEC use only)
(b) Report on Form 8-K dated June 8, 1998, regarding Agreement and
Plan of Merger with Republic Security Financial Corporation.
20
<PAGE>
FIRST PALM BEACH BANCORP, INC.
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.
First Palm Beach Bancorp, Inc.
(Registrant)
Date:
August __, 1998 /s/ Louis O. Davis, Jr.
-------------------------------------
Louis O. Davis, Jr.
President and Chief Executive Officer
(Duly Authorized Officer)
Date:
August __, 1998 /s/ Suzanne S. Brenner
-------------------------------------
Suzanne S. Brenner
Treasurer and Chief Financial Officer
(Principal Financial Officer)
21
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
<S> <C> <C>
2.1 Agreement and Plan of Merger by and between Republic Security Financial
Corporation and First Palm Beach Bancorp, Inc. dated as of May 27, 1998
(incorporated by reference from Form 8-K filed June 8, 1998).......................................--
10.1 Form of Change of Control Agreement between First Bank of Florida and
William R. Martin dated as of March 2, 1998 (incorporated by reference
from Form 10-K filed on December 23, 1997).........................................................--
10.2 Form of Change of Control Agreement between First Palm Beach Bancorp, Inc.
and William R. Martin dated as of March 2, 1998 (incorporated by reference
from Form 10-K filed on December 23, 1997).........................................................--
10.3 Form of Amendment to First Palm Beach Bancorp, Inc. Change of Control
Agreement effective as of April 21, 1998 between First Palm Beach Bancorp,
Inc. and each of Alissa Ballot, Rodney Bayliff, Suzanne Brenner, Calvin
Cearley, Jon Geitner, William Martin, John Rudy, John Trammel and
Rita Zambuto (filed herewith)......................................................................24
10.4 Form of Amendment to First Bank of Florida Change of Control
Agreement effective as of April 21, 1998 between First Bank of
Florida and each of Alissa Ballot, Rodney Bayliff, Suzanne
Brenner, Jon Geitner, William Martin,
John Rudy, John Trammel and Rita Zambuto (filed herewith)..........................................26
10.5 Form of Amendment to First Palm Beach Bancorp, Inc. Employment Agreement
effective as of April 21, 1998 between First Palm Beach Bancorp, Inc. and each of
Louis O. Davis, Jr. and R. Randy Guemple (filed herewith)..........................................28
10.6 Form of Amendment to First Bank of Florida Employment Agreement effective
as of April 21, 1998 between First Bank of Florida and each of Louis O. Davis, Jr.
and R. Randy Guemple (filed herewith)..............................................................30
10.7 Amendment No. 3 to First Palm Beach Bancorp, Inc. Incentive Stock Option
Plan for Officers and Employees (filed herewith)...................................................32
10.8 Amendment No. 3 to Amended and Restated Employee Stock Ownership Plan
(filed herewith)...................................................................................33
10.9 Amendment No. 4 to Amended and Restated Employee Stock Ownership Plan
(filed herewith)...................................................................................36
10.10 Amendment No. 5 to Amended and Restated Employee Stock Ownership Plan
(filed herewith)...................................................................................42
11 Statement Re: Computation of Per Share Earnings....................................................43
</TABLE>
22
<PAGE>
EXHIBIT INDEX
(Continued)
<TABLE>
<CAPTION>
Exhibit
Number Description Page
<S> <C> <C>
27 Financial Data Schedule (for SEC use only).........................................................44
99.1 Amendment No. 1, dated as of May 27, 1998, to the Rights Agreement, dated as
of January 23, 1995, between First Palm Beach Bancorp, Inc. and Mellon Bank,
N.A., as rights agent (incorporated by reference from Form 8-K filed
June 8, 1998)......................................................................................--
99.2 Stock Option Agreement, dated May 27, 1998, between Republic Security Financial
Corporation and First Palm Beach Bancorp, Inc. (incorporated by reference from
Form 8-K filed June 8, 1998).......................................................................--
</TABLE>
23
EXHIBIT 10.3
AMENDMENT TO FIRST PALM BEACH BANCORP., INC.
CHANGE OF CONTROL AGREEMENT
This Amendment is made effective as of April 21, 1998 by and between First Palm
Beach Bancorp, Inc. (the "Holding Company") and ____________ ("Executive"),
amending that certain Change of Control Agreement dated May 20, 1997 (the
"Agreement").
In consideration of the mutual covenants, terms and conditions herein set forth,
the Agreement is amended, effective on the date hereof, as follows:
1) Section 3(a) shall be amended by substituting the following for clause (B)
of the first sentence thereof:
"(B) the higher of the highest bonus (annual or otherwise) or incentive
payment earned by or accrued in respect of Executive during or in respect
of either (i) any of the three years immediately preceding that in which,
or (ii) the year in which, the Date of Termination occurs or the highest
bonus (annual or otherwise) or incentive payment so earned during or in
respect of either (x) any of the three years immediately preceding that in
which, or (y) the year in which, the Change of Control of the Holding
Company occurs."
2) The following shall be added at the end of Section 4 of the Agreement:
"(c) If within fifteen (15) days after any Notice of Termination is given,
or, if later, prior to the Date of Termination (as determined without
regard to this Section 4(c)), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be extended until the earlier of
(i) the date on which the term of this Agreement ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement
of the parties or by a final judgment, order or decree of an arbitrator or
a court of competent jurisdiction (which is not appealable or with respect
to which the time for appeal therefrom has expired and no appeal has been
perfected); provided, however, that the Date of Termination shall be
extended by a notice of dispute given by the Executive only if such notice
is given in good faith and the Executive pursues the resolution of such
dispute with reasonable diligence.
