U.S. 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, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------- ----------------
Commission file number 0-22608
FFLC BANCORP, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 59-3204891
------------------------- ----------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
800 North Boulevard West, Post Office Box 490420, Leesburg, Florida 34749-0420
-------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (352) 787-3311
--------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common stock, par value $.01 per share 3,542,526 shares outstanding at
-------------------------------------- October 23, 2000
--------------------------------
<PAGE>
FFLC BANCORP, INC.
INDEX
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
<S> <C>
Condensed Consolidated Balance Sheets -
at September 30, 2000 (unaudited) and at December 31, 1999...................2
Condensed Consolidated Statements of Income -
Three and Nine months ended September 30, 2000 and 1999 (unaudited)..........3
Condensed Consolidated Statement of Stockholders' Equity -
Nine months ended September 30, 2000 (unaudited).............................4
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 2000 and 1999 (unaudited)..................5-6
Notes to Condensed Consolidated Financial Statements (unaudited)..............7-9
Review by Independent Certified Public Accountants.............................10
Report on Review by Independent Certified Public Accountants...................11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................................2-19
Item 3. Quantative and Qualitative Disclosures About Market Risk..................20
Part II. OTHER INFORMATION
Item 1. Legal Proceedings..........................................................20
Item 2. Changes in Securities......................................................20
Item 3. Default upon Senior Securities.............................................20
Item 5. Other Information..........................................................20
Item 6. Exhibits and Reports on Form 8-K...........................................21
SIGNATURES ............................................................................22
</TABLE>
<PAGE>
FFLC BANCORP, INC.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
($ in thousands, except share amounts)
<TABLE>
<CAPTION>
At At
September 30, December 31,
2000 1999
---- ----
(unaudited)
<S> <C> <C>
Assets
Cash and due from banks $ 12,925 17,313
Interest-bearing deposits 18,947 17,026
------- --------
Cash and cash equivalents 31,872 34,339
-
Securities available for sale 37,891 36,909
Loans receivable, net of allowance for loan losses of $3,377 in 2000
and $2,811 in 1999 596,529 501,131
Accrued interest receivable 3,684 2,815
Premises and equipment, net 10,883 9,386
Foreclosed real estate 356 400
Federal Home Loan Bank stock, at cost 5,750 4,950
Other assets 1,051 502
-------- ---------
Total $ 688,016 590,432
======= ========
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits 13,473 11,100
NOW and money-market accounts 85,702 77,293
Savings accounts 19,456 21,110
Certificates 384,733 319,771
------- --------
Total deposits 503,364 429,274
-
Advances from Federal Home Loan Bank 115,000 99,000
Other borrowed funds 6,901 3,914
Accrued expenses and other liabilities 4,622 2,607
--------- ---------
Total liabilities 629,887 534,795
------- --------
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none outstanding - -
Common stock, $.01 par value, 9,000,000 shares authorized,
4,479,217 in 2000 and 4,447,461 in 1999 shares issued 45 44
Additional paid-in-capital 30,813 30,273
Retained income 46,249 43,539
Accumulated other comprehensive income (loss) (140) (182)
Treasury stock, at cost (943,191 shares in 2000 and
863,523 shares in 1999) (18,759) (17,721)
Stock held by Incentive Plan Trusts (79) (316)
--------- ---------
Total stockholders' equity 58,129 55,637
------- --------
Total $ 688,016 590,432
======= ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Income (Unaudited)
($ in thousands, except share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- -----------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $ 11,894 9,030 33,204 25,635
