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 June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 0-22608
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, 3,742,212 shares
par value $.01 per share outstanding at July 31, 1998
------------------------ ----------------------------
<PAGE>
FFLC BANCORP, INC.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
at June 30, 1998 (unaudited) and at December 31, 1997...................
Condensed Consolidated Statements of Income -
Three and Six months ended June 30, 1998 and 1997 (unaudited)...........
Condensed Consolidated Statements of Comprehensive Income -
Three and Six months ended June 30, 1998 and 1997 (unaudited)...........
Condensed Consolidated Statement of Stockholders' Equity -
Six months ended June 30, 1998 (unaudited)..............................
Condensed Consolidated Statements of Cash Flows -
Six months ended June 30, 1998 and 1997 (unaudited).....................
Notes to Condensed Consolidated Financial Statements (unaudited)..........
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................
Part II. OTHER INFORMATION
Item 1. Legal Proceedings..................................................
Item 2. Changes in Securities..............................................
Item 3. Default upon Senior Securities.....................................
Item 4. Submission of Matters to a Vote of Security Holders................
Item 5. Other Information..................................................
Item 6. Exhibits and Reports on Form 8-K...................................
SIGNATURES.....................................................................
<PAGE>
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
($ in thousands)
At At
June 30, December 31,
--------- ------------
1998 1997
--------- ---------
Assets (unaudited)
<S> <C> <C>
Cash and due from banks ............................................ $ 5,910 7,122
Interest-bearing deposits .......................................... 12,500 8,562
-------- --------
Cash and cash equivalents .............................. 18,410 15,684
Securities held to maturity ........................................ 25,303 32,017
Securities available for sale ...................................... 15,394 26,581
Loans receivable, net of allowance for loan losses of $2,034 in 1998
and $1,684 in 1997 ............................................. 342,539 315,353
Accrued interest receivable:
Securities ..................................................... 367 537
Loans receivable ............................................... 1,793 1,597
Premises and equipment, net ........................................ 5,186 5,313
Foreclosed real estate ............................................. 203 507
Real estate held for development ................................... 122 122
Restricted securities - Federal Home Loan Bank stock, at cost ...... 2,737 2,304
Other assets ....................................................... 389 222
-------- --------
Total .................................................. $412,443 400,237
======== ========
Liabilities and Stockholders' Equity
Liabilities:
Demand, NOW and money-market accounts .......................... 56,477 50,597
Savings accounts ............................................... 23,769 24,503
Certificates ................................................... 245,721 240,290
-------- --------
Total deposits ......................................... 325,967 315,390
Advances from Federal Home Loan Bank ............................... 30,000 30,000
Deferred income taxes .............................................. 445 737
Accrued expenses and other liabilities ............................. 3,241 2,681
-------- --------
Total liabilities ...................................... 359,653 348,808
-------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Condensed Consolidated Balance Sheets
($ in thousands)
(continued)
At At
June 30, December 31,
--------- ------------
1998 1997
--------- ---------
Assets (unaudited)
<S> <C> <C>
Stockholders' equity:
Preferred stock .................................. -- --
Common stock ..................................... 44 43
Additional paid-in-capital ....................... 28,886 28,265
Retained income .................................. 38,053 36,622
Accumulated other comprehensive income, net of tax
of $43 in 1998 and $53 in 1997 ............... (71) (88)
Treasury stock, at cost .......................... (13,333) (12,466)
Stock held by Incentive Plan Trusts .............. (789) (947)
--------- ---------
Total stockholders' equity ............... 52,790 51,429
--------- ---------
Total .................................... $ 412,443 400,237
========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Income
($ in thousands, except share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans receivable .......................... $ 6,901 5,332 13,521 10,171
Securities available for sale ............. 247 697 613 1,428
