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 JUNE 30, 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 August 5, 2003: 3,123,316
Form 10-Q
FLORIDA COMMUNITY BANKS, INC.
June 30, 2003
TABLE OF CONTENTS
Page No.
Part I - Financial Information
Item 1 - Consolidated Financial Statements (Unaudited)
Consolidated Statements of Financial Condition as of June 30, 2003
and December 31, 2002....................................................................... 3
Consolidated Statements of Income For The Three Months Ended
June 30, 2003 and 2002...................................................................... 4
Consolidated Statements of Income For The Six Months Ended
June 30, 2003 and 2002...................................................................... 5
Consolidated Statement of Shareholders' Equity For The Six Months
Ended June 30, 2003......................................................................... 6
Consolidated Statements of Cash Flows For The Six Months
Ended June 30, 2003 and 2003................................................................ 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..................................... 20
Item 4 - Controls and Procedures........................................................................ 21
Part II - Other Information
Item 1 - Legal Proceedings.............................................................................. 22
Item 4 - Submission of Matters to a Vote of Security Holders............................................ 22
Item 6 - Exhibits and Reports on Form 8-K............................................................... 23
Signatures
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 2003 (Unaudited) and December 31, 2002
June 30,
2003 December 31,
(Unaudited) 2002
Assets
Cash and due from banks................................................... $ 16,919,013 $ 13,264,464
Federal funds sold........................................................ 42,534,000 32,902,000
Interest-bearing deposits with banks...................................... 11,863,240 12,668,201
---------------- -----------------
Cash and Cash Equivalents............................................. 71,316,253 58,834,665
Securities available for sale................................................ 2,874,977 2,874,977
Securities held-to-maturity, fair value of $24,097,958 and $34,120,018....... 23,422,714 33,339,505
Loans, net of unearned income................................................ 419,690,362 416,414,676
Allowance for loan losses.................................................... (6,999,241) (6,319,298)
---------------- -----------------
Net Loans............................................................. 412,691,121 410,095,378
Premises and equipment, net.................................................. 11,311,225 10,109,252
Accrued interest............................................................. 2,821,895 2,904,150
Foreclosed real estate....................................................... 2,733,435 --
Deferred taxes, net.......................................................... 3,341,990 1,960,513
Other assets................................................................. 1,101,551 1,329,363
---------------- -----------------
Total Assets.......................................................... $ 531,615,161 $ 521,447,803
================ =================
Liabilities and Shareholders' Equity
Liabilities
Deposits
Non-interest-bearing...................................................... $ 71,599,373 $ 54,478,258
Interest-bearing.......................................................... 362,525,887 369,456,264
---------------- -----------------
Total Deposits........................................................ 434,125,260 423,934,522
Federal Home Loan Bank advances.............................................. 45,500,000 50,000,000
Other long-term debt......................................................... 30,945 39,415
Guaranteed preferred beneficial interests in the Company's
subordinated debentures................................................... 10,000,000 10,000,000
Deferred compensation........................................................ 399,337 424,745
Accrued interest............................................................. 1,328,231 1,866,824
Other liabilities............................................................ 1,611,583 718,497
---------------- -----------------
Total Liabilities..................................................... 492,995,356 486,984,003
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......................................................... 21,908,517 17,752,512
---------------- -----------------
Total Shareholders' Equity............................................ 38,619,805 34,463,800
---------------- -----------------
Total Liabilities and Shareholders' Equity................................... $ 531,615,161 $ 521,447,803
================ =================
See notes to consolidated financial statements
3
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three months Ended June 30, 2003 and 2002
(Unaudited)
Three Months
Ended June 30,
2003 2002
---------------- -----------------
Interest Income
Interest and fees on loans................................................ $ 7,955,513 $ 6,968,466
Interest and dividends
Taxable securities...................................................... 340,600 545,654
Tax-exempt securities..................................................... -- 1,431
Interest on federal funds sold and other interest income.................. 150,924 116,698
---------------- -----------------
Total Interest Income................................................. 8,447,037 7,632,250
