<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 SEPTEMBER 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 $.01 per share 2,494,337 shares outstanding at
- -------------------------------------- -------------------------------
October 22, 1996
----------------
<PAGE> 2
FFLC BANCORP, INC.
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
----
Condensed Consolidated Balance Sheets -
September 30, 1996 (unaudited) and December 31, 1995.....................2
Condensed Consolidated Statements of Operations -
Three and Nine months ended September 30, 1996 and 1995 (unaudited)......3
Condensed Consolidated Statement of Stockholders' Equity -
For the Nine months ended September 30, 1996 (unaudited).................4
Condensed Consolidated Statements of Cash Flows -
For the Nine months ended September 30, 1996 and 1995 (unaudited)......5-6
Notes to Condensed Consolidated Financial Statements (unaudited).........7-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..............................................10-17
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.................................................18
ITEM 2. CHANGES IN SECURITIES.............................................18
ITEM 3. DEFAULT UPON SENIOR SECURITIES....................................18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............18
ITEM 5. OTHER INFORMATION.................................................18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..................................18
SIGNATURES...................................................................19
1
<PAGE> 3
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SEPTEMBER 30, DECEMBER 31,
------------- ------------
1996 1995
---- ----
ASSETS (UNAUDITED)
<S> <C> <C>
Cash and due from banks $ 5,087 5,005
Interest-bearing deposits 7,160 8,924
-------- --------
Cash and cash equivalents 12,247 13,929
-------- --------
Investment securities held-to-maturity, at cost-
SBA-guaranteed securities (market value of $3,305
in 1996 and $3,472 in 1995) 3,272 3,441
-------- --------
Investment securities available-for-sale, at market:
Investment in mutual funds 9,204 8,900
U.S. Government and agency securities 13,692 11,392
Other investment securities 840 1,532
-------- --------
Investment securities available-for-sale 23,736 21,824
-------- --------
Mortgage-backed and related securities:
Securities held-to-maturity, at cost (market
value of $52,508 in 1996 and $75,257 in 1995) 52,364 74,925
Securities available-for-sale, at market 20,449 18,958
-------- --------
Mortgage-backed and related securities 72,813 93,883
-------- --------
Loans receivable, net 213,696 183,448
Accrued interest receivable:
Investment securities 455 643
Mortgage-backed securities 249 291
Loans receivable 1,189 1,012
Real estate acquired by foreclosure 161 165
Real estate held for development 122 122
Premises and equipment, net 5,107 4,817
Federal Home Loan Bank stock, at cost 1,939 1,928
Current income taxes receivable 616 -
Other assets 391 329
-------- --------
Total $ 335,993 325,832
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposit accounts 276,677 267,703
Advances from Federal Home Loan Bank 150 150
Advance payments by borrowers for taxes and insurance 574 100
Deferred income taxes 879 1,105
Accrued expenses and other liabilities 3,218 1,414
-------- --------
Total liabilities 281,498 270,472
-------- --------
Stockholders' Equity:
Preferred stock - -
Common stock 28 28
Additional paid-in-capital 27,280 27,041
Retained income, substantially restricted 33,396 32,704
Unrealized loss on securities available-for-sale (263) (94)
Treasury stock, at cost (249,056 shares at
September 30, 1996 and 132,044 at
December 31, 1995) (4,513) (2,373)
Stock held by Incentive Plan Trusts (1,433) (1,946)
-------- --------
Total stockholders' equity 54,495 55,360
-------- ---------
Total $ 335,993 325,832
======== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE> 4
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------- ---------------------
1996 1995 1996 1995
---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Interest income:
Interest on loans receivable $ 4,277 3,553 12,257 10,095
Interest on mortgage-backed securities 1,223 1,597 3,930 4,904
Interest on investment securities and time
deposits 586 578 1,784 1,670
--------- --------- --------- ---------
Total interest income 6,086 5,728 17,971 16,669
--------- --------- --------- ---------
Interest expense:
Certificates 2,859 2,801 8,473 7,705
Savings, NOW and money market deposits 390 410 1,177 1,280
Other borrowings 3 3 8 38
Withdrawal penalties (12) (14) (35) (73)
--------- --------- --------- ---------
Total interest expense 3,240 3,200 9,623 8,950
--------- --------- --------- ---------
Net interest income 2,846 2,528 8,348 7,719
Provision for loan losses 34 33 63 93
--------- --------- --------- ---------
Net interest income after provision
for loan losses 2,812 2,495 8,285 7,626
--------- --------- --------- ---------
Noninterest income:
Deposit account fees 128 120 355 353
Other service charges and fees 75 36 204 103
Other 5 7 26 35
--------- --------- --------- ---------
Total noninterest income 208 163 585 491
--------- --------- --------- ---------
Noninterest expense:
Compensation and benefits 932 833 2,753 2,455
Occupancy and equipment 215 141 613 414