(d) If a purported termination occurs following a Change of Control and
during the term of this Agreement and the Date of Termination is extended
in accordance with Section 4(c) hereof, the Holding Company shall continue
to pay Executive the full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, salary) and
continue Executive as a participant in all compensation, benfit and
insurance plans in which Executive was participating when the notice giving
rise to the dispute was given, until the Date of Termination, as determined
in accordance with Section 4(c) hereof. Amounts paid under this Section
4(d) are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement."
3) The following shall be added after the words "of even date herewith" in
Section 5 of the Agreement:
",as such Change of Control Agreement may have been amended at any time on
or before April 21, 1998,"
4) The following shall be added at the end of the first sentence of Section 6
of the Agreement:
24
<PAGE>
"and except that the parties understand that Executive is also a party to a
Change of Control Agreement with the Association dated of even date
herewith, as such agreement may be amended from time to time, and that the
Holding Company has guaranteed the Association's obligations thereunder
pursuant to paragraph 5 hereof."
All other terms and conditions of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, First Palm Beach Bancorp, Inc. has caused this Amendment to
be executed by its duly authorized officer, and Executive has executed this
Amendment, as of the day and year first above written.
ATTEST: FIRST PALM BEACH BANCORP, INC.
By:
- ------------------------------- --------------------------------
WITNESS
- ------------------------------- -------------------------------------
Executive
25
EXHIBIT 10.4
AMENDMENT TO FIRST BANK OF FLORIDA
CHANGE OF CONTROL AGREEMENT
This Amendment is made effective as of April 21, 1998 by and between First Bank
of Florida (the "Association") and _________ ("Executive"), amending that
certain Change of Control Agreement dated May 20, 1997 (the "Agreement").
In consideration of the mutual covenants, terms and conditions herein set forth,
the Agreement is amended, effective on the date hereof, as follows:
1) Section 3(a) shall be amended by substituting the following for clause (B)
of the first sentence thereof:
"(B) the higher of the highest bonus (annual or otherwise) or incentive
payment earned by or accrued in respect of Executive during or in respect
of either (i) any of the three years immediately preceding that in which,
or (ii) the year in which, the Date of Termination occurs or the highest
bonus (annual or otherwise) or incentive payment so earned during or in
respect of either (x) any of the three years immediately preceding that in
which, or (y) the year in which, the Change of Control of the Association
occurs."
2) The following shall be added at the end of Section 4 of the Agreement:
"(c) If within fifteen (15) days after any Notice of Termination is given,
or, if later, prior to the Date of Termination (as determined without
regard to this Section 4(c)), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be extended until the earlier of
(i) the date on which the term of this Agreement ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement
of the parties or by a final judgment, order or decree of an arbitrator or
a court of competent jurisdiction (which is not appealable or with respect
to which the time for appeal therefrom has expired and no appeal has been
perfected); provided, however, that the Date of Termination shall be
extended by a notice of dispute given by the Executive only if such notice
is given in good faith and the Executive pursues the resolution of such
dispute with reasonable diligence.
(d) If a purported termination occurs following a Change of Control and
during the term of this Agreement and the Date of Termination is extended
in accordance with Section 4(c) hereof, the Association shall continue to
pay Executive the full compensation in effect when the notice giving rise
to the dispute was given (including, but not limited to, salary) and
continue Executive as a participant in all compensation, benfit and
insurance plans in which Executive was participating when the notice giving
rise to the dispute was given, until the Date of Termination, as determined
in accordance with Section 4(c) hereof. Amounts paid under this Section
4(d) are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement."
All other terms and conditions of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, First Bank of Florida has caused this Amendment to be
executed by its duly authorized officer, and Executive has executed this
Amendment, as of the day and year first above written.
26
<PAGE>
ATTEST: FIRST BANK OF FLORIDA
By:
- ----------------------------- ----------------------------------
WITNESS
- ----------------------------- --------------------------------------
Executive
As to the Guarantee:
ATTEST: FIRST PALM BEACH BANCORP., INC.
By:
- ----------------------------- ---------------------------------
27
EXHIBIT 10.5
AMENDMENT TO FIRST PALM BEACH BANCORP., INC.
EMPLOYMENT AGREEMENT
This Amendment is made effective as of April 21, 1998 by and between First Palm
Beach Bancorp, Inc. (the "Holding Company") and _______ ("Executive"), amending
that certain Change of Control Agreement dated May 20, 1997 (the "Agreement").
In consideration of the mutual covenants, terms and conditions herein set forth,
the Agreement is amended, effective on the date hereof, as follows:
1) The following shall be added at the end of Section 8 of the Agreement:
"(c) If within fifteen (15) days after any Notice of Termination is given,
or, if later, prior to the Date of Termination (as determined without
regard to this Section 8(c)), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be extended until the earlier of
(i) the date on which the term of this Agreement ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement
of the parties or by a final judgment, order or decree of an arbitrator or
a court of competent jurisdiction (which is not appealable or with respect
to which the time for appeal therefrom has expired and no appeal has been
perfected); provided, however, that the Date of Termination shall be
extended by a notice of dispute given by the Executive only if such notice
is given in good faith and the Executive pursues the resolution of such
dispute with reasonable diligence.
(d) If a purported termination occurs following a Change of Control and
during the term of this Agreement and the Date of Termination is extended
in accordance with Section 8(c) hereof, the Holding Company shall continue
to pay Executive the full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, salary) and
continue Executive as a participant in all compensation, benfit and
insurance plans in which Executive was participating when the notice giving
rise to the dispute was given, until the Date of Termination, as determined
in accordance with Section 8(c) hereof. Amounts paid under this Section
8(d) are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement."
