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U.S. 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, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transition period from to
--------- ---------
Commission file number 0-24433
--------
POINTE FINANCIAL CORPORATION
----------------------------
(Exact Name of Registrant as Specified in Its Charter)
Florida 65-0451402
------- ----------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
21845 Powerline Road
Boca Raton, Florida 33433
- ------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(561) 368-6300
--------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
-------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED
SINCE LAST REPORT)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days:
YES [X] NO [ ]
Indicate by checkmark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
YES [ ] NO [X]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date;
Common stock, par value $.01 per share 2,274,610 shares
- -------------------------------------- ------------------------------
(class) Outstanding at August 13, 2004
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
Condensed Consolidated Balance Sheets -
at June 30, 2004 (unaudited) and at December 31, 2003................................2
Condensed Consolidated Statements of Earnings -
Three and Six Months ended June 30, 2004 and 2003 (unaudited)........................3
Condensed Consolidated Statements of Changes in Stockholders' Equity -
Six Months ended June 30, 2004 and 2003 (unaudited)..................................4
Condensed Consolidated Statements of Cash Flows -
Six Months ended June 30, 2004 and 2003 (unaudited)................................5-6
Notes to Condensed Consolidated Financial Statements (unaudited)....................7-11
Review by Independent Registered Public Accounting Firm...............................12
Report of Independent Registered Public Accounting Firm...............................13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..........................................................14-19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......................20
ITEM 4. CONTROLS AND PROCEDURES........................................................20
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........................20-21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................................22-23
SIGNATURES.................................................................................24
1
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
JUNE 30, DECEMBER 31,
ASSETS 2004 2003
--------- --------
(UNAUDITED)
Cash and due from banks .................................................... $ 13,687 12,341
Interest-bearing deposits with banks ....................................... 2,153 602
--------- --------
Total cash and cash equivalents ..................................... 15,840 12,943
Securities available for sale .............................................. 70,080 69,344
Loans, net of allowance for loan losses of $3,301 and $3,441 ............... 272,501 250,331
Loans held for sale ........................................................ 2,904 3,084
Accrued interest receivable ................................................ 2,033 2,072
Premises and equipment, net ................................................ 2,921 3,482
Federal Home Loan Bank stock, at cost ...................................... 2,163 1,915
Federal Reserve Bank stock, at cost ........................................ 479 479
Branch acquisition intangible asset ........................................ 2,853 2,974
Deferred income tax asset .................................................. 786 786
Other assets ............................................................... 1,705 1,304
--------- --------
Total ............................................................... $ 374,265 348,714
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Noninterest-bearing demand deposits ..................................... 83,483 71,326
Savings and NOW deposits ................................................ 36,523 32,562
Money-market deposits ................................................... 82,411 84,443
Time deposits ........................................................... 80,152 75,535
--------- --------
Total deposits ...................................................... 282,569 263,866
Official checks ......................................................... 2,696 2,143
Federal Home Loan Bank advances ......................................... 36,625 30,875
Other borrowings ........................................................ 14,827 15,050
Accrued interest payable ................................................ 372 393
Advance payments by borrowers for taxes and insurance ................... 547 260
Other liabilities ....................................................... 1,020 1,210
--------- --------
Total liabilities ................................................... 338,656 313,797
--------- --------
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized, none issued -- --
Common stock, $.01 par value, 5,000,000 shares authorized; 2,571,135 and
2,549,028 shares issued ............................................... 26 25
Additional paid-in capital .............................................. 27,065 26,617
Retained earnings ....................................................... 12,087 10,835
Accumulated other comprehensive (loss) income ........................... (324) 576
Treasury stock, at cost (297,000 shares) ................................ (3,000) (3,000)
Stock incentive plan .................................................... (245) (136)
--------- --------
Total stockholders' equity .......................................... 35,609 34,917
--------- --------
Total ............................................................... $ 374,265 348,714
========= ========
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ -----------------------
2004 2003 2004 2003
---------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
Interest income:
Loans ......................................... $ 4,163 3,834 8,235 7,534
Securities available for sale ................. 788 706 1,451 1,410
Other ......................................... 29 42 57 139
---------- --------- --------- ---------
Total interest income ................... 4,980 4,582 9,743 9,083
---------- --------- --------- ---------
Interest expense:
Deposits ...................................... 661 816 1,308 1,754
Borrowings .................................... 449 445 889 954
---------- --------- --------- ---------
Total interest expense .................. 1,110 1,261 2,197 2,708
---------- --------- --------- ---------
Net interest income ............................... 3,870 3,321 7,546 6,375
Provision for loan losses ............... 115 200 215 100
---------- --------- --------- ---------
Net interest income after provision for loan losses 3,755 3,121 7,331 6,275
---------- --------- --------- ---------
Noninterest income:
Service charges and fees on deposit accounts .. 517 470 1,001 920
Gain on sale of premises and equipment ........ -- -- 320 --
Net realized gains on sale of securities ...... 62 256 62 256
Loan correspondent fees ....................... 69 93 105 182
Other ......................................... 205 141 370 335
---------- --------- --------- ---------
Total noninterest income ................ 853 960 1,858 1,693
---------- --------- --------- ---------
Noninterest expenses:
Salaries and employee benefits ................ 1,772 1,609 3,666 3,271
Occupancy and equipment ....................... 623 658 1,217 1,288
Advertising and promotion ..................... 77 70 127 155
Professional fees ............................. 171 96 239 172
Data processing ............................... 178 221 349 429
Amortization of intangible asset .............. 61 60 121 121
Other ......................................... 555 531 1,048 1,039
---------- --------- --------- ---------