Securities available for sale 580 544 1,711 1,245
Securities held to maturity - - - 415
Other interest-earning assets 359 227 900 674
------------ ------------- ----------- -----------
Total interest income 12,833 9,801 35,815 27,969
----------- ------------ ---------- ----------
Interest expense:
Deposits 6,198 4,323 16,582 12,419
Borrowed funds 1,815 1,042 4,842 2,699
----------- ------------ ----------- -----------
Total interest expense 8,013 5,365 21,424 15,118
----------- ------------ ---------- -----------
Net interest income 4,820 4,436 14,391 12,851
Provision for loan losses 210 150 670 500
----------- ------------ ----------- -----------
Net interest income after provision
for loan losses 4,610 4,286 13,721 12,351
---------- ----------- ---------- ----------
Noninterest income:
Deposit account fees 224 154 596 451
Other service charges and fees 179 165 538 596
Gain on sale of real estate held for development - - - 886
Other 10 - 124 45
------------ -------------- ------------ ------------
Total noninterest income 413 319 1,258 1,978
----------- ------------ ----------- ----------
Noninterest expense:
Salaries and employee benefits 1,677 1,581 4,995 4,558
Occupancy 499 414 1,368 1,112
Deposit insurance premiums 23 54 66 157
Data processing 225 153 659 438
Professional services 77 71 224 219
Advertising and promotion 77 87 229 260
Other 310 282 894 834
------------ ------------ ------------ -----------
Total noninterest expense 2,888 2,642 8,435 7,578
----------- ----------- ----------- ----------
Income before income taxes 2,135 1,963 6,544 6,751
Income taxes 828 739 2,543 2,562
----------- ------------ ----------- ----------
Net income $ 1,307 1,224 4,001 4,189
=========== =========== =========== ==========
Basic income per share of common stock $ .37 . 35 1.13 1.18
============ ============ ============ ===========
Weighted-average number of shares outstanding
for basic 3,540,284 3,537,825 3,543,708 3,560,634
========= ========= ========= =========
Diluted income per share of common stock $ .36 .33 1.10 1.13
============ ============ ============ ============
Weighted-average number of shares outstanding
for diluted 3,613,869 3,670,492 3,618,768 3,695,240
========= ========= ========= =========
Dividends per share $ .12 .11 .36 .33
============ ============ ============ ============
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
4
<PAGE>
FFLC BANCORP, INC.
Condensed Consolidated Statement of Stockholders' Equity
Nine Months Ended September 30, 2000 (Unaudited)
($ in thousands)
<TABLE>
<CAPTION>
Accumulated
Stock Other
Held by Compre-
Additional Incentive hensive Total
Common Paid-In Treasury Plan Retained Income Stockholders'
Stock Capital Stock Trusts Income (Loss) Equity
-------- --------- --------- -------- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 $ 44 30,273 (17,721) (316) 43,539 (182) 55,637
------
Comprehensive income:
Net income (unaudited) - - - - 4,001 - 4,001
Net change in unrealized loss
on securities available for
sale, net of income taxes
of $25 (unaudited) - - - - - 42 42
--------
Comprehensive income (unaudited) 4,043
--------
Net proceeds from the issuance
of 23,517 shares of common
stock, stock options exercised
(unaudited) 1 146 - - - - 147
Net proceeds from the issuance
of 8,239 shares of common
stock under the Dividend
Reinvestment Plan (unaudited) - 107 - - - - 107
Dividends paid (unaudited) - - - - (1,291) - (1,291)
Purchase of treasury stock,
79,668 shares (unaudited) - - (1,038) - - - (1,038)
Shares committed to participants
in incentive plans (unaudited) - 287 - 237 - - 524
---- ------- -------- --- --------- ------ --------
Balance at September 30, 2000
(unaudited) $ 45 30,813 (18,759) (79) 46,249 (140) 58,129
== ====== ====== === ====== === =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
($ in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,001 4,189
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses 670 500
Depreciation 557 401
Credit for deferred income taxes (345) (74)
Shares committed and dividends to incentive plan participants 524 658
Net amortization of premiums or discounts on securities 25 57
Net deferral of loan fees and costs (78) (197)
Gain on sale of foreclosed real estate (10) (27)
Gain on sale of real estate held for development - (886)
