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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, 2005
[ ] 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 X No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $0.01 par Outstanding at May 5, 2005: 4,548,939
Form 10-Q
FLORIDA COMMUNITY BANKS, INC.
March 31, 2005
TABLE OF CONTENTS
Page No.
Part I - Financial Information
Item 1 - Consolidated Financial Statements (Unaudited)
Consolidated Statements of Financial Condition as of March 31, 2005
and December 31, 2004....................................................................... 3
Consolidated Statements of Income For The Three Months Ended
March 31, 2005 and 2004..................................................................... 4
Consolidated Statement of Shareholders' Equity For The Three Months
Ended March 31, 2005........................................................................ 5
Consolidated Statements of Cash Flows For The Three Months
Ended March 31, 2005 and 2004............................................................... 6
Notes to Consolidated Financial Statements..................................................... 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.................................................. 12
Item 3 - Quantitative and Qualitative Disclosures About Market Risk..................................... 19
Item 4 - Controls and Procedures........................................................................ 20
Part II - Other Information
Item 1 - Legal Proceedings.............................................................................. 21
Item 6 - Exhibits....................................................................................... 21
Signatures
2
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, 2005 (Unaudited) and December 31, 2004
March 31,
2005 December 31,
(Unaudited) 2004
Assets
Cash and due from banks................................................... $ 25,271,509 $ 18,665,823
Interest-bearing deposits with banks...................................... 1,422,123 948,255
Fed funds sold............................................................ 2,411,000 -
---------------- ------------------
Cash and Cash Equivalents............................................. 29,104,632 19,614,078
Securities available-for-sale................................................ 4,984,265 4,935,077
Securities held-to-maturity, fair value of $65,821,275 in 2005
and $68,991,864 in 2004................................................... 67,173,570 69,330,160
Loans, net of unearned income................................................ 610,443,954 552,509,155
Allowance for loan losses.................................................... (9,814,285) (9,791,269)
---------------- -----------------
Net Loans............................................................. 600,629,669 542,717,886
Premises and equipment, net.................................................. 13,520,648 13,345,071
Accrued interest............................................................. 3,675,661 3,289,678
Foreclosed real estate....................................................... 2,203,435 2,203,435
Deferred taxes, net.......................................................... 4,499,536 4,313,485
Other assets................................................................. 1,660,496 1,115,434
---------------- -----------------
Total Assets.......................................................... $ 727,451,912 $ 660,864,304
================ =================
Liabilities and Shareholders' Equity
Liabilities
Non interest-bearing...................................................... $ 128,817,127 $ 113,217,461
Interest-bearing.......................................................... 459,911,995 407,367,970
---------------- -----------------
Total Deposits........................................................ 588,729,122 520,585,431
Short-term borrowings........................................................ 10,206,000 14,057,000
Accrued interest............................................................. 1,498,177 1,407,563
Deferred compensation........................................................ 305,624 313,622
FHLB advances................................................................ 55,000,000 60,000,000
Subordinated debentures...................................................... 10,310,000 10,310,000
Other liabilities............................................................ 3,912,289 1,262,989
---------------- -----------------
Total Liabilities..................................................... 669,961,212 607,936,605
Shareholders' Equity
Common stock - par value $.01 per share, 10,000,000 shares authorized,
4,538,821 shares issued and outstanding at at March 31, 2005; 4,519,321
shares issued and outstanding
at December 31, 2004.................................................... 45,388 45,193
Paid-in capital........................................................... 17,675,502 17,155,534
Retained earnings......................................................... 39,769,810 35,726,972
---------------- -----------------
Total Shareholders' Equity............................................ 57,490,700 52,927,699
---------------- -----------------
Total Liabilities and Shareholders' Equity................................... $ 727,451,912 $ 660,864,304
================ =================
See notes to consolidated financial statements
3
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three months Ended March 31, 2005 and 2004
(Unaudited)
Three Months
Ended March 31,
2005 2004
---------------- -----------------
Interest Income
Interest and fees on loans................................................ $ 10,905,274 $ 8,649,618
Interest and dividends
Taxable securities...................................................... 755,214 325,270
Interest on federal funds sold and other interest income.................. 73,150 82,570
---------------- -----------------
Total Interest Income................................................... 11,733,638 9,057,458
---------------- -----------------
Interest Expense
Interest on deposits...................................................... 2,391,935 1,657,267
Interest on borrowed funds................................................ 779,848 514,324
---------------- -----------------
Total Interest Expense.................................................. 3,171,783 2,171,591
---------------- -----------------
Net Interest Income.......................................................... 8,561,855 6,885,867
Provision for loan losses.................................................... - 300,000