Total noninterest expenses .............. 3,437 3,245 6,767 6,475
---------- --------- --------- ---------
Earnings before income taxes ............ 1,171 836 2,422 1,493
Income taxes ...................................... 376 260 764 456
---------- --------- --------- ---------
Net earnings ............................ $ 795 576 1,658 1,037
========== ========= ========= =========
Earnings per share:
Basic ......................................... $ .35 .26 .73 .47
========== ========= ========= =========
Diluted ....................................... $ .34 .25 .70 .46
========== ========= ========= =========
Weighted-average shares outstanding for basic ..... $2,264,380 2,229,751 2,261,583 2,213,068
========== ========= ========= =========
Weighted-average shares outstanding for diluted ... $2,364,607 2,292,415 2,359.981 2,265,903
========== ========= ========= =========
Dividends per share ............................... $ 0.09 .05 .18 .10
========== ========= ========= =========
See Accompanying Notes to Condensed Consolidated Financial Statements
3
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2004 AND 2003
($ IN THOUSANDS)
ACCUMULATED
OTHER
COMPRE- TOTAL
COMMON STOCK ADDITIONAL STOCK HENSIVE STOCK-
----------------- PAID-IN INCENTIVE TREASURY RETAINED INCOME HOLDERS'
SHARES AMOUNT CAPITAL PLAN STOCK EARNINGS (LOSS) EQUITY
------ ------ ------- ---- ----- -------- -------- ------
Balance at December 31, 2002 ............ 2,471,668 $25 25,540 (52) (3,000) 8,878 940 32,331
------
Comprehensive income:
Net earnings (unaudited) ........... -- -- -- -- -- 1,037 -- 1,037
Net change in unrealized
gain on securities available
for sale, net of taxes
(unaudited) .................... -- -- -- -- -- -- 20 20
-------
Comprehensive income (unaudited) ........ 1,057
-------
Common stock options exercised
(unaudited) ........................ 51,694 -- 649 -- -- -- -- 649
Shares issued in stock incentive
plan (unaudited) ................... 10,891 -- 165 (165) -- -- -- --
Shares committed to participants
in stock incentive plan (unaudited) -- -- -- 8 -- -- -- 8
Committed shares cancelled in stock
incentive plan (unaudited) ......... (2,926) -- (33) (33) -- -- -- --
Cash dividends paid (unaudited) ......... -- -- -- -- -- (221) -- (221)
---------- --- ------- ---- ------ ------- ---- -------
Balance at June 30, 2003
(unaudited) ........................ 2,531,327 $25 26,321 (176) (3,000) 9,694 960 33,824
========== === ======= ==== ====== ======= ==== =======
Balance at December 31, 2003 ............ 2,549,028 $25 26,617 (136) (3,000) 10,835 576 34,917
Comprehensive income (loss):
Net earnings (unaudited) ........... -- -- -- -- -- 1,658 -- 1,658
Net change in unrealized
gain on securities
available for sale,
net of taxes (unaudited) ....... -- -- -- -- -- -- (900) (900)
-------
Comprehensive income (unaudited) ........ -- -- -- -- -- -- -- 758
-------
Common stock options exercised
(unaudited) ........................ 18,156 1 317 -- -- -- -- 318
Shares issued in stock incentive plan
(unaudited) ........................ 5,425 -- 152 (152) -- -- -- --
Shares committed to participants
in stock incentive plan (unaudited) -- -- -- (22) -- -- -- (22)
Shares cancelled in stock
incentive plan (unaudited) ......... (1,474) -- (21) 21 -- -- -- --
Cash dividends paid (unaudited) ......... -- -- -- -- -- (406) -- (406)
---------- --- ------- ---- ------ ------- ---- -------
Balance at June 30, 2004
(unaudited) ........................ 2,571,135 $26 27,065 (245) (3,000) 12,087 (324) 35,609
========== === ======= ==== ====== ======= ==== =======
See Accompanying Notes to Condensed Consolidated Financial Statements
4
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
SIX MONTHS ENDED
JUNE 30,
2004 2003
-------- -------
(UNAUDITED)
Cash flows from operating activities:
Net earnings ............................................................ $ 1,658 1,037
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:
Provision for loan losses ....................................... 215 100
Depreciation and amortization ................................... 312 353
Net amortization of fees, premiums, discounts and other ......... (88) 37
Shares committed to participants in stock incentive plan ........ 22 8
Gain on sale of securities available for sale ................... (62) (256)
Gain on sale of premises and equipment .......................... (320) --
Gain on sale of foreclosed real estate .......................... -- (12)
Originations of loans held for sale ............................. -- (3,069)
Repayments of loans held for sale ............................... 180 150
Decrease in accrued interest receivable ......................... 39 115
Decrease (increase) in other assets ............................. 249 (268)
Increase in official checks ..................................... 553 399
Decrease in accrued interest payable ............................ (21) (166)
Decrease in other liabilities ................................... (190) (117)
-------- -------
Net cash provided by (used in) operating activities ......... 2,547 (1,689)
-------- -------
Cash flows from investing activities:
Purchase of securities available for sale ............................... (40,558) (43,401)
Maturities and calls of securities available for sale ................... 32,505 38,027
Principal repayments on securities available for sale ....................... 230 792
Proceeds from sale of securities available for sale ..................... 5,578 3,262
Net increase in loans ................................................... (22,057) (14,585)
Proceeds from sale of premises and equipment ............................ 856 --
Purchase of premises and equipment, net ................................. (287) (264)
Proceeds from sale of foreclosed real estate ............................ -- 129
Net (increase) decrease in Federal Home Loan Bank stock ................. (248) 1,000
-------- -------
Net cash used in investing activities ....................... (23,981) (15,040)
-------- -------
Cash flows from financing activities:
Net increase in deposits ................................................ 18,703 14,090
Net (decrease) increase in other borrowings ............................. (223) 340
Net increase (decrease) in Federal Home Loan Bank advances .............. 5,750 (15,000)
Increase in advance payments by borrowers for taxes and insurance ....... 287 433
Cash dividends paid on common stock ..................................... (406) (221)
Proceeds from exercise of stock options ................................. 220 552
-------- -------
Net cash provided by financing activities ................... 24,331 194
-------- -------
Net increase (decrease) in cash and cash equivalents ........ 2,897 (16,535)
Cash and cash equivalents at beginning of period ............................ 12,943 35,648
-------- -------
Cash and cash equivalents at end of period .................................. $ 15,840 19,113
======== =======
(continued)
5
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
($ IN THOUSANDS)
SIX MONTHS ENDED
JUNE 30,
2004 2003
-------- -------
(UNAUDITED)
Supplemental disclosure of cash flow information: Cash paid during the period
for:
Interest ................................................................ $ 2,218 2,874
======== =======
Income taxes ............................................................ $ 611 695
======== =======
Noncash transactions:
Reclassification of loans to foreclosed real estate ..................... $ -- --
======== =======
Reclassification of other assets to foreclosed real estate .............. $ -- --
======== =======
Accumulated other comprehensive income (loss), net change in unrealized
gain (loss) on securities available for sale, net of tax ............ $ (900) 20
======== =======
Tax benefit related to exercise of common stock options ................. $ 98 97
======== =======
Activity in stock incentive plan, net ................................... $ (109) (124)
======== =======
See Accompanying Notes to Condensed Consolidated Financial Statements.
