U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange
--- Act of 1934
For the quarterly period ended June 30, 2000
__ Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _________ to _________
Commission file number 0-24433
--------
POINTE FINANCIAL CORPORATION
----------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 65-0451402
-------------------------------- ------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
21845 Powerline Road
Boca Raton, Florida 33433
-------------------------
(Address of Principal Executive Offices)
(561) 368-6300
--------------
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date;
Common stock, par value $.01 per share 2,024,582 shares
-------------------------------------- ------------------------
(class) Outstanding at July 20, 2000
Transitional small business disclosure format (check one):
YES [ ] NO [X]
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
----
<S> <C>
Condensed Consolidated Balance Sheets -
at June 30, 2000 (unaudited) and at December 31, 1999....................................................2
Condensed Consolidated Statements of Earnings -
Three and Six Months ended June 30, 2000 and 1999 (unaudited)..........................................3-4
Condensed Consolidated Statement of Changes in Stockholders' Equity -
Six Months ended June 30, 2000 (unaudited)...............................................................5
Condensed Consolidated Statements of Cash Flows -
Six Months ended June 30, 2000 and 1999 (unaudited)....................................................6-7
Notes to Condensed Consolidated Financial Statements (unaudited)........................................8-10
Review by Independent Certified Public Accountants........................................................11
Report on Review by Independent Certified Public Accountants..............................................12
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..............................................................................13-18
Item 3. Quantitative and Qualitative Disclosures about Market Risk..........................................18
Part II. OTHER INFORMATION
Item 1. Legal Proceedings..................................................................................18
Item 4. Submission of Matters to a Vote of Security Holders.............................................18-19
Item 6. Exhibits and Reports on Form 8-K...................................................................19
SIGNATURES.....................................................................................................20
</TABLE>
1
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
At
June 30, December 31,
-------- ------------
Assets 2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Cash and due from banks .................................... $ 5,029 6,822
Interest-bearing deposits with banks ....................... 225 87
--------- ---------
Total cash and cash equivalents ..................... 5,254 6,909
Securities available for sale .............................. 53,053 46,157
Loans receivable, net of allowance for loan losses of $1,597
in 2000 and $1,331 in 1999 .............................. 162,336 150,852
Loans held for sale ........................................ 736 2,696
Accrued interest receivable ................................ 1,669 1,375
Premises and equipment, net ................................ 2,262 2,225
Federal Home Loan Bank stock, at cost ...................... 2,355 1,753
Federal Reserve Bank stock, at cost ........................ 479 479
Foreclosed real estate ..................................... -- 257
Deferred income tax asset .................................. 348 348
Other assets ............................................... 701 605
--------- ---------
Total ............................................... $ 229,193 213,656
========= =========
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits ..................... 25,027 21,370
Savings and NOW deposits ................................ 13,059 13,640
Money-market deposits ................................... 36,144 38,146
Time deposits ........................................... 79,236 73,020
--------- ---------
Total deposits ...................................... 153,466 146,176
Official checks ......................................... 3,101 1,075
Other borrowings ........................................ 6,738 5,394
Advances from Federal Home Loan Bank .................... 38,520 35,060
Accrued interest payable ................................ 739 688
Advance payments by borrowers for taxes and insurance ... 886 451
Other liabilities ....................................... 453 229
--------- ---------
Total liabilities ................................... 203,903 189,073
--------- ---------
Stockholders' equity:
Preferred stock ......................................... -- --
Common stock ............................................ 23 23
Additional paid-in capital .............................. 23,857 23,753
Retained earnings ....................................... 5,545 4,959
Accumulated other comprehensive income (loss) ........... (1,097) (1,102)
Treasury stock .......................................... (3,000) (3,000)
Stock incentive plan .................................... (38) (50)
--------- ---------
Total stockholders' equity .......................... 25,290 24,583
--------- ---------
Total ............................................... $ 229,193 213,656
========= =========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -------------------
2000 1999 2000 1999
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans receivable............................................. $ 3,564 3,044 6,999 5,944
Securities................................................... 876 598 1,676 1,219
Other interest-earning assets................................ 118 13 127 22
------- ------- ------ -------
Total interest income.................................. 4,558 3,655 8,802 7,185
------- ------- ------ -------
Interest expense:
Deposits .................................................... 1,576 1,284 2,984 2,587
Borrowings................................................... 690 369 1,307 658
------- ------- ------ -------
Total interest expense................................. 2,266 1,653 4,291 3,245
------- ------- ------ -------
