<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.E 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the transition period from to
------------- -------------
COMMISSION FILE NUMBER 0-22608
FFLC BANCORP, INC.
------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 59-3204891
- ------------------------- --------------------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
800 North Boulevard West, Post Office Box 490420,
Leesburg, Florida 34749-0420
- ------------------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (352) 787-3311
--------------
- --------------------------------------------------------------------------------
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
-- --
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common stock, par value $.01 per share 2,596,264 shares outstanding
- -------------------------------------- -----------------------------
at July 30, 1996
----------------
<PAGE> 2
FFLC BANCORP, INC.
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
----
Condensed Consolidated Balance Sheets -
June 30, 1996 (unaudited) and December 31, 1995.....................2
Condensed Consolidated Statements of Income -
Three and Six months ended June 30, 1996 and 1995 (unaudited).......3
Condensed Consolidated Statement of Stockholders' Equity -
For the Six-Month Period Ended June 30, 1996 (unaudited)............4
Condensed Consolidated Statements of Cash Flows -
Six months ended June 30, 1996 and 1995 (unaudited)...............5-6
Notes to Condensed Consolidated Financial Statements (unaudited).....7-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS............................................10-17
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS..................................................18
ITEM 2. CHANGES IN SECURITIES..............................................18
ITEM 3. DEFAULT UPON SENIOR SECURITIES.....................................18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................18
ITEM 5. OTHER INFORMATION..................................................19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................................19
SIGNATURES....................................................................20
1
<PAGE> 3
FFLC BANCORP, INC.
PART I. INANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
JUNE 30, DECEMBER 31,
-------- ------------
1996 1995
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and due from banks $ 5,317 5,005
Interest-bearing deposits 3,895 8,924
------- -------
Cash and cash equivalents 9,212 13,929
------- -------
Investment securities held-to-maturity, at cost-
SBA-guaranteed securities (market value of $3,383
in 1996 and $3,472 in 1995) 3,345 3,441
------- -------
Investment securities available-for-sale, at market:
Investment in mutual funds 9,060 8,900
U.S. Government and agency securities 15,881 11,392
Other investment securities 1,250 1,532
------- -------
Investment securities available-for-sale 26,191 21,824
------- -------
Mortgage-backed and related securities:
Securities held-to-maturity, at cost (market value of $58,887
in 1996 and $75,257 in 1995) 58,801 74,925
Securities available-for-sale, at market 24,060 18,958
------- -------
Mortgage-backed and related securities 82,861 93,883
------- -------
Loans receivable, net 200,635 183,448
Accrued interest receivable:
Investment securities 659 643
Mortgage-backed securities 265 291
Loans receivable 1,135 1,012
Real estate acquired by foreclosure 205 165
Real estate held for development 122 122
Premises and equipment, net 5,114 4,817
Federal Home Loan Bank stock, at cost 1,939 1,928
Other assets 404 329
------- -------
Total $ 332,087 325,832
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposit accounts 273,304 267,703
Advances from Federal Home Loan Bank 150 150
Advance payments by borrowers for taxes and insurance 393 100
Deferred income taxes 927 1,105
Accrued expenses and other liabilities 909 1,414
------- -------
Total liabilities 275,683 270,472
------- -------
Stockholders' Equity:
Preferred stock - -
Common stock 28 28
Additional paid-in-capital 27,208 27,041
Retained income, substantially restricted 33,865 32,704
Unrealized loss on securities available-for-sale (307) (94)
Treasury stock, at cost (154,970 shares at June 30, 1996
and 132,044 at December 31, 1995) (2,786) (2,373)
Stock held by Incentive Plan Trusts (1,604) (1,946)
------- -------
Total stockholders' equity 56,404 55,360
------- -------
Total $ 332,087 325,832
======= =======
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
2
<PAGE> 4
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- ---------------------
1996 1995 1996 1995
---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Interest income:
Interest on loans receivable $ 4,039 3,361 7,980 6,542
Interest on mortgage-backed securities 1,289 1,634 2,707 3,307
Interest and dividends on investment securities
and time deposits 611 574 1,198 1,091
--------- --------- --------- ---------
Total interest income 5,939 5,569 11,885 10,940
--------- --------- --------- ---------
Interest expense:
Certificate accounts 2,793 2,636 5,614 4,904
Savings, NOW and money market deposits 383 417 787 869
Other borrowings 3 3 5 35
Withdrawal penalties (11) (15) (23) (59)
--------- --------- --------- ---------
Total interest expense 3,168 3,041 6,383 5,749
--------- --------- --------- ---------
Net interest income before provision
for loan losses 2,771 2,528 5,502 5,191
Provision for loan losses 15 30 29 60
--------- --------- --------- ---------
Net interest income after provision
for loan losses 2,756 2,498 5,473 5,131
--------- --------- --------- ---------
Noninterest income:
Deposit account fees 116 117 227 234
Other service charges and fees 66 40 129 66
Other 13 14 21 28
--------- --------- --------- ---------
Total noninterest income 195 171 377 328
--------- --------- --------- ---------
Noninterest expense:
Compensation and benefits 938 861 1,821 1,622
Occupancy and equipment 203 139 398 272
Federal deposit insurance premium 154 143 306 286
Data processing expense 91 79 185 155
Professional services 56 63 115 124
Advertising and promotion 25 20 46 51
Other 169 185 328 344
--------- --------- --------- ---------
Total noninterest expense 1,636 1,490 3,199 2,854
--------- --------- --------- ---------
Income before provision for income taxes 1,315 1,179 2,651 2,605
Provision for income taxes 519 442 1,044 976
--------- --------- --------- ---------
Net income $ 796 737 1,607 1,629
========= ========= ========= =========
Earnings per share $ .31 .28 .62 .61
========= ========= ========= =========
Dividends per share $ .10 .08 .18 .14
========= ========= ========= =========
Weighted average number of shares outstanding 2,601,294 2,659,424 2,597,533 2,665,041
========= ========= ========= =========
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1996
($ IN THOUSANDS)
UNREALIZED STOCK
RETAINED LOSS ON HELD BY
ADDITIONAL INCOME, SECURITIES INCENTIVE TOTAL
COMMON PAID-IN SUBSTANTIALLY AVAILABLE- TREASURY PLAN STOCKHOLDERS'
STOCK CAPITAL RESTRICTED FOR-SALE STOCK TRUSTS EQUITY
------ ---------- ------------- ---------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1995 $ 28 27,041 32,704 (94) (2,373) (1,946) 55,360
Proceeds from 4,333 shares
of common stock issued
under the employee stock
option plans (unaudited) - 43 - - - - 43
Net income (unaudited) - - 1,607 - - - 1,607
Dividends (unaudited) - - (446) - - - (446)
Purchase of 22,926 shares
at cost (unaudited) - - - - (413) - (413)
Shares committed to
participants in
incentive plans
(unaudited) - 124 - - - 342 466
Change in unrealized
losses on securities
available-for-sale,
net of income
taxes of $128
(unaudited) - - - (213) - - (213)
--- ------ ------ --- ----- ----- -----
Balance at June 30, 1996
(unaudited) $ 28 27,208 33,865 (307) (2,786) (1,604) 56,404
== ====== ====== === ===== ===== ======
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------
1996 1995
---- ----
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,607 1,629
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses 29 60
Depreciation 161 100
Stock committed to incentive plan participants 466 440
Amortization of premiums or discounts
on investments and mortgage-backed securities (54) (3)
Accretion of deferred loan fees and unearned income (11) (70)
Deferral of net loan fees collected 53 10
Loss on sale of real estate owned 2 1
Dividends on FHLB stock (11) -
Increase in accrued interest receivable (113) (99)
Increase in other assets (75) (165)
Credit for deferred income taxes (50) (126)
Decrease in other liabilities (505) (38)
------ ------
Net cash provided by operating activities 1,499 1,739
------ ------
Cash flows from investing activities:
Purchase of mortgage-backed securities held-to-maturity - (440)
Purchase of mortgage-backed securities available-for-sale (7,577) -
Principal repayments on mortgage-backed securities
held-to-maturity 16,158 10,905
Principal repayments on mortgage-backed securities
available-for-sale 2,264 1,205
Purchase of investment securities available-for-sale (7,923) (276)
Proceeds from maturities of investment securities held-to-maturity 96 146
Proceeds from maturities of investment securities available-for-sale 3,446 2,203
Loan disbursements (41,196) (25,146)
Principal repayments on loans 23,883 8,390
Purchase of premises and equipment (458) (850)
Proceeds from sale of real estate owned 13 53
------ ------
Net cash used in investing activities (11,294) (3,810)
------ ------
(continued)
</TABLE>
5
<PAGE> 7
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
($ IN THOUSANDS)
For the Six Months
Ended June 30,
---------------------
1996 1995
---- ----
(unaudited)
<S> <C> <C>
Cash flows from financing activities:
Stock options exercised 43 35
Purchase of treasury stock (413) (994)
Repayment of securities sold under agreements to repurchase - (3,000)
Cash dividends paid (446) (359)
Net increase in deposit accounts 5,601 6,591
Increase in advance payments by borrowers for taxes and insurance 293 292
------ ------
Net cash provided by financing activities 5,078 2,565
------ ------
Net (decrease) increase in cash and cash equivalents (4,717) 494
Cash and cash equivalents, beginning of period 13,929 10,255
------ ------
Cash and cash equivalents, end of period $ 9,212 10,749
====== ======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 6,245 5,655
====== ======
Income taxes $ 985 1,181
====== ======
Noncash investing and financing activities:
Decrease in equity valuation allowance
for market value of investment and mortgage-
backed securities available-for-sale $ (213) (609)
====== ======
Transfer from loans to real estate owned $ 55 318
====== ======
Loans originated on sales of real estate owned $ - 90
====== ======
Loans originated and sold to correspondent $ 1,967 107
====== ======
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
6
<PAGE> 8
FFLC BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION. In the opinion of the management of FFLC Bancorp,
Inc., the accompanying condensed consolidated financial statements contain
all adjustments (consisting of normal recurring accruals) necessary to
present fairly the financial position at June 30, 1996 and the results of
operations for the three- and six-month periods ended June 30, 1996 and
1995 and cash flows for the six-month periods ended June 30, 1996 and 1995.
