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, 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, 3,686,977 shares
par value $.01 per share outstanding at October 23, 1998
------------------------ -------------------------------
<PAGE>
FFLC BANCORP, INC.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
at September 30, 1998 (unaudited) and at December 31, 1997...............
Condensed Consolidated Statements of Income -
Three and Nine months ended September 30, 1998 and 1997 (unaudited)......
Condensed Consolidated Statement of Stockholders' Equity -
Nine months ended September 30, 1998 (unaudited).........................
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1998 and 1997 (unaudited)................
Notes to Condensed Consolidated Financial Statements (unaudited)...........
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................................
Part II. OTHER INFORMATION
Item 1. Legal Proceedings...................................................
Item 2. Changes in Securities...............................................
Item 3. Default upon Senior Securities......................................
Item 5. Other Information...................................................
Item 6. Exhibits and Reports on Form 8-K....................................
SIGNATURES......................................................................
<PAGE>
FFLC BANCORP, INC.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
Condensed Consolidated Balance Sheets
($ in thousands)
At At
September 30, December 31,
------------- ------------
1998 1997
--------- ---------
Assets (unaudited)
<S> <C> <C>
Cash and due from banks ............................................ $ 5,765 7,122
Interest-bearing deposits .......................................... 6,266 8,562
--------- ---------
Cash and cash equivalents .............................. 12,031 15,684
Securities held to maturity (market value of $21,247 in 1998 and
$32,520 in 1997) ............................................... 20,915 32,017
Securities available for sale ...................................... 13,665 26,581
Loans receivable, net of allowance for loan losses of $2,184 in 1998
and $1,684 in 1997 ............................................. 364,567 315,353
Accrued interest receivable:
Securities ..................................................... 298 537
Loans receivable ............................................... 1,953 1,597
Premises and equipment, net ........................................ 5,224 5,313
Foreclosed real estate ............................................. 264 507
Real estate held for development ................................... 122 122
Restricted securities - Federal Home Loan Bank stock, at cost ...... 2,737 2,304
Other assets ....................................................... 452 222
--------- ---------
Total .................................................. $ 422,228 400,237
========= =========
Liabilities and Stockholders' Equity
Liabilities:
Demand, NOW and money-market accounts .......................... 58,629 50,597
Savings accounts ............................................... 22,859 24,503
Certificates ................................................... 254,761 240,290
--------- ---------
Total deposits ......................................... 336,249 315,390
Advances from Federal Home Loan Bank ........................... 30,000 30,000
Deferred income taxes .......................................... 373 737
Accrued expenses and other liabilities ......................... 2,777 2,681
--------- ---------
Total liabilities ...................................... 369,399 348,808
--------- ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Condensed Consolidated Balance Sheets
($ in thousands)
(continued)
At At
September 30, December 31,
------------- ------------
1998 1997
--------- ---------
(unaudited)
<S> <C> <C>
Stockholders' equity:
Preferred stock ................................................ -- --
Common stock ................................................... 44 43
Additional paid-in-capital ..................................... 29,133 28,265
Retained income ................................................ 38,859 36,622
Accumulated other comprehensive income, net of tax
of $22 in 1998 and $53 in 1997 ............................. (38) (88)
Treasury stock, at cost ........................................ (14,459) (12,466)
Stock held by Incentive Plan Trusts ............................ (710) (947)
--------- ---------
Total stockholders' equity ............................. 52,829 51,429
--------- ---------
Total .................................................. $ 422,228 400,237
========= =========
</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 Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans receivable ............................ $ 7,264 5,843 20,785 16,014
