UNITED STATES
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 MARCH 31, 2003
[ ] 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 by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2):
Yes No X
------- -------
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 Outstanding at April 10, 2003: 3,123,316
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 sole 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.
This Form 10-Q includes certain 2002 information pertaining only to Florida
Community Bank, and the Form 10-Q for March 31, 2002 was filed with the
Securities and Exchange Commission to fulfill FCBI's obligations under SEC
Regulation 240.15d-13 and to provide relevant disclosure to FCBI's shareholders
and the public.
2
Form 10-Q
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
TABLE OF CONTENTS
Page No.
Part 1 - Financial Information
Item 1 - Consolidated Financial Statements (Unaudited)
Consolidated Statements of Financial Condition as of March 31, 2003
and December 31, 2002....................................................................... 4
Consolidated Statements of Income For The Three Months Ended
March 31, 2003 and 2002..................................................................... 5
Consolidated Statement of Shareholders' Equity For The Three Months
Ended March 31, 2003........................................................................ 6
Consolidated Statements of Cash Flows For The Three Months
Ended March 31, 2003 and 2002............................................................... 7
Notes to Consolidated Financial Statements..................................................... 8
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.................................................. 13
Item 3 - Quantitative and Qualitative Disclosures About Market Risk..................................... 18
Item 4 - Controls and Procedures........................................................................ 20
Part 2 - Other Information
Item 1 - Legal Proceedings.............................................................................. 21
Item 6 - Exhibits and Reports on Form 8-K............................................................... 21
Signatures
Certifications of Periodic Financial Reports
3
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, 2003 (Unaudited) and December 31, 2002
March 31,
2003 December 31,
(Unaudited) 2002
---------------- -----------------
Assets
Cash and due from banks...................................................... $ 21,060,573 $ 13,264,464
Federal funds sold........................................................... 25,786,000 32,902,000
Interest-bearing deposits with banks......................................... 7,240,087 12,668,201
---------------- -----------------
Cash and Cash Equivalents............................................. 54,086,660 58,834,665
Securities available for sale................................................ 2,874,977 2,874,977
Securities held-to-maturity, fair value of $29,013,271 and $34,120,018....... 28,549,156 33,339,505
Loans, net of unearned income................................................ 417,761,772 416,414,676
Allowance for loan losses.................................................... (6,722,045) (6,319,298)
---------------- -----------------
Net Loans............................................................. 411,039,727 410,095,378
Premises and equipment, net.................................................. 10,949,852 10,109,252
Accrued interest............................................................. 2,782,392 2,904,150
Foreclosed real estate....................................................... 2,733,435 --
Deferred taxes, net.......................................................... 2,576,949 1,960,513
Other assets................................................................. 1,237,497 1,329,363
---------------- -----------------
Total Assets.......................................................... $ 516,830,645 $ 521,447,803
================ =================
Liabilities and Shareholders' Equity
Liabilities
Deposits
Non-interest-bearing...................................................... $ 64,517,445 $ 54,478,258
Interest-bearing.......................................................... 352,902,586 369,456,264
---------------- -----------------
Total Deposits........................................................ 417,420,031 423,934,522
Federal Home Loan Bank advances.............................................. 50,000,000 50,000,000
Other long-term debt......................................................... 33,344 39,415
Guaranteed preferred beneficial interests in the Company's
subordinated debentures................................................... 10,000,000 10,000,000
Deferred compensation........................................................ 412,041 424,745
Accrued interest............................................................. 1,387,696 1,866,824
Other liabilities............................................................ 1,085,053 718,497
---------------- -----------------
Total Liabilities..................................................... 480,338,165 486,984,003
Shareholders' Equity
Common stock-par value $.01 per share, 10,000,000 shares
authorized, 3,123,316 shares issued and outstanding....................... 31,233 31,233
Paid-in capital.............................................................. 16,680,055 16,680,055
Retained earnings............................................................ 19,781,192 17,752,512
---------------- -----------------
Total Shareholders' Equity............................................ 36,492,480 34,463,800
---------------- -----------------
Total Liabilities and Shareholders' Equity................................... $ 516,830,645 $ 521,447,803
================ =================
See notes to the consolidated financial statements
4
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three months Ended March 31, 2003 and 2002
(Unaudited)
Three Months
Ended March 31,
2003 2002
---------------- -----------------
(Bank Only)
Interest Income
Interest and fees on loans................................................ $ 7,844,759 $ 6,453,698