Net interest income.............................................. 2,292 2,002 4,511 3,940
Provision for loan losses.............................. 165 155 330 310
------- ------- ------ -------
Net interest income after provision for loan losses.............. 2,127 1,847 4,181 3,630
------- ------- ------ -------
Noninterest income:
Service charges on deposit accounts.......................... 201 171 388 318
Loan servicing fees.......................................... 12 13 24 28
Net gains from sale of loans................................. 6 32 6 32
Net realized (losses) gains on sale of securities............ (124) 9 (124) 38
Other .................................................... 94 104 193 195
------- ------- ------ -------
Total noninterest income............................... 189 329 487 611
------- ------- ------ -------
Noninterest expenses:
Salaries and employee benefits............................... 966 795 1,913 1,603
Occupancy expense............................................ 291 273 572 540
Advertising and promotion.................................... 78 99 137 176
Professional fees............................................ 50 78 106 124
Data processing.............................................. 104 81 202 161
Other .................................................... 335 325 670 632
------- ------- ------ -------
Total noninterest expenses............................. 1,824 1,651 3,600 3,236
------- ------- ------ -------
Earnings before income taxes and extraordinary
item................................................ 492 525 1,068 1,005
Income taxes .................................................... 154 194 358 372
------- ------- ------ -------
Earnings before extraordinary item..................... 338 331 710 633
Extraordinary item - gain on extinguishment of debt, net of
taxes of $47................................................. 78 -- 78 --
------- ------- ------ -------
Net earnings........................................... $ 416 331 788 633
======= ======= ====== =======
(continued)
</TABLE>
3
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings, Continued
(Dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- -------------------------
2000 1999 2000 1999
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net earnings per share - basic:
Earnings from continuing operations....................... .17 .15 .35 .28
Extraordinary gain from extinguishment of debt............ .04 -- .04 --
------------- ------------ ------------ ------------
Net earnings per share - basic...................... $ .21 .15 .39 .28
============= ============ ============ ============
Net earnings per share - diluted:
Earnings from continuing operations....................... .17 .15 .35 .28
Extraordinary gain from extinguishment of debt............ .04 -- .04 --
------------- ------------ ------------ ------------
Net earnings per share - diluted.................... $ .21 .15 .39 .28
============= ============ ============ ============
Weighted-average shares outstanding for basic................. 2,021,423 2,285,527 2,017,221 2,285,063
============= ============ ============ ============
Weighted-average shares outstanding for diluted............... 2,021,496 2,295,433 2,017,221 2,294,920
============= ============ ============ ============
Dividends per share........................................... $ .05 .05 .10 .05
============= ============ ============ ============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
4
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Changes in Stockholders' Equity
Six Months Ended June 30, 2000
(In thousands)
<TABLE>
<CAPTION>
Accumulated
Other
Compre-
Additional Stock hensive Total
Common Paid-In Incentive Treasury Retained Income Stockholders'
Stock Capital Plan Stock Earnings (Loss) Equity
------- ----------- --------- -------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999.............. $ 23 23,753 (50) (3,000) 4,959 (1,102) 24,583
--------
Comprehensive income:
Net earnings (unaudited)............. -- -- -- -- 788 -- 788
Net change in unrealized
loss on securities available for sale,
net of tax of $5 (unaudited)..... -- -- -- -- -- 5 5
--------
Comprehensive income (unaudited).......... 793
--------
Shares committed to participants
in stock incentive plans (unaudited). -- -- 7 -- -- -- 7
Committed shares cancelled in stock
incentive plan (unaudited)........... -- (5) 5 -- -- -- --
Cash dividends paid (unaudited)........... -- -- -- -- (202) -- (202)
Issuance of common stock to directors
as compensation (unaudited).......... -- 109 -- -- -- -- 109
---- ------- ---- ------- ------- -------- --------
Balance at June 30, 2000 (unaudited)...... $ 23 23,857 (38) (3,000) 5,545 (1,097) 25,290
==== ======= ==== ======= ======= ======== ========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
5
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities: (Unaudited)
Net earnings .................................................................... $ 788 633
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for loan losses....................................................... 330 310
Depreciation.................................................................... 219 212
Net amortization of fees, premiums, discounts and other......................... 49 61
Shares committed to participants in incentive stock plans....................... 7 3
Common stock issued as compensation for services................................ 109 109
Loss (gain) on sale of securities............................................... 124 (38)
Gain on sale of loans........................................................... (6) (32)
Gain on sale of foreclosed real estate.......................................... -- (9)
Net originations of loans held for sale......................................... (7,099) (1,479)
Proceeds from sale of loans held for sale....................................... 9,065 449
Increase in other assets........................................................ (96) (474)
Increase in accrued interest receivable......................................... (294) (76)
Increase in official checks..................................................... 2,026 700
Increase (decrease) in accrued interest payable................................. 51 (104)
Increase in other liabilities................................................... 224 247