---------------- -----------------
Interest Expense
Interest on deposits...................................................... 2,181,406 2,538,692
Interest on borrowed funds................................................ 555,203 374,517
---------------- -----------------
Total Interest Expense................................................ 2,736,609 2,913,209
---------------- -----------------
Net Interest Income.......................................................... 5,710,428 4,719,041
Provision for loan losses.................................................... 300,000 280,000
---------------- -----------------
Net Interest Income After Provision for Loan Losses.......................... 5,410,428 4,439,041
Noninterest Income
Customer service fees..................................................... 469,837 431,055
Insurance commissions..................................................... 2,495 10,995
Other non-interest income................................................. 193,844 106,775
---------------- -----------------
Total Noninterest Income.............................................. 666,176 548,825
---------------- -----------------
Noninterest Expenses
Salaries and employee benefits............................................ 1,719,684 1,378,715
Occupancy and equipment expense........................................... 391,080 384,754
Other non-interest expenses............................................... 536,653 479,192
---------------- -----------------
Total Noninterest Expenses............................................ 2,647,417 2,242,661
---------------- -----------------
Income before income taxes................................................... 3,429,187 2,745,205
Provision for income tax expense............................................. 1,301,862 1,024,097
---------------- -----------------
Net Income................................................................... $ 2,127,325 $ 1,721,108
================ =================
Earnings Per Common Share
Basic..................................................................... $ 0.68 $ 0.55
Diluted................................................................... 0.68 0.55
Cash Dividends Declared
Cash dividends declared per common share.................................. $ 0.00 $ 0.35
Weighted Average Shares Outstanding
Basic..................................................................... 3,123,316 3,123,316
Diluted................................................................... 3,142,273 3,140,456
See notes to consolidated financial statements
4
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Six months Ended June 30, 2003 and 2002
(Unaudited)
Six Months
Ended June 30,
2003 2002
---------------- -----------------
Interest Income
Interest and fees on loans................................................ $ 15,800,272 13,393,735
Interest and dividends
Taxable securities...................................................... 720,884 1,069,318
Tax-exempt securities................................................... -- 2,876
Interest on federal funds sold and other interest income.................. 229,915 217,904
---------------- -----------------
Total Interest Income................................................. 16,751,071 14,683,833
---------------- -----------------
Interest Expense
Interest on deposits...................................................... 4,447,662 4,963,425
Interest on borrowed funds................................................ 1,107,210 758,047
---------------- -----------------
Total Interest Expense................................................ 5,554,872 5,721,472
---------------- -----------------
Net Interest Income.......................................................... 11,196,199 8,962,361
Provision for loan losses.................................................... 600,000 610,000
---------------- -----------------
Net Interest Income After Provision for Loan Losses.......................... 10,596,199 8,352,361
Noninterest Income
Customer service fees..................................................... 892,469 725,999
Insurance commissions..................................................... 4,820 18,124
Other non-interest income................................................. 395,369 367,923
Securities gain........................................................... -- 36,083
---------------- -----------------
Total Noninterest Income.............................................. 1,292,658 1,148,129
---------------- -----------------
Noninterest Expenses
Salaries and employee benefits............................................ 3,368,671 2,709,213
Occupancy and equipment expense........................................... 759,226 772,360
Other non-interest expenses............................................... 1,076,752 883,847
---------------- -----------------
Total Noninterest Expenses............................................ 5,204,649 4,365,420
---------------- -----------------
Income before income taxes................................................... 6,684,208 5,135,070
Provision for income tax expense............................................. 2,528,203 1,922,380
---------------- -----------------
Net Income................................................................... $ 4,156,005 $ 3,212,690
================ =================
Earnings Per Common Share
Basic..................................................................... $ 1.33 $ 1.03
Diluted................................................................... 1.32 1.02
Cash Dividends Declared
Cash dividends declared per common share.................................. $ 0.00 $ 0.35
Weighted Average Shares Outstanding
Basic..................................................................... 3,123,316 3,123,316