2) The following shall be added at the end of the first sentence of Section
11(a) of the Agreement:
"and except that the parties understand that Executive is also a party to
an Employment Agreement with the Association dated of even date herewith,
as such agreement may be amended from time to time, and that the Holding
Company has guaranteed the Association's obligations thereunder pursuant to
paragraph 11 thereof."
3) The following shall be added at the end of Section 4 of the Agreement:
"Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise.
Further, except as expressly provided in Sections 4(b)(iii) and 5(c)(iii),
the amount of any payment or benefit provided for in this Agreement shall
not be reduced by any compensation earned or benefits received by Executive
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by Executive to the Holding
Company, or otherwise."
28
<PAGE>
All other terms and conditions of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, First Palm Beach Bancorp, Inc. has caused this Amendment to
be executed by its duly authorized officer, and Executive has executed this
Amendment, as of the day and year first above written.
ATTEST: FIRST PALM BEACH BANCORP, INC.
By:
- ---------------------------------- --------------------------------
WITNESS
- ---------------------------------- -------------------------------------
Executive
29
EXHIBIT 10.6
AMENDMENT TO FIRST BANK OF FLORIDA
EMPLOYMENT AGREEMENT
This Amendment is made effective as of April 21, 1998 by and between First Bank
of Florida (the "Association") and ___________ ("Executive"), amending that
certain Employment Agreement dated May 20, 1997 (the "Agreement").
In consideration of the mutual covenants, terms and conditions herein set forth,
the Agreement is amended, effective on the date hereof, as follows:
1) The following shall be added at the end of Section 8 of the Agreement:
"(c) If within fifteen (15) days after any Notice of Termination following
a Change of Control is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 8(c)), the party
receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be
extended until the earlier of (i) the date on which the term of this
Agreement ends or (ii) the date on which the dispute is finally resolved,
either by mutual written agreement of the parties or by a final judgment,
order or decree of an arbitrator or a court of competent jurisdiction
(which is not appealable or with respect to which the time for appeal
therefrom has expired and no appeal has been perfected); provided, however,
that the Date of Termination shall be extended by a notice of dispute given
by the Executive only if such notice is given in good faith and the
Executive pursues the resolution of such dispute with reasonable diligence.
(d) If a purported termination occurs following a Change of Control and
during the term of this Agreement and the Date of Termination is extended
in accordance with Section 8(c) hereof, the Association shall continue to
pay Executive the full compensation in effect when the notice giving rise
to the dispute was given (including, but not limited to, salary) and
continue Executive as a participant in all compensation, benfit and
insurance plans in which Executive was participating when the notice giving
rise to the dispute was given, until the Date of Termination, as determined
in accordance with Section 8(c) hereof. Amounts paid under this Section
8(d) are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement."
2) The following shall be added at the end of Section 4 of the Agreement:
"Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise.
Further, except as expressly provided in Sections 4(b)(iii) and 5(c)(iii),
the amount of any payment or benefit provided for in this Agreement shall
not be reduced by any compensation earned or benefits received by Executive
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by Executive to the
Association, or otherwise."
3) The following shall be added after the words "in accordance with this
Agreement" in Section 11 of the Agreement:
",as such Agreement may have been amended at any time on or before April
21, 1998,"
All other terms and conditions of the Agreement shall remain in full force and
effect.
30
<PAGE>
IN WITNESS WHEREOF, First Bank of Florida has caused this Amendment to be
executed by its duly authorized officer, and Executive has executed this
Amendment, as of the day and year first above written.
ATTEST: FIRST BANK OF FLORIDA
By:
- ---------------------------- ------------------------------
WITNESS
- ---------------------------- -----------------------------------
Executive
As to the Guarantee:
ATTEST: FIRST PALM BEACH BANCORP., INC.
By:
- ---------------------------- ------------------------------
31
Exhibit 10.7
AMENDMENT NO. 3
FIRST PALM BEACH BANCORP, INC.
1993 INCENTIVE STOCK OPTION PLAN
This amendment is made and entered into the date below written by the Board
of Directors of First Palm Beach Bancorp, Inc. effective as of June 1, 1998.
WITNESSETH
NOW THEREFORE BE IT RESOLVED that Section 9.1(b) of the First Palm Beach
Bancorp, Inc. 1993 Incentive Stock Option Plan be replaced in its entirety to
read as follows:
"Upon exercise of a Limited Right, the holder shall promptly receive from
the Holding Company a number of shares of Common Stock having a Fair Market
Value on the date the Limited Right is exercised equal to (A) the excess,
if any, of the Fair Market Value of the underlying shares of Common Stock
on the date the Limited Right is exercised over the Exercise Price of the
Option, multiplied by (B) the number of shares with respect to which such
Limited Right is being exercised."
NOTWITHSTANDING this amendment or anything herein which might be construed
to the contrary, no other sections of the First Palm Beach Bancorp, Inc. 1993
Incentive Stock Option Plan shall be affected in any way as a result of this
amendment.
