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 March 31, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ------------------------
Commission file number 0-22608
FFLC BANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 59-3204891
--------------------------------- ----------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
800 North Boulevard West, Post Office Box 490420, Leesburg, Florida 34749-0420
------------------------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (352) 787-3311
--------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes X No ____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common stock, par value $.01 per share
--------------------------------------
3,537,090 shares outstanding at April 23, 2001
----------------------------------------------
FFLC BANCORP, INC.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets -
at March 31, 2001 (unaudited) and at December 31, 2000...................................................2
Condensed Consolidated Statements of Income -
Three months ended March 31, 2001 and 2000 (unaudited)...................................................3
Condensed Consolidated Statement of Changes in Stockholders' Equity -
Three months ended March 31, 2001 (unaudited)............................................................4
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 2001 and 2000 (unaudited).................................................5-6
Notes to Condensed Consolidated Financial Statements (unaudited).........................................7-9
Review by Independent Certified Public Accountants........................................................10
Report on Review by Independent Certified Public Accountants..............................................11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..............................................................................12-17
Item 3. Quantative and Qualitative Disclosures About Market Risk...........................................18
Part II. OTHER INFORMATION
Item 1. Legal Proceedings..................................................................................18
Item 2. Changes in Securities..............................................................................18
Item 3. Default upon Senior Securities.....................................................................18
Item 5. Other Information..................................................................................18
Item 6. Exhibits and Reports on Form 8-K...................................................................19
SIGNATURES.....................................................................................................20
1
FFLC BANCORP, INC.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
($ in thousands, except share amounts)
At At
March 31, December 31,
2001 2000
---- ----
Assets (unaudited)
Cash and due from banks $ 17,554 16,036
Interest-bearing deposits 17,235 14,445
--------- ---------
Cash and cash equivalents 34,789 30,481
Securities available for sale 42,706 42,717
Loans receivable, net of allowance for loan losses of $3,773 in 2001
and $3,552 in 2000 639,590 615,484
Accrued interest receivable 3,915 3,750
Premises and equipment, net 12,057 11,490
Foreclosed real estate 123 276
Federal Home Loan Bank stock, at cost 6,150 6,150
Other assets 1,205 1,145
--------- ---------
Total $ 740,535 711,493
========= =========
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits 14,124 13,335
NOW and money-market accounts 90,627 86,509
Savings accounts 19,639 19,143
Certificates 416,636 399,898
--------- ---------
Total deposits 541,026 518,885
--------- ---------
Advances from Federal Home Loan Bank 123,000 123,000
Other borrowed funds 11,777 6,376
Accrued expenses and other liabilities 4,312 3,949
--------- ---------
Total liabilities 680,115 652,210
--------- ---------
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none outstanding -- --
Common stock, $.01 par value, 9,000,000 shares authorized,
4,501,771 in 2001 and 4,491,646 in 2000 shares issued 45 45
Additional paid-in-capital 31,071 31,010
Retained income 48,104 47,132
Accumulated other comprehensive income 318 81
Treasury stock, at cost (967,181 shares in 2001 and
959,085 shares in 2000) (19,118) (18,985)
--------- ---------
Total stockholders' equity 60,420 59,283
--------- ---------
Total $ 740,535 711,493
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements.
2
FFLC BANCORP, INC.
Condensed Consolidated Statements of Income (Unaudited)
($ in thousands, except share amounts)
Three Months Ended
March 31,
2001 2000
---- ----
Interest income:
Loans receivable $ 12,949 10,255
Securities available for sale 714 572
Other interest-earning assets 316 293
---------- ----------
Total interest income 13,979 11,120
---------- ----------
Interest expense:
Deposits 6,933 4,965
Borrowed funds 1,988 1,430
---------- ----------
Total interest expense 8,921 6,395
---------- ----------
Net interest income 5,058 4,725
Provision for loan losses 275 200
---------- ----------
Net interest income after provision for loan losses 4,783 4,525
---------- ----------
Noninterest income:
Deposit account fees 217 171
Other service charges and fees 203 182
Other 51 50
---------- ----------
Total noninterest income 471 403
---------- ----------
Noninterest expense:
Salaries and employee benefits 1,719 1,652
Occupancy expense 481 423
Deposit insurance premium 24 21
Data processing expense 246 224
Professional services 59 72
Advertising and promotion 106 76
Other 328 288
---------- ----------
Total noninterest expense 2,963 2,756
---------- ----------
Income before income taxes 2,291 2,172
Income taxes 859 855
---------- ----------
Net income $ 1,432 1,317
========== ==========
Basic income per share of common stock $ .41 .37
========== ==========
Weighted-average number of shares outstanding for basic 3,534,998 3,539,918
========== ==========
Diluted income per share of common stock $ .40 .36
========== ==========
Weighted-average number of shares outstanding for diluted 3,621,029 3,627,734
========== ==========
Dividends per share $ .13 .12
========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements
3
FFLC BANCORP, INC.