6
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL. In the opinion of the management of Pointe Financial
Corporation, the accompanying condensed consolidated financial
statements contain all adjustments (consisting principally of normal
recurring accruals) necessary to present fairly the financial position
at June 30, 2004, the results of operations for the three- and six-month
periods ended June 30, 2004 and 2003 and cash flows for the six-month
periods ended June 30, 2004 and 2003. The results of operations for the
three and six months ended June 30, 2004 are not necessarily indicative
of the results to be expected for the year ending December 31, 2004.
Pointe Financial Corporation (the "Holding Company") owns 100% of Pointe
Bank (the "Bank"), a state-chartered commercial bank, and Pointe
Financial Services, Inc. On February 12, 2002, the Bank incorporated an
additional subsidiary, Will No-No, Inc., a Florida Corporation, which
owns, maintains, and disposes of the Bank's foreclosed assets
(collectively, the "Company"). The Bank provides a variety of community
banking services to small and middle-market businesses and individuals
through its nine banking offices located in Broward, Miami-Dade and Palm
Beach counties, Florida. Pointe Financial Services, Inc. is an inactive
subsidiary and Will No-No, Inc. had no activity during the six months
ended June 30, 2004.
2. LOAN IMPAIRMENT AND LOAN LOSSES. The activity in the allowance for loan
losses is as follows (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- ------------------
2004 2003 2004 2003
------- ------ ------ ------
Balance at beginning of period $ 3,550 3,371 3,441 3,519
Provision for loan losses .... 115 200 215 100
Net loans charged-off ........ (364) (48) (355) (96)
------- ------ ------ ------
Balance at end of period ..... $ 3,301 3,523 3,301 3,523
======= ====== ====== ======
The following summarizes the amount of impaired loans (in thousands):
AT
-------------------------
JUNE 30, DECEMBER 31,
---------- ----------
2004 2003
---------- ----------
Loans identified as impaired:
Gross loans with related allowance for losses recorded $ -- --
Less allowance for losses on these loans ............. -- --
---------- ----------
Net investment in impaired loans ......................... $ -- --
========== ==========
(continued)
7
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
2. LOAN IMPAIRMENT AND LOAN LOSSES, CONTINUED. The average net investment
in impaired loans and interest income recognized and received on
impaired loans is as follows (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- ----------------------
2004 2003 2004 2003
--------- --------- --------- --------
Average net investment in impaired loans ... $ -- -- -- --
========= ========= ========= ========
Interest income recognized on impaired loans $ -- -- -- --
========= ========= ========= ========
Interest income received on impaired loans . $ -- -- -- --
========= ========= ========= ========
Non accrual and past due loans were as follows (in thousands):
AT JUNE 30,
2004 2003
------ -----
Nonaccrual loans.............................................. $ 120 377
Past due ninety days or more, but still accruing............... 678 41
------ -----
$ 798 418
====== ======
3. EARNINGS PER SHARE. Earnings per share ("EPS") of common stock has been
computed on the basis of the weighted-average number of shares of common
stock outstanding. Outstanding stock options are considered dilutive
securities for purposes of calculating diluted EPS which is computed
using the treasury stock method. The following table presents the
calculations of the weighted-average number of shares for diluted EPS.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Weighted-average number of common shares
outstanding, for basic EPS .............. 2,264,380 2,229,751 2,261,583 2,213,068
Effect of dilutive options ................ 100,227 62,664 98,398 52,835
--------- --------- --------- ---------
Weighted-average number of common shares
outstanding used to calculate diluted EPS 2,364,607 2,292,415 2,359,981 2,265,903
========= ========= ========= =========
4. REGULATORY CAPITAL. The Bank is required to maintain certain minimum
regulatory capital requirements. The following is a summary at June 30,
2004 of the regulatory capital requirements and the Bank's actual
capital on a percentage basis:
REGULATORY
ACTUAL REQUIREMENT
------ -----------
Total capital to risk-weighted assets..................... 11.84% 8.00%
Tier I capital to risk-weighted assets.................... 10.68% 4.00%
Tier I capital to total assets - leverage ratio........... 8.35% 4.00%
(continued)
8
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
5. STOCK AWARD PLANS. Certain key employees and directors of the Company
have options to purchase shares of the Company's common stock under a
nonqualified stock option plan adopted in 1994. In 1998, a new Incentive
Compensation and Stock Award Plan ("1998 Plan") was adopted under which
both qualified and nonqualified options and shares of restricted stock
can be granted and awarded, as applicable, to employees and directors.
