TIB FINANCIAL CORP. - 10-Q Quarterly Report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the Quarterly Period Ended MARCH 31, 2005		Commission File Number 000-21329

TIB FINANCIAL CORP.

(Exact name of registrant as specified in its charter)


FLORIDA		65-0655973

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

599 9^th STREET NORTH, SUITE 101, NAPLES, FLORIDA 34102-5624

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (239) 263-3344

Not Applicable

(Former name, former address and former fiscal year,
if changed since last report)

Check whether the issuer (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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ or No o

Indicate by check mark whether the issuer is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes þ or No o

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:


Common Stock, $0.10 Par Value		5,710,564

Class		Outstanding as of April 30, 2005

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

TIB FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)


	March 31, 2005			December 31, 2004
	(Unaudited)
ASSETS
Cash and due from banks	$	20,216		$	27,410
Federal funds sold		62,391			15,528

Cash and cash equivalents		82,607			42,938

Investment securities available for sale		80,735			77,807
Loans, net of deferred loan costs and fees		719,285			655,678
Less: allowance for loan losses		6,541			6,243

Loans, net		712,744			649,435

Premises and equipment, net		27,141			27,559
Goodwill		155			155
Intangible assets, net		1,320			1,392
Accrued interest receivable and other assets		34,624			30,039

TOTAL ASSETS	$	939,326		$	829,325


LIABILITIES
Deposits:
Noninterest-bearing demand	$	185,012		$	152,035
Interest-bearing		614,269			535,824

Total Deposits		799,281			687,859
Federal Home Loan Bank (FHLB) advances		25,000			35,000
Short-term borrowings		19,922			12,157
Long-term borrowings		17,000			18,250
Accrued interest payable and other liabilities		9,844			7,945

TOTAL LIABILITIES		871,047			761,211


SHAREHOLDERS’ EQUITY
Preferred stock — no par value: 5,000,000
and 0 shares authorized, 0 and 0 shares issued		—			—
Common stock — $.10 par value: 20,000,000
and 7,500,000 shares authorized, 5,706,939
and 5,679,239 shares issued		571			568
Additional paid in capital		38,629			38,284
Retained earnings		29,859			28,968
Accumulated other comprehensive income		(780	)		294

TOTAL SHAREHOLDERS’ EQUITY		68,279			68,114

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	939,326		$	829,325

(See notes to consolidated financial statements)

TIB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars in thousands, except earnings per share amounts)


	Three months ended
	March 31,
	2005		2004
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	11,310	$	8,601
Investment securities:
Taxable		636		410
Tax-exempt		160		153
Interest bearing deposits in other bank		4		1
Federal Home Loan Bank Stock		27		15
Federal funds sold		209		38

TOTAL INTEREST AND DIVIDEND INCOME		12,346		9,218

INTEREST EXPENSE
Deposits		3,101		1,892
Federal Home Loan Bank advances		175		94
Short-term borrowings		73		9
Long term borrowings		383		395

TOTAL INTEREST EXPENSE		3,732		2,390


NET INTEREST INCOME		8,614		6,828

PROVISION FOR LOAN LOSSES		586		369

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		8,028		6,459

NON-INTEREST INCOME
Service charges on deposit accounts		608		644
Investment securities gains, net		—		44
Merchant bankcard processing income		1,896		1,760
Fees on mortgage loans sold		492		398
Other income		398		427

TOTAL NON-INTEREST INCOME		3,394		3,273

NON-INTEREST EXPENSE
Salaries and employee benefits		4,212		3,442
Net occupancy expense		1,276		1,122
Other expense		3,565		3,230

TOTAL NON-INTEREST EXPENSE		9,053		7,794


INCOME BEFORE INCOME TAX EXPENSE		2,369		1,938

INCOME TAX EXPENSE		822		665


NET INCOME	$	1,547	$	1,273


BASIC EARNINGS PER SHARE:	$	0.27	$	0.29
DILUTED EARNINGS PER SHARE:	$	0.26	$	0.27

(See notes to consolidated financial statements)

TIB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(dollars in thousands, except per share amounts)