Condensed Consolidated Statement of Changes in Stockholders' Equity
Three Months Ended March 31, 2001 (Unaudited)
($ in thousands)
Accumulated
Other
Additional Compre- Total
Common Paid-In Treasury Retained hensive Stockholders'
Stock Capital Stock Income Income Equity
-------- ---------- ---------- -------- ---------- -------------
Balance at December 31, 2000 $ 45 31,010 (18,985) 47,132 81 59,283
-------
Comprehensive income:
Net income (unaudited) -- -- -- 1,432 -- 1,432
Net change in unrealized gain on securities
available for sale, net of income taxes
of $143 (unaudited) -- -- -- -- 237 237
-------
Comprehensive income (unaudited) 1,669
-------
Net proceeds from the issuance of 10,125 shares
of common stock, stock options exercised
(unaudited) -- 61 -- -- -- 61
Dividends paid (unaudited) -- -- -- (460) --
(460)
Purchase of treasury stock, 8,096 shares (unaudited) -- -- (133) -- -- (133)
------- ------- ------- ------- ------- -------
Balance at March 31, 2001(unaudited) $ 45 31,071 (19,118) 48,104 318 60,420
======= ======= ======= ======= ======= =======
See accompanying Notes to Condensed Consolidated Financial Statements.
4
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
($ in thousands)
Three Months Ended
March 31,
----------------------
2001 2000
---- ----
Cash flows from operating activities:
Net income $ 1,432 1,317
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses 275 200
Depreciation 191 176
Credit for deferred income taxes (53) (144)
Gain on sale of foreclosed real estate (9) (21)
Shares committed and dividends to incentive plan participants -- 183
Net amortization of premiums or discounts on securities (22) 8
Net deferral of loan fees and costs 31 (35)
Increase in accrued interest receivable (165) (226)
Increase in other assets (60) (306)
Increase in accrued expenses and other liabilities 273 2,330
-------- --------
Net cash provided by operating activities 1,893 3,482
-------- --------
Cash flows from investing activities:
Proceeds from maturities and principal repayments on securities
available for sale 2,551 877
Purchase of securities available for sale (2,138) (131)
Loan disbursements (42,507) (51,286)
Principal repayments on loans 18,037 18,179
Purchase of premises and equipment, net (758) (1,046)
Purchase of Federal Home Loan Bank stock -- 275
Proceeds from sales of foreclosed real estate 220 56
-------- --------
Net cash used in investing activities (24,595) (33,076)
-------- --------
(continued)
5
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited), Continued
($ in thousands)
Three Months Ended
March 31,
2001 2000
---- ----
Cash flows from financing activities:
Net increase in deposits $ 22,141 17,994
Net decrease in advances from Federal Home Loan Bank -- (5,500)
Net increase in other borrowed funds 5,401 999
Issuance of common stock 61 127
Purchase of treasury stock (133) (78)
Dividends paid on common stock (460) (431)
-------- --------
Net cash provided by financing activities 27,010 13,111
-------- --------
Net increase (decrease) in cash and cash equivalents 4,308 (16,483)
Cash and cash equivalents at beginning of period 30,481 34,339
-------- --------
Cash and cash equivalents at end of period $ 34,789 17,856
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 8,967 6,217
======== ========
Income taxes $ 88 25
======== ========
Noncash investing and financing activities:
Accumulated other comprehensive income (loss), net change in unrealized
gain on securities available for sale, net of tax $ 237 (23)
======== ========
Transfers from loans to foreclosed real estate $ 63 180
======== ========
Loans originated on sales of foreclosed real estate $ 5 83
======== ========
Loans funded by and sold to correspondent $ 3,032 --
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements.
