-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J20Ek2bWK3Vy59Mm3gciQ464NtMjvU5sYBA6MWtJiNbBRArL99HQb2CUOia7rlqU jT6UXH9vyLNQ1CQcdYCnMQ== 0000950144-98-009267.txt : 19980812 0000950144-98-009267.hdr.sgml : 19980812 ACCESSION NUMBER: 0000950144-98-009267 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980810 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIB FINANCIAL CORP CENTRAL INDEX KEY: 0001013796 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 650655973 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21329 FILM NUMBER: 98680583 BUSINESS ADDRESS: STREET 1: 99451 OVERSEAS HIGHWAY CITY: KEY LARGO STATE: FL ZIP: 33037 BUSINESS PHONE: 3054514660 MAIL ADDRESS: STREET 1: 99451 OVERSEAS HIGHWAY CITY: KEY LARGO STATE: FL ZIP: 33037 10-Q 1 TIB FINANCIAL CORP 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended Commission File Number JUNE 30, 1998 0-29132 TIB FINANCIAL CORP. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) FLORIDA 65-0655973 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 99451 OVERSEAS HIGHWAY, KEY LARGO, FLORIDA 33037-7808 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 305-451-4660 Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by 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 the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: Common Stock, $0.10 Par Value 4,442,145 - ---------------------------------------- ------------------------------- Class Outstanding as of July 31, 1998 2 Part I. FINANCIAL INFORMATION Item 1. Financial Statements TIB FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
June 30, 1998 December 31, 1997 ------------- ----------------- ASSETS Cash and due from banks $ 16,623,913 $ 12,554,285 Federal funds sold 10,832,000 12,275,000 Investment securities held to maturity (market value of $64,560,080 and $36,674,391, respectively) 63,949,340 36,218,073 Investment securities available for sale 17,117,123 18,471,445 Loans, net of deferred loan fees 201,342,543 185,746,103 Less: Allowance for loan losses 2,365,588 2,201,974 ------------ ----------- Loans, net 198,976,955 183,544,129 Premises and equipment, net 9,941,395 10,034,088 Accrued interest receivable 2,067,788 1,750,703 Intangible assets 429,452 425,497 Other assets 4,726,182 2,685,600 ============ ============ TOTAL ASSETS $324,664,148 $277,958,820 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits: Noninterest-bearing demand $ 62,254,560 $ 52,060,404 Interest-bearing demand and money market 143,354,546 116,679,922 Savings 14,637,313 13,092,101 Time deposits of $100,000 or more 22,725,621 22,358,564 Other time deposits 50,244,137 44,630,828 ------------ ------------ Total Deposits 293,216,177 248,821,819 Short-term borrowings 1,990,967 2,007,178 Accrued interest payable 2,001,073 1,747,904 Other liabilities 1,385,623 818,362 ------------ ------------ TOTAL LIABILITIES 298,593,840 253,395,263 ------------ ------------ STOCKHOLDERS' EQUITY Common stock - $.10 par value: 7,500,000 shares authorized, 4,442,145 and 4,371,954 shares issued and outstanding 444,215 437,195 Surplus 7,138,153 6,507,072 Retained earnings 18,478,540 17,668,290 Accumulated other comprehensive income - market valuation reserve on investment securities 9,400 (49,000) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 26,070,308 24,563,557 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $324,664,148 $277,958,820 ============ ============
(See notes to consolidated financial statements) 3 TIB FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three months ended June 30, Six months ended June 30, INTEREST INCOME 1998 1997 1998 1997 --------------- -------------- ------------- ------------ Loans, including fees $ 4,496,399 $ 4,165,034 $ 8,822,185 $ 8,176,249 Investment securities: U.S. Treasury securities 335,061 494,223 693,154 919,511 U.S. Government agencies and corporations 629,012 217,854 990,705 450,777 States and political subdivisions 160,533 90,661 278,230 177,360 Other investments 26,000 11,031 51,343 22,062 Federal funds sold 274,039 170,927 619,711 302,205 --------------- -------------- ------------- ------------- TOTAL INTEREST INCOME 5,921,044 5,149,730 11,455,328 10,048,164 --------------- -------------- ------------- ------------- INTEREST EXPENSE Interest-bearing demand and money market 1,305,592 737,242 2,453,998 1,237,285 Savings 138,987 202,227 283,799 449,466 Time deposits of $100,000 or more 412,083 353,968 724,093 727,776 Other time deposits 616,098 640,804 1,232,976 1,304,129 