Interest and dividends
Taxable securities...................................................... 380,284 523,664
Tax-exempt securities................................................... -- 1,445
Interest on federal funds sold and other interest income.................. 78,991 101,204
---------------- -----------------
Total Interest Income................................................... 8,304,034 7,080,011
---------------- -----------------
Interest Expense
Interest on deposits...................................................... 2,266,256 2,424,733
Interest on borrowed funds................................................ 552,007 383,530
---------------- -----------------
Total Interest Expense.................................................. 2,818,263 2,808,263
---------------- -----------------
Net Interest Income.......................................................... 5,485,771 4,271,748
Provision for loan losses.................................................... 300,000 330,000
---------------- -----------------
Net Interest Income After Provision for Loan Losses..................... 5,158,771 3,941,748
Noninterest Income
Customer service fees..................................................... 422,632 342,555
Insurance commissions..................................................... 2,325 7,129
Other non-interest income................................................. 201,525 185,109
Securities gain........................................................... -- 36,083
---------------- -----------------
Total Noninterest Income.............................................. 626,482 570,876
---------------- -----------------
Noninterest Expenses
Salaries and employee benefits............................................ 1,648,987 1,330,498
Occupancy and equipment expense........................................... 368,146 387,606
Other non-interest expenses............................................... 540,099 404,655
---------------- -----------------
Total Noninterest Expenses............................................ 2,557,232 2,122,759
---------------- -----------------
Income before income taxes................................................... 3,255,021 2,389,865
Provision for income tax expense............................................. 1,226,341 898,283
---------------- -----------------
Net Income................................................................... $ 2,028,680 $ 1,491,582
================ =================
Weighted Average Common Shares Outstanding-Basic............................. 3,123,316 3,123,316
Weighted Average Common Shares Outstanding-Diluted........................... 3,140,228 3,134,783
Basic Earnings Per Common Share.............................................. $ 0.65 $ 0.48
Diluted Earnings Per Common Share............................................ 0.65 0.48
See notes to the consolidated financial statements
5
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Three months Ended March 31, 2003
(Unaudited)
Common Paid-in Retained
Stock Capital Earnings Total
------------ ------------ -------------- ----------------
Balance at December 31, 2002.............. $ 31,233 $ 16,680,055 $ 17,752,512 $ 34,463,800
Net income - Three months ended
March 31, 2003......................... -- -- 2,028,680 2,028,680
------------- ------------- -------------- ----------------
Balance at March 31, 2003................. $ 31,233 $ 16,680,055 $ 19,781,192 $ 36,492,480
============= ============= ============== ================
See notes to the consolidated financial statements
6
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months Ended March 31, 2003 and 2002
(Unaudited)
Three Months
Ended March 31,
2003 2002
---------------- -----------------
(Bank Only)
Operating Activities
Net Income................................................................ $ 2,028,680 $ 1,491,582
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses............................................. 300,000 330,000
Depreciation, amortization, and accretion, net........................ 119,672 147,677
Decrease in accrued interest receivable............................... 121,758 46,997
Decrease in accrued interest payable.................................. (479,128) (289,893)
Other, net............................................................ (170,718) 945,219
---------------- -----------------
Net Cash Provided By Operating Activities............................. 1,920,264 2,671,582
---------------- -----------------
Investing Activities
Net decrease (increase) in held-to-maturity securities.................... 4,790,349 (6,495,720)
Net increase in available-for-sale securities............................. -- (27,417)
Loans made to customers, net of repayments................................ (3,977,784) (24,149,751)
Purchase of fixed assets.................................................. (960,272) (536,102)
---------------- -----------------
Net Cash Used In Investing Activities................................. (147,707) (31,208,990)
---------------- -----------------
Financing Activities
Net increase (decrease) in noninterest-bearing deposits................... 19,809,810 (5,176,959)
Net (decrease) increase in interest-bearing deposits...................... (26,324,301) 43,768,221
Repayment of short-term borrowings........................................ (6,071) (1,086,000)
---------------- -----------------
Net Cash (Used In) Provided By Financing Activities................... (6,520,562) 37,505,262
---------------- -----------------
Net (Decrease) Increase in Cash and Cash Equivalents......................... (4,748,005) 8,967,854
Cash and Cash Equivalents at Beginning of Period............................. 58,834,665 23,039,128
---------------- -----------------
Cash and Cash Equivalents at End of Period................................... $ 54,086,660 $ 32,006,982
================ =================
See notes to the consolidated financial statements
7
FLORIDA COMMUNITY BANKS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
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 three-month period ended March 31, 2003
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2003.