					Additional					Accumulated Other			Total
			Common		Paid in		Retained			Comprehensive			Shareholders’
	Shares		Stock		Capital		Earnings			Income (Loss)			Equity
Balance, January 1, 2005		5,679,239	$	568	$	38,284	$	28,968		$	294		$	68,114
Comprehensive income:
Net income								1,547						1,547
Other comprehensive income, net of tax
benefit of $645:
Net market valuation adjustment on
securities available for sale											(1,074	)
Other comprehensive income, net of tax														(1,074	)

Comprehensive income														473

Exercise of stock options		27,700		3		280								283
Income tax benefit from stock options exercised						65								65
Cash dividends declared, $.115 per share						—		(656	)					(656	)

Balance, March 31, 2005		5,706,939	$	571	$	38,629	$	29,859		$	(780	)	$	68,279


					Additional					Accumulated Other			Total
			Common		Paid in		Retained			Comprehensive			Shareholders’
	Shares		Stock		Capital		Earnings			Income (Loss)			Equity
Balance, January 1, 2004		4,431,328	$	443	$	14,255	$	26,203		$	345		$	41,246
Comprehensive income:
Net income								1,273						1,273
Other comprehensive income, net of tax
expense of $431:
Net market valuation adjustment on
securities available for sale											740
Less: reclassification adjustment for gains
included in net income											(27	)
Other comprehensive income, net of tax														713

Comprehensive income														1,986

Exercise of stock options		57,736		6		420								426
Income tax benefit from stock options exercised						122								122
Cash dividends declared, $.1125 per share						—		(505	)					(505	)

Balance, March 31, 2004		4,489,064	$	449	$	14,797	$	26,971		$	1,058		$	43,275

(See notes to consolidated financial statements)

TIB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE IN CASH AND CASH EQUIVALENTS
(Unaudited)
(dollars in thousands)


	For the three month period ended
	March 31,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	1,547		$	1,273
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		617			527
Provision for loan losses		586			369
Deferred income tax benefit		(120	)		(115	)
Investment securities net gains		—			(44	)
Net gain on sale/disposal of premises, equipment and intangibles		(32	)		(1	)
Mortgage loans originated for sale		(45,679	)		(27,195	)
Proceeds from sale of mortgage loans		43,153			24,901
Fees on mortgage loans sold		(492	)		(398	)
Increase in accrued interest receivable and other assets		(818	)		(109	)
Increase (decrease) in accrued interest payable and other liabilities		1,960			(581	)

NET CASH PROVIDED BY (USED BY) OPERATING ACTIVITIES		722			(1,373	)


CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale		(5,000	)		—
Repayments of principal and maturities of investment securities available for sale		332			1,199
Sales of investment securities available for sale		—			2,046
Net sale of FHLB stock		129			1,250
Proceeds from sales of government guaranteed loans		—			569
Loans originated or acquired, net of principal repayments		(63,988	)		(11,854	)
Purchases of premises and equipment		(186	)		(1,525	)
Sales of premises, equipment and intangibles		93			2

NET CASH USED BY INVESTING ACTIVITIES		(68,620	)		(8,313	)


CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings		7,765			1,306
Net decrease in FHLB short-term advances		(10,000	)		(15,000	)
Repayments of FHLB long-term advances		—			(10,000	)
Repayments of notes payable		(1,250	)		—
Net increase in demand, money market and savings accounts		55,564			54,250
Net increase in time deposits		55,858			9,370
Proceeds from exercises of stock options		283			426
Cash dividends paid		(653	)		(499	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		107,567			39,853


NET INCREASE IN CASH AND CASH EQUIVALENTS		39,669			30,167
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		42,938			33,681

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	82,607		$	63,848


SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Cash paid for:
Interest	$	3,655		$	3,621

Income taxes	$	—		$	—

(See notes to consolidated financial statements)

TIB FINANCIAL CORP.
UNAUDITED CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(In thousands except for share and per share amounts)

NOTE 1 — BASIS OF PRESENTATION & ACCOUNTING POLICIES

TIB Financial Corp. is a financial holding company headquartered in Naples, Florida. TIB Financial Corp. owns and operates TIB Bank, which has a total of sixteen branches in Florida that are located in Monroe, Miami-Dade, Collier and Lee counties.

The accompanying unaudited consolidated financial statements for TIB Financial Corp. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. For further information and an additional description of the Company’s accounting policies, refer to the Company’s annual report for the year ended December 31, 2004.

