U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[ ] 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 0-22608
FFLC BANCORP, INC.
------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 59-3204891
--------------------------------- ---------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
800 North Boulevard West, Post Office Box 490420, Leesburg, Florida 34749-0420
-------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (352) 787-3311
--------------
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common stock, par value $.01 per share 3,580,802 shares outstanding at October 11, 2002
-------------------------------------- ------------------------------------------------
FFLC BANCORP, INC.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets -
at September 30, 2002 (Unaudited) and at December 31, 2001..........................................2
Condensed Consolidated Statements of Income (Unaudited) -
Three and Nine months ended September 30, 2002 and 2001.............................................3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) -
Nine months ended September 30, 2002 and 2001.....................................................4-5
Condensed Consolidated Statements of Cash Flows (Unaudited) -
Nine months ended September 30, 2002 and 2001.....................................................6-7
Notes to Condensed Consolidated Financial Statements (Unaudited)....................................8-12
Review by Independent Certified Public Accountants....................................................13
Report on Review by Independent Certified Public Accountants..........................................14
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................................................15-22
Item 3. Quantative and Qualitative Disclosures About Market Risk........................................23
Item 4. Controls and Procedures.........................................................................23
Part II. OTHER INFORMATION
Item 1. Legal Proceedings...............................................................................23
Item 2. Changes in Securities...........................................................................23
Item 3. Default upon Senior Securities..................................................................23
Item 5. Other Information...............................................................................24
Item 6. Exhibits and Reports on Form 8-K................................................................24
SIGNATURES 25
CERTIFICATIONS...........................................................................................25-27
1
FFLC BANCORP, INC.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
($ in thousands, except per share amounts)
At At
September 30, December 31,
------------- ------------
2002 2001
---- ----
(unaudited)
Assets
Cash and due from banks $ 28,549 19,609
Interest-bearing deposits 35,516 30,183
--------- -------
Cash and cash equivalents 64,065 49,792
Securities available for sale 81,552 59,503
Loans, net of allowance for loan losses of $4,781 in 2002
and $4,289 in 2001 742,452 685,935
Accrued interest receivable 4,127 4,193
Premises and equipment, net 18,766 14,338
Foreclosed assets 197 373
Federal Home Loan Bank stock, at cost 8,200 7,700
Deferred income taxes 359 274
Other assets 1,415 1,043
--------- -------
Total $ 921,133 823,151
========= =======
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits 18,313 14,334
NOW and money-market accounts 132,829 111,961
Savings accounts 24,301 24,093
Certificates 480,761 434,740
--------- -------
Total deposits 656,204 585,128
Advances from Federal Home Loan Bank 164,000 154,000
Other borrowed funds 15,850 13,327
Guaranteed preferred beneficial interest in junior subordinated debentures 5,000 --
Accrued expenses and other liabilities 10,822 6,628
--------- -------
Total liabilities 851,876 759,083
--------- -------
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none outstanding -- --
Common stock, $.01 par value, 9,000,000 shares authorized,
4,571,694 in 2002 and 4,542,953 in 2001 shares issued 46 45
Additional paid-in-capital 31,604 31,355
Retained income 56,673 51,575
Accumulated other comprehensive income 579 440
Treasury stock, at cost (990,892 shares in 2002 and
979,021 shares in 2001) (19,645) (19,347)
--------- -------
Total stockholders' equity 69,257 64,068
--------- -------
Total $ 921,133 823,151
========= =======
See accompanying Notes to Condensed Consolidated Financial Statements.
2
FFLC BANCORP, INC.
Condensed Consolidated Statements of Income (Unaudited)
($ in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2002 2001 2002 2001
---- ---- ---- ----
Interest income:
Loans $ 13,354 13,233 39,401 39,226
Securities available for sale 782 739 2,322 2,180
Other interest-earning assets 298 342 722 929
---------- ------ ------ ------
Total interest income 14,434 14,314 42,445 42,335
---------- ------ ------ ------
Interest expense:
Deposits 5,225 6,747 15,397 20,725
Borrowed funds 2,352 2,315 6,955 6,407
---------- ------ ------ ------
Total interest expense 7,577 9,062 22,352 27,132
---------- ------ ------ ------
Net interest income 6,857 5,252 20,093 15,203
Provision for loan losses 399 225 1,270 825
---------- ------ ------ ------
Net interest income after provision
for loan losses 6,458 5,027 18,823 14,378
---------- ------ ------ ------
Noninterest income:
Deposit account fees 245 214 696 635
Other service charges and fees 449 397 1,461 1,181
Other 114 64 365 169
---------- ------ ------ ------
Total noninterest income 808 675 2,522 1,985
---------- ------ ------ ------
Noninterest expense:
Salaries and employee benefits 2,254 1,873 6,404 5,344
Occupancy expense 630 533 1,788 1,503
Deposit insurance premium 25 25 77 74
Data processing expense 238 241 730 735
Professional services 115 99 312 286
Advertising and promotion 105 112 339 320
Other 407 318 1,165 954
---------- ------ ------ ------
Total noninterest expense 3,774 3,201 10,815 9,216
---------- ------ ------ ------
Income before income taxes 3,492 2,501 10,530 7,147
Income taxes 1,315 936 3,932 2,677
---------- ------ ------ ------
Net income $ 2,177 1,565 6,598 4,470
========== ===== ===== =====
Basic income per share of common stock $ .61 .44 1.85 1.26
========== ===== ===== =====
Weighted-average number of shares outstanding
for basic 3,576,818 3,557,820 3,571,850 3,544,119
========= ========= ========= =========
Diluted income per share of common stock $ .60 .43 1.81 1.23
========= ========= ========= =========
Weighted-average number of shares outstanding
for diluted 3,647,496 3,635,164 3,644,225 3,627,263
========= ========= ========= =========
Dividends per share $ .14 .13 .42 .39
========= ========= ========= =========
See accompanying Notes to Condensed Consolidated Financial Statements
3
FFLC BANCORP, INC.