---------------- -----------------
Net Interest Income After Provision for Loan Losses.......................... 8,561,855 6,585,867
Noninterest Income
Customer service fees..................................................... 524,486 488,064
Insurance commissions..................................................... 1,578 3,368
Other noninterest income.................................................. 374,907 235,569
---------------- -----------------
Total Noninterest Income.............................................. 900,971 727,001
---------------- -----------------
Noninterest Expenses
Salaries and employee benefits............................................ 1,866,021 1,867,841
Occupancy and equipment expense........................................... 485,692 432,826
Other noninterest expenses................................................ 533,059 547,131
---------------- -----------------
Total Noninterest Expenses............................................ 2,884,772 2,847,798
---------------- -----------------
Income before income taxes................................................... 6,578,054 4,465,070
Provision for income tax expense............................................. 2,535,216 1,679,690
---------------- -----------------
Net Income................................................................... $ 4,042,838 $ 2,785,380
================ =================
Weighted Average Common Shares Outstanding - Basic........................... 4,526,904 4,507,303
Weighted Average Common Shares Outstanding - Diluted......................... 4,591,946 4,550,080
Basic Earnings Per Common Share.............................................. $ 0.89 $ 0.62
Diluted Earnings Per Common Share............................................ 0.88 0.61
See notes to consolidated financial statements
4
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Three months Ended March 31, 2005
(Unaudited)
Common Paid-in Retained
Stock Capital Earnings Total
------------ ------------- -------------- ----------------
December 31, 2004......................... $ 45,193 $ 17,155,534 $ 35,726,972 $ 52,927,699
Issuance of common stock.................. 195 506,415 -- 506,610
Compensation effect of stock options...... -- 13,553 -- 13,553
Net income - Three months ended
March 31, 2005......................... -- -- 4,042,838 4,042,838
------------- --------------- -------------- ----------------
Balance at March 31, 2005................. $ 45,388 $ 17,675,502 $ 39,769,810 $ 57,490,700
============= =============== ============== ================
See notes to consolidated financial statements
5
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months Ended March 31, 2005 and 2004
(Unaudited)
Three Months
Ended March 31,
2005 2004
---------------- -----------------
Operating Activities
Net Income................................................................ $ 4,042,838 $ 2,785,380
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses............................................. -- 300,000
Deferred tax benefit.................................................. (186,051) --
Depreciation, amortization, and accretion, net........................ 300,586 226,417
Increase in accrued interest receivable............................... (385,983) (60,478)
Increase in accrued interest payable.................................. 90,614 119,492
Other, net............................................................ 2,119,257 1,087,681
---------------- -----------------
Net Cash Provided By Operating Activities............................. 5,981,261 4,458,492
---------------- -----------------
Investing Activities
Net increase in available-for-sale securities............................. (49,188) --
Net decrease in held-to-maturity securities............................... 2,063,997 1,339,716
Loans made to customers, net of repayments................................ (57,934,799) (15,995,876)
Proceeds from sale of other real estate owned............................. -- 504,752
Purchase of fixed assets.................................................. (383,571) (96,580)
---------------- -----------------
Net Cash Used In Investing Activities................................. (56,303,561) (14,247,988)
---------------- -----------------
Financing Activities
Net increase in demand deposits, NOW accounts
and savings accounts.................................................... 42,712,284 18,746,378
Net increase in certificates of deposits.................................. 25,431,407 24,592,156
Net decrease in short-term borrowings..................................... (3,851,000) (7,251,242)
Net decrease in long-term borrowings...................................... (5,000,000) --
Sale of common stock...................................................... 506,610 465,202
Compensation associated with the issuance of options, net of tax.......... 13,553 2,303
---------------- -----------------
Net Cash Provided By Financing Activities............................. 59,812,854 36,554,797
---------------- -----------------
Net Increase in Cash and Cash Equivalents.................................... 9,490,554 26,765,301
Cash and Cash Equivalents at Beginning of Period............................. 19,614,078 30,519,849
---------------- -----------------
Cash and Cash Equivalents at End of Period................................... $ 29,104,632 $ 57,285,150
================ =================
See notes to consolidated financial statements
6
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Unaudited)
Note A - Basis of Presentation
Florida Community Banks, Inc. ("FCBI" or the "Company") is a bank holding
company, which owns all of the common stock of Florida Community Bank ("Bank" or
"FCB") and a special purpose business trust organized to issue Trust Preferred
Securities. The special purpose business trust is not consolidated in the
financial statements that are included elsewhere herein. 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, 2005, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2005
The statement of financial condition at December 31, 2004, 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, 2004,
included in Form 10-K filed in March 2005.
Some items in the March 31, 2004, financial information have been
reclassified to conform to the March 31, 2005, presentation.
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.
7
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Unaudited)
Note C - Income Taxes
The effective tax rates of approximately 38.5% and 37.6% for the three
months ended March 31, 2005 and 2004 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).
