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, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
------ EXCHANGE ACT OF 1934
For the transition period from to
----------- -------------
Commission file number 0-22608
FFLC BANCORP, INC.
------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 59-3204891
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
800 North Boulevard West, Post Office Box 490420, Leesburg, Florida 34749-0420
- ------------------------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (352) 787-3311
- --------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common stock, par value 3,557,288 shares outstanding at
$.01 per share October 26, 1999
- ----------------------- -------------------------------
(CONFORMED COPY)
<PAGE>
FFLC BANCORP, INC.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets -
at September 30, 1999 (unaudited) and at December 31, 1998..............2
Condensed Consolidated Statements of Income -
Three and Nine months ended September 30, 1999 and 1998 (unaudited).....3
Condensed Consolidated Statement of Stockholders' Equity -
Nine months ended September 30, 1999 (unaudited)........................4
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1999 and 1998 (unaudited).............5-6
Notes to Condensed Consolidated Financial Statements (unaudited)........7-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..............................................9-17
Item 3. Quantative and Qualitative Disclosures About Market Risk..........18
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................18
Item 2. Changes in Securities.............................................18
Item 3. Default upon Senior Securities....................................18
Item 5. Other Information.................................................18
Item 6. Exhibits and Reports on Form 8-K..................................18
SIGNATURES....................................................................19
1
<PAGE>
FFLC BANCORP, INC.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
At At
September 30, December 31,
1999 1998
--------- --------
Assets (unaudited)
<S> <C> <C>
Cash and due from banks $ 9,723 9,515
Interest-bearing deposits 9,404 13,413
--------- --------
Cash and cash equivalents 19,127 22,928
--------- --------
Securities available for sale 40,307 22,165
Securities held to maturity (market value of $18,425 in 1998) - 18,227
Loans receivable, net of allowance for loan losses of $2,644 in 1999
and $2,283 in 1998 474,132 389,059
Accrued interest receivable 2,780 2,242
Premises and equipment, net 8,924 5,597
Foreclosed real estate 332 366
Real estate held for development - 122
Restricted security - Federal Home Loan Bank stock, at cost 4,450 2,800
Other assets 564 314
--------- --------
Total $ 550,616 463,820
''''''''' ''''''''
Liabilities and Stockholders' Equity
Liabilities:
NOW and money-market accounts 81,385 68,816
Savings accounts 21,614 23,038
Certificates 297,416 259,176
--------- --------
Total deposits 400,415 351,030
--------- --------
Advances from Federal Home Loan Bank 89,000 56,000
Other borrowed funds 2,582 789
Deferred income taxes 191 284
Accrued expenses and other liabilities 3,573 2,494
--------- --------
Total liabilities 495,761 410,597
(continued) ------- -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
At At
September 30, December 31,
1999 1998
--------- --------
Assets (unaudited)
<S> <C> <C>
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none outstanding - -
Common stock, $.01 par value, 9,000,000 shares authorized,
4,420,561 in 1999 and 4,372,041 in 1998 shares issued 44 44
Additional paid-in-capital 29,981 29,286
Retained income 42,713 39,714
Accumulated other comprehensive income - unrealized loss on securities
available for sale, net of tax of $58 in 1999 and $39 in 1998 (96) (65)
Treasury stock, at cost (845,030 shares in 1999 and
716,421 shares in 1998) (17,393) (15,125)
Stock held by Incentive Plan Trusts (394) (631)
--------- --------
Total stockholders' equity 54,855 53,223
--------- --------
Total $ 550,616 463,820
''''''''' ''''''''
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Income
($ in thousands, except share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $ 9,030 7,264 25,635 20,785
Securities available for sale 544 207 1,245 820
Securities held to maturity - 385 415 1,402
Other interest-earning assets 227 254 674 745
------------- ----------- ----------- -----------
Total interest income 9,801 8,110 27,969 23,752
------------- ----------- ----------- -----------
Interest expense:
Deposits 4,323 3,907 12,419 11,340
Borrowed funds 1,042 460 2,699 1,366
------------- ----------- ----------- -----------
Total interest expense 5,365 4,367 15,118 12,706
------------- ----------- ----------- -----------
Net interest income 4,436 3,743 12,851 11,046
Provision for loan losses 150 154 500 527
------------- ----------- ----------- -----------
Net interest income after provision
for loan losses 4,286 3,589 12,351 10,519
------------- ----------- ----------- -----------
Noninterest income:
Deposit account fees 154 131 451 397
Other service charges and fees 165 181 596 418
Gain on sale of real estate held for development - - 886 -
Other - 6 45 57
------------- ----------- ----------- -----------
Total noninterest income 319 318 1,978 872
------------- ----------- ----------- -----------
Noninterest expense:
Salaries and employee benefits 1,581 1,296 4,558 3,852
Occupancy expense 417 283 1,112 770
Deposit insurance premiums 54 50 157 147
Data processing expense 153 117 438 347
Professional services 71 84 219 208
Advertising and promotion 87 70 260 212
Other 279 239 834 669
------------- ----------- ----------- -----------
Total noninterest expense 2,642 2,139 7,578 6,205
------------- ----------- ----------- -----------
</TABLE>
(continued)
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Income before income taxes 1,963 1,768 6,751 5,186
Income taxes 739 636 2,562 1,967
------------- ----------- ----------- -----------
Net income $ 1,224 1,132 4,189 3,219
''''''''''''' ''''''''''' ''''''''''' '''''''''''
Basic income per share of common stock $ . 35 .31 1.18 .89
''''''''''''' ''''''''''' ''''''''''' '''''''''''
Weighted-average number of shares outstanding
for basic 3,537,825 3,591,672 3,560,634 3,600,679
''''''''''''' ''''''''''' ''''''''''' '''''''''''
Diluted income per share of common stock $ .33 .30 1.13 .85
''''''''''''' ''''''''''' ''''''''''' '''''''''''
Weighted-average number of shares outstanding
for diluted 3,670,492 3,770,271 3,695,240 3,790,632
''''''''''''' ''''''''''' ''''''''''' '''''''''''
Dividends per share of common stock $ .11 .09 .33 .27
''''''''''''' ''''''''''' ''''''''''' '''''''''''
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
3
<PAGE>
FFLC BANCORP, INC.