The statement of financial condition at December 31, 2002, 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.
Certain financial information contained in this Form 10-Q represents solely the
financial information of the subsidiary bank as the actual business combination
effecting the acquisition of the Bank by the Company did not occur until April
15, 2002 (see Note G).
For further information, refer to the financial statements and footnotes thereto
for Florida Community Banks, Inc. for the year ended December 31, 2002, included
in Form 10-K filed in March 2003.
Note B - Critical Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
The determination of the adequacy of the allowance for loan losses is based on
estimates that are particularly susceptible to significant changes in the
economic environment and market conditions. In connection with the determination
of the estimated losses on loans, management obtains independent appraisals for
significant collateral. While management uses available information to recognize
losses on loans, further reductions in the carrying amounts of loans may be
necessary based on changes in local economic conditions. In addition, regulatory
agencies, as an integral part of their examination process, periodically review
the estimated losses on loans. Such agencies may require the Bank to recognize
8
FLORIDA COMMUNITY BANKS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
Note B - Critical Accounting Policies - Continued
additional losses based on their judgments about information available to them
at the time of their examination. Because of these factors, it is reasonably
possible that the estimated losses on loans may change materially in the near
term. However, the amount of the change that is reasonably possible cannot be
estimated.
Note C - Income Taxes
The effective tax rates of approximately 37.7% and 37.6% for the three months
ended March 31, 2003 and 2002, 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 D - 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).
At March 31, 2003, the Bank 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 E - Shareholders' Equity
In December 2002, the Company declared a stock split of 1.2 shares for each of
the Company's outstanding shares of common stock. This effect of this stock
split has been retroactively reflected in the financial statements. All
references to weighted average shares outstanding and per share amounts included
in the accompanying financial statements and notes reflect the stock split and
its retroactive effects.
Note F - Segment Information
All of the Company's offices offer similar products and services, are located in
the same geographic region, and serve the same customer 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.
9
FLORIDA COMMUNITY BANKS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
Note G - Business Reorganization
On April 11, 2002 a majority of the shareholders of the Bank approved a Plan of
Reorganization ("Plan") whereby the Bank became 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. Consolidated
capital, assets, liabilities and operations after the reorganization, which
occurred on April 15, 2002, were substantially the same as reported by the Bank
before the reorganization.
The Plan allowed dissenting shareholders to exercise the right to be paid for
their shares in cash. There were no dissenting shareholders.
Note H - Stock-Based Compensation
The Company has long-term incentive stock option plans and an employee stock
purchase plan. The Company accounts for those plans under the recognition and
measurement principles of APB Opinion 25, Accounting for Stock Issued to
Employees, and related interpretations using the intrinsic value based method,
as permitted by Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-based Compensation. In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure.
This statement amends SFAS No. 123 to provide alternative methods of transition
for an entity that voluntarily changes to the fair value based method of
accounting for stock-based employee compensation. It amends the disclosure
provisions of that Statement to require prominent disclosure about the effects
on reported net income of an entity's accounting policy decisions with respect
to stock-based employee compensation. This Statement also amends APB Opinion No.
28 to require disclosure about those effects in interim financial information.
This Statement is effective for financial statements for fiscal years ending
after December 15, 2002 and for financial reports containing condensed financial
statements for interim periods beginning after December 15, 2002. No stock-based
employee compensation cost is reflected in net income for these plans.