Securities available for sale ............... 207 561 820 1,989
Securities held to maturity ................. 385 674 1,402 2,220
Other interest-earning assets ............... 254 186 745 404
---------- ---------- ---------- ----------
Total interest income ............... 8,110 7,264 23,752 20,627
---------- ---------- ---------- ----------
Interest expense:
Deposits .................................... 3,907 3,693 11,340 10,514
Borrowed funds .............................. 460 358 1,366 717
---------- ---------- ---------- ----------
Total interest expense .............. 4,367 4,051 12,706 11,231
---------- ---------- ---------- ----------
Net interest income ............................. 3,743 3,213 11,046 9,396
Provision for loan losses ....................... 154 364 527 502
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses ................. 3,589 2,849 10,519 8,894
---------- ---------- ---------- ----------
Noninterest income:
Deposit account fees ........................ 131 130 397 355
Other service charges and fees .............. 181 92 418 255
Gain on sale of securities available for sale -- 11 -- 11
Gain on sale of other assets ................ -- 302 -- 302
Other ....................................... 6 6 57 32
---------- ---------- ---------- ----------
Total noninterest income ............ 318 541 872 955
---------- ---------- ---------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Income
($ in thousands, except share amounts)
(continued)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Noninterest expense:
Salaries and employee benefits .............. 1,296 1,205 3,852 3,367
Occupancy expense ........................... 283 244 770 689
Deposit insurance premium ................... 50 37 147 109
Advertising and promotion ................... 70 60 212 159
Data processing expense ..................... 117 104 347 324
Professional services ....................... 84 64 208 181
Other ....................................... 239 203 669 602
---------- ---------- ---------- ----------
Total noninterest expense ........... 2,139 1,917 6,205 5,431
---------- ---------- ---------- ----------
Income before income taxes ...................... 1,768 1,473 5,186 4,418
Income taxes .................................... 636 547 1,967 1,617
---------- ---------- ---------- ----------
Net income ...................................... $ 1,132 926 3,219 2,801
========== ========== ========== ==========
Basic income per share of common stock .......... $ .31 .25 .89 .75
========== ========== ========== ==========
Weighted-average number of shares outstanding
for basic ................................... 3,591,672 3,669,211 3,600,679 3,730,225
========== ========== ========== ==========
Diluted income per share of common stock ........ $ .30 .24 .85 .71
========== ========== ========== ==========
Weighted-average number of shares outstanding
for diluted ................................. 3,770,271 3,888,612 3,790,632 3,938,896
========== ========== ========== ==========
Dividends per share of common stock ............. $ .09 .07 .27 .22
========== ========== ========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
Condensed Consolidated Statement of Stockholders' Equity
Nine Months Ended September 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
Comprehensive income:
Net income (unaudited) ........ -- -- 3,219 -- -- --
Net change in unrealized loss
on securities available for
sale net of tax of $31
(unaudited) ............... -- -- -- 50 -- --
Comprehensive income (unaudited) ... -- -- -- -- -- -- 3,269
Net proceeds from the issuance
of 56,895 shares of common
stock (unaudited) ............. 1 341 -- -- -- -- 342
Dividends paid, net of $28 of
dividends on ESOP shares
recorded as compensation
expense (unaudited) ........... -- -- (982) -- -- -- (982)
Purchase of treasury stock,
106,906 shares (unaudited) .... -- -- -- -- (1,993) -- (1,993)
Shares committed to participants
in incentive plans (unaudited) -- 527 -- -- -- 237 764
------- ------- ------- ------- ------- ------- -------
Balance at September 30, 1998
(unaudited) ................... $ 44 29,133 38,859 (38) (14,459) (710) 52,829
======= ======= ======= ======= ======= ======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
Nine Months Ended
September 30,
1998 1997
--------- ---------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income ....................................................................... $ 3,219 2,801
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses ................................................ 527 502
Depreciation ............................................................. 305 192
Credit for deferred income taxes ......................................... (395) (226)
Shares committed and dividends to incentive plan participants ............ 792 677