32
EXHIBIT 10.8
FIRST BANK OF FLORIDA
EMPLOYEE STOCK OWNERSHIP PLAN
(EFFECTIVE JANUARY 1, 1993;
AMENDED AND RESTATED EFFECTIVE APRIL 1, 1995)
AMENDMENT NO. 3
1. Section 16 - Effective as of November 18, 1997, a new Section 16 of the Plan
shall be added which shall read in its entirety as follows:
Section 16. Change of Control
16.1 Definition of Change of Control; Pending Change of Control
(a) A Change of Control shall be deemed to have occurred upon the happening
of any of the following events:
(i) any event upon which any "person" (as such term is used in
sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than (A) a trustee or other fiduciary holding securities
under an employee benefit plan maintained for the benefit of employees of
First Palm Beach Bancorp, Inc.; (B) a corporation owned, directly or
indirectly, by the stockholders of First Palm Beach Bancorp, Inc. in
substantially the same proportions as their ownership of stock of First
Palm Beach Bancorp, Inc.; or (C) any group constituting a person in which
employees of First Palm Beach Bancorp, Inc. are substantial members,
becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under
the Exchange Act), directly or indirectly, of securities issued by First
Palm Beach Bancorp, Inc. representing 20% or more of the combined voting
power of all of First Palm Beach Bancorp, Inc.'s then outstanding
securities; or
(ii) any event upon which the individuals who on the Effective Date
were members of the Board of Directors of First Palm Beach Bancorp, Inc.,
together with individuals whose election by such Board or nomination for
election by First Palm Beach Bancorp, Inc.'s stockholders was approved by
the affirmative vote of at least two-thirds of the members of such Board
then in office who were either members of such Board on the Effective Date
or whose nomination or election was previously so approved, cease for any
reason to constitute a majority of the members of such Board, but
excluding, for this purpose, any such individual whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of directors of First Palm Beach Bancorp, Inc. (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended; or
(iii) the consummation of either:
(A) a merger or consolidation of First Palm Beach Bancorp, Inc.
with any other corporation, other than a merger or consolidation
following which both of the following conditions are satisfied:
33
<PAGE>
(I) either (1) the members of the Board of Directors of
First Palm Beach Bancorp, Inc. immediately prior to such merger
or consolidation constitute at least a majority of the members of
the governing body of the institution resulting from such merger
or consolidation; or (2) the shareholders of First Palm Beach
Bancorp, Inc. own securities of the institution resulting from
such merger or consolidation representing 60% or more of the
combined voting power of all such securities then outstanding in
substantially the same proportions as their ownership of voting
securities of First Palm Beach Bancorp, Inc. before such merger
or consolidation; and
(II) the entity which results from such merger or
consolidation expressly agrees in writing to assume and perform
First Palm Beach Bancorp, Inc.'s obligations under the Plan; or
(B) a complete liquidation of First Palm Beach Bancorp, Inc. or
an agreement for the sale or disposition by First Palm Beach Bancorp,
Inc. of all or substantially all of its assets; or
(iv) any event that would be described in section 16.1 if "First Bank
of Florida" were substituted for "First Palm Beach Bancorp, Inc." therein;
In no event, however, shall the transaction by which First Bank of Florida
converted from a mutual institution to a stock institution, or any transaction
by which a company wholly owned by First Bank of Florida becomes the parent
company of First Bank of Florida, be deemed a Change of Control.
(b) A Pending Change of Control shall be deemed to have occurred upon the
happening of any of the following events:
(i) approval by the stockholders of First Palm Beach Bancorp, Inc. of
a transaction, or a plan for the consummation of a transaction, which, if
consummated, would result in a Change of Control;
(ii) approval by the Board of Directors of First Palm Beach Bancorp,
Inc. of a transaction, or a plan for the consummation of a transaction,
which, if consummated, would result in a Change of Control;
(iii) the commencement of a tender offer (within the meaning of
Section 14(d)(i) of the Securities Exchange Act of 1934, as amended) for
securities issued by First Palm Beach Bancorp, Inc., which, if completed,
would result in a Change of Control;
(iv) the furnishing or distribution of a proxy statement or other
document, whether or not in opposition to management, soliciting proxies,
consents or authorizations (within the meaning of section 14 of the
Securities Exchange Act of 1934, as amended) in respect of securities
issued by First Palm Beach Bancorp, Inc. in favor of any election,
transaction or other action which, if effected, would result in a Change of
Control; or
(v) any event which would be described in Sections 16.1(b)(i), (ii),
(iii) or (iv) if "First Bank of Florida" were substituted for "First Palm
Beach Bancorp, Inc." therein.
16.2 Vesting on Change of Control.
Notwithstanding any other provision of the Plan, upon the effective date of
a Change of Control, the Account of each person who would then, upon termination
of the Plan, be entitled to a benefit, shall be fully vested and nonforfeitable.
34
<PAGE>
16.3 Repayment of Stock Obligations.
(a) Notwithstanding any other provision of the Plan, upon the occurrence of
a Change of Control, the Committee shall direct the Trustee to sell a sufficient
number of shares of Stock to repay any outstanding Stock Obligations in full.
The proceeds of such sale shall be used to repay such Stock Obligations. After
repayment of the Stock Obligations, all remaining shares of Stock which had been
unallocated (or the proceeds from the sale thereof, if applicable) shall be
allocated among the accounts of all Participants who were employed by an
Employer on the effective date of such Change of Control. Such allocation of
Shares or proceeds shall be credited as of the date on which the Change of
Control occurs to the Accounts of each Participant who has not had a termination
of participation under section 2.3 as of such date, in proportion to the balance
credited to their Accounts immediately prior to such allocation. If any amount
cannot be allocated to such Participant's in the year of such Change of Control
as a result of the limitations of section 415 of the Code, the amounts will be
allocated in subsequent years to those persons who shared in the allocation and
who continue to be Participants in the Plan until all such amounts are allocated
to such Participants.
(b) In the event that the application of section 415 of the Code prevents
the allocation of all of the Stock or other assets released from the Loan
Repayment Account as provided in Section 16.3(a) as of the effective date of the
Change of Control, each Participant who shares in the allocation shall be
entitled to receive a supplemental benefit payment directly from the Company.