Short-term borrowings 9,741 16,020 23,077 33,834 --------------- ------------- ------------- ------------- TOTAL INTEREST EXPENSE 2,482,501 1,950,261 4,717,943 3,752,490 --------------- -------------- ------------- ------------- NET INTEREST INCOME 3,438,543 3,199,469 6,737,385 6,295,674 --------------- -------------- ------------- ------------- PROVISION FOR LOAN LOSSES 90,000 75,000 180,000 150,000 --------------- -------------- ------------- ------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,348,543 3,124,469 6,557,385 6,145,674 OTHER INCOME Service charges on deposit accounts 397,807 401,648 827,650 759,847 Merchant bank card processing income 571,578 573,883 1,226,440 1,093,457 Gain on sale of government guaranteed loans 106,698 109,237 455,987 124,906 Fees on mortgage loans sold at origination 168,276 86,557 262,732 151,457 Retail investment services 196,512 97,317 277,401 102,628 Other income 116,671 77,145 221,900 139,503 --------------- -------------- ------------- ------------- TOTAL OTHER INCOME 1,557,542 1,345,787 3,272,110 2,371,798 --------------- -------------- ------------- ------------- OTHER EXPENSE Salaries and employee benefits 1,703,805 1,573,376 3,604,411 3,070,986 Net occupancy expense 529,886 440,639 1,045,860 884,476 Other expense 1,326,130 1,189,922 2,553,304 2,144,917 --------------- -------------- ------------- ------------- TOTAL OTHER EXPENSE 3,559,821 3,203,937 7,203,575 6,100,379 --------------- -------------- ------------- ------------- INCOME BEFORE INCOME TAX EXPENSE 1,346,264 1,266,319 2,625,920 2,417,093 INCOME TAX EXPENSE 475,000 420,488 929,600 785,400 --------------- -------------- ------------- ------------- NET INCOME $ 871,264 $ 845,831 $ 1,696,320 $ 1,631,693 =============== ============== ============= ============= BASIC EARNINGS PER SHARE $0.20 $0.19 $0.39 $0.38 DILUTED EARNINGS PER SHARE $0.19 $0.18 $0.37 $0.36
(See notes to consolidated financial statements) 4 TIB FINANCIAL CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited)
Accumulated Other Comprehensive Income - Market Comprehensive Retained Valuation Common Total Income Earnings Reserve Stock Surplus ---------------------------------------------------------------------------------- Balance at December 31, 1997 $24,563,557 $17,668,290 $(49,000) $437,195 $6,507,072 Comprehensive Income Net Income 1,696,320 1,696,320 1,696,320 Other comprehensive income, net of tax: Unrealized gains on securities, net of tax expense of $35,600 58,400 58,400 58,400 ------------- Comprehensive income 1,754,720 ------------- Common stock issued 638,101 7,020 631,081 Dividends declared on common stock, $.20 per share (886,070) (886,070) ----------- ---------------------------------------------------- Balance at June 30, 1998 $26,070,308 $18,478,540 $9,400 $444,215 $7,138,153 =========== ==================================================== ---------------------------------------------------------------------------------- Balance at December 31, 1996 $22,620,917 $16,207,233 $(158,751) $432,236 $6,140,199 Comprehensive Income Net Income 1,631,693 1,631,693 1,631,693 Other comprehensive income, net of tax: Unrealized gains on securities, net of tax expense of $26,158 43,251 43,251 43,251 ------------- Comprehensive income 1,674,944 ------------- Common stock issued 190,563 3,469 187,094 Dividends declared on common stock, $.20 per share (870,711) (870,711) ----------- ---------------------------------------------------- Balance at June 30, 1997 $23,615,713 $16,968,215 $(115,500) $435,705 $6,327,293 =========== ====================================================
5 TIB FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (Unaudited)
For the six month period ended June 30, 1998 1997 --------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 1,696,320 $ 1,631,693 Adjustments to reconcile net income to net cash provided by operating activities: Net amortization of investments 5,842 73,559 Amortization of intangible assets 30,344 31,305 Depreciation of premises and equipment 490,495 389,984 Compensation paid thru issuance of common stock 214,575 - Provision for loan losses 180,000 150,000 Deferred income tax provision (benefit) (29,070) (49,000) Deferred net loan fees (30,009) (64,488) Gain on sales of premises and equipment (999) (2,217) Gain on sales of government guaranteed loans, net (455,987) (124,906) Increase in interest receivable (317,085) (30,544) Increase (decrease) in interest payable 253,169 (110,815) Increase in intangible assets (34,299) (180,305) (Increase) decrease in other assets (2,041,512) 31,588 Increase in other liabilities 675,300 515,225 --------------- ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 637,084 2,261,079 --------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investment securities held to maturity (34,716,116) (17,081,135) Repayments of principal and maturities of investment securities available for sale 1,427,329 8,952,478 Maturities of investment securities held to maturity 7,000,000 2,000,000 Proceeds from sales of government guaranteed loans 1,823,197 4,308,555 Loans originated or acquired, net of principal repayments (16,950,027) (17,233,470) Purchase of Small Business Consultants Inc. - (275,000) Purchases of premises and equipment (399,003) (473,926) Sales/conversion of premises and equipment 2,200 32,520 --------------- ------------ NET CASH USED BY INVESTING ACTIVITIES (41,812,420) (19,769,978) --------------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES Net decrease in federal funds purchased and securities sold under agreements to repurchase (16,211) (9,152,716) Net increase in demand, money market and savings accounts 38,413,992 39,801,182 Time deposits accepted, net of repayments 5,980,366 (9,632,421) Proceeds from exercise of stock options 302,867 190,563 Cash dividends paid (879,050) (867,242) --------------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 43,801,964 20,339,366 --------------- ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS 2,626,628 2,830,467 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 24,829,285 13,919,935 --------------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 27,455,913 $16,750,402 =============== =========== SUPPLEMENTAL DISCLOSURES OF CASH PAID: Interest $ 4,464,774 $ 3,863,305 =============== =========== Income taxes $ 960,000 $ 825,000 =============== ===========
(See notes to consolidated financial statements) 6 TIB FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1998 (Unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements for TIB Financial Corporation (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statement presentation. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 1998 are not necessarily indicative of trends or results to be expected for the year ended December 31, 1998. For further information, refer to the Company's consolidated financial statements and footnotes thereto for the year ended December 31, 1997. The consolidated statements include the accounts of TIB Financial Corporation and its wholly-owned subsidiary, TIB Bank of the Keys, and the Bank's two subsidiaries, TIB Government Loan Specialists, Inc. and TIB Investment & Insurance Center Inc., collectively known as the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts previously reported on have been reclassified to conform with current period presentation. NOTE 2 - LOANS Loans are reported at the gross amount outstanding, reduced by net deferred loan fees and a valuation allowance for loan losses. Interest income on loans is recognized over the terms of the loans based on the unpaid daily principal amount outstanding. If the collectibility of interest appears doubtful, the accrual thereof is discontinued. Loan origination fees, net of direct loan origination costs, are deferred and recognized as income over the life of the related loan on a level-yield basis. Gains on sales of government guaranteed loans are recognized as income when the sale occurs. Major classifications of loans are as follows:
June 30, 1998 December 31, 1997 ------------- ----------------- Commercial, financial and agricultural $ 129,237,954 $ 123,787,065 Real estate - construction 8,433,064 10,010,565 Real estate - individual 53,171,799 42,598,799 Installment and simple interest dividend 10,888,630 9,695,260 Other 113,579 186,905 ------------- ----------------- Total loans 201,845,026 186,278,594 Net deferred loan fees 502,483 532,491 ------------- ----------------- Loans, net of deferred loan fees $ 201,342,543 $ 185,746,103 ============= =================
