SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____
Commission File Number: 000-1170902
FLORIDA COMMUNITY BANKS, INC.
(Exact name of registrant as specified in its charter)
Florida 35-2164765
------- ----------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
1400 North 15th Street, Immokalee, Florida 34142-2202
------------------------------------------ ----------
(Address of Principal Executive Office) (Including Zip Code)
(239) 657-3171
(Issuer's Telephone Number, Including Area Code)
No Change (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
---------- -----------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $0.01 par value Outstanding at August 1, 2002: 2,602,764
INTRODUCTORY NOTE
Florida Community Banks, Inc. ("FCBI") was incorporated on February 20, 2002.
FCBI had no assets, liabilities, revenues or operations until April 15, 2002,
when FCBI acquired 100% of the outstanding shares of Florida Community Bank
("Bank") common stock pursuant to a Plan of Reorganization and Share Exchange.
Since April 15, 2002, FCBI's predominate activity has been acting as a one-bank
holding company for Florida Community Bank and the Bank has continued to conduct
its activities in substantially the same manner as it had before the
acquisition.
[The remainder of this page intentionally left blank.]
Form 10-Q
FLORIDA COMMUNITY BANKS, INC.
June 30, 2002
TABLE OF CONTENTS
Page No.
Part I - Financial Information
Item 1 - Consolidated Financial Statements (Unaudited)
Consolidated Statements of Financial Condition as of June 30, 2002
and December 31, 2001....................................................................... 4
Consolidated Statements of Income For The Three Months Ended
June 30, 2002 and 2001...................................................................... 5
Consolidated Statements of Income For The Six Months Ended
June 30, 2002 and 2001...................................................................... 6
Consolidated Statement of Shareholders' Equity For The Six Months
Ended June 30, 2002......................................................................... 7
Consolidated Statements of Cash Flows For The Six Months
Ended June 30, 2002 and 2001................................................................ 8
Notes to Consolidated Financial Statements..................................................... 9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.................................................. 12
Item 3 - Quantitative and Qualitative Disclosures About Market Risk..................................... 20
Part II - Other Information
Item 4 - Submission of Matters to a Vote of Security Holders............................................ 22
Item 6 - Exhibits and Reports on Form 8-K............................................................... 23
Certification of Periodic Financial Reports
Signatures
3
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 2002 (Unaudited) and December 31, 2001
June 30,
2002 December 31,
(Unaudited) 2001
---------------- -----------------
Assets
Cash and due from banks...................................................... $ 10,499,409 $ 15,193,797
Interest-bearing deposits with banks......................................... 2,388,155 7,845,331
Federal funds sold........................................................... 11,196,000 -
---------------- ----------------
Cash and Cash Equivalents............................................. 24,083,564 23,039,128
Interest-bearing time deposits with banks.................................... 2,534,214 2,500,000
Securities available for sale................................................ 1,933,058 1,960,475
Securities held-to-maturity, fair value of $40,140,277 and $33,290,686....... 39,449,215 33,041,035
Loans, net of unearned income................................................ 367,536,084 318,665,591
Allowance for loan losses.................................................... (4,428,912) (3,802,836)
---------------- -----------------
Net Loans............................................................. 363,107,172 314,862,755
Premises and equipment, net.................................................. 8,882,098 7,938,850
Accrued interest............................................................. 2,695,938 2,688,165
Foreclosed real estate....................................................... 118,131 49,788
Deferred taxes, net.......................................................... 1,111,359 1,111,359
Other assets................................................................. 1,330,717 869,117
---------------- -----------------
Total Assets.......................................................... $ 445,245,466 $ 388,060,672
================ =================
Liabilities and Shareholders' Equity
Liabilities
Deposits
Non-interest-bearing...................................................... $ 58,396,065 $ 60,160,766
Interest-bearing.......................................................... 317,369,539 257,700,574
---------------- -----------------
Total Deposits........................................................ 375,765,604 317,861,340
Short-term borrowings........................................................ -- 1,086,000
Long-term Federal Home Loan Bank advances.................................... 25,000,000 32,500,000
Subordinated capital note.................................................... -- 5,000,000
Other long-term debt......................................................... 68,786 79,761
Guaranteed preferred beneficial interests in the company's
subordinated debentures................................................... 10,000,000 --
Deferred compensation........................................................ 448,100 473,267
Accrued interest............................................................. 1,920,880 1,688,813
Other liabilities............................................................ 783,912 232,836
---------------- -----------------
Total Liabilities..................................................... 413,987,282 358,922,017
Shareholders' Equity
Common stock-par value $.01 per share, 10,000,000 shares
authorized, 2,602,764 shares issued and outstanding....................... 26,028 26,028
Paid-in capital.............................................................. 16,685,260 16,685,260
Retained earnings............................................................ 14,546,896 12,427,367
---------------- -----------------
Total Shareholders' Equity............................................ 31,258,184 29,138,655
---------------- -----------------
Total Liabilities and Shareholders' Equity................................... $ 445,245,466 $ 388,060,672
================ =================
See notes to consolidated financial statements
4
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three months Ended June 30, 2002 and 2001
(Unaudited)
Three Months
Ended June 30,
-----------------------------------
2002 2001
---------------- -----------------
Interest Income
Interest and fees on loans................................................ $ 6,864,511 $ 6,626,306
Interest and dividends
Taxable securities...................................................... 545,654 592,162
Tax-exempt securities..................................................... 1,431 5,760
Interest on federal funds sold and other interest income.................. 117,107 224,936
---------------- -----------------
Total Interest Income................................................. 7,528,703 7,449,164
---------------- -----------------
Interest Expense
Interest on deposits...................................................... 2,538,692 2,851,266
Interest on borrowed funds................................................ 374,924 233,854
---------------- -----------------
Total Interest Expense................................................ 2,913,616 3,085,120
---------------- -----------------
Net Interest Income.......................................................... 4,615,087 4,364,044
Provision for loan losses.................................................... 280,000 150,000
---------------- -----------------
Net Interest Income After Provision for Loan Losses.......................... 4,335,087 4,214,044
Noninterest Income
Customer service fees..................................................... 458,970 261,263
Insurance commissions..................................................... 10,995 8,744
Other non-interest income................................................. 182,814 146,077
---------------- -----------------
Total Noninterest Income.............................................. 652,779 416,084
---------------- -----------------
Noninterest Expenses
Salaries and employee benefits............................................ 1,378,715 1,426,068
Occupancy and equipment expense........................................... 384,754 286,565