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
Nine Months Ended September 30, 2002 and 2001
($ in thousands)
Accumulated
Other
Additional Compre- Total
Common Paid-In Treasury Retained hensive Stockholders'
Stock Capital Stock Income Income Equity
----- ------- ----- ------ ------ ------
Balance at December 31, 2000 $ 45 31,010 (18,985) 47,132 81 59,283
Comprehensive income:
Net income (unaudited) -- -- -- 4,470 -- 4,470
Net change in unrealized gain on securities
available for sale, net of income taxes
of $365 (unaudited) -- -- -- -- 604 604
------
Comprehensive income (unaudited) 5,074
------
Net proceeds from the issuance of 47,686 shares of
common stock, stock options exercised
(unaudited) -- 318 -- -- -- 318
Dividends paid (unaudited) -- -- -- (1,383) -- (1,383)
Purchase of treasury stock, 19,336 shares (unaudited) -- -- (350) -- -- (350)
------- ------ ------- ------ --- ------
Balance at September 30, 2001 (unaudited) $ 45 31,328 (19,335) 50,219 685 62,942
======= ====== ======= ====== === ======
(continued)
4
FFLC BANCORP, INC.
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited), Continued
Nine Months Ended September 30, 2002 and 2001
($ in thousands)
Accumulated
Other
Additional Compre- Total
Common Paid-In Treasury Retained hensive Stockholders'
Stock Capital Stock Income Income Equity
----- ------- ----- ------ ------ ------
Balance at December 31, 2001 $ 45 31,355 (19,347) 51,575 440 64,068
Comprehensive income:
Net income (unaudited) -- -- -- 6,598 -- 6,598
Change in unrealized gains on securities
available for sale, net of income taxes
of $111 (unaudited) -- -- -- -- 184 184
Change in unrealized loss on derivative
instrument, net of income taxes
of $27 (unaudited) -- -- -- -- (45) (45)
------
Comprehensive income (unaudited) 6,737
------
Net proceeds from the issuance of 28,741 shares of
common stock, stock options exercised
(unaudited) 1 249 -- -- -- 250
Dividends paid (unaudited) -- -- -- (1,500) -- (1,500)
Purchase of treasury stock, 11,871 shares (unaudited) -- -- (298) -- -- (298)
------- ------ ------- ------ --- ------
Balance at September 30, 2002 (unaudited) $ 46 31,604 (19,645) 56,673 579 69,257
======= ====== ======= ====== === ======
See accompanying Notes to Condensed Consolidated Financial Statements.
5
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
($ in thousands)
Nine Months Ended
September 30,
-------------
2002 2001
---- ----
Cash flows from operating activities:
Net income $ 6,598 4,470
Adjustments to reconcile net income to net cash provided by operations:
Provision for loan losses 1,270 825
Depreciation 781 605
Credit for deferred income taxes (169) (135)
Net amortization of premiums and discounts on securities 130 (72)
Net deferral of loan fees and costs (83) 104
Gain on sale of foreclosed assets (51) (28)
Decrease (increase) in accrued interest receivable 66 (364)
Increase in other assets (372) (174)
Increase in accrued expenses and other liabilities 4,122 599
------- -------
Net cash provided by operating activities 12,292 5,830
------- -------
Cash flows from investing activities:
Proceeds from principal repayments and maturities on securities available for sale 11,183 8,750
Purchase of securities available for sale (33,067) (21,164)
Loan disbursements (189,634) (148,283)
Principal repayments on loans 131,071 87,006
Purchase of premises and equipment, net (5,209) (3,002)
Purchase of Federal Home Loan Bank stock (500) (1,300)
Proceeds from sales of foreclosed assets 1,086 447
------- -------
Net cash used in investing activities (85,070) (77,546)
------- -------
(continued)
6
FFLC BANCORP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited), Continued
($ in thousands)
Nine Months Ended
September 30,
--------------------
2002 2001
---- ----
Cash flows from financing activities:
Net increase in deposits $ 71,076 51,353
Net increase in advances from Federal Home Loan Bank 10,000 26,000
Net increase in other borrowed funds 2,523 8,146
Increase in guaranteed preferred beneficial interest in junior
subordinated debentures 5,000 --
Issuance of common stock 250 318
Purchase of treasury stock (298) (350)
Cash dividends paid (1,500) (1,383)
-------- ------
Net cash provided by financing activities 87,051 84,084
-------- ------
Net increase in cash and cash equivalents 14,273 12,368
Cash and cash equivalents at beginning of period 49,792 30,481
-------- ------
Cash and cash equivalents at end of period $ 64,065 42,849
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 22,503 26,957
======== ========
Income taxes $ 4,204 2,823
======== ========
Noncash investing and financing activities:
Accumulated other comprehensive income:
Net change in unrealized gain on securities available for sale, net of tax $ 184 604
======== ========
Net change in unrealized loss on derivative instrument, net of tax $ (45) --
======== ========
Transfers from loans to foreclosed assets $ 1,097 395
======== ========
Loans originated on sales of foreclosed assets $ 238 89
======== ========
Loans funded by and sold to correspondent $ 10,640 11,542
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements.
7
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Basis of Presentation. In the opinion of the management of FFLC Bancorp,
Inc.(the "Holding Company"), the accompanying condensed consolidated
financial statements contain all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial position at
September 30, 2002, the results of operations for the three- and nine-month
periods ended September 30, 2002 and 2001 and the cash flows for the
nine-month periods ended September 30, 2002 and 2001. The results of
operations for the three-and nine-month periods ended September 30, 2002,
are not necessarily indicative of results that may be expected for the year
ending December 31, 2002.