------- --------
Net cash provided by operating activities................................... 5,497 512
------- --------
Cash flows from investing activities:
Purchase of securities available for sale........................................... (14,576) (12,788)
Proceeds from sale of securities available for sale................................. 4,963 12,079
Principal repayments on securities available for sale............................... 523 1,636
Maturities and calls of securities available for sale............................... 2,025 7,705
Net increase in loans............................................................... (11,813) (21,443)
Net proceeds from sale of foreclosed real estate.................................... 257 231
Net increase in other securities.................................................... (602) (437)
Purchase of premises and equipment, net............................................. (256) (272)
------- --------
Net cash used in investing activities....................................... (19,479) (13,289)
------- --------
Cash flows from financing activities:
Net increase (decrease) in deposits................................................. 7,290 (1,600)
Net increase in advances from Federal Home Loan Bank................................ 3,460 15,095
Net increase in other borrowings.................................................... 1,344 710
Increase in advance payments by borrowers for taxes and insurance................... 435 636
Proceeds from issuance of common stock.............................................. -- 258
Cash dividends paid on common stock................................................. (202) (116)
Purchase of treasury stock.......................................................... -- (1,752)
------- --------
Net cash provided by financing activities................................... 12,327 13,231
------- --------
(continued)
</TABLE>
6
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows, Continued
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Net (decrease) increase in cash and cash equivalents ........................ $(1,655) 454
Cash and cash equivalents at beginning of period ............................ 6,909 3,471
------- -------
Cash and cash equivalents at end of period .................................. $ 5,254 3,925
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ................................................................ $ 4,240 3,349
======= =======
Income taxes ............................................................ $ 328 256
======= =======
Noncash transactions:
Reclassification of loans receivable to foreclosed real estate .......... $ -- 181
======= =======
Accumulated other comprehensive income (loss), net change in unrealized
loss on securities available for sale, net of tax ................... $ 5 (383)
======= =======
Transfer of loans to loans held for sale ................................ $ 6,736 --
======= =======
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
7
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
1. General. In the opinion of the management of Pointe Financial
Corporation, the accompanying condensed consolidated financial
statements contain all adjustments (consisting principally of normal
recurring accruals) necessary to present fairly the financial position
at June 30, 2000, 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 months ended June 30, 2000 are not necessarily indicative
of the results to be expected for the year ending December 31, 2000.
Pointe Financial Corporation (the "Holding Company") was incorporated
under the laws of the State of Florida in September 1993. The Holding
Company"s principal business is conducted through Pointe Bank (the
"Bank"), a state-chartered commercial bank. The Holding Company and the
Bank are collectively referred to as the "Company." The Bank provides a
wide range of community banking services to small and middle-market
business and individuals through its five banking offices located in
Broward, Miami-Dade and Palm Beach counties, Florida.
On March 12, 2000, the Company received approval of the election to
become a Financial Holding Company from the Board of Governors of the
Federal Reserve System. The Company plans to use the expanded business
capacity to broaden the services it provides to its clients.
2. Loan Impairment and Loan Losses. The activity in the allowance for loan
losses is as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Balance at beginning of period.................... $ 1,446 1,228 1,331 1,078
Provision charged to earnings..................... 165 155 330 310
(Charge-offs), net of recoveries.................. (14) (102) (64) (107)
------- ------ ------ -----
Balance at end of period.......................... $ 1,597 1,281 1,597 1,281
======= ====== ====== =====
</TABLE>
The following summarizes the amount of impaired loans (in thousands):
<TABLE>
<CAPTION>
At
June 30, December 31,
-------- ------------
2000 1999
---- ----
<S> <C> <C>
Loans identified as impaired:
Gross loans with related allowance for losses recorded.................. $ 150 440
Less allowance on these loans........................................... (75) (220)
----- ---
Net investment in impaired loans............................................ $ 75 220
===== ===
</TABLE>
The average net investment in impaired loans and interest income
recognized and received on impaired loans is as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average net investment in impaired loans.......... $ 98 220 143 220
====== ===== ===== =====
Interest income recognized on impaired
loans......................................... $ -- -- -- --
====== ===== ===== =====
Interest income received on impaired
loans......................................... $ -- -- -- --
====== ===== ===== =====
(continued)
</TABLE>
8
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited), Continued
3. Earnings Per Share . Earnings per share of common stock has been
computed on the basis of the weighted-average number of shares of common
stock outstanding. For the six months ended June 30, 2000 outstanding
stock options are not considered dilutive securities for purposes of
calculating diluted earnings per share. The following table presents the
calculations of earnings per share ($ in thousands, except per share
amounts).