Diluted................................................................... 3,139,884 3,139,703
See notes to consolidated financial statements
5
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Six months Ended June 30, 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 - Six months ended
June 30, 2003.......................... -- -- 4,156,005 4,156,005
------------- ------------- -------------- ----------------
Balance at June 30, 2003.................. $ 31,233 $ 16,680,055 $ 21,908,517 $ 38,619,805
============= ============= ============== ================
See notes to consolidated financial statements
6
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months Ended June 30, 2003 and 2002
(Unaudited)
Six Months
Ended June 30,
2003 2002
---------------- -----------------
Operating Activities
Net Income................................................................ $ 4,156,005 $ 3,212,690
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses............................................. 600,000 610,000
Depreciation, amortization, and accretion, net........................ 363,580 288,942
(Increase) decrease in accrued interest receivable.................... 82,255 (7,773)
Increase in accrued interest payable.................................. (538,593) 232,068
Other, net............................................................ (295,317) 19,120
---------------- -----------------
Net Cash Provided By Operating Activities............................. 4,367,930 4,355,047
---------------- -----------------
Investing Activities
Net decrease (increase) in held-to-maturity securities.................... 9,916,791 (6,408,181)
Net decrease in available-for-sale securities............................. -- 27,417
Loans made to customers, net of repayments................................ (3,275,686) (48,854,417)
Purchase of fixed assets, net............................................. (1,484,750) (1,232,190)
Net (increase) decrease in other real estate owned........................ (2,733,435) (68,343)
---------------- -----------------
Net Cash Provided By (Used In) Investing Activities................... 2,422,920 (56,535,714)
---------------- -----------------
Financing Activities
Net increase (decrease) in noninterest-bearing deposits................... 17,121,115 (1,764,701)
Net (decrease) increase in interest-bearing deposits...................... (6,930,377) 59,668,965
Dividends paid............................................................ -- (1,093,161)
Repayment of short-term borrowings........................................ -- (1,086,000)
Repayment of subordinated note............................................ -- (5,000,000)
Repayment of Federal Home Loan Bank advances.............................. (4,500,000) (7,500,000)
Issuance of subordinated floating rate deferrable interest debentures..... -- 10,000,000
---------------- -----------------
Net Cash Provided By Financing Activities............................. 5,690,738 53,225,103
---------------- -----------------
Net Increase in Cash and Cash Equivalents.................................... 12,481,588 1,044,436
Cash and Cash Equivalents at Beginning of Period............................. 58,834,665 23,039,128
---------------- -----------------
Cash and Cash Equivalents at End of Period................................... $ 71,316,253 $ 24,083,564
================ =================
See notes to consolidated financial statements
7
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003
(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, 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.
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
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.
8
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003
(Unaudited)
Note C - Income Taxes
The effective tax rates of approximately 37.8% and 37.4% for the three months
ended June 30, 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 June 30, 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 CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003
(Unaudited)
Note G - Stock-Based Compensation
The Company has long-term incentive stock option plans. 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.
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.
10
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003
(Unaudited)
Note G - Stock-Based Compensation - Continued
The Company's actual and pro forma information follows:
Six Months Ended
June 30, June 30,
2003 2002
---------------- -----------------
Net Income
As Reported.................................................................. $ 4,156,005 $ 3,212,690
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of tax................................................................ 11,166 23,352
---------------- -----------------
Pro forma net income......................................................... $ 4,144,839 $ 3,189,338
================ =================
Basic earnings per share:
As Reported.................................................................. $ 1.33 $ 1.03
================ ================
Pro forma.................................................................... $ 1.33 $ 1.02
================ ================
Diluted earnings per share:
As Reported.................................................................. $ 1.32 $ 1.02
================ ================
Pro forma.................................................................... $ 1.32 $ 1.02
================ ================
Note H - 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 commitments may expire without being drawn upon, the
total reported above do not necessarily represent expected future cash flows.