Other non-interest expenses............................................... 479,192 422,508
---------------- -----------------
Total Noninterest Expenses............................................ 2,242,661 2,135,141
---------------- -----------------
Income before income taxes................................................... 2,745,205 2,494,987
Provision for income tax expense............................................. 1,024,097 933,229
---------------- -----------------
Net Income................................................................... $ 1,721,108 $ 1,561,758
================ =================
Earnings Per Common Share
Basic..................................................................... $ 0.66 $ 0.60
Diluted................................................................... 0.66 0.60
Cash Dividends Declared
Cash dividends declared per common share.................................. $ 0.42 $ 0.42
Weighted Average Shares Outstanding
Basic..................................................................... 2,602,764 2,602,764
Diluted................................................................... 2,613,784 2,602,764
See notes to consolidated financial statements
5
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Six months Ended June 30, 2002 and 2001
(Unaudited)
Six Months
Ended June 30,
-----------------------------------
2002 2001
---------------- -----------------
Interest Income
Interest and fees on loans................................................ $ 13,318,209 $ 12,707,565
Interest and dividends
Taxable securities...................................................... 1,069,318 1,215,352
Tax-exempt securities................................................... 2,876 14,396
Interest on federal funds sold and other interest income.................. 218,311 432,504
---------------- -----------------
Total Interest Income................................................. 14,608,714 14,369,817
---------------- -----------------
Interest Expense
Interest on deposits...................................................... 4,963,425 5,784,144
Interest on borrowed funds................................................ 758,454 482,074
---------------- -----------------
Total Interest Expense................................................ 5,721,879 6,266,218
---------------- -----------------
Net Interest Income.......................................................... 8,886,835 8,103,599
Provision for loan losses.................................................... 610,000 300,000
---------------- -----------------
Net Interest Income After Provision for Loan Losses.......................... 8,276,835 7,803,599
Noninterest Income
Customer service fees..................................................... 801,525 521,924
Insurance commissions..................................................... 18,124 19,599
Other non-interest income................................................. 367,923 244,925
Securities gain........................................................... 36,083 --
---------------- -----------------
Total Noninterest Income.............................................. 1,223,655 786,448
---------------- -----------------
Noninterest Expenses
Salaries and employee benefits............................................ 2,709,213 2,809,819
Occupancy and equipment expense........................................... 772,360 561,071
Other non-interest expenses............................................... 883,847 772,952
---------------- -----------------
Total Noninterest Expenses............................................ 4,365,420 4,143,842
---------------- -----------------
Income before income taxes................................................... 5,135,070 4,446,205
Provision for income tax expense............................................. 1,922,380 1,657,281
---------------- -----------------
Net Income................................................................... $ 3,212,690 $ 2,788,924
================ =================
Earnings Per Common Share
Basic..................................................................... $ 1.23 $ 1.07
Diluted................................................................... 1.23 1.07
Cash Dividends Declared
Cash dividends declared per common share.................................. $ 0.42 $ 0.42
Weighted Average Shares Outstanding
Basic..................................................................... 2,602,764 2,602,764
Diluted................................................................... 2,607,916 2,602,764
See notes to consolidated financial statements
6
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Six months Ended June 30, 2002
(Unaudited)
Common Paid-in Retained
Stock Capital Earnings Total
------------ ------------ -------------- ----------------
Balance at December 31, 2001.............. $ 26,028 $ 16,685,260 $ 12,427,367 $ 29,138,655
Net income - Six months ended
June 30, 2002.......................... -- -- 3,212,690 3,212,690
Cash dividends - Six months ended
June 30, 2002.......................... -- -- (1,093,161) (1,093,161)
------------- ------------- -------------- ----------------
Balance at June 30, 2002.................. $ 26,028 $ 16,685,260 $ 14,546,896 $ 31,258,184
============= ============= ============== ================
See notes to consolidated financial statements
7
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months Ended June 30, 2002 and 2001
(Unaudited)
Six Months
Ended June 30,
-----------------------------------
2002 2001
---------------- -----------------
Operating Activities
Net Income................................................................ $ 3,212,690 $ 2,788,924
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses............................................. 610,000 300,000
Depreciation, amortization, and accretion, net........................ 288,942 270,752
(Increase) decrease in accrued interest receivable.................... (7,773) 642,171
Increase in accrued interest payable.................................. 232,068 362,782
Other, net............................................................ 53,334 (408,464)
---------------- -----------------
Net Cash Provided By Operating Activities............................. 4,389,261 3,956,165
---------------- -----------------
Investing Activities
Net (increase) decrease in held-to-maturity securities.................... (6,408,181) 2,475,281
Net decrease in available-for-sale securities............................. 27,417 --
Increase in interest-bearing time-deposits held at banks.................. (34,214) --
Loans made to customers, net of repayments................................ (48,854,417) (20,706,579)
Purchase of fixed assets, net............................................. (1,232,190) (356,219)
Sale of branch premises................................................... -- 1,855,000
Net (increase) decrease in other real estate owned........................ (68,343) 193,626
---------------- -----------------
Net Cash Used In Investing Activities................................. (56,569,928) (16,538,891)
---------------- -----------------
Financing Activities
Net decrease in noninterest-bearing deposits.............................. (1,764,701) (1,117,108)
Net increase in interest-bearing deposits................................. 59,668,965 31,158,920
Dividends paid............................................................ (1,093,161) (1,084,485)
Repayment of short-term borrowings........................................ (1,086,000) (3,000,000)
Repayment of subordinated note............................................ (5,000,000) --
Repayment of Federal Home Loan Bank advances.............................. (7,500,000) --
Issuance of subordinated floating rate deferrable interest debentures..... 10,000,000 --
--------------- -----------------
Net Cash Provided By Financing Activities............................. 53,225,103 25,957,327
---------------- -----------------
Net Increase in Cash and Cash Equivalents.................................... 1,044,436 13,374,601
Cash and Cash Equivalents at Beginning of Period............................. 23,039,128 16,846,983
---------------- -----------------
Cash and Cash Equivalents at End of Period................................... $ 24,083,564 $ 30,221,584
================ =================
Supplemental Disclosure of Non-cash Transactions
Issuance of common stock for a one-for-one 100% acquisition.................. 29,138,655 --
See notes to consolidated financial statements
8
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002
(Unaudited)
Note A - Basis of Presentation
The consolidated financial statements include the accounts of Florida Community
Banks, Inc. ("FCBI") and its wholly-owned subsidiaries, Florida Community Bank
(the "Bank") and FCBI Capital Trust I ("the Trust"), collectively the "Company."