Securities held to maturity ............... 475 735 1,017 1,546
Other interest-earning assets ............. 266 116 491 218
---------- ---------- ---------- ----------
Total interest income ............. 7,889 6,880 15,642 13,363
---------- ---------- ---------- ----------
Interest expense:
Deposits .................................. 3,739 3,511 7,433 6,821
Borrowed funds ............................ 456 230 906 359
---------- ---------- ---------- ----------
Total interest expense ............ 4,195 3,741 8,339 7,180
---------- ---------- ---------- ----------
Net interest income ........................... 3,694 3,139 7,303 6,183
Provision for loan losses ..................... 225 70 373 138
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses ............... 3,469 3,069 6,930 6,045
---------- ---------- ---------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Income
($ in thousands, except share amounts)
(continued)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Noninterest income:
Deposit account fees ...................... 137 106 266 225
Other service charges and fees ............ 150 92 237 163
Other ..................................... 39 18 51 26
---------- ---------- ---------- ----------
Total noninterest income .......... 326 216 554 414
---------- ---------- ---------- ----------
Noninterest expense:
Salaries and employee benefits ............ 1,295 1,180 2,556 2,162
Occupancy expense ......................... 254 226 487 445
Deposit insurance premiums ................ 49 36 97 72
Advertising and promotion ................. 65 65 142 99
Data processing expense ................... 115 107 230 220
Professional services ..................... 74 57 124 117
Other ..................................... 197 212 430 399
---------- ---------- ---------- ----------
Total noninterest expense ......... 2,049 1,883 4,066 3,514
---------- ---------- ---------- ----------
Income before income taxes .................... 1,746 1,402 3,418 2,945
Income taxes .................................. 650 500 1,331 1,070
---------- ---------- ---------- ----------
Net income .................................... $ 1,096 902 2,087 1,875
========== ========== ========== ==========
Basic income per share of common stock ........ $ .30 .24 .58 .50
========== ========== ========== ==========
Weighted-average number of shares outstanding
for basic ................................. 3,611,634 3,694,088 3,606,678 3,756,975
========== ========== ========== ==========
Diluted income per share of common stock ...... $ .29 .23 .55 .47
========== ========== ========== ==========
Weighted-average number of shares outstanding
for diluted ............................... 3,803,297 3,904,148 3,803,281 4,020,059
========== ========== ========== ==========
Dividends per share of common stock ........... $ .09 .07 .18 .14
========== ========== ========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Comprehensive Income
($ in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -------------------
1998 1997 1998 1997
------- ------- ------- -------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net income ........................................... $ 1,096 902 2,087 1,875
Other comprehensive income-
Change in unrealized loss on securities
available for sale, net of tax (benefit)
of $(7) and $78 for the three months
ended June 30, 1998 and 1997, and
$10 and $2 for the six months ended
June 30 in 1998 and 1997 ................. (11) 131 17 4
------- ------- ------- -------
Comprehensive income ................................. $ 1,085 1,033 2,104 1,879
======= ======= ======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
Condensed Consolidated Statement of Stockholders' Equity
Six Months Ended June 30, 1998
($ in thousands)
Accumulated Stock
Other Held by
Additional Compre- Incentive Total
Common Paid-In Retained hensive Treasury Plan Stockholders'
Stock Capital Income Income Stock Trusts Equity
----- ------- ------ ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 ...... $ 43 28,265 36,622 (88) (12,466) (947) 51,429
Net proceeds from the issuance
of 42,792 shares of common
stock (unaudited) ............ 1 256 -- -- -- -- 257
Net income (unaudited) ............ -- -- 2,087 -- -- -- 2,087
Dividends paid, net of $19 of
dividends on ESOP shares
recorded as compensation
expense (unaudited) .......... -- -- (656) -- -- -- (656)
Purchase of treasury stock,
45,041 shares (unaudited) .... -- -- -- -- (867) -- (867)
Shares committed to participants
in incentive plans (unaudited) -- 365 -- -- -- 158 523
Change in accumulated other
comprehensive income, net
of income taxes of $10
(unaudited) .................. -- -- -- 17 -- -- 17
------- ------- ------- ------- ------- ------- -------
Balance at June 30, 1998
(unaudited) .................. $ 44 28,886 38,053 (71) (13,333) (789) 52,790
======= ======= ======= ======= ======= ======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
Six Months Ended
June 30,
----------------------
1998 1997