Increase in accrued interest receivable (869) (538)
Increase in other assets (549) (250)
Increase in accrued expenses and other liabilities 2,335 1,079
-------- --------
Net cash provided by operating activities 6,261 4,912
-------- --------
Cash flows from investing activities:
Proceeds from maturities and principal repayments on securities held to maturity - 3,428
Proceeds from maturities and principal repayments on securities available for sale 3,443 3,923
Purchase of securities available for sale (4,383) (7,373)
Loan disbursements (153,568) (145,362)
Principal repayments on loans 57,079 59,843
Purchase of premises and equipment, net (2,054) (3,728)
Purchase of Federal Home Loan Bank stock (800) (1,650)
Proceeds from sales of foreclosed real estate 553 204
Proceeds from sale of real estate held for development - 1,008
--------- ---------
Net cash used in investing activities (99,730) (89,707)
------- -------
</TABLE>
(continued)
6
<PAGE>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited), Continued
($ in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from financing activities:
Net increase in deposits $ 74,090 49,385
Net increase in advances from Federal Home Loan Bank 16,000 33,000
Net increase in other borrowed funds 2,987 1,793
Issuance of common stock 254 291
Purchase of treasury stock (1,038) (2,268)
Dividends paid on common stock (1,291) (1,207)
------- ------
Net cash provided by financing activities 91,002 80,994
------ ------
Net decrease in cash and cash equivalents (2,467) (3,801)
Cash and cash equivalents at beginning of period 34,339 22,928
------ ------
Cash and cash equivalents at end of period $ 31,872 19,127
====== ======
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Interest $ 20,831 14,816
====== ======
Income taxes $ 2,745 2,573
====== =======
Noncash investing and financing activities:
Accumulated other comprehensive income (loss), net change in unrealized
loss on securities available for sale, net of tax $ 42 (31)
========= ========
Transfers from loans to foreclosed real estate $ 707 340
======== ========
Loans originated on sales of foreclosed real estate $ 208 197
======== ========
Loans funded by and sold to correspondent $ 555 6,882
======== =======
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.
7
<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, 2000 and the results of operations for the three- and
nine-month periods ended September 30, 2000 and 1999 and cash flows
for the nine month periods ended September 30, 2000 and 1999. The
results of operations for the three- and nine-month periods ended
September 30, 2000 are not necessarily indicative of results that
may be expected for the year ending December 31, 2000.
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.
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,
-------------------- --------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Beginning balance $ 3,182 2,545 2,811 2,283
Provision for loan losses 210 150 670 500
Loans charged-off (20) (51) (115) (158)
Recoveries 5 - 11 19
------- -------- ------ ------
Ending balance $ 3,377 2,644 3,377 2,644
===== ===== ===== =====
</TABLE>
The following summarizes the amount of impaired loans, all of which are
collateral dependent (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
---- ----
<S> <C> <C>
Loans identified as impaired:
Gross loans with no related allowance for losses $ - -
Gross loans with related allowance for losses recorded 1,280 1,348
Less: Allowances on these loans (192) (202)
----- ------
Net investment in impaired loans $ 1,088 1,146
======= =====
</TABLE>
(continued)
8
<PAGE>
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
2. Loan Impairment and Loan Losses, Continued.The average net investment in
impaired loans and interest income recognized and received on
impaired loans was as follows (in thousands):
<TABLE>
<CAPTION>
Three Nine
Months Ended Months Ended
September 30, September 30,
2000 2000
---- ----
<S> <C> <C>
Average net investment in impaired loans $1,088 1,117
====== ======
Interest income recognized on impaired loans $ 12 26
====== ======
Interest income received on impaired loans $ 12 26
====== ======
</TABLE>
No impaired loans were identified by the Company during the three
or nine months ended September 30, 1999.