The results of operations and other data for the three and six months ended
June 30, 1996, are not necessarily indicative of results that may be
expected for the year ending December 31, 1996.
The condensed consolidated financial statements include the accounts of
FFLC Bancorp, Inc. (the "Holding Company") and its wholly-owned subsidiary,
First Federal Savings Bank of Lake County (the "Savings Bank") (together,
the "Company"). All significant intercompany accounts and transactions have
been eliminated in consolidation.
2. LOAN IMPAIRMENT AND LOAN LOSSES. On January 1, 1995, the Company adopted
Statements of Financial Accounting Standards No. 114 and 118. Those
Statements address the accounting by creditors for impairment of certain
loans. The Statements generally require the Company to identify loans for
which the Company probably will not receive full repayment of principal and
interest as impaired loans. The Statements require that impaired loans be
valued at the present value of expected future cash flows, discounted at
the loan's effective interest rate, at the observable market price of the
loan, or the fair value of the underlying collateral if the loan is
collateral dependent. The Company has implemented the Statements by
modifying its quarterly review of the adequacy of the allowance for loan
losses to also identify and value impaired loans in accordance with
guidance in the Statements. No impaired loans were identified by the
Company during the six months ended June 30, 1996 or 1995.
The activity in the allowance for loan losses is as follows (in thousands):
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Balance, beginning of period $ 988 899 977 869
Provision charged to earnings 15 30 29 60
Charge-offs - - (3) -
----- --- ----- ---
Balance, end of period $ 1,003 929 1,003 929
===== === ===== ===
(continued)
</TABLE>
7
<PAGE> 9
FFLC BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
3. IMPACT OF NEW ACCOUNTING ISSUES. On January 1, 1996, the Company
adopted Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS No. 123"), which establishes financial
accounting and reporting standards for stock-based employee compensation
plans. The Statement requires certain disclosures about stock-based
compensation arrangements, regardless of the method used to account for
them, defines a fair value based method of accounting for an employee stock
option or similar equity instrument and encourages all entities to adopt
that method of accounting for all of their employee stock compensation
plans. However, SFAS No. 123 also allows an entity to continue to measure
compensation cost for stock-based compensation plans using the intrinsic
value method of accounting prescribed by APB Opinion No. 25, "Accounting
for Stock Issued to Employees." Entities electing to continue using the
accounting method in APB Opinion No. 25 must make pro forma disclosures of
net income and earnings per share as if the fair value method of accounting
defined in SFAS No. 123 had been applied. Under the fair value method,
compensation cost is measured at the grant date based on the value of the
award and is recognized over the service period, which is usually the
vesting period. Under the intrinsic value method, compensation cost is the
excess, if any, of the quoted market price of the stock at grant date or
other measurement date over the amount an employee must pay to acquire the
stock. The Company elected to continue to utilize the intrinsic value
method of accounting defined in APB Opinion No. 25, and accordingly, the
adoption of SFAS No. 123 had no effect on the Company's financial position
at June 30, 1996 or results of operations for the three and six months then
ended. The pro forma disclosures required under SFAS No. 123, for stock
options granted during 1995 and thereafter, are not required for interim
condensed financial statements.
4. FUTURE ACCOUNTING REQUIREMENTS. In June 1996, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS No. 125"). That Statement provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishments of liabilities. That Statement also provides
consistent standards for distinguishing transfers of financial assets that
are sales from transfers that are secured borrowings. SFAS No. 125 is
effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996.