The Company's Board of Directors in 2001 determined that all new options
would be granted under the 1998 Plan. Directors options vest immediately
and officers and employees vest over three and five years. A total of
400,000 options or shares can be granted to directors and employees of
the Company under the 1998 Plan. As of June 30, 2004, 1,855 options or
shares remain available for grant. A summary of stock option
transactions follows ($ in thousands, except per share amounts):
RANGE
OF PER WEIGHTED- AVERAGE
SHARE AVERAGE AGGREGATE
NUMBER OF OPTION PER SHARE OPTION
SHARES PRICE PRICE PRICE
------ ----- ----- -----
Outstanding at December 31, 2002.................. 311,527 $ 8.62-15.375 11.02 3,433
Options granted................................... 70,105 15.15-16.30 15.56 1,091
Options exercised................................. (51,694) 8.62-15.375 10.69 (553)
Options forfeited................................. (3,561) 9.00-11.95 11.52 (41)
-------- -------
Outstanding at June 30, 2003...................... 326,377 $ 9.00-16.30 12.04 3,930
======= ============= ===== =====
Outstanding at December 31, 2003.................. 310,086 9.00-24.15 12.40 3,845
Options granted................................... 14,000 28.00 28.00 392
Options exercised................................. (18,156) 9.00-15.375 12.11 (220)
Options forfeited................................. (2,282) 11.95-13.10 12.29 (28)
-------- ----- -------
Outstanding at June 30, 2004...................... 303,648 $ 9.00-28.00 13.14 3,989
======== ============= ===== =======
(continued)
9
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
5. STOCK AWARD PLANS, CONTINUED. The Company accounts for their stock
option plans under the recognition and measurement principles of
Accounting Principles Board Opinion No. 25. No stock option-based
employee compensation cost is reflected in net earnings, as all options
granted under those plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. The following
table illustrates the effect on net earnings and earnings per share if
the Company had applied the fair value recognition provisions of
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting
for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for
Stock-Based Compensation Transition and Disclosure to stock-based
employee compensation ($ in thousands, except per share amounts).
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
2004 2003 2004 2003
---------- ------ ------- ---------
Net earnings, as reported .............. $ 795 576 1,658 1,037
Deduct: Total stock-based employee
compensation determined under the
fair value based method for all
awards, net of related tax benefit (34) (85) (59) (118)
---------- ------ ------- ---------
Pro forma net earnings ................. $ 761 491 1,599 919
========== ====== ======= =========
Basic earnings per share:
As reported ...................... $ .35 .26 .73 .47
========== ====== ======= =========
Pro forma ........................ $ .34 .22 .71 .22
========== ====== ======= =========
Diluted earnings per share:
As reported ...................... $ .34 .25 .70 .46
========== ====== ======= =========
Pro forma ........................ $ .32 .21 .68 .21
========== ====== ======= =========
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions:
SIX MONTHS ENDED
JUNE 30,
2004 2003
---- ----
Risk-free interest rate................................... 4.8% 4.5%
Expected dividend yield................................... 2.0% 2.0%
Expected volatility....................................... 16.5% 13.5-17.5%
Expected life in years.................................... 10 10
Weighted-average grant date fair value of options
issued during the period............................ $ 7.38 2.77
======== =========
(continued)
10
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
5. STOCK AWARDS PLANS, CONTINUED. Also, the Company awarded shares of
restricted common stock to employees under the 1998 Plan. Four years
following the date of the grant these restricted stock awards become
entirely vested. The Company is amortizing these restricted stock
awards into salaries and employee benefits over the four-year period.
From the date awarded, the employees are entitled to dividends paid on
common stock and may vote these shares. These restricted shares are as
follows:
Shares
------
Shares outstanding at December 31, 2002................ 12,142
Shares granted..................................... 10,891
Shares forfeited................................... (2,926)
Shares issued.......................................... (2,955)
-----
Shares outstanding at June 30, 2003.................... 17,152
======
Shares outstanding at December 31, 2003................ 15,663
Shares granted......................................... 5,425
Shares forfeited....................................... (1,474)
-----
Shares outstanding at June 30, 2004.................... 19,614
======
11
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
REVIEW BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Hacker, Johnson & Smith PA, the Company's independent registered public
accounting firm, have made a limited review of the financial data as of June 30,
2004, and for the three- and six-month periods ended June 30, 2004 and 2003
presented in this document, in accordance with standards established by the
Public Company Accounting Oversight Board.
Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.
12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Pointe Financial Corporation
Boca Raton, Florida:
We have reviewed the accompanying condensed consolidated balance sheet of
Pointe Financial Corporation and Subsidiaries (the "Company") as of June 30,
2004, the related condensed consolidated statements of earnings for the three-
and six- month periods ended June 30, 2004 and 2003, the related condensed
consolidated statements of cash flows and changes in stockholders' equity for
the six-month periods ended June 30, 2004 and 2003. These financial statements
are the responsibility of the Company's management.
We conducted our reviews in accordance with the standards established by
the Public Company Accounting Oversight Board. A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, 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 reviews, 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 United States generally accepted
accounting principles.
We have previously audited, in accordance with the standards of the Public
Company Accounting Oversight Board, the consolidated balance sheet as of
December 31, 2003, and the related consolidated statements of earnings, changes
in stockholders' equity and cash flows for the year then ended (not presented
herein); and in our report dated January 13, 2004 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, 2003, is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
/s/ Hacker, Johnson & Smith PA
HACKER, JOHNSON & SMITH PA
Fort Lauderdale, Florida
July 15, 2004
13
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARISON OF JUNE 30, 2004 AND DECEMBER 31, 2003
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of cash during the six months ended June 30, 2004
was from net deposit inflows of $18.7 million and $38.0 million from maturities,
sales and exercised call options by issuers of government securities that were
held in the Company's available for sale portfolio. Cash was used primarily for
net loan originations of $22.0 million and for the purchase of securities
available for sale of $40.6 million. At June 30, 2004, the Company had
outstanding commitments to originate loans of $22.6 million and time deposits of
$54.8 million that mature in one year or less. It is expected that these
requirements will be funded from the sources described above. At June 30, 2004,
the Bank exceeded its regulatory liquidity requirements.
