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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 SEPTEMBER 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 November 10, 2003: 3,747,979
Form 10-Q
FLORIDA COMMUNITY BANKS, INC.
September 30, 2003
TABLE OF CONTENTS
Page No.
Part I - Financial Information
Item 1 - Consolidated Financial Statements (Unaudited)
Consolidated Statements of Financial Condition as of September 30, 2003
and December 31, 2002....................................................................... 3
Consolidated Statements of Income For The Three Months Ended
September 30, 2003 and 2002................................................................. 4
Consolidated Statements of Income For The Nine Months Ended
September 30, 2003 and 2002................................................................. 5
Consolidated Statement of Shareholders' Equity For The Nine Months
Ended September 30, 2003.................................................................... 6
Consolidated Statements of Cash Flows For The Nine Months
Ended September 30, 2003 and 2002........................................................... 7
Notes to Consolidated Financial Statements..................................................... 8
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.................................................. 13
Item 3 - Quantitative and Qualitative Disclosures About Market Risk..................................... 20
Item 4 - Controls and Procedures........................................................................ 21
Part II - Other Information
Item 1 - Legal Proceedings.............................................................................. 22
Item 6 - Exhibits and Reports on Form 8-K............................................................... 22
Signatures
2
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, 2003 (Unaudited) and December 31, 2002
September 30,
2003 December 31,
(Unaudited) 2002
Assets
Cash and due from banks...................................................... $ 10,692,726 $ 13,264,464
Federal funds sold........................................................... 16,528,000 32,902,000
Interest-bearing deposits with banks......................................... 4,449,284 12,668,201
---------------- -----------------
Cash and Cash Equivalents............................................. 31,670,010 58,834,665
Securities available for sale................................................ 2,374,977 2,874,977
Securities held-to-maturity, fair value of $26,173,066 and $34,120,018....... 26,620,221 33,339,505
Loans, net of unearned income................................................ 424,260,094 416,414,676
Allowance for loan losses.................................................... (7,680,653) (6,319,298)
---------------- -----------------
Net Loans............................................................. 416,579,441 410,095,378
Premises and equipment, net.................................................. 12,647,822 10,109,252
Accrued interest............................................................. 2,778,426 2,904,150
Foreclosed real estate....................................................... 6,055,413 --
Deferred taxes, net.......................................................... 3,716,057 1,960,513
Other assets................................................................. 1,167,633 1,329,363
---------------- -----------------
Total Assets.......................................................... $ 503,610,000 $ 521,447,803
================ =================
Liabilities and Shareholders' Equity
Liabilities
Deposits
Non-interest-bearing...................................................... $ 67,215,629 $ 54,478,258
Interest-bearing.......................................................... 341,853,628 369,456,264
---------------- -----------------
Total Deposits........................................................ 409,069,257 423,934,522
Federal Home Loan Bank advances.............................................. 40,000,000 50,000,000
Other long-term debt......................................................... 26,339 39,415
Guaranteed preferred beneficial interests in the Company's
subordinated debentures................................................... 10,000,000 10,000,000
Deferred compensation........................................................ 386,633 424,745
Accrued interest............................................................. 1,162,793 1,866,824
Other liabilities............................................................ 2,380,130 718,497
---------------- -----------------
Total Liabilities..................................................... 463,025,152 486,984,003
Shareholders' Equity
Common stock-par value $.01 per share, 10,000,000 shares
authorized, 3,747,979 shares issued and outstanding..................... 37,480 37,480
Paid-in capital........................................................... 16,673,808 16,673,808
Retained earnings......................................................... 23,873,560 17,752,512
---------------- -----------------
Total Shareholders' Equity............................................ 40,584,848 34,463,800
---------------- -----------------
Total Liabilities and Shareholders' Equity................................... $ 503,610,000 $ 521,447,803
================ =================
See notes to consolidated financial statements
3
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three months Ended September 30, 2003 and 2002
(Unaudited)
Three Months
Ended September 30,
2003 2002
---------------- -----------------