Pro forma information regarding net income and earnings per share is presented
as if the Company had accounted for its employee stock options under the fair
value method, as prescribed by SFAS No. 123. The fair value for these options
was estimated at the dates of grant using the Black-Scholes option pricing
model.
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options.
10
FLORIDA COMMUNITY BANKS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
Note H - Stock-Based Compensation - Continued
The Company granted 6,000 options in 2003, at an exercise price of $20.00 per
share. These options vest 0 percent on the grant date, 40 percent at the end of
the first year and 20 percent at the end of each of the next three years. Other
options granted include 55,200 (split adjusted) granted in 2001 at an exercise
price of $15.00 per share, with similar terms and conditions as the 2003
options. The compensation expense related to the granted options has been
allocated over the vesting period for purposes of pro forma disclosures. Options
expire ten years after the date of grant.
The Company's actual and pro forma information follows:
Three Months Ended
March 31, March 31,
2003 2002
---------------- -----------------
(Bank Only)
Net Income
As Reported.................................................................. $ 2,028,680 $ 1,491,582
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of tax................................................................ 5,532 11,676
---------------- -----------------
Pro forma net income......................................................... $ 2,023,148 $ 1,479,906
================ =================
Basic earnings per share:
As Reported.................................................................. $ 0.65 $ 0.48
================ ================
Pro forma.................................................................... $ 0.65 $ 0.48
================ ================
Diluted earnings per share:
As Reported.................................................................. $ 0.65 $ 0.48
================ ================
Pro forma.................................................................... $ 0.64 $ 0.47
================ ================
Note I - Commitments and Contingencies
In the normal course of business the Company enters into commitments to extend
credit, which are agreements to lend to customers 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 generally require a
payment of fees. Since many of the commitments are expected to expire without
being drawn upon, the total amounts do not necessarily represent expected future
cash flows.
11
FLORIDA COMMUNITY BANKS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
Standby letters of credit are commitments issued by the Company to guarantee the
performance of a customer to a third party. These guarantees are primarily
issued to support public and private borrowing arrangements, including
commercial paper, bond financing and similar transactions, and expire in
decreasing amounts with terms ranging from one to four years. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers.
The following represents the Company's commitments to extend credit and standby
letters of credit as of March 31, 2003 and December 31, 2002:
Period Ended
March 31, December 31,
2003 2002
---------------- -----------------
Commitments to extend credit................................................. $ 92,452,000 $ 94,694,000
Standby and commercial letters of credit..................................... 5,290,000 5,852,000
---------------- -----------------
Total commitments and contingencies.......................................... $ 97,742,000 $ 100,546,000
================ =================
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12
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
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 March 31, 2003, Form 10-Q, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002.
The financial analysis that follows represents Bank only information for the
first quarter of 2002 as FCBI had no activity prior to April 15, 2002, the
actual date of the acquisition of the Bank. See Note F to the consolidated
financial statements as of March 31, 2003, included herein.
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 real estate
development, 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
March 31, 2003 compared to December 31, 2002
The Bank continued its operations concentrating in the origination of loans in
southwestern Florida. As discussed more fully below, loan growth was modest
during the first quarter of 2003. No significant changes in operating goals or
policies occurred during the first quarter of 2003. Loans
13
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
Loans comprised the largest single category of the Bank's earning assets on
March 31, 2003. Loans, net of unearned income and reserve for loan losses,
totaled 79.6% of total assets at March 31, 2003 compared to 78.6% of total
assets at December 31, 2002. During the quarter, loans increased approximately
$1.2 million, a significant decrease in the growth rate that the Company has
experienced over the past two years. The Company originated approximately $41.8
million in loans or lines of credit during the first quarter of 2003. In
contrast, during the first quarter of 2002, the Company originated approximately
$79.3 million in loans or lines of credit. The lower loan origination activity
occurred because loan demand softened in the Company's primary market area and,
to a lesser extent, the lower level of interest rates on loans influenced
management to reduce extensions of credit for real estate and other loan
categories.
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 Bank. Investment securities and other short-term
investments decreased $13 million during the first quarter of 2003 as
certificates of deposits decreased $26 million, partially offset by increases in
other deposit categories of $20 million.
