UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 2002
Transition report under Section 13 or 15(d) of the Securities Exchange
- ---
Act of 1934
For the transition period from to
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Commission file number 0-32139
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FLORIDAFIRST BANCORP, INC.
--------------------------
(Exact Name of Registrant as Specified in Its Charter)
Florida 59-3662010
- --------------------------------- -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
205 East Orange Street
Lakeland, Florida 33801-4611
----------------------------------------
(Address of Principal Executive Offices)
(863) 688-6811
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
-------------------------------------------------------------------------------
(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
--- ---
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 $.10 per share 5,373,994 shares
- -------------------------------------- -----------------------------
(class) Outstanding at August 7, 2002
- --------------------------------------------------------------------------------
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets -
At June 30, 2002 (unaudited) and At September 30, 2001..................................2
Condensed Consolidated Statements of Income -
Three and Nine Months ended June 30, 2002 and 2001 (unaudited)..........................3
Condensed Consolidated Statement of Stockholders' Equity
Nine Months Ended June 30, 2002 (unaudited).............................................4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended June 30, 2002 and 2001 (unaudited)..................................5-6
Notes to Condensed Consolidated Financial Statements (unaudited)........................7-9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................................10-21
Item 3. Quantitative and Qualitative Disclosure about Market Risk..........................22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................................23
Item 2. Changes in Securities and Use of Proceeds.........................................23
Item 3. Defaults Upon Senior Securities...................................................23
Item 4. Submission of Matters to a Vote of Security Holders...............................23
Item 5. Other Information.................................................................23
Item 6. Exhibits and Reports on Form 8-K..................................................24
SIGNATURES....................................................................................25
1
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(In thousands)
At
------------------------------
June 30, September 30,
Assets 2002 2001
---- ----
(unaudited)
Cash and cash equivalents ...................................... $ 16,381 21,676
Securities available for sale .................................. 248,973 129,534
Loans, net of allowance for loan losses of
$4,714 and $3,652 .......................................... 490,166 474,155
Premises and equipment, net .................................... 14,605 10,944
Federal Home Loan Bank stock, at cost .......................... 6,806 7,670
Cash surrender value of bank-owned life insurance .............. 15,879 10,795
Core deposit intangible, net ................................... 11,981 --
Other assets ................................................... 7,518 5,595
------- -------
Total assets ..................................... $ 812,309 660,369
======= =======
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing checking ............................... 32,167 20,306
Interest-bearing checking .................................. 72,754 34,705
Savings accounts ........................................... 54,825 27,547
Money-market accounts ...................................... 65,482 33,768
Certificate accounts ....................................... 350,423 283,211
------- -------
Total deposits ................................... 575,651 399,537
Federal Home Loan Bank advances ............................ 125,300 149,500
Other borrowings ........................................... 10,724 11,048
Other liabilities .......................................... 6,359 6,470
------- -------
Total liabilities ................................ 718,034 566,555
------- -------
Stockholders' equity:
Preferred stock ............................................ - -
Common stock ............................................... 552 552
Additional paid-in capital ................................. 52,068 52,059
Retained earnings .......................................... 49,642 46,454
Treasury stock, at cost .................................... (2,680) (481)
Unallocated shares held by the employee stock ownership plan (4,869) (5,410)
Unallocated shares held by the restricted stock plan ....... (3,069) (986)
Accumulated other comprehensive income ..................... 2,631 1,626
------- -------
Total stockholders' equity ....................... 94,275 93,814
------- -------
Total liabilities and stockholders' equity ....... $ 812,309 660,369
======= =======
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------- ---------------------
2002 2001 2002 2001
---- ---- ---- ----
Interest income:
Loans..................................................... $ 9,184 9,344 27,064 27,367
Securities and other...................................... 3,764 2,041 8,975 5,990
------ ------ ------ ------
Total interest income................................ 12,948 11,385 36,039 33,357
------ ------ ------ ------
Interest expense:
Deposits.................................................. 4,775 4,450 13,386 13,395
Federal Home Loan Bank advances and other borrowings...... 1,615 1,981 5,305 6,132
------ ------ ------ ------
Total interest expense............................... 6,390 6,431 18,691 19,527
------ ------ ------ ------
Net interest income........................................... 6,558 4,954 17,348 13,830
Provision for loan losses..................................... 180 150 500 465
------ ------ ------ ------
Net interest income after provision for loan losses........... 6,378 4,804 16,848 13,365
------ ------ ------ ------
Noninterest income:
Fees and service charges.................................. 697 396 1,585 1,140
Net gain on sale of loans held for sale................... 33 60 224 148
Net gain (loss) on sale of securities available for sale.. 296 (4) 500 (19)
Earnings on bank-owned life insurance..................... 244 167 584 391
Other..................................................... 318 110 580 319
------ ------ ------ ------
Total noninterest income............................. 1,588 729 3,473 1,979
------ ------ ------ ------
Noninterest expense:
Salaries and employee benefits............................ 2,897 1,942 7,874 5,613
Occupancy expense......................................... 834 551 2,149 1,574
Marketing................................................. 77 66 282 260
Data processing........................................... 172 118 435 375
Postage and office supplies............................... 130 87 402 311
Professional fees......................................... 129 143 343 354
Amortization of core deposit intangible................... 450 - 675 -
Other..................................................... 1,024 552 2,306 1,628
------ ------- ------- -------
Total noninterest expense............................ 5,713 3,459 14,466 10,115
------ ------ ------ ------
Income before income taxes.................................... 2,253 2,074 5,855 5,229
Income taxes.................................................. 681 640 1,741 1,643
------ ------ ------ ------
Net income.................................................... $ 1,572 1,434 4,114 3,586
====== ====== ====== ======
Earnings per share:
Basic..................................................... $ 0.31 0.27 0.80 0.67
====== ====== ====== ======
Diluted................................................... $ 0.29 0.26 0.77 0.65
====== ====== ====== ======
Weighted-average common and common equivalent
shares outstanding (in thousands):
Basic..................................................... 5,098 5,297 5,114 5,344
====== ====== ====== ======
Diluted................................................... 5,342 5,417 5,377 5,480
====== ====== ====== ======
Cash dividends per share...................................... $ .06 .05 .17 .14
====== ====== ====== ======
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statement of Stockholders' Equity (Unaudited)
For the Nine Months Ended June 30, 2002
(In thousands, except share amounts)
Unallocated Accumulated
Shares Unallocated Other
Additional Held Shares Compre- Total
Common Stock Paid-In Retained Treasury by the Held by hensive Stockholders'
-------------------------
Shares Amount Capital Earnings Stock ESOP the RSP Income Equity
------ ------ ------- -------- ----- ---- ------- ------ -------
Balance at September
30, 2001............... 5,521,850 $ 552 52,059 46,454 (481) (5,410) (986) 1,626 93,814
------
Comprehensive income:
Net income............. - - - 4,114 - - - - 4,114
Net change in
unrealized gain
on securities
available for
sale, net of tax
of $590.............. - - - - - - - 1,005 1,005
------
Comprehensive income...... 5,119
------
115,000 and 121,700 shares
repurchased for treasury
and RSP, respectively,
at cost................ - - - - (2,199) - (2,286) - (4,485)
Proceeds from exercise
of stock options....... 2,144 - 18 - - - - - 18
Cash dividends............ - - - (926) - - - - (926)
Fair value of ESOP and
RSP shares allocated... - - (9) - - 541 203 - 735
--------- --- ------ ------ ------ ----- ----- ----- ------
Balance at June 30,
2002................... 5,523,994 $ 552 52,068 49,642 (2,680) (4,869) (3,069) 2,631 94,275
========= === ====== ====== ====== ====== ===== ===== ======
See Accompanying Notes to Condensed Consolidated Financial Statements.