The supplemental benefit payment to each such Participant shall be an amount
equal to the excess of:
(i) the total amount of Stock or other property that would be
allocated to such Participant's Accounts under Section 16.3(a) if Section
415 of the Code did not apply; over
(ii) the total of Stock or other property actually allocated to such
Participant's Accounts under Section 16.3(a).
Such payment (without offset for any allocations which may occur under this Plan
subsequent to the Change of Control) shall be made as soon as practicable, but
in any event within ten (10) business days, after the effective date of the
Change of Control. This Section 16.3(b) shall be treated as a separate,
non-qualified "excess benefit plan" within the meaning of section 3(34) of ERISA
and shall be interpreted, administered and enforced in a manner consistent with
this intention. To the extent that any Participant is entitled to the same or a
similar payment under any other non-qualified plan, program or arrangement of
the Employer, any payment under this Section 16.3(b) shall be coordinated with
the payments under such other non-qualified programs, plan or arrangements in
such manner as shall be determined by the Committee to be necessary to prevent
the duplication of benefits.
16.4 Plan Termination After Change of Control.
Notwithstanding any other provision of the Plan, after repayment of the
loan and allocation of Stock or proceeds as provided in Section 16.2, the Plan
shall be terminated and all amounts shall be distributed as soon as practicable.
16.5 Amendment of Section 16.
Notwithstanding any other provision of the Plan, Section 16 of the Plan may
not be amended after the earliest date after November 18, 1997 on which a Change
of Control or Pending Change of Control occurs unless required by the Internal
Revenue Service as a condition to the continued treatment of the Plan as a
tax-qualified plan under section 401(a) of the Code.
35
EXHIBIT 10.9
FIRST BANK OF FLORIDA
EMPLOYEE STOCK OWNERSHIP PLAN
(EFFECTIVE JANUARY 1, 1993;
AMENDED AND RESTATED EFFECTIVE APRIL 1, 1995)
AMENDMENT NO. 4
1. Section 2 - Effective January 1, 1997, the definition of "Employee" in
Section 2 of the Plan shall be amended to read in its entirety as follows:
"Employee" means any individual who is or has been employed or
self-employed by an Employer. At the Effective Date of the Plan, Employee
shall mean individuals employed by First Bank of Florida, but shall not
include individuals employed by subsidiaries of First Bank of Florida who
are not also employed by the Company. "Employee" also means an individual
employed by a leasing organization who, pursuant to an agreement between an
Employer and the leasing organization, has performed services for the
Employer and any related persons (within the meaning of Section 414(n)(6)
of the Code) on a substantially full-time basis for more than one year,
and, for periods prior to January 1, 1997, such services are of a type
historically performed by employees in the business field of the Employer,
and for periods on or after January 1, 1997, such services are performed
under primary direction or control by the recipient. However, such a
"leased employee" shall not be considered an Employee if (i) he
participates in a money purchase pension plan sponsored by the leasing
organization which provides for immediate participation, immediate full
vesting, and an annual contribution of at least 10 percent of the
Employee's Total Compensation, and (ii) leased employees do not constitute
more than 20 percent of the Employer's total work force (including leased
employees, but excluding Highly Paid Employees and any other employees who
have not performed services for the Employer on a substantially full-time
basis for at least one year).
2. Section 2 - Effective January 1, 1997, the definition of "Highly Paid
Employee" contained in Section 2 of the Plan shall be amended to read in
its entirety as follows:
"Highly Paid Employee" for any Plan Year beginning before January 1,
1997 means an Employee who, during either of that or the immediately
preceding Plan Year, (i) was a Five Percent Owner, (ii) had Total
Compensation exceeding $75,000 (as adjusted pursuant to section 415(d) of
the Code), (iii) had Total Compensation exceeding $50,000 (as adjusted
pursuant to section 415(d) of the Code) and was among the most highly
compensated one-fifth of all Employees, or (iv) was at any time an officer
of an Employer and had Total Compensation exceeding $45,000 (or 50 percent
of the currently applicable dollar limit under Section 415(b)(1)(A) of the
Code) and for any Plan Year beginning after December 31, 1996 means an
Employee who (i) during either of that or the immediately preceding Plan
Year was a Five Percent Owner or (ii) during the immediately preceding Plan
Year had Total Compensation exceeding $80,000 (adjusted for cost of living
increases at the time and in the manner prescribed under section 415(d) of
the Code) and (if so elected by the Plan Administrator) was among the most
highly compensated one-fifth of all Employees. For this purpose:
36
<PAGE>
(a) "Total Compensation" shall include any amount which is
excludable from the Employee's gross income for tax purposes pursuant
to Sections 125, 402(a)(8), 402(h)(1)(B), or 403(b) of the Code.
(b) The number of Employees in "the most highly compensated
one-fifth of all Employees" shall be determined by taking into account
all individuals working for all related employer entities described in
the definition of "Service", but excluding any individual who has not
completed six months of Service, who normally works fewer than 17-1/2
hours per week or in fewer than six months per year, who has not
reached age 21, whose employment is covered by a collective bargaining
agreement, or who is a nonresident alien who receives no earned income
from United States sources.
(c) The number of individuals counted as "officers" shall not be
more than the lesser of (i) 50 individuals and (ii) the greater of 3
individuals or 10 percent of the total number of Employees. If no
officer earns more than $45,000 (or the adjusted limit), then the
highest paid officer shall be a Highly Paid Employee.
(d) A former employee shall be treated as a highly compensated
employee if such employee was a highly paid employee when such
employee separated from service, or if such employee was a highly paid
employee at any time after attaining age 55.