Interest Income
Interest and fees on loans................................................ $ 8,149,959 $ 7,514,425
Interest and dividends
Taxable securities...................................................... 284,050 554,528
Tax-exempt securities................................................... -- 979
Interest on federal funds sold and other interest income.................. 67,802 26,391
---------------- -----------------
Total Interest Income................................................. 8,501,811 8,096,323
---------------- -----------------
Interest Expense
Interest on deposits...................................................... 1,862,040 2,500,247
Interest on borrowed funds................................................ 518,518 450,723
---------------- -----------------
Total Interest Expense................................................ 2,380,558 2,950,970
---------------- -----------------
Net Interest Income.......................................................... 6,121,253 5,145,353
Provision for loan losses.................................................... 700,000 1,100,000
---------------- -----------------
Net Interest Income After Provision for Loan Losses.......................... 5,421,253 4,045,353
Noninterest Income
Customer service fees..................................................... 508,363 501,241
Real estate rental income ................................................ 20,283 24,096
Other non-interest income................................................. 134,113 117,955
---------------- -----------------
Total Noninterest Income.............................................. 662,759 643,292
---------------- -----------------
Noninterest Expenses
Salaries and employee benefits............................................ 1,903,948 1,492,150
Occupancy and equipment expense........................................... 378,015 397,940
Other non-interest expenses............................................... 652,331 408,333
---------------- -----------------
Total Noninterest Expenses............................................ 2,934,294 2,298,423
---------------- -----------------
Income before income taxes................................................... 3,149,718 2,390,222
Provision for income tax expense............................................. 1,184,675 902,005
---------------- -----------------
Net Income................................................................... $ 1,965,043 $ 1,488,217
================ =================
Earnings Per Common Share
Basic..................................................................... $ 0.52 $ 0.40
Diluted................................................................... 0.52 0.40
Weighted Average Shares Outstanding
Basic..................................................................... 3,747,979 3,747,979
Diluted................................................................... 3,766,829 3,761,382
See notes to consolidated financial statements
4
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Nine months Ended September 30, 2003 and 2002
(Unaudited)
Nine Months
Ended September 30,
2003 2002
---------------- -----------------
Interest Income
Interest and fees on loans................................................ $ 23,950,231 $ 21,032,976
Interest and dividends
Taxable securities...................................................... 1,004,934 1,665,684
Tax-exempt securities................................................... -- 3,855
Interest on federal funds sold and other interest income.................. 297,717 202,864
---------------- -----------------
Total Interest Income................................................. 25,252,882 22,905,379
---------------- -----------------
Interest Expense
Interest on deposits...................................................... 6,309,702 7,463,671
Interest on borrowed funds................................................ 1,625,728 1,209,177
---------------- -----------------
Total Interest Expense................................................ 7,935,430 8,672,848
---------------- -----------------
Net Interest Income.......................................................... 17,317,452 14,232,530
Provision for loan losses.................................................... 1,300,000 1,710,000
---------------- -----------------
Net Interest Income After Provision for Loan Losses.......................... 16,017,452 12,522,530
Noninterest Income
Customer service fees..................................................... 1,400,832 1,102,424
Real estate rental income ................................................ 63,836 66,712
Other non-interest income................................................. 490,748 461,387
Security gains............................................................ -- 36,083
---------------- -----------------
Total Noninterest Income.............................................. 1,955,416 1,666,606
---------------- -----------------
Noninterest Expenses
Salaries and employee benefits............................................ 5,272,619 4,201,363
Occupancy and equipment expense........................................... 1,137,240 1,170,300
Other non-interest expenses............................................... 1,729,084 1,292,182
---------------- -----------------
Total Noninterest Expenses............................................ 8,138,943 6,663,845
---------------- -----------------
Income before income taxes................................................... 9,833,925 7,525,292
Provision for income tax expense............................................. 3,712,877 2,824,385