<TABLE>
<CAPTION>
Three Months Ended June 30,
-----------------------------------------------------------------------------------
2000 1999
-----------------------------------------------------------------------------------
Earnings Shares Per Share Earnings Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic Earnings Per Share:
Net earnings available
to common stockholders.... $ 416 2,021,423 $ .21 $ 331 2,285,527 $ .15
===== =====
Effect of dilutive securities-
Incremental shares from
assumed exercise of
options utilizing the
treasury stock method..... 73 9,906
--------- ---------
Diluted Earnings Per Share:
Net earnings available
to common stockholders
and assumed conversions... $ 416 2,021,496 $ .21 $ 331 2,295,433 $ .15
===== ========= ===== ===== ========= =====
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------------------------------------------------------------
2000 1999
-----------------------------------------------------------------------------------
Earnings Shares Per Share Earnings Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic Earnings Per Share:
Net earnings available
to common stockholders.... $ 788 2,017,221 $ .39 $ 633 2,285,063 $ .28
===== =====
Effect of dilutive securities-
Incremental shares from
assumed exercise of
options utilizing the
treasury stock method..... -- 9,857
--------- ---------
Diluted Earnings Per Share:
Net earnings available to
common stockholders
and assumed conversions... $ 788 2,017,221 $ .39 $ 633 2,294,920 $ .28
===== ========= ===== ===== ========= =====
(continued)
</TABLE>
9
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited), Continued
4. Regulatory Capital. The Bank is required to maintain certain minimum
regulatory capital requirements. The following is a summary at June 30,
2000 of the regulatory capital requirements and the Bank's actual
capital on a percentage basis:
<TABLE>
<CAPTION>
Regulatory
Actual Requirement
------ -----------
<S> <C> <C>
Total capital to risk-weighted assets........................................... 16.79% 8.00%
Tier I capital to risk-weighted assets.......................................... 15.70% 4.00%
Tier I capital to total assets - leverage ratio................................. 10.05% 4.00%
</TABLE>
5. Extraordinary Item. During the quarter, the Bank successfully completed
the sale of a $5.0 million Federal Home Loan Bank advance. The Company
recorded a pre-tax gain of $125,000 on the sale of the advance. This
will be reported as an extraordinary item - gain on extinguishment of
debt, net of tax of $47,000. In a related transaction, the Bank sold
$2.1 million of investments available for sale recognizing a loss of
$124,000. The net effect of these transactions had a minimal effect on
the reported earnings.
10
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
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.
11
<PAGE>
Report on Review by Independent Certified Public Accountants
The Board of Directors
Pointe Financial Corporation
Boca Raton, Florida:
We have reviewed the accompanying condensed consolidated balance sheet of
Pointe Financial Corporation and subsidiaries (the "Company") as of June 30,
2000, the related condensed consolidated statements of earnings for the three-
and six- month periods ended June 30, 2000 and 1999, the related condensed
consolidated statements of cash flows for the six-month periods ended June 30,
2000 and 1999 and the related condensed consolidated statement of changes in
stockholders' equity for the six-month period ended June 30, 2000. 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 earnings, changes in stockholders' equity and
cash flows for the year then ended (not presented herein); and in our report
dated January 21, 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 12, 2000
12
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Comparison of June 30, 2000 and December 31, 1999
Liquidity and Capital Resources
The Company's primary source of cash during the six months ended June 30, 2000
was from net deposit inflows of $7.3 million, an increase in advances from the
Federal Home Loan Bank of $3.5 million, an increase in other borrowings of $1.3
million, proceeds from the sale, maturity and call of securities available for
sale of $7.0 million and cash flows from operating activities of $5.4 million.