-------- --------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................................................ $ 2,087 1,875
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses ................................................. 373 138
Depreciation .............................................................. 201 192
Credit for deferred income taxes .......................................... (302) (103)
Shares committed and dividends to incentive plan participants ............. 542 429
Amortization of premiums or discounts
on securities ......................................................... (23) (27)
Accretion of deferred loan fees and unearned income ....................... 35 3
Deferral of net loan fees collected, net of costs deferred ................ 122 97
Gain on sale of foreclosed real estate .................................... (36) (11)
Increase in accrued interest receivable ................................... (26) (216)
Increase in other assets .................................................. (167) (114)
Increase (decrease) in accrued expenses and other liabilities ............. 560 1,195
-------- --------
Net cash provided by operating activities ......................... 3,366 3,458
-------- --------
Cash flows from investing activities:
Proceeds from maturities and principal repayments on securities held to maturity . 6,716 8,717
Proceeds from maturities and principal repayments on securities available for sale 11,511 8,832
Purchase of securities available for sale ......................................... (276) (6,230)
Loan disbursements ................................................................ (67,084) (66,175)
Principal repayments on loans ..................................................... 39,680 21,342
Purchase of premises and equipment, net ........................................... (74) (339)
Purchase of Federal Home Loan Bank stock .......................................... (433) (365)
Proceeds from sales of foreclosed real estate ..................................... 28 242
-------- --------
Net cash used in investing activities ............................. (9,932) (33,976)
-------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows, Continued
($ in thousands)
Six Months Ended
June 30,
----------------------
1998 1997
------- --------
(unaudited)
<S> <C> <C>
Cash flows from financing activities:
Net increase in demand, savings, NOW and
money-market accounts .................................... 5,146 1,496
Net increase in certificate accounts ......................... 5,431 17,695
Increase in advances from Federal Home Loan Bank ............. -- 19,850
Net increase in securities sold under agreements to repurchase -- 1,960
Stock options exercised ...................................... 257 173
Purchase of treasury stock ................................... (867) (3,349)
Cash dividends paid .......................................... (675) (572)
-------- --------
Net cash provided by financing activities ........ 9,292 37,253
-------- --------
Net increase in cash and cash equivalents ........................ 2,726 6,735
Cash and cash equivalents at beginning of period ................. 15,684 10,157
-------- --------
Cash and cash equivalents at end of period ....................... $ 18,410 16,892
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ................................................. $ 8,482 7,130
======== ========
Income taxes ............................................. $ 1,608 1,055
======== ========
Noncash investing and financing activities:
Increase in accumulated other comprehensive income ....... $ 17 4
======== ========
Transfer from loans to foreclosed real estate ............ $ 3 158
======== ========
Loans originated on sales of foreclosed real estate ...... $ 315 54
======== ========
Loans funded by and sold to correspondent ................ $ 3,716 968
======== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
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, 1998 and
the results of operations for the three- and six-month periods ended
June 30, 1998 and 1997 and cash flows for the six month periods ended
June 30,1998 and 1997. The results of operations for the three-and
six-month periods ended June 30, 1998 and 1997 and other data for the
three- and six-month periods ended June 30, 1998, are not necessarily
indicative of results that may be expected for the year ending December
31, 1998.
The condensed consolidated financial statements include the accounts of
FFLC Bancorp, Inc. (the "Holding Company"), its wholly-owned subsidiary,
First Federal Savings Bank of Lake County (the "Savings Bank") and the
Savings Bank's wholly-owned subsidiary, Lake County Service Corporation
(together, the "Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
2. Loan Impairment and Loan Losses. The Company prepares a 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 of
Financial Accounting Standards No. 114 and 118. No impaired loans were
identified by the Company during the six months ended June 30, 1998 or
1997.