---------------- -----------------
Net Income................................................................... $ 6,121,048 $ 4,700,907
================ =================
Earnings Per Common Share
Basic..................................................................... $ 1.63 $ 1.25
Diluted................................................................... 1.62 1.25
Cash Dividends Declared
Cash dividends declared per common share.................................. $ 0.00 $ 0.29
Weighted Average Shares Outstanding
Basic..................................................................... 3,747,979 3,747,979
Diluted................................................................... 3,768,805 3,761,382
See notes to consolidated financial statements
5
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Nine months Ended September 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 - Nine months ended
September 30, 2003..................... -- -- 6,121,048 6,121,048
------------- ------------- -------------- ----------------
Balance at September 30, 2003............. $ 31,233 $ 1,680,055 $ 23,873,560 $ 40,584,848
============= ============= ============== ================
See notes to consolidated financial statements
6
FLORIDA COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months Ended September 30, 2003 and 2002
(Unaudited)
Nine Months
Ended September 30,
2003 2002
---------------- -----------------
Operating Activities
Net Income................................................................ $ 6,121,048 $ 4,700,907
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses............................................. 1,300,000 1,710,000
Depreciation, amortization, and accretion, net........................ 542,942 509,535
Decrease (increase) in accrued interest receivable.................... 125,724 (286,392)
(Decrease) increase in accrued interest payable....................... (704,031) 136,228
Other, net............................................................ (33,404) 354,110
---------------- -----------------
Net Cash Provided By Operating Activities............................. 7,352,279 7,124,388
---------------- -----------------
Investing Activities
Net decrease (increase) in held-to-maturity securities.................... 6,719,284 (7,934,370)
Net decrease (increase) in available-for-sale securities.................. 500,000 (414,502)
Net decrease in interest-bearing time deposits at banks................... -- 2,500,000
Loans made to customers, net of repayments................................ (7,845,418) (72,096,630)
Purchase of fixed assets, net............................................. (2,957,048) (2,040,096)
Net (increase) decrease in other real estate owned........................ (6,055,411) 49,788
---------------- -----------------
Net Cash Used In Investing Activities................................. (9,638,593) (79,935,810)
---------------- -----------------
Financing Activities
Net increase (decrease) in noninterest-bearing deposits................... 12,737,371 (4,420,350)
Net (decrease) increase in interest-bearing deposits...................... (27,602,636) 60,094,337
Dividends paid............................................................ -- (1,093,161)
(Decrease) in short-term borrowings....................................... -- (1,112,450)
(Decrease) in other debt.................................................. (13,076) --
Repayment of subordinated note............................................ -- (5,000,000)
Net (decrease) increase in Federal Home Loan Bank advances................ (10,000,000) 7,500,000
Issuance of subordinated floating rate deferrable interest debentures..... -- 10,000,000
----------------- -----------------
Net Cash Provided By (Used In) Financing Activities................... (24,878,341) 65,968,376
---------------- -----------------
Net (Decrease) in Cash and Cash Equivalents................................. (27,164,655) (6,843,046)
Cash and Cash Equivalents at Beginning of Period............................. 58,834,665 23,039,128
---------------- -----------------
Cash and Cash Equivalents at End of Period................................... $ 31,670,010 $ 16,196,082
================ =================
See notes to consolidated financial statements
7
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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 nine-month period ended September 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.
On April 15, 2002, FCBI acquired all the outstanding stock of the Bank through a
100%, one-for-one stock exchange under a method of accounting similar to the
pooling method. This method is allowed under Statement of Financial Accounting
Standards No. 141, Business Combinations ("SFAS 141") as defined by Accounting
Principles Board Opinion No. 16, "Business Combinations" ("APB 16") when the
exchange of shares between entities under common control result only in a change
of the reporting entity (see Note F). Certain reported amounts have been
reclassified in prior periods to conform to the most recent period presented.
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
September 30, 2003
(Unaudited)
Note C - Income Taxes
The effective tax rates of approximately 37.6% and 37.7% for the three months
ended September 30, 2003 and 2002 and 37.8% and 37.5% for the nine months ended
September 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 September 30, 2003, the Company had no net unrealized gains/losses in
available-for-sale securities, which are reflected in the presented assets and
resulted in no change in shareholders' equity. There were no trading securities.