Amortization of premiums or discounts on securities ...................... (28) (38)
Accretion of deferred loan fees and unearned interest .................... 66 1
Deferral of net loan fees collected, net of costs deferred ............... 246 172
Gain on sale of foreclosed real estate ................................... (36) (11)
Increase in accrued interest receivable .................................. (117) (139)
Increase in other assets ................................................. (230) (413)
Increase in accrued expenses and other liabilities ....................... 96 1,605
--------- ---------
Net cash provided by operating activities ........................ 4,445 5,123
--------- ---------
Cash flows from investing activities:
Proceeds from maturities and principal repayments on securities held to maturity . 11,108 13,164
Proceeds from maturities and principal repayments on securities available for sale 13,424 23,110
Purchase of securities available for sale ........................................ (405) (7,354)
Loan disbursements ............................................................... (109,702) (104,157)
Principal repayments on loans .................................................... 59,898 37,159
Purchase of premises and equipment, net .......................................... (216) (385)
Purchase of Federal Home Loan Bank stock ......................................... (433) (365)
Proceeds from sales of foreclosed real estate .................................... 30 255
--------- ---------
Net cash used in investing activities ............................ (26,296) (38,573)
--------- ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(continued)
Nine Months Ended
September 30,
1998 1997
--------- ---------
(unaudited)
<S> <C> <C>
Cash flows from financing activities:
Net increase in demand, savings, NOW and money-market accounts ................... $ 6,388 1,343
Net increase in certificate accounts ............................................. 14,471 23,349
Increase in advances from Federal Home Loan Bank ................................. -- 19,850
Net decrease in securities sold under agreements to repurchase ................... -- (8,048)
Stock options exercised .......................................................... 342 177
Purchase of treasury stock ....................................................... (1,993) (3,856)
Cash dividends paid .............................................................. (1,010) (850)
--------- ---------
Net cash provided by financing activities ............................ 18,198 31,965
--------- ---------
Net decrease in cash and cash equivalents ............................................ (3,653) (1,485)
Cash and cash equivalents at beginning of period ..................................... 15,684 10,157
--------- ---------
Cash and cash equivalents at end of period ........................................... $ 12,031 8,672
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ..................................................................... $ 12,877 11,084
========= =========
Income taxes ................................................................. $ 2,342 1,534
========= =========
Noncash investing and financing activities:
Change in unrealized loss on securities available for sale, net of
tax of $31 and $44 ....................................................... $ 50 74
========= =========
Transfers from loans to foreclosed real estate ............................... $ 64 182
========= =========
Loans originated on sales of foreclosed real estate .......................... $ 313 54
========= =========
Loans funded by and sold to correspondent .................................... $ 5,562 1,275
========= =========
</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 September 30, 1998
and the results of operations for the three- and nine-month periods
ended September 30, 1998 and 1997 and cash flows for the nine month
periods ended September 30,1998 and 1997. The results of operations for
the three-and nine-month periods ended September 30, 1998 and other data
for the three- and nine-month periods ended September 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 nine months ended September 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 Nine Months Ended
September 30, September 30,
-------------------- --------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Beginning balance .................. $ 2,034 1,193 1,684 1,063
Provision for loan losses .......... 154 364 527 502
Loans charged-off, net of recoveries (4) (8) (27) (16)
------- ------- ------- -------
Ending balance ..................... $ 2,184 1,549 2,184 1,549
======= ======= ======= =======
</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 September 30, 1998 or results of operations for
the three and nine months then ended.