Condensed Consolidated Statement of Stockholders' Equity
Nine Months Ended September 30, 1999
($ in thousands)
<TABLE>
<CAPTION>
Stock Accumulated
Held by Other
Additional Incentive Compre- Total
Common Paid-In Treasury Plan Retained hensive Stockholders
Stock Capital Stock Trusts Income Income Equity
------- --------- --------- ---------- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1998 $ 44 29,286 (15,125) (631) 39,714 (65) 53,223
------
Comprehensive income:
Net income (unaudited) - - - - 4,189 - 4,189
Net change in unrealized loss
on securities available for
sale, net of tax of $19
(unaudited) - - - - - (31) (31)
-------
Comprehensive income (unaudited) 4,158
-------
Net proceeds from the exercise
of stock options (48,520 shares)
(unaudited) - 291 - - - - 291
Dividends paid, net of $17 of
dividends on ESOP shares
recorded as compensation
expense (unaudited) - - - - (1,190) - (1,190)
Purchase of treasury stock,
128,609 shares (unaudited) - - (2,268) - - - (2,268)
Shares committed to participants
in incentive plans (unaudited) - 404 - 237 - - 641
--- ------- --------- --- -------- ----- -------
Balance at September 30, 1999
(unaudited) $ 44 29,981 (17,393) (394) 42,713 (96) 54,855
'' '''''' '''''' ''' '''''' '' ''''''
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,189 3,219
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses 500 527
Depreciation 401 305
Credit for deferred income taxes (74) (395)
Shares committed and dividends to incentive plan participants 658 792
Net amortization of premiums or discounts on securities 57 (28)
Accretion of deferred loan fees and unearned income 44 66
Deferral of net loan fees collected, net of costs deferred 209 246
Gain on sale of foreclosed real estate (27) (36)
Gain on sale of real estate held for development (886) -
Increase in accrued interest receivable (538) (117)
Increase in other assets (250) (230)
Increase in accrued expenses and other liabilities 1,079 96
-------- ---------
Net cash provided by operating activities 5,362 4,445
-------- -------
Cash flows from investing activities:
Proceeds from maturities and principal repayments on securities held to maturity 3,428 11,108
Proceeds from maturities and principal repayments on securities available for sale 3,923 13,424
Purchase of securities available for sale (7,373) (405)
Loan disbursements (145,812) (109,702)
Principal repayments on loans 59,843 59,898
Purchase of premises and equipment, net (3,728) (216)
Purchase of Federal Home Loan Bank stock (1,650) (433)
Proceeds from sales of foreclosed real estate 204 30
Proceeds from sale of real estate held for development 1,008 -
-------- -------
Net cash used in investing activities (90,157) (26,296)
------- -------
(continued)
</TABLE>
5
<PAGE>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows, Continued
($ in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Cash flows from financing activities:
Net increase in demand, savings, NOW and money-market accounts $ 11,145 6,388
Net increase in certificate accounts 38,240 14,471
Net increase in advances from Federal Home Loan Bank 33,000 -
Net increase in other borrowed funds 1,793 -
Stock options exercised 291 342
Purchase of treasury stock (2,268) (1,993)
Cash dividends paid (1,207) (1,010)
-------- --------
Net cash provided by financing activities 80,994 18,198
-------- --------
Net decrease in cash and cash equivalents (3,801) (3,653)
Cash and cash equivalents at beginning of period 22,928 15,684
-------- --------
Cash and cash equivalents at end of period $ 19,127 12,031
'''''''' ''''''''
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Interest $ 14,816 12,877
'''''''' ''''''''
Income taxes $ 2,573 2,342
'''''''' ''''''''
Noncash investing and financing activities:
(Decrease) increase in accumulated other comprehensive income, net of tax $ (31) 50
'''''''' ''''''''
Transfers from loans to foreclosed real estate $ 340 64
'''''''' ''''''''
Loans originated on sales of foreclosed real estate $ 197 313
'''''''' ''''''''
Loans funded by and sold to correspondent $ 6,882 5,562
'''''''' ''''''''
Transfer securities from held to maturity to available for sale
upon adoption of FAS 133 $ 14,784 -
'''''''' ''''''''
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
6
<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, 1999
and the results of operations for the three- and nine-month periods
ended September 30, 1999 and 1998 and cash flows for the nine month
periods ended September 30, 1999 and 1998. The results of operations for
the three-and nine-month periods ended September 30, 1999 and other data
for the three- and nine-month periods ended September 30, 1999, are not
necessarily indicative of results that may be expected for the year
ending December 31, 1999.
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,
1999 or 1998.
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,
----------------------- -----------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Beginning balance $ 2,545 2,034 2,283 1,684
Provision for loan losses 150 154 500 527
Loans charged-off (51) (4) (158) (29)
Recoveries - - 19 2
------- ------- ------- -------
Ending balance $ 2,644 2,184 2,644 2,184
''''''' ''''''' ''''''' '''''''
</TABLE>
3. New Accounting Requirements. The FASB has recently issued the following
Statement of Financial Accounting Standards which is relevant to the
Company:
Financial Accounting Standards 133 - Accounting for Derivative
Investments and Hedging Activities requires companies to record
derivatives on the balance sheet as assets or liabilities, measured at
fair value. Gains or losses resulting from changes in the values of
those derivatives would be accounted for depending on the use of the
derivatives and whether they qualify for hedge accounting. The key
criterion for hedge accounting is that the hedging relationship must be
highly effective in achieving offsetting changes in fair value or cash
flows. The Company adopted this Statement effective July 1, 1999. As
allowed by this standard, the Company reclassified all securities held
to maturity with a book value of $14,784,000 and a market value of
$14,969,000 to available for sale on July 1, 1999.
(continued)
7
<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 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,
------------------------- ----------------------
1999 1998 1999 1998
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Weighted average shares of common stock issued
and outstanding before adjustments for ESOP,
RRP and common stock options 3,614,739 3,721,193 3,650,701 3,743,352
Adjustment to reflect the effect of unallocated
ESOP and RRP shares (76,914) (129,521) (90,067) (142,673)
---------- --------- ---------- ----------
Weighted average common shares, for basic
income per share 3,537,825 3,591,672 3,560,634 3,600,679
''''''''' ''''''''' ''''''''' '''''''''
Basic income per share $ .35 .31 1.18 .89
''''''''' '''''''''''' ''''''''''' '''''''''
Total weighted average common shares and
equivalents outstanding for basic income
per share computation 3,537,825 3,591,672 3,560,634 3,600,679
Additional dilutive shares using the average market
value for the period utilizing the treasury stock
method regarding stock options 132,667 178,599 134,606 189,953
---------- ---------- --------- ----------
Weighted average common shares and equivalents
outstanding for diluted income per share 3,670,492 3,770,271 3,695,240 3,790,632
''''''''' ''''''''' ''''''''' '''''''''
Diluted income per share $ .33 .30 1.13 .85
''''''''' '''''''''''' '''''''''''' '''''''''
</TABLE>
8
<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 securities 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 securities
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 12 full-service locations in Lake, Sumter and Citrus
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 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, securities
available for sale and foreclosed real estate. The Savings Bank's
operating expenses consist primarily of salaries and employee benefits,
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.
9
<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, 1999, cash, amounts
due from depository institutions and interest-bearing deposits, totaled
$19.1 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, 1999 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, 1999, the Savings Bank had outstanding commitments to
originate $7.6 million of loans and to fund the undisbursed portion of
loans in process of approximately $14.4 million and undisbursed commercial
lines of credit of approximately $28.9 million. The Savings Bank believes
that it will have sufficient funds available to meet its commitments. At
September 30, 1999, certificates of deposit which were scheduled to mature
in one year or less totaled $193.1 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 requirements
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, 1999, that the Savings Bank meets all capital adequacy requirements to
which it is subject.
10
<PAGE>
FFLC BANCORP, INC.