The carrying amounts of securities as shown in the consolidated statements
of financial condition and their approximate fair values at March 31, 2005 and
December 31, 2004 were as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------------- --------------- --------------- ----------------
Securities Available-for-Sale
March 31, 2005:
Equity Securities........................ $ 4,984,265 $ -- $ -- $ 4,984,265
=============== ================ ================ ================
December 31, 2004:
Equity securities........................ $ 4,935,077 $ -- $ -- $ 4,935,077
=============== ================ ================ ================
Securities Held-to-Maturity
March 31, 2005:
U. S. Government and
agency securities...................... $ 1,996,788 $ -- $ 49,188 $ 1,947,600
Mortgage-backed securities............... 65,176,782 51,293 1,406,800 63,821,275
--------------- ---------------- --------------- ----------------
$ 67,173,570 $ 51,293 $ 1,455,988 $ 65,768,875
=============== ================ =============== ================
December 31, 2004:
U. S. Government and
agency securities...................... $ 1,996,586 $ -- $ 9,186 $ 1,987,400
Mortgage-backed securities............... 67,333,574 96,466 425,576 67,004,464
--------------- ---------------- --------------- ----------------
$ 69,330,160 $ 96,466 $ 434,762 $ 68,991,864
=============== ================ =============== ================
8
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Unaudited)
Note D - Securities - continued
The following tables show our investments' gross unrealized losses and fair
value, aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position, at March 31, 2005
and December 31, 2004.
March 31, 2005:
Less Than 12 Months 12 Months or More Total
--------------------------- -------------------------- ---------------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Description of Securities Value Losses Value Losses Value Losses
- ----------------------------- ------------- ----------- ------------- ----------- ------------- -----------
U.S. Government and
agency securities......... $ 1,947,600 $ 49,188 $ _ $ _ $ 1,947,600 $ 49,188
Mortgage-backed
securities................ 42,620,393 804,051 18,673,970 602,749 61,294,363 1,406,800
------------- ----------- ------------- ----------- ------------- -----------
Total Temporarily
Impaired Securities..... $ 46,567,993 $ 853,239 $ 18,673,970 $ 602,749 $ 63,241,963 $ 1,455,988
============= =========== ============= =========== ============= ===========
Management evaluates securities for other-than-temporary impairment at
least on a quarterly basis, and more frequently when economic or market concerns
warrant such evaluation. Consideration is given to (1) the length of time and
the extent to which the fair value has been less than cost, (2) the financial
condition and near-term prospects of the issuer, and (3) the intent and ability
of the Company to retain its investment in the issuer for a period of time
sufficient to allow for any anticipated recovery in fair value.
At March 31, 2005 the Company had 9 individual securities that were in an
unrealized loss position or impaired for the timeframes indicated above. All of
these investment positions' impairments are deemed not to be
other-than-temporary impairments. Substantially all of these positions are
backed by 1-4 family mortgages and the unrealized loss of these securities is
based solely on interest rate changes and not due to credit ratings. Management
intends to hold these securities until maturity.
December 31, 2004:
Less Than 12 Months 12 Months or More Total
--------------------------- -------------------------- ---------------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Description of Securities Value Losses Value Losses Value Losses
- ----------------------------- ------------- ----------- ------------- ----------- ------------- -----------
U.S. Government and
agency securities......... $ 1,987,400 $ 9,186 $ -- $ -- $ 1,987,400 $ 9,186
Mortgage-backed
securities................ 21,480,599 274,039 8,030,582 151,537 29,511,181 425,576
------------- ----------- ------------- ----------- ------------- -----------
Total Temporarily
Impaired Securities..... $ 23,467,999 $ 283,225 $ 8,030,582 $ 151,537 $ 31,498,581 $ 434,762
============= =========== ============= =========== ============= ===========
9
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Unaudited)
Note D - Securities - Continued
At December 31, 2004, the Company had 3 individual securities that were in
an unrealized loss position or impaired for the timeframe 12 months or more
indicated above. All of these investment positions' impairments are deemed not
to be other-than-temporary impairments. Substantially all of these positions are
backed by 1-4 family mortgages and the related securities have experienced
volatility in their market prices as a result of the fluctuating home mortgage
interest rate environment during 2004. The Company does not expect any
other-than-temporary impairments to develop related to the investment positions.
Note E - Shareholders' Equity
In December 2004, 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.
Note G - Stock-Based Compensation
During 2002 the Company adopted a Key Employee Stock Compensation Program
under which statutory and non-statutory stock options may be granted to certain
key employees. The options granted provide for these key employees to purchase
shares of the Company's $0.01 par value common stock at no less than the market
value at the dates of grant. The options granted may be exercised within ten
years from the dates of grant subject to vesting requirements. Prior to 2003,
the Company accounted for this plan under the recognition and measurement
provisions of APB No. 25, Accounting for Stock Issued to Employees, and the
related Interpretations. Effective January 1, 2003, the Company adopted the fair
value recognition provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, as provided by SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure. SFAS No. 148 allows for a prospective
method of adoption of SFAS 123, whereas, the Company can prospectively account
for the current expense of options granted during 2003 and thereafter. The
following table illustrates the effect on net income and earnings per share as
if the fair value based method had been applied to all outstanding and unearned
awards in each period.