3. Per Share Amounts. Basic 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. Dilutive income per share is computed by dividing
net income by the weighted-average number of shares outstanding
including the dilutive effect of stock options computed using the
treasury stock method. The following table presents the calculation
of basic and diluted weighted-average number of shares:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- -----------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted-average shares of common stock issued
and outstanding before adjustments for ESOP,
RRP and common stock options 3,564,592 3,614,739 3,581,168 3,650,701
Adjustment to reflect the effect of unallocated
ESOP and RRP shares (24,308) (76,914) (37,460) (90,067)
---------- ---------- ---------- ----------
Weighted-average common shares for basic
income per share 3,540,284 3,537,825 3,543,708 3,560,634
========= ========= ========= =========
Basic income per share $ .37 .35 1.13 1.18
========== ============= ============ ===========
Total weighted-average common shares and
equivalents outstanding for basic income
per share computation 3,540,284 3,537,825 3,543,708 3,560,634
Additional dilutive shares using the average market
value for the period utilizing the treasury stock
method regarding stock options 73,585 132,667 75,060 134,606
---------- ---------- ----------- ---------
Weighted-average common shares and equivalents
outstanding for diluted income per share 3,613,869 3,670,492 3,618,768 3,695,240
========= ========= ========= =========
Diluted income per share $ .36 .33 1.10 1.13
========== ============= ============ ============
</TABLE>
(continued)
9
<PAGE>
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
4. Dividend Reinvestment Plan. On January 7, 2000, the Company
established a Dividend Reinvestment Plan (the "Plan"). The Plan was
approved by the Board of Directors on December 30, 1999 and is
intended to provide stockholders of record of at least 50 shares
with a convenient and economical way to automatically reinvest all
or a portion of their cash dividends and to invest optional cash
payments, subject to minimum and maximum purchase limitations, in
additional shares of common stock. Stockholders pay no service
charges or brokerage commissions for common stock purchased under
the Plan. During the nine months ended September 30, 2000, 13,144
shares of common stock were purchased under this plan. Beginning
June, 2000 the Company decided not to issue new shares but rather
have their plan administrator purchase shares in the open market on
an as needed basis.
10
<PAGE>
FFLC BANCORP, INC.
Review by Independent Certified Public Accountants
Hacker, Johnson & Smith PA, the Company's independent certified public
accountants, have made a limited review of the financial data as of September
30, 2000, and for the three- and nine-month periods ended September 30, 2000 and
1999 presented in this document, in accordance with standards established by the
American Institute of Certified Public Accountants.
Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.
11
<PAGE>
Report on Review by Independent Certified Public Accountants
The Board of Directors
FFLC Bancorp, Inc.
Leesburg, Florida:
We have reviewed the accompanying condensed consolidated balance sheet
of FFLC Bancorp, Inc. and Subsidiary (the "Company") as of September 30, 2000,
the related condensed consolidated statements of income for the three- and
nine-month periods ended September 30, 2000 and 1999, the related condensed
consolidated statement of changes in stockholders' equity for the nine-month
period ended September 30, 2000 and the related condensed consolidated
statements of cash flows for the nine-month periods ended September 30, 2000 and
1999. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of December 31, 1999, and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for the year then ended (not presented herein); and in our report
dated January 14, 2000 we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December 31, 1999, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
HACKER, JOHNSON & SMITH PA
Tampa, Florida
October 6, 2000
12
<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 "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 Bank.
The 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 Bank
holds investments permitted by federal laws and regulations including
securities issued by the U.S. Government and agencies thereof. The
Company's revenues are derived principally from interest on its loan
and mortgage-backed securities portfolios and interest and dividends on
its investment securities. The 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 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 Bank has 12 full-service banking locations in Lake, Sumter and
Citrus Counties, Florida.
The Company's results of operations are dependent primarily on net
interest income, which is the difference between the interest income
earned primarily on its loan and securities portfolios, and its cost of
funds, consisting of the interest paid on its deposits and borrowings.
The Company's operating results are also affected, to a lesser extent,
by fee income. The Company's operating expenses consist primarily of
salaries and employee benefits, occupancy expenses, deposit insurance
premiums and other general and administrative expenses. The Company'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.
13
<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, 2000,
cash, amounts due from depository institutions and interest-bearing
deposits, totaled $31.9 million.
The 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 Bank's liquidity ratio at
September 30, 2000 exceeded the requirement.
The Bank's primary sources of funds include proceeds from payments and
prepayments on mortgage loans and mortgage-backed securities, proceeds
from maturities of investment securities, and increases in deposits.
While maturities and scheduled amortization of loans and investment
securities are predictable sources of funds, deposit inflows and
mortgage prepayments are greatly influenced by local conditions,
general interest rates, and regulatory changes.