As of September 30, 1999, 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, 1999
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 9.3% $ 51,021
Less: investment in
nonincludable
subsidiary (1,216)
Add back: unrealized loss on
available-for-sale
securities 34
Tangible capital,
and ratio to adjusted
total assets 9.1% $ 49,839 1.5% $ 8,242
''''''' '''''''
Tier 1 (core) capital, and
ratio to adjusted total
assets 9.1% $ 49,839 3.0% $ 16,485 5.0% $ 27,475
''''''' '''''' ''''''
Tier 1 capital, and ratio
to risk-weighted assets 14.8% 49,839 4.0% $ 13,505 6.0% $ 20,257
'''''' ''''''
Tier 2 capital (allowance for
loan losses and deductible
assets) 2,548
Total risk-based capital,
and ratio to risk-
weighted assets 15.6% $ 52,387 8.0% $ 27,010 10.0% $ 33,762
'''''''' '''''' ''''''
Total assets $ 550,672
''''''''
Adjusted total assets $ 549,490
''''''''
Risk-weighted assets $ 337,622
''''''''
</TABLE>
11
<PAGE>
FFLC BANCORP, INC.
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,
1999 1998 1998
<S> <C> <C> <C>
Average equity as a percentage
of average assets 10.83% 12.52% 12.75%
Total equity to total assets at end of period 9.96% 11.47% 12.51%
Return on average assets (1) 1.11% 1.05% 1.05%
Return on average equity (1) 10.25% 8.37% 8.20%
Noninterest expense to average assets (1) 2.01% 2.01% 2.02%
Nonperforming assets to total assets
at end of period .23% .17% .19%
Operating efficiency ratio (2) 54.35% 52.25% 52.06%
</TABLE>
(1) Annualized for the nine months ended September 30, 1999 and 1998.
(2) Excludes gain on sale of real estate held for development.
<TABLE>
<CAPTION>
At At At
September 30, December 31, September 30,
1999 1998 1998
------------------------------ --------
<S> <C> <C> <C>
Weighted-average interest rates:
Interest-earning assets:
Loans receivable 7.85% 7.96% 8.08%
Securities 6.23% 6.37% 6.54%
Other interest-earning assets 6.11% 5.32% 6.25%
Total interest-earning assets 7.68% 7.72% 7.91%
Interest-bearing liabilities:
Deposits 4.45% 4.58% 4.73%
Borrowed funds 5.45% 5.27% 6.01%
Total interest-bearing liabilities 4.64% 4.67% 4.84%
Interest-rate spread 3.04% 3.05% 3.07%
</TABLE>
Change in Financial Condition
Total assets increased $86.8 million or 18.7%, from $463.8 million at December
31, 1998 to $550.6 million at September 30, 1999, primarily as a result of an
increase in loans receivable of $85.1 million. Deposits increased $49.4 million
from $351.0 million at December 31, 1998 to $400.4 million at September 30,
1999. Also advances from the Federal Home Loan Bank increased $33.0 million from
$56.0 million at December 31, 1998 to $89.0 million at September 30, 1999. The
$1.6 million net increase in stockholders equity during the nine months ended
September 30, 1999 resulted primarily from net income of $4.2 million, credits
to equity totaling $641,000 related to the stock incentive plans and proceeds of
$291,000 from stock options exercised, partially offset by repurchases of the
Company's stock of $2.3 million and dividends paid of $1.2 million.
12
<PAGE>
FFLC BANCORP, INC.
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest income; (iv) interest-rate spread; and (v) net
interest margin. Yields and costs were derived by dividing income or expense by
the average balance of assets or liabilities, respectively, for the periods
shown. The average balance of loans receivable includes loans on which the
Company has discontinued accruing interest. The yields and costs include fees
which are considered to constitute adjustments to yields.
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended September 30,
1999 1998
----------------------------- ----------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
($ in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable $ 453,385 9,030 7.97% $ 350,274 7,264 8.30%
Securities 37,207 544 5.85 37,526 592 6.31
Other interest-earning assets (1) 15,507 227 5.86 17,027 254 5.97
-------- ------ ------- ------
Total interest-earning assets 506,099 9,801 7.75 404,827 8,110 8.01
----- -----
Noninterest-earning assets 23,759 15,816
-------- -------
Total assets $ 529,858 $ 420,643
''''''' '''''''
Interest-bearing liabilities:
NOW and money-market accounts 69,077 424 2.46 50,882 280 2.20
Passbook and statement savings accounts 22,005 127 2.31 23,389 124 2.12
Certificates 289,801 3,772 5.21 249,173 3,503 5.62
FHLB advances 74,750 1,017 5.44 30,000 460 6.13
Other borrowings 1,982 25 5.05 - - -
--------- ------ --------- --------
Total interest-bearing liabilities 457,615 5,365 4.69 353,444 4,367 4.94
----- -----
Noninterest-bearing deposits 10,893 8,050
Noninterest-bearing liabilities 6,468 6,159
Stockholders' equity 54,882 52,990
------- -------
Total liabilities and stockholders' equity $ 529,858 $ 420,643
''''''' '''''''
Net interest income $ 4,436 $ 3,743
''''' '''''
Interest-rate spread (2) 3.06% 3.07%
'''' ''''
Net average interest-earning assets,
net interest margin (3) $ 48,484 3.51% $ 51,383 3.70%
'''''''' '''' ''''''' ''''
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.11 1.15
'''' ''''
</TABLE>
(1) Includes interest-bearing deposits, federal funds sold and FHLB stock.
(2) Interest-rate spread represents the difference between the average yield
on interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin is net interest income divided by average
interest-earning assets. FFLC BANCORP, INC.
13
<PAGE>
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. Yields and costs were derived by dividing income or expense by
the average balance of assets or liabilities, respectively, for the periods
shown. The average balance of loans receivable includes loans on which the
Company has discontinued accruing interest. The yields and costs include fees
which are considered to constitute adjustments to yields.
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1999 1998
--------------------------- ---------------------------
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 $ 427,068 25,635 8.00% $ 333,770 20,785 8.30%
Securities 38,414 1,660 5.76 46,339 2,222 6.39
Other interest-earning assets (1) 16,509 674 5.44 16,885 745 5.88
-------- ------- ------- -------
Total interest-earning assets 481,991 27,969 7.74 396,994 23,752 7.98
------ ------
Noninterest-earning assets 21,451 13,521
-------- -------
Total assets $ 503,442 $ 410,515
''''''' '''''''
Interest-bearing liabilities:
NOW and money-market accounts 64,541 1,145 2.37 48,773 791 2.16
Passbook and statement savings accounts 22,391 362 2.16 24,002 394 2.19
Certificates 278,259 10,912 5.23 243,822 10,155 5.55
FHLB advances 66,594 2,645 5.30 30,000 1,366 6.07
Other borrowings 1,478 54 4.87 - - -
-------- -------- ------- -------
Total interest-bearing liabilities 433,263 15,118 4.65 346,597 12,706 4.89
------ ------
Noninterest-bearing deposits 10,131 7,473
Noninterest-bearing liabilities 5,550 4,093
Stockholders' equity 54,498 52,352
------- -------
Total liabilities and stockholders' equity $ 503,442 $ 410,515
''''''' '''''''
Net interest income $ 12,851 $ 11,046
'''''' ''''''
Interest-rate spread (2) 3.09% 3.09%
'''' ''''
Net average interest-earning assets,
net interest margin (3) $ 48,728 3.55% $ 50,397 3.71%
''''''' '''' ''''''' ''''
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.11 1.15
'''' ''''
</TABLE>
(1) Includes interest-bearing deposits, federal funds sold and FHLB stock.