10
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Unaudited)
The Company's actual and pro forma information follows:
Three Months
Ended March 31,
2005 2004
---------------- -----------------
Net Income
Net Income, as reported...................................................... $ 4,042,838 $ 2,785,380
Add: Stock-based compensation expense included in net income,
net of related taxes...................................................... 10,433 2,358
Deduct: Total stock-based employee compensation expense
determined under the fair value method for all awards,
net of related taxes...................................................... (11,378) (4,563)
---------------- -----------------
Pro Forma Net Income......................................................... $ 4,041,893 $ 2,783,175
================ =================
Basic earnings per share:
As Reported.................................................................. $ 0.89 $ 0.62
================ ================
Pro forma.................................................................... $ 0.89 $ 0.62
================ ================
Diluted earnings per share:
As Reported.................................................................. $ 0.88 $ 0.61
================ ================
Pro forma.................................................................... $ 0.88 $ 0.61
================ ================
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11
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Unaudited)
Note G - Stock-Based Compensation - Continued
The following information relates to options outstanding under the plan at March
31, 2005.
Weighted
Number of Average Number of
Options Expiration Contractual Options
Outstanding Date Life-Years Exercisable
10/25/01 Options with an Exercise
Price of $10.42...................................... 79,488 10/25/11 6.57 64,973
01/17/03 Options with an Exercise
Price of $13.89...................................... 8,640 01/17/13 7.81 6,336
12/22/03 Options with an Exercise
Price of $20.00...................................... 16,800 12/22/13 8.73 9,600
09/16/04 Options with an Exercise
Price of $22.92...................................... 65,400 09/16/14 9.47 14,400
-------------- -----------
Total................................................ 170,328 7.96 95,309
============== ===========
The following table presents the activity in the plan for the three months ended
March 31, 2005 and 2004:
Three Months Ended March 31,
2005 2004
----------------------------- -----------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
-------------- ------------- ------------- --------------
Outstanding at January 1,............................ 170,328 16.34 104,928 $ 12.24
Granted.............................................. -- 0.00 -- 0.00
Forfeited............................................ -- 0.00 -- 0.00
Expired.............................................. -- 0.00 -- 0.00
--------------- --------------
Outstanding at March 31,............................. 170,328 16.34 104,928 12.24
============== =============
Exercisable at March 31,............................. 95,309 13.50 51,149 10.65
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12
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Unaudited)
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.
The following represents the Company's commitments to extend credit and standby
letters of credit as of March 31, 2005 and December 31, 2004:
March 31, December 31,
2005 2004
---------------- -----------------
Commitments to extend credit................................................. $ 152,061,000 $ 133,865,000
Standby and commercial letters of credit..................................... 4,190,000 3,715,000
---------------- -----------------
Total commitments and contingencies.......................................... $ 156,251,000 $ 137,580,000
================ =================
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13
FLORIDA COMMUNITY BANKS, INC.
March 31, 2005
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, 2005, 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, 2004.
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, 2005 compared to December 31, 2004
The Bank continued its operations concentrating in the origination of loans
in southwestern and other areas of Florida. As discussed more fully below, loans
increased 10.5% during the first three months of 2005, while equity capital grew
at a slightly lower rate (8.6%). No significant changes in operating goals or
policies occurred during 2005.
14
FLORIDA COMMUNITY BANKS, INC.
March 31, 2005
Loans
Loans comprised the largest single category of the Company's earning assets
on March 31, 2005. Loans, net of unearned income, totaled 83.9% of total assets
at March 31, 2005 compared to 83.6% of total assets at December 31, 2004. During
the first three months of 2005, loans increased approximately $57.9 million, a
relatively large increase compared with recent periods. While the influx of
population to southwest Florida continues to influence the demand for real
estate loans, particularly construction and development loans, the Bank's growth
has enable it to increase the size of the loans that it is now doing.
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 did not change significantly compared to December
31, 2004 and totaled $74.6 million at March 31, 2005.
Asset Quality
From December 31, 2004 to March 31, 2005, 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 non-accrual loans, loans past due 90
days or greater, restructured loans, non-accruing securities, and other real
estate) improved, increasing from 99.5% to 287.3%. The percentage of
nonperforming assets to total assets improved, decreasing from 1.49% to 0.47%,
and the percentage of nonperforming loans to total loans improved from 1.78% to
0.56%. These ratios were affected by a $6.9 million decrease in nonperforming
loans during the first quarter of 2005. During the past three months,
nonperforming loans have decreased significantly, due primarily to the reduction
in the number of loans that were temporarily restructured due to the hurricanes
during 2004 and which are now performing in accordance with their original
agreement. As a percent of loans the allowance was 1.77% at December 31, 2004,
and 1.61% at March 31, 2005.
During the first three months of 2005, net recoveries totaled $23 thousand.
Deposits
Total deposits of $588.7 million at March 31, 2005, represented an increase
of $68.1 million (13.1%) from total deposits of $520.6 million at year-end 2004.
The increase was attributable to growth in non-interest bearing deposits ($15.6
million), money market accounts ($25.9 million), certificate of deposits ($25.4
million), savings accounts ($3.7 million); now accounts decreased ($2.6
million). At March 31, 2005, brokered certificates of deposit totaled
approximately $181.2 million and Internet certificates of deposit totaled
approximately $13.5 million.
Shareholders' Equity
Shareholders' equity increased $4.6 million from December 31, 2004 to March
31, 2005, due to the retention of earnings ($4.04 million and the sale of 19,500
shares of common stock to the Employee Stock Ownership Plan ($507 thousand)
during the first quarter of 2005. On March 31, 2005, 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.
