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 June 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:
<TABLE>
<CAPTION>
<S> <C>
Common stock, par value $.01 per share 3,574,379 shares outstanding at July 21, 2000
-------------------------------------- ---------------------------------------------
</TABLE>
<PAGE>
FFLC BANCORP, INC.
INDEX
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets -
at June 30, 2000 (unaudited) and at December 31, 1999.................................2
Condensed Consolidated Statements of Income -
Three and Six Months ended June 30, 2000 and 1999 (unaudited).........................3
Condensed Consolidated Statement of Changes in Stockholders' Equity -
Six Months ended June 30, 2000 (unaudited)............................................4
Condensed Consolidated Statements of Cash Flows -
Six Months ended June 30, 2000 and 1999 (unaudited).................................5-6
Notes to Condensed Consolidated Financial Statements (unaudited)......................7-8
Review by Independent Certified Public Accountants......................................9
Report on Review by Independent Certified Public Accountants...........................10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................................11-18
Item 3. Quantitative and Qualitative Disclosures about Market Risk.......................19
Part II. OTHER INFORMATION
Item 1. Legal Proceedings...............................................................19
Item 2. Changes in Securities...........................................................19
Item 3. Default upon Senior Securities..................................................19
Item 4. Submission of Matters to a Vote of Security Holders..........................19-20
Item 5. Other Information...............................................................20
Item 6. Exhibits and Reports on Form 8-K................................................20
SIGNATURES.................................................................................21
</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
June 30, December 31,
2000 1999
---- ----
Assets (unaudited)
<S> <C> <C>
Cash and due from banks $ 15,551 17,313
Interest-bearing deposits 5,462 17,026
--------- ---------
Cash and cash equivalents 21,013 34,339
Securities available for sale 34,277 36,909
Loans receivable, net of allowance for loan losses
of $3,182 in 2000 and $2,811 in 1999 570,524 501,131
Accrued interest receivable 3,173 2,815
Premises and equipment, net 10,877 9,386
Foreclosed real estate 408 400
Federal Home Loan Bank stock, at cost 5,400 4,950
Other assets 929 502
--------- ---------
Total $ 646,601 590,432
========= =========
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits 13,471 11,100
NOW and money-market accounts 83,006 77,293
Savings accounts 19,997 21,110
Certificates 355,101 319,771
--------- --------
Total deposits 471,575 429,274
Advances from Federal Home Loan Bank 108,000 99,000
Other borrowed funds 4,941 3,914
Accrued expenses and other liabilities 4,579 2,607
--------- ---------
Total liabilities 589,095 534,795
--------- ---------
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none outstanding - -
Common stock, $.01 par value, 9,000,000 shares authorized,
4,478,217 in 2000 and 4,447,461 in 1999 shares issued 45 44
Additional paid-in-capital 30,710 30,273
Retained income 45,371 43,539
Accumulated other comprehensive income (loss) (229) (182)
Treasury stock, at cost (903,838 shares in 2000 and
863,523 shares in 1999) (18,233) (17,721)
Stock held by Incentive Plan Trusts (158) (316)
--------- ---------
Total stockholders' equity 57,506 55,637
--------- ---------
Total $ 646,601 590,432
========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Income (Unaudited)
($ in thousands, except share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- --------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $ 11,055 8,519 21,310 16,605
Securities available for sale 559 356 1,131 701
Securities held to maturity - 195 - 415
Other interest-earning assets 248 247 541 447
---------- --------- --------- ----------
Total interest income 11,862 9,317 22,982 18,168
---------- --------- --------- ----------
Interest expense:
Deposits 5,419 4,156 10,384 8,096
Borrowed funds 1,597 849 3,027 1,657
---------- --------- --------- ----------
Total interest expense 7,016 5,005 13,411 9,753
---------- --------- --------- ----------
Net interest income 4,846 4,312 9,571 8,415
Provision for loan losses 260 150 460 350
---------- --------- --------- ----------
Net interest income after provision