(2) Interest-rate spread represents the difference between the average yield
on interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin is net interest income divided by average
interest-earning assets.
14
<PAGE>
FFLC BANCORP, INC.
Comparison of the Three Months Ended September 30, 1999 and 1998
Results of Operations
General Operating Results. Net income for the three months ended September 30,
1999 was $1.2 million or $.35 and $.33 per basic and diluted income per
share, respectively, compared to $1.1 million or $.31 and $.30 per basic and
diluted income per share, respectively, for the three months ended September
30, 1998. The increase in net income for the 1999 period was primarily due to
an increase in net interest income of $693,000, offset by a $503,000 increase
in noninterest expense during the 1999 period.
Interest Income. Interest income increased $1.7 million, or 20.9% from $8.1
million for the three months ended September 30, 1998 to $9.8 million for the
three months ended September 30, 1999. The increase was due to a $101.3
million increase in average interest-earning assets outstanding, partially
offset by a decrease in the average yield on interest-earning assets from
8.01% for the three months ended September 30, 1998 to 7.75% for the
comparable period in 1999.
Interest Expense. Interest expense increased $1.0 million or 22.9% from $4.4
million for the three months ended September 30, 1998 to $5.4 million for the
1999 period. The increase was the result of a $104.2 million increase in
average interest-bearing liabilities outstanding during the 1999 period,
compared to the 1998 period, partially offset by a decrease in the weighted
average rate paid on interest-bearing liabilities from 4.94% for the three
months ended September 30, 1998 to 4.69% for the comparable period in 1999.
Provision for Loan Losses. The Company's provision for loan losses was $150,000
for the three months ended September 30, 1999 and the allowance for loan
losses at September 30, 1999 was $2.6 million. The provision reflects
Company'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 Company's loan
portfolio.
Noninterest Expense. Noninterest expense consists primarily of salaries and
employee benefits, occupancy expense and data processing expense. Noninterest
expenses increased by $503,000, or 23.5% from $2.1 million for the three
months ended September 30, 1998 to $2.6 million for the 1999 period. The
increase was primarily due to increases in salaries and employee benefits of
$285,000 and occupancy expense of $134,000 resulting from the overall growth
of the Company.
Income Tax Provision. The income tax provision increased from $636,000 for the
three months ended September 30, 1998 (an effective tax rate of 36.0%) to
$739,000 (an effective tax rate of 37.6%) for the corresponding period in
1999.
15
<PAGE>
FFLC BANCORP, INC.
Comparison of the Nine Months Ended September 30, 1999 and 1998
General Operating Results. Net income for the nine months ended September 30,
1999, was $4.2 million, or $1.18 and $1.13 per basic and diluted share,
respectively, compared to $3.2 million or $.89 and $.85 per basic and diluted
share, respectively, for the nine months ended September 30, 1998. Net income
for the 1999 period included a gain on sale of real estate held for
development of $886,000 ($553,000, net of tax). An increase in interest
income of $4.2 million, partially offset by increases in interest expense of
$2.4 million and noninterest expense of $1.4 million also contributed to the
increase in net income.
Interest Income. Interest income increased $4.2 million, or 17.8% from $23.8
million for the nine months ended September 30, 1998 to $28.0 million for the
nine months ended September 30, 1999. The increase in interest income
resulted from an $85.0 million increase in average interest-earning assets
outstanding, partially offset by a decrease in the average yield on
interest-earning assets from 7.98% for the nine months ended September 30,
1998 to 7.74% for nine months ended September 30, 1999.
Interest Expense. Interest expense increased $2.4 million, or 19.0% from $12.7
million for the nine months ended September 30, 1998 to $15.1 million for the
1999 period. The increase was due to an increase of $86.7 million in average
interest-bearing liabilities outstanding, partially offset by a decrease in
the weighted average rate paid on interest-bearing liabilities from 4.89% for
the nine months ended September 30, 1998 to 4.65% for the 1999 period.
Provision for Loan Losses. The Company's provision for loan losses was $500,000
for the nine months ended September 30, 1999 and the allowance for loan
losses was $2.6 million at September 30, 1999. The provision reflects the
Company'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 Company's loan portfolio.
Noninterest Income. Noninterest income increased $1.1 million from the nine
months ended September 30, 1998 to the nine months ended September 30, 1999.
This was primarily due to a pretax gain on sale of real estate held for
development of $886,000 recognized during 1999.
Noninterest Expense. Noninterest expense consists primarily of salaries and
employee benefits, occupancy expense and data processing expense. Noninterest
expense increased by $1.4, or 22.1%, from $6.2 million for the nine months
ended September 30, 1998 to $7.6 million for the 1999 period. This increase
was primarily due to increases in salaries and employee benefits of $706,000
and occupancy expense of $342,000 resulted from the overall growth of the
Company.
Income Tax Provision. The income tax provision increased from $2.0 million for
the nine months ended September 30, 1998 (an effective tax rate of 37.9%) to
$2.6 million (an effective tax rate of 37.9%) for the corresponding period in
1999.
16
<PAGE>
FFLC BANCORP, INC.
Year 2000 Readiness Disclosure
The Company is acutely aware of the many areas affected by the Year 2000
computer issue, as addressed by the Federal Financial Institutions Examination
Council ("FFIEC") in its interagency statements which provide an outline for
institutions to manage the Year 2000 challenges effectively. A Year 2000 plan
has been approved by the Board of Directors which includes multiple phases,
tasks to be completed, and target dates for completion. Issues addressed in the
plan include awareness, assessment, renovation, validation, implementation, and
contingency planning.
The Company has formed a Year 2000 committee that is charged with the oversight
of completing the Year 2000 project on a timely basis. The Company has completed
its awareness, assessment, renovation, validation and implementation phases of
its plan and is substantially Year 2000 ready. Since it routinely upgrades and
purchases technologically advanced software and hardware on a continuing basis,
the Company has determined that the cost of making modifications to correct any
Year 2000 issues will not materially affect reported operating results.
Management does not believe that the Company has incurred or will incur material
costs associated with the Year 2000 issue.
The Company's vendors and suppliers have been contacted for written confirmation
of their product readiness for Year 2000 compliance. Negative or deficient
responses are analyzed and periodically reviewed to prescribe timely actions
within the Company's contingency planning. The Company's main service provider
has completed testing of its mission critical application software and item
processing software; the test results, which have been documented and validated,
are deemed to be Year 2000 compliant. FFIEC guidance on testing Year 2000
compliance of service providers states that proxy tests are acceptable
compliance tests. In proxy testing, the service provider tests with a
representative sample of financial institutions that use a particular service,
with the results of such testing shared with all similarly situated clients of
the service provider. The Company has authorized the acceptance of proxy testing
since the proxy tests have been conducted with financial institutions that are
similar in type and complexity to the Company using the same version of the Year
2000 ready software and the same hardware and operating systems.