15
FLORIDA COMMUNITY BANKS, INC.
March 31, 2005
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 $244 million at March 31, 2005.
The liability portion of the balance sheet provides liquidity through
deposits to various customers' interest-bearing and non-interest-bearing deposit
accounts, brokered and Internet certificated of deposit. At March 31, 2005, the
Bank had funds available through the purchase of federal funds from
correspondent commercial banks up to an aggregate of $45 million, and another $9
million available from the Federal Reserve Bank; the Company had $4.9 million
available through a separate line with a commercial bank. The Bank also has
available a credit line with the Federal Home Loan Bank "FHLB" of up to 15% of
assets (approximately $108 million) of which $53 million is available and
unused. At March 31, 2005, the bank had unused collateral totaling approximately
$34 million, thus limiting the advances potentially available to that amount.
Capital Resources
A strong capital position is vital to the continued profitability of the
Company and the Bank because it promotes depositor and investor confidence and
provides a solid foundation for future growth of the organization. The Company
has provided a significant portion of its capital requirements through the
retention of earnings.
On June 21, 2002, FCBI Capital Trust I ("FCBI Trust"), a Delaware statutory
trust established by the Company, received $10,000,000 in proceeds in exchange
for $10,000,000 principal amount of FCBI Trust's floating rate cumulative trust
preferred securities (the "preferred securities") in a trust preferred private
placement. The proceeds of that transaction were then used by FCBI Trust to
purchase an equal amount of floating rate subordinated debentures (the
"subordinated debentures") of the Company. The Company has fully and
unconditionally guaranteed all obligations of FCBI Trust on a subordinated basis
with respect to the preferred securities. Subject to certain limitations, the
preferred securities qualify as Tier 1 capital and are presented in the
Consolidated Statements of Financial Condition as subordinated debentures. The
sole asset of FCBI Trust is the subordinated debentures issued by the Company.
Both the
FLORIDA COMMUNITY BANKS, INC.
March 31, 2005
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.
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 and the
2002 issue of subordinated debentures, subject to limitation, totaled
$67,491,000 at March 31, 2005. 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 $75,955,000 at March 31, 2005.
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 March 31, 2005 and 2004
Summary
Net earnings of the Company for the three months ended March 31, 2005,
totaled $4,042,838 compared to $2,785,380 for the same period in 2004,
representing a 45.1% increase. The increase was due primarily to loan growth
(29.3%), which generated $26.1% higher interest and fees than a year ago. The
growth in non-interest bearing demand deposits (51.2%) and low cost interest
bearing deposits, like money market, Now and savings accounts (25.5%),
contributed greatly to keeping the cost of funds down. Keeping the growth of
non-interest expense to just 1% over the same time period as last year, also
added to the Bank's improved earnings.
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 net income. Net interest income during the three months ended March
31, 2005, increased $1.7 million (24.3%) from the same period in 2004. This
increase was due primarily to an increase in interest income on loans ($2.2
million) and investments ($425 thousand), which was offset by an increase in
interest expense on both deposits ($735 thousand) and borrowings ($266
thousand). Both loans and deposits experienced increased volume. Earning assets
averaged $663.1 million during the first quarter of 2005 compared to $509.0
million in 2004, with the increase due primarily to loans, which increased
$130.1 million and to investment securities and fed funds, which increased $23.2
million. Average interest-bearing liabilities increased from $416.1 million
during the first quarter of 2004 to $521.1 million during the same period in
2005. Interest bearing accounts (money market, savings and NOW accounts)
averaged $34.8 million higher in 2005 compared to the first quarter of 2004
reflecting an increase of 25.5%; average certificates of deposit also increased
(up $41.5 million) reflecting an increasing of 18.5%.
17
FLORIDA COMMUNITY BANKS, INC.
March 31, 2005
The Bank was in an interest sensitive position during 2004 and 2003 with a
larger dollar amount of interest-earning assets subject to re-pricing than
interest-bearing liabilities. Therefore, during 2002 when rates were generally
declining, the Bank's loan and investment portfolios rapidly re-priced at lower
rates. To counter act this trend management began making loans with interest
rate floors (the lowest rate that the loan will adjust to in a declining rate
environment). While this helped to stabilize and improve the net interest margin
between 2003 and 2004, it has slowed the upward rate movement of the variable
rate loans (largest portion of the Bank's portfolio) during a time when rates
started to rise again (beginning in June 2004). As the Bank's cost of funds
rose, the net interest margin was beginning to decline, from 5.50% in 2004 down
to 5.29% at the end of first quarter 2005. The negative effect that the rate
floors are currently having will end when the prime rate gets to 6.25% (it's
currently at 5.75%); this is the point at which the majority of the loans that
have not re-priced will start to adjust above their floor rate.
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 non-accruing and past
due loans. The provision for loan losses was $-0- and $300,000 for the three
months ended March 31, 2005 and 2004, respectively. Recoveries exceeded
charge-offs by approximately $23 thousand and $52 thousand for the three months
ended March 31, 2005 and 2004, respectively. The reserve for loan losses as a
percent of outstanding loans, net of unearned income, was 1.61% at March 31,
2005, compared to 1.77% at year-end 2004. No provision for loan losses was
necessary during the first quarter of 2005 due to the extremely low historical
charge-off ratio, which is one of the factors used to determine if a provision
is needed.