for loan losses 4,586 4,162 9,111 8,065
---------- --------- --------- ----------
Noninterest income:
Deposit account fees 201 151 372 297
Other service charges and fees 178 187 360 431
Gain on sale of real estate held for development - - - 886
Other 64 32 114 45
---------- --------- --------- ----------
Total noninterest income 443 370 846 1,659
---------- --------- --------- ----------
Noninterest expense:
Salaries and employee benefits 1,666 1,533 3,318 2,977
Occupancy 446 361 869 697
Deposit insurance premium 22 52 43 103
Data processing 210 145 434 285
Professional services 75 92 147 148
Advertising and promotion 76 95 152 173
Other 296 284 584 553
---------- --------- --------- ----------
Total noninterest expense 2,791 2,562 5,547 4,936
---------- --------- --------- ----------
Income before income taxes 2,238 1,970 4,410 4,788
Income taxes 861 739 1,716 1,823
---------- --------- --------- ----------
Net income $ 1,377 1,231 2,694 2,965
========== ========= ========= ==========
Basic income per share of common stock $ .39 .34 .76 .83
========== ========= ========= ==========
Weighted-average number of shares outstanding
for basic 3,556,124 3,574,634 3,547,389 3,572,874
========== ========= ========= ==========
Diluted income per share of common stock $ .38 .33 .74 .80
========== ========= ========= ==========
Weighted-average number of shares outstanding
for diluted 3,624,812 3,715,189 3,624,850 3,717,142
========== ========= ========= ==========
Dividends per share $ .12 .11 .24 .22
========== ========= ========= ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
<PAGE>
FFLC BANCORP, INC.
Condensed Consolidated Statement of Changes in Stockholders' Equity
Six Months Ended June 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) - - - - 2,694 - 2,694
Net change in unrealized loss
on securities available for
sale, net of income taxes
of $28 (unaudited) - - - - - (47) (47)
-------
Comprehensive income (unaudited) 2,647
-------
Net proceeds from the issuance
of 22,517 shares of common
stock, stock options exercised
(unaudited) 1 140 - - - - 141
Net proceeds from the issuance
of 8,239 shares of common
stock under the Dividend
Reinvestment Plan (unaudited) - 107 - - - - 107
Dividends paid (unaudited) - - - - (862) - (862)
Purchase of treasury stock,
40,315 shares (unaudited) - - (512) - - - (512)
Shares committed to participants
in incentive plans (unaudited) - 190 - 158 - - 348
-------- --------- ---------- ---------- -------- ------------ -------------
Balance at June 30, 2000
(unaudited) $ 45 30,710 (18,233) (158) 45,371 (229) 57,506
======== ========= ========== ========== ======== ============ =============
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------
2000 1999
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 2,694 2,965
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses 460 350
Depreciation 358 244
(Credit) provision for deferred income taxes (236) 49
Gain on sale of foreclosed real estate (11) (22)
Gain on sale of real estate held for development - (886)
Shares committed and dividends to incentive plan participants 348 439
Net amortization of premiums or discounts
on securities 18 43
Net deferral of loan fees and costs (74) (56)
Increase in accrued interest receivable (358) (304)
Increase in other assets (427) (236)
Increase (decrease) in accrued expenses and other liabilities 2,236 (96)
---------- ---------
Net cash provided by operating activities 5,008 2,490
---------- ---------
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 2,808 1,725
Purchase of securities available for sale (269) (2,246)
Loan disbursements (106,540) (95,679)
Principal repayments on loans 36,238 42,415
Purchase of premises and equipment, net (1,849) (3,043)
Purchase of Federal Home Loan Bank stock (450) (600)
Proceeds from sales of foreclosed real estate 526 102
Proceeds from sale of real estate held for development - 1,008
---------- ---------
Net cash used in investing activities (69,536) (52,890)
---------- ---------
</TABLE>
(continued)
<PAGE>
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited), Continued
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------
2000 1999
---- ----
Cash flows from financing activities:
<S> <C> <C>
Net increase in deposits 42,301 35,997
Net increase in advances from Federal Home Loan Bank 9,000 12,000
Net increase in other borrowed funds 1,027 612
Issuance of common stock 248 269
Purchase of treasury stock (512) (1,142)
Dividends paid on common stock (862) (809)
-------- ---------
Net cash provided by financing activities 51,202 46,927