Cash was used primarily for net loan originations of $11.8 million and the
purchase of securities totaling $14.6 million. At June 30, 2000, the Company
had outstanding commitments to originate loans of $13.1 million and time
deposits of $56.9 million which mature in one year or less. It is expected that
these requirements will be funded from the sources described above. At June 30,
2000, the Bank exceeded its regulatory liquidity requirements.
The following table shows selected ratios for the periods ended or at the dates
indicated:
<TABLE>
<CAPTION>
Six Months Six Months
Ended Year Ended Ended
June 30, December 31, June 30,
2000 1999 1999
---- ---- ----
<S> <C> <C> <C>
Average equity as a percentage
of average assets..................................... 10.82% 12.95% 13.88%
Equity to total assets at end of period.................. 11.03% 11.51% 12.66%
Return on average assets (1)............................. .70% .60% .65%
Return on average equity (1)............................. 6.43% 4.67% 4.67%
Noninterest expense to average assets (1)................ 3.18% 3.32% 3.31%
Nonperforming loans and foreclosed real
estate to total assets at end of period............... .64% .83% .84%
</TABLE>
(1) Annualized for the six months ended June 30, 2000 and 1999.
13
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest/dividend income; (iv) interest-rate spread; (v)
net interest margin; and (vi) ratio of average interest-earning assets to
average interest-bearing liabilities.
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------------------------------------------
2000 1999
---------------------------------------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Rate Balance Dividends Rate
------- --------- ------- ------- --------- -----
($ in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans ................................... $ 156,817 3,564 9.09% $ 143,529 3,044 8.48%
Securities................................. 57,196 876 6.13 44,674 598 5.35
Other interest-earning assets (1).......... 7,622 118 6.19 1,101 13 4.72
--------- ------ --------- ------
Total interest-earning assets.......... 221,635 4,558 8.23 189,304 3,655 7.72
------ ------
Noninterest-earning assets (2)............. 10,365 9,444
--------- ---------
Total assets........................... $ 232,000 $ 198,748
========= =========
Interest-bearing liabilities:
Savings and NOW deposits................... 13,324 49 1.47 13,123 49 1.49
Money-market deposits...................... 39,467 424 4.30 39,674 371 3.74
Time deposits.............................. 79,409 1,103 5.56 66,410 864 5.20
Other borrowings (3)....................... 47,423 690 5.82 29,917 369 4.93
--------- ------ --------- ------
Total interest-bearing liabilities..... 179,623 2,266 5.05 149,124 1,653 4.43
------ ------
Demand deposits............................ 24,276 19,183
Noninterest-bearing liabilities............ 3,371 3,287
Stockholders' equity....................... 24,730 27,154
--------- ---------
Total liabilities and
stockholders' equity............... $ 232,000 $ 198,748
========= =========
Net interest income........................... $ 2,292 $ 2,002
===== =======
Interest-rate spread (4)...................... 3.18% 3.29%
==== ====
Net interest margin (5)....................... 4.14% 4.23%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities....... 1.23 1.27
========= =========
</TABLE>
----------
(1) Includes interest-bearing deposits and federal funds sold.
(2) Includes nonaccrual loans.
(3) Includes advances from Federal Home Loan Bank, investment repurchase
agreements and federal funds purchased.
(4) Interest-rate spread represents the difference between the
weighted-average yield on interest-earning assets and the
weighted-average cost of interest-bearing liabilities.
(5) Net interest margin is net interest income divided by average
interest-earning assets.
14
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
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/dividend income; (iv) interest-rate spread; (v)
net interest margin; and (vi) ratio of average interest-earning asset to average
interest-bearing liabilities.