At September 30, 2000, the Bank had outstanding commitments to
originate $8.2 million of loans and to fund the undisbursed portion of
loans in process of approximately $15.3 million and undisbursed lines
of credit of approximately $41.0 million. The Bank believes that it
will have sufficient funds available to meet its commitments. At
September 30, 2000, certificates of deposit which were scheduled to
mature in one year or less totaled $278.6 million. Management believes,
based on past experience, that a significant portion of those funds
will remain with the Bank.
The Bank is subject to various regulatory capital requirements
administered by the Federal banking agencies. Failure to meet minimum
capital requirements can require regulators to initiate certain
mandatory-and possibly additional discretionary-actions 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 Bank must meet
specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The 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 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, 2000, that the Bank meets all capital adequacy
requirements to which it is subject.
14
<PAGE>
FFLC BANCORP, INC.
As of September 30, 2000, the most recent notification from the OTS
categorized the Bank as well capitalized under the regulatory framework
for prompt corrective action. To be categorized as well capitalized,
the Bank must maintain minimum tangible, Tier I (core), Tier I
(risk-based) and total risk-based capital percentages 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 Bank's actual capital amounts and percentages at September 30, 2000
are also presented in the table.
<TABLE>
<CAPTION>
Minimum Capitalized
For Capital For Prompt
Adequacy Corrective Action
Actual Purposes Provisions
-------------------- -------------------- ----------------------
% Amount % Amount % Amount
-------- ---------- ------ ----------- ------ ------
($ in thousands)
<S> <C> <C> <C> <C> <C> <C>
Stockholders' equity,
and ratio to total
assets 7.91% $ 54,419
Less: investment in
nonincludable
subsidiary (490)
Add back: unrealized loss on
securities available for sale 2
-----------
Tangible capital,
and ratio to adjusted
total assets 7.84% $ 53,931 1.5% $ 10,318
========= ========
Tier 1 (core) capital, and
ratio to adjusted total
assets 7.84% $ 53,931 3.0% $ 20,635 5.0% $ 34,392
======= ========= ========
Tier 1 capital, and ratio
to risk-weighted assets 12.55% 53,931 4.0% $ 17,187 6.0% $ 25,781
======== ========
Less: Nonincludable investment
in 80% land loans (177)
Tier 2 capital (allowance for
loan losses) 3,302
---------
Total risk-based capital,
and ratio to risk-
weighted assets 13.28% $ 57,056 8.0% $ 34,374 10.0% $ 42,968
======= ======== ========
Total assets $ 688,323
=========
Adjusted total assets $ 687,835
=========
Risk-weighted assets $ 429,678
=========
</TABLE>
15
<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,
2000 1999 1999
--------------- ------------- -----------
<S> <C> <C> <C>
Average equity as a percentage
of average assets 9.03% 10.45% 10.83%
Total equity to total assets at end of period 8.45% 9.42% 9.96%
Return on average assets (1) (2) .85% .93% .96%
Return on average equity (1) (2) 9.36% 8.88% 8.90%
Noninterest expense to average assets (1) 1.78% 1.97% 2.01%
Nonperforming assets to total assets
at end of period .42% .47% .23%
Operating efficiency ratio (1) (2) 53.90% 54.73% 54.35%
</TABLE>
(1) Annualized for the nine months ended September 30, 2000 and 1999.
(2) Excludes gain on sale of real estate held for development.