NOTE 3 - ALLOWANCE FOR LOAN LOSSES The allowance for loan losses is established through a provision for loan losses charged to expense. The allowance represents an amount which, in management's judgment, will be adequate to absorb probable losses on existing loans that may become uncollectible. Management's judgment in determining the adequacy of the allowance is based on evaluations of the collectibility of loans and takes into consideration such factors as changes in the nature and volume of the loan portfolio, current economic conditions that may affect the borrower's ability to pay, overall portfolio quality and review of specific problem loans. Periodic revisions are made to the allowance when circumstances which necessitate such revisions become 7 known. Recognized losses are charged to the allowance for loan losses, while subsequent recoveries are added to the allowance. Activity in the allowance for loan losses for the six months ended June 30, 1998 and June 30, 1997 follows:
June 30, 1998 June 30, 1997 ------------- ------------- Balance, January 1 $ 2,201,974 $ 1,929,719 Provision charged to expense 180,000 150,000 Loans charged off (21,897) (16,692) Recoveries of loans previously charged off 5,511 152 ------------- ------------- Balance, June 30 $ 2,365,588 $ 2,063,179 ============= =============
NOTE 4 - INVESTMENT SECURITIES Securities available-for-sale are securities which management believes may be sold prior to maturity for liquidity or other reasons and are reported at fair value, with unrealized gains and losses, net of related income taxes, reported as a separate component of stockholders' equity. Securities held-to-maturity are those securities for which management has both the ability and intent to hold to maturity and are carried at amortized cost. The amortized cost and estimated market value of investment securities held-to-maturity at June 30, 1998 and December 31, 1997 are presented below:
June 30, 1998 --------------------------------------------------------------------- Amortized Unrealized Unrealized Market Cost Gains Losses Value --------------------------------------------------------------------- U.S. Treasury Securities $ 13,981,355 $ 166,147 $ - $ 14,147,502 States and political subdivisions 11,898,816 290,685 8,208 12,181,293 U.S. Government agencies and corporations 37,161,069 169,943 7,827 37,323,185 Other investments 908,100 - - 908,100 --------------------------------------------------------------------- $ 63,949,340 $ 626,775 $ 16,035 $ 64,560,080 ===================================================================== December 31, 1997 --------------------------------------------------------------------- Amortized Unrealized Unrealized Market Cost Gains Losses Value --------------------------------------------------------------------- U.S. Treasury Securities $ 15,978,285 $ 157,355 $ - $ 16,135,640 States and political subdivisions 7,373,701 293,750 - 7,667,451 U.S. Government agencies and corporations 12,001,487 20,693 15,480 12,006,700 Other investments 864,600 - - 864,600 --------------------------------------------------------------------- $ 36,218,073 $ 471,798 $ 15,480 $ 36,674,391 =====================================================================
The amortized cost and estimated market value of investment securities available for sale at June 30, 1998 and December 31, 1997 are presented below:
June 30, 1998 --------------------------------------------------------------------- Amortized Unrealized Unrealized Market Cost Gains Losses Value --------------------------------------------------------------------- U.S. Treasury Securities $ 9,032,840 $ - $ 11,275 $ 9,021,565 Mortgage-backed securities 7,619,498 23,144 29,337 7,613,305 Other debt securities 449,785 32,468 - 482,253 ===================================================================== $ 17,102,123 $ 55,612 $ 40,612 $17,117,123 =====================================================================
8
December 31, 1997 ---------------------------------------------------- Amortized Unrealized Unrealized Market Cost Gains Losses Value ----------------------------------------------------- U.S. Treasury Securities $ 9,044,333 $ $ 33,753 $ 9,010,580 Mortgage-backed securities 9,056,448 20,064 88,253 8,988,259 Other debt securities 449,664 22,942 -- 472,606 ===================================================== $18,550,445 $ 43,006 $ 122,006 $18,471,445 =====================================================
Other investments at June 30, 1998 and December 31, 1997 consist of stock in the Independent Bankers Bank of Florida and the Federal Home Loan Bank of Atlanta. Other debt securities at June 30, 1998 and December 31, 1997 consist of corporate debt securities. NOTE 5 - EARNINGS PER SHARE AND COMMON STOCK Basic earnings per share has been computed based on the weighted average number of common equivalent shares outstanding during the period. Stock options are considered to be common stock equivalents for purposes of calculating diluted earnings per share. A 3 for 1 stock split was declared on February 25, 1997 and has been treated retroactively as occurring on January 1, 1997, for earnings per share computation purposes. The reconciliation of basic earnings per share to diluted earnings per share is as follows:
Net Earnings Common Shares Per Share Amount --------------------------------------------------- For the three months ended June 30, 1998: Basic earnings per common share $ 871,264 4,424,462 $ .20 Effect of dilutive stock options -- 225,744 (.01) --------------------------------------------- Diluted earnings per common share $ 871,264 4,650,206 $ .19 ============================================= For the three months ended June 30, 1997: Basic earnings per common share $ 845,831 4,353,397 $ .19 Effect of dilutive stock options -- 253,594 (.01) ============================================= Diluted earnings per common share $ 845,831 4,606,991 $ .18 ============================================= For the six months ended June 30, 1998: Basic earnings per common share $1,696,320 4,404,813 $ .39 Effect of dilutive stock options -- 232,818 (.02) --------------------------------------------- Diluted earnings per common share $1,696,320 4,637,631 $ .37 ============================================= For the six months ended June 30, 1997: Basic earnings per common share $1,631,693 4,343,374 $ .38 Effect of dilutive stock options -- 218,386 (.02) ============================================= Diluted earnings per common share $1,631,693 4,561,760 $ .36 =============================================
NOTE 6 - STOCK BASED COMPENSATION Under the Bank's 1994 Incentive Stock Option and Nonstatutory Stock Option Plan ("the Plan"), the Company may grant stock options to persons who are now or who during the term of the Plan become directors, officers, or key executives as defined by the Plan. Stock options granted under the Plan may either be incentive stock options or nonqualified stock options for federal income tax purposes. The Company's Board of Directors may grant nonqualified stock options to any director, and incentive stock options or nonqualified stock options to any officer, key executive, administrative, or other employee including an employee who is a director of the Company. Subject to the provisions of the Plan, the maximum number of shares of 9 Company common stock that may be optioned or sold is 978,000 shares. Such shares may either be treasury or authorized, but unissued shares of common stock of the Company. Total options granted, exercised, and expired during the six months ended June 30, 1998 were 63,000, 53,525, and 22,800, respectively. NOTE 7 - NEW ACCOUNTING PRONOUNCEMENTS Effective January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income." This statement is effective for financial statements issued for periods ending after December 15, 1997. Under SFAS 130, a company is required to show changes in assets and liabilities as comprehensive income in the statement of stockholders equity or in alternative comprehensive income statement presentations. The adoption of SFAS 130 did not have a significant impact on the financial condition or results of operations of the Company. The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 131 (SFAS 131), "Disclosures About Segments of an Enterprise and Related Information." SFAS 131 is effective January 1, 1998 and requires disclosures of certain financial information by segments of a company's business. The adoption of SFAS 131 is not expected to have a significant impact on the financial condition or results of operations of the Company. In June 1998, the Financial Accounting Standards Board issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 133 requires companies to recognize all derivatives contracts as either assets or liabilities in the balance sheet and to measure them at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. SFAS 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 1999, however, early adoption is allowed. Historically, the Company has not entered into derivatives contracts either to hedge existing risks or for speculative purposes. The Company plans to adopt the new standard as of July 1, 1998. The effect on the financial statements at July 1, 1998 which results from the transfer of certain investment securities from the held to maturity category to the available for sale category is an increase in other comprehensive income market valuation reserve of approximately $176,000. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion addresses the factors that have affected the financial condition and results of operations of TIB Financial Corporation (the "Company") as reflected in the unaudited consolidated statement of condition as of June 30, 1998, and statements of income for the three months and six months ended June 30, 1998. The Company's net income of $871,264 for the second quarter of 1998 was a 3.0% increase compared to $845,831 for the same period last year. The increase in net income is attributed to an increase of $239,074, or 7.5%, in net interest income; an increase of $211,755, or 15.7%, in other income; offset by an increase of $15,000 in the provision for loan losses; an increase in other expense of $355,884, or 11.1%; and an increase in income tax expense of $54,512 or 13.0%. Net income for the six months ended June 30, 1998 was $1,696,320 up 4.0% from $1,631,693 for the comparable period in 1997. Basic and diluted earnings per share for the first quarter of 1998 were $0.20 and $0.19 respectively as compared to $0.19 and $0.18 per share in the previous year's quarter. Basic and diluted earnings per share for the six months ended June 30, 1998 were $0.39 and $0.37 respectively compared to $0.38 and $0.36 for the corresponding period ended June 30, 1997. Book value per share increased to $5.87 at June 30, 1998 from $5.62 at December 31, 1997. The Company paid a quarterly dividend of $0.10 per share in both the first and second quarters of 1998 and 1997. Performance of banks is often measured by various ratio analyses. Two widely recognized indicators are return on average equity and return on average assets. Annualized return on average equity for the six months ended June 30, 1998 was 13.4% on average equity of $25,257,338, compared to 14.0% on average equity of $23,274,758 for the same period in 1997. Annualized return on average assets of $302,701,479 for the six months ended June 30, 1998 was 1.12%, compared to 1.29% on average assets of $252,259,913 for the same period in 1997. 10 Net interest income is an effective measurement of how well management has balanced the Company's interest rate sensitive assets and liabilities. The Company's net interest income is its principal source of income. Interest earning assets for the Company include loans, federal funds sold, and investment securities. The Company's interest-bearing liabilities include its deposits, federal funds purchased, and other short-term borrowings. Net interest income increased 7.0% to $6.7 million, in the six months ended June 30, 1998 as compared to the same period last year primarily as a result of a higher level of earning assets. A decrease in net interest margins on a percentage basis is currently being more than compensated for by volume increases. This decrease in margins is partly due to a general trend in the banking industry but also is a reflection of management's decision to be very competitive in both loan and deposit pricing. The Company's ability to sell multiple products and services to individuals and businesses allows the growth of overall profits in spite of lower net interest margins. This is consistent with management's goal to diversify and enhance non-interest bearing sources of income. Interest from loans increased to $8.8 million for the first six months of 1998 compared to $8.2 million for the comparable period last year. The establishment of a very competitive money market account at the end of 1996 has continued to attract substantial deposits and has increased interest expense. The Company's net interest margin declined to 4.91% in the first six months of 1998 compared to 5.41% in the first six months of 1997. Provision for loan losses increased slightly to $180,000 from $150,000 for the respective first six months of 1998 and 1997 due to increased loan growth. Gross charged off loans for the first six months were $21,897 offset by recoveries of $5,511, resulting in an annualized net charge-off rate of 0.02% of total loans. This compares to net charge offs during the same period last year of $16,540. At June 30, 1998, the Company had aggregate non-accrual loans of $459,246 compared to $272,949 at December 31, 1997. The ratio of non-performing loans (including loans 90 days or more past due and still accruing) to total outstanding loans was 0.23% at June 30, 1998 compared to 0.15% at December 31, 1997. Other income