Non interest Income
Non interest income for the three months ended March 31, 2005, was $900,971
compared to $727,001 for the same period of 2004, an increase of 23.9%. The
increase was primarily due to an $85 thousand settlement that was received, an
increase in secondary market loan fee income of $63 thousand and an increase in
check cashing fees of $61 thousand.
Non interest Expenses
Non interest expenses for the three months ended March 31, 2005, totaled
$2,884,772 reflecting a 1.2% increase from the same period of 2004. The primary
components of non-interest expenses are salaries and employee benefits, which
actually decreased by $2 thousand for the three months ended March 31, 2005,
compared to the same period in 2004; the increase in all other expenses was
approximately $39 thousand.
Income Taxes
The provision for income taxes of $2,535,216 for the three months ended
March 31, 2005, increased $856 thousand compared to the same period of 2004, due
to higher pre-tax income. 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.
18
FLORIDA COMMUNITY BANKS, INC.
March 31, 2005
Other Accounting Issues
In December 2003, the FASB revised previously issued SFAS No. 132,
Employers' Disclosures about Pensions and Other Postretirement. This statement
revises employers' disclosures about pension plans and other postretirement
benefit plans. It does not change the measurement or recognition of those plans
required by FASB Statements No. 87, Employers' Accounting for Pensions, No. 88,
Employers' Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits, and No 106, Employers' Accounting
for Postretirement Benefits Other Than Pensions. This statement retains the
disclosure requirements contained in FASB Statement No. 132, Employers'
Disclosures about Pensions and Other Postretirement Benefits, which it replaces.
It requires additional disclosures to those in the original Statement 132 about
the assets, obligations, cash flows, and net periodic benefit cost of defined
benefit pension plans and other defined benefit postretirement plans. The
required information should be provided separately for pension plans and for
other postretirement benefit plans. The provisions of this statement are
effective for financial statements with fiscal years ending after December 15,
2003. The interim-period disclosures required by this statement are effective
for interim periods beginning after December 15, 2003. The adoption of the
provisions of this revised statement did not have a material effect on the
Company's operating results or financial position.
In December 2003, the FASB revised previously issued FIN 46, Consolidation
of Variable Interest Entities, ("FIN 46R") 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 reporting and
disclosure requirements of this Interpretation are effective for all financial
statements of public companies for the first period ending after December 15,
2003 and for all other types of entities for periods ending after March 15,
2004. The adoption of this interpretation did not have a material impact on the
Company's consolidated financial statements.
In December 2003, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
(SOP) 03-3, Accounting for Certain Loans or Debt Securities Acquired in a
Transfer, which addresses the accounting for differences between contractual
cash flows and expected cash flows for loans acquired in a transfer when those
differences are attributable at least in part to a decline in credit quality.
The scope of SOP 03-3 includes loans where there is evidence of deterioration in
credit quality since origination, and includes loans acquired individually, in
pools or as part of a business combination. Under SOP 03-3, the difference
between expected cash flows and the purchase price is accreted as an adjustment
to yield over the life. The Company does not expect the application of SOP 03-03
to have a material impact on our consolidated financial position or results of
operations.
In March 2004, the Emerging Issues Task Force (EITF) reached a consensus on
the remaining portions of EITF 03-01, The Meaning of Other-Than-Temporary
Impairment and It's Application to Certain Investments, effective for the first
fiscal year or interim period beginning after June 15, 2004. EITF 03-01 provides
guidance for determining when an investment is considered impaired, whether
impairment is other-than-temporary, and measurement of an impairment loss. An
investment is considered impaired if the fair value of the investment is less
than its cost. Generally, an impairment is considered other-than-temporary
unless: (1) the investor has the ability and intent to hold an investment for a
reasonable period of time sufficient for an anticipated recovery of fair value
up to (or beyond) the cost of the investment, and (2) evidence indicating that
the cost of the investment is recoverable within
19
FLORIDA COMMUNITY BANKS, INC.
March 31, 2005
a reasonable period of time outweighs evidence to the contrary. If impairment is
determined to be other-than-temporary, then an impairment loss should be
recognized equal to the difference between the investment's cost and its fair
value. Certain disclosure requirements of EITF 03-01 were adopted in 2003 and
the Company began presenting the new disclosure requirements in its consolidated
financial statements for the year ended December 31, 2003. The recognition and
measurement provisions were initially effective for other-than-temporary
impairment evaluations in reporting periods beginning after June 15, 2004.
However in September 2004, the effective date of these provisions was delayed
until the finalization of an FASB Staff Position to provide additional
implementation guidance. Due to the recognition and measurement provisions being
suspended and the final rule delayed, the Company is not able to determine
whether the adoption of these new provisions will have a material impact on its
consolidated financial position or results of operations.