<TABLE>
<CAPTION>
At At At
September 30, December 31, September 30,
2000 1999 1999
--------------- --------------- -------------
<S> <C> <C> <C>
Weighted-average interest rates:
Interest-earning assets:
Loans receivable 8.10% 7.88% 7.85%
Securities 6.62% 6.22% 6.23%
Other interest-earning assets 6.89% 5.03% 6.11%
Total interest-earning assets 7.97% 7.66% 7.68%
Interest-bearing liabilities:
Interest-bearing deposits 5.21% 4.53% 4.45%
Borrowed funds 6.14% 5.62% 5.45%
Total interest-bearing liabilities 5.39% 4.84% 4.64%
Interest-rate spread 2.58% 2.82% 3.04%
</TABLE>
Change in Financial Condition
Total assets increased $97.6 million or 16.5%, from $590.4 million at December
31, 1999 to $688.0 million at September 30, 2000 primarily as a result of an
increase in loans receivable of $95.4 million, partially offset by a decrease in
cash and cash equivalents of $2.5 million. Deposits increased $74.1 million from
$429.3 million at December 31, 1999 to $503.4 million at September 30, 2000. The
$2.5 million net increase in stockholders equity during the nine months ended
September 30, 2000 resulted from net income of $4 million, credits to equity
totaling $524,000 related to the stock incentive plans and proceeds of $254,000
from stock options exercised and shares issued under the Company's Dividend
Reinvestment Plan, partially offset by repurchases of the Company"s stock of $1
million and dividends paid of $1.3 million.
16
<PAGE>
FFLC BANCORP, INC.
Results of Operations
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest and dividend income; (iv) interest-rate spread;
and (v) net interest margin. Yields and costs were derived by dividing income or
expense by the average balance of assets or liabilities, respectively, for the
periods shown. The average balance of loans receivable includes loans on which
the Company has discontinued accruing interest. The yields and costs include
fees which are considered to constitute adjustments to yields.
<TABLE>
<CAPTION>
Three Months Ended September 30,
-------------------------------------------------------------------
2000 1999
------------------------------------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- -------- ------- -------- ---------
($ in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable $580,948 11,894 8.19% $453,385 9,030 7.97%
Securities 35,673 580 6.50 37,207 544 5.85
Other interest-earning assets (1) 20,656 359 6.95 15,507 227 5.86
-------- ------- -------- -------
Total interest-earning assets 637,277 12,833 8.05 506,099 9,801 7.75
------- ------- ------
Noninterest-earning assets 28,994 23,759
------- -------
Total assets $666,271 $529,858
======== ========
Interest-bearing liabilities:
NOW and money-market accounts 82,315 546 2.65 69,077 424 2.46
Savings accounts 19,722 107 2.17 22,005 127 2.31
Certificates 369,952 5,545 6.00 289,801 3,772 5.21
Advances from Federal Home Loan Bank 109,902 1,736 6.32 74,750 1,017 5.44
Other borrowed funds 6,052 79 5.22 1,982 25 5.05
-------- -------- --------- -------
Total interest-bearing liabilities 587,943 8,013 5.45 457,615 5,365 4.69
-------- -------- --------- -------
Noninterest-bearing deposits 14,011 10,893
Noninterest-bearing liabilities 6,491 6,468
Stockholders' equity 57,826 54,882
-------- ---------
Total liabilities and stockholders' equity $666,271 $529,858
======== ========
Net interest income $ 4,820 $ 4,436
======== ========
Interest-rate spread (2) 2.60% 3.06%
==== ====
Net average interest-earning assets, net interest margin (3) $ 49,334 3.03% $ 48,484 3.51%
======== ==== ======== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.08 1.11
==== ====
</TABLE>
(1) Includes interest-bearing deposits, federal funds sold and Federal Home
Loan Bank 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.
17
<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 and dividend 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.