(e) For Plan Years beginning before January 1, 1997, if an
employee is, during a determination year or look-back year, a family
member of either a 5 percent owner who is an active or former employee
or a highly compensated employee who is one of the 10 most highly
compensated employees ranked on the basis of compensation paid by the
employer during such year, then the family member and the 5 percent
owner or top-ten highly compensated employee shall be aggregated. In
such case, the family member and 5 percent owner or top-ten highly
compensated employee shall be treated as a single employee receiving
compensation and plan contributions or benefits equal to the sum of
such compensation and contributions or benefits of the family member
and 5 percent owner or top-ten highly compensated employee. For
purposes of this section, family member includes the spouse, lineal
ascendants and descendants of the employee or former employee and the
spouses of such lineal ascendants and descendants.
For this purpose, the determination year shall be the plan year. The
look-back year shall be the twelve-month period immediately preceding the
determination year.
(f) The determination of who is a highly compensated employee,
including the determinations of the number and identity of employees
in the top-paid group, the top 100 employees, the number of employees
treated as officers and the compensation that is considered, will be
made in accordance with section 414(q) of the Code and the regulations
thereunder.
3. Section 2 - Effective January 1, 1997, the definition of "Total
Compensation" in Section 2 of the Plan shall be amended to read in its
entirety as follows:
"Total Compensation" means a Participant's wages, salary, overtime,
bonuses, commissions, and any other amounts received for personal services
rendered while in Service from any Employer or an affiliate (within the
purview of Section 414(b), (c), and (m) of the Code), plus his earned
income from any such entity as defined in Section 401(c)(2) of the Code if
he is self-employed. "Total Compensation":
(a) shall include (i) severance payments and amounts paid as a
result of termination, (ii) amounts excludable from gross income under
Section 911, (iii) amounts described in Sections
37
<PAGE>
104(a)(3), 105(a) and 105(h) of the Code to the extent includable in
gross income, (iv) amounts received from an Employer for moving
expenses which are not deductible under Section 217 of the Code, (v)
amounts includable in gross income in the year of, and on account of,
the grant of a non-qualified stock option, (vi) amounts includable in
gross income pursuant to Section 83(b) of the Code, (vii) amounts
includable in gross income under an unfunded non-qualified plan of
deferred compensation, (viii) any elective deferrals (within the
meaning of section 402(g) of the Code) under any qualified cash or
deferred arrangement described in section 401(k) of the Code and
maintained by any Employer, any tax-deferred annuity described in
section 403(b) of the Code and maintained by any Employer, any salary
reduction simplified employee pension plan described in section 408(k)
of the Code and maintained by any Employer, and (ix) any salary
reduction contributions under any cafeteria plan described in section
125 of the Code and maintained by any Employer; but
(b) shall exclude (i) Employer contributions to or amounts
received from a funded or qualified plan of deferred compensation,
(ii) Employer contributions to a simplified employee pension account
to the extent deductible under Section 219 of the Code, (iii) Employer
contributions to a Section 403(b) annuity contract, (iv) amounts
includable in gross income pursuant to Section 83(a) of the Code, (v)
amounts includable in gross income upon the exercise of nonqualified
stock option or upon the disposition of stock acquired under any stock
option, and (vi) any other amounts expended by the Employer on the
Participant's behalf which are excludable from his income or which
receive special tax benefits.
In no event shall a person's Total Compensation for any Plan Year beginning
after December 31, 1988 and before January 1, 1994 include any compensation
in excess of $200,000 (or such other amount as may be permitted under
section 401(a)(17) of the Code) and for any Plan Year beginning after
December 31, 1993 include any compensation in excess of $150,000 (or such
other amount as may be permitted under section 401(a)(17) of the Code). For
purposes of applying the foregoing limitation in any Plan Year beginning
before January 1, 1997 to any person who is a Five Percent Owner or who is
one of the 10 Highly Paid Employees with the highest Total Compensation
(determined prior to the application of this sentence), any Total
Compensation paid to the spouse of such person or to any lineal descendant
of such person who has not attained age 19 on or before the last day of
such calendar year shall be deemed to have been paid to such person.
4. Section 5 - Effective January 1, 1997, the first sentence of Section 5.2 of
the Plan shall be amended to read in its entirety as follows:
For limitation years beginning before January 1, 2000, aside from the
limitation prescribed by Section 5.1 with respect to the annual addition to
a Participant's accounts for any single limitation year, if a Participant
has ever participated in one or more defined benefit plans maintained by an
Employer or an affiliate, then the annual additions to his accounts shall
be limited on a cumulative basis so that the sum of his defined
contribution plan fraction and his defined benefit plan fraction does not
exceed one.
5. Section 5 - Effective December 12, 1994, Section 5 of the Plan shall be
amended by adding a new Section 5.5 which shall read in its entirety as
follows:
5.5 Retroactive Contributions for Returning Veterans. Notwithstanding
anything in the Plan to the contrary, to the extent required by section
414(u) of the Code, in the event of the reemployment, or after December 12,
1994, by the Employer of a Participant with statutory reemployment rights
following a period of service in the uniformed services of the United
States, such person shall be eligible for retroactive benefit contributions
or allocations under the Plan computed as though he or she had continued
working for an Employer during the period of uniformed service.
38
<PAGE>
6. Section 6 - Effective December 31, 1997, the second sentence of Section 6.2
shall be amended to read in its entirety as follows:
The Trustee shall have no investment responsibility for the Stock Fund, but
shall accept any Employer contributions made in the form of Stock, and
shall acquire, sell, exchange, distribute, and otherwise deal with and
dispose of Stock in accordance with the provisions of the Plan and Trust
Agreement.