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.
11
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003
(Unaudited)
Note H - Commitments and Contingencies - Continued
The following represents the Company's commitments to extend credit and standby
letters of credit as of June 30, 2003 and December 31, 2002:
Period Ended
-----------------------------------
June 30, December 31,
2003 2002
---------------- -----------------
Commitments to extend credit................................................. $ 107,610,000 $ 94,694,000
Standby and commercial letters of credit..................................... 4,699,000 5,852,000
---------------- -----------------
Total commitments and contingencies.......................................... $ 106,949,000 $ 100,546,000
================ =================
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12
FLORIDA COMMUNITY BANKS, INC.
June 30, 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 June 30, 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.
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
June 30, 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 six months of 2003. No significant changes in operating goals
or policies occurred during 2003.
13
FLORIDA COMMUNITY BANKS, INC.
June 30, 2003
Loans
Loans comprised the largest single category of the Company's earning assets on
June 30, 2003. Loans, net of unearned income and reserve for loan losses,
totaled 79.0% of total assets at June 30, 2003 compared to 79.9% of total assets
at December 31, 2002. During the first six months of 2003, loans increased
approximately $3.3 million, a relatively small increase compared with recent
periods. The rapid influx of population to southwest Florida continued to
influence the demand for real estate loans, particularly construction and
development loans. That demand was tempered somewhat by the national economic
conditions, which included depressed stock market values, increased job losses,
and lower economic growth.
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 decreased $300 thousand during the first six months of 2003 and
totaled $69 million at June 30, 2003.
Asset Quality
From December 31, 2002 to June 30, 2003, the Company's asset quality improved
slightly 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)
increased from 82.1% to 92.3%. The percentage of nonperforming assets to total
assets decreased from 1.48% to 1.43%, and the percentage of nonperforming loans
to total loans decreased from 1.85% to 1.81%. These ratios were affected by a
$113 thousand decrease in nonperforming loans during the first six months of
2003. 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. In response to the increase in non-performing
loans during the past twelve months, the allowance for loan losses also has been
increased from 1.21% of loans at June 30, 2002 to 1.67% at June 30, 2003, an
increase of $2.6 million in the reserve.
During the first six months of 2003, recoveries on loans previously charged-off
exceeded the amount of loans charged-off by $81 thousand.
Deposits
Total deposits of $434.1 million at June 30, 2003 represented an increase of
$10.2 million (2.4%) from total deposits of $423.9 million at year-end 2002. The
majority of the increase was attributable to two deposit sources: money market
accounts and demand deposit accounts. Approximately $30 million of local
customer certificates of deposit, 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 were allowed to run off, as loan demand did not require the funds. At
June 30, 2003, brokered certificates of deposit totaled approximately $74
million and Internet certificates of deposit totaled approximately $36 million.
14
FLORIDA COMMUNITY BANKS, INC.
June 30, 2003
Shareholders' Equity
Shareholders' equity increased $4.2 million from December 31, 2002 to June 30,
2003, due to retained net income during the six months 2003. On June 30, 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 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 $137 million at June 30, 2003, and
there are approximately $10 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, 2003, funds also were available through the purchase of federal
funds from correspondent commercial banks from available lines of up to an
aggregate of $25 million and credit availability at the Federal Home Loan Bank
("FHLB") of up to 15% of assets (approximately $80 million) of which $34 million
is available and unused. At June 30, 2003, the bank had unused collateral
totaling approximately $15 million, thus limiting the FHLB 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
15
FLORIDA COMMUNITY BANKS, INC.
June 30, 2003
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.
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
the Bank as collateral on this note. At June 30, 2003, no portion of this loan
was outstanding.