Asset Quality
From December 31, 2002 to March 31, 2003, the Bank's asset quality remained
satisfactory 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 82.1% to 81.9%. The percentage of nonperforming assets to
total assets increased from 1.48% to 1.59%, and the percentage of nonperforming
loans to total loans increased from 1.52% to 1.61%. These ratios were affected
by a $514 thousand increase in nonperforming loans during the first quarter of
2003. During the past nine months, nonperforming loans have increased
significantly, primarily in part to three relatively large real estate loan
borrowers, one of which became owned real estate during the first quarter of
2003. In response to the increase in non-performing loans, the allowance for
loan losses also has been increased from 1.21% of loans at March 31, 2002 to
1.61% at March 31, 2003, an increase of $2.6 million in the reserve.
Subsequent to March 31, 2003 a customer having significant indebtedness to the
Bank declared bankruptcy (Chapter 11). As of April 23, 2003 the customer had
five loans outstanding totaling $8,116,355, all of which were current at that
date. Based on an initial review of the customer's borrowing relationships with
the Bank, the value of the collateral (primarily real estate) securing the loans
exceeds the principal and interest due on the loans. While it is too soon to
determine the ultimate outcome of the bankruptcy proceedings, the Company
believes the loan loss allowance is adequate to absorb any losses that might
result from the customer's indebtedness.
During the first quarter of 2003, recoveries on loans previously charged-off
exceeded the amount of loans charged-off by $103 thousand.
14
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
Deposits
Total deposits of $417.4 million at March 31, 2003 represented a decrease of
$6.5 million (1.6%) from total deposits of $423.9 million at year-end 2002. The
decrease was attributable to certificates of deposit maturities from two
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 March 31, 2003, brokered
certificates of deposit totaled approximately $78.4 million and Internet
certificates of deposit totaled approximately $36.8 million.
Shareholders' Equity
Shareholders' equity increased $2.0 million from December 31, 2002 to March 31,
2003, due to retained net income during the first quarter of 2003. On March 31,
2003 the Company and the Bank exceeded the regulatory minimums and qualified as
well-capitalized under the regulations of the Federal Reserve System, the State
of Florida, and the FDIC.
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 Bank's 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 Bank 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 for the Bank to meet the needs of its customer base,
but to maintain an appropriate balance between interest-sensitive assets and
interest-sensitive liabilities so that the Bank 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 Bank, 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 or principal repayments of investment
securities. Loans that mature or reprise, in one year or less, equaled
approximately $266.7 million at March 31, 2003, and there are approximately $1.7
million of investment securities repayments expected within one year.
The liability portion of the balance sheet provides liquidity through deposits
to various customers' interest-bearing and noninterest-bearing deposit accounts,
brokered and Internet certificated of deposit. At March 31, 2003, funds also
were available through the purchase of federal funds from correspondent
commercial banks from available lines of up to an aggregate of $30 million and
credit availability at the Federal Home Loan Bank of up to 15% of assets
(approximately $77 million) of which $27 million is available and unused. At
March 31, 2003, the bank had unused collateral totaling approximately $13.5
million, thus limiting the advances potentially available to that amount.
15
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
Capital Resources
A strong capital position is vital to the continued profitability of the Bank
because it promotes depositor and investor confidence and provides a solid
foundation for future growth of the organization. The Bank has provided a
significant portion of its capital requirements through the retention of
earnings.
Bank regulatory authorities are placing increased emphasis on the maintenance of
adequate capital. In 1990, new risk-based capital requirements became effective.
The guidelines take into consideration risk factors, as defined by regulators,
associated with various categories of assets, both on and off the balance sheet.
Under the guidelines, capital strength is measured in two tiers, which are used
in conjunction with risk-adjusted assets to determine the risk-based capital
ratios. The Bank's Tier I capital, which consists of common equity less
goodwill, amounted to $45.9 million at March 31, 2003. Tier II capital
components include supplemental capital components such as qualifying allowance
for loan losses and qualifying subordinated debt. Tier I capital plus the Tier
II capital components are referred to as Total Risk-Based capital and was $51.8
million at March 31, 2003.
The Bank's current capital positions exceed the regulatory guidelines.
Management has reviewed and will continue to monitor the Bank's asset mix and
product pricing, and the loan loss allowance, which are the areas determined to
be most affected by these new requirements.