7. Section 6 - Effective January 1, 1997, section 6.4 shall be amended to read
in its entirety as follows:
6.4 Participants' Option to Diversify. The Committee shall provide for
a procedure under which each Participant may, for the first five years of a
certain six-year period, elect to have up to 25 percent of the value of his
Account committed to alternative investment options within the Investment
Fund. For the sixth year in this period, the Participant may elect to have
up to 50 percent of the value of his Account committed to other
investments. The six-year period shall begin with the Plan Year in which
the Participant has both reached age 55 and completed 10 years of
participation in the Plan; a Participant's election to diversify his
Account must be made within the 90-day period immediately following the
last day of each of the six Plan Years. The Committee shall see that the
Investment Fund includes a sufficient number of investment options to
comply with Section 401(a)(28)(B) of the Code. The Trustee shall comply
with any investment directions received from Participants in accordance
with the procedures adopted from time to time by the Committee under this
Section 6.4.
8. Section 9 - Effective August 5, 1993, Section 9.2 of the Plan shall be
amended to read in its entirety as follows:
(b) Unless otherwise specifically excluded, a Participant's Vesting
Years shall include any period of active military duty to the extent
required by the Military Selective Service Act of 1967 (38 U.S.C. Section
2021) and any period of absence required to be recognized for vesting
purposes pursuant to the Family and Medical Leave Act of 1993.
9. Section 10 - Effective January 1, 1997, Section 10.1 of the Plan shall be
amended to read in its entirety as follows:
10.1 Benefits for Participants.(a) Except as provided in section
10.1(b), a Participant whose Service ends for any reason shall receive the
vested portion of his Account in a single payment on a date selected by the
Committee. That date shall be on or before (i) the 180th day after the end
of the Plan Year in which his Service ends (if his Service ends in a Plan
Year the precedes the Plan Year in which he attains age 65 or the Plan Year
which includes the 10th anniversary of his commencement of participation in
the Plan) and (ii) the 60th day after the end of the Plan Year in which his
Service ends (in all other cases). Notwithstanding the foregoing, if the
balance credited to his Account exceeds $3,500 (or such greater amount as
may be prescribed pursuant to section 417(e) of the Code) in the case of
termination of employment prior to January 1, 1998 and $5,000 (or such
greater amount as may be prescribed pursuant to section 417(e) of the Code)
in the case of termination of employment after December 31, 1997, his
benefits shall not be paid before the latest of his 65th birthday or the
tenth anniversary of the year in which he commenced participation in the
Plan unless he elects an early payment date in a written election filed
with the Committee. A Participant may modify such an election at any time,
provided any new benefit payment date is at least 30 days after a modified
election is delivered to the Committee.
(b) Except as provided by the last two sentences of this section
10.1(b), a Participant's benefits shall be paid by April 1st of the
calendar year in which he reaches age 71 1/2. A Participant's benefits from
that portion of his Account committed to the Investment Fund shall be
calculated on the basis of the most recent Valuation Date before the day of
payment. In the case of an individual who continues to be a Participant
after the calendar year in which he reaches age 70 1/2, a lump sum payment
representing the entire
39
<PAGE>
benefit accrued through the last day of the calendar year in which the
Participant reaches age 70 1/2 shall be made prior to April 1st of the
calendar year in which the Participant reaches age 71 1/2, and any benefits
accrued in a subsequent calendar year shall be paid in a lump sum no later
than December 31st of the calendar year following the calendar year in
which such additional benefits are accrued. A Participant who has attained
age 70 1/2 prior to January 1, 1999 and who continues in Service after
December 31, 1996 may elect, in such form and manner as the Plan
Administrator may prescribe, to defer distributions until the earlier of
April 1st of the calendar year following the calendar year in which he
terminates Service or April 1st of the calendar year following any earlier
calendar year in which he is a Five Percent Owner. Further, a Participant,
other than a Five Percent Owner, who attains age 70 1/2 after December 31,
1998 shall not receive benefits while he or she continues in Service.
10. Section 12.1 - Effective December 31, 1997, Section 12.1 of the Plan shall
be amended to read in its entirety as follows:
12.1 Authority of Committee. The Committee shall be the "plan
administrator" within the meaning of ERISA and shall have exclusive
responsibility and authority to control and manage the operation and
administration of the Plan, including the interpretation and application of
its provisions, except to the extent such responsibility and authority are
otherwise specifically (i) allocated to the Company, the Employers, or the
Trustee under the Plan and Trust Agreement, (ii) delegated in writing to
other persons by the Company, the Employers, the Committee, or the Trustee,
or (iii) allocated to other parties by operation of law. The Committee
shall have exclusive responsibility regarding decisions concerning the
payment of benefits under the Plan. The Committee shall have no investment
responsibility. In the discharge of its duties, the Committee may employ
accountants, actuaries, legal counsel, and other agents (who also may be
employed by an Employer or the Trustee in the same or some other capacity)
and may pay their reasonable expenses and compensation. Any action taken or
omitted by the Committee or any other fiduciary with respect to the Plan,
including any decision, interpretation, claim denial or review on appeal,
shall be conclusive and binding on all interested parties and shall be
subject to judicial modification or reversal only to the extent it is
determined by a court of competent jurisdiction that such action or
omission was arbitrary and capricious and contrary to the terms of the
Plan.
11. Section 12 - Effective December 31, 1997, Section12.3 of the Plan shall be
amended by deleting therefrom the entirety of the second paragraph thereof.