The Company also recognizes the importance of determining that its borrowers are
facing the Year 2000 problem in a timely manner to avoid deterioration of the
loan portfolio solely due to this issue. By December 31, 1998 all material
relationships were identified through completed questionnaires or direct contact
with the customer to determine Year 2000 readiness. On an ongoing basis, new
commercial loan borrowers are asked to certify that their systems are Year 2000
compliant. Deposit customers have received statement stuffers and informational
material in this regard.
Notwithstanding our actions, there can be no assurances that all hardware and
software that the Company will use will be Year 2000 compliant. Management
cannot predict the amount of financial difficulties it may incur due to
customers and vendors inability to perform according to their agreements with
the Company or the effects that other third parties may cause as a result of
this issue. Therefore, there can be no assurance that the failure or delay of
others to address the issue or that the costs involved in such process will not
have a material adverse effect on the Company's business, financial condition,
and results of operations.
Based on testing results to date (as noted above), the Company's mission
critical systems have been deemed to be Year 2000 ready. However, a written
contingency plan has been developed to address problems that might be caused
from Year 2000 system failures. Testing of the contingency plan was completed
during July 1999. With regard to non-mission critical internal systems, the
Company's contingency plans are to replace those systems that test as being
noncompliant. Alternatively, some systems could be handled manually on an
interim basis. Should outside service providers not be able to provide compliant
systems, the Company will terminate those relationships and transfer to other
vendors. It is anticipated that the Company's deposit customers will have
increased demands for cash in the latter part of 1999 and, correspondingly, the
Company will maintain higher liquidity levels.
17
<PAGE>
FFLC BANCORP, INC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss from adverse changes in market prices and rates.
The Company's market risk arises primarily from interest rate risk inherent in
its lending and deposit taking activities. The Company has little or no risk
related to trading accounts, commodities or foreign exchange.
Management actively monitors and manages its interest rate risk exposure. The
primary objective in managing interest-rate risk is to limit, within established
guidelines, the adverse impact of changes in interest rates on the Company's net
interest income and capital, while adjusting the Company's asset-liability
structure to obtain the maximum yield-cost spread on that structure. Management
relies primarily on its asset-liability structure to control interest rate risk.
However, a sudden and substantial increase in interest rates could adversely
impact the Company's earnings, to the extent that the interest rates borne by
assets and liabilities do not change at the same speed, to the same extent, or
on the same basis. There have been no significant changes in the Company's
market risk exposure since December 31, 1998.
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. The following exhibits are filed as part of this report:
(3)ii Amended Bylaws of FFLC Bancorp, Inc.
(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, 1999.
18
<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 3, 1999 By:/s/ Stephen T. Kurtz
----------------- -----------------------------------------------
Stephen T. Kurtz, President and Chief Executive
Officer
Date: November 3, 1999 By:/s/ Paul K. Mueller
----------------- -----------------------------------------------
Paul K. Mueller, Executive Vice President and
Treasurer
19
Exhibit (3)ii
FFLC BANCORP, INC.
BYLAWS
ARTICLE I - STOCKHOLDERS
------------------------
Section 1. Annual Meeting.
- --------------------------
An annual meeting of the stockholders, for the election of Directors to succeed
those whose terms expire and for the transaction of such other business as may
properly come before the meeting, shall be held at such place, on such date, and
at such time as the Board of Directors shall each year fix, which date shall be
within thirteen (13) months subsequent to the later of the date of incorporation
or the last annual meeting of stockholders.
Section 2. Special Meetings.
- ----------------------------
Subject to the rights of the holders of any class or series of preferred stock
of the Corporation, special meetings of stockholders of the Corporation may be
called only by the Board of Directors pursuant to a resolution adopted by a
majority of the Whole Board. The term "Whole Board" shall mean the total number
of Directors which the Corporation would have if there were no vacancies on the
Board of Directors (hereinafter the "Whole Board")
Section 3. Notice of Meetings.
- ------------------------------
Written notice of the place, date, and time of all meetings of the stockholders
shall be given, not less than ten (10) nor more than sixty (60) days before the
date on which the meeting is to be held, to each stockholder entitled to vote at
such meeting, except as otherwise provided herein or required by law.
When a meeting is adjourned to another place, date or time, written notice need
not be given of the adjourned meeting if the place, date and time thereof are
announced at the meeting at which the adjournment is taken; provided, however,
that if the date of any adjourned meeting is more than thirty (30) days after
the date for which the meeting was originally noticed, or if a new record date
is fixed for the adjourned meeting, written notice of the place, date, and time
of the adjourned meeting shall be given in conformity herewith. At any adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting.
Section 4. Quorum.
- ------------------
At any meeting of the stockholders, the holders of a majority of all of the
shares of the stock entitled to vote at the meeting, present in person or by
proxy (after giving effect to the provisions of Article FOURTH of the
Corporation's Certificate of Incorporation), shall constitute a quorum for all
purposes, unless or except to the extent that the presence of a larger number
may be required by law. Where a separate vote by a class or classes is required,
a majority of the shares of such class or classes present in person or
represented by proxy (after giving effect to the provisions of Article FOURTH of
the Corporation's Certificate of Incorporation) shall constitute a quorum
entitled to take action with respect to that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting or the
holders of a majority of the shares of stock entitled to vote who are present,
in person or by proxy, may adjourn the meeting to another place, date, or time.
<PAGE>
Section 5. Organization.
- ------------------------
The Chairman of the Board of the Corporation or, in his or her absence, such
person as the Board of Directors may have designated or, in the absence of such
a person, such person as may be chosen by the holders of a majority of the
shares entitled to vote who are present, in person or by proxy, shall call to
order any meeting of the stockholders and shall chair the meeting. In the
absence of the Secretary of the Corporation, the secretary of the meeting shall
be such person as the chairman appoints.
Section 6. Conduct of Business.
- -------------------------------
(a) The chairman of any meeting of stockholders shall determine the order of
business and the procedures at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him or her in order.
The date and time of the opening and closing of the polls for each matter upon
which the stockholders will vote at the meeting shall be announced at the
meeting.
(b) At any annual meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting (i) by or at the
direction of the Board of Directors or (ii) by any stockholder of the
Corporation who is entitled to vote with respect thereto and who complies with
the notice procedures set forth in this Section 6(b). For business to be
properly brought before an annual meeting by a stockholder, the business must
relate to a proper subject matter for stockholder action and the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered or mailed to
and received at the principal executive office of the Corporation not less than
ninety (90) days prior to the date of the annual meeting; provided, however,
that if less than one hundred (100) days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must b e received not later than the close of business
on the 10th day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure was made. A stockholder's notice to
the Secretary shall set forth as to each matter such stockholder proposes to
bring before the annual meeting (i) a brief description of the business desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, (iii) the class
and number of shares of the Corporation's capital stock that are beneficially
owned by such stockholder and (iv) any material interest of such stockholder in
such business. Notwithstanding anything in these Bylaws to the contrary, no
business shall be brought before or conducted at an annual meeting except in
accordance with the provisions of this Section 6(b). The Chairman of the Board
or other person presiding over the annual meeting shall, if the facts so
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of this Section
6(b) and, if he should so determine, he shall so declare to the meeting and any
such business so determined to be not properly brought before the meeting shall
not be transacted.