4
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended
June 30,
------------------------
2002 2001
---- ----
Cash flows from operating activities:
Net income..................................................................... $ 4,114 3,586
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses................................................. 500 465
Depreciation.............................................................. 995 728
Amortization of core deposit intangible................................... 675 -
Net (gain) loss on sale of securities available for sale.................. (500) 19
Net gain on sale of loans held for sale................................... (224) (148)
Proceeds from sales of loans held for sale................................ 18,088 8,140
Loans originated for sale................................................. (16,975) (7,992)
Earnings on bank-owned life insurance..................................... (584) (391)
Net increase in other assets.............................................. (904) (287)
Net increase in other liabilities......................................... 624 423
-------- -------
Net cash provided by operating activities............................ 5,809 4,543
-------- -------
Cash flows from investing activities:
Proceeds from calls, sales, maturities and repayment of securities
available for sale........................................................ 72,455 28,228
Purchase of securities available for sale...................................... (189,799) (37,738)
Net decrease (increase) in loans, exclusive of branch acquisition.............. 7,894 (34,592)
Net redemption of FHLB stock................................................... 864 255
Purchase of bank-owned life insurance.......................................... (4,500) (5,000)
Purchases of premises and equipment, exclusive of branch
acquisition............................................................... (3,406) (1,693)
Net proceeds from sales of foreclosed assets................................... 391 165
Net proceeds on sale of premises and equipment................................. - 4
-------- -------
Net cash used in investing activities................................ (116,101) (50,371)
-------- -------
Cash flows from financing activities:
Cash received upon purchase of deposits........................................ 120,922 -
Net increase in deposits, exclusive of branch acquisition...................... 13,992 34,620
Net decrease in FHLB advances.................................................. (24,200) (18,500)
Net (decrease) increase in other borrowings.................................... (324) 3,605
Payments to acquire treasury stock............................................. (2,199) -
Payments to acquire shares held by the ESOP.................................... - (3,897)
Payments to acquire shares held by the RSP..................................... (2,286) (673)
Dividends paid................................................................. (926) (644)
Net proceeds received from issuance of common stock............................ 18 30,555
-------- -------
Net cash provided by financing activities............................ 104,997 45,066
-------- -------
Net decrease in cash and cash equivalents.......................................... (5,295) (762)
Cash and cash equivalents at beginning of period................................... 21,676 6,734
-------- -------
Cash and cash equivalents at end of period......................................... $ 16,381 5,972
======== =======
(continued)
5
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited), Continued
(In thousands)
Nine Months Ended
June 30,
------------------
2002 2001
---- ----
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest .............................................. $18,556 19,625
====== ======
Taxes ................................................. $ 1,799 1,934
====== ======
Supplemental disclosure of noncash information:
Transfer loans to foreclosed assets ........................ $ 801 297
====== ======
Change in unrealized gain (loss) on securities available for
sale, net ............................................. $ 1,005 2,416
====== ======
Net distribution of restricted stock plan shares ........... $ 140 97
====== ======
Net allocation of shares held by the ESOP .................. $ 595 325
====== ======
Transfer land from premises and equipment to other assests.. $ 1,199 -
====== ======
Acquisition of branches:
Fair value of premises and equipment acquired .............. $ 2,449 -
====== ======
Fair value of loans acquired ............................... $26,095 -
====== ======
Core deposit intangible .................................... $12,656 -
====== ======
Total deposits assumed in acquisition of branches .......... $41,200 -
====== ======
See Accompanying Notes to Condensed Consolidated Financial Statements.
6
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited)
(1) Basis of Presentation
General. FloridaFirst Bancorp, Inc. (the "Company") is the parent of and
conducts its business principally through FloridaFirst Bank (the "Bank").
The Bank, a federally-chartered savings bank headquartered in Lakeland,
Florida, is a community-oriented savings institution that delivers retail
and commercial banking services through eighteen full-service locations.
The Company purchased seven branches during February 2002 (see Footnote 3).
Principal sources of income are derived through interest earned on loans
and securities. The primary sources of funds are customer deposits and
Federal Home Loan Bank advances. The Bank is subject to various regulations
governing savings institutions and is subject to periodic examination by
its primary regulator, the Office of Thrift Supervision ("OTS").
The accompanying condensed consolidated financial statements were prepared
in accordance with instructions for Form 10-Q and, therefore, do not
include all information necessary for a complete presentation of financial
condition, results of operations, and cash flows in conformity with
accounting principles generally accepted in the United States of America.
However, all adjustments, consisting of normal recurring accruals, which,
in the opinion of management, are necessary for a fair presentation of the
condensed consolidated financial statements have been included. The results
of operations for the three and nine-month periods ended June 30, 2002 and
2001 are not necessarily indicative of the results that may be expected for
the entire fiscal year or any other period. These statements should be read
in conjunction with the consolidated financial statements and related
notes, which are included in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 2001.