The consolidated statements include the accounts of TIB Financial Corp. and its wholly-owned subsidiary, TIB Bank, and the Bank’s subsidiary, TIB Investment Center Inc. (this corporation was dissolved in January 2005 — see Note 2), collectively known as the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain amounts previously reported on have been reclassified to conform to the current period presentation.

As used in this document, the terms “we,” “us,” “our,” “TIB Financial,” and “Company” mean TIB Financial Corp. and its subsidiaries (unless the context indicates another meaning), and the term “Bank” means TIB Bank and its subsidiaries (unless the context indicates another meaning).

CRITICAL ACCOUNTING POLICIES

The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted within the United States of America and conform to general practices within the banking industry. Accounting and reporting policies for the allowance for loan losses are deemed critical since they involve the use of estimates and require significant management judgments. Losses on loans result from a broad range of causes from borrower specific problems, to industry issues, to the impact of the economic environment. The identification of these factors that lead to default or non-performance under a borrower loan agreement and the estimation of loss in these situations are very subjective. In addition, a dramatic change in the performance of one or a small number of borrowers can have a significant impact on the estimate of losses. Management has implemented a process that has been applied consistently to systematically consider the many variables that impact the estimation of the allowance for loan losses.

Additional information with regard to the Company’s methodology and reporting of the allowance for loan losses is included in the 2004 Annual Report and 10-K.

NOTE 2 — ACQUISITIONS AND DIVESTITURES

On December 15, 2004, the Company closed the sale of certain intangible assets which primarily comprised a book of business which served as the foundation of the Company’s investment center operations. The buyer paid $50 in cash at the closing. The Company recognized a gain of $50 on the transaction. Under the purchase agreement, additional cash payments totaling up to $60 may be paid to the Company subject to the achievement of certain production and customer and asset retention thresholds. Additionally, the Company will receive monthly cash payments of 10% of production related to new referrals made through December 31, 2005. On January 7, 2005, the Company filed Articles of Dissolution dissolving TIB Investment Center, Inc.

NOTE 3 — INVESTMENT SECURITIES

The amortized cost and estimated fair value of investment securities available for sale at March 31, 2005 and December 31, 2004 are presented below:


	March 31, 2005
(dollars in thousands)	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
U.S. Treasury securities	$	5,179	$	2	$	142	$	5,039
U.S. Government agencies and corporations		59,208		47		1,814		57,441
States and political subdivisions-tax-exempt		9,595		156		76		9,675
States and political subdivisions-taxable		2,691		10		13		2,688
Marketable equity securities		3,000		521		—		3,521
Mortgage-backed securities		2,311		60		—		2,371

	$	81,984	$	796	$	2,045	$	80,735


	December 31, 2004
(dollars in thousands)	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
U.S. Treasury securities	$	5,178	$	5	$	29	$	5,154
U.S. Government agencies and corporations		54,228		104		869		53,463
States and political subdivisions-tax-exempt		9,596		246		26		9,816
States and political subdivisions-taxable		2,862		17		23		2,856
Marketable equity securities		3,000		987		—		3,987
Mortgage-backed securities		2,473		58		—		2,531

	$	77,337	$	1,417	$	947	$	77,807

NOTE 4 — LOANS

Major classifications of loans are as follows:


(dollars in thousands)	March 31, 2005		December 31, 2004
Real estate mortgage loans:
Commercial	$	393,362	$	351,346
Residential		70,490		67,204
Farmland		4,825		4,971
Construction and vacant land		67,552		49,815
Commercial and agricultural loans		57,647		64,622
Indirect auto dealer loans		98,633		91,890
Home equity loans		14,637		13,856
Other consumer loans		10,075		9,817

Total loans		717,221		653,521
Net deferred loan costs		2,064		2,157

Loans, net of deferred loan costs	$	719,285	$	655,678

NOTE 5 — ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses for the three months ended March 31, 2005 and 2004 follows:


(dollars in thousands)	2005			2004
Balance, January 1	$	6,243		$	5,216
Provision for loan losses charged to expense		586			369
Loans charged off		(307	)		(243	)
Recoveries of loans previously charged off		19			5

Balance, March 31	$	6,541		$	5,347


	2005		2004
For the three months ended March 31:
Basic		5,686,233		4,462,493
Dilutive effect of options outstanding		179,866		196,901