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month period ended June 30, 2002,
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2002.
The statement of financial condition at December 31, 2001, has been derived from
the audited financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
The December 31, 2001 financial information contained in this Form 10-Q
represents solely the financial information of the Bank. On April 15, 2002, FCBI
acquired all the outstanding stock of the Bank through a 100%, one-for-one stock
exchange under a method of accounting similar to the pooling method. This method
is allowed under Statement of Financial Accounting Standards No. 141, Business
Combinations ("SFAS 141") as defined by Accounting Principles Board Opinion No.
16, "Business Combinations" ("APB 16") when the exchange of shares between
entities under common control result only in a change of the reporting entity
(see Note F).
Note B - Income Taxes
The effective tax rates of approximately 37.3% and 37.4% for the three months
ended June 30, 2002 and 2001, respectively, are more than the federal statutory
tax rate for corporations principally because of the effect of state income
taxes, net of federal tax benefit.
Note C - Securities
The Company applies the accounting and reporting requirements of Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments in
Debt and Equity Securities ("SFAS 115"). This pronouncement requires that all
investments in debt securities be classified as either "held-to-maturity"
securities, which are reported at amortized cost; trading securities, which are
reported at fair value, with unrealized gains and losses included in earnings;
or "available-for-sale" securities, which are reported at fair value, with
unrealized gains and losses excluded from earnings and reported in a separate
component of shareholders' equity (net of deferred tax effect).
9
Note C - Securities - Continued
At June 30, 2002, the Company had no net unrealized gains/losses in
available-for-sale securities, which are reflected in the presented assets and
resulted in no change in shareholders' equity. There were no trading securities.
Note D - Shareholders' Equity
In June 2001, the Company declared a stock split and issued 1.2 shares for each
share outstanding of the Company's common stock. This effect of this stock split
has been retroactively reflected in the Company's consolidated financial
statements. All references to weighted average shares outstanding and per share
amounts included in the accompanying financial statements and notes reflect and
the stock split and its retroactive effect.
Note E - Segment Information
All of the Company's offices offer similar products and services, are located in
the same geographic region, and serve similar segments of the market. As a
result, management considers all units as one operating segment and therefore
feels that the basic financial statements and related footnotes provide details
related to segment reporting.
Note F - Business Combination
On April 11, 2002 a majority of the shareholders of the Bank approved a Plan of
Reorganization ("Plan") whereby the Bank would become the subsidiary of Florida
Community Banks, Inc., a Florida corporation and a registered bank holding
company. Under the Plan, each share of the Bank's common stock was converted
into one share of Florida Community Banks, Inc. common stock. The acquisition of
the Bank occurred on April 15, 2002. These financial statements reflect the
consolidated operations of the Bank and FCBI for all periods presented.
The Plan allowed dissenting shareholders to exercise the right to be paid for
their shares in cash. There were no dissenting shareholders.
Shareholders also approved a stock option plan covering certain key employees
under which these employees have been granted options to purchase a total of
46,000 shares of common stock at a price of $18.00 per share.
10
Note G - Guaranteed Preferred Beneficial Interests in the Company's Subordinated
Debentures
On June 21, 2002, FCBI Capital Trust I ("FCBI Trust"), a Delaware statutory
trust established by the Company, received $10,000,000 in proceeds in exchange
for $10,000,000 principal amount of FCBI Trust's floating rate cumulative trust
preferred securities (the "preferred securities") in a trust preferred private
placement. The proceeds of that transaction were then used by FCBI Trust to
purchase an equal amount of floating rate subordinated debentures (the
"subordinated debentures") of the Company. The Company has fully and
unconditionally guaranteed all obligations of FCBI Trust on a subordinated basis
with respect to the preferred securities. The Company accounts for the FCBI
Trust preferred securities as a minority interest. Subject to certain
limitations, the preferred securities qualify as Tier 1 capital and are
presented in the Consolidated Statements of Financial Condition as "Guaranteed
preferred beneficial interests in the Company's subordinated debentures." The
sole asset of FCBI Trust is the subordinated debentures issued by the Company.
Both the preferred securities of FCBI Trust and the subordinated debentures of
the Company each have approximately 30-year lives. However, both the Company and
FCBI Trust have a call option of five years, subject to regulatory capital
requirements.
Note H - Stock Options
On April 16, 2002, the Company issued statutory and non-statutory stock options
to certain key employees. The total options issued were 46,000 at an exercise
price of $18.00 per share (fair market value on the date of grant). Fair market
value was determined based upon an independent appraiser's valuation. These
options vest over a three and one-half year time period at 25% on October 25,
2002, and 25% on October 25 of each year thereafter until fully vested. The
options expire nine and one-half years from the grant date.
Note I - Term Loan Agreement
On June 13, 2002, the Company entered into a $5,000,000, 360-day term loan
agreement with The Bankers Bank, Atlanta, Georgia, at an interest rate of prime
less one-half (P-1/2%). The Company has pledged 51% of the outstanding shares of
Florida Community Bank, a 100% owned subsidiary of the Company, as collateral on
this note. At June 30, 2002, no portion of this loan had been funded.
Note J - Recently Passed Legislation
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002
("the Act"), which immediately impacts Securities and Exchange Commission
registrants, public accounting firms, lawyers and securities analysts. This
legislation is the most comprehensive since the passage of the Securities Acts
of 1933 and 1934. It has far reaching effects on the standards of integrity for
corporate management, board of directors, and executive management. Additional
disclosures, certifications and possibly procedures will be required of our
company. We do not expect any material adverse effect on our company as a result
of the passage of this legislation, however, the full scope of the Act has not
been determined. The Act provides for additional regulations and requirements of
publicly-traded companies which have yet to be issued.
11
FLORIDA COMMUNITY BANKS, INC.