The condensed consolidated financial statements include the accounts of the
Holding Company and its three subsidiaries, First Federal Savings Bank of
Lake County (the "Bank"), First Alliance Title, LLC and FFLC Statutory
Trust I and the Bank's wholly-owned subsidiary, Lake County Service
Corporation (together, the "Company"). All significant intercompany
accounts and transactions have been eliminated in consolidation.
FFLC Statutory Trust I was formed in September 2002 for the sole purpose of
issuing $5,000,000 of trust preferred securities as more fully described in
note 6.
2. Loans. The following table sets forth the composition of the Bank's loan
portfolio in dollar amounts and percentages at the dates indicated (in
thousands):
At September 30, 2002 At December 31, 2001
--------------------- --------------------
% of % of
Amount Total Amount Total
------ ----- ------ -----
Mortgage loans:
One-to-four-family residential $ 421,513 54.97% $ 413,712 58.77%
Construction and land 29,222 3.81 22,951 3.26
Multi-family units 22,666 2.96 20,304 2.88
Commercial real estate, churches and other 131,509 17.15 108,804 15.46
--------- ----- --------- -----
Total mortgage loans 604,910 78.89 565,771 80.37
Consumer loans 136,475 17.80 119,357 16.96
Commercial loans 25,376 3.31 18,814 2.67
--------- ----- --------- -----
Total loans (1) 766,761 100.00% 703,942 100.00%
====== ======
Less:
Loans in process (20,326) (14,310)
Net deferred loan costs 798 592
Allowance for loan losses (2) (4,781) (4,289)
--------- ---------
Loans, net $ 742,452 $ 685,935
========= =========
(1) Total loans outstanding by department consists of the following (in
thousands):
At
------------------
September 30, 2002 December 31, 2001
------------------ -----------------
% of % of
Amount Total Amount Total
------ ----- ------ -----
Residential $ 413,020 53.87% $ 403,897 57.37%
Commercial 214,868 28.02 180,688 25.67
Consumer 138,873 18.11 119,357 16.96
$ 766,761 100.00% $ 703,942 100.00%
=========== ====== =========== ======
(continued)
8
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
2. Loans, Continued.
(2) Total allowance for loan losses by department consist of the following (in
thousands):
At
--------------------
September 30, 2002 December 31, 2001
------------------ -----------------
% to % to
Gross Gross
Amount Loans Amount Loans
------ ----- ------ -----
Residential $ 1,139 .28% $ 1,229 .30%
Commercial 2,621 1.22 2,039 1.13
Consumer 1,021 .73 1,021 .86
$ 4,781 . 62% $ 4,289 .61%
========= ===== ========= ====
Total gross loans originated by department, including unfunded construction
and line of credit loans, consist of the following (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2002 2001 2002 2001
---- ---- ---- ----
Residential $34,290 28,186 105,243 73,725
Commercial 18,322 15,539 72,432 64,363
Consumer 19,626 20,683 62,107 57,245
------ ------ ------ ------
$72,238 64,408 239,782 195,333
======= ====== ======= =======
3. Loan Impairment and Loan Losses. The Company also prepares a quarterly
review of the adequacy of the allowance for loan losses to identify and
value impaired loans in accordance with guidance in the Statements of
Financial Accounting Standards No. 114 and 118.
An analysis of the change in the allowance for loan losses was as follows
(in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2002 2001 2002 2001
---- ---- ---- ----
Beginning balance $ 4,701 4,054 4,289 3,552
Provision for loan losses 399 225 1,270 825
Net loans charged-off (319) (69) (778) (167)
------- ----- ----- -----
Ending balance $ 4,781 4,210 4,781 4,210
======= ===== ===== =====
(continued)
9
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
3. Loan Impairment and Loan Losses, Continued. The following summarizes the
amount of impaired loans, all of which were collateral dependent (in
thousands):
At
-------------
September 30, December 31,
------------- ------------
2002 2001
---- ----
Loans identified as impaired:
Gross loans with no related allowance for losses $ -- --
Gross loans with related allowance for losses recorded 400 306
Less: Allowances on these loans (60) (150)
----- -----
Net investment in impaired loans $ 340 156
===== =====
The average net investment in impaired loans and interest income recognized
and received on impaired loans was as follows (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2002 2001 2002 2001
---- ---- ---- ----
Average net investment in impaired loans $170 364 50 723
==== === === ===
Interest income recognized on impaired loans $ 5 -- 5 81
==== === === ===
Interest income received on impaired loans $ 5 -- 5 81
==== === === ===
During the three months ended June 30, 2001, an impaired loan in the amount
of $1.3 million was repaid.
(continued)
10
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
4. Income Per Share of Common Stock. Basic income per share of common stock
has been computed by dividing the net income for the period by the
weighted-average number of shares outstanding. Shares of common stock
purchased by the RRP incentive plans are only considered outstanding when
the shares are released or committed to be released for allocation to
participants. Diluted income per share is computed by dividing net income
by the weighted-average number of shares outstanding including the dilutive
effect of stock options computed using the treasury stock method. The
following table presents the calculation of basic and diluted income per
share of common stock:
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2002 2001 2002 2001
---- ---- ---- ----
Weighted-average shares of common stock issued
and outstanding before adjustments for
RRP and common stock options 3,579,553 3,560,555 3,574,585 3,546,854
Adjustment to reflect the effect of unallocated
RRP shares (2,735) (2,735) (2,735) (2,735)
--------- --------- --------- ---------
Weighted-average common shares for basic
income per share 3,576,818 3,557,820 3,571,850 3,544,119
========= ========= ========= =========
Basic income per share of common stock $ .61 .44 1.85 1.26
========= ========= ========= =========
Total weighted-average common shares and
equivalents outstanding for basic income
per share computation 3,576,818 3,557,820 3,571,850 3,544,119
========= ========= ========= =========
Additional dilutive shares using the average market
value for the period utilizing the treasury stock
method regarding stock options 70,678 77,344 72,375 83,144
--------- --------- --------- ---------
Weighted-average common shares and equivalents
outstanding for diluted income per share 3,647,496 3,635,164 3,644,225 3,627,263
========= ========= ========= =========
Diluted income per share of common stock $ .60 .43 1.81 1.23
========= ========= ========= =========
5. Stock Option Plan. At the Company's annual meeting in May 2002, the
stockholders approved the 2002 Stock Option Plan (the "Plan"). Under this
Plan, up to 250,000 options can be granted to directors, officers or
employees of the Company. As of September 30, 2002, no options have been
granted under the Plan.