In March 2004, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 105, Application of Accounting Principles to Loan
Commitments. SAB 105 requires that the fair value measurement of mortgage loan
commitments, which are derivatives, exclude any expected future cash flows
related to the customer relationship or servicing rights. The guidance in SAB
105 must be applied to mortgage loan commitments entered into after March 31,
2004. The impact on the Company is not material given the declines in mortgage
banking volume, but could be in the future. The impact is primarily the timing
of when gains should be recognized in the financial statements.
In December 2004, the FASB issued Statement of Financial Accounting
Standards No. 123 (revised 2004) entitled Share-Based Payment ("SFAS No. 123R")
that will require compensation costs related to share-based payment transactions
to be recognized in the financial statements. This Statement eliminates the
alternative to use Opinion 25's intrinsic value method of accounting that was
provided in Statement 123 as originally issued. Under Opinion 25, issuing stock
options to employees generally resulted in recognition of no compensation cost.
This statement requires entities to recognize the cost of employee services
received in exchange for awards of equity instruments based on the grant-date
fair value of those awards (with limited exceptions). Recognition of that
compensation cost helps users of financial statements to better understand the
economic transactions affecting an entity and to make better resource allocation
decisions. On April 21, 2005, the SEC amended Rule 4-01(a) of Regulation S-X
regarding the compliance date for SFAS 123(R) so that the effective date is
delayed to January 1, 2006. The Company is currently evaluating the provisions
of SFAS No. 123R and will adopt it on January 1, 2006.
On December 16, 2004, The FASB issued SFAS 153, Exchanges of Nonmonetary
Assets, an Amendment of APB Opinion No. 29. SFAS 153 amends the principle that
exchanges of nonmonetary assets should be measured based on the fair value of
the assets exchanged and more broadly provides exceptions regarding exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetary exchange
has commercial substance when the future cash flows of the entity are expected
to change significantly as a result of the exchange. The provisions of SFAS 153
are effective for nonmonetary asset exchanges occurring in periods beginning
after June 15, 2005. Management does not believe that the adoption of this
standard will have material impact on the financial condition or the results of
operations of the Company.
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20
FLORIDA COMMUNITY BANKS, INC.
March 31, 2005
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk arising from adverse changes in the fair value of
financial instruments due to a change in interest rates, exchange rates and
equity prices. The Company's primary market risk arises from the possibility
that interest rates may change significantly and affect the fair value of the
Company's financial instruments (also known as interest rate risk).
The primary objective of Asset/Liability Management at the Company is to
manage interest rate risk and achieve reasonable stability in net interest
income throughout interest rate cycles. This is achieved by maintaining a
reasonable balance between rate sensitive earning assets and rate sensitive
interest-bearing liabilities. The amount invested in rate sensitive earning
assets compared to the amount of rate sensitive liabilities issued are the
principal factors in projecting the effect that fluctuating interest rates will
have on future net interest income and the fair value of financial instruments.
Rate sensitive earning assets and interest-bearing liabilities are those that
can be re-priced to current market rates within a given time period. Management
monitors the rate sensitivity of all interest earning assets and interest
bearing liabilities, but places particular emphasis on the upcoming year. The
Company's Asset/Liability Management policy requires risk assessment relative to
interest pricing and related terms and places limits on the risk to be assumed
by the Company.
The Company uses several tools to monitor and manage interest rate
sensitivity. One of the primary tools is simulation analysis. Simulation
analysis is a method of estimating the fair value of financial instruments, the
earnings at risk, and capital at risk under varying interest rate conditions.
Simulation analysis is used to estimate the sensitivity of the Company's net
interest income and stockholders' equity to changes in interest rates.
Simulation analysis accounts for the expected timing and magnitude of assets and
liability cash flows as interest rates change, as well as the expected timing
and magnitude of deposit flows and rate changes whether or not these deposits
re-price on a contractual basis. In addition, simulation analysis includes
adjustments for the lag between movements in market interest rates on loans and
interest-bearing deposits. These adjustments are made to reflect more accurately
possible future cash flows, re-pricing behavior and ultimately net interest
income.
As of March 31, 2005, the Company's simulation analysis indicated that the
Company is at greatest risk in a sudden decreasing interest rate environment.
This analysis assumes that rates will change suddenly on a specific date. The
Company believes that an actual increase of interest rates will occur over a
prolonged period of time and, during the period of change, liabilities will
re-price faster than the assets (due to the effect of the "floored" loans) and
the Company will experience a decline in its net interest margin. A prolonged
increase in rates is anticipated to have an effect inverse to the simulation
analysis depicted in the following table. This table depicts the results of the
simulation assuming one and two percent decrease and increase in market interest
rates.
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21
FLORIDA COMMUNITY BANKS, INC.