Note E - Shareholders' Equity
In December 2002 and October 2003, the Company declared a stock split and issued
1.2 shares for each share outstanding of the Company's common stock. This effect
of this stock split has been retroactively reflected in the Company's
consolidated financial statements. All references to weighted average shares
outstanding and per share amounts included in the accompanying financial
statements and notes reflect and the stock split and its retroactive effect.
Note F - Segment Information
All of the Company's offices offer similar products and services, are located in
the same geographic region, and serve similar segments of the market. As a
result, management considers all units as one operating segment and therefore
feels that the basic financial statements and related footnotes provide details
related to segment reporting.
Note 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. No
stock-based employee compensation cost is reflected in net income for these
plans.
9
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)
Note G - Stock-Based Compensation - Continued
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 7,200 (split adjusted) options in 2003, at an exercise price
of $16.67 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 66,240 (split adjusted) granted in 2001 at
an exercise price of $12.50 per share, with similar terms and conditions as the
2003 options. The compensation expense related to the granted options has been
allocated over the vesting period for purposes of pro forma disclosures. Options
expire ten years after the date of grant.
The Company's actual and pro forma information follows:
Nine Months Ended
September 30,
2003 2002
---------------- -----------------
Net Income
As Reported.................................................................. $ 6,121,048 $ 4,700,907
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of tax................................................................ 16,800 35,028
---------------- -----------------
Pro forma net income......................................................... $ 6,104,248 $ 4,665,879
================ =================
Basic earnings per share:
As Reported.................................................................. $ 1.63 $ 1.25
================ ================
Pro forma.................................................................... $ 1.63 $ 1.24
================ ================
Diluted earnings per share:
As Reported.................................................................. $ 1.62 $ 1.25
================ ================
Pro forma.................................................................... $ 1.62 $ 1.24
================ ================
10
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(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 September 30, 2003 and December 31, 2002:
Period Ended
September 30, December 31,
2003 2002
---------------- -----------------
Commitments to extend credit................................................. $ 107,952,000 $ 94,694,000
Standby and commercial letters of credit..................................... 3,993,000 5,852,000
---------------- -----------------
Total commitments and contingencies.......................................... $ 111,945,000 $ 100,546,000
================ =================
Note I - Business Combination
On April 11, 2002 a majority of the shareholders of the Bank approved a Plan of
Reorganization ("Plan") whereby the Bank would become the subsidiary of Florida
Community Banks, Inc., a Florida corporation and a registered bank holding
company. Under the Plan, each share of the Bank's common stock was converted
into one share of Florida Community Banks, Inc. common stock. The acquisition of
the Bank occurred on April 15, 2002. These financial statements reflect the
consolidated operations of the Bank and FCBI for all periods presented.
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
11
FLORIDA COMMUNITY BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)
Note I - Business Combination - Continued
with respect to the preferred securities. The Company accounts for the FCBI
Trust preferred securities as a minority interest. Subject to certain
limitations, the preferred securities qualify as Tier 1 capital and are
presented in the Consolidated Statements of Financial Condition as "Guaranteed
preferred beneficial interests in the Company's subordinated debentures." The
sole asset of FCBI Trust is the subordinated debentures issued by the Company.
Both the preferred securities of FCBI Trust and the subordinated debentures of
the Company each have approximately 30-year lives. However, both the Company and
FCBI Trust have a call option of five years, subject to regulatory capital
requirements.
Note J - Subsequent Events
On October 15, 2003 the Company announced a cash dividend of $0.25 per share, to
all shareholders of record on November 3, 2003. The Company also announced a 1.2
to 1 stock split effective December 1, 2003 to all shareholders of record on
November 3, 2003. Weighted average shares and earnings per share data have been
retroactively restated to reflect the stock split.
12
FLORIDA COMMUNITY BANKS, INC.