-------- ---------
Net decrease in cash and cash equivalents (13,326) (3,473)
Cash and cash equivalents at beginning of period 34,339 22,928
-------- ---------
Cash and cash equivalents at end of period $ 21,013 19,455
======== =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 12,898 9,707
======== =========
Income taxes $ 1,820 1,760
======== =========
Noncash investing and financing activities:
Accumulated other comprehensive income (loss), net change in unrealized
loss on securities available for sale, net of tax $ (47) (96)
========= =========
Transfer from loans to foreclosed real estate $ 673 271
========= =========
Loans originated on sales of foreclosed real estate $ 150 197
========= =========
Loans funded by and sold to correspondent $ 143 6,442
========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Basis of Presentation. In the opinion of the management of FFLC Bancorp,
Inc., the accompanying condensed consolidated financial statements contain
all adjustments (consisting of normal recurring accruals) necessary to
present fairly the financial position at June 30, 2000 and the results of
operations for the three- and six-month periods ended June 30, 2000 and
1999 and cash flows for the six-month periods ended June 30, 2000 and 1999.
The results of operations for the three-and six-month periods ended June
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 "Bank") and the 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 Nos. 114 and 118.
An analysis of the change in the allowance for loan losses was as follows
(in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
---- ---- ---- ----
Beginning balance $ 2,980 2,399 2,811 2,283
Provision for loan losses 260 150 460 350
Net loans charged-off (58) (4) (89) (88)
-------- ------- ------- -------
Ending balance $ 3,182 2,545 3,182 2,545
======== ======= ======= =======
The following summarizes the amount of impaired loans, all of which are
collateral dependent (in thousands):
<TABLE>
<CAPTION>
At
June 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)
<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):
Three Six
Months Months
Ended Ended
June 30, June 30,
-------- --------
2000 2000
---- ----
Average net investment in impaired loans $ 1,093 1,117
======== ======
Interest income recognized on impaired loans $ 9 14
======== ======
Interest income received on impaired loans $ 9 14
======== ======
No impaired loans were identified by the Company during the three or six
months ended June 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 Six Months Ended
June 30, June 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 3,593,584 3,664,701 3,591,425 3,669,516
Adjustment to reflect the effect of unallocated ESOP
and RRP shares (37,460) (90,067) (44,036) (96,642)
------------ ---------- ---------- ----------
Weighted-average shares for basic income per share 3,556,124 3,574,634 3,547,389 3,572,874
============ ========== ========== ==========
Basic income per share $ .39 .34 .76 .83
============ ========== ========== ==========
Total weighted-average common shares and
equivalents outstanding for basic income per
share computation 3,556,124 3,574,634 3,547,389 3,572,874
Additional dilutive shares using the average market
value for the period utilizing the treasury stock
method regarding stock options 68,688 140,555 77,461 144,268
------------ ---------- ---------- ----------
Weighted-average common shares and equivalents
outstanding for diluted income per share 3,624,812 3,715,189 3,624,850 3,717,142
============ ========== ========== ==========
Diluted income per share $ .38 .33 .74 .80
============ ========== ========== ==========
</TABLE>
<PAGE>
FFLC BANCORP, INC.
Review by Independent Certified Public Accountants
Hacker, Johnson, Cohen & Grieb PA, the Company's independent certified
public accountants, have made a limited review of the financial data as of June
30, 2000, and for the three- and six-month periods ended June 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.
<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 June 30, 2000, the
related condensed consolidated statements of income for the three- and six-month
periods ended June 30, 2000 and 1999, the related condensed consolidated
statement of changes in stockholders' equity for the six-month period ended June
30, 2000 and the related condensed consolidated statements of cash flows for the
six-month periods ended June 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, COHEN & GRIEB PA
Tampa, Florida
July 7, 2000
<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.
