-----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, I+iFeb5HKPDB3x2yKiUWHLf498D4qSVRDOEzbZRIG/G+7Tpfk4aUM1k9lVXVeS8m e+5ye0HCsqCNBdHJHrkPOw== 0000950144-00-004017.txt : 20000331 0000950144-00-004017.hdr.sgml : 20000331 ACCESSION NUMBER: 0000950144-00-004017 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 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-K405 SEC ACT: SEC FILE NUMBER: 000-21329 FILM NUMBER: 584027 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-K405 1 TIB FINANCIAL CORP. 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year Commission file number ended December 31, 1999 000-21329 TIB FINANCIAL CORP. (Exact Name of Registrant as Specified in Its Charter) Florida 65-0655973 (State of Incorporation) (I.R.S. Employer Identification No.) 99451 Overseas Highway Key Largo, Florida 33037-7808 (Address of Principal Executive Offices) (Zip Code) (305) 451-4660 (Registrant's telephone number) Securities Registered pursuant to Section 12(b) of the Act: None Securities Registered pursuant to Section 12(g) of the Act: Common stock, par value $0.10 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of the registrant at March 1, 2000 was $29,828,756 based on $ 10.125 per share as of March 1, 2000. The number of shares outstanding of issuer's class of common stock at March 1, 2000 was 4,392,337 shares of common stock. Documents Incorporated By Reference: Portions of the Proxy Statement for the 2000 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission within 120 days of the Registrant's 1999 fiscal year end are incorporated by reference into Part III of this report. 2 TABLE OF CONTENTS
Page ---- PART I ITEM 1. BUSINESS..........................................................1 ITEM 2. PROPERTIES........................................................8 ITEM 3. LEGAL PROCEEDINGS.................................................9 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................................9 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.......................................9 ITEM 6. SELECTED FINANCIAL DATA..........................................10 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.....................11 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK....... 28 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA......................29 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.............................................65 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................................................65 ITEM 11. EXECUTIVE COMPENSATION...........................................65 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.................................65 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................................65
i 3 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K..........................................66 SIGNATURES .................................................................67
ii 4 CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS Certain of the matters discussed under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Annual Report on Form 10-K may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act and as such may involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of TIB Financial Corp. (the "Company") to be materially different from future results described in such forward-looking statements. Actual results may differ materially from the results anticipated in these forward looking statements due to a variety of factors, including, without limitation: the effects of future economic conditions; governmental monetary and fiscal policies, as well as legislative and regulatory changes; the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, and interest rate risks; the effects of competition from other commercial banks, thrifts, consumer finance companies, and other financial institutions operating in the Company's market area and elsewhere. All forward looking statements attributable to the Company are expressly qualified in their entirety by these cautionary statements. The Company disclaims any intent or obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise. PART I ITEM 1. BUSINESS TIB Financial Corp. (the "Company"), Key Largo, Florida, was incorporated as a Florida business corporation in February 1996, for the purpose of becoming a bank holding company by acquiring all of the common stock of TIB Bank of the Keys (the "Bank"), Key Largo, Florida. Following the receipt of approval from the Board of Governors of the Federal Reserve System (the "Federal Reserve"), the Company became a bank holding company within the meaning of the Bank Holding Company Act of 1956 (the "Act") upon the acquisition of all of the Common Stock of the Bank on August 31, 1996. The Company is authorized to engage in any activity permitted by law to a Florida corporation, subject to applicable Federal regulatory restrictions on the activities of bank holding companies. The Bank was incorporated under the laws of the State of Florida on December 28, 1973, for the purpose of conducting the business of commercial banking. The Bank commenced commercial banking operations on February 1, 1974. The deposits at the Bank are insured up to applicable limits by the Federal Deposit Insurance Corporation (the "FDIC"). The Bank conducts a general commercial banking business in its primary service area of Monroe County and Dade County, Florida, emphasizing the banking needs of individuals, professionals and business customers. The Company and the Bank conduct business from the main office of the Bank located at 99451 Overseas Highway, Key Largo, Florida 33037. The Bank also conducts business from its ten branch locations throughout the Florida Keys from Key Largo to Key West and South Dade County Florida. The principal business of the Bank is to attract deposits from the public and to use such deposits to make real