June 30, 2002
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
This discussion is intended to assist an understanding of the Company's
financial condition and results of operations. This analysis should be read in
conjunction with the consolidated financial statements and related notes
appearing in Item 1 of the June 30, 2002, Form 10-Q, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
appearing in the Bank's Annual Report on Form 10-KSB for the year ended December
31, 2001.
Forward-Looking Information
Certain statements contained in this Quarterly Report on Form 10-Q, which are
not historical facts, are forward-looking in nature and relate to trends and
events that may affect the Company's future financial position and operating
results. In addition, the Company, through its senior management, from time to
time makes forward-looking public statements concerning its expected future
operations and performance and other developments. All forward-looking
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The terms "expect," "anticipates,"
"intend" and "project" and similar words or expression are intended to identify
forward-looking statements. In addition to risks and uncertainties that may
affect operations, performance, growth projections and the results of the
Company's business, which include, but are not limited to, fluctuations in the
economy, the relative strength and weakness in the commercial and consumer
sector and in the real estate market, the actions taken by the Federal Reserve
Board for the purpose of managing the economy, interest rate movements, the
impact of competitive products, services and pricing, timely development by the
Company of technology enhancements for its products and operating systems,
legislation and similar matters, the Company's future operations, performance,
growth projections and results will depend on its ability to respond to the
challenges associated with a weakening economy- particularly in the real estate
development sector, which is prominent in the Company's primary market. Although
management of the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to be correct. Prospective investors are cautioned that
any such forward-looking statements are not guaranties of future performance,
involve risks and uncertainties, and that actual results may differ materially
from those contemplated by such forward-looking statements. The Company makes no
commitment to update any forward-looking statement or to disclose any facts,
events or circumstances that may affect the accuracy of any forward-looking
statement.
FINANCIAL CONDITION
June 30, 2002 compared to December 31, 2001
The Company continued its operations concentrating in the origination of loans
in southwestern Florida. As discussed more fully below, loan growth was funded
by an increase in deposits from brokered certificates of deposit and from
Internet bulletin board rate postings. No significant changes in operating goals
or policies occurred during the first two quarters of 2002.
12
Loans
Loans comprised the largest single category of the Company's earning assets on
June 30, 2002. Loans, net of unearned income and reserve for loan losses,
totaled 81.6% of total assets at June 30, 2002 compared to 81.1% of total assets
at December 31, 2001. During the first six months of 2002, loans increased
approximately $49 million with $2.3 million of that increase in commercial and
industrial loans and the remainder of the increase in loans secured by real
estate. The rapid influx of population to southwest Florida continued to
influence the demand for real estate loans, particularly construction and
development loans.
Investment Securities and Other Earning Assets
The investment securities portfolio is used to provide a source of liquidity, to
serve as collateral for borrowings and to secure certain government deposits.
Federal funds sold are the most liquid earning asset and is used to manage the
daily cash position of the Company. Investment securities and other short-term
investments increased $6.4 million during the first six months of 2002 as
deposits increased more rapidly than loans.
Asset Quality
From December 31, 2001 to June 30, 2002, the Company's asset quality
deteriorated but remained high as measured by three key ratios. The ratio of
loan loss allowance to total nonperforming assets (defined as nonaccrual loans,
loans past due 90 days or greater, restructured loans, nonaccruing securities,
and other real estate) decreased from 1.61:1 to 0.58:1. The percentage of
nonperforming assets to total assets increased from 0.61% to 1.70%, and the
percentage of nonperforming loans to total loans increased from 0.73% to 2.06%.
These ratios were affected by a $5.2 million increase in nonperforming loans
during the first six months of 2002. All three ratios are comparable to industry
averages, and management is aware of no factors that would suggest that the Bank
will perform less well than its peer group in future periods.
During the first six months of 2002, recoveries on loans previously charged-off
exceeded the amount of loans charged-off by $16 thousand.
Deposits
Total deposits of $375.8 million at June 30, 2002 represented an increase of
$57.9 million (18.2%) from total deposits of $317.9 million at year-end 2001.
The majority of the increase was attributable to two deposit sources: Internet
certificates of deposit (gathered by posting the Bank's rates on an Internet
bulletin board accessed by various financial institutions in the United States)
and brokered certificates of deposit. At June 30, 2002, brokered and Internet
certificates of deposit totaled approximately $80 million.
Shareholders' Equity
Consolidated shareholders' equity increased $2.1 million from December 31, 2001
to June 30, 2002, due to net income during the first six months of 2002, less
dividends paid.
13
Liquidity Management
Liquidity is defined as the ability of a company to convert assets (by
liquidating or pledging for borrowings) into cash or cash equivalents without
significant loss. Liquidity management involves maintaining the ability to meet
the day-to-day cash flow requirements of its customers, whether they are
depositors wishing to withdraw funds or borrowers requiring funds to meet their
credit needs. Without proper liquidity management, the Company would not be able
to perform the primary function of a financial intermediary and would,
therefore, not be able to meet the production and growth needs of the
communities it serves.
The primary function of asset and liability management is not only to ensure
adequate liquidity in order to meet the needs of its customer base, but also to
maintain an appropriate balance between interest-sensitive assets and
interest-sensitive liabilities so that the Company can also meet the investment
requirements of its shareholders. Daily monitoring of the sources and uses of
funds is necessary to maintain an acceptable position that meets both
requirements. To the company, both assets and liabilities are considered sources
of liquidity funding and both are, therefore, monitored on a daily basis.
The asset portion of the balance sheet provides liquidity primarily through loan
principal repayments and maturities of investment securities. Loans that mature
in one year or less equaled approximately $71.8 million at June 30, 2002, and
there are approximately $3.1 million of investment securities maturing within
one year.
The liability portion of the balance sheet provides liquidity through deposits
to various customers' interest-bearing and noninterest-bearing deposit accounts.
At June 30, 2002, funds also were available through the purchase of federal
funds from correspondent commercial banks from available lines of up to an
aggregate of $22.5 million and credit availability at the Federal Home Loan Bank
of up to 15% of assets (approximately $67 million) of which $42 million is
available and unused. At June 30, 2002, the bank had unused collateral totaling
approximately $20 million, thus limiting the advances potentially available to
that amount.
Capital Resources
A strong capital position is vital to the continued profitability of the Company
and the Bank because it promotes depositor and investor confidence and provides
a solid foundation for future growth of the organization. The Company has
provided a significant portion of its capital requirements through the retention
of earnings.