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------------------------------------
2000 1999
---------------------------------------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Rate Balance Dividends Rate
------- --------- ------- ------- --------- -----
($ in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans ................................... $ 156,867 6,999 8.92% $ 138,495 5,944 8.58%
Securities................................. 55,046 1,676 6.09 46,254 1,219 5.27
Other interest-earning assets (1).......... 4,133 127 6.15 934 22 4.71
--------- ------ --------- -------
Total interest-earning assets.......... 216,046 8,802 8.15 185,683 7,185 7.74
------ -----
Noninterest-earning assets (2)............. 10,707 9,720
--------- ---------
Total assets........................... $ 226,753 $ 195,403
========= =========
Interest-bearing liabilities:
Savings and NOW deposits................... 13,063 96 1.47 12,883 96 1.49
Money-market deposits...................... 38,537 804 4.17 39,608 734 3.71
Time deposits.............................. 76,940 2,084 5.42 67,133 1,757 5.23
Other borrowings (3)....................... 46,422 1,307 5.63 26,486 658 4.97
--------- ------ ---------- ------
Total interest-bearing liabilities..... 174,962 4,291 4.91 146,110 3,245 4.44
------ ------
Demand deposits............................ 23,939 19,122
Noninterest-bearing liabilities............ 3,325 3,047
Stockholders' equity....................... 24,527 27,124
--------- ---------
Total liabilities and
stockholders' equity............... $ 226,753 $ 195,403
========= =========
Net interest income........................... $ 4,511 $ 3,940
======= =======
Interest-rate spread (4)...................... 3.24% 3.30%
==== ====
Net interest margin (5)....................... 4.18% 4.24%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities....... 1.23 1.27
========= =========
</TABLE>
----------
(1) Includes interest-bearing deposits and federal funds sold.
(2) Includes nonaccrual loans.
(3) Includes advances from Federal Home Loan Bank, investment repurchase
agreements and federal funds purchased.
(4) Interest-rate spread represents the difference between the
weighted-average yield on interest-earning assets and the
weighted-average cost of interest-bearing liabilities.
(5) Net interest margin is net interest income divided by average
interest-earning assets.
15
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
Comparison of the Three Months Ended June 30, 2000 and 1999
Results of Operations
General. Net earnings for the three months ended June 30, 2000 were $416,000
or $.21 basic and diluted earnings per share compared to net earnings of
$331,000 or $.15 basic and diluted earnings per share for the three months
ended June 30, 1999. The increase in the Company's net earnings was
primarily due to an increase in net interest income, partially offset by
an increase in noninterest expenses and a decrease in noninterest income.
Interest Income and Expense. Interest income increased by $903,000 or 24.7%
from $3.7 million for the three months ended June 30, 1999 to $4.6 million
for the three months ended June 30, 2000. Interest income on loans
increased $520,000 or 17.1% primarily due to an increase of 9.3% in the
average loan portfolio balance from $143.5 million for the three months
ended June 30, 1999 to $156.8 million for the comparable period in 2000
and by an increase in the yield earned from 8.48% during 1999 to 9.09%
during the 2000 period. Interest income on securities increased $278,000
or 46.5% primarily due to an increase in the average securities portfolio
balance of $12.5 million and an increase in the yield earned from 5.35% in
1999 to 6.13% in 2000.
Interest expense on deposit accounts increased $292,000 or 22.7% to $1.6
million for the three months ended June 30, 2000 from $1.3 million for the
three months ended June 30, 1999. Interest expense on deposits increased
due to an increase in the weighted-average rate paid from 4.31% for the
three months ended June 30, 1999 to 4.77% for the comparable period in
2000 and an increase in the average balance from $119.2 million in 1999 to
$132.2 million in 2000.
Interest expense on other borrowings increased $321,000 to $690,000 for
the three months ended June 30, 2000 from $369,000 for the three months
ended June 30, 1999. Interest expense on other borrowings increased due to
an increase of $17.5 million in the average balance and an increase in the
weighted-average rate paid for the three months ended June 30, 2000
compared to the same period in 1999.
Provision for Loan Losses. The provision for loan losses is charged to
earnings to bring the total allowance to a level deemed appropriate by
management and is based upon historical experience, the volume and type of
lending conducted by the Company, industry standards, the amount of
nonperforming loans, general economic conditions, particularly as they
relate to the Company's market areas, and other factors related to the
collectibility of the Company's loan portfolio. The provision was $165,000
for the three months ended June 30, 2000 compared to $155,000 for the
comparable period in 1999. Management believes the balance in the
allowance for loan losses of $1.6 million at June 30, 2000 is adequate.
Noninterest Income. Noninterest income decreased $140,000 primarily due to a
decrease of $133,000 in realized gains on the sales of securities
available for sale and a decrease of $26,000 in gains from the sale of
loans for the three months ended June 30, 2000 when compared to the same
period in 1999.
Noninterest Expenses. Noninterest expenses increased $173,000 for the three
months ended June 30, 2000 compared to the same period in 1999 primarily
due to increases in salaries and employee benefits of $171,000, occupancy
expense of $18,000 and data processing fees of $21,000 which relates to
the Company's overall expansion plans.