<PAGE>
FFLC BANCORP, INC.
Liquidity and Capital Resources
The Company's most liquid assets are cash, amounts due from depository
institutions and interest-bearing deposits. The levels of these assets are
dependent on the Company's lending, investing, operating, and deposit
activities during any given period. At June 30, 2000, cash, amounts due
from depository institutions and interest-bearing deposits, totaled $21.0
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 June 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 June 30, 2000, the Bank had outstanding commitments to originate $7.6
million of loans and to fund the undisbursed portion of loans in process of
approximately $17.4 million and undisbursed lines of credit of
approximately $37.4 million. The Bank believes that it will have sufficient
funds available to meet its commitments. At June 30, 2000, certificates of
deposit which were scheduled to mature in one year or less totaled $220.2
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 requirement administered
by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory-and possibly additional
discretionary-actions by regulators that, if undertaken, could have a
direct material effect on the Company's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective
action, the 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 June 30,
2000, that the Bank meets all capital adequacy requirements to which it is
subject.
<PAGE>
FFLC BANCORP, INC.
As of June 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 June 30, 2000 are also
presented in the table.
<TABLE>
<CAPTION>
To Be Well
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 8.37% $ 54,153
Less: investment in
nonincludable
subsidiary (1,221)
Add back: unrealized loss on
securities available for sale 68
---------
Tangible capital,
and ratio to adjusted
total assets 8.20% $ 53,000 1.5% $ 9,692
========= =======
Tier 1 (core) capital, and
ratio to adjusted total
assets 8.20% $ 53,000 3.0% $19,384 5.0% $32,306
========= ======= =======
Tier 1 capital, and ratio
to risk-weighted assets 12.74% $ 53,000 4.0% $16,636 6.0% $24,954
========= ======= =======
Less: Nonincludable investment
in 80% land loans (130)
Tier 2 capital (allowance for
loan losses) 3,181
---------
Total risk-based capital,
and ratio to risk-
weighted assets 13.48% $ 56,051 8.0% $33,272 10.0% $41,590
========= ======= =======
Total assets $647,270
=========
Adjusted total assets $646,117
=========
Risk-weighted assets $415,903
=========
</TABLE>
<PAGE>
FFLC BANCORP, INC.
The following table shows selected ratios for the periods ended or at the
dates indicated:
<TABLE>
<CAPTION>
Six Months Six Months
Ended Year Ended Ended
June 30, December 31, June 30,
2000 1999 1999
------------ ------------- -------------
<S> <C> <C> <C>
Average equity as a percentage
of average assets 9.24% 10.45% 11.09%
Total equity to total assets at end of period 8.89% 9.42% 10.67%
Return on average assets (1) (2) .88% .93% .98%
Return on average equity (1) (2) 9.52% 8.88% 8.88%
Noninterest expense to average assets (1) 1.81% 1.97% 2.02%
Nonperforming assets to total assets
at end of period .44% .47% .10%
Operating efficiency ratio (1) (2) 53.25% 54.73% 53.72%
</TABLE>
(1) Annualized for the six months ended June 30, 2000 and 1999.
(2) Excludes gain on sale of real estate held for development.