On June 21, 2002, FCBI Capital Trust I ("FCBI Trust"), a Delaware statutory
trust established by the Company, received $10,000,000 in proceeds in exchange
for $10,000,000 principal amount of FCBI Trust's floating rate cumulative trust
preferred securities (the "preferred securities") in a trust preferred private
placement. The proceeds of that transaction were then used by FCBI Trust to
purchase an equal amount of floating rate subordinated debentures (the
"subordinated debentures") of the Company. The Company has fully and
unconditionally guaranteed all obligations of FCBI Trust on a subordinated basis
with respect to the preferred securities. The Company accounts for the FCBI
Trust preferred securities as a minority interest. Subject to certain
limitations, the preferred securities qualify as Tier 1 capital and are
presented in the Consolidated Statements of Financial Condition as "Guaranteed
preferred beneficial
14
interests in the Company's subordinated debentures." The sole asset of FCBI
Trust is the subordinated debentures issued by the Company. Both the preferred
securities of FCBI Trust and the subordinated debentures of the Company each
have approximately 30-year lives. However, both the Company and FCBI Trust have
a call option of five years, subject to regulatory capital requirements.
On June 13, 2002, the Company entered into a $5,000,000, 360-day term loan
agreement with The Bankers Bank, Atlanta, Georgia, at an interest rate of prime
less one-half (P-1/2%). The Company has pledged 51% of the outstanding shares of
Florida Community Bank, a 100% owned subsidiary of the Company, as collateral on
this note. At June 30, 2002, no portion of this loan had been funded.
Regulatory authorities are placing increased emphasis on the maintenance of
adequate capital. Capital strength is measured in two tiers, which are used in
conjunction with risk-adjusted assets to determine the risk-based capital
ratios. The Company's Tier I capital, which consists of common equity less
goodwill and the newly issued guaranteed preferred beneficial interest in the
Company's subordinated debentures, subject to limitation, totaled $41.3 million
at June 30, 2002. Tier II capital components include supplemental capital
components such as qualifying allowance for loan losses and the portion of the
guaranteed preferred beneficial interest in the Company's subordinated
debentures which exceeds the allowable Tier I capital amount. Tier I capital
plus the Tier II capital components is referred to as Total Risk-Based capital
and was $45.7 million at June 30, 2002.
The Company's and the Bank's current capital positions exceed the
"well-capitalized" regulatory guidelines. Management has reviewed and will
continue to monitor the Company's asset mix and the loan loss allowance, which
are the areas determined to be most affected by these capital requirements.
RESULTS OF OPERATIONS
Three months ended June 30, 2002 and 2001
Summary
Net earnings of the Company for the three months ended June 30, 2002, totaled
$1,721,108 compared to $1,561,758 for the same period in 2001, representing a
10.2% increase. The increase was due principally to the after-tax effect of a
$251 thousand increase in net interest income. As explained more fully below,
the increase in net interest income was due to an increased volume of loans and
interest-bearing deposits, each offset by a decline in rates.
Net Interest Income
Net interest income, the difference between interest earned on assets and the
cost of interest-bearing liabilities, is the largest component of the Company's
income. Net interest income during the three months ended June 30, 2002
increased $251 thousand (5.8%) from the same period in 2001. This increase was
due primarily to the increase in loan interest and fee income and a decrease in
deposit interest expense. Interest income increased due to greater volume,
partially offset by a decline in the rate. Interest expense decreased due to
greater volume more than offset by the declines in the rate paid for deposits.
Earning assets averaged $419.7 million during the second quarter of 2002
compared to $299.9 million in the second quarter of 2001, with most of the
increase due to loan volume. Average interest-bearing
15
liabilities increased from $257.8 million during the second quarter of 2001 to
$388.7 million during the same period in 2002, primarily due to an increase in
certificates of deposit.
The Company was in an interest sensitive position during 2002 and 2001 with a
larger dollar amount of interest-earning assets subject to repricing than
interest-bearing liabilities. Therefore, during 2002 and 2001 when rates were
generally declining, the Company's loan and investment portfolios rapidly
repriced at lower rates and reduced the net interest margin. Conversely, during
periods when rates generally increase, the Company may benefit from increased
net interest income due to its asset sensitive position.
Provision for Loan Losses
The provision for loan losses represents the charge against current earnings
necessary to maintain the reserve for loan losses at a level which management
considers appropriate. This level is determined based upon the Bank's historical
charge-offs, management's assessment of current economic conditions, the
composition of the loan portfolio and the levels of nonaccruing and past due
loans. The provision for loan losses was $280,000 for the three months ended
June 30, 2002 compared to $150,000 during the same period in 2001. Recoveries
exceeded charge-offs by approximately $8 thousand for the three months ended
June 30, 2002. During the three months ended June 30, 2001, net charge-offs
totaled $67 thousand. The reserve for loan losses as a percent of outstanding
loans, net of unearned income, was 1.21% at June 30, 2002, compared to 1.19% at
year-end 2001.
Noninterest Income
Noninterest income for the three months ended June 30, 2002, was $652,779
compared to $416,084 for the same period of 2001, an increase of 56.9%. The
increase was primarily due to an increase in customer service fees of $198
thousand. During 2001, the Company increased charges for cash provided to
customers and for certain services, the full effect of which was reflected
during 2002.
Noninterest Expenses
Noninterest expenses for the three months ended June 30, 2002, were $2,242,661
reflecting a 5.0% increase from the same period of 2001. The primary components
of noninterest expenses are salaries and employee benefits, which decreased $47
thousand for the three months ended June 30, 2002 compared to the same period in
2001, caused by a $218 thousand increase in the deferral of employee related
loan origination expenses. Occupancy costs increased $98 thousand. Both employee
cost (other than the deferred portion) and occupancy cost increased due to the
new branch offices opened during 2001.
Income Taxes
The provision for income taxes of $1,024,097 for the three months ended June 30,
2002, increased $91 thousand compared to the same period of 2001, due to higher
taxable earnings. The effective tax rate for both periods is more than the
statutory federal rate principally because of state income taxes, net of the
federal tax benefit.