Provision for Income Taxes. The income tax provision for the three months
ended June 30, 2000 was $154,000 (an effective rate of 31.3%) compared to
$194,000 (an effective rate of 37.0%) for the comparable 1999 period.
16
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
Comparison of the Six Months Ended June 30, 2000 and 1999
Results of Operations
General. Net earnings for the six months ended June 30, 2000 were $788,000 or
$.39 basic and diluted earnings per share compared to net earnings of
$633,000 or $.28 basic and diluted earnings per share for the six months
ended June 30, 1999. The increase in the Company's net earnings was
primarily due to an increase in net interest income, partially offset by
an increase in noninterest expenses and a decrease in noninterest income.
Interest Income and Expense. Interest income increased by $1.6 million or
22.5% from $7.2 million for the six months ended June 30, 1999 to $8.8
million for the six months ended June 30, 2000. Interest income on loans
increased $1.1 million or 17.8% primarily due to an increase of 13.3% in
the average loan portfolio balance from $138.5 million for the six months
ended June 30, 1999 to $156.9 million for the comparable period in 2000
and an increase in the yield earned from 8.58% during 1999 to 8.92% during
the 2000 period. Interest income on securities increased $457,000 or 37.5%
primarily due to an increase in the average securities portfolio balance
of $8.8 million and an increase in the yield earned from 5.27% in 1999 to
6.09% in 2000.
Interest expense on deposit accounts increased $397,000 or 15.4% to $3.0
million for the six months ended June 30, 2000 from $2.6 million for the
six months ended June 30, 1999. Interest expense on deposits increased due
to an increase in the weighted-average rate paid from 4.33% for the six
months ended June 30, 1999 to 4.64% for the comparable period in 2000 and
an increase in the average balance from $119.6 million in 1999 to $128.5
million in 2000.
Interest expense on other borrowings increased $649,000 to $1.3 million
for the six months ended June 30, 2000 from $658,000 for the six months
ended June 30, 1999. Interest expense on other borrowings increased due to
an increase of $19.9 million in the average balance and an increase in the
weighted-average rate paid for the six months ended June 30, 2000 compared
to the same period in 1999.
Provision for Loan Losses. The provision for loan losses is charged to
earnings to bring the total allowance to a level deemed appropriate by
management and is based upon historical experience, the volume and type of
lending conducted by the Company, industry standards, the amount of
nonperforming loans, general economic conditions, particularly as they
relate to the Company's market areas, and other factors related to the
collectibility of the Company's loan portfolio. The provision was $330,000
for the six months ended June 30, 2000 compared to $310,000 for the
comparable period in 1999. Management believes the balance in the
allowance for loan losses of $1.6 million at June 30, 2000 is adequate.
Noninterest Income. Noninterest income decreased $124,000 primarily due to a
decrease of $162,000 in realized gains on the sales of securities
available for sale and a decrease of $26,000 in gains from the sale of
loans, partially offset by an increase of $70,000 in service charges on
deposit accounts for the six months ended June 30, 2000 when compared to
the same period in 1999.
Noninterest Expenses. Noninterest expenses increased $364,000 for the six
months ended June 30, 2000 compared to the same period in 1999 primarily
due to increases in salaries and employee benefits of $310,000, occupancy
expense of $32,000 and data processing fees of $41,000 which relates to
the Company's overall expansion plans.
Provision for Income Taxes. The income tax provision for the six months ended
June 30, 2000 was $358,000 (an effective rate of 33.5%) compared to
$372,000 (an effective rate of 37.0%) for the comparable 1999 period.
17
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
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.
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 Pointe Financial
Corporation or any of its subsidiaries is a party or to which any of their
property is subject.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders (the "Annual Meeting") of Pointe Financial
Corporation was held on April 28, 2000, to consider the election of three
directors each for a term of three years and to amend the 1998 Directors
Deferred Compensation Plan. At the Annual Meeting, incumbent directors Roberto
Kassin, Timothy McGinn and R. Carl Palmer, Jr., were reelected. The terms of
Directors Steven A. Elias, Morris Massry, D. Richard Mead, Jr., and Parker D.
Thomson continued after the Annual Meeting. Also the 1998 Directors Deferred
Compensation Plan was amended to increase the number of shares authorized to
122,500.
At the Annual Meeting, 1,447,818 shares were present in person or by proxy. The
following is a summary and tabulation of the matter that was voted upon at the
Annual Meeting:
Proposal I.