(continued)
11
FFLC BANCORP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
6. Guaranteed Preferred Beneficial Interest in Junior Subordinated Debentures.
On September 26, 2002, the Holding Company's wholly-owned subsidiary, FFLC
Statutory Trust I (the "Trust"), sold adjustable-rate Trust Preferred
Securities due September 26, 2032 in the aggregate principal amount of
$5,000,000 (the "Capital Securities") in a pooled trust preferred
securities offering. The interest rate on the Capital Securities adjusts
quarterly, to a rate equal to the then current three-month London
Interchange Bank Offering Rate ("LIBOR"), plus 340 basis points. In
addition, the Holding Company contributed capital of $155,000 to the Trust
for the purchase of the common securities of the Trust. The proceeds from
these sales were paid to the Holding Company in exchange for $5,155,000 of
its adjustable-rate Junior Subordinated Debentures (the "Debentures") due
September 26, 2032. The Debentures have the same terms as the Capital
Securities. The Holding Company then invested $3,000,000 as a capital
contribution in the Bank. The sole asset of the Trust, the obligor on the
Capital Securities, is the Debentures.
The Holding Company has guaranteed the Trust's payment of distributions on,
payments on any redemptions of, and any liquidation distribution with
respect to, the Capital Securities. Cash distributions on both the Capital
Securities and the Debentures are payable quarterly in arrears on March 26,
June 26, September 26 and December 26 of each year. At September 30, 2002,
approximately $4,000 of distributions were accrued and is included in
accrued expenses and other liabilities in the condensed consolidated
balance sheet. Issuance costs of approximately $160,000 associated with the
Capital Securities have been capitalized by the Holding Company and are
being amortized over the life of the securities.
Capital
Securities Outstanding at
September 30, Prepayment
Name 2002 2001 Option Date
---- ---- ---- -----------
FFLC Statutory Trust I $ 5,000,000 -- September 26, 2007
The Capital Securities are subject to mandatory redemption (i) in whole,
but not in part, upon repayment of the Debentures at stated maturity or, at
the option of the Holding Company, their earlier redemption in whole upon
the occurrence of certain changes in the tax treatment or capital treatment
of the Capital Securities, or a change in the law such that the Trust would
be considered an investment company and (ii) in whole or in part at any
time on or after September 26, 2007 contemporaneously with the optional
redemption by the Holding Company of the Debentures in whole or in part.
The Debentures are redeemable prior to maturity at the option of the
Holding Company (i) on or after September 26, 2007, in whole at any time or
in part from time to time, or (ii) in whole, but not in part, at any time
within 90 days following the occurrence and continuation of certain changes
in the tax treatment or capital treatment of the Capital Securities, or a
change in law such that the Trust would be considered an Investment
Company, required to be registered under the Investment Company Act of
1940.
The Company has entered into a five year interest rate swap agreement that
effectively converted the floating interest rate of these Capital
Securities into a fixed interest rate of 6.85%, thus reducing the impact of
interest rate changes on future interest expense for the five year period.
In accordance with Statement of Financial Accounting Standards No. 133
"Accounting for Derivative Instruments and Hedging Activities," this
interest rate swap qualifies as a cash flow hedge. The fair value of this
interest rate swap will be recorded as an asset or liability on the
consolidated balance sheet with an offsetting entry recorded in other
comprehensive income, net of the income tax effect.
7. Reclassifications. Certain amounts in the 2001 condensed consolidated
financial statements have been reclassified to conform to the presentation
for 2002.
12
FFLC BANCORP, INC.
Review by Independent Certified Public Accountants
Hacker, Johnson & Smith PA, the Company's independent certified public
accountants, have made a limited review of the financial data as of
September 30, 2002, and for the three- and nine-month periods ended
September 30, 2002 and 2001 presented in this document, in accordance with
standards established by the American Institute of Certified Public
Accountants.
Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.
13
Report on Review by Independent Certified Public Accountants
The Board of Directors
FFLC Bancorp, Inc.
Leesburg, Florida:
We have reviewed the accompanying condensed consolidated balance sheet of
FFLC Bancorp, Inc. and Subsidiaries (the "Company") as of September 30, 2002,
the related condensed consolidated statements of income for the three- and
nine-month periods ended September 30, 2002 and 2001 and the related condensed
consolidated statements of changes in stockholders' equity and cash flows for
the nine-month periods ended September 30, 2002 and 2001. These financial
statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with accounting principles generally accepted
in the United States of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet as of
December 31, 2001, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the year then ended (not presented
herein); and in our report dated January 11, 2002 we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 2001, is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
HACKER, JOHNSON & SMITH PA
Orlando, Florida
October 11, 2002
14
FFLC BANCORP, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
General
FFLC Bancorp, Inc., (the "Holding Company") is the holding company for its
three subsidiaries, First Federal Savings Bank of Lake County (the "Bank"),
First Alliance Title, LLC and FFLC Statutory Trust I and the Bank's
wholly-owned subsidiary, Lake County Service Corporation (together, the
"Company"). The Company's consolidated results of operations are primarily
those of the Bank.
The Bank's principal business continues to be attracting retail deposits
from the general public and investing those deposits, together with
principal repayments on loans and investments and funds generated from
operations, primarily in mortgage loans secured by one-to-four-family,
owner-occupied homes, commercial loans, consumer loans and, to a lesser
extent, construction loans, other loans, and multi-family residential
mortgage loans. In addition, the Bank holds investments permitted by
federal laws and regulations including securities issued by the U.S.