<TABLE>
<CAPTION>
At At At
June 30, December 31, June 30,
2000 1999 1999
--------- ------------- ---------
<S> <C> <C> <C>
Weighted-average interest rates:
Interest-earning assets:
Loans receivable 8.04% 7.88% 7.84%
Securities 6.55% 6.22% 6.09%
Other interest-earning assets 7.40% 5.03% 6.06%
Total interest-earning assets 7.94% 7.66% 7.66%
Interest-bearing liabilities:
Interest-bearing deposits 4.94% 4.53% 4.38%
Borrowed funds 6.13% 5.62% 5.21%
Total interest-bearing liabilities 5.17% 4.84% 4.51%
Interest-rate spread 2.77% 2.82% 3.15%
</TABLE>
Change in Financial Condition
Total assets increased $56.2 million or 9.5%, from $590.4 million at December
31, 1999 to $646.6 million at June 30, 2000, primarily as a result of an
increase in loans receivable of $69.4 million, partially offset by a decrease in
cash and cash equivalents of $13.3 million. Deposits increased $42.3 million
from $429.3 million at December 31, 1999 to $471.6 million at June 30, 2000. The
$1.9 million net increase in stockholders equity during the six months ended
June 30, 2000 resulted from net income of $2.7 million, credits to equity
totaling $348,000 related to the stock incentive plans and proceeds of $248,000
from stock options exercised and shares issued under the Company's Dividend
Reinvestment Plan, partially offset by repurchases of the Company"s stock of
$512,000, dividends paid of $862,000 and a $47,000 decrease in accumulated other
comprehensive income (loss).
<PAGE>
FFLC BANCORP, INC.
Results of Operations
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest income; (iv) interest-rate spread; and (v) net
interest margin. Yields and costs were derived by dividing income or expense by
the average balance of assets or liabilities, respectively, for the periods
shown. The average balance of loans receivable includes loans on which the
Company has discontinued accruing interest. The yields and costs include fees
which are considered to constitute adjustments to yields.
<TABLE>
<CAPTION>
Three Months Ended June 30,
2000 1999
----------------------------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ------- ------- -------- -------
($ in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable $ 549,077 11,055 8.05% $ 425,619 8,519 8.01%
Securities 35,317 559 6.33 38,479 551 5.73
Other interest-earning assets (1) 14,518 248 6.83 18,825 247 5.25
--------- ------- --------- -------
Total interest-earning assets 598,912 11,862 7.92 482,923 9,317 7.72
------- -------
Noninterest-earning assets 28,926 21,492
------- ---------
Total assets $ 627,838 $ 504,415
========= =========
Interest-bearing liabilities:
NOW and money-market accounts 83,281 545 2.62 65,603 390 2.38
Savings accounts 20,540 106 2.06 22,483 119 2.12
Certificates 341,003 4,768 5.59 280,530 3,647 5.20
Advances from Federal Home Loan Bank 99,313 1,523 6.13 63,440 830 5.23
Other borrowed funds 5,659 74 5.23 1,672 19 4.55
--------- ------- --------- -------
Total interest-bearing liabilities 549,796 7,016 5.10 433,728 5,005 4.62
------- -------
Noninterest-bearing deposits 13,629 10,707
Noninterest-bearing liabilities 7,338 5,211
Stockholders' equity 57,075 54,769
--------- ---------
Total liabilities and
stockholders' equity $ 627,838 $ 504,415
========= =========
Net interest income $ 4,846 $ 4,312
======= =======
Interest-rate spread (2) 2.82% 3.10%
==== ====
Net average interest-earning assets,
net interest margin (3) $ 49,116 3.24% $ 49,195 3.57%
========= ==== ========= ====
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 annualized net interest income
divided by average interest-earning assets.
<PAGE>
FFLC BANCORP, INC.