The election of three directors, each for a term of three years:
<TABLE>
<CAPTION>
For Withheld Against
--- -------- -------
<S> <C> <C> <C>
Roberto Kassin 1,446,868 - 950
========= ========= ===
Timothy McGinn 1,446,868 - 950
========= ======== ===
R. Carl Palmer, Jr. 1,446,868 - 950
========= ======== ===
</TABLE>
18
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
Item 4. Submission of Matters to a Vote of Security Holders, Continued
Proposal II.
The amendment of the number of shares authorized under the 1998 Directors
Deferred Compensation Plan to 122,500:
<TABLE>
<CAPTION>
For Withheld Against
--- -------- -------
<S> <C> <C> <C>
1,421,244 23,073 3,501
========= ====== =====
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report.*
<TABLE>
<CAPTION>
<S> <C> <C>
2.1 Plan of Merger and Merger Agreement dated February 14, 1997 by
and between Pointe Federal Savings Bank and Pointe Bank
(Exhibit 2.1 to the Registrant's Form SB-2 Registration
Statement, File No. 333-49835, as initially filed with the
Securities and Exchange Commission on April 9, 1998 [the
"Registration Statement"]).
3.1 Articles of Incorporation of the Registrant (Exhibit 3.1 to the Registration Statement).
3.2 By-Laws of the Registrant (Exhibit 3.2 to the Registration Statement).
4.1 Specimen Common Stock Certificate (Exhibit 4.1 to the Registration Statement).
10.1** 1994 Non-Statutory Stock Option Plan (Exhibit 10.1 to the Registration Statement).
10.2** Deferred Compensation Plan (Exhibit 10.2 to the Registration Statement).
10.3 Office Lease Agreement dated October 8, 1986 by and between Centrum Pembroke, Inc. and Flamingo
Bank (Exhibit 10.3 to the Registration Statement).
10.4 Lease dated as of July 15, 1992 between Konrad Ulmer and Pointe Savings Bank (Exhibit 10.4 to
the Registration Statement).
10.5 Lease Agreement dated January 23, 1995 by and between Hollywood
Associates VI and Pointe Bank (Exhibit 10.5 to the Registration Statement).
10.6 Credit Agreement dated August 18, 1997 between Independent Bankers' Bank of Florida and Pointe
Bank (Exhibit 10.6 to the Registration Statement).
10.7 Credit Agreement dated October 14, 1997 between SunTrust Bank/Miami, N.A. and Pointe Bank
(Exhibit 10.7 to the Registration Statement).
10.8 Agreement for Advances and Security Agreement with Blanket
Floating Lien dated November 24, 1997 between Pointe Bank and
the Federal Home Loan Bank of Atlanta (Exhibit 10.8 to the
Registration Statement).
10.9 Equipment Sales and Software License Agreements between Information Technology, Inc. and Pointe
Financial Corporation (Exhibit 10.9 to the Registration Statement).
10.10 Master Equipment Lease Agreement dated May 7, 1997 between
Leasetec Corporation and Pointe Financial Corporation (Exhibit
10.10 to the Registration Statement).
10.11** Letter Agreement dated March 9, 1995 between Pointe Financial Corporation and R. Carl Palmer,
Jr. (Exhibit 10.11 to the Registration Statement).
10.12** 1998 Incentive Compensation and Stock Award Plan.
10.13*** Employment agreement between the company and R. Carl Palmer, Jr.
10.14*** Employment agreement between the company and Beverly P. Chambers
10.15*** Employment agreement between the company and Bradley R. Meredith
27 Financial Data Schedule (for SEC use only)
</TABLE>
----------
* Exhibits followed by a parenthetical reference are incorporated
herein by reference from the documents described therein.
** Exhibits 10.1, 10.2, 10.11 and 10.12 are compensatory plans or
arrangements.
*** Contracts with Management.
(b) On July 13, 2000 the Company filed a Form 8-K in connection with an
amendment to the 1998 Directors Deferred Compensation Plan increasing the
number of authorized shares to 122,500.
19
<PAGE>
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
SIGNATURES
In accordance with 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.
POINTE FINANCIAL CORPORATION
(Registrant)
Date: July 20, 2000 By: /s/ R. Carl Palmer,Jr.
--------------- ----------------------------------------------
R. Carl Palmer, Jr., President and Chief
Executive Officer
Date: July 20, 2000 By: /s/ Bradley R. Meredith
--------------- ----------------------------------------------
Bradley R. Meredith, Senior Vice President and
Chief Financial Officer
20