Federal deposit insurance premiums 160 145 466 431
SAIF recapitalization assessment 1,655 - 1,655 -
Data processing expense 99 83 284 238
Professional services 73 66 188 189
Advertising and promotion 34 26 80 76
Other 166 139 494 484
--------- --------- --------- ---------
Total noninterest expense 3,334 1,433 6,533 4,287
--------- --------- --------- ---------
(Loss) income before provision for income taxes (314) 1,225 2,337 3,830
(Credit) provision for income taxes (91) 457 953 1,433
--------- --------- --------- ---------
Net (loss) income $ (223) 768 1,384 2,397
========= ========= ========= =========
(Loss) earnings per share $ (.09) .29 .54 .90
========= ========= ========= =========
Dividends per share $ .10 .08 .28 .22
========= ========= ========= =========
Weighted average number of shares outstanding 2,572,459 2,658,744 2,586,901 2,663,416
========= ========= ========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 5
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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 4,993 shares
of common stock issued
under the employee stock
option plans (unaudited) - 50 - - - - 50
Net income (unaudited) - - 1,384 - - - 1,384
Dividends (unaudited) - - (692) - - - (692)
Purchase of 117,012 shares
at cost (unaudited) - - - - (2,140) - (2,140)
Shares committed to
participants in
incentive plans
(unaudited) - 189 - - - 513 702
Change in unrealized
losses on securities
available-for-sale,
net of income
taxes of $102
(unaudited) - - - (169) - - ( 169)
--- ------ ------ --- ----- ------ ------
Balance at September 30, 1996
(unaudited) $ 28 27,280 33,396 (263) (4,513) (1,433) 54,495
== ====== ====== === ===== ===== ======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 6
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
--------------------
1996 1995
---- ----
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,384 2,397
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses 63 93
Credit for deferred income taxes (124) (270)
Depreciation 244 151
Stock committed to incentive plan participants 702 680
Amortization of premiums or discounts
on investments and mortgage-backed securities (58) (1)
Accretion of deferred loan fees and unearned interest (53) (91)
Deferral of net loan fees collected 99 28
Loss on sale of real estate owned 2 1
Dividends on FHLB stock (11) -
Decrease (increase) in accrued interest receivable 53 (76)
Increase in current income taxes receivable (616) -
Increase in other assets (62) (192)
Increase in other liabilities 1,804 386
------- ------
Net cash provided by operating activities 3,427 3,106
------- ------
Cash flows from investing activities:
Proceeds from maturities of investment securities held-to-maturity 169 191
Purchase of investment securities available-for-sale (12,811) (419)
Proceeds from maturities of investment securities available-for-sale 10,857 2,768
Purchase of mortgage-backed securities held-to-maturity - (2,927)
Principal repayments on mortgage-backed securities
held-to-maturity 22,595 18,806
Purchase of mortgage-backed securities available-for-sale (7,577) -
Principal repayments on mortgage-backed securities
available-for-sale 5,881 1,964
Loan disbursements (64,158) (38,655)
Principal repayments on loans 33,746 14,765
Proceeds from sale of real estate owned 57 53
Purchase of premises and equipment, net (534) (1,423)
------- ------
Net cash used in investing activities (11,775) (4,877)
------- ------
(continued)
</TABLE>
5
<PAGE> 7
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
($ IN THOUSANDS)
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
-------------------
1996 1995
---- ----
(UNAUDITED)
<S> <C> <C>
Cash flows from financing activities:
Net increase in deposit accounts 8,974 12,050
Repayment of securities sold under agreement to repurchase - (3,000)
Increase in advance payments by borrowers for
taxes and insurance 474 385
Stock options exercised 50 49
Purchase of treasury stock (2,140) (1,120)
Cash dividends paid (692) (560)
------ ------
Net cash provided by financing activities 6,666 7,804
------ ------
Net (decrease) increase in cash and cash equivalents (1,682) 6,033
Cash and cash equivalents, beginning of period 13,929 10,255
------ ------
Cash and cash equivalents, end of period $ 12,247 16,288
====== ======
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 9,563 8,746
====== ======
Income taxes $ 1,430 1,700
====== ======
Noncash investing and financing activities:
(Decrease) increase in equity valuation allowance
for market value of investment and mortgage-
backed securities available-for-sale $ (169) 616
====== ======
Transfers of loans to real estate owned $ 76 333
====== ======
Loans originated on sales of real estate owned $ 21 90
====== ======
Loans originated and sold to correspondent $ 2,749 1,073
====== ======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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 September 30, 1996 and the
results of operations for the three and nine months ended September 30,
1996 and 1995 and cash flows for the nine months ended September 30, 1996
and 1995. The results of operations and other data for the three and nine
months ended September 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 Nos. 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 nine months ended September 30, 1996 or 1995.