Government and agencies thereof. The Bank's revenues are derived
principally from interest on its loan and mortgage-backed securities
portfolios and interest and dividends on its investment securities. The
Bank is a member of the Federal Home Loan Bank ("FHLB") system and its
deposits are insured to the applicable limits by the Savings Association
Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation (the
"FDIC"). The Bank is subject to regulation by the Office of Thrift
Supervision (the "OTS") as its chartering agency, and the FDIC as its
deposit insurer.
The Bank has 13 full-service banking facilities in Lake, Sumter, Citrus and
Marion Counties, Florida, and has a new branch under construction in the
Clermont area of Lake County. That branch is expected to open in the fourth
quarter of 2002. The Bank has also purchased two former branch sites from
another bank, one located in Marion County (opened in the third quarter of
2002 and included in the 13 above), and the other located in Lake County.
The site acquired in Lake County will replace the Bank's existing Lake
Square office and provide the Bank with a larger facility needed to
accommodate the continued growth of that branch.
The Company's results of operations depend primarily on net interest
income, which is the difference between the interest income earned
primarily on its loan and securities portfolios, and its cost of funds,
consisting of the interest paid on its deposits and borrowings. The
Company's operating results are also affected, to a lesser extent, by fee
income. The Company's operating expenses consist primarily of salaries and
employee benefits, occupancy expenses, and other general and administrative
expenses. The Company's results of operations are also significantly
affected by general economic and competitive conditions, particularly
changes in market interest rates, government policies, and actions of
regulatory authorities.
15
FFLC BANCORP, INC.
Capital Resources
The Bank's primary sources of funds include proceeds from payments and
prepayments on mortgage loans and mortgage-backed securities, proceeds from
maturities of investment securities, increases in deposits, advances from
the Federal Home Loan Bank and proceeds from the issuance of trust
preferred securities. While maturities and scheduled amortization of loans
and investment securities are predictable sources of funds, deposit inflows
and mortgage prepayments are greatly influenced by local conditions,
general interest rates, and regulatory changes.
At September 30, 2002, the Bank had outstanding commitments to originate
$26.6 million of loans, commitments to fund approximately $20.3 million of
the undisbursed portion of loans in process and undisbursed lines of credit
of approximately $51.8 million. The Bank believes that it will have
sufficient funds available to meet its commitments. At September 30, 2002,
certificates of deposit which were scheduled to mature in one year or less
totaled $289.3 million. Based on past experience, management believes, that
a significant portion of those funds will remain with the Bank.
The Bank is subject to various regulatory capital requirements administered
by the Federal banking agencies. Failure to meet minimum capital
requirements can require regulators to initiate certain mandatory- and
possibly additional discretionary-actions that, if undertaken, could have a
direct material effect on the Company's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital guidelines that involve
quantitative measures of the Bank's assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting
practices. The Bank's capital amounts and classification are also subject
to qualitative judgements by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts (set forth in the table) of
total and Tier I capital (as defined in the regulations) to risk-weighted
assets (as defined). Management believes that, as of September 30, 2002,
the Bank meets all capital adequacy requirements to which it is subject.
16
FFLC BANCORP, INC.
As of September 30, 2002, the most recent notification from the OTS
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Bank
must maintain minimum tangible, Tier I (core), Tier I (risk-based) and
total risk-based capital percentages as set forth in the table. There are
no conditions or events since that notification that management believes
have changed the institution's category.
The Bank's actual capital amounts and percentages at September 30, 2002 are
also presented in the table.
To Be Well
Minimum Capitalized
For Capital For Prompt
Adequacy Corrective Action
Actual Purposes Provisions
------ -------- ----------
% Amount % Amount % Amount
--- ------ --- ------ --- ------
($ in thousands)
Stockholders' equity,
and ratio to total
assets 7.6% $ 69,992
=========
Less: investment in
nonincludable
subsidiary (522)
Less: unrealized gain on
securities available for sale (654)
--------
Tangible capital,
and ratio to adjusted
total assets 7.5% $ 68,816 1.5% $ 13,800
========= =========
Tier 1 (core) capital, and
ratio to adjusted total
assets 7.5% $ 68,816 3.0% $ 27,601 5.0% $ 46,001
========= ========= =========
Tier 1 capital, and ratio
to risk-weighted assets 11.6% 68,816 4.0% $ 23,650 6.0% $ 35,475
========= =========
Less: Nonincludable investment
in 80% land loans (344)
Tier 2 capital (allowance for
loan losses) 4,755
-----
Total risk-based capital,
and ratio to risk-
weighted assets 12.4% $ 73,227 8.0% $ 47,300 10.0% $ 59,125
========= ========= =========
Total assets $ 921,196
=========
Adjusted total assets $ 920,018
=========
Risk-weighted assets $ 591,246
=========
17
FFLC BANCORP, INC.
The following table shows selected ratios for the periods ended or at the dates
indicated:
Nine Months Nine Months
Ended Year Ended Ended
September 30, December 31, September 30,
2002 2001 2001
---- ---- ----
Average equity as a percentage
of average assets 7.70% 8.05% 8.11%
Total equity to total assets at end of period 7.52% 7.78% 7.86%
Return on average assets (1) 1.01% .82% .79%
Return on average equity (1) 13.16% 10.20% 9.77%
Noninterest expense to average assets (1) 1.66% 1.68% 1.63%
Nonperforming assets to total assets
at end of period .28% .28% .28%
Operating efficiency ratio (1) 47.82% 53.63% 53.62%
(1) Annualized for the nine months ended September 30, 2002 and 2001.