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 $48.6 million
at June 30, 2003. 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 $54.5 million at June 30, 2003.
The Company'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, 2003 and 2002
Summary
Net earnings of the Company for the three months ended June 30, 2003, totaled
$2,127,325 compared to $1,721,108 for the same period in 2002, representing a
23.6% increase. The increase was due principally to the effect of a $991
thousand increase in net interest income, partially offset by a $405 thousand
increase in operating expenses. As explained more fully below, the increase in
net interest income was due to an increased volume of loans and interest-bearing
deposits, each partially offset by a decline in rates.
16
FLORIDA COMMUNITY BANKS, INC.
June 30, 2003
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, 2003
increased $991 thousand (21.0%) from the same period in 2002. 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 earning asset
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 $494.6 million during the second quarter of
2003 compared to $419.7 million in the second quarter of 2002, with most of the
increase due to loan volume. Average interest-bearing liabilities increased from
$388.7 million during the second quarter of 2002 to $415.8 million during the
same period in 2003, primarily due to an increase in certificates of deposit.
The Company 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 2003 and 2002 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 $300 thousand for the three months
ended June 30, 2003 compared to $280 thousand during the same period in 2002.
Loans charged off exceeded recoveries by approximately $20 thousand for the
three months ended June 30, 2003. During the three months ended June 30, 2002,
net recoveries totaled $8 thousand. The reserve for loan losses as a percent of
outstanding loans, net of unearned income, was 1.67% at June 30, 2003, compared
to 1.52% at year-end 2002.
Noninterest Income
Noninterest income for the three months ended June 30, 2003, was $666,176
compared to $548,825 for the same period of 2002, an increase of 21.4%. The
increase was primarily due to an increase in customer service fees and secondary
market loan fees. During 2003, the Bank earned increased fees for cash provided
to customers and for secondary market loan services due primarily to volume.
Noninterest Expenses
Noninterest expenses for the three months ended June 30, 2003, were $2,647,417
reflecting an 18% increase from the same period of 2002. The primary components
of noninterest expenses are salaries and employee benefits, which increased $341
thousand for the three months ended June 30, 2003 compared to the same period in
2002, caused by additional staff at new branches and added staff in the
secondary loan market department. Occupancy costs, during this same period,
increased by approximately $6 thousand due to the new branch offices opened
during 2002.
17
FLORIDA COMMUNITY BANKS, INC.
June 30, 2003
Income Taxes
The provision for income taxes of $1,301,862 for the three months ended June 30,
2003, increased $278 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.
Six months ended June 30, 2003 and 2002
Summary
Net earnings of the Company for the six months ended June 30, 2003, totaled
$4,156,005 compared to $3,212,690 for the same period in 2002, representing a
29.4% increase. The increase was due principally to an increase in net interest
income after provision for loan losses of $2.2 million partially offset by an
increase in non-interest expense of $839 thousand.
Net Interest Income
Net interest income of the Company during the six months ended June 30, 2003,
increased $2.2 million (24.9%) from the same period in 2002. 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 2003 and 2002 with a
larger dollar amount of interest-earning assets subject to re-pricing than
interest-bearing liabilities. During the first six months of 2002 when rates
were generally declining, the Company's interest income has been reduced at a
faster rate than the cost of liabilities. During 2003 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 $600,000 for the comparable period in 2003. Net recoveries during the
six months ending June 30, 2002 totaled $80 thousand. The level of
non-performing loans did not change significantly during the period from
December 31, 2002 to June 30, 2003.
Noninterest Income
Noninterest income for the six months ended June 30, 2003, was $1,292,658
compared to $1,148,129 for the same period of 2002. The increase was caused by
an increase in charges for cash services to customers and secondary market loan
fees.
18
FLORIDA COMMUNITY BANKS, INC.