(2) Loans
Loans consist of the following (in thousands):
At
----------------------------
June 30, September 30,
2002 2001
---- ----
(unaudited)
Loans secured by mortgages on real estate:
Residential 1-4:
Permanent $307,425 312,309
Construction 33,305 35,516
Multi-family 2,274 2,306
Commercial real estate 46,415 56,065
Land 11,671 8,907
------- -------
Total mortgage loans 401,090 415,103
Consumer loans 103,407 85,932
Other loans 10,675 5,061
------- -------
Total loans 515,172 506,096
Allowance for loan losses (4,714) (3,652)
Loans in process (20,292) (28,289)
------- -------
Loans, net $490,166 474,155
======= =======
7
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Loans held for sale, included in the totals above, were $304,000 and $1,193,000
at June 30, 2002 and September 30, 2001, respectively.
The activity in the allowance for loan losses is as follows (in thousands):
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------- ------------------
2002 2001 2002 2001
---- ---- ---- ----
Balance at beginning of period $ 4,801 3,515 3,652 3,321
Provision for loan losses 180 150 500 465
Allowance acquired - - 1,000 -
Net loan charge-offs (267) (77) (438) (198)
----- ----- ----- -----
Balance at end of period $ 4,714 3,588 4,714 3,588
===== ===== ===== =====
No loans were identified as impaired at or during the three months or nine
months ended June 30, 2002 or 2001.
(3) Branch Acquisition
On February 15, 2002, the Company finalized the purchase of seven Florida
retail sales offices ("Branch Acquisition") from SunTrust Bank coincident
with SunTrust Bank's acquisition of such offices from Huntington National
Bank ("Huntington"). Four of these Huntington offices are located in
Lakeland, Florida, and one each in Avon Park and Sebring in Highlands
County, and one office in Wildwood, Florida. The transaction resulted in
the Company receiving approximately $120.9 million in cash, $162.1 million
in deposits, $26.1 million in loans and $2.4 million in premises and
equipment related to these seven offices. The Company paid a premium of
approximately 7.8%. This premium, along with additional acquisition costs,
resulted in a core deposit intangible asset of $12.7 million being
recorded. This intangible asset is being amortized using an accelerated
method over twelve years.
8
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
(4) Earnings Per Share
The Company follows the provisions of SFAS No. 128, "Earnings Per Share."
SFAS No. 128 provides accounting and reporting standards for calculating
earnings per share. Basic earnings per share of common stock has been
computed by dividing the net income for the period by the weighted-average
number of shares outstanding. Shares of common stock purchased by the
Employee Stock Ownership Plan ("ESOP") are only considered outstanding when
the shares are released or committed to be released for allocation to
participants. Diluted earnings per share is computed by dividing net income
by the weighted-average number of shares outstanding including the dilutive
effect of stock options and shares needed to satisfy the requirements of
the restricted stock plan, computed using the treasury stock method
prescribed by SFAS No. 128. The following table presents the calculation of
basic and diluted earnings per share of common stock (in thousands, except
per share amounts):
Three Months Ended Nine Months Ended
June 30, June 30,
------------------- -------------------
2002 2001 2002 2001
---- ---- ---- ----
Weighted-average shares of common stock issued and
outstanding before adjustments for ESOP 5,479 5,520 5,484 5,520
Adjustments to reflect the effect of unallocated ESOP
shares (381) (223) (370) (176)
----- ----- ----- -----
Weighted-average shares for basic earnings per share 5,098 5,297 5,114 5,344
===== ===== ===== =====
Basic earnings per share $ .31 .27 .80 .67
===== ===== ===== =====
Weighted-average shares for basic earnings per share 5,098 5,297 5,114 5,344
Additional dilutive shares using the average market
value for the period utilizing the treasury
stock method regarding stock options and
outstanding restricted stock shares 244 120 263 136
----- ----- ----- -----
Weighted-average common shares and equivalents
outstanding for diluted earnings per share 5,342 5,417 5,377 5,480
===== ===== ===== =====
Diluted earnings per share $ .29 .26 .77 .65
===== ===== ===== =====
(5) Reclassifications
Certain amounts in the 2001 condensed consolidated financial statements
have been reclassified to conform to the presentation for 2002.
9
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
FloridaFirst Bancorp, Inc. (the "Company") is the parent of and conducts its
business principally through the FloridaFirst Bank (the "Bank"). The Bank, a
federally-chartered savings bank headquartered in Lakeland, Florida, is a
community-oriented savings institution that delivers retail and commercial
banking services through eighteen full-service locations. The Company purchased
seven retail sales offices during February 2002, see "Overview" below. Principal
sources of income are derived through interest earned on loans and securities.
The primary sources of funds are customer deposits and Federal Home Loan Bank
advances. The Bank is subject to various regulations governing savings
institutions and is subject to periodic examination by its primary regulator,
the Office of Thrift Supervision ("OTS").
Forward-Looking Statements
The Company may from time to time make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission (the "Commission") and its reports to
stockholders. Statements made in such documents, other than those concerning
historical information, should be considered forward-looking and subject to
various risks and uncertainties. Such forward-looking statements are made based
upon management's belief as well as assumptions made by, and information
currently available to management, pursuant to "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995. The Company's actual results
may differ materially from the results anticipated in forward-looking statements
due to a variety of factors, including governmental monetary and fiscal
policies, deposit levels, loan demand, loan collateral values, securities
portfolio values, and interest rate risk management; the effects of competition
in the banking business from other commercial banks, savings and loan
associations, mortgage banking firms, consumer finance companies, credit unions,
securities brokerage firms, insurance companies, money market mutual funds and
other financial institutions operating in the Company's market area and
elsewhere, including institutions operating through the Internet; changes in
governmental regulation relating to the banking industry, including regulations
relating to branching and acquisitions; failure of assumptions underlying the
establishment of reserves for losses, including the value of collateral
underlying delinquent loans, and other factors. The Company cautions that such
factors are not exclusive.
New Regulations
On July 30, 2002 the President of the United States of America signed into law
the Sarbanes-Oxley Act of 2002 (the "Act"), following an investigative order
proposed by the Securities and Exchange Commission (the "SEC") on chief
financial officers and chief executive officers of 947 large public companies on
June 27, 2002. Additional regulations are expected to be promulgated by the SEC.