RESULTS OF OPERATIONS
Three months ended March 31, 2003 and 2002
Summary
Net earnings of the Bank for the three months ended March 31, 2003, totaled
$2,028,680 compared to $1,491,582 for the same period in 2002, representing a
36.0% increase. The increase was due principally to a $1.2 million increase in
net interest income. As explained more fully below, the increase in net interest
income was due to an increased average volume of loans and lower
interest-bearing deposit 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 Bank's net
income. Net interest income of the Bank during the three months ended March 31,
2003 increased $1.2 million (28.4%) from the same period in 2002. This increase
was due primarily to the increase in loan interest and fee income and, to a
lesser extent, a decrease in deposit interest expense. Both loans and deposits
experienced increased volume with lower overall rates. Earning assets averaged
$482.0 million during the first quarter of 2003 compared to $388.8 million in
2002, with all of the increase due to loan volume. Average interest-bearing
liabilities increased from $288.5 million during the first quarter of 2002 to
$395.4 million during the same period in 2003. Interest bearing checking
accounts (money market and NOW accounts) averaged $11.7 million higher in 2003
compared to the first quarter of 2002 reflecting an increase of 15.3%, as did
average certificates of deposit (up $40.1 million) increasing 21.8%.
16
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
The Bank was in an interest sensitive position during 2003 and 2002 with a
larger dollar amount of interest-earning assets subject to repricing than
interest-bearing liabilities. Therefore, during 2002 when rates were generally
declining, the Bank's loan and investment portfolios rapidly repriced at lower
rates. By the first quarter of 2003 significant rate declines on deposits
continued while the rate declines on earning assets began to slow. The net
effect was an increase in the net interest margin from 4.36% in first quarter of
2002 to 4.64% in 2003.
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 $300,000 for the three months ended
March 31, 2003 compared to $330,000 during the same period in 2002. Recoveries
exceeded charge-offs by approximately $103 thousand and $8 thousand for the
three months ended March 31, 2003 and 2002, respectively. The reserve for loan
losses as a percent of outstanding loans, net of unearned income, was 1.61% at
March 31, 2003, compared to 1.52% at year-end 2002.
Noninterest Income
Noninterest income for the three months ended March 31, 2003, was $626,482
compared to $570,876 for the same period of 2002, an increase of 9.7%. The
increase was primarily due to an increase in customer service fees of $80
thousand. During 2003, the Bank earned increased fees for cash provided to
customers and for certain services due primarily to volume.
Noninterest Expenses
Noninterest expenses for the three months ended March 31, 2003 totaled
$2,557,232 reflecting a 20.4% increase from the same period of 2002. The primary
components of noninterest expenses are salaries and employee benefits, which
increased $327 thousand for the three months ended March 31, 2003 compared to
the same period in 2002, caused by a added staff for branches and mortgage
brokerage operations.
Income Taxes
The provision for income taxes of $1,226,341 for the three months ended March
31, 2003, increased $328 thousand compared to the same period of 2002, 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.
Other Accounting Issues
In September 2002, the Auditing Standards Board issued SAS No. 98, Omnibus
Statement on Auditing Standards - 2002. This statement revises and amends
several previously issued Statements on Auditing Standards. The changes required
impose enhanced quality controls and audit considerations on a firm of
independent auditors in the conduct of their audit of a company's financial
statements. The additional requirements primarily relate to more descriptive
guidance on the application of auditing procedures, the
17
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
auditors report and related disclosures and supplementary information. This SAS
No. 98 was effective upon issuance except for the amendment to SAS No. 70, which
is effective for reports issued on or after January 1, 2003. The impact on the
audit of the Company's consolidated financial statements resulting from the
issuance of this auditing standard was not material.