The following table shows selected rates for the periods ended or at the dates
indicated:
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30,
2004 2003 2003
-------------- --------------- ---------------
Average equity as a percentage
of average assets......................................... 9.87% 10.07% 10.17%
Equity to total assets at end of period...................... 9.51% 10.01% 10.29%
Return on average assets (1)................................. .92% .75% .64%
Return on average equity (1)................................. 9.37% 7.42% 6.27%
Noninterest expense to average assets (1).................... 3.77% 3.92% 3.98%
Nonperforming loans and foreclosed real estate
to total assets at end of period.......................... .03% .21% .11%
(1) Annualized for the six months ended June 30, 2004 and 2003.
OFF-BALANCE SHEET ARRANGEMENTS AND AGGREGATE CONTRACTUAL OBLIGATIONS
The Company is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit, unused lines
of credit and standby letters of credit. These instruments involve, to varying
degrees, elements of credit and interest-rate risk in excess of the amounts
recognized in the condensed consolidated balance sheet. The contract amounts of
those instruments reflect the extent of the Company's involvement in particular
classes of financial instruments.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit, unused
lines of credit and standby letters of credit is represented by the contractual
amount of those instruments. The Company uses the same credit policies in making
commitments as it does for on-balance-sheet instruments.
14
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if it is
deemed necessary by the Company upon extension of credit, is based on
management's credit evaluation of the counter party.
Standby letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loans to customers.
A summary of the amounts of the Company's financial instruments, with
off-balance sheet risk at June 30, 2004, follows (in thousands):
CONTRACT
AMOUNT
------
Commitments to extend credit......................... $22,602
=======
Unused lines of credit............................... $39,273
=======
Standby letters of credit............................ $ 2,670
=======
Management believes that the Company has adequate resources to fund all of its
commitments and that substantially all its existing commitments will be funded
in the next twelve months.
Management believes the Bank was in compliance with all minimum capital
requirements which it was subject to at June 30, 2004. See note 4 to the
condensed consolidated financial statements.
15
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
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/dividend income; (iv) interest-rate spread; (v)
net interest margin; and (vi) ratio of average interest-earning assets to
average interest-bearing liabilities.
THREE MONTHS ENDED JUNE 30,
------------------------------------------------------------
2004 2003
----------------------------- --------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE AND YIELD/ AVERAGE AND YIELD/
BALANCE DIVIDENDS RATE BALANCE DIVIDENDS RATE
------- --------- ---- ------- --------- ----
($ in Thousands)
Interest-earning assets:
Loans...................................... $ 266,329 4,163 6.25% $ 226,088 3,834 6.78%
Securities (1)............................. 76,567 788 4.41 72,466 706 4.16
Other interest-earning assets (2).......... 4,812 29 2.41 8,129 42 2.07
------- ----- ------- -----
Total interest-earning assets.......... 347,708 4,980 5.79 306,683 4,582 6.04
----- -----
Noninterest-earning assets (3)............. 20,808 17,458
------- -------
Total assets........................... $ 368,516 $ 324,141
========== =========
Interest-bearing liabilities:
Savings and NOW deposits................... 35,431 36 .41 26,516 42 .63
Money-market deposits...................... 86,687 208 .96 76,150 216 1.13
Time deposits.............................. 79,129 417 2.11 81,893 558 2.73
Borrowings (4)............................. 52,400 449 3.43 43,837 445 4.06
------- ----- ------- -----
Total interest-bearing liabilities..... 253,647 1,110 1.75 228,396 1,261 2.21
----- -----
Demand deposits............................ 75,208 57,660
Noninterest-bearing liabilities............ 4,239 4,661
Stockholders' equity....................... 35,422 33,424
------- -------
Total liabilities and stockholders'
equity............................. $ 368,516 $ 324,141
========== =========
Net interest income........................... $ 3,870 $ 3,321
======= ======
Interest-rate spread (5)...................... 4.04% 3.83%
====== ====
Net interest margin (6)....................... 4.45% 4.33%
====== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities....... 1.37 1.34
===== ====
(1) Yield on securities is stated on a tax equivalent basis.
(2) Includes interest-bearing deposits, Federal Home Loan Bank stock and
Federal Reserve Bank stock.
(3) Includes nonaccrual loans.
(4) Includes advances from Federal Home Loan Bank and other borrowings
which consist of investment repurchase agreements.
(5) Interest-rate spread represents the difference between the
weighted-average yield on interest-earning assets and the
weighted-average cost of interest-bearing liabilities.
(6) Net interest margin is net interest income divided by average
interest-earning assets.
16
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest/dividend income; (iv) interest-rate spread; (v)
net interest margin; and (vi) ratio of average interest-earning assets to
average interest-bearing liabilities.
SIX MONTHS ENDED JUNE 30,
------------------------------------------------------------
2004 2003
----------------------------- --------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE AND YIELD/ AVERAGE AND YIELD/
BALANCE DIVIDENDS RATE BALANCE DIVIDENDS RATE
------- --------- ---- ------- --------- ----
($ in Thousands)
Interest-earning assets:
Loans...................................... $261,253 8,235 6.30% $ 220,847 7,534 6.82%
Securities (1)............................. 72,180 1,451 4.31 70,665 1,410 4.25
Other interest-earning assets (2).......... 4,695 57 2.43 16,758 139 1.66
-------- ------ ------- -----
Total interest-earning assets ......... 338,128 9,743 5.82 308,270 9,083 5.95
------ ------
Noninterest-earning assets (3)............. 20,569 17,107
-------- ---------
Total assets........................... $358,697 $ 325,377
======== =========
Interest-bearing liabilities:
Savings and NOW deposits................... 34,573 72 .42 25,820 82 .64
Money-market deposits...................... 85,548 404 .94 76,984 454 1.18
Time deposits.............................. 76,536 832 2.17 85,125 1,218 2.86
Borrowings (4)............................. 51,396 889 3.46 45,856 954 4.16
-------- ----- --------- ------
Total interest-bearing liabilities..... 248,053 2,197 1.77 233,785 2,708 2.32
------ ------
Demand deposits............................ 70,888 54,408
Noninterest-bearing liabilities............ 4,366 4,108
Stockholders' equity....................... 35,390 33,076
-------- ---------
Total liabilities and stockholders'
equity............................. $358,697 $ 325,377
======== =========
Net interest income........................... $7,546 $6,375
======= ======
Interest-rate spread (5)...................... 4.05% 3.63%
===== ====
Net interest margin (6)....................... 4.46% 4.14%
===== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities....... 1.36 1.32
===== =====
(1) Yield on securities is stated on a tax equivalent basis.