estate, business and consumer loans in its primary service area. As of December 31, 1999, the Bank had total assets of approximately $390.8 million, total deposits of approximately $346.9 million and total shareholders' equity of approximately $27.6 million. The Bank offers a full range of deposit services that are typically available from financial institutions, including NOW accounts, money market checking accounts, demand accounts, savings accounts, certificates of deposit and other time deposits. In addition, retirement accounts such as Individual Retirement Accounts are available from the Bank. The Bank pays interest on its deposit accounts and certificates competitive with other financial institutions in its primary service area. The Bank seeks to concentrate its deposits and loan efforts within Monroe and South Dade Counties, Florida, its primary service area. The primary factors in competing for deposits are interest rates, the range of financial services offered, service, convenience of office locations and flexible office hours. Direct competition for such deposits comes from other commercial banks, savings institutions, credit unions, brokerage firms and money market funds. 1 5 The Bank's lending philosophy is to make loans, taking into consideration the safety of the Bank's depositors' funds, the preservation of the Bank's liquidity, the interest of the Company's shareholders, and the welfare of the community. Interest income from the Bank's lending operations is a principal component of the Bank's income, so therefore prudent lending is essential for the prosperity of the Bank. The primary factors in competing for loans are interest rates, loan origination fees and the range of lending services offered. Competition for origination of loans normally comes from other commercial banks, savings institutions, credit unions and mortgage banking firms. Such entities may have competitive advantages as a result of greater resources and higher lending limits (by virtue of their greater capitalization). There are also smaller financial institutions that compete for the same market. The Bank seeks to attract customers with its products and services which are tailored to the needs of the customers. Management seeks to emphasize a high degree of personalized client service in order to be able to better meet the banking needs of its customers. The Bank's loan portfolio at December 31, 1999 contained approximately 31% real estate loans, 63% commercial loans and 6% consumer loans. At that date, approximately 87% of all loans outstanding were secured by real estate. The Bank's gross loan to deposit ratio at December 31, 1999 was approximately 83.8%. In addition to interest income from the Bank's lending operations, the other major sources of income for the Bank are fees collected on loans, interest on investment securities, service charges on deposit accounts, gains on sales of government guaranteed loans, and merchant bankcard processing income. The principal expenses of the Bank are interest paid on deposits, employee compensation, office expenses, and other overhead expenses. The Bank engages through a wholly-owned subsidiary, TIB Investment & Insurance Center, Inc. ("TIB Investment"), in the retail sale of nondeposit investment products such as variable and fixed rate annuities, mutual funds and other products. The Bank has entered into an agreement with Linsco/Private Ledger Corp., a third-party provider which trains and supervises employees of the Bank or TIB Investment in the sale of these products from various offices of the Bank. The Bank also engages through a wholly-owned subsidiary, TIB Government Loan Specialists, Inc., in the origination and sale of the government guaranteed portion of loans that qualify for government guaranteed loan programs such as those offered by the Small Business Administration and the U.S. Department of Agriculture Rural Development Business and Industry Program. The Company has a 30% interest in ERAS JV, a company that specializes in cash item processing for depository institutions and customized software for the financial services industry. The Bank's business plan relies principally upon local advertising and promotional activity and upon personal contacts by its directors, officers and shareholders to attract business and to acquaint potential customers with the Bank's personalized services. The Bank emphasizes a high degree of personalized client service in order to be able to provide for each customer's banking needs. The Bank's marketing approach emphasizes the advantages of dealing with an independent, locally-owned and managed state chartered bank to meet the particular needs of consumers, professionals and business customers in the community. All banking services are continually evaluated with regard to their profitability and efforts are made to modify the Bank's business plan if deemed appropriate. EMPLOYEES As of December 31, 1999, the Bank employed 187 full-time employees and 10 part-time employees. Except for the officers of the Bank who presently serve as officers of the Company, the Company does not have any employees. Neither the Company nor the Bank is a party to any collective bargaining agreement, and management believes the Bank enjoys satisfactory relations with its employees. 