12. Section 14 - Effective August 5, 1997, Section 14.2 of the Plan shall be
amended to read in its entirety as follows:
14.2 Nonassignability of Benefits. No assignment, pledge, or other
anticipation of benefits from the Plan will be permitted or recognized by
the Employers, the Committee, or the Trustee. Moreover, benefits from the
Plan shall not be subject to attachment, garnishment, or other legal
process for debts or liabilities of any Participant or Beneficiary, to the
extent permitted by law. This prohibition on assignment or alienation shall
apply to any judgment, decree, or order (including approval of a property
settlement agreement) which relates to the provision of child support,
alimony, or property rights to a present or former spouse, child or other
dependent of a Participant pursuant to a State domestic relations or
community property law, unless the judgment, decree, or order is determined
by the Committee to be a qualified domestic relations order within the
meaning of Section 414(p) of the Code. This prohibition on assignment shall
also not apply to prevent a benefit offset by any amount such Participant,
Former Participant or Beneficiary is required or ordered to pay to the Plan
if:
(i) the order or requirement to pay arises: (A) under a judgment
issued on or after August 5, 1997 of conviction for a crime involving
the Plan; (B) under a civil judgment (including a consent order or
decree) entered by a court on or after August 5, 1997 in an action
brought in
40
<PAGE>
connection with a violation (or alleged violation) of part 4 of
subtitle B of title I of ERISA; or (C) pursuant to a settlement
agreement entered into on or after August 5, 1997 between the
Participant, Former Participant or Beneficiary and one or both of the
United States Department of Labor and the Pension Benefit Guaranty
Corporation in connection with a violation (or alleged violation) of
part 4 of subtitle B of title I of ERISA by a fiduciary or any other
person; and
(ii) the judgment, order, decree or settlement agreement
expressly provides for the offset of all or part of the amount ordered
or required to be paid to the Plan against the Participant's, Former
Participant's or Beneficiary's benefits under the Plan.
13. Section 14 - Effective November 1, 1996, Section 14 of the Plan shall be
amended by deleting Section 14.10 therefrom in its entirety.
41
EXHIBIT 10.10
FIRST BANK OF FLORIDA EMPLOYEE STOCK OWNERSHIP PLAN
AMENDMENT NO. 5
1. Section 16 - Effective as of May 21, 1998, Section 16.5 of the Plan shall
be deleted in its entirety, and the following substituted therefor:
"Notwithstanding any other provision of the Plan, Section 16 of the Plan
may not be amended after the earliest date after November 18, 1997 on which
a Change of Control or Pending Change of Control occurs, except (i) to the
extent any amendment is required by the Internal Revenue Service as a
condition to the continued treatment of the Plan as a tax-qualified plan
under section 401(a) of the Code or (ii) to the extent that the Company, in
its sole discretion, determines that any such amendment is necessary in
order to permit any transaction to which the Company, and/or its parent or
other affiliate, is or proposes to be a party to qualify for "pooling of
interests" accounting treatment."
42
EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------------ -----------------------------------
June 30, 1997 June 30, 1998 June 30, 1997 June 30, 1998
----------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
1. Net income...................................... $ 2,352,000 $ 1,163,000 $ 6,901,000 $ 5,563,000
================= ================ ================ ================
2. Weighted average common shares outstanding...... 4,886,886 5,003,645 4,878,050 4,969,132
3. Basic earnings per share........................ $ 0.48 $ 0.23 $ 1.41 $ 1.12
================= ================ ================ ================
4. Weighted average common shares outstanding...... 4,886,886 5,003,645 4,878,050 4,969,132
5. Potential common stock due to dilutive effec
of stock options................................ 133,492 153,126 124,244 150,062
----------------- ---------------- ---------------- ----------------
6. Total weighted average common shares and
potential common shares outstanding for
diluted earnings per share computation.......... 5,020,378 5,156,771 5,002,294 5,119,194
================= ================ ================ ================
7. Diluted earnings per share...................... $ 0.47 $ 0.23 $ 1.38 $ 1.09
================= ================ ================ ================
</TABLE>
43
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extraced from the
Consolidated Statement of Financial Condition for the period ended June 30,
1998 and the Consolidated Statement of Operations for the period ended June
30, 1998 and is qualified in its entirety by reference to such financial
statements filed with form 10-Q for the period ended June 30, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 28,673
<INT-BEARING-DEPOSITS> 73,529
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 537,799
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,064,346
<ALLOWANCE> 5,363
<TOTAL-ASSETS> 1,764,026
<DEPOSITS> 1,299,323
<SHORT-TERM> 125,000
<LIABILITIES-OTHER> 25,334
<LONG-TERM> 179,792
0
0
<COMMON> 55
<OTHER-SE> 120,773
<TOTAL-LIABILITIES-AND-EQUITY> 1,764,026
<INTEREST-LOAN> 66,108
<INTEREST-INVEST> 28,629
<INTEREST-OTHER> 1,021
<INTEREST-TOTAL> 95,758
<INTEREST-DEPOSIT> 46,008
<INTEREST-EXPENSE> 64,068
<INTEREST-INCOME-NET> 31,690
<LOAN-LOSSES> 4,062
<SECURITIES-GAINS> 2,948
<EXPENSE-OTHER> 29,461
<INCOME-PRETAX> 9,251
<INCOME-PRE-EXTRAORDINARY> 9,251
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,563
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.09
<YIELD-ACTUAL> 2.46
<LOANS-NON> 5,860
<LOANS-PAST> 201
<LOANS-TROUBLED> 10,792
<LOANS-PROBLEM> 1,096
<ALLOWANCE-OPEN> 6,046
<CHARGE-OFFS> 5,053
<RECOVERIES> 308
<ALLOWANCE-CLOSE> 5,363
<ALLOWANCE-DOMESTIC> 5,363
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