(2) Includes interest-bearing deposits, Federal Home Loan Bank stock and
Federal Reserve Bank stock.
(3) Includes nonaccrual loans.
(4) Includes advances from Federal Home Loan Bank and other borrowings
which consist of investment repurchase agreements.
(5) Interest-rate spread represents the difference between the
weighted-average yield on interest-earning assets and the
weighted-average cost of interest-bearing liabilities.
(6) Net interest margin is net interest income divided by average
interest-earning assets.
17
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003
GENERAL. Net earnings for the three months ended June 30, 2004 were $795,000
or $.35 basic and $.34 diluted earnings per share compared to net earnings
of $576,000 or $.26 basic and $.25 diluted earnings per share for the
three months ended June 30, 2003. The increase in the Company's net
earnings was primarily due to increased average interest-earning asset
volumes offset by lower yielding interest-bearing liabilities.
INTEREST INCOME AND EXPENSE. Interest income increased by $398,000, or 8.7%,
to $5.0 million for the three months ended June 30, 2004 from $4.6 million
for same period in 2003. Interest on loans increased by $329,000 or 8.6%
to $4.2 million for the three months ended June 30, 2004 from $3.8 million
for the same period in 2003. The increase is the result of a $40.2 million
or 17.8% increase in average loan volumes to $266.3 million from $226.1
million at June 30, 2003 partially offset by a decline in the
weighted-average yield to 6.25% for the three months ended June 30, 2004
from 6.78% for the same period 2003. Interest on securities increased
$82,000 due an increase in the weighted-average yield to 4.41% from 4.16%
in the 2003 period and an increase in the average securities portfolio
balance to $76.6 million in 2004 from $72.5 million in 2003.
Interest expense on deposits decreased $155,000 or 19.0% to $661,000 for
the three months ended June 30, 2004 from $816,000 for the three months
ended June 30, 2003. Interest expense on deposits decreased due to a
decrease in the average rate paid on deposits to 1.31% in 2004 from 1.77%
in 2003, partially offset by an increase in the average balance to $201.2
million in 2004 from $184.6 million in 2003.
Interest expense on borrowings increased to $449,000 from $445,000 for the
three months ended June 30, 2004. Interest expense on borrowings increased
due to an increase in the average balance of borrowings outstanding to
$52.4 million in 2004 from $43.8 million in 2003 and a decrease in the
weighted-average rate paid for the three months ended June 30, 2004 to
3.43% compared to 4.06% for the same period in 2003.
PROVISION FOR LOAN LOSSES. The provision for loan losses is charged to
earnings to bring the total allowance to a level deemed appropriate by
management and is based upon historical experience, the volume and type of
lending conducted by the Company, industry standards, the amount of
nonperforming loans, general economic conditions, particularly as they
relate to the Company's market areas, and other factors related to the
collectibility of the Company's loan portfolio. The Company recorded a
provision of $115,000 for the three months ended June 30, 2003. Management
believes the balance in the allowance for loan losses of $3.3 million at
June 30, 2004 is adequate.
NON-INTEREST INCOME. Non-interest income decreased $107,000 primarily due to
decreased realized gains on the sale of securities of $194,000, decreased
loan correspondent fees of $47,000 offset by increased service charges on
deposit accounts of $47,000 and other miscellaneous fee income of $64,000
for the three months ended June 30, 2004 compared to the same period in
2003.
NON-INTEREST EXPENSES. Non-interest expenses increased $192,000 for the three
months ended June 30, 2004 compared to the same period in 2003.
Professional fees increased $75,000, or 78.1% over the same period for
2003. Salaries and employee benefits increased $163,000, or 10.1% over the
same period for 2003. In connection with the Annual Meeting of
Stockholders in April 2004, one of our Directors, Clarita Kassin,
commenced a solicitation of proxies in opposition to the previously Board
approved proposals for that meeting. As a result of the solicitation of
proxies by Director Kassin, the Company's expenses related to its annual
meeting (primarily legal and proxy solicitor expenses) exceeded those
normally spent for an annual meeting by an aggregate of approximately
$104,000.
In addition, following the annual meeting, Director Kassin, without
advance notice to the Company, filed a change in control application with
the Federal Reserve Bank of Atlanta, and another stockholder filed proxy
materials with the Securities and Exchange Commission. The Company
continues to incur significant legal expenses in those regards. Also, the
stockholder that filed proxy materials with the SEC has indicated in its
proxy materials that it may seek to have the Company pay that
stockholder's expenses. Although the Company has no present intention to
do so, if that stockholder is successful in asserting her plan, and the
Company were to approve the payment by the Company of these expenses, the
stockholder has estimated her expenses at $100,000, which would be in
addition to the Company's own expenses.
INCOME TAXES. Income taxes for the three months ended June 30, 2004 were
$376,000 (an effective rate of 32.1%) compared to $260,000 (an effective
rate of 31.1%) for the comparable 2003 period.
18
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
GENERAL. Net earnings for the six months ended June 30, 2004 were $1.7
million or $.73 basic and $.70 diluted earnings per share compared to net
earnings of $1.0 million or $.47 basic and $.46 diluted earnings per share
for the six months ended June 30, 2003. The increase in the Company's net
earnings was primarily due to an increase in the net interest income, an
increase in non-interest income, both partially offset by increases in the
loan loss provision and non-interest expenses.