The activity in the allowance for loan losses is as follows (in
thousands):
<TABLE>
<CAPTION>
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Balance, beginning of period $ 1,003 929 977 869
Provision charged to earnings 34 33 63 93
Charge-offs (14) - (17) -
----- --- ----- ---
Balance, end of period $ 1,023 962 1,023 962
===== === ===== ===
(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 September 30, 1996 or results of
operations for the three and nine 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 (loss) 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 (loss) per share:
<TABLE>
<CAPTION>
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1996
---- ----
($ IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Net (loss) income $ (223) 1,384
========== =========
Weighted average common shares outstanding 2,597,562 2,622,743
Less: ESOP and RRP Plan shares not committed
to be released (144,751) (152,793)
---------- ---------
Weighted average common shares outstanding for
calculation of (loss) earnings per share 2,452,811 2,469,950
Common stock equivalents due to dilutive effect
of stock options 119,648 116,951
---------- ---------
Total weighted average common shares and equivalents
outstanding for primary (loss) earnings per share
computation 2,572,459 2,586,901
========== =========
Primary (loss) earnings per share $ (.09) .54
========== =========
Total weighted average common shares and equivalents
outstanding for primary (loss) earnings per share
computation 2,572,459 2,586,901
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 575 3,197
---------- ---------
Total weighted average common shares and equivalents
outstanding for fully diluted (loss) earnings per
share computation 2,573,034 2,590,098
========== =========
Fully diluted (loss) earnings per share $ (.09) .53
========== =========
</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 September 30, 1996, cash, amounts due
from depository institutions and interest-earning deposits, totaled $12.2
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 September 30, 1996 were
13.4% and 4.2%, 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 September 30, 1996, the Savings Bank had outstanding commitments to
originate $3.2 million of loans and to fund the undisbursed portion of loans
in process of approximately $8.6 million. The Savings Bank believes that it
will have sufficient funds available to meet its commitments. At September
30, 1996, certificates of deposit which were scheduled to mature in one year
or less totaled $146.2 million. Management believes, based on past
experience, that a significant portion of those funds will remain with the
Savings Bank.
As a federally chartered financial institution, the Savings Bank is required
to maintain certain minimum amounts of regulatory capital. The following
table is a summary of the regulatory capital requirements, the Savings Bank's
regulatory capital and the amounts in excess of such required capital as of
September 30, 1996:
<TABLE>
<CAPTION>
TANGIBLE CORE RISK-BASED
------------------ ----------------- ------------------
($ IN THOUSANDS)
% OF
% OF % OF RISK-
QUALIFYING QUALIFYING WEIGHTED
AMOUNT ASSETS AMOUNT ASSETS AMOUNT ASSETS
------ ------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Regulatory capital $ 40,642 12.1% $ 40,642 12.1% $ 41,665 28.2%
Requirement 5,031 1.5 10,062 3.0 11,824 8.0
----- ---- ------ ---- ------ ----
Excess $ 35,611 10.6% $ 30,580 9.1% $ 29,841 20.2%
====== ==== ====== ==== ====== ====
</TABLE>
11
<PAGE> 13
FFLC BANCORP, INC.