An analysis of the change in the allowance for loan losses was as
follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Beginning balance .................. $ 1,834 1,123 1,684 1,063
Provision for loan losses .......... 225 70 373 138
Loans charged-off, net of recoveries (25) -- (23) (8)
------- ------- ------- -------
Ending balance ..................... $ 2,034 1,193 2,034 1,193
======= ======= ======= =======
</TABLE>
3. Impact of New Accounting Issues. In June, 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS No. 130"). That Standard
defines comprehensive income as the change in equity of an enterprise
except those resulting from stockholder transactions. All components of
comprehensive income are required to be reported in the financial
statements with equal prominence as existing financial statements. The
adoption of SFAS No. 130 had no significant effect on the Company's
financial position at June 30, 1998 or results of operations for the
three and six months then ended.
<PAGE>
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
4. Per Share Amounts. Income 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 basic and
diluted income per share calculations. Common stock equivalents are
computed using the treasury stock method. The following table presents
the calculation of basic and diluted income per share:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- --------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Weighted-average shares of common stock issued and
outstanding before adjustments for ESOP, RRP
and common stock options .......................... 3,754,307 3,890,293 3,755,926 3,959,600
Adjustment to reflect the effect of unallocated ESOP
and RRP shares .................................... (142,673) (196,205) (149,248) (202,625)
---------- ---------- ---------- ----------
Weighted-average shares for basic net income per share 3,611,634 3,694,088 3,606,678 3,756,975
========== ========== ========== ==========
Basic net income per share ........................... $ .30 .24 .58 .50
========== ========== ========== ==========
Total weighted-average common shares and
equivalents outstanding for basic net income per
share computation ................................. 3,611,634 3,694,088 3,606,678 3,756,975
Additional dilutive shares using the average market
value for the period utilizing the treasury stock
method regarding stock options .................... 191,663 210,060 196,603 263,084
---------- ---------- ---------- ----------
Weighted-average common shares and equivalents
outstanding for diluted net income per share ...... 3,803,297 3,904,148 3,803,281 4,020,059
========== ========== ========== ==========
Diluted net income per share ......................... $ .29 .23 .55 .47
========== ========== ========== ==========
</TABLE>
<PAGE>
FFLC BANCORP, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
General
FFLC Bancorp, Inc. (the "Holding Company") is the holding company for
First Federal Savings Bank of Lake County (the "Savings Bank") and its
wholly-owned subsidiary, Lake County Service Corporation (together, the
"Company"). 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, commercial loans, 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 9 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 foreclosed real estate. The Savings Bank's
operating expenses consist primarily of employee compensation, occupancy
expenses, deposit 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.
<PAGE>
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, 1998, cash, amounts due
from depository institutions and interest-bearing deposits, totaled $18.4
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 4% 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. Monetary penalties may be imposed for failure to meet
this liquidity requirement. The Savings Bank's liquidity ratio at June 30,
1998 exceeded the requirement.
The Savings Bank's primary sources of funds include proceeds from payments
and prepayments on loans and mortgage-backed securities, proceeds from
maturities of investment securities, and increases in deposits. While
maturities and scheduled amortization of loans, mortgage-backed and
investment securities are predictable sources of funds, deposit inflows
and mortgage and mortgage-backed securities prepayments are greatly
influenced by local conditions, general interest rates, and regulatory
changes.
At June 30, 1998, the Savings Bank had outstanding commitments to
originate $17.7 million of loans and to fund the undisbursed portion of
loans in process of approximately $11.2 million and undisbursed commercial
lines of credit of approximately $17.8 million. The Savings Bank believes
that it will have sufficient funds available to meet its commitments. At
June 30, 1998, certificates of deposit which were scheduled to mature in
one year or less totaled $192.2 million. Management believes, based on
past experience, that a significant portion of those funds will remain
with the Savings Bank.