INTEREST INCOME AND EXPENSE. Interest income increased by $660,000 or 7.3%,
from $9.1 million for the six months ended June 30, 2003 to $9.7 million
for the six months ended June 30, 2004. Interest income on loans increased
$701,000 or 9.3% due to a $40.4 million increase in average loan volumes
from $220.9 million in 2003 to $261.2 million in 2004 partially offset by
a decline in the weighted-average yield from 6.82% in 2003 to 6.30% in
2004. Interest on securities increased $41,000 due to an increase in the
weighted-average yield to 4.31% from 4.25% in the 2003 period, partially
offset by an increase in the average securities portfolio balance from
$70.7 million in 2003 to $72.2 million in 2004.
Interest expense on deposits decreased to $1.3 million for the six months
ended June 30, 2004 from $1.8 million for the six months ended June 30,
2003. Interest expense on deposits decreased due to a decrease in the
average rate paid on deposits from 1.87% in 2003 to 1.33% in 2004,
partially offset by an increase in the average balance from $187.9 million
in 2003 to $196.7 million in 2004. Interest expense on borrowings
decreased $65,000 to $889,000 for the six months ended June 30, 2004 from
$954,000 for the six months ended June 30, 2003. Interest expense on
borrowings decreased due to a decrease in the weighted-average rate paid
for the six months ended June 30, 2004 to 3.46% compared to 4.16% for the
same period in 2003, partially offset by an increase in the average
balance of borrowings outstanding from $45.9 million in 2003 to $51.4
million in 2004.
PROVISION FOR LOAN LOSSES. The provision for loan losses is charged to
earnings to bring the total allowance to a level deemed appropriate by
management and is based upon historical experience, the volume and type of
lending conducted by the Company, industry standards, the amount of
nonperforming loans, general economic conditions, particularly as they
relate to the Company's market areas, and other factors related to the
collectibility of the Company's loan portfolio. The Company recorded a
provision of $215,000 for the six months ended June 30, 2004 compared to a
provision of $100,000 for the comparable period in 2003. Management
believes the balance in the allowance for loan losses of $3.3 million at
June 30, 2004 is adequate.
NON-INTEREST INCOME. Non-interest income increased $165,000 primarily due to
the sale of the Boca Greens branch during the six months ended June 30,
2004 which resulted in a gain of $320,000, increased service charges on
deposit accounts of $81,000 offset by decreased realized gains on the sale
of securities of $194,000 and decreased loan correspondent fees of
$77,000.
NON-INTEREST EXPENSES. Non-interest expenses increased $292,000 for the six
months ended June 30, 2004 compared to the same period in 2003, primarily
due to increases in salaries and employee benefits of $395,000 which
relate to the Company's expansion.
INCOME TAXES. Income taxes for the six months ended June 30, 2004 was
$764,000 (an effective rate of 31.5%) compared to income taxes of $456,000
(an effective rate of 30.5%) for the comparable 2003 period.
19
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
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 the 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, and is effected by adjusting the Company's
asset-liability structure to obtain the maximum yield-cost spread on that
structure. Management relies primarily on its asset-liability structure to
control interest rate risk. However, a sudden and substantial increase in
interest rates could adversely impact the Company's earnings, to the extent that
the interest rates borne by assets and liabilities do not change at the same
speed, to the same extent, or on the same basis. There has been no significant
change in the Company's market risk exposure since December 31, 2003.
ITEM 4. CONTROLS AND PROCEDURES
The Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of the design and operation
of the Company's disclosure controls and procedures (as defined in Rule 13a-15e
and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) as of June 30, 2004. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures were effective in ensuring that information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commissions rules and
forms.
There were no changes made in the Company's internal controls over financial
reporting that occurred during the Company's most recent fiscal quarter that
have materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders (the "Annual Meeting") of Pointe Financial
Corporation was held on April 29, 2004, to consider the election of two
directors each for a term of three years, to amend the 1998 Pointe Financial
Corporation Incentive Compensation and Stock Award Plan to increase the number
of shares authorized thereunder by 200,000, and to approve the appointment of
Hacker, Johnson & Smith PA as the Company's independent auditors for the fiscal
year 2004. At the Annual Meeting, incumbent directors James L. Horan and Clarita
Kassin were reelected. The terms of Directors Morris Massry, Timothy M. McGinn,
D. Richard Mead, Jr. and R. Carl Palmer, Jr. continued after the Annual Meeting.
Also, Hacker, Johnson & Smith was appointed as the Company's independent
auditors for the fiscal year 2004. The shareholders also voted on a shareholder
proposal to amend the Company's bylaws to declassify the board and set the size
of the board at six.
At the Annual Meeting, 2,173,675 shares were present in person or by proxy. The
following is a summary and tabulation of the matters that were voted upon at the
Annual Meeting:
20
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS CONTINUED
PROPOSAL I.
The election of two directors, each for a term of three years and the vote for
each director is as follows:
For Withheld Against
--- -------- -------
Clarita Kassin 1,571,812 5,169 268,937
========= ===== =======
James L. Horan 1,284,422 8,169 128,810
========= ===== =======
Barbara Wortley
(Shareholder nominee) 610,511 -- --
========= ===== =======
PROPOSAL II.
To Amend the 1998 Pointe Financial Corporation Incentive Compensation and Stock
Award Plan to increase the number of shares authorized thereunder by 200,000.
For Withheld Against
647,979 9,330 1,178,723
======= ===== =========
PROPOSAL III.
The appointment of Hacker, Johnson & Smith PA as the Company's independent
auditors for the fiscal year 2004:
For Withheld Against
--- -------- -------
2,013,576 4,630 124,714
========= ===== =======
PROPOSAL IV (SHAREHOLDER PROPOSAL)
To amend the Company's bylaws to declassify the board of directors and set the
size of the board of directors at six.
For Withheld Against
640,466 -- 1,533,209
======= ======== =========
21
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report.