As a result of the accounting restatements by large public companies, the
passage of the Act and regulations expected to be implemented by the SEC,
publicly-registered companies, such as the Company, will be subject to
additional reporting regulations and disclosure. These new regulations, which
are intended to curtail corporate fraud, will require certain officers to
personally certify certain SEC filings and financial statements and may require
additional measures to be taken by our outside auditors, officers and directors.
The loss of investor confidence in the stock market and the new laws and
regulations will increase non-interest expenses of the Company and could
adversely affect the prices of publicly-traded stocks, such as the Company.
10
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Overview
On February 15, 2002, the Company finalized the purchase of seven Florida retail
sales offices ("Branch Acquisition") from SunTrust Bank coincident with SunTrust
Bank's acquisition of such offices from Huntington National Bank ("Huntington").
The transaction resulted in the Company receiving approximately $120.9 million
in cash, and included approximately $162.1 million in deposits and approximately
$26.1 million in loans related to those seven offices. The Company paid a
premium of approximately 7.8%. This premium, along with additional acquisition
costs, resulted in a core deposit intangible asset of $12.7 million being
recorded which is subject to periodic amortization over a period of twelve
years. The cash received from the purchase was primarily used to reduce $30.0
million in short-term fixed-rate and adjustable-rate FHLB advances and fund the
purchase of approximately $85.0 million in securities. The securities were
primarily mortgage-backed securities with average lives less than five years and
which provide cash flow from the time of purchase. This strategy allows the
Company to immediately earn a fair rate of return on the invested funds and
utilize the cash flow from the securities to fund new loan originations.
Liquidity and Capital Resources
The liquidity of a savings institution reflects its ability to provide funds to
meet loan requests, to accommodate possible outflows in deposits, and to take
advantage of interest rate market opportunities. Funding of loan requests,
providing for liability outflows, and management of interest rate fluctuations
require continuous analysis in order to match the maturities of specific
categories of short-term loans and investments with specific types of deposits
and borrowing. Savings institution liquidity is normally considered in terms of
the nature and mix of the savings institution's sources and uses of funds.
Asset liquidity is provided through loan repayments and the management of
maturity distributions for loans and securities. An important aspect of
liquidity lies in maintaining sufficient levels of loans and mortgage-backed
securities that generate monthly cash flows.
Cash and cash equivalents decreased $5.3 million for the nine months ended June
30, 2002 to $16.4 million. Significant cash flows or uses (amounts shown in
parentheses) were as follows:
(In Millions)
-------------
Cash provided by operations $ 5.8
FHLB advances and other borrowings (24.5)
Increase in net deposits, including purchased deposits 134.9
Maturities, sales, calls and repayments on securities available for sale 72.5
Purchases of securities available for sale (189.8)
Net decrease in loans, excluding purchased loans 7.9
Purchase bank-owned life insurance (4.5)
Purchase premises and equipment, excluding branch acquisition (3.4)
Other, net (4.2)
-------
Net decrease in cash and cash equivalents $ (5.3)
=======
See "Comparison of Financial Condition at June 30, 2002 and September 30, 2001"
for discussion of significant cash flows.
11
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
On June 30, 2002, the Bank was in compliance with its three regulatory capital
requirements as follows:
Amount Percent
------ -------
(In thousands)
Tangible capital $ 59,693 7.40%
Tangible capital requirement 11,950 1.50
Excess over requirement 47,743 5.90
Core capital 59,693 7.40
Core capital requirement 31,868 4.00
Excess over requirement 27,825 3.40
Risk based capital 64,494 12.74
Risk based capital requirement 41,551 8.00
Excess over requirement 22,943 4.74
Management believes that under current regulations, the Bank will continue to
meet its minimum capital requirements for the foreseeable future. Events beyond
the control of the Bank, such as increased interest rates or a downturn in the
economy in areas in which the Bank operates could adversely affect future
earnings and as a result, the ability of the Bank to meet its future minimum
capital requirements.
12
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Comparison of Financial Condition at June 30, 2002 and September 30, 2001
Assets. Total assets increased $151.9 million, or 23.0%, to $812.3 million at
June 30, 2002 from $660.4 million at September 30, 2001. The increase in
total assets resulted primarily from $120.9 in cash received from the
Branch Acquisition, together with $16.5 million in consumer loans and $9.6
million in commercial loans, but was partially offset by a $7.9 million
decrease in the loan portfolio primarily attributable to the Company's
residential mortgage loan origination strategy to originate and sell, on a
servicing-released basis, fixed-rate loans with original terms in excess of
fifteen years. This strategy has caused residential loan balances to
decline, while increasing gains from selling the loans and related
servicing rights. An increase in refinance activity has resulted in
increased repayment activity primarily due to the Federal Reserve policy to
reduce interest rates in order to stimulate the economy. Management
continues to focus on the origination of commercial and consumer loans,
which totaled $54.6 million for the nine months ended June 30, 2002.
Securities available for sale increased $119.4 million, as the funds
received from the Branch Acquisition transaction together with an increase
in deposits exceeded general loan demand and were deployed in primarily
shorter duration, fixed-rate and variable-rate mortgage-backed securities
providing market rate yields with strong cash flow characteristics.
Premises and equipment increased $3.7 million primarily due to $2.4 million
of property and equipment acquired in the Branch Acquisition, the addition
of $322,000 of telecommunications and data processing equipment for the
acquired retail sales offices, and the purchase of land in Manatee County
for $782,000 which will be used for a new retail sales office scheduled to
open in November 2002. This increase was offset by the transfer of a parcel
of land in Winter Haven, valued at $1.2 million to other assets, because
the site is no longer being considered as a future retail sales office.
The net core deposit intangible of $12.0 million resulted from the Branch
Acquisition during February less $675,000 of amortization through June 30,
2002.
Cash surrender of bank-owned life insurance increased $5.1 million
primarily due to the purchase of additional insurance contracts with
one-time premiums of $4.5 million.