Management of the Company does not expect SFAS No. 125 to have a material
effect on the Company's financial statements.
(continued)
8
<PAGE> 10
FFLC BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
5. PER SHARE AMOUNTS. Earnings per share of common stock has been determined
by dividing net income for the period by the weighted average number of
shares outstanding. Shares of common stock purchased by the ESOP and RRP
incentive plans are only considered outstanding when the shares are
released for allocation to participants. Stock options are regarded as
common stock equivalents and are therefore considered in both primary and
fully diluted earnings per share calculations. Common stock equivalents are
computed using the treasury stock method. The following table presents the
calculation of earnings per share:
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
1996 1996
---- ----
($ in thousands, except
per share amounts)
<S> <C> <C>
Net income $ 796 1,607
========= =========
Weighted average common shares outstanding 2,637,155 2,638,200
Less: ESOP and RRP Plan shares not committed
to be released (152,643) (156,803)
--------- ---------
Weighted average common shares outstanding for
calculation of earnings per share 2,484,512 2,481,397
Common stock equivalents due to dilutive effect
of stock options 116,782 116,136
--------- ---------
Total weighted average common shares and equivalents
outstanding for primary earnings per share
computation 2,601,294 2,597,533
========= =========
Primary earnings per share $ .31 .62
========= =========
Total weighted average common shares and equivalents
outstanding for primary earnings per share computation 2,601,294 2,597,533
Additional dilutive shares using the higher of the end of period
market value versus average market value for the period
utilizing the treasury stock method regarding stock options 670 1,316
--------- ---------
Total weighted average common shares and equivalents
outstanding for fully diluted earnings per share
computation 2,601,964 2,598,849
========= =========
Fully diluted earnings per share $ .31 .62
========= =========
</TABLE>
9
<PAGE> 11
FFLC BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
FFLC Bancorp, Inc. (the "Holding Company") was formed as the holding
company for First Federal Savings Bank of Lake County (the "Savings Bank")
in connection with the Savings Bank's conversion from a federally chartered
mutual savings and loan association to a federally chartered stock savings
bank on January 4, 1994. The Company's consolidated results of operations
are primarily those of the Savings Bank.
The Savings Bank's principal business continues to be attracting retail
deposits from the general public and investing those deposits, together
with principal repayments on loans and investments and funds generated from
operations, primarily in mortgage loans secured by one-to-four-family
owner-occupied homes, mortgage-backed securities and, to a lesser extent,
construction loans, consumer and other loans, and multi-family residential
mortgage loans. In addition, the Savings Bank holds investments permitted
by federal laws and regulations including securities issued by the U.S.
Government and agencies thereof. The Savings Bank's revenues are derived
principally from interest on its mortgage loan and mortgage-backed
securities portfolios and interest and dividends on its investment
securities. The Savings Bank is a member of the Federal Home Loan Bank
("FHLB") system and its deposits are insured to the applicable limits by
the Savings Association Insurance Fund ("SAIF") of the Federal Deposit
Insurance Corporation (the "FDIC"). The Savings Bank is subject to
regulation by the Office of Thrift Supervision (the "OTS") as its
chartering agency, and the FDIC as its deposit insurer.
The Savings Bank has 8 full-service locations in Lake and Sumter Counties,
Florida.
The Savings Bank's results of operations are dependent primarily on net
interest income, which is the difference between the interest income earned
primarily on its loans and investment and mortgage-backed securities
portfolios, and its cost of funds, consisting of the interest paid on its
deposits and borrowings. The Savings Bank's operating results are also
affected, to a lesser extent, by fee income and by gains or losses on the
sale of loans, investment and mortgage-backed securities available-for-sale
and real estate owned. The Savings Bank's operating expenses consist
primarily of employee compensation, occupancy expenses, FDIC insurance
premiums and other general and administrative expenses. The Savings Bank's
results of operations are also significantly affected by general economic
and competitive conditions, particularly changes in market interest rates,
government policies, and actions of regulatory authorities.
10
<PAGE> 12
FFLC BANCORP, INC.
LIQUIDITY AND CAPITAL RESOURCES
The Company's most liquid assets are cash, amounts due from depository
institutions and interest-bearing deposits. The levels of these assets are
dependent on the Company's lending, investing, operating, and deposit
activities during any given period. At June 30, 1996, cash, amounts due
from depository institutions and interest-earning deposits, totaled $9.2
million.