March 31, 2005
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......................................... $ 618,286 $ 609,054 $ 622,918 $ 604,950
Federal funds sold and cash equivalents....... 3,842 3,824 3,851 3,815
Securities.................................... 67,949 62,947 69,703 59,761
------------ ------------- ------------- --------------
Total Interest-earning Assets............... 690,077 675,825 696,472 668,526
------------ ------------- ------------- --------------
Interest-bearing Liabilities
Deposits - Savings and demand................. 186,772 184,110 188,103 182,779
Deposits - Time............................... 277,751 271,191 281,031 267,911
Other borrowings.............................. 69,046 61,166 72,985 57,227
------------ ------------- ------------- --------------
Total Interest-bearing Liabilities.......... 533,569 516,467 542,119 507,917
------------ ------------- ------------- --------------
Net Difference in Fair Value..................... $ 156,508 $ 159,358 $ 154,353 $ 160,609
============ ============= ============= ==============
Change in Net Interest Income.................... $ (1,059) $ 1,483 $ (2,204) $ 2,910
============ ============= ============= ==============
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 Rule 13a-15(e) under the Securities Exchange Act of 1934
(the "Exchange Act"), the Company's chief executive officer and chief financial
officer have concluded that as of the end of the period covered by this
Quarterly Report of Form 10-Q such disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Corporation
in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms.
Changes in Internal Controls
During the quarter under report, there was no change in the Company's
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
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22
FLORIDA COMMUNITY BANKS, INC.
March 31, 2005
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 6 - Exhibits
The following Exhibits are filed with this report:
Exhibit No. Exhibit Page
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, 2004, and incorporated herein by reference).
4.2 Specimen Common Stock Certificate of FCBI (included as Exhibit
4.1 to FCBI's Registration Statement on Form 8-A filed with the
SEC on April 15, 2002, and incorporated herein by reference).
10.1 Employment agreement with Thomas S. Junker dated December 9,
1997 (included as Exhibit 10.1 to the Bank's Registration
Statement on Form 10-SB-A for the year ended December 31, 1998,
and incorporated herein by reference).
10.2 2002 Key Employee Stock Compensation Program of FCBI (included
as Appendix D to the Bank's Definitive Schedule 14-A filed with
the FDIC on March 22, 2002, and incorporated herein by
reference).
10.3 Amended and Restated Trust Agreement among Florida Community
Banks, Inc. as depositor, Wilmington Trust Company as property
trustee, Wilmington Trust Company, as Delaware trustee, and
Stephen L. Price, and Thomas V. Ogletree as administrators,
dated as of June 21, 2002 (included as Exhibit 10.3 to the
Company's Form 10-Q for the quarter ended June 30, 2002, and
incorporated herein by reference).
23
FLORIDA COMMUNITY BANKS, INC.
March 31, 2005
Exhibit No. Exhibit Page
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 March 31, 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).
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).
10.7 Employee Stock Ownership Plan (included as Exhibit 10.5 to the
Company's Form S-8 filed May 6, 2004.
11 Statement re: computation of earnings per common share 26
14 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.)
31.1 Chief Executive Officer - Certification of principal executive
officer pursuant to the Exchange Act Rule
13(a)-14(a) or 15(d)-14(a). 27
31.2 Chief Financial Officer - Certification of principal financial
officer pursuant to the Exchange Act Rule
13(a)-14(a) or 15(d)-14(a). 28
32.1 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. 29
32.2 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. 29
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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
--------------------------------------------- ---------------------------
Stephen L. Price Date
President, Chief Executive Officer
And Chairman of the Board of Directors
/s/ Guy W. Harris
--------------------------------------------- ---------------------------
Guy W. Harris 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 periods ended March 31, 2005 and 2004.
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
Ended March 31
2005 2004
------------- --------------
Basic Earnings Per Share:
Net income................................................................... $ 4,042,838 $ 2,785,380
============= ==============
Earnings on common shares.................................................... $ 4,042,838 $ 2,785,380
============= ==============
Weighted average common shares
outstanding - basic........................................................ 4,526,904 4,507,303
============= ==============
Basic earnings per common share.............................................. $ 0.89 $ 0.62
============= ==============
Diluted Earnings Per Share:
Net income................................................................... $ 4,042,838 $ 2,785,380
============= ==============
Earnings on common shares.................................................... $ 4,042,838 $ 2,785,380
============= ==============
Weighted average common shares
outstanding - diluted...................................................... 4,591,946 4,550,080
============= ==============
Diluted earnings per common share............................................ $ 0.88 $ 0.61
============= ==============
26
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
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 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
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
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-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
first quarter that has materially affected or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: May 9, 2005 By: /s/ Stephen L. Price
--------------- ---------------------------------------------
Stephen L. Price, President,
Chief Executive Officer and
Chairman of the Board of Directors
27
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Guy W. Harris, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Florida Community
Banks, Inc.
2. Based on my knowledge, this 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
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
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-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
first quarter that has materially affected or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: May 9, 2005 By: /s/ Guy W. Harris
---------------- ---------------------------------------------
Guy W. Harris
Chief Financial Officer
28
EXHIBIT 32.1
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, 2005 ("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 9, 2005 By: /s/ Stephen L. Price
------------- ---------------------------------
Stephen L. Price
President, Chief Executive Officer
And Chairman of the Board of Directors
EXHIBIT 32.2
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, 2005 ("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 9, 2005 By: /s/ Guy W. Harris
-------------------- -----------------------------------------
Guy W. Harris
Chief Financial Officer
29