2 6 SUPERVISION AND REGULATION REGULATION OF THE BANK. The operations of the Bank are subject to state and federal statutes applicable to state chartered banks whose deposits are insured by the FDIC, and also to the regulations of the Florida Department of Banking and Finance (the "DBF") and the FDIC. Such statutes and regulations relate to, among other things, required reserves, investments, loans, mergers and consolidations, branching, issuances of securities, payment of dividends, payment of interest rates, establishment of branches and other aspects of the Bank's operations. Under the provisions of the Federal Reserve Act, the Bank is subject to certain restrictions on any extensions of credit to the Company or, with certain exceptions, other affiliates, and on the taking of such stock or securities as collateral on loans to any borrower. In addition, the Bank is prohibited from engaging in certain tie-in arrangements in connection with any extension of credit or the providing of any property or service. Florida law permits banks to branch on a statewide basis. Therefore, the Bank has the ability to expand from its market presence in Monroe and Dade counties into other markets in Florida. The FDIC has adopted risk-based capital guidelines for all FDIC insured state chartered banks that are not members of the Federal Reserve System. These guidelines require all banks to maintain a minimum ratio of total capital to risk weighted assets of 8 percent (of which at least 4 percent must consist of Tier 1 capital). Tier 1 capital of state chartered banks (as defined in regulations) generally consists of (i) common stockholders equity; (ii) noncumulative perpetual preferred stock and related surplus; and (iii) minority interests in the equity accounts of consolidated subsidiaries. In addition, the FDIC adopted a minimum ratio of Tier 1 capital to total assets of banks. This capital measure is generally referred to as the leverage capital ratio. The FDIC has established a minimum leverage capital ratio of 3 percent if the FDIC determines that the institution is not anticipating or experiencing significant growth and has well-diversified risk, including no undue interest rate exposure, excellent asset quality, high liquidity, good earnings and, in general, is considered a strong banking organization, rated Composite 1 under the Uniform Financial Institutions Rating System. Other financial institutions are expected to maintain leverage capital at least 100 to 200 basis points above the minimum level. At December 31, 1999, the Bank exceeded the minimum Tier 1, risk-based and leverage capital ratios. The table which follows set forth certain capital information for the Bank as of December 31, 1999. CAPITAL ADEQUACY (Dollars in thousands)
December 31, 1999 ----------------- Amount Percent ------ ------- Leverage Ratio: - --------------- Actual $ 26,406 7.1% Minimum Required (1) $ 11,185 3.0% Risk-Based Capital: - ------------------- Tier 1 Capital - -------------- Actual $ 26,406 9.2% Minimum Required $ 11,531 4.0% Total Capital - ------------- Actual $ 29,403 10.2% Minimum Required $ 23,062 8.0%
(1) Represents the highest regular minimum requirement. Institutions that are contemplating acquisitions or anticipating or experiencing significant growth may be required to maintain a substantially higher leverage ratio. See below regarding the consequences of failing to meet specified capital standards. 3 7 The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") contains "prompt corrective action" provisions which established among other things, the following five capital standard categories for depository institutions: (i) well capitalized, (ii) adequately capitalized, (iii) undercapitalized, (iv) significantly undercapitalized and (v) critically undercapitalized. FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions depending on the category in which an institution is classified. Each of the federal banking agencies has issued uniform regulations, which, among other things, define the capital levels described above. Under the regulations, a bank is considered "well capitalized" if it (i) has a total risk-based capital ratio of 10% or greater, (ii) has a Tier 1 risk-based capital ratio of 6% or greater, (iii) has a leverage ratio of 5% or greater, and (iv) is not subject to any order or written directive to meet and maintain a specific capital level for any capital measure. An "adequately capitalized" bank is defined as one that has (i) a total risk-based capital ratio of 8% or greater, (ii) a Tier 1 risk-based capital ratio of 4% or greater and (iii) a leverage ratio of 4% or greater. An "undercapitalized" bank is defined as one that has a total risk-based capital ratio of less than 8%, (ii) a Tier I risk-based capital ratio of less than 4% or (iii) a leverage ratio of less than 3%. A "significantly undercapitalized" bank is defined as one that has a total risk-based capital ratio of less than 6%, a Tier 1 risk-based capital ratio of less than 3% or a leverage ratio of less than 3% and a bank is "critically undercapitalized" if the bank has a leverage ratio equal to or less than 2%. The applicable federal regulatory agency for a bank that is "well capitalized" may reclassify it as "adequately capitalized" or "undercapitalized" and subject the institution to the supervisory actions applicable to the next lower capital category, if it determines that the Bank is in an unsafe or unsound condition or deems the bank to be engaged in an unsafe or unsound practice and not to have corrected the deficiency. As of December 31, 1999, the Bank met the definition of a "well capitalized" institution. "Undercapitalized" depository institutions, among other things, are subject to growth limitations, are prohibited, with certain exceptions, from making capital distributions, are limited in their ability to obtain funding from a Federal Reserve Bank and are required to submit a capital restoration plan. The federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution's capital. In addition, for a capital restoration plan to be acceptable, the depository institution's parent holding company must guarantee that the institution will comply with such capital restoration plan and provide appropriate assurances of performance. If a depository institution fails to submit an acceptable plan, including if the holding company refuses or is unable to make the guarantee described in the previous sentence, it is treated as if it is "significantly undercapitalized". Failure to submit or implement an acceptable capital plan also is grounds for the appointment