The Savings Bank is required to maintain an average daily balance of
specified liquid assets equal to a monthly average of not less than a
specified percentage of its net withdrawable deposit accounts plus
short-term borrowings. This liquidity requirement is currently 5% but may
be changed from time to time by the OTS to any amount within the range of
4% to 10% depending upon economic conditions and the savings flows of
member institutions. OTS regulations also require each member savings
institution to maintain an average daily balance of short-term liquid
assets at a specified percentage (currently 1%) of the total of its net
withdrawable deposit accounts and borrowings payable in one year or less.
Monetary penalties may be imposed for failure to meet these liquidity
requirements. The Savings Bank's liquidity and short-term liquidity ratios
for June 30, 1996 were 13.9% and 6.3%, respectively, which exceeded the
requirements. The Savings Bank has never been subject to monetary penalties
for failure to meet its liquidity requirements.
The Savings Bank's sources of funds include payments and prepayments on
loans and mortgage-backed securities, proceeds from maturities of
investment securities, and increases in deposit accounts. While maturities
and scheduled amortization of loans, mortgage-backed and investment
securities are predictable sources of funds, deposit inflows and mortgage
prepayments are greatly influenced by local conditions, general interest
rates, and regulatory changes.
At June 30, 1996, the Savings Bank had outstanding commitments to originate
$2.2 million of loans and to fund the undisbursed portion of loans in
process of approximately $9.5 million. The Savings Bank believes that it
will have sufficient funds available to meet its commitments. At June 30,
1996, certificates of deposit which were scheduled to mature in one year or
less totaled $154.9 million. Management believes, based on past experience,
that a significant portion of those funds will remain with the Savings
Bank.
As a federally chartered financial institution, the Savings Bank is
required to maintain certain minimum amounts of regulatory capital. The
following table is a summary of the regulatory capital requirements, the
Savings Bank's regulatory capital and the amounts in excess of such
required capital as of June 30, 1996:
<TABLE>
<CAPTION>
Tangible Core Risk-Based
-------------------- ----------------------- -----------------------
($ in thousands)
% of
% of % of Risk-
Qualifying Qualifying Weighted
Amount Assets Amount Assets Amount Assets
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Regulatory capital $ 40,704 12.3% $ 40,704 12.3% $ 41,707 28.2%
Requirement 4,982 1.5 9,963 3.0 11,841 8.0
------ ---- ------ ---- ------ ----
Excess $ 35,722 10.8% $ 30,741 9.3% $ 29,866 20.2%
====== ==== ====== ==== ====== ====
</TABLE>
11
<PAGE> 13
FFLC BANCORP, INC.
The FDIC recently established a new assessment rate schedule of 0 to 27 basis
points for Bank Insurance Fund ("BIF") members. Approximately 92% of BIF members
pay only the $2,000 per year legal minimum insurance premium. The FDIC retained
the existing assessment rate schedule of 23 to 31 basis points applicable to
SAIF member institutions. In announcing the rule, the FDIC noted that the
premium differential may have adverse consequences for SAIF members, including
reduced earnings and an impaired ability to raise funds in the capital markets.
In addition, SAIF members, such as the Savings Bank, could be placed at a
disadvantage to BIF members with respect to pricing of loans and deposits and
the ability to achieve lower operating costs. Legislation pending in Congress
would impose a one-time assessment of between 85 and 90 basis points on the
amount of deposits held by SAIF-member institutions, including the Savings Bank,
to recapitalize the SAIF fund. If the assessment is made at the proposed rate,
the effect on the Savings Bank would be a pretax charge of approximately
$2,157,000 (0.85% on deposits of $253.8 million at March 31, 1995), or
$1,348,000 after tax (37.5% assumed tax rate). Should this occur, the Holding
Company does not expect to have to contribute capital to the Savings Bank for it
to remain a well-capitalized institution.
During the six months ended June 30, 1996, the Savings Bank declared and paid a
cash dividend of $2.7 million to the Holding Company.
The following table shows selected ratios for the periods ended or at the dates
indicated:
<TABLE>
<CAPTION>
Six Months Six Months
Ended Year Ended Ended
June 30, December 31, June 30,
1996 1995 1995
---------- ------------ ----------
<S> <C> <C> <C>
Average equity as a percentage
of average assets 17.02% 7.46% 17.65%
Total equity to total assets at end of period 16.98% 16.99% 17.44%
Return on average assets .98% .98% 1.04%
Return on average equity 5.73% 5.59% 5.92%
Noninterest expense to average assets 1.94% 1.85% 1.83%
Nonperforming loans and real estate owned to
total assets at end of period .13% .10% .09%
</TABLE>
12
<PAGE> 14
FFLC BANCORP, INC.