6
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 March 31, 2001 and the results of
operations and cash flows for the three-month periods ended March 31, 2001
and 2000. The results of operations for the three-month period ended March
31, 2001, are not necessarily indicative of results that may be expected
for the year ending December 31, 2001.
The condensed consolidated financial statements include the accounts of
FFLC Bancorp, Inc. (the "Holding Company"), its wholly-owned subsidiary,
First Federal Savings Bank of Lake County (the "Savings Bank") and the
Savings Bank's wholly-owned subsidiary, Lake County Service Corporation
(together, the "Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
2. Loan Receivable. The following table sets forth the composition of the
Bank's loan portfolio in dollar amounts and percentages at the dates
indicated (in thousands):
At March 31, 2001 At December 31, 2000
----------------------- -------------------------
% of % of
Amount Total Amount Total
------- ------ ------- ------
Mortgage loans:
One-to-four-family $ 412,561 63.15% $ 409,600 64.97%
Construction and land 18,932 2.90 13,006 2.06
Multi-family 18,828 2.88 17,602 2.79
Commercial real estate 83,571 12.80 79,729 12.65
------- ------ ------- ------
Total mortgage loans 533,892 81.73 519,937 82.47
Consumer loans 102,972 15.76 95,824 15.20
Commercial loans 16,416 2.51 14,677 2.33
------- ------- ------- -------
Total loans receivable (1) 653,280 100.00% 630,438 100.00%
====== ======
Less:
Loans in process (10,612) (12,128)
Unearned discounts, premiums and deferred loan
fees, net (includes dealer prepaid fees) 695 726
Allowance for loan losses (3,773) (3,552)
-------- -------
Loans receivable, net $ 639,590 $ 615,484
======= =======
(1) Total loans receivable outstanding by department consists of the following
(in thousands):
At
------------------------------------------------
March 31, 2001 December 31, 2000
% of % of
Amount Total Amount Total
------- ------ ------- ------
Residential $ 406,224 62.18% $ 404,494 64.16%
Commercial 144,084 22.06 130,120 20.64
Consumer 102,972 15.76 95,824 15.20
------- ------ ------- ------
$ 653,280 100.00% $ 630,438 100.00%
======= ====== ======= ======
(continued)
7
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
3. Loan Impairment and Loan Losses. The Company prepares a quarterly review of
the adequacy of the allowance for loan losses to also identify and value
impaired loans in accordance with guidance in the Statements of Financial
Accounting Standards No. 114 and 118.
An analysis of the change in the allowance for loan losses was as follows
(in thousands):
Three Months Ended
March 31,
-------------------
2001 2000
---- ----
Balance at January 1 $ 3,552 2,811
Provision for loan losses 275 200
Net loans charged-off (54) (31)
------- -------
Balance at March 31 $ 3,773 2,980
======= =======
The following summarizes the amount of impaired loans, all of which are
collateral dependent (in thousands):
At
-------------------------
March 31, December 31,
2001 2000
---- ----
Loans identified as impaired:
Gross loans with no related allowance for losses $ - -
Gross loans with related allowance for losses recorded 1,579 1,280
Less: Allowances on these loans (237) (192)
------- ------
Net investment in impaired loans $ 1,342 1,088
======= ======
The average net investment in impaired loans and interest income recognized
and received on impaired loans was as follows (in thousands):
Three Months Ended
March 31,
---------------------
2001 2000
---- ----
Average net investment in impaired loans $ 1,215 1,146
======= ======
Interest income recognized on impaired loans $ 11 5
======= ======
Interest income received on impaired loans $ 11 5
======= ======
(continued)
8
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
4. 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 income per share:
Three Months Ended
March 31,
2001 2000
---- ----
Weighted-average shares of common stock issued and
outstanding before adjustments for ESOP, RRP and
common stock options 3,537,733 3,590,530
Adjustment to reflect the effect of unallocated ESOP and
RRP shares (2,735) (50,612)
---------- ----------
Weighted-average shares for basic net income per share 3,534,998 3,539,918
========== ==========
Basic income per share $ .41 .37
========== ==========
Total weighted-average common shares and equivalents
outstanding for basic income per share computation 3,534,998 3,539,918
Additional dilutive shares using the average market value for
the period utilizing the treasury stock method regarding stock options 86,031 87,816
---------- ----------
Weighted-average common shares and equivalents outstanding for
diluted income per share 3,621,029 3,627,734
========== ==========
Diluted income per share $ .40 .36
========== ==========
9
FFLC BANCORP, INC.