(continued)
<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 Nine Months Ended
September 30, September 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 .................... 3,721,193 3,853,360 3,743,352 3,926,650
Adjustment to reflect the effect of unallocated
ESOP and RRP shares ............................. (129,521) (184,149) (142,673) (196,425)
---------- ---------- ---------- ----------
Weighted average common share, for basic
income per share ................................ 3,591,672 3,669,211 3,600,679 3,730,225
========== ========== ========== ==========
Basic income per share ............................ $ .31 .25 .89 .75
========== ========== ========== ==========
Total weighted average common shares and
equivalents outstanding for basic income
per share computation ........................... 3,591,672 3,669,211 3,600,679 3,730,225
Additional dilutive shares using the average market
value for the period utilizing the treasury stock
method regarding stock options .................. 178,599 219,401 189,953 208,671
---------- ---------- ---------- ----------
Weighted average common shares and equivalents
outstanding for diluted income per share ........ 3,770,271 3,888,612 3,790,632 3,938,896
========== ========== ========== ==========
Diluted income per share .......................... $ .30 .24 .85 .71
========== ========== ========== ==========
</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 September 30, 1998, cash, amounts
due from depository institutions and interest-bearing deposits, totaled
$12.0 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
September 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 September 30, 1998, the Savings Bank had outstanding commitments to
originate $11.7 million of loans and to fund the undisbursed portion of
loans in process of approximately $12.5 million and undisbursed commercial
lines of credit of approximately $22.4 million. The Savings Bank believes
that it will have sufficient funds available to meet its commitments. At
September 30, 1998, certificates of deposit which were scheduled to mature
in one year or less totaled $181.7 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 September
30, 1998, that the Savings Bank meets all capital adequacy requirements to
which it is subject.
<PAGE>
FFLC BANCORP, INC.
As of September 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 September 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 10.6% $ 44,932
Less: investment in
nonincludable
subsidiary (195)
Add back: unrealized loss on
available-for-sale
securities 8
Tangible capital,
and ratio to adjusted
total assets 10.6% $ 44,745 1.5% $ 6,334
========= =========
Tier 1 (core) capital, and
ratio to adjusted total
assets 10.6% $ 44,745 3.0% $ 12,668 5.0% $ 21,113
========= ======== ========
Tier 1 capital, and ratio
to risk-weighted assets 18.1% 44,745 4.0% $ 9,863 6.0% $ 14,795
======== ========
Tier 2 capital (allowance for
loan losses and deductible
assets) 2,097
Total risk-based capital,
and ratio to risk-
weighted assets 19.0% $ 46,842 8.0% $ 19,727 10.0% $ 24,659
========= ======== ========
Total assets $ 422,447
=========
Adjusted total assets $ 422,260
=========
Risk-weighted assets $ 246,586
=========
</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>
Nine Months Nine Months
Ended Year Ended Ended
September 30, December 31, September 30,
1998 1997 1997
------------- ------------ -------------
<S> <C> <C> <C>
Average equity as a percentage
of average assets 12.75% 13.93% 14.26%
Total equity to total assets at end of period 12.51% 12.85% 13.73%
Return on average assets 1.05% 1.00% 1.01%
Return on average equity 8.20% 7.18% 7.11%
Noninterest expense to average assets 2.02% 1.99% 1.96%
Nonperforming assets to total assets
at end of period .19% .19% .18%
Operating efficiency ratio 52.06% 53.54% 52.47%
<CAPTION>
At At At
September 30, December 31, September 30,
1998 1997 1997
------------- ------------ -------------
<S> <C> <C> <C>
Weighted-average interest rates:
Interest-earning assets:
Loans receivable 8.08% 8.18% 8.19%
Securities 6.54% 6.51% 6.68%
Other interest-earning assets 6.25% 6.23% 6.14%
Total interest-earning assets 7.91% 7.87% 7.84%
Interest-bearing liabilities:
Deposits 4.73% 4.94% 4.86%
Borrowed funds 6.01% 6.01% 6.14%
Total interest-bearing liabilities 4.84% 5.03% 4.94%
Interest-rate spread 3.07% 2.84% 2.90%
</TABLE>
Change in Financial Condition
Total assets increased $22.0 million or 5.5%, from $400.2 million at December
31, 1997 to $422.2 million at September 30, 1998, primarily as a result of an
increase in loans receivable of $49.2 million, partially offset by a decrease in
securities of $24.0 million. Deposits increased $20.9 million from $315.4
million at December 31, 1997 to $336.2 million at September 30, 1998. The $1.4
million net increase in stockholders equity during the nine months ended
September 30, 1998 resulted from net income of $3.2 million, credits to equity
totaling $764,000 related to the stock incentive plans, proceeds of $342,000
from stock options exercised and a $50,000 decrease in net accumulated other
comprehensive income, partially offset by repurchases of the Company's stock of
$2.0 million and dividends paid of $983,000.