<TABLE>
<CAPTION>
Nine Months Ended September 30,
----------------------------------------------------------------------
2000 1999
----------------------------------------------------------------------
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 $547,992 33,204 8.08% $427,068 25,635 8.00%
Securities 35,861 1,711 6.36 38,414 1,660 5.76
Other interest-earning assets (1) 18,092 900 6.63 16,509 674 5.44
-------- ------ -------- ------
Total interest-earning assets 601,945 35,815 7.93 481,991 27,969 7.74
------
Noninterest-earning assets 28,958 21,451
-------- --------
Total assets $630,903 $503,442
======== ========
Interest-bearing liabilities:
NOW and money-market accounts 81,464 1,619 2.65 64,541 1,145 2.37
Savings accounts 20,476 315 2.05 22,391 362 2.16
Certificates 344,940 14,648 5.66 278,259 10,912 5.23
Advances from Federal Home Loan Bank 100,850 4,644 6.14 66,594 2,645 5.30
Borrowed funds 5,141 198 5.14 1,478 54 4.87
-------- ------ -------- ------
Total interest-bearing liabilities 552,871 21,424 5.17 433,263 15,118 4.65
------
Noninterest-bearing deposits 13,354 10,131
Noninterest-bearing liabilities 7,678 5,550
Stockholders' equity 57,000 54,498
-------- --------
Total liabilities and stockholders' equity $630,903 $503,442
======== ========
Net interest income $ 14,391 $ 12,851
======== ========
Interest-rate spread (2) 2.76% 3.09%
==== ====
Net average interest-earning assets, net interest margin (3) $ 49,074 3.19% $ 48,728 3.55%
======== ==== ======== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.09 1.11
==== ====
</TABLE>
(1) Includes interest-bearing deposits, federal funds sold and Federal Home
Loan Bank 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.
18
<PAGE>
FFLC BANCORP, INC.
Comparison of the Three Months Ended September 30, 2000 and 1999
General Operating Results. Net income for the three-month period ended September
30, 2000 was $1.3 million, or $.37 and $.36 per basic and diluted share,
respectively, compared to $1.2 million, or $.35 and $.33 per basic and
diluted share, respectively, for the comparable period in 1999. The
increase in net income was primarily a result of an increase of $3.0
million in interest income, partially offset by increases of $2.6 million
in interest expense and $246,000 in noninterest expense.
Interest Income. Interest income increased $3.0 million or 30.9%, from $9.8
million for the three-month period ended September 30, 1999 to $12.8
million for the three-month period ended September 30, 2000. The increase
was due to a $131.2 million or 25.9% increase in average interest-earning
assets outstanding for the three months ended September 30, 2000 compared
to the 1999 period and an increase in the average yield on interest-earning
assets from 7.75% for the three months ended September 30, 1999 to 8.05%
for the three months ended September 30, 2000.
Interest Expense. Interest expense increased $2.6 million or 49.4%, from $5.4
million for the three-month period ended September 30, 1999 to $8.0 million
for the three-month period ended September 30, 2000. The increase was due
to increases of $91.1 million and $39.2 million in average interest-bearing
deposits and borrowings outstanding, respectively. Average interest-bearing
deposits increased from $380.9 million outstanding during the three months
ended September 30, 1999 to $472.0 million outstanding during the
comparable period for 2000. Average borrowings increased from $76.7 million
during the three months ended September 30, 1999 to $116.0 million for the
comparable 2000 period. The average yield paid on interest-bearing
liabilities increased from 4.69% for the three months ended September 30,
1999 to 5.45% for the comparable 2000 period.
Noninterest Income. Noninterest income increased $94,000 or 29.5% from $319,000
during the 1999 period to $413,000 during the 2000 period. The increase was
mainly due to a $70,000 increase in deposit account fees.
Noninterest Expense. Noninterest expense increased by $246,000 or 9.3% from $2.6
million for the three-month period ended September 30, 1999 to $2.9 million
for the three-month period ended September 30, 2000. The increase was
primarily due to increases of $96,000 in salaries and employee benefits,
$85,000 in occupancy expense and $72,000 in data processing expense related
to the overall growth of the Company.
Income Tax Provision. The income tax provision increased from $739,000 for the
three-month period ended September 30, 1999 (an effective tax rate of
37.6%) to $828,000 (an effective tax rate of 38.8%) for the corresponding
period in 2000.
19
<PAGE>
FFLC BANCORP, INC.
Comparison of the Nine-Month Periods Ended September 30, 2000 and 1999
General Operating Results. Net income for the nine-month period ended September
30, 2000 was $4.0 million, or $1.13 and $1.10 per basic and diluted share,
respectively, compared to $4.2 million, or $1.18 and $1.13 per basic and
diluted share, respectively, for the comparable period in 1999. 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). Without the 1999 gain on
sale, net income for 2000 exceeded net income for the 1999 period by
$365,000 or 10.0%. An increase in interest income of $7.8 million,
partially offset by increases in interest expense of $6.3 million and
noninterest expense of $857,000 contributed to the increase in net income
during the current nine month period.