On September 30, 1996, legislation was enacted which, among other things,
imposes a special one-time assessment on SAIF member institutions, including
the Savings Bank, to recapitalize the SAIF and spreads the obligations for
payments of Financing Corporation ("FICO") bonds across all SAIF and BIF
members. The FDIC special assessment being levied amounts to 65.7 basis
points on SAIF assessable deposits held as of March 31, 1995. The special
assessment was recognized in the third quarter and is tax deductible. The
Savings Bank took a charge of $1.6 million before taxes as a result of the
FDIC special assessment. This legislation will eliminate the substantial
disparity between the amount that BIF and SAIF members had been paying for
deposit insurance premiums.
Beginning on January 1, 1997, BIF members will pay a portion of the FICO
payment equal to 1.3 basis points on BIF-insured deposits compared to 6.5
basis points payable by SAIF members on SAIF-insured deposits and will pay a
pro rata share of the FICO payment on the earlier of January 1, 2000 or the
date upon which the last savings association, such as the Savings Bank,
ceases to exist. The legislation also requires BIF and SAIF to be merged by
January 1, 1999 provided that subsequent legislation is adopted to eliminate
the savings association charter and no savings associations remain as of that
time.
The FDIC has recently proposed to lower SAIF assessments to a range
comparable to those of BIF members, although SAIF members will continue to
make the higher FICO payments described above. Management cannot predict the
level of FDIC insurance assessments on an on-going basis or whether the BIF
and SAIF will eventually be merged.
During the nine months ended September 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>
NINE MONTHS NINE MONTHS
ENDED YEAR ENDED ENDED
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
1996 1995 1995
------------ ----------- ------------
<S> <C> <C> <C>
Average equity as a percentage
of average assets 16.88% 17.46% 17.55%
Total equity to total assets at end of period 16.22% 16.99% 17.30%
Return on average assets .56% .98% 1.02%
Return on average equity 3.30% 5.59% 5.79%
Noninterest expense to average assets 2.63% 1.85% 1.82%
Nonperforming loans and real estate owned to
total assets at end of period .23% .10% .17%
Operating efficiency ratio 73.13% 53.30% 52.22%
</TABLE>
12
<PAGE> 14
FFLC BANCORP, INC.
<TABLE>
<CAPTION>
AT AT AT
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
1996 1995 1995
-------------- ------------ ------------
<S> <C> <C> <C>
Weighted average interest rates:
Interest-earning assets:
Loans 8.19% 8.30% 8.30%
Mortgage-backed securities 6.31% 6.29% 6.23%
Investment securities and other interest-
earning assets 5.94% 5.94% 6.23%
Total interest-earning assets 7.51% 7.42% 7.38%
Interest-bearing liabilities:
Deposit accounts 4.72% 4.87% 4.93%
Borrowed funds 7.17% 7.17% 7.17%
Total interest-bearing liabilities 4.72% 4.87% 4.93%
Interest-rate spread 2.79% 2.55% 2.45%
</TABLE>
CHANGE IN FINANCIAL CONDITION
Total assets increased $10.2 million or 3.1%, from $325.8 million at December
31, 1995 to $336.0 million at September 30, 1996, primarily as a result of an
increase in loans receivable of $30.2 million, partially offset by decrease in
mortgage-backed securities of $21.1 million. Customer deposits increased $9.0
million from $267.7 million at December 31, 1995 to $276.7 million at
September 30, 1996. The $865,000 net decrease in stockholders' equity during
the nine months ended September 30, 1996 resulted from the repurchase of
shares of the Company's stock of $2.1 million, dividends paid of $692,000, and
the $169,000 increase in the unrealized loss on securities available-for-sale,
net of tax effect, all of which was partially offset by net income of $1.4
million, credits to equity totaling $702,000 related to the stock incentive
plans and proceeds of $50,000 from stock options exercised.
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 and dividend income; (iv) interest-rate spread;
and (v) net interest margin.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------------------------
1996 1995
-------------------------------- ----------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE AND YIELD/ AVERAGE AND YIELD/
BALANCE DIVIDENDS RATE BALANCE DIVIDENDS RATE
------- --------- ------- ------- --------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans (1) $ 205,916 4,277 8.31% $ 168,298 3,553 8.44%
Mortgage-backed securities 78,569 1,223 6.23 104,632 1,597 6.11
Investment securities and other interest-earning assets (2) 38,570 586 6.08 37,606 578 6.15
------- ------ ------- -----
Total interest-earning assets 323,055 6,086 7.53 310,536 5,728 7.38
------ -----
Noninterest - earning assets 11,489 9,005
------- -------
Total assets $ 334,544 $ 319,541
======= =======
Interest-bearing liabilities:
Deposit accounts 274,813 3,237 4.71 261,050 3,197 4.90
Borrowed funds 150 3 8.00 150 3 8.00
------- ----- ------- -----
Total interest-bearing liabilities 274,963 3,240 4.71 261,200 3,200 4.90
----- -----
Noninterest-bearing liabilities 3,810 3,025
Stockholders' equity 55,771 55,316
------- -------
Total liabilities and stockholders' equity $ 334,544 $ 319,541
======= =======
Net interest income $ 2,846 $ 2,528
======= =====
Interest-rate spread (3) 2.82% 2.48%
==== ====
Net average interest-earning assets,
net interest margin (4) $ 48,092 3.52% $ 49,336 3.26%
======= ==== ======= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.17 1.19
==== ====
- -----------------------------
(1) Includes nonaccrual loans.