increased $900,312 to $3,272,110 for the six month period ended June 30, 1998 from $2,371,798 in the comparable period last year. The substantial improvement in this category is primarily attributable to the establishment of two new subsidiaries of TIB Bank of the Keys in 1997 which are now fully functioning: TIB Investment & Insurance Center, Inc. and TIB Government Loan Specialists, Inc. Retail sales of investment products brought in commissions to the Company of $277,401 during the first six months of 1998 as compared to $102,628 for the first six months of 1997. Gains on sales of government guaranteed loans went from $124,906 during the first six months of 1997 to $455,987 during the first six months of 1998. Mortgage loan origination fees also increased $111,275. Other expense increased 18.1% in the first six months of 1998 as compared to the prior year period, partly as a result of the personnel and other costs associated with the two new subsidiaries of the Bank. Also, other expense reflects increases in computer services, interchange fees, commissions on mortgage loan originations and other general salary expense increases in the first six months of 1998 as compared to the same period in 1997. Total assets at June 30, 1998 were $324,664,148, up from total assets of $277,958,820 at December 31, 1997. Loans net of deferred loan fees increased $15,596,440 for the first six months of 1998 from year end 1997. Also, in the same period, investment securities increased $26,376,945. This increase was funded by a deposit increase of $44,394,358 and a decrease in federal funds sold of $1,443,000. Other assets at June 30, 1998 were $4,726,182, an increase of $2,040,582 from year end 1997. This increase is primarily the result of an increase in receivables of $803,000 on the sale of mortgage loans and $736,000 of assets in the process of construction. At June 30, 1998, the Company had $1,990,967 in short-term borrowings compared to $2,007,178 at year ended December 31, 1997. Short-term borrowings include $221,797 in securities sold under agreements to repurchase and $1,769,170 in Treasury tax deposits. This decrease in short-term borrowings reflects the effects of seasonal inflows of deposits along with strong growth in new accounts. The Company is currently addressing a universal situation commonly referred to as the "Year 2000 Problem." The Year 2000 Problem relates to the inability of certain computer software programs and equipment to properly recognize and process date-sensitive information relative to the year 2000 and beyond. During 1997, the Company developed a plan to devote the necessary resources to identify and modify systems impacted by the Year 2000 problem, or implement new systems to become year 2000 compliant in a timely manner. The cost of executing this plan is not expected to have a material impact on the Company's results of operations or financial condition. Year 2000 efforts are progressing as scheduled. All mission critical vendors and servicers have been identified. Certifications/assurances have been received from major data processing and item processing vendors. Independent testing of all mission critical systems commenced in June 1998 and will be completed as scheduled no later than June 1999. 11 TIB Bank has signed a definitive agreement to acquire the Homestead banking facilities and Homestead deposit account base of Coconut Grove Bank, subject to regulatory approval. The branch, which has deposits of roughly $12 million, is located in South Dade County in the heart of Homestead at the corner of Campbell and Krome Avenue. The acquisition will be TIB's second Homestead facility. An office building was converted to a bank branch and opened on July 17, 1998. The Company anticipates its extensive range of products and services will be well received in Homestead and South Dade. The Company's subsidiary TIB Software and Services, Inc. has entered into purchase agreements with two unrelated parties to acquire an aggregate 30% interest in ERAS Joint Venture (the "Venture") in exchange for a total cash consideration of $757,605. These purchases are pending the approval of the Board of Governors of the Federal Reserve System. The Venture's primary business is item processing and the design, development, installation and maintenance of accounting software for financial institutions. CAPITAL ADEQUACY Federal banking regulators have established certain capital adequacy standards required to be maintained by banks and bank