of a conservator or a receiver. "Significantly undercapitalized" depository institutions may be subject to a number of additional requirements and restrictions such as orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets, and cessation of receipt of deposits from correspondent banks. "Critically undercapitalized" institutions, among other things, are prohibited from making any payments of principal and interest on subordinated debt, and are subject to the appointment of a receiver or conservator. Under FDICIA, the FDIC is permitted to provide financial assistance to an insured bank before appointment of a conservator or receiver only if (i) such assistance would be the least costly method of meeting the FDIC's insurance obligations, (ii) grounds for appointment of a conservator or a receiver exist or are likely to exist, (iii) it is unlikely that the bank can meet all capital standards without assistance and (iv) the bank's management has been competent, has complied with applicable laws, regulations, rules and supervisory directives and has not engaged in any insider dealing, speculative practice or other abusive activity. The Bank is also subject to, among other things, the provisions of the Equal Credit Opportunity Act (the "ECOA") and the Fair Housing Act (the "FHA"), both of which prohibit discrimination based on race or color, religion, national origin, sex, and familial status in any aspect of a consumer or commercial credit or residential real estate transaction. The Department of Housing and Urban Development, the Department of Justice (the "DOJ"), and all of the federal banking agencies have issued an Interagency Policy Statement on discrimination in Lending which provides guidance to financial institutions as to what the agencies consider in determining whether discrimination exists, how the agencies will respond to lending discrimination, and what steps lenders might take to prevent discriminatory lending practices. REGULATION OF THE COMPANY. The Company is a bank holding company within the meaning of the Act. As a bank holding company, the Company is required to file with the Federal Reserve an annual report and such additional information as the Board may require pursuant to the Act. The Federal Reserve may also make examinations of the Company and each of its subsidiaries. Bank holding companies are required by the Act to obtain approval from the Federal 4 8 Reserve prior to acquiring, directly or indirectly, ownership or control of more than 5% of the voting shares of a bank. The Act also prohibits bank holding companies, with certain exceptions, from acquiring more than 5% of the voting shares of any company that is not a bank and from engaging in any nonbanking business (other than a business closely related to banking as determined by the Federal Reserve) or from managing or controlling banks and other subsidiaries authorized by the Act or furnishing services to, or performing services for, its subsidiaries without the prior approval of the Federal Reserve. The Federal Reserve is empowered to differentiate between activities that are initiated de novo by a bank holding company or a subsidiary and activities commenced by acquisition of a going concern. As a bank holding company, the Company is subject to capital adequacy guidelines established for bank holding companies by the Federal Reserve. The minimum required ratio for total capital to risk weighted assets is 8 percent (of which at least 4 percent must consist of Tier 1 capital). Tier 1 capital (as defined in regulations of the Federal Reserve) consists of common and qualifying preferred stock and minority interests in equity accounts of consolidated subsidiaries, less goodwill and other intangible assets required to be deducted under the Federal Reserve's guidelines. The Federal Reserve's guidelines apply on a consolidated basis to bank holding companies with total consolidated assets of $150 million or more. For bank holding companies with less than $150 million in total consolidated assets, the guidelines apply on a bank only basis, unless the bank holding company is engaged in nonbanking activity involving significant leverage or has significant amount of debt outstanding that is held by the general public. The Federal Reserve has stated that risk based capital guidelines establish minimum standards and that bank holding companies generally are expected to operate well above the minimum standards. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking Act"), subject to certain restrictions, allows adequately capitalized and managed bank holding companies to acquire existing banks across state lines, regardless of state statutes that would prohibit acquisitions by out-of-state institutions. Further, a bank holding company may consolidate interstate bank subsidiaries into branches and a bank may merge with an unaffiliated bank across state lines to the extent that the applicable states authorize such transactions. The Interstate Banking Act generally prohibits an interstate acquisition (other than the initial entry into a state by a bank holding company) that would result in either the control of more than (i) 10% of the total amount of insured deposits in the United States, or (ii) 30% of the total insured deposits in the home state of the target bank, unless such 30% limitation is waived by the home state on a basis which does not discriminate against out-of-state institutions. As a result of this legislation, the Company may become a candidate for acquisition by, or may itself seek to acquire, banking organizations located in other states. Florida has enacted the Florida Interstate Branching Act (the "Florida Branching Act"), which permits interstate branching through merger transactions under the Interstate Banking Act. Under the Florida Branching Act, with the prior approval of the DBF, a Florida bank may establish, maintain and operate one or more branches in a state other than the State of