The Savings Bank is subject to various regulatory capital requirement
administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory-and possibly
additional discretionary-actions by regulators that, if undertaken, could
have a direct material effect on the Company's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Savings Bank must meet specific capital guidelines
that involve quantitative measures of the Savings Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Savings Bank's capital amounts and
classification are also subject to qualitative judgements by the
regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Savings Bank to maintain minimum amounts (set forth in the
table below) of total and Tier I capital (as defined in the regulations)
to risk-weighted assets (as defined). Management believes, as of June 30,
1998, that the Savings Bank meets all capital adequacy requirements to
which it is subject.
<PAGE>
FFLC BANCORP, INC.
As of June 30, 1998, the most recent notification from the OTS categorized
the Savings Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the
Savings Bank must maintain minimum tangible, Tier I (core), Tier I
(risk-based) and total risk-based capital ratios as set forth in the
table. There are no conditions or events since that notification that
management believes have changed the institution's category.
The Savings Bank's actual capital amounts and ratios at June 30, 1998 are
also presented in the table.
<TABLE>
<CAPTION>
To Be Well
Minimum Capitalized
For Capital For Prompt
Adequacy Corrective Action
Actual Purposes Provisions
Ratio Amount Ratio Amount Ratio Amount
----- ------ ----- ------ ----- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Stockholders' equity,
and ratio to total
assets 10.56% $ 43,561
Less: investment in
nonincludable
subsidiary (195)
Add back: unrealized loss on
available-for-sale
securities 8
Tangible capital,
and ratio to adjusted
total assets 10.52% $ 43,374 1.5% $ 6,186
========== =========
Tier 1 (core) capital, and
ratio to adjusted total
assets 10.52% $ 43,374 3.0% $ 12,372 5.0% $ 20,620
========== ======== ========
Tier 1 capital, and ratio
to risk-weighted assets 18.83% 43,374 4.0% $ 9,214 6.0% $ 13,821
======== ========
Tier 2 capital (allowance for
loan losses and deductible
assets) 1,960
Total risk-based capital,
and ratio to risk-
weighted assets 19.68% $ 45,334 8.0% $ 18,428 10.0% $ 23,034
========== ======== ========
Total assets $ 412,595
==========
Adjusted total assets $ 412,408
==========
Risk-weighted assets $ 230,344
==========
</TABLE>
<PAGE>
FFLC BANCORP, INC.
During March 1998, the Savings Bank declared and paid a cash dividend of
$3.5 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,
1998 1997 1997
-------- ------- ------
<S> <C> <C> <C>
Average equity as a percentage
of average assets 12.85% 13.93% 14.53%
Total equity to total assets at end of period 12.80% 12.85% 13.48%
Return on average assets 1.03% 1.00% 1.04%
Return on average equity 8.00% 7.18% 7.13%
Noninterest expense to average assets 2.00% 1.99% 1.94%
Nonperforming assets to total assets
at end of period .26% .19% .19%
Operating efficiency ratio 51.75% 53.54% 53.27%
<CAPTION>
At At At
June 30, December 31, June 30,
1998 1997 1997
------ ------ ------
<S> <C> <C> <C>
Weighted-average interest rates:
Interest-earning assets:
Loans receivable 8.13% 8.18% 8.18%
Securities 6.58% 6.51% 6.60%
Other interest-earning assets 6.34% 6.23% 6.13%
Total interest-earning assets 7.90% 7.87% 7.69%
Interest-bearing liabilities:
Deposits 4.82% 4.94% 4.93%
Borrowed funds 6.01% 6.01% 6.02%
Total interest-bearing liabilities 4.92% 5.03% 5.03%
Interest-rate spread 2.98% 2.84% 2.66%
</TABLE>
Change in Financial Condition
Total assets increased $12.2 million or 3.0%, from $400.2 million at December
31, 1997 to $412.4 million at June 30, 1998, primarily as a result of an
increase in loans receivable of $27.2 million, partially offset by a decrease in
securities of $17.9 million. Deposits increased $10.6 million from $315.4
million at December 31, 1997 to $326.0 million at June 30, 1998. The $1.4 net
increase in stockholders equity during the six months ended June 30, 1998
resulted from net income of $2.1 million, credits to equity totaling $523,000
related to the stock incentive plans, proceeds of $257,000 from stock options
exercised and a $17,000 decrease in net accumulated other comprehensive income,
partially offset by repurchases of the Company's stock of $867,000 and dividends
paid of $656,000.