Liabilities. Total liabilities increased $151.5 million, or 26.7%, to $718.0
million at June 30, 2002 from $566.6 million at September 30, 2001. The
increase in total liabilities resulted primarily from the $162.1 million in
deposits acquired in the Branch Acquisition. In addition to the deposits
acquired, deposits increased approximately $14.0 million reflecting
increases in lower cost checking and money-market accounts partially
attributable to expansion of our customer base. Actions by the Federal
Reserve to decrease short-term interest rates appear to have caused certain
customers to move maturing certificates into the more liquid checking and
money-market accounts until the interest rate environment stabilizes.
FHLB advances decreased $24.2 million as funds provided by the Branch
Acquisition were used to repay short-term fixed-rate and adjustable-rate
advances.
Stockholders' Equity. The $461,000 increase in the Company's stockholders'
equity reflects:
>> net income for the nine months ended June 30, 2002 of $4.1 million.
>> net distribution of $140,000 from the restricted stock plan.
>> repayment of $541,000 on the Employee Stock Ownership Plan ("ESOP")
loan and simultaneous allocation of ESOP shares with a fair value of
$595,000.
>> increase in accumulated other comprehensive income of $1.0 million.
>> dividends paid that totaled $926,000.
>> repurchase of shares of the Company's stock at a cost of $4.5 million.
The increased value in accumulated other comprehensive income resulted from
the fluctuation in market value of the Company's securities available for
sale. Because of continued interest rate volatility, accumulated other
comprehensive income and stockholders' equity could materially fluctuate
for each interim and year-end period.
13
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Results of Operations
The following tables set forth, for the periods indicated, information regarding
(i) the total dollar amount of interest income of the Company from
interest-earning assets and the resultant average yields based on various
interest methods; (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.
Three Months Ended June 30,
---------------------------------------------------------------------
2002 2001
---------------------------------- --------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ------- ------- -------- -------
(Dollars in thousands)
Interest-earning assets (IEA):
Mortgage loans.......................... $ 313,507 5,690 7.26% $ 325,909 6,234 7.65%
Consumer loans.......................... 101,725 2,075 8.16 84,148 1,847 8.78
Commercial loans........................ 73,488 1,419 7.72 60,859 1,263 8.30
------- ------ ------- ------
Total loans......................... 488,720 9,184 7.52 470,916 9,344 7.94
Securities and other (1)................ 254,561 3,883 6.10 121,538 2,119 6.97
------- ------ ------- ------
Total IEA (1)....................... 743,281 13,067 7.03 592,454 11,463 7.74
------ ------
Other assets............................... 59,891 29,598
------- -------
Total assets........................ $ 803,172 $ 622,052
======= =======
Interest-bearing liabilities (IBL):
Interest checking....................... 70,835 323 1.83 32,670 142 1.74
Savings accounts........................ 55,315 230 1.67 27,537 119 1.73
Money-market accounts................... 64,799 374 2.31 29,492 297 4.04
Certificate accounts.................... 354,429 3,848 4.35 264,393 3,892 5.90
------- ------ ------- ------
Total interest-bearing deposits..... 545,378 4,775 3.51 354,092 4,450 5.04
FHLB advances and other borrowings...... 127,007 1,615 5.03 148,188 1,981 5.29
------- ------ ------- ------
Total IBL........................... 672,385 6,390 3.80 502,280 6,431 5.11
------ ------
Other liabilities (2)...................... 37,078 25,514
------- -------
Total liabilities................... 709,463 527,794
Stockholders' equity....................... 93,709 94,258
------- -------
Total liabilities and
stockholders' equity............ $ 803,172 $ 622,052
======= =======
Net interest income (1).................... $ 6,677 $ 5,032
====== ======
Average IEA to IBL......................... 111% 118%
Interest-rate spread....................... 3.23% 2.63%
==== ====
Net interest margin........................ 3.59% 3.40%
==== ====
(1) Interest income and net interest income do not agree to the condensed
consolidated statements of income because the tax equivalent income on
municipal bonds is included in this schedule.
(2) Includes noninterest-bearing checking accounts.
14
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Nine Months Ended June 30,
---------------------------------------------------------------------
2002 2001
---------------------------------- --------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ------- ------- -------- -------
(Dollars in thousands)
Interest-earning assets (IEA):
Mortgage loans.......................... $ 314,656 17,388 7.37% $ 321,585 18,447 7.65%
Consumer loans.......................... 93,021 5,726 8.21 81,962 5,359 8.72
Commercial loans........................ 70,600 3,950 7.46 55,574 3,561 8.54
------- ------ ------- ------
Total loans......................... 478,277 27,064 7.54 459,121 27,367 7.95
Securities and other (1)................ 204,658 9,362 6.10 117,439 6,203 7.04
------- ------ ------- ------
Total IEA (1)....................... 682,935 36,426 7.11 576,560 33,570 7.76
------ ------
Other assets............................... 43,980 26,087
------- -------
Total assets........................ $ 726,915 $ 602,647
======= =======
Interest-bearing liabilities (IBL):
Interest checking....................... 53,034 694 1.75 32,254 427 1.77
Savings accounts........................ 41,689 496 1.59 28,075 395 1.88
Money-market accounts................... 50,702 922 2.43 27,537 947 4.60
Certificate accounts.................... 320,686 11,274 4.70 258,648 11,626 5.99
------- ------ ------- ------
Total interest-bearing deposits..... 466,111 13,386 3.84 346,514 13,395 5.15
FHLB advances and other borrowings...... 136,887 5,305 5.11 140,361 6,055 5.75
------- ------ ------- ------
Total IBL........................... 602,998 18,691 4.13 486,875 19,450 5.32
------ ------
Other liabilities (2)(3)................... 29,752 31,269 77
------- ------- -------
Total liabilities................... 632,750 518,144 19,527
------
Stockholders' equity....................... 94,165 84,503
------- -------
Total liabilities and
stockholders' equity............ $ 726,915 $ 602,647
======= =======
Net interest income (1).................... $ 17,735 $ 14,043
====== ======
Average IEA and IBL........................ 111% 118%
Interest-rate spread....................... 2.98% 2.44%
==== ====
Net interest margin........................ 3.46% 3.25%
==== ====
(1) Interest income and net interest income do not agree to the condensed
consolidated statements of income because the tax equivalent income on
municipal bonds is included in this schedule.
(2) Includes noninterest-bearing checking accounts.
(3) Includes interest expense on subscription funds refunded in 2001 related to
the public stock offering.