September 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 September 30, 2003, Form 10-Q, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
appearing in the Bank's Annual Report on Form 10-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 meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchanged Act of 1934, as
amended. The Company intends such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and is including this
statement for purposes of invoking these safe harbor provisions. Forward-looking
statements, which are based on certain assumptions and describe future plans,
strategies and expectations of the Company are generally identifiable by the
words "believe, intend, anticipate, estimate, project, plan", or similar
expressions. The Company's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain and actual results may differ
from those predicted. Factors which could have a material adverse effect on the
operations and future prospects of the Company and the subsidiaries include, but
are not limited to changes in interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve
Board, the quality or composition of the Company's loan or investment
portfolios, demand for loan products, deposit flows, cost and availability of
borrowings, competition, demand for financial services in the Company's market
area, real estate values in the Company's primary market area, the possible
short-term dilutive effect of potential acquisitions, and tax and financial
accounting principles, policies and guidelines. These risks and uncertainties
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements.
FINANCIAL CONDITION
September 30, 2003 compared to December 31, 2002
The Company continued its operations concentrating in the origination of loans
in southwestern Florida. As discussed more fully below, loan growth was funded
by an increase in deposits. No significant changes in operating goals or
policies occurred during the first nine months of 2003.
13
FLORIDA COMMUNITY BANKS, INC.
September 30, 2003
Loans
Loans comprised the largest single category of the Company's earning assets on
September 30, 2003. Loans, net of unearned income and reserve for loan losses,
totaled 84.2% of total assets at September 30, 2003 compared to 79.8% of total
assets at December 31, 2002. During the first nine months of 2003, loans
increased approximately $7.8 million with agricultural, commercial and
industrial loans declining $2.1 million offset by a $9.9 million increase in
loans secured by real estate. The rapid influx of population to southwest
Florida continued to influence the demand for real estate loans, particularly
construction and development loans, although demand has slowed due to current
economic factors.
The company has a significant investment in loans to finance land development
and construction. At September 30, 2003, the Company had $162 million in
construction, land development and other land loans outstanding, compared to a
total loan portfolio of $424 million.
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 $7.2 million during the first nine months of 2003 as the
investment portfolio was used to fund certificates of deposit maturing during
that period.
Asset Quality
From December 31, 2002 to September 30, 2003, the Company's asset quality
deteriorated due to the increase in non-performing loans. The ratio of loan loss
allowance to total nonperforming assets (defined as nonaccrual loans, loans past
due 90 days or greater, restructured loans, nonaccruing securities, and other
real estate) decreased from 0.82:1 to 0.44:1. The percentage of nonperforming
assets to total assets increased from 1.48% to 3.50%, and the percentage of
nonperforming loans to total loans increased from 1.52% to 1.81%. These ratios
were affected by a $6.1 million increase in foreclosed loans, secured by real
estate, that were classified as other real estate owned at September 30, 2003.
In response to this increase in non-performing loans, the allowance for loan
losses for the Company was increased by $1.4 million during the first nine
months of 2003.
During the first nine months of 2003, recoveries on loans previously charged-off
exceeded the amount of loans charged-off by $59 thousand.
Deposits
Total deposits of $409 million at September 30, 2003, represented a decrease of
$14.8 million (3.5%) from total deposits of $424 million at year-end 2002. The
majority of the decrease was attributable to roll off of Internet certificates
of deposit (gathered by posting the Bank's rates on an Internet bulletin board
accessed by various financial institutions in the United States) and brokered
certificates of deposit. At September 30, 2003, brokered and Internet
certificates of deposit totaled approximately $98 million.
14
FLORIDA COMMUNITY BANKS, INC.
September 30, 2003
Shareholders' Equity
Consolidated shareholders' equity increased $6.1 million from December 31, 2002
to September 30, 2003, due to net income retained during the first nine months
of 2003. On September 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 also can provide a return to
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 $142 million at September 30, 2003,
and there are no investment securities maturing within one year. In addition,
Federal funds sold (an overnight investment) totaled $16.5 million at September
30, 2003.
The liability portion of the balance sheet provides liquidity through deposits
to various customers' interest-bearing and noninterest-bearing deposit accounts.
At September 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 $27 million and credit availability at the Federal Home Loan Bank
of Atlanta (up to 15% of assets, approximately $75 million) of which $29 million
is available and unused. At September 30, 2003, the Bank had unused collateral
totaling approximately $14 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.
15
FLORIDA COMMUNITY BANKS, INC.