<PAGE>
FFLC BANCORP, INC.
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest income; (iv) interest-rate spread; and (v) net
interest margin.
<TABLE>
<CAPTION>
Three Months Ended September 30,
-------------------------------------------------------------------
1998 1997
------------------------------- --------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
---------- -------- ------ --------- -------- --------
($ in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (1) $ 350,274 7,264 8.30% $ 281,439 5,843 8.30%
Securities 37,526 592 6.31 76,961 1,235 6.42
Other interest-earning assets (2) 17,027 254 5.97 12,561 186 5.92
--------- ------ --------- ------
Total interest-earning assets 404,827 8,110 8.01 370,961 7,264 7.83
------ ------
Noninterest-earning assets 15,816 13,507
--------- ====-----
Total assets $ 420,643 $ 384,468
========= =========
Interest-bearing liabilities:
Deposit accounts 323,444 3,907 4.83 298,562 3,693 4.95
Borrowed funds 30,000 460 6.13 23,100 358 6.20
--------- ------ --------- ------
Total interest-bearing liabilities 353,444 4,367 4.94 321,662 4,051 5.04
------ ------
Noninterest-bearing deposits 8,050 5,915
Noninterest-bearing liabilities 6,159 4,454
Stockholders' equity 52,990 52,437
--------- ---------
Total liabilities and stockholders' equity $ 420,643 $ 384,468
========= =========
Net interest income $ 3,743 $ 3,213
======= =======
Interest-rate spread (3) 3.07% 2.79%
==== ====
Net average interest-earning assets,
net interest margin (4) $ 51,383 3.70% $ 49,299 3.46%
========= ==== ========= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.15 1.15
==== ====
</TABLE>
<PAGE>
FFLC BANCORP, INC.
(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.
<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>
Nine Months Ended September 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) $ 333,770 20,785 8.30% $ 256,678 16,014 8.32%
Securities 46,339 2,222 6.39 89,026 4,209 6.30
Other interest-earning assets (2) 16,885 745 5.88 9,183 404 5.87
--------- ------- --------- -------
Total interest-earning assets 396,994 23,752 7.98 354,887 20,627 7.75
------- -------
Noninterest-earning assets 13,521 13,643
--------- ---------
Total assets $ 410,515 $ 368,530
========= =========
Interest-bearing liabilities:
Deposit accounts 316,597 11,340 4.78 289,418 10,514 4.84
Borrowed funds 30,000 1,366 6.07 16,045 717 5.96
--------- ------- ==------- -------
Total interest-bearing liabilities 346,597 12,706 4.89 305,463 11,231 4.90
=------ -------
Noninterest-bearing deposits 7,473 5,787
Noninterest-bearing liabilities 4,093 4,739
Stockholders' equity 52,352 52,541
--------- ---------
Total liabilities and stockholders' equity $ 410,515 $ 368,530
========= =========
Net interest income $ 11,046 $ 9,396
======== ========
Interest-rate spread (3) 3.09% 2.85%
==== ====
Net average interest-earning assets,
net interest margin (4) $ 50,397 3.71% $ 49,424 3.53%
========= ==== ========== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.15 1.16
==== ====
</TABLE>
<PAGE>
FFLC BANCORP, INC.
(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.
<PAGE>
FFLC BANCORP, INC.
Comparison of the Three Months Ended September 30, 1998 and 1997
Results of Operations
General Operating Results. Net income for the three months ended September 30,
1998 was $1.1 million compared to $926,000 for the three months ended
September 30, 1997. The increase in net income for the 1998 period was
primarily due to an increase in interest income of 846,000, partially offset
by a $316,000 increase in interest expense during the 1998 period.
Interest Income. Interest income increased $846,000, or 11.6% from $7.3 million
for the three months ended September 30, 1997 to $8.1 million for the three
months ended September 30, 1998. The increase was due to a $33.9 million
increase in average interest-earning assets outstanding and an increase in
the average yield on interest-earning assets from 7.83% for the three months
ended September 30, 1997 to 8.01% for the comparable period in 1998.