Review by Independent Certified Public Accountants
Hacker, Johnson & Smith PA, the Company's independent certified public
accountants, have made a limited review of the financial data as of March 31,
2001, and for the three-month periods ended March 31, 2001 and 2000 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.
10
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 March 31, 2001, and the
related condensed consolidated statements of income and cash flows for the
three-month periods ended March 31, 2001 and 2000, and the condensed
consolidated statement of changes in stockholders' equity for the three-month
period ended March 31, 2001. 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, 2000, 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 12, 2001 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, 2000, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
HACKER, JOHNSON & SMITH PA
Tampa, Florida
April 6, 2001
11
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.
12
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 March 31, 2001, cash, amounts due
from depository institutions and interest-bearing deposits, totaled $34.8
million.
The OTS has issued an interim final rule that removes the regulatory
provisions establishing the required liquidity level and containing the
definitions needed to calculate the level. The repeal of Section 6 of HOLA,
and the removal of the regulatory section, places savings associations on
the same basis as other insured depositories that do not have statutorily
mandated liquidity requirements. Instead of a specific regulation, the OTS
has amended its management and financial policies to provide that savings
associations and their service corporations must be well managed and
operate on a safe and sound basis. As part of meeting those requirements,
each savings association and its service corporation must maintain
sufficient liquidity to ensure its safe and sound operation. The Bank
continued to maintain an adequate liquidity level at March 31, 2001.
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 March 31, 2001, the Bank had outstanding commitments to originate $18.1
million of loans and to fund the undisbursed portion of loans in process of
approximately $10.6 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 March 31, 2001, certificates of
deposit which were scheduled to mature in one year or less totaled $327.9
million. Management believes, based on past experience, that a significant
portion of those funds will remain with the Bank.
The Bank is subject to various regulatory capital requirements administered
by the Federal banking agencies. Failure to meet minimum capital
requirements can require regulators to initiate certain mandatory-and
possibly additional discretionary-actions that, if undertaken, could have a
direct material effect on the Company's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital guidelines that involve
quantitative measures of the Bank's assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting
practices. The Bank's capital amounts and classification are also subject
to qualitative judgements by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts (set forth in the table) of
total and Tier I capital (as defined in the regulations) to risk-weighted
assets (as defined). Management believes that, as of March 31, 2001, the
Bank meets all capital adequacy requirements to which it is subject.
13
FFLC BANCORP, INC.
As of March 31, 2001, 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 March 31, 2001 are
also presented in the table.
To Be Well
Minimum Capitalized
For Capital For Prompt
Adequacy Corrective Action
Actual Purposes Provisions
------------------ ------------------ --------------------
% Amount % Amount % Amount
- ------ - ------ - ------
($ in thousands)
Stockholders' equity,
and ratio to total
assets 7.63% $ 56,501
Less: investment in
nonincludable
subsidiary (484)
Less: unrealized loss on
securities available for sale (377)
-------
Tangible capital,
and ratio to adjusted
total assets 7.52% $ 55,640 1.5% $ 11,099
======= ======
Tier 1 (core) capital, and
ratio to adjusted total
assets 7.52% $ 55,640 3.0% $ 22,198 5.0% $ 36,996
======= ====== =======
Tier 1 capital, and ratio
to risk-weighted assets 11.90% 55,640 4.0% $ 18,706 6.0% $ 28,060
====== =======
Less: Nonincludable investment
in 80% land loans (548)
Tier 2 capital (allowance for
loan losses) 3,598
-------
Total risk-based capital,
and ratio to risk-
weighted assets 12.55% $ 58,690 8.0% $ 37,413 10.0% $ 46,766
======= ====== =======
Total assets $ 740,781
=======
Adjusted total assets $ 739,920
=======
Risk-weighted assets $ 467,661
=======
14
FFLC BANCORP, INC.