At At At
September 30, December 31, September 30,
2002 2001 2001
---- ---- ----
Weighted-average interest rates:
Interest-earning assets:
Loans 7.24% 7.61% 7.82%
Securities 4.63% 5.16% 5.63%
Other interest-earning assets 2.50% 2.48% 4.08%
Total interest-earning assets 6.76% 7.17% 7.51%
Interest-bearing liabilities:
Interest-bearing deposits 3.05% 3.85% 4.50%
Borrowed funds 5.15% 5.44% 5.60%
Total interest-bearing liabilities 3.51% 4.22% 4.75%
Interest-rate spread 3.25% 2.95% 2.76%
Change in Financial Condition
Total assets increased $98.0 million or 11.90%, from $823.2 million at December
31, 2001 to $921.1 million at September 30, 2002 primarily as a result of a
$56.5 million increase in net loans and an increase in securities available for
sale of $22.0 million. Deposits increased $71.1 million from $585.1 million at
December 31, 2001 to $656.2 million at September 30, 2002. The $5.2 million net
increase in stockholders' equity during the nine months ended September 30, 2002
resulted from net income of $6.6 million, proceeds of $250,000 from stock
options exercised and a $184,000, net of tax, increase in unrealized gains on
securities available for sale, partially offset by repurchases of the Company's
stock of $298,000, dividends paid of $1.5 million and a $45,000, net of tax
decrease in unrealized loss on a derivative instrument.
18
FFLC BANCORP, INC.
Results of Operations
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average costs; (iii) net interest/dividend income; (iv) interest-rate spread;
and (v) net interest margin. Yields and costs were derived by dividing
annualized income or expense by the average balance of assets or liabilities,
respectively, for the periods shown. The average balance of loans includes loans
on which the Company has discontinued accruing interest. The yields and costs
include fees which are considered to constitute adjustments to yields.
Three Months Ended September 30,
------------------------------------------------------
2002 2001
---------------------------------- -----------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Cost Balance Dividends Cost
------- --------- ---- ------- --------- ----
($ in Thousands)
Interest-earning assets:
Loans $ 738,259 13,354 7.24% $ 664,371 13,233 7.97%
Securities 84,316 782 3.71 53,351 739 5.54
Other interest-earning assets (1) 45,206 298 2.64 32,033 342 4.27
--------- ------ --------- ------
Total interest-earning assets 867,781 14,434 6.65 749,755 14,314 7.64
------ ------
Noninterest-earning assets 46,971 34,629
------ ------
Total assets $ 914,752 $ 784,384
========= =========
Interest-bearing liabilities:
NOW and money-market accounts 129,895 332 1.02 100,664 574 2.28
Savings accounts 24,051 52 .86 19,617 95 1.94
Certificates 484,962 4,841 3.99 425,005 6,078 5.72
Federal Home Loan Bank advances 164,000 2,283 5.57 144,054 2,177 6.04
Other borrowed funds 16,914 69 1.63 13,160 138 4.19
--------- ------ --------- ------
Total interest-bearing liabilities 819,822 7,577 3.70 702,500 9,062 5.16
--------- ------ --------- ------
Noninterest-bearing deposits 17,284 13,837
Noninterest-bearing liabilities 9,437 5,853
Stockholders' equity 68,209 62,194
--------- ---------
Total liabilities and stockholders' equity $ 914,752 $ 784,384
========= =========
Net interest income $ 6,857 $ 5,252
========= =========
Interest-rate spread (2) 2.95% 2.48%
==== ====
Net interest-earning assets,
net interest margin (3) $ 47,959 3.16% $ 47,255 2.80%
========= ==== ========= ====
Ratio of interest-earning assets to
interest-bearing liabilities 1.06 1.07
==== ====
(1) Includes interest-bearing deposits and Federal Home Loan Bank stock.
(2) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin is annualized net interest income divided by average
interest-earning assets.
19
FFLC BANCORP, INC.
The following table sets forth, for the periods indicated, information
regarding (i) the total dollar amount of interest and dividend income of the
Company from interest-earning assets and the resultant average yields; (ii) the
total dollar amount of interest expense on interest-bearing liabilities and the
resultant average cost; (iii) net interest and dividend income; (iv)
interest-rate spread; and (v) net interest margin. Yields and costs were derived
by dividing annualized income or expense by the average balance of assets or
liabilities, respectively, for the periods shown. The average balance of loans
includes loans on which the Company has discontinued accruing interest. The
yields and costs include fees which are considered to constitute adjustments to
yields.
Nine Months Ended September 30,
------------------------------------------------------
2002 2001
---------------------------------- ----------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Cost Balance Dividends Cost
------- --------- ---- ------- --------- ----
($ in Thousands)
Interest-earning assets:
Loans $ 715,484 39,401 7.34% $ 646,659 39,226 8.09%
Securities 78,067 2,322 3.97 48,141 2,180 6.04
Other interest-earning assets (1) 31,889 722 3.02 24,774 929 5.00
------- ------ ---- ------- ------ ----
Total interest-earning assets 825,440 42,445 6.86 719,574 42,335 7.84
------ ------
Noninterest-earning assets 42,559 32,412
------ ------
Total assets $ 867,999 $ 751,986
========= =========
Interest-bearing liabilities:
NOW and money-market accounts 125,246 1,137 1.21 93,539 1,740 2.48
Savings accounts 23,113 165 .95 19,545 298 2.03
Certificates 453,255 14,095 4.15 416,563 18,687 5.98
Federal Home Loan Bank advances 159,385 6,738 5.64 131,436 6,039 6.13
Other borrowed funds 15,577 217 1.86 10,749 368 4.56
------- ------ ---- ------- ------ ----
Total interest-bearing liabilities 776,576 22,352 3.84 671,832 27,132 5.38
------ ------
Noninterest-bearing deposits 16,100 13,343
Noninterest-bearing liabilities 8,496 5,818
Stockholders' equity 66,827 60,993
------ ------
Total liabilities and stockholders' equity $ 867,999 $ 751,986
========= =========
Net interest income $ 20,093 $ 15,203
======== ========
Interest-rate spread (2) 3.02% 2.46%
==== ====
Net interest-earning assets, net
interest margin (3) $ 48,864 3.25% $ 47,742 2.82%
========= ==== ========= ====
Ratio of interest-earning assets to
interest-bearing liabilities 1.06 1.07
==== ====
(1) Includes interest-bearing deposits and Federal Home Loan Bank stock.