At any special meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting by or at the direction
of a majority of the Whole Board of Directors.
<PAGE>
(c) Only persons who are nominated in accordance with the procedures set forth
in these Bylaws shall be eligible for election as Directors. Nominations of
persons for election to the Board of Directors of the Corporation may be made at
a meeting of stockholders at which directors are to be elected only (i) by or at
the direction of the Board of Directors or (ii) by any stockholder of the
Corporation entitled to vote for the election of Directors at the meeting who
complies with the notice procedures set forth in this Section 6(c). Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made by timely notice in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice shall be delivered or mailed
to and received at the principal executive office of the Corporation not less
than ninety (90) days prior to the date of the meeting; provided, however, that
in the event that less than one hundred (100) days' notice or prior disclosure
of the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed
2
<PAGE>
or such public disclosure was made. Such stockholder's notice shall set forth
(i) as to each person whom such stockholder proposes to nominate for election or
re-election as a Director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of Directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
Director if elected); and (ii) as to the stockholder giving the notice (x) the
name and address, as they appear on the Corporation's books, of such stockholder
and (y) the class and number of shares of the Corporation's capital stock that
are beneficially owned by such stockholder. At the request of the Board of
Directors any person nominated by the Board of Directors for election as a
Director shall furnish to the Secretary of the Corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee. No person shall be eligible for election as a Director of the
Corporation unless nominated in accordance with the provisions of this Section
6(c). The Chairman of the Board or other person presiding at the meeting shall,
if the facts so warrant, determine that a nomination was not made in accordance
with such provisions and, if he or she shall so determine, he or she shall so
declare to the meeting and the defective nomination shall be disregarded.
Section 7. Proxies and Voting.
- ------------------------------
At any meeting of the stockholders, every stockholder entitled to vote may vote
in person or by proxy authorized by an instrument in writing filed in accordance
with the procedure established for the meeting or by proxy by internet at the
discretion of the Board of Directors. Any facsimile telecommunication or other
reliable reproduction of the writing or transmission created pursuant to this
paragraph may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission.
A stockholder may also authorize another person or persons to act as his proxy
by transmitting or authorizing the transmission of a telegram, cablegram or
other means of electronic transmission, as authorized by the Whole Board of
Directors and permitted under Section 212 of the Delaware General Corporation
Law.
All voting, including the election of Directors but excepting where otherwise
required by law or by the governing documents of the Corporation, may be made by
a voice vote; provided, however, that upon demand therefore by a stockholder
entitled to vote or his her proxy, a stock vote shall be taken. Every stock vote
shall be taken by ballot, each of which shall state the name of the stockholder
or proxy voting and such other information as may be required under the
procedures established for the meeting. The Board of Directors shall, in advance
of any meeting of stockholders, appoint one or more inspectors to act at the
meeting and make a written report thereof. The Board of Directors may designate
one or more persons as alternate inspectors to replace any inspector who fails
to act. If no inspector or alternate is able to act at a meeting of
stockholders, the Chairman of the Board, or in his absence such person presiding
at the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector with strict impartiality
and according to the best of his or her ability.
All elections for Directors shall be determined by a plurality of the votes
cast, and except as otherwise required by law, the Certificate of Incorporation
or these Bylaws, all other matters shall be determined by a majority of the
votes cast affirmatively or negatively.
3
<PAGE>
Section 8. Stock List.
- ----------------------
A complete list of stockholders entitled to vote at any meeting of stockholders,
arranged in alphabetical order for each class of stock and showing the address
of each such stockholder and the number of shares registered in his or her name,
shall be open to the examination of any such stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during the whole
time thereof and shall be open to the examination of any such stockholder who is
present. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
Section 9. Consent of Stockholders in Lieu of Meeting.
- ------------------------------------------------------
Subject to the rights of the holders of any class or series of preferred stock
of the Corporation, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at an annual or special meeting
of stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders.
ARTICLE II - BOARD OF DIRECTORS
-------------------------------
Section 1. General Powers. Number and Term of Office.
- -----------------------------------------------------
The business and affairs of the Corporation shall be under the direction of its
Board of Directors. The number of Directors who shall constitute the Whole Board
shall be seven. The Board of Directors shall annually elect a Chairman of the
Board and a Vice Chairman of the Board from among its members. When present,
either the Chairman of the Board or the Vice Chairman of the Board, in that
order of precedence, shall preside at meetings of the Board of Directors.
The Directors, other than those who may be elected by the holders of any class
or series of Preferred Stock, shall be divided, with respect to the time for
which they severally hold office, into three classes, with the term of office of
the first class to expire at the first annual meeting of stockholders, the term
of office of the second class to expire at the annual meeting of stockholders
one year thereafter and the term of office of the third class to expire at the
annual meeting of stockholders two years thereafter, with each Director to hold
office until his or her successor shall have been duly elected and qualified. At
each annual meeting of stockholders, Directors elected to succeed those
Directors whose terms then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after their
election, with each Director to hold office until his or her successor shall
have been duly elected and qualified.
Section 2. Vacancies and Newly Created Directorships.
- -----------------------------------------------------
Subject to the rights of the holders of any class or series of Preferred Stock,
and unless the Board of Directors otherwise determines, newly created
directorships resulting from any increase in the authorized number of directors
or any vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the Directors then in office, though less than a
quorum, and Directors so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of office of the class to which
they have been elected expires and until such Director's successor shall have
been duly elected and qualified. No decrease in the number of authorized
directors constituting the Board shall shorten the term of any incumbent
Director.
4
<PAGE>
Section 3. Regular Meetings.
- ----------------------------
Regular meetings of the Board of Directors shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all Directors. A
notice of each regular meeting shall not be required.
Section 4. Special Meetings.
- ----------------------------
Special meetings of the Board of Directors may be called by a majority of the
Directors then in office (rounded up to the nearest whole number), or by the
Chairman of the Board and shall be held at such place, on such date, and at such
time as they, or he or she, shall fix. Notice of the place, date, and time of
each such special meeting shall be given each Director by whom it is not waived
by mailing written notice not less than five (5) days before the meeting or by
telegraphing or telexing or by facsimile transmission of the same not less than
twenty-four (24) hours before the meeting. Unless otherwise indicated in the
notice thereof, any and all business may be transacted at a special meeting.
Section 5. Quorum.
- ------------------
At any meeting of the Board of Directors, a majority of the Whole Board shall
constitute a quorum for all purposes. If a quorum shall fail to attend any
meeting, a majority of those present may adjourn the meeting to another place,
date, or time, without further notice or waiver thereof.