The following table shows selected ratios for the periods ended or at the
dates indicated:
Three Months Three Months
Ended Year Ended Ended
March 31, December 31, March 31,
2001 2000 2000
------------ ------------ ------------
Average equity as a percentage
of average assets 8.27% 8.88% 9.42%
Total equity to total assets at end of period 8.16% 8.33% 9.34%
Return on average assets (1) .79% .82% .88%
Return on average equity (1) 9.57% 9.24% 9.38%
Noninterest expense to average assets (1) 1.64% 1.76% 1.85%
Nonperforming assets to total assets
at end of period .49% .39% .45%
Operating efficiency ratio (1) 53.59% 54.44% 53.74%
(1) Annualized for the three months ended March 31, 2001 and 2000.
At At At
March 31, December 31, March 31,
2001 2000 2000
---------- ------------ ----------
Weighted-average interest rates:
Interest-earning assets:
Loans receivable 8.11% 8.17% 7.94%
Securities 6.35% 6.50% 6.36%
Other interest-earning assets 5.82% 6.55% 6.71%
Total interest-earning assets 7.93% 8.02% 7.82%
Interest-bearing liabilities:
Interest-bearing deposits 5.33% 5.29% 4.64%
Borrowed funds 6.08% 6.13% 5.99%
Total interest-bearing liabilities 5.48% 5.51% 4.88%
Interest-rate spread 2.45% 2.51% 2.94%
Change in Financial Condition
Total assets increased $29.0 million or 4.1%, from $711.5 million at December
31, 2000 to $740.5 million at March 31, 2001 primarily as a result of a $24.1
million increase in loans receivable, net, and an increase in cash and cash
equivalents of $4.3 million. Deposits increased $22.1 million from $518.9
million at December 31, 2000 to $541.0 million at March 31, 2001. The $1.1
million net increase in stockholders equity during the three months ended March
31, 2001 resulted from net income of $1.4 million, credits to equity totaling
$237,000 related to the change in unrealized gain on securities available for
sale, and proceeds of $61,000 from stock options exercised, partially offset by
repurchases of the Company's stock of $133,000 and dividends paid of $460,000.
15
FFLC BANCORP, INC.
Results of Operations
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest and dividend income; (iv) interest-rate spread;
and (v) net interest margin. Yields and costs were derived by dividing income or
expense by the average balance of assets or liabilities, respectively, for the
periods shown. The average balance of loans receivable includes loans on which
the Company has discontinued accruing interest. The yields and costs include
fees which are considered to constitute adjustments to yields.
Three Months Ended March 31,
-----------------------------------------------------------------
2001 2000
--------------------------------- -----------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
($ in Thousands)
Interest-earning assets:
Loans receivable $ 628,834 12,949 8.24% $ 514,045 10,255 7.98%
Securities 43,613 714 6.55 36,760 572 6.22
Other interest-earning assets (1) 20,839 316 6.07 19,072 293 6.15
------- ------ -------- -------
Total interest-earning assets 693,286 13,979 8.07 569,877 11,120 7.81
------ ------
Noninterest-earning assets 30,640 26,719
-------- -------
Total assets $ 723,926 $ 596,596
======= =======
Interest-bearing liabilities:
NOW and money-market accounts 87,405 580 2.65 78,572 524 2.67
Savings accounts 19,425 97 2.00 21,173 106 2.00
Certificates 407,708 6,256 6.14 323,591 4,335 5.36
Advances from Federal Home Loan Bank 123,000 1,896 6.17 93,236 1,385 5.94
Other borrowed funds 8,318 92 4.42 3,703 45 4.86
--------- -------- -------- -------
Total interest-bearing liabilities 645,856 8,921 5.53 520,275 6,395 4.92
------ ------
Noninterest-bearing deposits 12,825 12,736
Noninterest-bearing liabilities 5,388 7,408
Stockholders' equity 59,857 56,177
-------- -------
Total liabilities and stockholders' equity $ 723,926 $ 596,596
======= =======
Net interest income $ 5,058 $ 4,725
====== ======
Interest-rate spread (2) 2.54% 2.89%
==== ====
Net average interest-earning assets, net margin (3) $ 47,430 2.92% $ 49,602 3.32%
======= ==== ======= ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.07 1.10
==== ====
(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.