September 30, 2003
On June 13, 2002, the Company entered into a $5,000,000, 360-day term loan
agreement with The Bankers Bank, Atlanta, Georgia, at an interest rate of prime
less one-half (P-1/2%). The Company has pledged 51% of the outstanding shares of
Florida Community Bank, a 100% owned subsidiary of the Company, as collateral on
this note. At September 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 $50.6 million
at September 30, 2003. Tier II capital components include supplemental capital
components such as qualifying allowance for loan losses and any 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 approximately $57 million at September 30, 2003.
The Company's and the Bank's current capital positions exceed the
"well-capitalized" regulatory guidelines. Management has reviewed and will
continue to monitor the Company's asset mix and the loan loss allowance, which
are the areas determined to be most affected by these capital requirements.
RESULTS OF OPERATIONS
Three months ended September 30, 2003 and 2002
Summary
Net income of the Company for the three months ended September 30, 2003, totaled
$1,965,043 compared to $1,488,217 for the same period in 2002, representing a
32.0% increase. The increase was due principally to a $976 thousand increase in
net interest income and a $400 thousand decrease in the provision for loan
losses. As explained more fully below, the increase in net interest income was
due to an increased volume of loans and interest-bearing deposits, each offset
by a decline in rates. The decrease in the provision in loan losses, as compared
to the three months ended September 30, 2002, was in response to a review of the
non-performing loans as compared to the overall loan portfolio, which indicated
that a lower provision in the current quarter, would keep the allowance for loan
losses adequate.
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 September 30, 2003,
increased $976 thousand (19.0%) from the same period in 2002. This increase was
due primarily to the increase in loan interest and fee income with a
significantly lower increase in interest expense. Interest income increased due
to greater volume, partially offset by a decline in the rate. Interest expense
increased due to greater volume, all of which was offset by the declines in the
rate paid for deposits. Lower deposit rates available in the brokered
certificate of deposit markets prompted the Company to seek funds from that
source.
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
16
FLORIDA COMMUNITY BANKS, INC.
September 30, 2003
at lower rates. During 2003, higher rate certificates of deposit re-priced,
causing the net interest margin to improve. During periods when rates generally
increase, the Company may benefit from increased net interest income due to its
asset sensitive position. A principal reason for the improved net interest
income during the third quarter of 2003 was the re-pricing of the Bank's
certificates of deposit at lower rates during most of 2003.
Provision for Loan Losses
The provision for loan losses represents the charge against current earnings
necessary to maintain the reserve for loan losses at a level which management
considers appropriate. This level is determined based upon the Bank's historical
charge-offs, management's assessment of current economic conditions, the
composition of the loan portfolio and the levels of nonaccruing and past due
loans. The provision for loan losses was $700,000 for the three months ended
September 30, 2003, compared to $1,100,000 during the same period in 2002.
Charge-offs totaled approximately $20 thousand for the three months ended
September 30, 2003. During the three months ended September 30, 2002, net
charge-offs totaled approximately $10 thousand. The reserve for loan losses as a
percent of outstanding loans, net of unearned income, was 1.81% at September 30,
2003, compared to 1.52% at year-end 2002.
Noninterest Income
Noninterest income for the three months ended September 30, 2003, was $663
thousand compared to $643 thousand for the same period of 2002, an increase of
3.0%. The increase was due in most part to an increase in customer service fees
of $7 thousand.
Noninterest Expenses
Noninterest expenses for the three months ended September 30, 2003, totaled $2.9
million, reflecting a 27.7% increase from the same period of 2002. The primary
components of noninterest expenses are salaries and employee benefits, which
increased $412 thousand for the three months ended September 30, 2003, compared
to the same period in 2002, caused by added staff, particularly in the branch
system and mortgage broker activities. Occupancy costs did not change
significantly. Both salaries and employee benefits costs increased due to the
new branch offices opened during 2002 and 2003 and an added emphasis on mortgage
loan brokerage operations.
Income Taxes
The provision for income taxes of $1,184,675 for the three months ended
September 30, 2003, increased $283 thousand compared to the same period of 2002,
due to higher taxable 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.