Interest Expense. Interest expense increased $316,000 or 7.8% for the three
months ended September 30, 1998 when compared to the 1997 period. The
increase was the result of a $31.8 million increase in average
interest-bearing liabilities outstanding during the 1998 period compared to
the 1997 period, partially offset by a decrease in the weighted average rate
paid on interest-bearing liabilities from 5.04% for the three months ended
September 30, 1997 to 4.94% for the comparable period in 1998.
Provision for Loan Losses. The Savings Bank's provision for loan losses
decreased $210,000 from $364,000 for the three months ended September 30,
1997 to $154,000 for the comparable period in 1998. The provision reflects
Savings Bank's continuing policy of evaluating the adequacy of its allowance
for loan losses with the prevailing standards within the thrift industry.
Generally, such evaluation includes consideration of the level of
nonperforming loans and the level and composition of the Savings Bank's loan
portfolio.
Noninterest Income. Noninterest income decreased $223,000 or 41.2% from $541,000
for the three months ended September 30, 1997 to $318,000 for the 1998
period. The decrease was primarily due to a $302,000 pretax gain recognized
on the sale of the Savings Bank's investment in its computer service bureau
in September 1997.
Noninterest Expense. Noninterest expense consists primarily of salaries and
employee benefits, occupancy expense and data processing expense.
Noninterest expenses increased by $222,000 million, from $1.9 million for
the three months ended September 30, 1997 to $2.1 million for the 1998
period. The increase was related to the overall growth of the Company.
Income Taxes. The income tax provision increased from $547,000 for the three
months ended September 30, 1997 (an effective rate of 37.1%) to $636,000 (an
effective tax rate of 36.0%) for the corresponding period in 1998.
<PAGE>
FFLC BANCORP, INC.
Comparison of the Nine Months Ended September 30, 1998 and 1997
General Operating Results. Net income for the nine months ended September 30,
1998, was $3.2 million, compared to $2.8 million for the nine months ended
September 30, 1997. The increase in net income for the 1998 period was
primarily due to an increase in interest income of $3.1 million, partially
offset by increases in interest expense of $1.5 million and noninterest
expense of $774,000.
Interest Income. Interest income increased $3.1 million or 15.2% from $20.6
million for the nine months ended September 30, 1997 to $23.8 million for
the nine months ended September 30, 1998. The increase in interest income
was due to a $42.1 million increase in average interest-earning assets
outstanding and an increase in the average yield on interest-earning assets
from 7.75% for the nine months ended September 30, 1997 to 7.98% for nine
months ended September 30, 1998.
Interest Expense. Interest expense increased $1.5 million, or 13.1% from $11.2
million for the nine months ended September 30, 1997 to $12.7 million for
the 1998 period. The increase was due to an increase of $41.1 million in
average interest-bearing liabilities outstanding, partially offset by a
decrease in the weighted average rate paid on interest-bearing liabilities
from 4.90% for the nine months ended September 30, 1997 to 4.89% for the
1998 period.
Provision for Loan Losses. The Savings Bank's provision for loan losses
increased $25,000 from $502,000 for the nine months ended September 30, 1997
to $527,000 for the 1998 period. The increase reflects the overall growth
within the loan portfolio and the Savings Bank's continuing policy of
evaluating the adequacy of its allowance for loan losses and prevailing
standards within the thrift industry. Generally, such evaluation includes
consideration of the level of nonperforming loans and the level and
composition of the Savings Bank's loan portfolio.
Noninterest Income. Noninterest income decreased $83,000 from $955,000 for the
nine months ended September 30, 1997 to $872,000 for the 1998 period. The
decrease was primarily due to a $302,000 pretax gain recognized on the sale
of the Savings Bank's investment in its computer service bureau in September
1997, partially offset by an increase in other service charges and fees of
$163,000.