16
Six months ended June 30, 2002 and 2001
Summary
Net earnings of the Company for the six months ended June 30, 2002, totaled
$3,212,690 compared to $2,788,924 for the same period in 2001, representing an
15.2% increase. The increase was due principally to an increase in net interest
income after provision for loan losses of $473 thousand and an increase in
non-interest income, partially offset by an increase in non-interest expense.
Net Interest Income
Net interest income of the Company during the six months ended June 30, 2002
increased $783 thousand (9.7%) from the same period in 2001. This increase was
due primarily to the increase in loan interest and fee income and decreased
deposit interest expense. The increase loan interest was caused primarily by
volume increases and the decrease in deposit interest expense was caused by
lower rates paid on a higher volume.
The Company was in an asset sensitive position during 2000 and 2001 with a
larger dollar amount of interest-earning assets subject to re-pricing than
interest-bearing liabilities. During the first six months of 2001 when rates
were generally declining, the Company's interest income has been reduced at a
faster rate than the cost of liabilities. During 2002 rates remained low and the
Company's cost of deposits also re-priced at lower rates, thus contributing to
the improved net interest income.
Provision for Loan Losses
The provision for loan losses was $610,000 for the six months ended June 30,
2002 and $300,000 for the comparable period in 2001. Net recoveries during the
six months ending June 30, 2002 totaled $16 thousand. During the comparable
period during 2001 net charge-offs totaled $36 thousand.
Noninterest Income
Noninterest income for the six months ended June 30, 2002, was $1,223,655
compared to $786,448 for the same period of 2001. The increase was caused by an
increase in charges for cash services to customers.
Noninterest Expenses
Noninterest expenses for the six months ended June 30, 2002, totaled $4,365,420
and reflected a 5.3% increase from the same period of 2001. Both employee costs
(before deferral of loan origination salary expense) and occupancy expenses
increased due to a new branch office opening in mid-2001.
Income Taxes
The provision for income taxes of $1,922,380 for the six months ended June 30,
2002 increased $265 thousand compared to the same period of 2001 due to higher
earnings. The effective tax rates of approximately 37.4% for 2002 and 37.3% in
2001 were higher than the federal tax rate due to the effect of state income
tax, net of federal tax benefit.
17
Other Accounting Issues
In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities - a replacement
of FASB Statement No. 125. While SFAS No. 140 carries over most of the
provisions of SFAS No. 125, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities, it provides new standards for
reporting financial assets transferred as collateral and new standards for the
derecognition of financial assets, in particular transactions involving the use
of special purpose entities. SFAS No. 140 also prescribes additional disclosures
for collateral transactions and for securitization transactions accounted for as
sales. The new collateral standards and disclosure requirements are effective
for fiscal years ending after December 15, 2000, while the new standards for the
derecognition of financial assets are effective for transfers made after March
31, 2001. The adoption of this statement did not have a material effect on the
Company's consolidated financial statements.
In May 2001, the Auditing Standards Board issued Statement on Auditing Standards
("SAS") No. 94, The Effect of Information Technology on the Auditor's
Consideration of Internal Control in a Financial Statement Audit. This statement
amends SAS No. 55, Consideration of Internal Control in a Financial Statement
Audit, by providing additional guidance related to the understanding by the
auditor of an entity's use of information technology relevant to the audit. This
auditing standard is effective for audits of financial statements for periods
beginning on or after June 1, 2001. The impact on the audit of the Company's
consolidated financial statements resulting from the issuance of this auditing
standard is not expected to be material.
In June 2001, the FASB issued SFAS No. 141, Business Combinations. This
statement address financial accounting and reporting for business combinations
and supersedes APB Opinion No. 16, Business Combinations, and SFAS No. 38,
Accounting for Preacquisition Contingencies of Purchased Enterprises. All
business combinations in the scope of SFAS No. 141 are to be accounted for using
one method, the purchase method. Prior to the issuance of this statement,
subject to certain criteria, business combinations were accounted for using one
of two methods, the pooling-of-interests method or the purchase method. The two
methods produce different financial statement results. The single-method
approach used in SFAS No. 141 reflects the conclusion that virtually all
business combinations are acquisitions and therefore should be accounted for in
the same manner as other asset acquisitions based on the values exchanged. This
statement provides expanded and revised guidance related to the allocation of
the purchase price to goodwill and other intangibles arising from the business
combination. The provisions of SFAS No. 141 apply to all business combinations
initiated after June 30, 2001.
Also, in June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets, which addresses financial accounting and reporting for acquired goodwill
and other intangible assets and supersedes APB Opinion No. 17, Intangible
Assets. SFAS No. 142 provides new standards for accounting relating to
intangible assets after initial recognition in the financial statements. This
statement proscribes the accounting practice of amortizing or expensing
intangibles ratably over a prescribed period of time and imposes new guidance
requiring that goodwill and certain other intangibles be tested for impairment
at least annually by comparing fair values of those assets with their recorded
amounts. Additional disclosure requirements also are provided. The provisions of
SFAS No. 142 are required to be applied in fiscal years beginning after December
15, 2001.
18
The adoption of SFAS No. 141 and SFAS No. 142 are not expected to have a
material effect on the Company's consolidated financial statements.
In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. This statement requires that the fair value of a liability for an
asset retirement obligation be recognized in the period in which it is incurred
if a reasonable estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the
long-lived asset. This statement is effective for financial statements issued
for fiscal years beginning after June 15, 2002. The adoption of this statement
is not expected to have a material effect on the Company's consolidated
financial statements.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-lived Assets. This statement addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. This statement
supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, and the accounting and
reporting provisions of APB Opinion No. 30, Reporting the Results of
Operations--Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for
the disposal of a segment of a business (as previously defined in that opinion).
This statement also amends Accounting Research Bulletin No. 51, Consolidated
Financial Statements, to eliminate the exception to consolidation for a
subsidiary for which control is likely to be temporary. The major changes
resulting from this statement relate to the establishment of a single method for
the recognition of impairment losses on long-lived assets to be held and used
whether from discontinuance of a business segment or otherwise. This statement
is effective for financial statements issued for fiscal years beginning after
December 15, 2001. The adoption of this statement is not expected to have a
material effect on the Company's consolidated financial statements.