<TABLE>
<CAPTION>
At At At
June 30, December 31, June 30,
1996 1995 1995
-------- ------------ --------
<S> <C> <C> <C>
Weighted average interest rates:
Interest-earning assets:
Loans 8.20% 8.30% 8.28%
Mortgage-backed securities 6.26% 6.29% 6.09%
Investment securities and other interest-
earning assets 5.89% 5.94% 6.13%
Total interest-earning assets 7.43% 7.42% 7.27%
Interest-bearing liabilities:
Deposit accounts 4.70% 4.87% 4.88%
Borrowed funds 7.17% 7.17% 7.17%
Total interest-bearing liabilities 4.70% 4.87% 4.88%
Interest-rate spread 2.73% 2.55% 2.39%
</TABLE>
CHANGE IN FINANCIAL CONDITION
Total assets increased $6.3 million or 1.9%, from $325.8 million at
December 31, 1995 to $332.1 million at June 30, 1996, primarily as a result
of increases in investment securities of $4.3 million and loans receivable
of $17.2 million, partially offset by decreases in mortgage-backed
securities of $11.0 million and cash and cash equivalents of $4.7 million.
Customer deposits increased $5.6 million from $267.7 million at December
31, 1995 to $273.3 million at June 30, 1996. The net increase in
stockholders' equity during the six month period ended June 30, 1996
resulted from net income of $1.6 million, credits to equity of $466,000
related to the stock incentive plans and proceeds of $43,000 from stock
options exercised, all of which was partially offset by a $213,000 increase
in the unrealized loss on securities available-for-sale, net of tax effect,
by $413,000 related to the repurchase of shares of the Company's stock and
by $446,000 of dividends paid during the period.
13
<PAGE> 15
FFLC BANCORP, INC.
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of FFLC Bancorp from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest/dividend income; (iv) interest rate spread; and
(v) net interest margin.
<TABLE>
<CAPTION>
Three Months Ended June 30,
-------------------------------------------------------------
1996 1995
------------------------------ ----------------------------
Interest Average Interest Average
Average and Yield/ Averag and Yield/
Balance Dividends Rate Balance Dividends Rate
------- --------- ------- ------- --------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $ 194,604 4,039 8.30% $ 159,665 3,361 8.42%
Mortgage-backed securities 83,098 1,289 6.21 109,541 1,634 5.97
Investment securities and other interest-earning assets (1) 42,043 611 5.81 37,069 574 6.19
------- ----- ------- -----
Total interest-earning assets 319,745 5,939 7.43 306,275 5,569 7.27
----- -----
Noninterest-earning assets 11,867 8,045
------- -------
Total assets $ 331,612 $ 314,320
======= =======
Interest-bearing liabilities:
Deposit accounts 271,093 3,165 4.67 256,881 3,038 4.73
Borrowed funds 150 3 8.00 150 3 8.00
------- ----- ------- -----
Total interest-bearing liabilities 271,243 3,168 4.67 257,031 3,041 4.73
----- -----
Noninterest-bearing liabilities 4,011 2,201
Stockholders' equity 56,358 55,088
------- -------
Total liabilities and
stockholders' equity $ 331,612 $ 314,320
======= =======
Net interest and dividend income $ 2,771 $ 2,528
===== =====
Interest-rate spread (2) 2.76% 2.54%
==== ====
Net average interest-earning assets,
net interest margin (3) $ 48,502 3.47% $ 49,244 3.30%
======= ==== ======= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.18 1.19
==== ====
- -----------------------------
(1) Includes interest-bearing deposits, federal funds sold and FHLB stock.
(2) Interest-rate spread represents the difference between the average yield
on interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin is net interest income divided by average interest-
earning assets.
</TABLE>
14
<PAGE> 16
FFLC BANCORP, INC.
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of FFLC Bancorp from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest and dividend income; (iv) interest-rate spread;
and (v) net interest margin.