<PAGE>
FFLC BANCORP, INC.
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest income; (iv) interest-rate spread; and (v) net
interest margin.
<TABLE>
<CAPTION>
Three Months Ended June 30,
----------------------------------------------------------------
1998 1997
------------------------------- -----------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
-------- ------ --------- ------
($ in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (1) $ 332,806 6,901 8.29% $ 254,484 5,332 8.38%
Securities 45,091 722 6.40 91,020 1,432 6.29
Other interest-earning assets (2) 18,093 266 5.88 7,844 116 5.92
-------- ------ --------- ------
Total interest-earning assets 395,990 7,889 7.97 353,348 6,880 7.79
----- -----
Noninterest-earning assets 12,795 20,982
------- -------
Total assets $ 408,785 $ 374,330
======= =======
Interest-bearing liabilities:
Deposits 314,551 3,739 4.75 289,508 3,511 4.85
Borrowed funds 30,000 456 6.08 15,611 230 5.89
------- ------ ------- ------
Total interest-bearing liabilities 344,551 4,195 4.87 305,119 3,741 4.90
----- -----
Noninterest-bearing deposits 7,442 6,142
Noninterest-bearing liabilities 4,344 10,828
Stockholders' equity 52,448 52,241
------- -------
Total liabilities and
stockholders' equity $ 408,785 $ 374,330
======= =======
Net interest income $ 3,694 $ 3,139
===== =====
Interest-rate spread (3) 3.10% 2.89%
==== ====
Net average interest-earning assets,
net interest margin (4) $ 51,439 3.73% $ 48,229 3.55%
======= ==== ======= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.15 1.16
==== ====
</TABLE>
- ----------
(1) Includes nonaccrual loans.
(2) Includes interest-bearing deposits 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.
<PAGE>
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,
----------------------------------------------------------------
1998 1997
----------------------------- -------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- ------- -------- ------
($ in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (1) $ 325,223 13,521 8.32% $ 244,090 10,171 8.33%
Securities 50,819 1,630 6.42 94,401 2,974 6.30
Other interest-earning assets (2) 16,813 491 5.84 7,473 218 5.83
------- ------- -------- ------
Total interest-earning assets 392,855 15,642 7.96 345,964 13,363 7.73
------ ------
Noninterest-earning assets 13,320 16,111
------- -------
Total assets $ 406,175 $ 362,075
======= =======
Interest-bearing liabilities:
Deposits 313,068 7,433 4.75 284,881 6,821 4.79
Borrowed funds 30,000 906 6.04 12,459 359 5.76
------- ------- ------- -------
Total interest-bearing liabilities 343,068 8,339 4.86 297,340 7,180 4.83
------ ------
Noninterest-bearing deposits 7,154 5,660
Noninterest-bearing liabilities 3,771 6,455
Stockholders' equity 52,182 52,620
------- -------
Total liabilities and stockholders' equity $ 406,175 $ 362,075
======= =======
Net interest income $ 7,303 $ 6,183
====== ======
Interest-rate spread (3) 3.10% 2.90%
==== ====
Net average interest-earning assets,
net interest margin (4) $ 49,787 3.72% $ 48,624 3.57%
======= ==== ======= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.15 1.16
==== ====
</TABLE>
- ----------------
(1) Includes nonaccrual loans.