holding companies. These regulations establish minimum requirements for risk-based capital of 4% for core capital (tier I), 8% for total risk-based capital and 3% for the leverage ratio. At June 30, 1998, the Company's tier I risk-based capital was 12.2% and total risk-based capital was 13.3%, compared to 12.7% and 13.8% at year-ended December 31, 1997, respectively. At June 30, 1998, the Company's leverage ratio was 8.5% compared to 9.5% at December 31, 1997. This change is due to strong asset growth exceeding a smaller increase in retained earnings. The Company does not have any commitments which it believes would reduce its capital to levels below the regulatory definition of a `well capitalized' financial institution. LIQUIDITY The goal of liquidity management is to ensure the availability of an adequate level of funds to meet the loan demand and deposit withdrawal needs of the Company's customers. The Company does not anticipate any events which would require liquidity beyond that which is available through deposit growth, federal funds balances, or investment portfolio maturities. The Company actively manages the levels, types and maturities of earning assets in relation to the sources available to fund current and future needs to ensure that adequate funding will be available at all times. In 1997, the Bank invested in Federal Home Loan Bank stock for the purpose of establishing credit lines with the Federal Home Loan Bank. The credit availability to the Bank is $27 million, and any advances are secured by the Bank's one-to-four family residential mortgage loans. No advances were made on the credit line in 1997 or 1998. The Bank has unsecured lines of credit for federal funds purchased from other banks totaling $5,000,000. Securities sold under agreements to repurchase (wholesale) represent a wholesale agreement with a correspondent bank which is collateralized by a U.S. Treasury note. The Bank also has several securities sold under repurchase agreements (retail) with commercial account holders whereby the Bank sweeps the customer's accounts on a daily basis and pays interest on these amounts. These agreements are collateralized by investment securities chosen by the Bank. 12 Part II. OTHER INFORMATION Item 4. MATTERS SUBMITTED TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Shareholders held on May 26, 1998, the following directors were elected to hold office for the coming three years: B.G. Carter, Armando J. Henriquez and James R. Lawson III. Also, the following directors term of office continued after the meeting: Gretchen K. Holland, Edward V. Lett, Scott A. Marr, Derek D. Martin-Vegue, Joseph H. Roth, Jr., Marvin F. Schindler and Richard J. Williams. Further, the shareholders ratified the selection of BDO Seidman, LLP as independent Certified Public Accountants for the Company. A detail of the voting for each matter is summarized below: Proposal 1. Election of Directors B.G. Carter, Armando J. Henriquez and James R. Lawson III to serve three-year terms: B.G. Carter Voting for 3,564,747 81% Withhold Authority 13,562 0% --------- -- Total 3,578,309 81% Armando Henriquez Voting for 3,541,949 80% Withhold Authority 36,360 1% --------- -- Total 3,578,309 81% James R. Lawson III Voting for 3,576,785 81% Withhold Authority 1,524 0% --------- -- Total 3,578,309 81%
Proposal 2. To ratify the selection of BDO Seidman, LLP as independent Certified Public Accountants for the Company: Voting for 3,520,879 80% Voting Against 4,794 0% Abstain from Voting 52,636 1% --------- -- Total 3,578,309 81%
13 Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 27 - Financial Data Schedule (SEC use only) (b) There were no reports filed on Form 8-K for the quarter ended June 30, 1998 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TIB FINANCIAL CORP. /s/ Edward V. Lett --------------------- Date: August 10, 1998 Edward V. Lett President and Chief Executive Officer EX-27 2 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF TIB FINANCIAL CORP. FOR THE SIX MONTHS ENDED JUNE 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 16,608,669 15,244 10,832,000 0 17,117,123 63,949,340 64,560,080 201,342,543 2,365,588 324,664,148 293,216,177 1,990,967 3,386,696 0 0 0 444,215 25,626,093 324,664,148 8,822,185 2,013,432 619,711 11,455,328 4,694,866 4,717,943 6,737,385 180,000 0 7,203,575 2,625,920 1,696,320 0 0 1,696,320 .39 .37 4.91 459,246 0 0 0 2,201,974 21,897 5,511 2,365,588 2,365,588 0 0
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