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------------------------------------
1996 1995
------------------------------ ----------------------------
Interest Average Interest Average
Average and Yield/ Averag and Yield/
Balance Dividends Rate Balance Dividends Rate
------- --------- ------- ------- --------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $ 190,466 7,980 8.38% $ 155,608 6,542 8.41%
Mortgage-backed securities 86,807 2,707 6.24 112,141 3,307 5.90
Investment securities and other interest-earning assets (1) 40,698 1,198 5.89 35,537 1,091 6.14
------- ----- ------- ------
Total interest-earning assets 317,971 11,885 7.48 303,286 10,940 7.21
----- ------
Noninterest-earning assets 11,457 8,752
------- -------
Total assets $ 329,428 $ 312,038
======= =======
Interest-bearing liabilities:
Deposit accounts 269,881 6,378 4.73 253,219 5,714 4.51
Borrowed funds 150 5 6.67 1,097 35 6.38
------- ----- ------- ------
Total interest-bearing liabilities 270,031 6,383 4.73 254,316 5,749 4.52
----- ------
Noninterest-bearing liabilities 3,335 2,648
Stockholders' equity 56,062 55,074
------- -------
Total liabilities and stockholders' equity $ 329,428 $ 312,038
======= =======
Net interest and dividend income $ 5,502 $ 5,191
===== ======
Interest rate spread (2) 2.75% 2.69%
==== ====
Net average interest-earning assets,
net interest margin (3) $ 47,940 3.46% $ 48,970 3.42%
======= ==== ======= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.18 1.19
==== ====
- ---------------------------------------
(1) Includes interest-bearing deposits, federal funds sold and FHLB stock.
(2) Interest-rate spread represents the difference between the average yield
on interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin is net interest income divided by average interest
earning assets.
</TABLE>
15
<PAGE> 17
FFLC BANCORP, INC.
COMPARISON OF THE THREE-MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
RESULTS OF OPERATIONS
GENERAL OPERATING RESULTS. Net income for the three-month period ended June
30, 1996 was $796,000, or $.31 per share, compared to $737,000, or $.28 per
share, for the comparable period in 1995. The increase in net income was
primarily a result of an increase of $243,000 in net interest income which
was partially offset by a $146,000 increase in noninterest expense.
INTEREST INCOME. Interest income increased $370,000, from $5.6 million for
the three-month period ended June 30, 1995 to $5.9 million for the
three-month period ended June 30, 1996. The increase was due to a 4.4%
increase in average interest-earning assets outstanding for the three
months ended June 30, 1996 compared to the 1995 period, coupled with an
increase in the average yield on interest-earning assets from 7.27% for the
three months ended June 30, 1995, to 7.43% for the three months ended June
30, 1996.
INTEREST EXPENSE. Interest expense increased $127,000, from $3.0 million for
the three-month period ended June 30, 1995 to $3.2 million for the
three-month period ended June 30, 1996. The increase was due to a 5.5%
increase in average interest-bearing liabilities outstanding during the
three months ended June 30, 1996 compared to the 1995 period, partially
offset by a decrease in the weighted average rate paid on interest-bearing
liabilities from 4.73% during the 1995 period to 4.67% during the 1996
period.
NONINTEREST EXPENSE. Noninterest expense consists primarily of employee
compensation and benefits, occupancy and equipment expense and FDIC
insurance premiums. Noninterest expense increased by $146,000, or 9.8% from
$1.5 million for the three-month period ended June 30, 1995 to $1.6 million
for the three-month period ended June 30, 1996. The increase included an
increase in compensation and benefits of $77,000 and a $64,000 increase in
occupancy and equipment relating to the opening of two new branches.
INCOME TAX PROVISION. The income tax provision increased from $442,000 for
the three-month period ended June 30, 1995 (an effective tax rate of 37.5%)
to $519,000 (an effective tax rate of 39.5% for the corresponding period
in 1996.
16
<PAGE> 18
FFLC BANCORP, INC.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
RESULTS OF OPERATIONS
GENERAL OPERATING RESULTS. Net income for the six-month period ended June 30,
1996 was $1.6 million, or $.62 per share, compared to $1.6 million, or $.61
per share, for the comparable period in 1995. As a result of the Company's
stock repurchase program, the weighted average number of common shares
outstanding during the six months ended June 30, 1996 declined from the
comparable period in 1995. The $311,000 increase in net interest income was
offset by a $345,000 increase in noninterest expense.
INTEREST INCOME. Interest income increased $945,000, or 8.6% from $10.9
million for the six- month period ended June 30, 1995 to $11.9 million for
the comparable period in 1996. The increase was due to 4.8% increase in
average interest-earning assets outstanding for the six months ended June
30, 1996 compared to the 1995 period, coupled with an increase in the
average yield on interest-earning assets from 7.21% for the six months
ended June 30, 1995, to 7.48% for the six months ended June 30, 1996.
INTEREST EXPENSE. Interest expense increased $634,000, or 11.0% from $5.7
million for the six- month period ended June 30, 1995 to $6.4 million for
the six-month period ended June 30, 1996. The increase was due to a 6.2%
increase in average interest-bearing liabilities outstanding during the six
months ended June 30, 1996 compared to the 1995 period, coupled with an
increase in the weighted average rate paid on interest-bearing liabilities
from 4.52% during the 1995 period to 4.73% during the 1996 period.