June 30, 2003
Noninterest Expenses
Noninterest expenses for the six months ended June 30, 2003, totaled $5,204,649
and reflected a 19.2% increase from the same period of 2002. Both employee costs
and occupancy expenses increased due to a new branch office opening in mid-2002
and due to added staff in the secondary market loan department.
Income Taxes
The provision for income taxes of $2,528,203 for the six months ended June 30,
2003 increased $606 thousand compared to the same period of 2002 due to higher
earnings. The effective tax rates of approximately 37.8% for 2003 and 37.4% in
2002 were higher than the federal tax rate due to the effect of state income
tax, net of federal tax benefit.
Other Accounting Issues
In November 2002, the Auditing Standards Board issued Statement on Auditing
Standards ("SAS") No. 100, Interim Financial Information. This statement
supersedes SAS No. 71 and establishes revised standards and guidance on the
nature, timing, and extent of the procedures to be performed by an independent
accountant when conducting a review of interim financial information. This SAS
is effective for interim periods within fiscal years beginning after December
15, 2002. The impact on the interim consolidated financial statements of the
Company resulting from the issuance of this auditing standard is not expected to
be 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 Financial Accounting Standards Board ("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.
In April 2003, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 149, Amendment of Statement 133 on Derivative instruments and
Hedging Activities. The provisions of this Statement are effective for contracts
entered into or modified after June 20, 2003 and hedging relationships
designated after June 30, 2003, and generally require that contracts with
comparable characteristics be accounted for similarly. Except for the provisions
related to FASB Statement No. 133,
19
FLORIDA COMMUNITY BANKS, INC.
June 30, 2003
Accounting for Derivative Instruments and Hedging Activities, all provisions of
this Statement should be applied prospectively. The provisions of the Statement
related to Statement 133 Implementation Issues that have been effective for
fiscal quarters that begin prior to June 15, 2003, should continue to be applied
in accordance with their respective effective dates. We do not expect the
adoption of the provisions of this Statement to have a material effect on the
Company's operating results or financial position.
In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires liability treatment for certain financial instruments which had
previously been recognized as equity. The provisions of this Statement are
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise are effective at the beginning of the first interim period
beginning after June 15, 2003. It is to be implemented by reporting the
cumulative effect of a change in accounting principle for financial instruments
created before May 15, 2003 and still existing at the beginning of the interim
period of adoption. Restatement is not permitted. We do not expect the adoption
of the provisions of this Statement to have a material effect on the Company's
operating results or financial position.
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
20
FLORIDA COMMUNITY BANKS, INC.
June 30, 2003
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 June 30, 2003, 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......................................... $ 421,020 $ 408,355 $ 427,113 $ 402,366
Federal funds sold and cash equivalents....... 54,397 54,397 54,397 54,397
Securities.................................... 24,961 23,779 25,206 22,759
------------ ------------- ------------- --------------
Total Interest-earning Assets............... 500,378 486,531 506,716 479,522
------------ ------------- ------------- --------------
Interest-bearing Liabilities
Deposits - Savings and demand................. 142,702 137,824 145,140 135,386
Deposits - Time............................... 224,477 220,051 226,689 217,839
Other borrowings.............................. 46,618 44,383 47,735 43,265
------------ ------------- ------------- --------------
Total Interest-bearing Liabilities.......... 413,797 402,258 419,564 396,490
------------ ------------- ------------- --------------
Net Difference in Fair Value..................... $ 86,581 $ 84,273 $ 87,152 $ 83,032
============ ============= ============= ==============
Change in Net Interest Income.................... $ (442) $ 318 $ (994) $ 626
============ ============= ============== ==============
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 quarterly 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.
21
FLORIDA COMMUNITY BANKS, INC.
June 30, 2003
PART II - 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 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 16, 2003, to consider the election of directors (Proposal
I) and to allow adjournment of the Annual Meeting if a quorum was not present in
person or by proxy (Proposal II), an issue made moot since a quorum was present.