In December 2001, the Accounting Standards Executive Committee issued Statement
of Position ("SOP") 01-6, Accounting by Certain Entities (Including Entities
With Trade Receivables) That Lend to or Finance the Activities of Others. This
statement reconciles and conforms the accounting and financial reporting
provisions for similar transactions as applied to different entities within the
financial services industry. It eliminates differences in disclosure practices
where not warranted and should provide greater consistency in reporting by
entities in the financial services industry. This statement is effective for
annual and interim financial statements issued for fiscal years beginning after
December 15, 2001. The adoption of SOP 01-6 is not expected to have a material
effect on the Company's consolidated financial statements.
In December 2001, the Auditing Standards Board issued SAS No. 95, Generally
Accepted Auditing Standards. This statement supersedes Generally Accepted
Auditing Standards of SAS No. 1 and generally provides additional guidance to
the independent auditor in the conduct of an audit engagement, primarily by
addressing authoritative and nonauthoritative publications for audit
consideration and guidance. This SAS is effective for audits of financial
statements for periods beginning on or after December 15, 2001.
In January 2002, the Auditing Standards Board issued SAS No. 96, Audit
Documentation. This statement supersedes SAS No. 41, Working Papers and amends
SAS No. 47, Audit Risk and Materiality in Conducting an Audit, SAS No. 56,
Analytical Procedures and SAS No. 59, The Auditor's Consideration of an Entity's
Ability to Continue as a Going Concern. This statement provides revised guidance
to the
19
independent auditor as to the type, purpose and requirements of audit
documentation. This SAS is effective for audits of financial statements for
periods beginning on or after May 15, 2002. The impact of SAS No. 95 and SAS No.
96 on the audit of the Company's consolidated financial statements resulting
from the issuance of these auditing standards is not expected to be material.
Recently Passed Legislation
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002
("the Act"), which immediately impacts Securities and Exchange Commission
registrants, public accounting firms, lawyers and securities analysts. This
legislation is the most comprehensive since the passage of the Securities Acts
of 1933 and 1934. It has far reaching effects on the standards of integrity for
corporate management, board of directors, and executive management. Additional
disclosures, certifications and possibly procedures will be required of our
company. We do not expect any material adverse effect on our company as a result
of the passage of this legislation, however, the full scope of the Act has not
been determined. The Act provides for additional regulations and requirements of
publicly-traded companies which have yet to be issued.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk arising from adverse changes in the fair value of
financial instruments due to a change in interest rates, exchange rates and
equity prices. The Company's primary market risk arises from the possibility
that interest rates may change significantly and affect the fair value of the
Company's financial instruments (also known as interest rate risk).
The primary objective of Asset/Liability Management at the Company is to manage
interest rate risk and achieve reasonable stability in net interest income
throughout interest rate cycles. This is achieved by maintaining a reasonable
balance between rate sensitive earning assets and rate sensitive
interest-bearing liabilities. The amount invested in rate sensitive earning
assets compared to the amount of rate sensitive liabilities issued are the
principal factors in projecting the effect that fluctuating interest rates will
have on future net interest income and the fair value of financial instruments.
Rate sensitive earning assets and interest-bearing liabilities are those that
can be re-priced to current market rates within a given time period. Management
monitors the rate sensitivity of all interest earning assets and interest
bearing liabilities, but places particular emphasis on the upcoming year. The
Company's Asset/Liability Management policy requires risk assessment relative to
interest pricing and related terms and places limits on the risk to be assumed
by the Company.
The Company uses several tools to monitor and manage interest rate sensitivity.
One of the primary tools is simulation analysis. Simulation analysis is a method
of estimating the fair value of financial instruments, the earnings at risk, and
capital at risk under varying interest rate conditions. Simulation analysis is
used to estimate the sensitivity of the Company's net interest income and
stockholders' equity to changes in interest rates. Simulation analysis accounts
for the expected timing and magnitude of assets and liability cash flows as
interest rates change, as well as the expected timing and magnitude of deposit
flows and rate changes whether or not these deposits re-price on a contractual
basis. In addition, simulation analysis includes adjustments for the lag between
movements in market interest rates on loans and interest-bearing deposits. These
adjustments are made to reflect more accurately possible future cash flows,
re-pricing behavior and ultimately net interest income.
20
As of June 30, 2002, the Company's simulation analysis indicated that the
Company is at greatest risk in a decreasing interest rate environment. The table
that follows depicts the results of the simulation assuming one and two percent
decreases and increases in market interest rates.
Estimated Fair Value of Financial Instruments
----------------------------------------------------------------
Down Up Down Up
1 Percent 1 Percent 2 Percent 2 Percent
------------ ------------- ------------- --------------
Dollars in Thousands
Interest-earning Assets:
Loans......................................... $ 370,035 $ 362,318 $ 373,457 $ 358,609
Deposits in banks............................. 2,534 2,534 2,534 2,534
Federal funds sold............................ 11,021 11,021 11,021 11,021
Securities.................................... 41,177 38,969 41,946 39,661
------------ ------------- ------------- --------------
Total Interest-earning Assets............... 424,767 414,842 428,958 411,825
------------ ------------- ------------- --------------
Interest-bearing Liabilities
Deposits - Savings and demand................. 115,762 111,746 117,769 109,739
Deposits - Time............................... 205,731 201,501 207,846 199,386
Other borrowings.............................. 35,791 34,339 36,517 33,613
------------ ------------- ------------- --------------
Total Interest-bearing Liabilities.......... 357,284 347,586 362,132 342,738
------------ ------------- ------------- --------------
Net Difference in Fair Value..................... $ 67,483 $ 67,256 $ 66,826 $ 69,087
============ ============= ============= ==============
Change in Net Interest Income.................... $ (611) $ 517 $ (1,290) $ 1,543
============ ============= ============= ==============
21
PART II - Other Information
Item 4 - Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders (the "Annual Meeting") of Florida Community
Bank was held on April 11, 2002, to consider: (i) the election of ten directors,
each for a term of one year; (ii) the approval of a Plan of Reorganization and
Share Exchange whereby Florida Community Bank would become a wholly-owned
subsidiary of Florida Community Banks, Inc. and all of the outstanding shares of
Florida Community Bank common stock would be converted, on a one-for-one basis,
into outstanding shares of common stock of Florida Community Banks, Inc.; (iii)
approval of the 2002 Key Employee Stock Compensation Program; and (iv)
ratification of the appointment of Schauer, Taylor, Cox, Vise & Morgan, P.C., as
the independent auditors for Florida Community Bank, for the year ending
December 31, 2002;
At the Annual Meeting, 2,150,609 shares were present in person or by proxy. The
following is a summary and tabulation of the matters that were voted upon at the
Annual Meeting:
PROPOSAL I. To elect the following directors:
FOR WITHHELD
Beauford E. Davidson 2,047,755 40,866
Patrick B. Langford 2,048,040 40,582
Lewis J. Nobles, Jr. 2,088,623 0
John R. Olliff 2,088,623 0
James O'Quinn 2,088,623 0
Stephen L. Price 2,088,623 0
Bernard T. Rasmussen 2,048,040 40,582
R.A. Roberts 2,088,623 20
Daniel G. Rosbough 2,088,623 0
James E. Williams, Jr. 2,088,623 0
PROPOSAL II. Approval of a Plan of Reorganization and Share Exchange;
FOR AGAINST ABSTAIN
------------------ ------------------ ------------------
2,132,331 2,518 11,538
PROPOSAL III. Approval of the 2002 Key Employee Stock Compensation Program:
FOR AGAINST ABSTAIN
------------------ ------------------ ------------------
2,076,202 55,556 18,802
PROPOSAL IV. Ratification of the selection of Schauer, Taylor, Cox, Vise &
Morgan, P.C., as independent auditors of the Bank for the fiscal year ending
December 31, 2002;
FOR AGAINST ABSTAIN
------------------ ------------------ ------------------
2,142,474 0 8,135
22
Item 6 - Exhibits and Reports on Form 8-K
Exhibit No. Exhibit Page
(a) Financial Statements, Financial Schedules and Exhibits.