16
FFLC BANCORP, INC.
Comparison of the Three Months Ended March 31, 2001 and 2000
General Operating Results. Net income for the three-month period ended March 31,
2001 was $1.4 million compared to $1.3 million for the comparable 2000
period. An increase in net interest income of $333,000, partially offset by
a $207,000 increase in noninterest expense contributed to the increase in
net income.
Interest Income. Interest income increased $2.9 million, or 25.7%, from $11.1
million for the three-month period ended March 31, 2000 to $14.0 million
for the three-month period ended March 31, 2001. The increase was due to a
$123.4 million increase in the average balance of interest-earning assets
outstanding during the three-month period ended March 31, 2001, compared to
the 2000 period and an increase in the average yield earned on
interest-earning assets from 7.81% for the three-month period ended March
31, 2000, to 8.07% for the three-month period ended March 31, 2001.
Interest Expense. Interest expense increased $2.5 million or 39.5%, from $6.4
million for the three-month period ended March 31, 2000 to $8.9 million for
the three-month period ended March 31, 2001. The increase was primarily due
to increases of $91.2 million and $34.4 million in average deposits and
borrowed funds outstanding, respectively. Average deposits increased from
$423.3 million outstanding during the three months ended March 31, 2000 to
$514.5 million outstanding during the comparable period for 2001. Average
borrowed funds increased from $96.9 million outstanding during the three
months ended March 31, 2000 to $131.3 million outstanding during the three
months ended March 31, 2001.
Noninterest Income. Noninterest income for the three-month period ended March
31, 2001 exceeded noninterest income for the three-month period ended March
31, 2000 by $68,000 mainly due to an increase in deposit account fees
earned.
Noninterest Expense. Noninterest expense increased by $207,000, or 7.5% from the
three-month period ended March 31, 2000 to the three-month period ended
March 31, 2001. The increase was primarily due to increases in salaries and
employee benefits of $67,000, occupancy expense of $58,000 and data
processing expense of $22,000 related to the overall growth of the Company.
Income Tax Provision. The income tax provision increased from $855,000 (an
effective tax rate of 39.4%) for the three-month period ended March 31,
2000 to $859,000 (an effective tax rate of 37.5%) for the corresponding
period in 2001.
17
FFLC BANCORP, INC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss from adverse changes in market prices and
rates. The Company's market risk arises primarily from interest-rate risk
inherent in its lending and deposit taking activities. The Company has
little or no risk related to trading accounts, commodities or foreign
exchange.
Management actively monitors and manages its interest rate risk exposure.
The primary objective in managing interest-rate risk is to limit, within
established guidelines, the adverse impact of changes in interest rates on
the Company's net interest income and capital, while adjusting the
Company's asset-liability structure to obtain the maximum yield-cost spread
on that structure. Management relies primarily on its asset-liability
structure to control interest rate risk. However, a sudden and substantial
increase in interest rates could adversely impact the Company's earnings,
to the extent that the interest rates borne by assets and liabilities do
not change at the same speed, to the same extent, or on the same basis.
There have been no significant changes in the Company's market-risk
exposure since December 31, 2000.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceeding to which FFLC Bancorp, Inc.
or any of its subsidiaries is a party or to which any of their property is
subject.
Item 2. Changes in Securities
Not applicable
Item 3. Default upon Senior Securities
Not applicable
Item 5. Other Information
Not applicable
18
FFLC BANCORP, INC.
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**
* 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 2000 FFLC
Bancorp, Inc. Form 10-K filed March 22, 2001.
(b) Reports on Form 8-K, there were no reports.
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: April 26, 2001 By: /s/ Stephen T. Kurtz
--------------------------- -----------------------------------
Stephen T. Kurtz, President and
Chief Executive Officer
Date: April 26, 2001 By: /s/ Paul K. Mueller
--------------------------- -----------------------------------
Paul K. Mueller, Executive Vice
President and Treasurer
19