2.1 Plan of Merger and Merger Agreement dated February 14, 1997 by
and between Pointe Federal Savings Bank and Pointe Bank
(Exhibit 2.1 to the Registrant's Form SB-2 Registration
Statement, File No. 333-49835, as initially filed with the
Securities and Exchange Commission on April 9, 1998 (the
"Registration Statement").
3.1 Articles of Incorporation of the Registrant (Incorporated by
reference to Exhibit 3.1 to the Registration Statement).
3.2 Bylaws of the Registrant (Incorporated by reference to
Exhibit 3.2 to the Company's Current Report on Form 8-K filed
with the SEC on June 28, 2004.).
4.1 Specimen Common Stock Certificate (Incorporated by reference
to Exhibit 4.1 to the Registration Statement).
10.1 Employment Protection Agreement by and among John P. Dover,
Pointe Bank and Pointe Financial Corporation, dated as of July
23, 2004.
10.2 Employment Protection Agreement by and among John W. Lowery,
Jr., Pointe Bank and Pointe Financial Corporation, dated as of
July 23, 2004.
10.3 Employment Protection Agreement by and among Bradley R.
Meredith, Pointe Bank and Pointe Financial Corporation, dated
as of July 23, 2004.
10.4 Employment Protection Agreement by and among Jean
Murphy-Engler, Pointe Bank and Pointe Financial Corporation,
dated as of July 23, 2004.
10.5 Employment Protection Agreement by and among R. Carl Palmer,
Jr., Pointe Bank and Pointe Financial Corporation, dated as of
July 23, 2004.
10.6 Employment Protection Agreement by and among Charles D.
Umberger, Pointe Bank and Pointe Financial Corporation, dated
July 23, 2004.
10.7 Lease Agreement between 4035, Inc. and Pointe Bank, dated
April 6, 2004.
10.8 Commercial Lease Agreement by and between 3700 Grand Avenue
LLC and Pointe Bank, dated as of May 12, 2004.
11.1 Statement regarding calculation of earnings per common share
(included in Note 3 to the Condensed Consolidated Financial
Statements).
31.1 CEO Certification required under Section 302 of Sarbanes-Oxley
Act of 2002.
31.2 CFO Certification required under Section 302 of Sarbanes-Oxley
Act of 2002.
32.1 CEO Certifications required under Section 906 of
Sarbanes-Oxley Act of 2002.
32.2 CFO Certifications required under Section 906 of
Sarbanes-Oxley Act of 2002.
22
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K, CONTINUED
(b) Reports on Form 8-K
During the second quarter ended June 30, 2004, the Company filed a
report on Form 8-K dated April 15, 2004 reporting the press release
covering the results for first quarter of 2004, a report on Form 8-K
dated April 30, 2004 reporting the results of its 2004 Annual Meeting
of Shareholders on April 29, 2004, and a report on Form 8-K dated May
28, 2004 reporting the Board of Directors adopting Amended Bylaws.
Under applicable rules, information provided in the foregoing Forms 8-K
under Items 9 and 12 is deemed furnished and not filed.
23
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
POINTE FINANCIAL CORPORATION
(Registrant)
Date: August 13, 2004 By: /s/ R. Carl Palmer, Jr.
----------------- --------------------------------------------
R.Carl Palmer, Jr., Chairman of the Board,
President and Chief Executive Officer
Date: August 13, 2004 By: /s/ Bradley R. Meredith
------------------ --------------------------------------------
Bradley R. Meredith, Senior Vice President
and Chief Financial Officer
24
EXHIBIT INDEX
2.1 Plan of Merger and Merger Agreement dated February 14, 1997 by
and between Pointe Federal Savings Bank and Pointe Bank
(Exhibit 2.1 to the Registrant's Form SB-2 Registration
Statement, File No. 333-49835, as initially filed with the
Securities and Exchange Commission on April 9, 1998 (the
"Registration Statement").
3.1 Articles of Incorporation of the Registrant (Incorporated by
reference to Exhibit 3.1 to the Registration Statement).
3.2 Bylaws of the Registrant (Incorporated by reference to
Exhibit 3.2 to the Company's Current Report on Form 8-K filed
with the SEC on June 28, 2004.).
4.1 Specimen Common Stock Certificate (Incorporated by reference
to Exhibit 4.1 to the Registration Statement).
10.1 Employment Protection Agreement by and among John P. Dover,
Pointe Bank and Pointe Financial Corporation, dated as of July
23, 2004.
10.2 Employment Protection Agreement by and among John W. Lowery,
Jr., Pointe Bank and Pointe Financial Corporation, dated as of
July 23, 2004.
10.3 Employment Protection Agreement by and among Bradley R.
Meredith, Pointe Bank and Pointe Financial Corporation, dated
as of July 23, 2004.
10.4 Employment Protection Agreement by and among Jean
Murphy-Engler, Pointe Bank and Pointe Financial Corporation,
dated as of July 23, 2004.
10.5 Employment Protection Agreement by and among R. Carl Palmer,
Jr., Pointe Bank and Pointe Financial Corporation, dated as of
July 23, 2004.
10.6 Employment Protection Agreement by and among Charles D.
Umberger, Pointe Bank and Pointe Financial Corporation, dated
July 23, 2004.
10.7 Lease Agreement between 4035, Inc. and Pointe Bank, dated
April 6, 2004.
10.8 Commercial Lease Agreement by and between 3700 Grand Avenue
LLC and Pointe Bank, dated as of May 12, 2004.
11.1 Statement regarding calculation of earnings per common share
(included in Note 3 to the Condensed Consolidated Financial
Statements).
31.1 CEO Certification required under Section 302 of Sarbanes-Oxley
Act of 2002.
31.2 CFO Certification required under Section 302 of Sarbanes-Oxley
Act of 2002.
32.1 CEO Certifications required under Section 906 of
Sarbanes-Oxley Act of 2002.
32.2 CFO Certifications required under Section 906 of
Sarbanes-Oxley Act of 2002.
25