(2) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin is annualized net interest income divided by average
interest-earning assets.
20
FFLC BANCORP, INC.
Comparison of the Three-Month Periods Ended September 30, 2002 and 2001
General Operating Results. Net income for the three-month period ended September
30, 2002 was $2.2 million, or $.61 per basic share and $.60 per diluted
share, compared to $1.6 million, or $.44 per basic share and $.43 per
diluted share, for the comparable period in 2001. The increase in net
income was primarily a result of an increase of $1.6 million in net
interest income, partially offset by an increase of $573,000 in noninterest
expense.
Interest Income. Interest income increased $120,000 to $14.4 million for the
three-month period ended September 30, 2002. The increase was due to a
$118.0 million or 15.74% increase in average interest-earning assets
outstanding for the three months ended September 30, 2002 compared to the
2001 period, partially offset by a decrease in the average yield earned on
interest-earning assets from 7.64% for the three months ended September 30,
2001 to 6.65% for the three months ended September 30, 2002.
Interest Expense. Interest expense decreased $1.5 million or 16.39%, from $9.1
million for the three-month period ended September 30, 2001 to $7.6 million
for the three-month period ended September 30, 2002. The decrease was due
primarily to a decrease in the average cost of interest-bearing liabilities
from 5.16% for the three months ended September 30, 2001 to 3.70% for the
comparable 2002 period, partially offset by increases of $93.6 million and
$23.7 million in average interest-bearing deposits and borrowings
outstanding, respectively. Average interest-bearing deposits increased from
$545.3 million outstanding during the three months ended September 30, 2001
to $638.9 million outstanding during the comparable period for 2002.
Average borrowings increased from $157.2 million during the three months
ended September 30, 2001 to $180.9 million for the comparable 2002 period.
Provision for Loan Losses. The provision for loan losses is charged to income to
increase the total allowance to a level deemed appropriate by management
and is based upon the volume and type of lending conducted by the Company,
charge-off experience, industry standards, the amount of nonperforming
loans, general economic conditions, particularly as they relate to the
Company's market area, and other factors related to the collectibility of
the Company's loan portfolio. The Company recorded provisions for loan
losses for the three-month periods ended September 30, 2002 and 2001 of
$399,000 and $225,000, respectively. Net loans charged off for the
three-month periods ended September 30, 2002 and 2001 were $319,000 and
$69,000, respectively. Management believes that the allowance for loan
losses, which was $4.8 million or .62% of gross loans at September 30, 2002
is adequate.
Noninterest Income. Noninterest income increased $133,000 or 19.70% from
$675,000 during the 2001 period to $808,000 during the 2002 period. The
increase was mainly due to a $52,000 increase in other service charges and
fees.
Noninterest Expense. Noninterest expense increased by $573,000 or 17.90% from
$3.2 million for the three-month period ended September 30, 2001 to $3.8
million for the three-month period ended September 30, 2002. The increase
was primarily due to increases of $381,000 in salaries and employee
benefits and $97,000 in occupancy expense related to the overall growth of
the Company.
Income Tax Provision. The income tax provision increased from $936,000 for the
three-month period ended September 30, 2001 (an effective tax rate of
37.4%) to $1.3 million (an effective tax rate of 37.7%) for the
corresponding period in 2002.
21
FFLC BANCORP, INC.
Comparison of the Nine-Month Periods Ended September 30, 2002 and 2001
General Operating Results. Net income for the nine-month period ended September
30, 2002 was $6.6 million, or $1.85 per basic share and $1.81 per diluted
share, compared to $4.5 million, or $1.26 per basic share and $1.23 per
diluted share, for the comparable period in 2001. This increase was mainly
due to an increase in net interest income of $4.9 million, partially offset
by a increase in noninterest expense of $1.6 million.
Interest Income. Interest income increased $110,000 to $42.4 million for the
nine months ended September 30, 2002. The increase was due to a $105.9
million or 14.71% increase in average interest-earning assets outstanding
for the nine months ended September 30, 2002 compared to the 2001 period,
partially offset by a decrease in the average yield earned on
interest-earning assets from 7.84% for the nine months ended September 30,
2001 to 6.86% for the nine months ended September 30, 2002.
Interest Expense. Interest expense decreased $4.8 million or 17.62%, from $27.1
million for the nine-month period ended September 30, 2001 to $22.4 million
for the nine-month period ended September 30, 2002. The decrease was due
primarily to a decrease in the average cost of interest-bearing liabilities
from 5.38% for the nine months ended September 30, 2001 to 3.84% for the
comparable 2002 period, partially offset by increases of $72.0 million and
$32.8 million in average interest-bearing deposits and borrowings
outstanding, respectively. Average interest-bearing deposits increased from
$529.6 million outstanding during the nine months ended September 30, 2001
to $601.6 million outstanding during the comparable period for 2002.
Average borrowings increased from $142.2 million outstanding during the
nine months ended September 30, 2001 to $175.0 million for the comparable
2002 period.
Provision for Loan Losses. The provision for loan losses is charged to income to
increase the total allowance to a level deemed appropriate by management
and is based upon the volume and type of lending conducted by the Company,
charge-off experience, industry standards, the amount of nonperforming
loans, general economic conditions, particularly as they relate to the
Company's market area, and other factors related to the collectibility of
the Company's loan portfolio. The Company recorded provisions for loan
losses for the nine-month periods ended September 30, 2002 and 2001 of $1.3
million and $825,000, respectively. Net loans charged off for the
nine-month periods ended September 30, 2002 and 2001 were $778,000 and
$167,000, respectively. Management believes that the allowance for loan
losses, which was $4.8 million or .62% of gross loans at September 30, 2002
is adequate.