Nine months ended September 30, 2003 and 2002
Summary
Net earnings of the Company for the nine months ended September 30, 2003,
totaled $6,121,048 compared to $4,700,907 for the same period in 2002,
representing a 30.2% increase. The increase was due principally increased net
interest income after the loan loss provision of $3.8 million, partially offset
by a $2.5 million increase in noninterest expenses.
17
FLORIDA COMMUNITY BANKS, INC.
September 30, 2003
Net Interest Income
Net interest income of the Company during the nine months ended September 30,
2003, increased $3.1 million (21.7%) from the same period in 2002. This increase
was due primarily to the increase in average loans outstanding and the
re-pricing of certificates of deposit at lower rates.
The Company was in an asset sensitive position during 2001 and 2002 with a
larger dollar amount of interest-earning assets subject to re-pricing than
interest-bearing liabilities. During the first nine 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 $1,300,000 for the nine months ended September
30, 2003, and $1,710,000 for the comparable period in 2002. Net recoveries
during the nine months ending September 30, 2003, totaled $59 thousand. During
the comparable period during 2002 net recoveries totaled $16 thousand. As noted
previously, the increase in the allowance for loan losses during 2003 was in
response to an increase in non-performing loans and due to loan portfolio growth
since December 31, 2002.
Noninterest Income
Noninterest income for the nine months ended September 30, 2003, was $1,955,416
compared to $1,666,606 for the same period of 2002. The increase was caused
primarily by an increase in charges for cash services to customers and mortgage
brokerage fees.
Noninterest Expenses
Noninterest expenses for the nine months ended September 30, 2003, totaled
$8,138,943 and reflected a 22.1% increase from the same period of 2002. Both
employee costs and other noninterest expenses increased due to a new branch
offices opening in 2002 and 2003.
Income Taxes
The provision for income taxes of $3,712,877 for the nine months ended September
30, 2003, increased $888 thousand compared to the same period of 2002 due to
increased taxable income. The effective tax rates of approximately 37.8% for
2003 and 37.5% for 2002 were higher than the federal tax rate due to the effect
of state income tax, net of federal tax benefit.
18
FLORIDA COMMUNITY BANKS, INC.
September 30, 2003
Other Accounting Issues
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, 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.
The foregoing may not constitute a comprehensive summary of all material changes
or developments affecting the manner in which the Company keeps its books and
records or performs it's financial accounting responsibilities. It is intended
only as a summary of the most recent accounting pronouncements made which are of
particular interest to financial institutions.
19
FLORIDA COMMUNITY BANKS, INC.
September 30, 2003
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 September 30, 2003, the Company's simulation analysis indicated that the
Company's net interest income 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.
[The remainder of this page intentionally left blank.]
20
FLORIDA COMMUNITY BANKS, INC.
September 30, 2003
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......................................... $ 430,298 $ 417,352 $ 436,168 $ 411,170
Federal funds sold and cash equivalents....... 20,977 20,977 20,977 20,977
Securities.................................... 27,583 24,705 28,703 23,208
------------ ------------- ------------- --------------
Total Interest-earning Assets............... 478,858 463,034 485,848 455,355
------------ ------------- ------------- --------------
Interest-bearing Liabilities
Deposits - Savings and demand................. 143,341 138,481 145,786 136,006
Deposits - Time............................... 203,162 198,754 205,367 196,549
Other borrowings.............................. 41,035 39,018 42,043 38,009
------------ ------------- ------------- --------------
Total Interest-bearing Liabilities.......... 387,538 376,253 393,196 370,564
------------ ------------- ------------- --------------
Net Difference in Fair Value..................... $ 91,320 $ 86,781 $ 92,652 $ 84,791
============ ============= ============= ==============
Change in Net Interest Income.................... $ (270) $ 162 $ (629) $ 313
============ ============= ============= ==============
Item 4. Controls and Procedures
The Company has evaluated the effectiveness of its disclosure controls and
procedures pursuant to Securities Exchange Act Rule 13a-14. The evaluation was
performed under the supervision and with the participation of management,
including the chief executive officer and the chief financial officer, within 90
days prior to the date of the filing of this annual report. Based on this
evaluation, the chief executive officer and chief financial officer have
concluded that the disclosure controls and procedures are effective in ensuring
that all material information required to be disclosed in this quarterly 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.