Noninterest Expense. Noninterest expense consists primarily of salaries and
employee benefits, occupancy expense and data processing expense.
Noninterest expense increased by $774,000 million, or 14.3%, from $5.4
million for the nine months ended September 30, 1997 to $6.2 million for the
1998 period. That increase was primarily due to an increase in salaries and
employee benefits of $485,000 related to the overall growth of the Company.
Income Taxes. The income tax provision increased from $1.6 million for the nine
months ended September 30, 1997 (an effective rate of 36.6%) to $2.0 million
(an effective tax rate of 37.9%) for the corresponding period in 1998.
<PAGE>
FFLC BANCORP, INC.
Year 2000 Issues
Management of the Company is acutely aware of the Year 2000 problem and has an
ongoing program designed to ensure that its operational and financial systems,
and those of its Savings Bank subsidiary, will not be adversely affected by Year
2000 software failures, due to processing errors arising from calculations using
the Year 2000 date. The Savings Bank has formed a Year 2000 compliance committee
to assess the extent to which the Savings Bank and its outside vendors may be
adversely affected by Year 2000 problems. This committee has prepared and is
responsible for monitoring the Vendor Status Report which identifies the vendors
and equipment that have been determined to be Year 2000 sensitive. As of
September 30, 1998, the Savings Bank had received written assurances from most
of the companies listed on the Vendor Status Report indicating that their
systems are or will be Year 2000 compliant.
The most significant vendor to the Savings Bank, which acts as a service bureau
for the Savings Bank's on-line data processing, has completed its system
renovation and is in the testing process. The Savings Bank has and will continue
to participate in the testing and verification of Year 2000 related changes made
by that vendor.
Based on current estimates, the Savings Bank does not expect to incur a material
amount of expenses over the next two years on its program to redevelop, replace,
or repair its computer applications to make them "Year 2000 compliant." It is
recognized that any Year 2000 compliance failures could result in additional
expense to the Savings Bank.
While management is diligently working to assure Year 2000 compliance,
compliance by the Savings Bank is largely dependent upon compliance by vendors,
primarily in that area of on-line data processing. Management is requiring its
computer system and software vendors to represent that the products are, or will
be, Year 2000 compliant, and has planned a program for testing for compliance.
Although management believes that the Savings Bank's systems will be Year 2000
compliant, a written contingency plan has been developed to address problems
that might be caused from Year 2000 system failures.
<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 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
September 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: November 6, 1998 By:/s/ Stephen T. Kurtz
----------------- ---------------------
Stephen T. Kurtz, President and
Chief Executive Officer
Date: November 6, 1998 By:/s/ Paul K. Mueller
------------------ --------------------
Paul K. Mueller, Executive Vice President
and Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 5,765
<INT-BEARING-DEPOSITS> 6,266
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,665
<INVESTMENTS-CARRYING> 20,915
<INVESTMENTS-MARKET> 21,247
<LOANS> 364,567
<ALLOWANCE> 2,184
<TOTAL-ASSETS> 422,228
<DEPOSITS> 336,249
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,150
<LONG-TERM> 30,000
0
0
<COMMON> 44
<OTHER-SE> 52,785
<TOTAL-LIABILITIES-AND-EQUITY> 422,228
<INTEREST-LOAN> 20,785
<INTEREST-INVEST> 2,222
<INTEREST-OTHER> 745
<INTEREST-TOTAL> 23,752
<INTEREST-DEPOSIT> 11,340
<INTEREST-EXPENSE> 12,706
<INTEREST-INCOME-NET> 11,046
<LOAN-LOSSES> 527
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,205
<INCOME-PRETAX> 5,186
<INCOME-PRE-EXTRAORDINARY> 3,219
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,219
<EPS-PRIMARY> .89
<EPS-DILUTED> .85
<YIELD-ACTUAL> 3.71
<LOANS-NON> 527
<LOANS-PAST> 28
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,684
<CHARGE-OFFS> 29
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 2,184
<ALLOWANCE-DOMESTIC> 2,184
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