(2) Includes interest-bearing deposits, federal funds sold and FHLB stock.
(3) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of
interest-bearing liabilities.
(4) 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/dividend income; (iv) interest rate spread; and
(v) net interest margin.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------------------------
1996 1995
------------------------------ -------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE AND YIELD/ AVERAGE AND YIELD/
BALANCE DIVIDENDS RATE BALANCE DIVIDENDS RATE
------- --------- ------- ------- --------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans (1) $ 195,653 12,257 8.35% $ 159,884 10,095 8.42%
Mortgage-backed securities 84,041 3,930 6.24 109,611 4,904 5.97
Investment securities and other interest-earning assets (2) 40,000 1,784 5.95 36,354 1,670 6.12
------- ------ ------- ------
Total interest-earning assets 319,694 17,971 7.50 305,849 16,669 7.27
------ ------
Noninterest - earning assets 11,514 8,791
------- -------
Total assets $ 331,208 $ 314,640
======= =======
Interest-bearing liabilities:
Deposit accounts 271,620 9,615 4.72 255,840 8,912 4.64
Borrowed funds 150 8 7.11 778 38 6.51
------- ------ ------- -------
Total interest-bearing liabilities 271,770 9,623 4.72 256,618 8,950 4.65
------ -------
Noninterest - bearing liabilities 3,531 2,796
Stockholders' equity 55,907 55,226
------- -------
Total liabilities and stockholders' equity $ 331,208 $ 314,640
======= =======
Net interest income $ 8,348 $ 7,719
====== =======
Interest-rate spread (3) 2.78% 2.62%
==== ====
Net average interest-earning assets,
net interest margin (4) $ 47,924 3.48% $ 49,231 3.37%
======= ==== ======= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.18 1.19
==== ====
- -------------------------
(1) Includes nonaccrual loans.
(2) Includes interest-bearing deposits, federal funds sold and FHLB stock.
(3) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of
interest-bearing liabilities.
(4) Net interest margin is net interest income divided by average interest-earning assets.
</TABLE>
15
<PAGE> 17
FFLC BANCORP, INC.
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
RESULTS OF OPERATIONS
GENERAL OPERATING RESULTS. Net loss for the three months ended September 30,
1996 was $223,000, a decrease of $991,000, from the $768,000 earned in the
period ended September 30, 1995. The decrease in net income for the 1996
period was primarily due to the effect of the one-time SAIF assessment of
$1.6 million, before taxes, included in noninterest expense. The one-time
assessment is designed to recapitalize SAIF and should result in a reduction
in FDIC assessment rates beginning January 1, 1997.
INTEREST INCOME. Interest income increased $358,000, or 6.2% from $5.7 million
for the three months ended September 30, 1995 to $6.1 million for the three
months ended September 30, 1996. The increase was due to the combination of a
$12.5 million increase in average interest-earning assets outstanding and an
increase in the average yield on interest-earning assets outstanding from
7.38% to 7.53% for the three months ended September 30, 1996 compared to the
corresponding period in 1995.
INTEREST EXPENSE. Interest expense increased $40,000, for the three months ended
September 30, 1996 when compared to the 1995 period. The increase was the
result of an increase in the average balance of deposit accounts outstanding
during the 1996 period, partially offset by a decrease in the weighted
average rate paid on deposit accounts from 4.90% for the three months ended
September 30, 1995 to 4.71% for the comparable period in 1996.