15
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Comparison of Operating Results for the Three Months Ended June 30, 2002 and
2001
Net Income. Net income for the three months ended June 30, 2002 increased 9.6%
to $1.6 million, compared to the same period in 2001. Net interest income
increased $1.6 million, or 32.4%, for the three months ended June 30, 2002
compared to the same period in 2001. This increase resulted from an
increase in interest income of $1.6 million, together with a decrease in
interest expense of $41,000. Noninterest income increased $859,000 to $1.6
million from $729,000 and noninterest expenses increased $2.3 million to
$5.7 million from $3.5 million for the three months ended June 30, 2002
compared to the three months ended June 30, 2001, due to an accumulation of
several income and expense categories. See discussion of Noninterest Income
and Noninterest Expense.
Interest Income. The following discussion highlights the major factors that
impacted the changes in interest income during the quarter when compared to
the prior year quarter. Details are contained in the Average Balance Sheet
table at page 14.
>> While residential loan balances decreased as a result of loan sales
and accelerated repayments, consumer loan and commercial loan balances
showed strong increases, in addition to loans acquired in the Branch
Acquisition. The Company continues its increased emphasis on
commercial and consumer loan growth in an effort to restructure its
loan portfolio. Excluding the loans acquired from the Branch
Acquisition, average commercial loans outstanding increased by
approximately 6% (total increase of 21% including the loans acquired)
and average consumer loans outstanding increased 7% (total increase of
21% including the loans acquired) during the quarter from the same
quarter in the preceding year.
>> The average yield on loans decreased 42 basis points to 7.52%, for the
three months ended June 30, 2002 compared to the same period in 2001.
The sharp decrease in shorter-term interest rates throughout 2001 had
a major impact on consumer and commercial loan yields; consumer loan
yields decreased 62 basis points and commercial loan yield decreased
58 basis points for the three months ended June 30, 2002 compared to
the same period in 2001. The decrease in the commercial loan yield can
be attributed to a change in the mix of the portfolio and the intense
competition for these loans, in addition to continued reduction in
short-term interest rates by the Federal Reserve during the course of
the year. Increased refinance activity brought about by an overall
decrease in interest rates caused residential loan yields to decrease
39 basis points.
>> The average balances in the securities and other portfolio grew 109%
as the Company invested funds received from the Branch Acquisition,
while it continued to pursue the strategy of leveraging the capital
raised in April 1999 and December 2000.
>> The lower yield in the securities and other portfolio resulted from a
shift to shorter duration and adjustable rate securities in fiscal
year 2001 to manage the interest rate risk profile of the Company, as
well as the Federal Reserve actions of reducing short-term interest
rates.
16
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Interest Expense. The following discussion highlights the major factors that
impacted the changes in Interest Expense during the quarter when compared
to the prior year. Detailed changes are contained in the Average Balance
Sheet table at page 14.
>> The increase in average interest-bearing deposits is mainly
attributable to the Branch Acquisition. However, our increased sales
effort to attract new and current deposits, as well as customer
concerns about equity investments, provided additional deposit growth.
>> Average FHLB advances and other borrowings decreased this quarter
compared to the same quarter last year due to the repayment of
short-term fixed-rate and adjustable-rate advances with funds provided
primarily from the Branch Acquisition.
>> The growth in average balances in interest checking and money-market
accounts helped to reduce the overall cost of deposits. The reduction
in the cost of deposits is reflective of the significant decrease in
interest rates over the past year.
>> The decrease in the cost of FHLB advances and other borrowings
reflects the Company's decision to keep recent advances in short-term
adjustable-rate credit advances together with short-term daily rate
credit advances and borrowings utilizing the Treasury Investment
Program. While actions by the Federal Reserve to decrease short-term
interest rates have provided an immediate reduction in the cost of the
advances, greater declines in the overall cost of advances were not
achieved due to higher rate convertible advances taken out in 2000
when the consensus of opinion was that rates at that time would
continue to increase.
Provision for Loan Losses. The provision for loan losses is charged to earnings
to bring the total allowance for loan losses to an amount that represents
management's best estimate of the losses inherent in the loan portfolio at
the balance sheet date, based on historical experience, volume and type of
lending conducted by the Company, industry standards, the level and status
of past due and nonperforming loans, the general economic conditions in its
lending area and other factors affecting the collectability of the loans in
its portfolio.
The provision for loan losses was $180,000 for the three months ended June
30, 2002 compared to $150,000 for the three months ended June 30, 2001. The
provision for loan losses increased for the current three month period
primarily as a result of increased consumer loan growth from the seven new
retail sales offices. The allowance for loan losses increased to $4.7
million at June 30, 2002 from $3.6 million at June 30, 2001. An additional
$1.0 million was added to the allowance for loan losses related to loans
acquired in the Branch Acquisition due to the loans being underwritten on a
different basis than the Company's guidelines. A higher charge-off
percentage is anticipated on the loans acquired. The current allowance
represents .95% of loans outstanding at June 30, 2002. The Company had net
charge-offs of $267,000 for the three months ended June 30, 2002 compared
to net charge-offs of $77,000 for the same period in 2001. The Company
intends to maintain its allowance for loan losses commensurate with its
loan portfolio, especially its commercial real estate and consumer loan
portfolio.
17
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Noninterest Income. Noninterest income increased $859,000 to $1.6 million for
the three months ended June 30, 2002 from $729,000 for the three months
ended June 30, 2001. The major components or changes in noninterest income
were:
>> An increase of $301,000 in fees and service charges on loans and
deposit accounts when compared to the prior period related to the
overall increase in accounts during the quarter.
>> A decrease of $27,000 in net gain on sale of loans held for sale as
current residential loan production during recent months has been
retained in the portfolio to maintain the balances in mortgage loans
outstanding.
>> Bank-owned life insurance increased of $77,000 over the prior period
due to the purchase of additional insurance contracts with one-time
premiums of $4.5 million.
>> Net gain of $296,000 on the sale of $29.9 million of securities
available for sale, including a recovery of $88,000 on a corporate
bond previously written down due to a decline that was deemed to be
other than temporary.
>> An increase of $208,000 in other noninterest income, primarily due to
the recognition of a $201,000 deferred gain related to the sale of a
former Bank property (previously deferred due to possible
environmental cleanup concerns).