Noninterest Income. Noninterest income increased $537,000, or 27.05% from $2.0
million for the nine months ended September 30, 2001 to $2.5 million for
the comparable period in 2002. That was primarily due to an increase of
$280,000 in other service charges and fees.
Noninterest Expense. Noninterest expense increased by $1.6 million or 17.35%,
from $9.2 million for the nine-month period ended September 30, 2001 to
$10.8 million for the nine-month period ended September 30, 2002. The
increase was primarily due to increases in salaries and employee benefits
of $1.1 million and occupancy expense of $285,000 related to the overall
growth of the Company.
Income Tax Provision. The income tax provision was $3.9 million for the
nine-month period ended September 30, 2002 (an effective tax rate of 37.3%)
compared to $2.7 million (an effective tax rate of 37.5%) for the
corresponding period for 2001.
22
FFLC BANCORP, INC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss from adverse changes in market prices and
rates. The Company's market risk arises primarily from interest-rate risk
inherent in its lending and deposit taking activities. The Company has
little or no risk related to trading accounts, commodities or foreign
exchange.
Management actively monitors and manages its interest rate risk exposure.
The primary objective in managing interest-rate risk is to limit, within
established guidelines, the adverse impact of changes in interest rates on
the Company's net interest income and capital, while adjusting the
Company's asset-liability structure to obtain the maximum yield-cost spread
on that structure. Management relies primarily on its asset-liability
structure to control interest rate risk. However, a sudden and substantial
increase in interest rates could adversely impact the Company's earnings,
to the extent that the interest rates borne by assets and liabilities do
not change at the same speed, to the same extent, or on the same basis.
There have been no significant changes in the Company's market risk
exposure since December 31, 2001. The Company does not believe that the
interest rate swap entered into in September 2002 exposes the Company to
significant interest rate risk.
Item 4. Controls and Procedures
a. Evaluation of disclosure controls and procedures. The Company
-------------------------------------------------------
maintains controls and procedures designed to ensure that information
required to be disclosed in the reports that the Company files or
submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified
in the rules and forms of the Securities and Exchange Commission.
Based upon their evaluation of those controls and procedures performed
within 90 days of the filing date of this report, the chief executive
and chief financial officers of the Company concluded that the
Company's disclosure controls and procedures were adequate.
b. Changes in internal controls. The Company made no significant changes
-----------------------------
in its internal controls or in other factors that could significantly
affect these controls subsequent to the date of the evaluation of
those controls by the Chief Executive and Chief Financial officers.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceeding to which FFLC Bancorp,
Inc. or any of its subsidiaries is a party or to which any of their
property is subject.
Item 2. Changes in Securities
The Holding Company has the right at one or more times, unless an
event of default exists under the floating rate junior subordinated
deferrable interest debentures due September 26, 2032 (the
"Debentures"), to defer interest payments on the Debentures for up to
twenty consecutive quarterly periods. During that time, the Holding
Company will be prohibited from declaring or paying cash dividends on
its common stock.
Item 3. Default upon Senior Securities
Not applicable
23
FFLC BANCORP, INC.
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report.
3.1 Certificate of Incorporation of FFLC Bancorp, Inc.*
3.2 Bylaws of FFLC Bancorp, Inc. ***
4.0 Stock Certificate of FFLC Bancorp, Inc.*
10.1 First Federal Savings Bank of Lake County Recognition and
Retention Plan**
10.2 First Federal Savings Bank of Lake County Recognition and
Retention Plan for Outside Directors**
10.3 FFLC Bancorp, Inc. Incentive Stock Option Plans for
Officers and Employees**
10.4 FFLC Bancorp, Inc. Stock Option Plan for Outside
Directors**
99.1 CEO Certification required under Section 906 of Sarbanes
-Oxley Act of 2002
99.2 CFO Certification required under Section 906 of Sarbanes
-Oxley Act of 2002
* Incorporated herein by reference into this document from the Exhibits
to Form S-1, Registration Statement, initially filed on September 27,
1993, Registration No. 33-69466.
** Incorporated herein by reference into this document from the Proxy
Statement for the Annual Meeting of Stockholders held on May 12, 1994.
*** Incorporated herein by reference into this document from the September
30, 1999 FFLC Bancorp, Inc. Form 10-Q filed November 3, 1999.
(b) There were no reports on Form 8-K filed during the three months
ended September 30, 2002.
24
FFLC BANCORP, INC.
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.
FFLC BANCORP, INC.
(Registrant)
Date: October 16, 2002 By: /s/ Stephen T. Kurtz
-----------------------------------------
Stephen T. Kurtz, President and Chief
Executive Officer
Date: October 16, 2002 By: /s/ Paul K. Mueller
-------------------------------------
Paul K. Mueller, Executive Vice
President and Treasurer
25
CERTIFICATIONS
I, Stephen T. Kurtz, certify, that:
1. I have reviewed this quarterly report on Form 10-Q of FFLC Bancorp, Inc.;
2. Based on my knowledge, the 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 the
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 the internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: October 16, 2002 By: /s/ Stephen T. Kurtz
---------------- ----------------------------------------
Stephen T. Kurtz, President and Chief
Executive Officer
26
I, Paul K. Mueller, certify, that:
1. I have reviewed this quarterly report on Form 10-Q of FFLC Bancorp, Inc.;
2. Based on my knowledge, the 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 the
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 the internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: October 16, 2002 By: /s/ Paul K. Mueller
---------------- -------------------------------------------
Paul K. Mueller, Executive Vice President
and Treasurer