In January 2003, the Auditing Standards Board issued SAS No. 101, Auditing Fair
Value Measurements and Disclosures. This statement establishes standards on
auditing the measurement and disclosure of assets, liabilities, and specific
components of equity presented or disclosed at fair value in financial
statements. This SAS is effective for audits of financial statements for periods
beginning on or after June 15, 2003. 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 January 2003, the FASB issued FIN 46, which clarifies the application of
Accounting Research Bulletin ("ARB") 51, Consolidated Financial Statements, to
certain entities (called variable interest entities) in which equity investors
do not have the characteristics of a controlling financial interest or do not
have sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. The disclosure
requirements of this Interpretation are effective for all financial statements
issued after January 31, 2003. The consolidation requirements apply to all
variable interest entities created after January 31, 2003. In addition, public
companies must apply the consolidation requirements to variable interest
entities that existed prior to February 1, 2003 and remain in existence as of
the beginning of annual or interim periods beginning after June 15, 2003.
Management is currently assessing the impact of FIN 46, and does not expect this
Interpretation to have a material impact to the Consolidated Financial
Statements.
On April 30, 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and clarifies
financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities
under SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities. The provisions of SFAS No. 149 are effective for fiscal quarters
beginning after June 15, 2003. Management does not believe the provisions of
this standard will have a material impact on results of future operations.
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 Bank's primary market risk arises from the possibility that
interest rates may change significantly and affect the fair value of the Bank's
financial instruments (also known as interest rate risk).
The primary objective of Asset/Liability Management at the Bank 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
18
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
period. Management monitors the rate sensitivity of all interest earning assets
and interest bearing liabilities, but places particular emphasis on the upcoming
year. The Bank'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 Bank.
The Bank 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 Bank'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.
As of March 31, 2003, the Bank's simulation analysis indicated that the Bank 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......................................... $ 428,203 $ 415,437 $ 433,819 $ 409,381
Deposits in banks............................. 28,301 28,301 28,301 28,301
Federal funds sold............................ 25,786 25,786 25,786 25,786
Securities.................................... 29,521 28,409 29,932 27,756
------------ ------------- ------------- --------------
Total Interest Earning Assets............... 511,811 497,933 517,838 491,224
------------ ------------- ------------- --------------
19
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
Estimated Fair Value of Financial Instruments
----------------------------------------------------------------
Down Up Down Up
1 Percent 1 Percent 2 Percent 2 Percent
------------ ------------- ------------- --------------
Interest Bearing Liabilities:
Deposits - Savings and demand................. 128,870 124,442 131,084 122,228
Deposits - Time............................... 228,728 223,766 231,210 221,285
Other borrowings.............................. 51,115 48,885 52,230 47,770
------------ ------------- ------------- --------------
Total Rate Sensitive Liabilities............ 408,713 397,093 414,524 391,283
------------ ------------- ------------- --------------
Net Difference in Fair Value..................... $ 103,098 $ 100,840 $ 103,314 $ 99,941
============ ============= ============= ==============
Change in Net Interest Income.................... $ (455) $ 642 $ (1,012) $ 1,273
============ ============= ============= ==============
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures
The Company has evaluated the effectiveness of its disclosure controls and
procedures pursuant to Securities Exchange Act Rule 13a-14. The evaluation was
performed under the supervision and with the participation of management,
including the chief executive officer and the chief financial officer, within 90
days prior to the date of the filing of this annual report. Based on this
evaluation, the chief executive officer and chief financial officer have
concluded that the disclosure controls and procedures are effective in ensuring
that all material information required to be disclosed in this annual report has
been communicated to them in a manner appropriate to allow timely decisions
regarding required disclosure.
Changes in internal controls
Subsequent to the date of their evaluation, there were no significant changes in
internal controls or other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
[The remainder of this page intentionally left blank]
20
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
PART 2 - Other Information
Item 1 - Legal Proceedings
In the ordinary course of business, the Company is subject to legal proceedings,
which involve claims for substantial monetary relief. However, based upon the
advice of legal counsel, management is of the opinion that any legal
proceedings, individually or in the aggregate, will not have a material adverse
effect on the Company's financial condition or results of operations.
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,
2002, 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).
10.2 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).
10.4 Guarantee Agreement between Florida Community Banks, Inc. as
guarantor, and Wilmington Trust Company as guarantee trustee, dated as
of June 21, 2002 (included as Exhibit 10.4 to the Company's Form 10-Q
for the quarter ended June 30, 2002, and incorporated herein by
reference).