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of FFLC Bancorp from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest and dividend income; (iv) interest-rate spread;
and (v) net interest margin. 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>
Six Months Ended June 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 $ 531,334 21,310 8.02% $ 413,691 16,605 8.03%
Securities 35,956 1,131 6.29 39,028 1,116 5.72
Other interest-earning assets (1) 16,795 541 6.44 17,019 447 5.25
--------- ------- --------- -------
Total interest-earning assets 584,085 22,982 7.87 469,738 18,168 7.74
------- -------
Noninterest-earning assets 28,850 20,110
--------- ---------
Total assets $ 612,935 $ 489,848
========= =========
Interest-bearing liabilities:
NOW and money-market accounts 81,066 1,073 2.65 61,967 721 2.33
Savings accounts 20,856 208 1.99 22,587 235 2.08
Certificates 332,297 9,103 5.48 272,392 7,140 5.24
Advances from Federal Home Loan Bank 96,275 2,908 6.04 62,448 1,628 5.21
Other borrowed funds 4,681 119 5.08 1,272 29 4.56
--------- ------- --------- -------
Total interest-bearing liabilities 535,175 13,411 5.01 420,666 9,753 4.64
------- -------
Noninterest-bearing deposits 12,996 9,914
Noninterest-bearing liabilities 8,158 4,962
Stockholders' equity 56,606 54,306
--------- ---------
Total liabilities and stockholders' equity $ 612,935 $ 489,848
========= =========
Net interest income $ 9,571 $ 8,415
======= =======
Interest-rate spread (2) 2.86% 3.10%
==== ====
Net average interest-earning assets,
net interest margin (3) $ 48,910 3.28% $ 49,072 3.58%
========= ==== ========= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.09 1.12
==== ====
</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 annualized net interest income divided by average
interest-earning assets.
<PAGE>
FFLC BANCORP, INC.
Comparison of the Three-Month Periods Ended June 30, 2000 and 1999
General Operating Results. Net income for the three-month period ended June 30,
2000 was $1.4 million, or $.39 and $.38 per basic and diluted share,
respectively, compared to $1.2 million, or $.34 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 $2.6 million in
interest income, partially offset by increases of $2.0 million in interest
expense and $229,000 in noninterest expense.
Interest Income. Interest income increased $2.6 million or 27.3%, from $9.3
million for the three-month period ended June 30, 1999 to $11.9 million for
the three-month period ended June 30, 2000. The increase was due to a $116.0
million or 24.0% increase in average interest-earning assets outstanding for
the three months ended June 30, 2000 compared to the 1999 period and an
increase in the average yield on interest-earning assets from 7.72% for the
three months ended June 30, 1999 to 7.92% for the three months ended June 30,
2000.
Interest Expense. Interest expense increased $2.0 million or 40.2%, from $5.0
million for the three-month period ended June 30, 1999 to $7.0 million for
the three-month period ended June 30, 2000. The increase was due to increases
of $76.2 million and $39.9 million in average interest-bearing deposits and
borrowings outstanding, respectively. Average interest-bearing deposits
increased from $368.6 million outstanding during the three months ended June
30, 1999 to $444.8 million outstanding during the comparable period for 2000.
Average borrowings increased from $65.1 million during the three months ended
June 30, 1999 to $105.0 million for the comparable 2000 period. The average
yield paid on interest-bearing liabilities increased from 4.62% for the three
months ended June 30, 1999 to 5.10% for the comparable 2000 period.
Noninterest Income. Noninterest income increased $73,000 or 19.7% from $370,000
during the 1999 period to $443,000 during the 2000 period. The increase was
mainly due to a $50,000 increase in deposit account fees.
Noninterest Expense. Noninterest expense increased by $229,000 or 8.9% from $2.6
million for the three-month period ended June 30, 1999 to $2.8 million for
the three-month period ended June 30, 2000. The increase was primarily due to
increases of $133,000 in salaries and employee benefits, $87,000 in occupancy
expense and $65,000 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 June 30, 1999 (an effective tax rate of 37.5%) to
$861,000 (an effective tax rate of 38.5%) for the corresponding period in
2000.
<PAGE>
FFLC BANCORP, INC.
Comparison of the Six-Month Periods Ended June 30, 2000 and 1999
General Operating Results. Net income for the six-month period ended June 30,
2000 was $2.7 million, or $.76 and $.74 per basic and diluted share,
respectively, compared to $3.0 million, or $.83 and $.80 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 $282,000
or 11.7%. An increase in interest income of $4.8 million, partially offset by
increases in interest expense of $3.6 million and noninterest expense of
$611,000 contributed to net income in the current six month period.
Interest Income. Interest income increased $4.8 million or 26.5%, from $18.2
million for the six-month period ended June 30, 1999 to $23.0 million for the
comparable period in 2000. The increase was due to a $114.3 million or 24.3%
increase in average interest-earning assets outstanding for the six months
ended June 30, 2000 compared to the 1999 period and an increase in the
average yield earned on interest-earning assets from 7.74% for the six months
ended June 30, 1999 to 7.87% for the six months ended June 30, 2000.