September 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 6 - Exhibits and Reports on Form 8-K
Exhibit No. Exhibit Page
- ---------- --------------------------------------------------------------------- ------
(a) Financial Statements, Financial Schedules and Exhibits.
3.1 Articles of Incorporation of FCBI (included as Exhibit 3.1 to FCBI's
Registration Statement on Form 8-A filed with the SEC on April 15,
2002 and incorporated herein by reference).
3.2 By-laws of FCBI (included as Exhibit 3.2 to FCBI's Registration
Statement on Form 8-A filed with the SEC on April 15, 2002 and
incorporated herein by reference).
4.1 Subordinated Promissory Note, dated December 24, 2001, between Florida
Community Bank and Independent Bankers Bank of Florida (included as
Exhibit 4.1 to the Bank's Form 10-KSB for the year ended December 31,
2001, and incorporated herein by reference).
4.2 Specimen Common Stock Certificate of FCBI (included as Exhibit 4.1 to
FCBI's Registration Statement on Form 8-A filed with the SEC on April
15, 2002 and incorporated herein by reference).
10.1 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).
22
FLORIDA COMMUNITY BANKS, INC.
September 30, 2003
Exhibit No. Exhibit Page
- ---------- --------------------------------------------------------------------- ------
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 25
31.1 Chief Executive Officer - Certification pursuant to Section 302, as
adopted of the Sarbanes-Oxley Act of 2002 26
31.2 Chief Financial Officer - Certification pursuant to Section 302, as
adopted of the Sarbanes-Oxley Act of 2002 27
32.1 Chief Executive Officer - Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 28
32.2 Chief Financial Officer - Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 28
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 July 18, 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 six-month period ended June 30, 2003,
pursuant to 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 July 18, 2003, was attached as an exhibit to the
current report on Form 8-K.
[The remainder of this page intentionally left blank.]
23
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 November 10, 2003
------------------------------------- ------------------
Stephen L. Price Date
President and Chief Executive Officer
/s/ Thomas V. Ogletree November 10, 2003
------------------------------------ -------------------
Thomas V. Ogletree Date
Chief Financial Officer
24
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 September 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 Nine Months
Ended September 30, Ended September 30,
------------------------------ -----------------------------
2003 2002 2003 2002
------------- ------------- ------------ --------------
Basic Earnings Per Share:
Net income.................................... $ 1,965,043 $ 1,488,217 $ 6,121,048 $ 4,700,907
============= ============= ============= ==============
Earnings on common shares..................... $ 1,965,043 $ 1,488,217 $ 6,121,048 $ 4,700,907
============= ============= ============= ==============
Weighted average common shares
outstanding - basic......................... 3,747,979 3,747,979 3,747,979 3,747,979
============= ============= ============= ==============
Basic earnings per common share............... $ 0.52 $ 0.40 $ 1.63 $ 1.25
============= ============= ============= ==============
Diluted Earnings Per Share:
Net income.................................... $ 1,965,043 $ 1,488,217 $ 6,121,048 $ 4,700,907
============= ============= ============= ==============
Weighted average common shares
outstanding - diluted....................... 3,766,829 3,761,382 3,768,805 3,761,382
============= ============= ============= ==============
Diluted earnings per common share............. $ 0.52 $ 0.40 $ 1.62 $ 1.25
============= ============= ============= ==============
25
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: November 10, 2003
/s/ Stephen L. Price
- -----------------------
Stephen L. Price
Chief Executive Officer
26
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: November 10, 2003
/s/ Thomas V. Ogletree
- -----------------------
Thomas V. Ogletree
Chief Financial Officer
27
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 September 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: November 10, 2003 By: /s/ Stephen L. Price
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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 September 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: November 10, 2003 By: /s/ Thomas V. Ogletree
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Thomas V. Ogletree
Chief Financial Officer
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