Noninterest Expense. Noninterest expense increased by $2.3 million to $5.7
million for the three months ended June 30, 2002 from $3.5 million for the
three months ended June 30, 2001. The major changes or components of
noninterest expense were:
>> Salaries and employee benefits increased $955,000 primarily due to:
> $330,000 for seven retail sales offices acquired in the Branch
Acquisition (56 staff members), and $23,000 for one new retail
sales office opened (four new staff positions),
> 5% average salary increases due to merit and cost of living
adjustments,
> mortgage loan commissions increased $66,000 due to a change in
commission structure,
> an increase in costs of $94,000 related to the 2002 Restricted
Stock Plan.
> a $60,000 increase in ESOP costs due to the increased price of
Company stock, and
> a $124,000 increase for health insurance costs due to the growth
in our employee base, including the Branch Acquisition, as well
as increased claims experience.
>> Occupancy expense increased $283,000 due to implementation of new
technology and the opening of one new retail sales office, the
addition of seven new offices in the Branch Acquisition and extensive
remodeling at several retail sales offices.
>> Data processing expense increased $54,000 due to the increased
processing charges related to the Branch Acquisition.
>> Postage and office supplies expense increased $43,000 primarily due to
the Branch Acquisition and the conversion to a proof of deposit
("POD") balancing environment.
>> A core deposit intangible amortization expense of $450,000 resulting
from the Branch Acquisition.
>> Other noninterest expenses increased $469,000 primarily due to
increases in the costs of the 2002 Restricted Stock Plan for
Directors, correspondent bank service charges, item processing costs
and additional costs relating to the POD conversion.
18
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Comparison of Operating Results for the Nine Months Ended June 30, 2002 and 2001
Net Income. Net income for the nine months ended June 30, 2002 increased
$528,000 or 14.7% to $4.1 million, compared to $3.6 million for the same
period in 2001. Net interest income increased $3.5 million or 25.4%, for
the nine months ended June 30, 2002 compared to the same period in 2001.
This increase resulted from an increase in interest income of $2.7 million,
together with a decrease in interest expense of $836,000. See discussion of
interest income and interest expense below. Noninterest income increased
$1.5 million to $3.5 million from $2.0 million and noninterest expenses
increased $4.4 million to $14.5 million from $10.1 million for the nine
months ended June 30, 2002 compared to the nine months ended June 30, 2001.
See discussion of Noninterest Income and Noninterest Expense.
Interest Income. The following discussion highlights the major factors that
impacted the changes in interest income during the nine months ended June
30, 2002 when compared to the prior year. Details are contained in the
Average Balance Sheet table at page 15.
>> While residential loan balances decreased as a result of loan sales
and accelerated repayments, consumer and commercial loan balances
increased. The Company continues its emphasis on commercial and
consumer loan production in an effort to restructure its loan
portfolio. Excluding the loans acquired from the Branch Acquisition,
average commercial loans outstanding increased by approximately 19%
(total increase of 27%) and average consumer loans outstanding
increased 6% (total increase of 13%) for the nine months ended June
30, 2002 when compared to the prior year.
>> The average yield on loans decreased 41 basis points to 7.54%, for the
nine months ended June 30, 2002 compared to 7.95% for the same period
in 2001. The sharp decrease in shorter-term interest rates throughout
2001 had a major impact on loan yields, as consumer loan yields
decreased 51 basis points and commercial loan yield decreased 108
basis points for the nine months ended June 30, 2002 compared to the
same period in 2001. The decrease in the commercial loan yield can be
attributed to a change in the mix of the portfolio and the intense
competition for these loans, in addition to continued reduction in
short-term interest rates by the Federal Reserve during the course of
the year. Increased refinance activity brought about by an overall
decrease in interest rates caused residential loan yields to decrease
28 basis points.
>> The average balances in the securities and other portfolio grew 74% as
the Company invested funds received from the Branch Acquisition, while
it continued to pursue the strategy of leveraging the capital raised
in April 1999 and December 2000.
>> The lower yield in the securities and other portfolio resulted from a
shift to shorter duration and adjustable rate investments in fiscal
year 2001 to manage the interest-rate risk profile of the Company, as
well as the previously mentioned Federal Reserve policy to reduce
short-term interest rates.
19
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Interest Expense. The following discussion highlights the major factors that
impacted the changes in Interest Expense during the nine months ended June
30, 2002 when compared to the prior year. Detailed changes are contained in
the Average Balance Sheet table at page 15.
>> The increase in average interest-bearing deposits is mainly
attributable to the Branch Acquisition. However, our increased sales
effort to attract new and retain current deposits, as well as customer
concerns about equity investments, provided additional deposit growth.
>> Average FHLB advances and other borrowings decreased this period
compared to the same period last year due to the repayment of
short-term fixed-rate and adjustable-rate advances with funds provided
by the Branch Acquisition.
>> The growth in average balances in interest checking and money-market
accounts helped to reduce the overall cost of deposits. The reduction
in the cost of deposits is reflective of the significant decrease in
interest rates over the past year.
>> The decrease in the cost of FHLB advances and other borrowings
reflects the Company's decision to replace short-term fixed-rate
advances with short-term daily rate credit advances and advances
utilizing the Treasury Investment Program. Actions by the Federal
Reserve to decrease short-term interest rates has also provided a
reduction in the cost of adjustable rate credit advances; however,
greater declines in the overall cost of advances were not achieved due
to higher-rate convertible advances taken out in 2000 when the
consensus of opinion was that rates at that time would continue to
increase.
Provision for Loan Losses. The provision for loan losses was $500,000 for the
nine months ended June 30, 2002, compared to $465,000 for the nine months
ended June 30, 2001. The Company had net charge-offs of $438,000 for the
nine months ended June 30, 2002 compared to net charge-offs of $198,000 for
the nine months ended June 30, 2001. See other discussion at the three-
month comparison of operations.
Noninterest Income. Noninterest income increased $1.5 million to $3.5 million
for the nine-month period ended June 30, 2002 from $2.0 million for the
nine-month period ended June 30, 2001. The major components or changes
were:
>> Increase of $445,000 in account fees and service charges, primarily
attributable to the Branch Acquisition.
>> Net gain of $224,000, an increase of $76,000 from 2001, on the sales
of $17.6 million of mortgage loans held for sale.