Section 6. Participation in Meetings By Conference Telephone.
- -------------------------------------------------------------
Members of the Board of Directors, or of any committee thereof, may participate
in a meeting of such Board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other and such participation shall constitute presence
in person at such meeting.
Section 7. Conduct of Business.
- -------------------------------
At any meeting of the Board of Directors, business shall be transacted in such
order and manner as the Board or the Chairman of the Board may from time to time
determine, and all matters shall be determined by the vote of a majority of the
Directors present, except as otherwise provided herein or required by law.
Action may be taken by the Board of Directors without a meeting if all members
thereof consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board of Directors.
<PAGE>
Section 8. Powers.
- ------------------
The Board of Directors may, except as otherwise required by law, exercise all
such powers and do all such acts and things as may be exercised or done by the
Corporation, including, without limiting the generality of the foregoing, the
unqualified power:
(1) To declare dividends from time to time in accordance with law;
(2) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form
as it may determine, of written obligations of every kind,
negotiable or non-negotiable, secured or unsecured, and to do
all things necessary in connection therewith;
(4) To remove any Officer of the Corporation with or without
cause, and from time to time to dissolve the powers and duties
of any Officer upon any other person for the time being;
(5) To confer upon any Officer of the Corporation the power to
appoint, remove and suspend subordinate Officers, employees
and agents;
5
<PAGE>
(6) To adopt from time to time such stock option; stock purchase,
bonus or other compensation plans for Directors, Officers,
employees and agents of the Corporation and its subsidiaries
as it may determine;
(7) To adopt from time to time such insurance, retirement, and
other benefit plans for Directors, Officers, employees and
agents of the Corporation and its subsidiaries
(8) To adopt from time to time regulations, not inconsistent with
these Bylaws, for the management of the Corporation's business
and affairs.
Section 9. Compensation of Directors.
- -------------------------------------
Directors, as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services as Directors,
including, without limitation, their services as members of committees of the
Board of Directors.
Section 10. Age Limitations (Amended 8/22/96). No person 72 years of age or
above shall be eligible for election, reelection, appointment or reappointment
to the board of FFLC Bancorp, Inc. A director who reaches the age of 72 during
his term of service on the board may complete the term as director. This age
limitation does not apply to an advisory director.
ARTICLE III - COMMITTEES
Section 1. Committees of the Board of Directors.
- ------------------------------------------------
The Board of Directors, by a vote of a majority of the Whole Board of Directors,
may from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of a
majority of the Whole Board and shall, for these committees and any others
provided for herein, elect a Director or Directors to serve as the member or
members, designating, if it desires, other Directors as alternate members who
may replace any absent or disqualified member at any meeting of the committee.
The Board of Directors, by a resolution adopted by a majority of the Whole Board
may terminate any committee previously established. Any committee so designated
by resolution adopted by a majority of the Whole Board may exercise the power
and authority of the Board of Directors to declare a dividend, to authorize the
issuance of stock or to adopt a certificate of ownership and merger pursuant to
Section 253 of the Delaware General Corporation Law if the resolution which
designates the committee or a supplemental resolution of the Board of Directors
shall so provide. In the absence or disqualification of any member of any
committee and any alternate member in his or her place, the member or members of
the committee present at the meeting and not disqualified from voting, whether
or not he or she or they constitute a quorum, may by unanimous vote appoint
another member of the Board of Directors to act at the meeting in the place of
the absent or disqualified member.
Section 2. Conduct of Business.
- -------------------------------
Each committee may determine the procedural rules for meeting and conducting its
business and shall act in accordance therewith, except as otherwise provided
herein or required by law or the Board of Directors. Adequate provision shall be
made for notice to members of all meetings; a majority of the members shall
constitute a quorum unless the committee shall consist of one (1) or two (2)
members, in which event one (1) member shall constitute a quorum; and all
matters shall be determined by a majority vote of the members present. Action
may be taken by any committee without a meeting if all members thereof consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of such committee.
6
<PAGE>
Section 3. Nominating Committee.
- --------------------------------
The Board of Directors, by resolution adopted by a majority of the Whole Board,
shall appoint a Nominating Committee of the Board, consisting of not less than
three (3) members of the Board of Directors, one of whom shall be the Chairman
of the Board. The Nominating Committee shall have authority (a) to review any
nominations for election to the Board of Directors made by a stockholder of the
Corporation pursuant to Section 6(c)(ii) of Article 1 of these Bylaws in order
to determine compliance with such Bylaw and (b) to recommend to the Whole Board
nominees for election to the Board of Directors (i) to replace those Directors
whose terms expire at the annual meeting of stockholders next ensuing and (ii)
to fill vacancies resulting from death, resignation, retirement,
disqualification, removal from office or other cause, or resulting from an
increase in the authorized number of Directors.
ARTICLE IV - OFFICERS
Section 1. Generally
- --------------------
(a) The Board of Directors as soon as may be practicable after the annual
meeting of stockholders shall choose a Chairman of the Board, Vice-Chairman of
the Board, President, one or more Vice Presidents, and a Secretary and from time
to time may choose such other officers as it may deem proper. The Chairman of
the Board shall be an outside member of the Board of Directors. Any number of
offices may be held by the same person. The Chairman of the Board shall not
serve for more than three consecutive annual one year terms.
(b) The term of office of all Officers shall be until the next annual election
of Officers and until their respective successors are chosen but any Officer may
be removed from office at any time by the affirmative vote of a majority of the
authorized number of Directors then constituting the Board of Directors, or by
the Chairman of the Board.
(c) All Officers chosen by the Board of Directors or the Chairman of the Board
shall each have such powers and duties as generally pertain to their respective
Offices, subject to the specific provisions of this ARTICLE IV. Such officers
shall also have such powers and duties as from time to time may be conferred by
the Board of Directors.
Section 2. Chief Executive Officer and President.
- -------------------------------------------------
The Chief Executive Officer and President, subject to the provisions of these
Bylaws and to the direction of the Board of Directors, shall serve in a general
executive capacity. He shall perform all duties and have all powers which are
commonly incident to the office of President & CEO or which are delegated to him
by the Board of Directors. He shall have power to sign all stock certificates,
contracts and other instruments of the Corporation which are authorized.
He shall also have general responsibility for the management and control of the
business and affairs of the Corporation and shall perform all duties and have
all powers which are commonly incident to the offices of President and Chief
Executive Officer or which are delegated to him by the Board of Directors.
Subject to the direction of the Board of Directors, he shall have general
supervision of all of the other Officers, employees and agents of the
Corporation.
Section 3. Vice President.
- --------------------------
The Vice Presidents shall perform the duties and exercise the powers usually
incident to their respective offices an-or such other duties and powers as may
be properly assigned to them by the Board of Directors or the Chairman of the
Board. A Vice President or Vice Presidents may be designated as Executive Vice
President or Senior Vice President.
7
<PAGE>
Section 4. Secretary.