10.5 Junior Subordinated Indenture between Florida Community Banks, Inc.
(as Company) and Wilmington Trust Company (as trustee), dated as of
June 21, 2002 (included as Exhibit 10.5 to the Company's Form 10-Q for
the quarter ended June 30, 2002, and incorporated herein by
reference).
21
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
Exhibit No. Exhibit Page
10.6 Term Loan Agreement between Florida Community Banks, Inc. and The
Bankers Bank, Atlanta, Georgia, dated June 13, 2002 (included as
Exhibit 10.6 to the Company's Form 10-Q for the quarter ended June 30,
2002, and incorporated herein by reference).
11 Statement re: computation of earnings per common share 24
99.1 Code of Ethics (included as Exhibit 99.1 to the Company's Form 8-K
filed on March 3, 2003, and incorporated herein by reference.)
99.2 Chief Executive Officer - Certification pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 25
99.3 Chief Financial Officer - Certification pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 25
(b) Reports on Form 8-K
On January 29, 2003 Florida Community Banks, Inc. filed a current
report on Form 8-K in which it furnished a press release announcing
its financial results for the year-ended December 31, 2002, pursuant
to Item 9 in satisfaction of Item 12 -- Disclosure of Results of
Operations and Financial Condition in accordance with Guidelines
issued by the Securities and Exchange Commission in Release 33-8216. A
copy of this press release, dated January 29, 2003, was attached as an
exhibit to the current report on Form 8-K.
On April 16, 2003 Florida Community Banks, Inc. filed a current report
on Form 8-K in which it furnished a press release announcing its
financial results for the three-month period ended March 31, 2003,
pursuant to Item 9 in satisfaction of Item 12 -- Disclosure of Results
of Operations and Financial Condition in accordance with Guidelines
issued by the Securities and Exchange Commission in Release 33-8216. A
copy of this press release, dated April 16, 2003, was attached as an
exhibit to the current report on Form 8-K.
22
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
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 May 14, 2003
--------------------------------------------- ------------
Stephen L. Price Date
President and Chief Executive Officer
/s/ Thomas V. Ogletree May 14, 2003
--------------------------------------------- ------------
Thomas V. Ogletree Date
Chief Financial Officer
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 periods ended March 31, 2003 and 2002.
Average shares outstanding have been retroactively adjusted on an equivalent
share basis for the stock split as discussed in the notes to the consolidated
financial statements.
Three Months
Ended March 31
2003 2002
------------- --------------
(Bank Only)
Basic Earnings Per Share:
Net income................................................................... $ 2,028,680 $ 1,491,582
============= ==============
Earnings on common shares.................................................... $ 2,028,680 $ 1,491,582
============= ==============
Weighted average common shares
outstanding - basic........................................................ 3,123,316 3,123,316
============= ==============
Basic earnings per common share.............................................. $ 0.65 $ 0.48
============= ==============
Diluted Earnings Per Share:
Net income................................................................... $ 2,028,680 $ 1,491,582
============= ==============
Earnings on common shares.................................................... $ 2,028,680 $ 1,491,582
============= ==============
Weighted average common shares
outstanding - diluted...................................................... 3,140,228 3,134,783
============= ==============
Diluted earnings per common share............................................ $ 0.65 $ 0.48
============= ==============
24
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
EXHIBIT 99.2
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 March 31, 2003 ("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: May 14, 2003 By: /s/ Stephen L. Price
-------------------------------------
Stephen L. Price
President and Chief Executive Officer
EXHIBIT 99.3
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 March 31, 2003 ("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: May 14, 2003 By: /s/ Thomas V. Ogletree
-------------------------------------
Thomas V. Ogletree
Chief Financial Officer
25
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
CERTIFICATIONS
I, Stephen L. Price, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Florida Community
Banks, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 14, 2003
/s/ Stephen L. Price
- ----------------------------------
Stephen L. Price
Chief Executive Officer
26
FLORIDA COMMUNITY BANKS, INC.
March 31, 2003
CERTIFICATIONS
I, Thomas V. Ogletree, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Florida Community
Banks, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 14, 2003
/s/ Thomas V. Ogletree
- ----------------------------------
Thomas V. Ogletree
Chief Financial Officer
27