Interest Income. Interest income increased $7.8 million or 28.1%, from $28.0
million for the nine-month period ended September 30, 1999 to $35.8 million
for the comparable period in 2000. The increase was due to a $120.0 million
or 24.9% increase in average interest-earning assets outstanding for the
nine months ended September 30, 2000 compared to the 1999 period and an
increase in the average yield earned on interest-earning assets from 7.74%
for the nine months ended September 30, 1999 to 7.93% for the nine months
ended September 30, 2000.
Interest Expense. Interest expense increased $6.3 million or 41.7%, from $15.1
million for the nine-month period ended September 30, 1999 to $21.4 million
for the nine-month period ended September 30, 2000. The increase was due to
increases of $81.7 million and $37.9 million in average interest-bearing
deposits and borrowings outstanding, respectively. Average interest-bearing
deposits increased from $365.2 million outstanding during the nine months
ended September 30, 1999 to $446.9 million outstanding during the
comparable period for 2000. Average borrowings increased from $68.1 million
outstanding during the nine months ended September 30, 1999 to $106.0
million for the comparable 2000 period. The average yield paid on
interest-bearing liabilities increased from 4.65% for the nine months ended
September 30, 1999 to 5.17% for the comparable 2000 period.
Noninterest Income. Noninterest income for the nine-month period ended September
30, 1999 exceeded noninterest income for the nine-month period ended
September 30, 2000 primarily as a result of the previously discussed pretax
gain on sale of real estate held for development recognized during 1999,
partially offset by an increase of $145,000 in deposit account fees during
the 2000 period.
Noninterest Expense. Noninterest expense increased by $857,000 or 11.3%, from
$7.6 million for the nine-month period ended September 30, 1999 to $8.4
million for the nine-month period ended September 30, 2000. The increase
was primarily due to increases in salaries and employee benefits of
$437,000, occupancy expense of $256,000 and data processing expense of
$221,000 related to the overall growth of the Company.
Income Tax Provision. The income tax provision decreased from $2.6 million for
the nine-month period ended September 30, 1999 (an effective tax rate of
37.9%) to $2.5 million (an effective tax rate of 38.9%) for the
corresponding period for 2000.
20
<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, 1999.
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
21
<PAGE>
FFLC BANCORP, INC.
Item 6. Exhibits and Reports on Form 8-K
a. The following exhibits are filed as part of this report:
(a) The following exhibits are filed as part of this report.
3.1 Certificate of Incorporation of FFLC Bancorp,
Inc.*
3.2 Bylaws of FFLC Bancorp, Inc. ***
4.0 Stock Certificate of FFLC Bancorp, Inc.*
10.1 First Federal Savings Bank of Lake County
Recognition and Retention Plan**
10.2 First Federal Savings Bank of Lake County
Recognition and Retention Plan for Outside
Directors**
10.3 FFLC Bancorp, Inc. Incentive Stock Option Plans
for Officers and Employees**
10.4 FFLC Bancorp, Inc. Stock Option Plan for Outside
Directors**
27 Financial Data Schedule (for SEC use only)
* Incorporated herein by reference into this document from the
Exhibits to Form S-1, Registration Statement, initially filed on
September 27, 1993, Registration No. 33-69466.
** Incorporated herein by reference into this document from the Proxy
Statement for the Annual Meeting of Stockholders held on May 12,
1994.
*** Incorporated herein by reference into this document from the 1999
FFLC Bancorp, Inc. Form 10-K filed March 22, 2000.
(b) Reports on Form 8-K.
b. There were no reports on Form 8-K filed during the three months ended
September 30, 2000.
22
<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: October 26, 2000 By: /s/ Stephen T. Kurtz
------------------- ------------------------------------------------
Stephen T. Kurtz, President and Chief Executive
Officer
Date: October 26, 2000 By: /s/ Paul K. Mueller
------------------- ------------------------------------------------
Paul K. Mueller, Executive Vice President and
Treasurer
23