(2) Includes interest-bearing deposits 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.
<PAGE>
FFLC BANCORP, INC.
Comparison of the Three-Month Periods Ended June 30, 1998 and 1997
Results of Operations
General Operating Results. Net income for the three-month period ended June 30,
1998 was $1.1 million, or $.30 and $.29 per basic and diluted share,
respectively, compared to $902,000, or $.24 and $.23 per basic and diluted
share, respectively, for the comparable period in 1997. The increase in net
income was primarily a result of an increase of $1.0 million in interest
income which was partially offset by a $454,000 increase in interest expense
and an increase of $155,000 in the provision for loan losses.
Interest Income. Interest income increased $1.0 million or 14.7%, from $6.9
million for the three-month period ended June 30, 1997 to $7.9 million for
the three-month period ended June 30, 1998. The increase was due to a 12.1%
increase in average interest-earning assets outstanding for the three months
ended June 30, 1998 compared to the 1997 period, coupled with an increase in
the average yield on interest-earning assets from 7.79% for the three months
ended June 30, 1997, to 7.97% for the three months ended June 30, 1998.
Interest Expense. Interest expense increased $454,000, from $3.7 million for the
three-month period ended June 30, 1997 to $4.2 million for the three-month
period ended June 30, 1998. The increase was due to a 12.9% increase in
average interest-bearing liabilities outstanding during the three months
ended June 30, 1998 compared to the 1997 period, partially offset by a
decrease in the weighted average rate paid on interest-bearing liabilities
from 4.90% during the 1997 period to 4.87% during the 1998 period.
Noninterest Income. Noninterest income increased $110,000 or 50.9% from $216,000
during the 1997 period to $326,000 during the 1998 period. The increase was
primarily due to a $58,000 increase in other service charges and fees.
Noninterest Expense. Noninterest expense increased by $166,000, or 8.8% from
$1.9 million for the three-month period ended June 30, 1997 to $2.0 million
for the three-month period ended June 30, 1998. The increase was primarily
due to increases in salaries and employee benefits of $115,000 and occupancy
expense of $28,000 related to the overall growth of the Company.
Income Tax Provision. The income tax provision increased from $500,000 for the
three-month period ended June 30, 1997 (an effective tax rate of 35.7%) to
$650,000 (an effective tax rate of 37.2%) for the corresponding period in
1998.
<PAGE>
FFLC BANCORP, INC.
Comparison of the Six-Month Periods Ended June 30, 1998 and 1997
Results of Operations
General Operating Results. Net income for the six-month period ended June 30,
1998 was $2.1 million, or $.58 and $.55 per basic and diluted share,
respectively, compared to $1.9 million, or $.50 and $.47 per basic and
diluted share, respectively, for the comparable period in 1997. The increase
in net income was primarily the result of an increase in interest income of
$2.3 million, partially offset by an increase in interest expense of $1.2
million and an increase in provision for loan losses of $235,000.
Interest Income. Interest income increased $2.3 million, or 17.1% from $13.4
million for the six-month period ended June 30, 1997 to $15.6 million for
the comparable period in 1998. The increase was due to an 13.6% increase in
average interest-earning assets outstanding for the six months ended June
30, 1998 compared to the 1997 period, coupled with an increase in the
average yield earned on interest-earning assets from 7.73% for the six
months ended June 30, 1997, to 7.96% for the six months ended June 30, 1998.
Interest Expense. Interest expense increased $1.2 million, or 16.1% from $7.2
million for the six-month period ended June 30, 1997 to $8.3 million for the
six-month period ended June 30, 1998. The increase was due to a 15.4%
increase in average interest-bearing liabilities outstanding during the six
months ended June 30, 1998 compared to the 1997 period.
Noninterest Income. Noninterest income increased $140,000 or 33.8% from $414,000
during the 1997 period to $554,000 during the 1998 period. The increase was
primarily due to a $74,000 increase in other service charges and fees.