>> $500,000 in net gain on sales of $36.2 million of securities available
for sale, including a recovery of $88,000 on a corporate bond
previously written down due to a decline that was deemed to be other
than temporary.
>> Earnings on bank-owned life insurance increased $193,000 over the same
period in 2001 due to the additional purchases of $9.5 million in
insurance contracts in 2001 and 2002.
>> An increase of $261,000 in other noninterest income, primarily due to
the recognition of a $201,000 deferred gain related to the sale of a
former Bank property (previously deferred due to possible
environmental cleanup concerns), in addition to the recovery of a
$54,000 Federal Reserve penalty assessed in error.
20
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Noninterest Expense. Noninterest expense increased by $4.4 million to $14.5
million for the nine months ended June 30, 2002 from $10.1 million for the
nine months ended June 30, 2001. The major components or changes in
noninterest expense were:
>> Salaries and employee benefits increased $2.3 million primarily due:
> $500,000 for seven retail sales offices acquired in the Branch
Acquisition (56 staff members), and $84,000 for two new retail
sales offices opened (10 new staff positions),
> 5% average salary increases due to merit and cost of living
adjustments,
> mortgage loan commissions increased $231,000 due to a change in
commission structure and a $24.2 million increase in loan
origination volume over the prior year period,
> a $180,000 increase in ESOP costs due to the increased price of
Company stock in the ESOP,
> an increase in costs of $315,000 related to the 2002 Restricted
Stock Plan, and
> a $246,000 increase for health insurance costs due to growth in
our employee base, including the Branch Acquisition, as well as
increased claims experience.
>> Occupancy expense increased $575,000 due to implementation of new
technology and the opening the two new retail sales offices and
increased costs related to the Branch Acquisition and extensive
remodeling at several retail sales offices.
>> Data processing expense increased $60,000 due to increased processing
charges related to the Branch Acquisition.
>> Postage and other supplies expense increased $91,000 primarily due to
the Branch Acquisition and the conversion to POD.
>> A core deposit intangible amortization expense of $675,000 resulting
from the Branch Acquisition.
>> Other noninterest expenses increased $689,000 primarily due to
increases in the cost of the 2002 Restricted Stock Plan for Directors,
correspondent bank service charges, item processing costs expenses and
additional costs relating to the POD conversion.
21
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Qualitative Analysis. There have been no material changes from the Qualitative
Analysis information regarding market risk disclosed under the heading
"Management of Interest Rate Risk and Market Risk" in the Company's Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the annual report on Form 10-K for the year ended September 30,
2001.
Quantitative Analysis. Exposure to interest rate risk is actively monitored by
management. The Company's objective is to maintain a consistent level of
profitability within acceptable risk tolerances across a broad range of
potential interest rate environments. The Company uses the OTS Net Portfolio
Value ("NPV") Model to monitor its exposure to interest rate risk, which
calculates changes in net portfolio value. Reports generated from assumptions
provided and modified by management are reviewed by the Asset/Liability
Management Committee and reported to the Board of Directors quarterly. The
Interest Rate Sensitivity of Net Portfolio Value Report shows the degree to
which balance sheet line items and net portfolio value are potentially affected
by a 100 to 300 basis point (1 basis point equals 1/100th of a percentage point)
upward and downward parallel shift (shock) in the Treasury yield curve.
Since the OTS Net Portfolio Value ("NPV") Model measures exposure to interest
rate risk of the Bank to assure capital adequacy for the protection of the
depositors, only the Bank's financial information is used for the model.
However, the Bank is the only subsidiary and significant asset of the Company,
therefore the OTS NPV model provides a reliable basis upon which to perform the
quantitative analysis. The following table presents the Company's NPV as of
March 31, 2002. Although, the results of the NPV model are not yet available for
June 30, 2002, it is anticipated that the NPV Ratio for all rate scenarios will
not be materially different than those below. The NPV was calculated by the OTS,
based on information provided by the Company ($ in thousands).
NPV as % of
Net Portfolio Value ("NPV") Present Value of Assets
-------------------------------- -----------------------
Change Basis Point
In Rates $ Amount $ Change % Change NPV Ratio Change
- -------- -------- -------- -------- --------- ------
+300 bp 44,505 (50,530) (53)% 5.77% (555)
+200 bp 61,731 (33,304) (35)% 7.78% (354)
+100 bp 78,962 (16,073) (17)% 9.67% (165)
0 bp 95,035 - - 11.32% -
-100 bp 105,039 10,004 11% 12.26% 94
-200 bp * * * * *
-300 bp * * * * *
* Scenario not used due to the low prevailing interest rate environment
22
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
23
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION, CONTINUED
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit Number
--------------
3(i) Articles of Incorporation for FloridaFirst Bancorp,
Inc.*
3(ii) Bylaws of FloridaFirst Bancorp, Inc.*
4 Specimen Stock Certificate of FloridaFirst Bancorp,
Inc.*
10.1 Form of Employment Agreements entered into with the
named Executive Officers of FloridaFirst Bank*
10.2 1999 Stock Option Plan **
10.3 Restricted Stock Plan **
10.4 Supplemental Executive Retirement Plan for the
benefit of Certain Senior Officers *
10.5 2002 Stock Option Plan ***
10.6 2002 Restricted Stock Plan ***
99 Report on Review by Independent Certified Public
Accountants.
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
* Incorporated by reference to the Predecessor Registrant's Registration
Statement on Form S-1 initially filed with the Commission on September 5,
2000 (File No. 333-45150).
** Incorporated by reference to the identically numbered exhibits to the Form
10-K filed by the Predecessor Registrant on December 29, 1999 (File No.
0-25693).
*** Incorporated by reference to the Proxy Statement filed by the Registrant on
December 21, 2001.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three-month
period ended June 30, 2002.
24
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
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.
FLORIDAFIRST BANCORP, INC.
(Registrant)
Date: August 14, 2002 By: /s/ Gregory C. Wilkes
---------------- ------------------------------------------
Gregory C. Wilkes, President and
Chief Executive Officer
(Principal Executive Officer)
Date: August 14, 2002 By: /s/ Kerry P. Charlet
---------------- ------------------------------------------
Kerry P. Charlet, Chief Financial Officer
(Principal Accounting Officer)
25