3.1 Articles of Incorporation of FCBI (included as Exhibit 3.1 to FCBI's
Registration Statement on Form 8-A filed with the SEC on April 15,
2002 and incorporated herein by reference).
3.2 By-laws of FCBI (included as Exhibit 3.2 to FCBI's Registration
Statement on Form 8-A filed with the SEC on April 15, 2002 and
incorporated herein by reference).
4.1 Subordinated Promissory Note, dated December 24, 2001, between Florida
Community Bank and Independent Bankers Bank of Florida (included as
Exhibit 4.1 to the Bank's Form 10-KSB for the year ended December 31,
2001, and incorporated herein by reference).
4.2 Specimen Common Stock Certificate of FCBI (included as Exhibit 4.1 to
FCBI's Registration Statement on Form 8-A filed with the SEC on April
15, 2002 and incorporated herein by reference).
10.1 Employment agreement with Thomas S. Junker dated December 9, 1997
(included as Exhibit 10.1 to the Bank's Registration Statement on Form
10-SB-A for the year ended December 31, 1998 and incorporated herein
by reference).
10.2 2002 Key Employee Stock Compensation Program of FCBI (included as
Appendix D to the Bank's Definitive Schedule 14-A filed with the FDIC
on March 22, 2002 and incorporated herein by reference).
10.3 Amended and Restated Trust Agreement among Florida Community Banks,
Inc. as depositor, Wilmington Trust Company as property trustee,
Wilmington Trust Company, as Delaware trustee, and Stephen L. Price,
and Thomas V. Ogletree as administrators, dated as of June 21, 2002.
10.4 Guarantee Agreement between Florida Community Banks, Inc. as
guarantor, and Wilmington Trust Company as guarantee trustee, dated as
of June 21, 2002.
10.5 Junior Subordinated Indenture between Florida Community Banks, Inc.
(as Company) and Wilmington Trust Company (as trustee), dated as of
June 21, 2002.
10.6 Term Loan Agreement between Florida Community Banks, Inc. and The
Bankers Bank, Atlanta, Georgia, dated June 13, 2002.
11 Statement of computation of earnings per common share 24
(b) Reports on Form 8-K
During the quarter ended June 30, 2002, no reports were filed for
Florida Community Bank or Florida Community Banks, Inc. on Form 8-K.
23
Exhibit 11 - Statements Re: Computation of Per Share Earnings
FLORIDA COMMUNITY BANKS, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
The following tabulation presents the calculation of basic and diluted earnings
per common share for the three-month and six-month periods ended June 30, 2001
and 2000. Average shares outstanding have been retroactively adjusted on an
equivalent share basis for the effects of the stock dividends and splits as
discussed in the notes to the financial statements.
Three Months Six Months
Ended June 30, Ended June 30,
------------------------------ -----------------------------
2002 2001 2002 2001
------------- ------------- ------------- --------------
Basic Earnings Per Share:
Net income.................................... $ 1,721,108 $ 1,561,758 $ 3,212,690 $ 2,788,924
============= ============= ============= ==============
Earnings on common shares..................... $ 1,721,108 $ 1,561,758 $ 3,212,690 $ 2,788,924
============= ============= ============= ==============
Weighted average common shares
outstanding - basic......................... 2,602,764 2,602,764 2,602,764 2,602,764
============= ============= ============= ==============
Basic earnings per common share............... $ 0.66 $ 0.60 $ 1.23 $ 1.07
============= ============= ============= ==============
Diluted Earnings Per Share:
Net income.................................... $ 1,721,108 $ 1,561,758 $ 3,212,690 $ 2,788,924
============= ============= ============= ==============
Weighted average common shares
outstanding - diluted....................... 2,613,784 2,602,764 2,607,916 2,602,764
============= ============= ============= ==============
Diluted earnings per common share............. $ 0.66 $ 0.60 $ 1.23 $ 1.07
============= ============= ============= ==============
24
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with Florida Community Banks, Inc.'s ("Company") Quarterly Report
on Form 10-Q for the period ended June 30, 2002 ("Report"), each of the
undersigned certify that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: August 12, 2002 By: /s/ Stephen L. Price
-------------------------------------------
Stephen L. Price
President and Chief Executive Officer
Date: August 12, 2002 By: /s/ Thomas V. Ogletree
-------------------------------------------
Thomas V. Ogletree
Chief Financial Officer
25
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.
FLORIDA COMMUNITY BANKS, INC.
By: /s/ Stephen L. Price August 12, 2002
--------------------------------------------- ---------------------------
Stephen L. Price Date
President and Chief Executive Officer
/s/ Thomas V. Ogletree August 12, 2002
--------------------------------------------- -----------------------
Thomas V. Ogletree Date
Chief Financial Officer
26