NONINTEREST EXPENSE. Noninterest expense consists primarily of employee
compensation and benefits, occupancy and equipment expense and FDIC insurance
premiums. Noninterest expenses increased by $1.9 million, from $1.4 million
for the three months ended September 30, 1995 to $3.3 million for the three
months ended September 30, 1996. The increase was primarily due to the
one-time SAIF recapitalization assessment of $1.6 million, and increases in
compensation and benefits of $99,000 and occupancy and equipment of $74,000
due to the opening of two new branches.
INCOME TAX PROVISION. The income tax provision decreased from $457,000 for the
three months ended September 30, 1995 (an effective rate of 37.3%) to a
$91,000 income tax credit (an effective tax rate of 29.0%) for the
corresponding period for 1996.
16
<PAGE> 18
FFLC BANCORP, INC.
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
GENERAL OPERATING RESULTS. Net income for the nine months ended September 30,
1996, was $1.4 million, a decrease of $1.0 million from the $2.4 million
earned for the nine months ended September 30, 1995. The decrease in net
income for the 1996 period was primarily the result of the effect of the
one-time SAIF assessment of $1.6 million, before taxes, included in
noninterest expense.
INTEREST INCOME. Interest income increased $1.3 million or 7.8% from $16.7
million for the nine months ended September 30, 1995 to $18.0 million for the
nine months ended September 30, 1996. The increase in interest income was due
to an increase of $13.8 million in average interest-earning assets
outstanding and an increase in the average yield on interest-earning assets
from 7.27% for the nine months ended September 30, 1995 compared to the 7.50%
for nine months ended September 30, 1996.
INTEREST EXPENSE. Interest expense increased $673,000, or 7.5% from $9.0 million
for the nine months ended September 30, 1995 to $9.6 million for the nine
months ended September 30, 1996. The increase was due to an increase of $15.2
million in average interest-bearing liabilities, and an increase in the
weighted average rate paid on interest-bearing liabilities from 4.65% for the
nine months ended September 30, 1995 to 4.72% for the comparable period of
1996.
NONINTEREST EXPENSE. Noninterest expense consists primarily of employee
compensation and benefits, occupancy and equipment expense and federal
deposit insurance premiums. Noninterest expense increased by $2.2 million, or
52.4%, from $4.3 million for the nine months ended September 30, 1995 to $6.5
million for the nine months ended September 30, 1996. That increase was
primarily due to the one-time SAIF recapitalization assessment of $1.6
million, and increases in compensation and benefits of $298,000 and occupancy
and equipment of $199,000, due to the opening of two new branches.
INCOME TAX PROVISION. The income tax provision decreased from $1.4 million for
the nine months ended September 30, 1995 (an effective rate of 37.4%) to
$953,000 (an effective tax rate of 40.8%) for the corresponding period in
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
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit 27 Financial Data Schedule (for SEC use only)
b. There were no reports on Form 8-K filed for the three months ended
September 30, 1996.
18
<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: November 6, 1996 By: /s/ Stephen T. Kurtz
-------------------- ---------------------------------------------
Stephen T. Kurtz, President and Chief Executive
Officer
Date: November 6, 1996 By: /s/ Paul K. Mueller
-------------------- ---------------------------------------------
Paul K. Mueller, Senior Vice President and Chief
Accounting Officer
19
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary information extracted from the Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000912738
<NAME> FFLC BANCORP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,087
<INT-BEARING-DEPOSITS> 7,160
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 44,185
<INVESTMENTS-CARRYING> 55,636
<INVESTMENTS-MARKET> 55,813
<LOANS> 213,696
<ALLOWANCE> 1,023
<TOTAL-ASSETS> 335,993
<DEPOSITS> 276,677
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,671
<LONG-TERM> 150
0
0
<COMMON> 28
<OTHER-SE> 54,467
<TOTAL-LIABILITIES-AND-EQUITY> 335,993
<INTEREST-LOAN> 12,257
<INTEREST-INVEST> 5,714
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 17,971
<INTEREST-DEPOSIT> 9,615
<INTEREST-EXPENSE> 9,623
<INTEREST-INCOME-NET> 8,348
<LOAN-LOSSES> 63
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,533
<INCOME-PRETAX> 2,337
<INCOME-PRE-EXTRAORDINARY> 2,337
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,384
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0.53
<YIELD-ACTUAL> 7.50
<LOANS-NON> 604
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 977
<CHARGE-OFFS> (17)
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,023
<ALLOWANCE-DOMESTIC> 1,023
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