Noninterest Expense. Noninterest expense increased by $552,000, or 15.7%, from
$3.5 million for the six-month period ended June 30, 1997 to $4.1 million
for the six-month period ended June 30, 1998. The increase was primarily due
to increases in salaries and employee benefits of $394,000, occupancy
expense of $42,000, advertising and promotion expense of $43,000 and other
expenses of $31,000 related to the overall growth of the Company.
Income Tax Provision. The income tax provision increased from $1.1 million for
the six-month period ended June 30, 1997 (an effective tax rate of 36.3%) to
$1.3 million (an effective tax rate of 38.9%) for the corresponding period
for 1998.
<PAGE>
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 (the "Annual Meeting") of FFLC Bancorp,
Inc. was held on May 7, 1998, to consider the election of two directors each
for a term of three years, the amendment of the Certificate of Incorporation
to increase the number of authorized shares of common stock from 4,500,000
to 9,000,000 and the ratification of the appointment of the Company's
independent auditors for the year ending December 31, 1998. At the Annual
Meeting, incumbent directors H.D. Robuck, Jr. and Stephen T. Kurtz were
reelected. The terms of Directors Joseph J. Junod, James P. Logan, Ted R.
Ostrander, Jr., Claron D. Wagner and Paul K. Mueller continued after the
Annual Meeting.
At the Annual Meeting, 3,126,230 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:
Abstentions
and Broker
For Withheld Against Nonvotes
--- -------- ------- --------
H.D. Robuck, Jr. 3,062,438 63,792 - -
========= ====== ======== =====
Stephen T. Kurtz 3,070,686 55,544 - -
========= ====== ======== =====
<PAGE>
FFLC BANCORP, INC.
Part III - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders, Continued
Proposal II:
To amend the Certificate of Incorporation to increase the number of
authorized shares of common stock from 4,500,000 to 9,000,000:
Abstentions
and Broker
For Withheld Against Nonvotes
--- -------- ------- --------
2,980,259 - 111,765 34,206
========= ======= ======= ======
Proposal III:
To ratify the appointment of the Company's independent auditors for the year
ending December 31, 1998:
Abstentions
and Broker
For Withheld Against Nonvotes
--- -------- ------- --------
3,104,604 - 9,914 11,712
========= ======= ===== ======
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 during the three months ended June
30, 1998.
<PAGE>
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 7, 1998 By: /s/ Stephen T. Kurtz
--------------- --------------------
Stephen T. Kurtz, President and
Chief Executive Officer
Date: August 7, 1998 By: /s/ Paul K. Mueller
--------------- ------------------
Paul K. Mueller, Executive Vice
President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,910
<INT-BEARING-DEPOSITS> 12,500
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,394
<INVESTMENTS-CARRYING> 25,303
<INVESTMENTS-MARKET> 25,754
<LOANS> 342,539
<ALLOWANCE> 2,034
<TOTAL-ASSETS> 412,443
<DEPOSITS> 325,967
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,686
<LONG-TERM> 30,000
44
0
<COMMON> 0
<OTHER-SE> 52,746
<TOTAL-LIABILITIES-AND-EQUITY> 412,443
<INTEREST-LOAN> 13,521
<INTEREST-INVEST> 1,630
<INTEREST-OTHER> 491
<INTEREST-TOTAL> 15,642
<INTEREST-DEPOSIT> 7,433
<INTEREST-EXPENSE> 8,339
<INTEREST-INCOME-NET> 7,303
<LOAN-LOSSES> 373
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,066
<INCOME-PRETAX> 3,418
<INCOME-PRE-EXTRAORDINARY> 2,087
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,087
<EPS-PRIMARY> .58
<EPS-DILUTED> .55
<YIELD-ACTUAL> 3.72
<LOANS-NON> 854
<LOANS-PAST> 98
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,684
<CHARGE-OFFS> 25
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 2,034
<ALLOWANCE-DOMESTIC> 2,034
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