Interest Expense. Interest expense increased $3.6 million or 37.5%, from $9.8
million for the six-month period ended June 30, 1999 to $13.4 million for the
six-month period ended June 30, 2000. The increase was due to increases of
$77.3 million and $37.3 million in average interest-bearing deposits and
borrowings outstanding, respectively. Average interest-bearing deposits
increased from $356.9 million outstanding during the six months ended June
30, 1999 to $434.2 million outstanding during the comparable period for 2000.
Average borrowings increased from $63.7 million outstanding during the six
months ended June 30, 1999 to $101.0 million for the comparable 2000 period.
The average yield paid on interest-bearing liabilities increased from 4.64%
for the six months ended June 30, 1999 to 5.01% for the comparable 2000
period.
Noninterest Income. Noninterest income for the six-month period ended June 30,
1999 exceeded noninterest income for the six-month period ended June 30, 2000
primarily as a result of the previously discussed pretax gain on sale of real
estate held for development recognized during 1999.
Noninterest Expense. Noninterest expense increased by $611,000 or 12.4%, from
$4.9 million for the six-month period ended June 30, 1999 to $5.5 million for
the six-month period ended June 30, 2000. The increase was primarily due to
increases in salaries and employee benefits of $341,000, occupancy expense of
$174,000 and data processing expense of $149,000 related to the overall
growth of the Company.
Income Tax Provision. The income tax provision decreased from $1.8 million for
the six-month period ended June 30, 1999 (an effective tax rate of 38.1%) to
$1.7 million (an effective tax rate of 38.9%) for the corresponding period
for 2000.
Year 2000 Issues
The Company's operating and financial systems have been found to be compliant;
the "Y2K Problem" has not adversely affected the Company's operations nor does
management expect that it will.
<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 has been no significant change 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 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders (the "Annual Meeting") of FFLC Bancorp,
Inc. was held on May 4, 2000, to consider the election of three directors
each for a term of three years and the ratification of the appointment of
the Company's independent auditors for the year ending December 31, 2000.
At the Annual Meeting, incumbent Directors Joseph J. Junod, Claron D.
Wagner and Paul K. Mueller were reelected. The terms of Directors H.D.
Robuck, Jr., Stephen T. Kurtz, James P. Logan and Ted R. Ostrander, Jr.
continued after the Annual Meeting.
At the Annual Meeting, 3,099,446 shares were present in person or by proxy.
The following is a summary and tabulation of the matters that were voted
upon at the Annual Meeting:
Proposal I.
The election of three directors, each for a term of three years:
Abstentions
and Broker
For Withheld Against Nonvotes
--- -------- ------- -----------
Joseph J. Junod 3,084,077 15,369 - -
========= ====== ======== ========
Claron D. Wagner 3,083,744 15,702 - -
========= ====== ======== ========
Paul K. Mueller 3,084,077 15,369 - -
========= ====== ======== ========
<PAGE>
FFLC BANCORP, INC.
Item 4. Submission of Matters to a Vote of Security Holders, Continued
Proposal II:
To ratify the appointment of Hacker, Johnson, Cohen & Grieb PA as the
Company's independent auditors for the year ending December 31, 2000
Abstentions
and Broker
For Withheld Against Nonvotes
--- -------- ------- -----------
3,081,975 - 5,938 11,533
========= ======= ===== ======
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.
3.1 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.
There were no reports on Form 8-K filed during the six months ended
June 30, 2000.
<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: July 25, 2000 By: /s/ Stephen T. Kurtz
----------------- ----------------------------
Stephen T. Kurtz, President and Chief
Executive Officer
Date: July 25, 2000 By: /s/ Paul K. Mueller
----------------- ----------------------------
Paul K. Mueller, Executive Vice
President and Treasurer