- ---------------------
The Secretary or Assistant Secretary shall issue notices of meetings, shall keep
their minutes, shall have charge of the seal and the corporate books, shall
perform such other duties and exercise such other powers as are usually incident
to such office an-or such other duties and powers as are properly assigned
thereto by the Board of Directors or the Chairman of the Board. Subject to the
direction of the Board of Directors, the Secretary shall have the power to sign
all stock certificates.
Section 5. Assistant Secretaries and Other Officers.
- ----------------------------------------------------
The Board of Directors or the Chairman of the Board may appoint one or more
Assistant Secretaries and such other Officers who shall have such powers and
shall perform such duties as are provided in these Bylaws or as may be assigned
to them by the Board of Directors or the Chairman of the Board.
Section 6. Action with Respect to Securities of Other Corporations.
- -------------------------------------------------------------------
Unless otherwise directed by the Board of Directors, the Chairman of the Board
or any Officer of the Corporation authorized by the Chairman of the Board shall
have power to vote and otherwise act on behalf of the Corporation, in person or
by proxy, at any meeting of stockholders of or with respect to any action of
stockholders of any other corporation in which this Corporation may hold
securities and otherwise to exercise any and all rights and powers which this
Corporation may possess by reason of its ownership of securities in such other
corporation.
ARTICLE V - STOCK
Section 1. Certificates of Stock.
- ---------------------------------
Each stockholder shall be entitled to a certificate signed by, or in the name of
the Corporation by, the Chairman of the Board or the President, and by the
Secretary or an Assistant Secretary, certifying the number of shares owned by
him or her. Any or all of the signatures on the certificate may be a facsimile.
Section 2. Transfers of Stock.
- ------------------------------
Transfers of stock shall be made only upon the transfer books of the Corporation
kept at an office of the Corporation or by transfer agents designated to
transfer shares of the stock of the Corporation. Except where a certificate is
issued in accordance with Section 4 of Article V of these Bylaws, an outstanding
certificate for the number of shares involved shall be surrendered for
cancellation before a new certificate is issued therefor.
Section 3. Record Date.
- -----------------------
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders, or to receive payment of any
dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted and which record date shall not be more than
sixty (60) days nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is
fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the next day preceding the day
on which the meeting is held, and, for determining stockholders entitled to
receive payment of any dividend or other distribution or allotment or rights or
to exercise any rights of change, conversion or exchange of stock or for any
other purpose,
8
<PAGE>
the record date shall be at the close of business on the day on which the Board
of Directors adopts a resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 4. Lost. Stolen or Destroyed Certificates.
- --------------------------------------------------
In the event of the loss, theft or destruction of any certificate of stock,
another may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
Section 5. Regulations.
- -----------------------
The issue, transfer, conversion and registration of certificates of stock shall
be governed by such other regulations as the Board of Directors may establish.
ARTICLE VI - NOTICES
Section 1. Notices.
- -------------------
Except as otherwise specifically provided herein or required by law, all notices
required to be given to any stockholder, Director, Officer, employee or agent
shall be in writing and may in every instance be effectively given by hand
delivery to the recipient thereof, by depositing such notice in the mails,
postage paid, or by sending such notice by prepaid telegram or mailgram or other
courier. Any such notice shall be addressed to such stockholder, Director,
Officer, employee or agent at his or her last known address as the same appears
on the books of the Corporation. The time when such notice is received, if hand
delivered, or dispatched, if delivered through the mails or by telegram or
mailgram or other courier, shall be the time of the giving of the notice.
Section 2. Waivers.
- -------------------
A written waiver of any notice, signed by a stockholder, Director, Officer,
employee or agent, whether before or after the time of the event for which
notice is to be given, shall be deemed equivalent to the notice required to be
given to such stockholder, Director, Officer, employee or agent. Neither the
business nor the purpose of any meeting need be specified in such a waiver.
ARTICLE VII - MISCELLANEOUS
Section 1. Facsimile Signatures.
- --------------------------------
In addition to the provisions for use of facsimile signatures elsewhere
specifically authorized in these Bylaws, facsimile signatures of any Officer or
officers of the Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof designated by the Board.
Section 2. Corporate Seal.
- --------------------------
The Board of Directors may provide a suitable seal, containing the name of the
Corporation, which seal shall be in the charge of the Secretary. If and when so
directed by the Board of Directors or a designated committee thereof, duplicates
of the seal may be kept and used by the Chief Financial Officer or by an
Assistant Secretary or an assistant to the Chief Financial Officer.
9
<PAGE>
Section 3. Reliance Upon Books, Reports and Records.
- ----------------------------------------------------
Each Director, each member of any committee designated by the Board of
Directors, and each Officer of the Corporation shall, in the performance of his
or her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of its Officers or
employees, or committees of the Board of Directors so designated, or by lawyers,
accountants, agents or any other person as to matters which such Director or
committee member or officer reasonably believes are within such other person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Corporation.
Section 4. Fiscal Year.
- -----------------------
The fiscal year of the Corporation shall be as fixed by the Board of Directors.
Section 5. Time Periods.
- ------------------------
In applying any provision of these Bylaws which requires that an act be done or
not be done a specified number of days prior to an event or that an act be done
during a period of a specified number of days prior to an event, calendar days
shall be used, the day of the doing of the act shall be excluded, and the day of
the event shall be included.
ARTICLE VIII - AMENDMENTS
-------------------------
The Board of Directors by a resolution adopted by a majority of the Whole Board,
may amend, alter or repeal these Bylaws at any meeting of the Board, provided
notice of the proposed change was given not less than two days prior to the
meeting. The stockholders shall also have power to amend, alter or repeal these
Bylaws at any meeting of stockholders provided notice of the proposed change was
given in the notice of the meeting; provided, however, that, notwithstanding any
other provisions of the Bylaws or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote of the
holders of any particular class or series of the voting stock required by law,
the Certificate of Incorporation, any Preferred Stock Designation or these
Bylaws, the affirmative votes of the holders of at least 80% of the voting power
(taking into account the provisions of Article FOURTH of the Certificate of
Incorporation) of all the then-outstanding shares of the Voting Stock voting
together as a single class, shall be required to alter, amend or repeal any
provisions of these Bylaws.
The above Bylaws are effective as of September 16, 1993, the date of their
adoption by the incorporator of FFLC Bancorp, Inc.
10
<PAGE>
EXCERPTS FROM THE MINUTES OF THE FFLC BANCORP, INC.
BOARD OF DIRECTORS
MEETING HELD ON AUGUST 22, 1996
The following new Section 10 replaces the
existing section 10 (Retirement of Directors) of Article
II of the Bylaws of FFLC Bancorp, Inc.
Section 10. Age Limitations.
- ----------- ----------------
No person 72 years of age or above shall be eligible for election, reelection,
appointment or reappointment to the board of FFLC Bancorp, Inc. A director who
reaches the age of 72 during his term of service on the board may complete the
term as director. This age limitation does not apply to an advisory director.
I hereby certify that the forgoing is a true copy of the action taken
by the Board of Directors of the FFLC Bancorp, Inc., Leesburg, Florida, and that
it remains in full force and effect.
Sandra L. Rutschow, Secretary
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