NONINTEREST EXPENSE. Noninterest expense consists primarily of employee
compensation and benefits, occupancy and equipment expense and FDIC
insurance premiums. Noninterest expense increased by $345,000, or 12.1%,
from $2.9 million for the six-month period ended June 30, 1995 to $3.2
million for the six-month period ended June 30, 1996. The increase was due
primarily to an increase in compensation and benefits of $199,000 and a
$126,000 increase in occupancy and equipment related to the opening of two
new branches in 1996.
INCOME TAX PROVISION. The income tax provision increased from $976,000 for
the six-month period ended June 30, 1995 (an effective tax rate of 37.5%)
to $1.0 million (an effective tax rate of 39.4%) for the corresponding
period for 1996.
17
<PAGE> 19
FFLC BANCORP, INC.
Part II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceeding to which FFLC Bancorp, Inc.
or any of its subsidiaries is a party or to which any of their property is
subject.
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULT UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders ("Annual Meeting") of FFLC Bancorp, Inc.
("Company") was held on May 9, 1996, to consider the election of two
directors each for a term of three years and the ratification of the
appointment of the Company's independent auditors for the year ending
December 31, 1996. At the Annual Meeting, incumbent directors James P.
Logan and Ted R. Ostrander, Jr., were reelected. The terms of Directors
James R. Gregg, Joseph J. Junod, Stephen T. Kurtz, Claron D. Wagner, and
Paul K. Mueller continued after the Annual Meeting.
At the Annual Meeting, 2,142,556 shares were present in person or by proxy.
The following is a summary and tabulation of the matters that were voted
upon at the Annual Meeting:
PROPOSAL I.
The election of two directors, each for a term of three years:
<TABLE>
<CAPTION>
Abstentions
and Broker
For Withheld Against Nonvotes
--- -------- ------- -----------
<S> <C> <C> <C> <C>
James P. Logan 2,126,856 15,700 - -
========= ====== ====== ======
Ted R. Ostrander, Jr 2,126,331 16,225 - -
========= ====== ====== ======
</TABLE>
PROPOSAL II:
To ratify the appointment of the Company's independent auditors for the
year ending December 31, 1996:
<TABLE>
<CAPTION>
Abstentions
and Broker
For Withheld Against Nonvotes
--- -------- ------- -----------
<C> <C> <C> <C>
2,131,850 - 9,706 1,000
========= ====== ===== =====
</TABLE>
18
<PAGE> 20
FFLC BANCORP, INC.
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits - not applicable
b. On May 31, 1996, FFLC Bancorp, Inc., filed a Form 8-K which disclosed
that it has received regulatory approval to repurchase up to five percent
of its common stock. The Company was authorized by its Board of Directors
to repurchase up to 131,900 shares of its 2,641,689 outstanding shares
during the subsequent six to twelve months. The repurchases will be made
from time to time in open-market transactions as management deems prudent.
19
<PAGE> 20
FFLC 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.
FFLC BANCORP, INC.
(Registrant)
Date: August 2, 1996 By: /s/ Stephen T. Kurtz
-------------------- --------------------------------------
Stephen T. Kurtz, President and Chief Executive
Officer
Date: August 2, 1996 By: /s/ Paul K. Mueller
-------------------- --------------------------------------
Paul K. Mueller, Senior Vice President and
Chief Accounting Officer
20
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000912738
<NAME> FFLC BANCORP INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 5,317
<INT-BEARING-DEPOSITS> 3,895
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 50,251
<INVESTMENTS-CARRYING> 62,146
<INVESTMENTS-MARKET> 62,270
<LOANS> 200,635
<ALLOWANCE> 1,003
<TOTAL-ASSETS> 332,087
<DEPOSITS> 273,304
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,229
<LONG-TERM> 150
0
0
<COMMON> 28
<OTHER-SE> 56,376
<TOTAL-LIABILITIES-AND-EQUITY> 332,087
<INTEREST-LOAN> 7,980
<INTEREST-INVEST> 3,905
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 11,885
<INTEREST-DEPOSIT> 6,378
<INTEREST-EXPENSE> 6,383
<INTEREST-INCOME-NET> 5,502
<LOAN-LOSSES> 29
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,199
<INCOME-PRETAX> 2,651
<INCOME-PRE-EXTRAORDINARY> 2,651
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,607
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
<YIELD-ACTUAL> 7.48
<LOANS-NON> 70
<LOANS-PAST> 143
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 977
<CHARGE-OFFS> (3)
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,003
<ALLOWANCE-DOMESTIC> 1,003
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