At the Annual Meeting, 2,217,950 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. Election of Directors :
FOR WITHHELD
------------------ ------------------
Beauford E. Davidson 2,216,617 1,333
Patrick B. Langford 2,216,617 1,333
Lewis J. Nobles, Jr. 2,216,978 972
John R. Olliff 2,216,978 972
James O'Quinn 2,216,978 972
Stephen L. Price 2,216,622 1,328
Bernard T. Rasmussen 2,216,978 972
R.A. Roberts 2,216,978 972
Daniel G. Rosbough 2,216,978 972
James E. Williams, Jr. 2,216,978 972
PROPOSAL II. Adjournment if Necessary:
FOR AGAINST ABSTAIN
------------------ ------------------ ------------------
2,114,627 87,113 16,210
[The remainder of this page intentionally left blank]
22
FLORIDA COMMUNITY BANKS, INC.
June 30, 2003
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).
10.1 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).
10.2 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).
10.3 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).
10.4 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 26
23
FLORIDA COMMUNITY BANKS, INC.
June 30, 2003
Exhibit No. Exhibit Page
- ----------- ------------------------------------------------------------------ -----------
31.1 Chief Executive Officer - Certification pursuant Section 302,
as adopted of the Sarbanes-Oxley Act of 2002 27
31.2 Chief Financial Officer - Certification pursuant Section 302,
as adopted of the Sarbanes-Oxley Act of 2002 28
32.1 Chief Executive Officer - Certification pursuant Section 906,
as adopted of the Sarbanes-Oxley Act of 2002 29
32.2 Chief Financial Officer - Certification pursuant Section 906,
as adopted of the Sarbanes-Oxley Act of 2002 29
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.)
(b) Reports 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.
[The remainder of this page intentionally left blank.]
24
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, 2003
------------------------------------- ---------------
Stephen L. Price Date
President and Chief Executive Officer
/s/ Thomas V. Ogletree August 12, 2003
------------------------------------- ---------------
Thomas V. Ogletree Date
Chief Financial Officer
25
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, 2003
and 2002. 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,
------------------------------ -----------------------------
2003 2002 2003 2002
------------- ------------- ------------- --------------
Basic Earnings Per Share:
Net income.................................... $ 2,127,325 $ 1,721,108 $ 4,156,005 $ 3,212,690
============= ============= ============= ==============
Earnings on common shares..................... $ 2,127,325 $ 1,721,108 $ 4,156,005 $ 3,212,690
============= ============= ============= ==============
Weighted average common shares
outstanding - basic......................... 3,123,316 3,123,316 3,123,316 3,123,316
============= ============= ============= ==============
Basic earnings per common share............... $ 0.68 $ 0.55 $ 1.33 $ 1.03
============= ============= ============= ==============
Diluted Earnings Per Share:
Net income.................................... $ 2,127,325 $ 1,721,108 $ 4,156,005 $ 3,212,690
============= ============= ============= ==============
Weighted average common shares
outstanding - diluted....................... 3,142,273 3,140,456 3,139,884 3,139,703
============= ============= ============= ==============
Diluted earnings per common share............. $ 0.68 $ 0.55 $ 1.32 $ 1.02
============= ============= ============= ==============
26
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
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: August 12, 2003
/s/ Stephen L. Price
- --------------------------
Stephen L. Price
Chief Executive Officer
27
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
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: August 12, 2003
/s/ Thomas V. Ogletree
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Thomas V. Ogletree
Chief Financial Officer
28
EXHIBIT 32.1
CERTIFICATION 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, 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: August 12, 2003 By: /s/ Stephen L. Price
-------------------------------------
Stephen L. Price
President and Chief Executive Officer
EXHIBIT 32.2
CERTIFICATION 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, 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: August 12, 2003 By: /s/ Thomas V. Ogletree
-------------------------------------
Thomas V. Ogletree
Chief Financial Officer
29