Florida pursuant to a merger transaction in which the Florida bank is the resulting bank. In addition, the Florida Branching Act provides that one or more Florida banks may enter into a merger transaction with one or more out-of-state banks, and an out-of-state bank resulting from such transaction may maintain and operate the branches of the Florida bank that participated in such merger. An out-of-state bank, however, is not permitted to acquire a Florida bank in a merger transaction unless the Florida bank has been in existence and continuously operated for more than three years. The Riegle Community Development and Regulatory Improvement Act of 1994 (the "Improvement Act") provides for the creation of a community development financial institutions' fund to promote economic revitalization in community development. Banks and thrift institutions are allowed to participate in such community development banks. The Improvement Act also contains (i) provisions designed to enhance small business capital formation and to enhance disclosure with regard to high cost mortgages for the protection of consumers, and (ii) more than 50 regulatory relief provisions that apply to banks and thrift institutions, including the coordination of examinations by various federal agencies, coordination of frequency and types of reports financial institutions are required to file and reduction of examinations for well capitalized institutions. Federal Reserve policy requires a bank holding company to act as a source of financial strength and to take measures to preserve and protect bank subsidiaries in situations where additional investments in a troubled bank may not otherwise be warranted. In addition, under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), where a bank holding company has more than one bank or thrift subsidiary, each of the bank holding company's subsidiary 5 9 depository institutions is responsible for any losses to the FDIC as a result of an affiliated depository institution's failure. As a result, a bank holding company may be required to loan money to its subsidiaries in the form of capital notes or other instruments which qualify as capital under regulatory rules. However, any loans from the holding company to such subsidiary banks likely will be unsecured and subordinated to such bank's depositors and perhaps to other creditors of the bank. In addition, a bank holding company may be required to provide additional capital to any additional banks it acquires as a condition to obtaining the approvals and consents of regulatory authorities in connection with such acquisitions. The Federal Reserve has adopted certain provisions implementing The Economic Growth and Regulatory Paperwork Reduction Act of 1996. Among other things, these provisions reduce the notice and application requirements applicable to bank and nonbank acquisitions and de novo expansion by well-capitalized and well-managed bank holding companies; expand the list of nonbanking activities permitted to bank holding companies; reduce certain limitations on previously permitted activities; and amend Federal Reserve anti-tying restrictions to allow banks greater flexibility to package products and services with their affiliates. The Company and the Bank are subject to Section 23A of the Federal Reserve Act, which limits a bank's "covered transactions" (generally, any extension of credit or purchase of assets) with any single affiliate to no more than 10% of a bank's capital and surplus. Covered transactions with all affiliates combined are limited to no more than 20% of a bank's capital and surplus. All covered and exempt transactions between a bank and its affiliates must be on terms and conditions consistent with safe and sound banking practices, and a bank and its subsidiaries are prohibited from purchasing low quality assets from the bank's affiliates. Finally, Section 23A requires that all of a bank's extensions of credit to an affiliate be appropriately secured by collateral. The Company and the Bank are also subject to Section 23B of the Federal Reserve Act, which further limits transactions among affiliates. Sections 22(g) and 22(h) of the Federal Reserve Act and implementing regulations also prohibit extensions of credit by a state non-member bank (such as the Bank) to its directors, executive officers and controlling shareholders on terms which are more favorable than those afforded other borrowers, and impose limits on the amounts of loans to individual affiliates and all affiliates as a group. The Company and the Bank are subject to the provisions of the Community Reinvestment Act of 1977 (the "CRA") and the federal banking agencies' regulations issued thereunder. Under the CRA, all banks and thrifts have a continuing and affirmative obligation, consistent with its safe and sound operation to help meet the credit needs for their entire communities, including low- and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions, nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA requires a depository institution's primary federal regulator, in connection with its examination of the institution, to assess the institution's record of assessing and meeting the credit needs of the community served by that institution, including low- and moderate-income neighborhoods. The regulatory agency's assessment of the institution's record is made available to the public. In the case of a bank holding company applying for approval to acquire a bank or other bank holding company, the Federal Reserve will assess the records of each subsidiary depository institution of the applicant bank holding company, and such records may be the basis for denying the application. The evaluation system used to judge an institution's CRA performance consists of three tests: a lending test; an investment test; and a service test. Each of these tests will be applied by the institution's primary federal regulator taking into account such factors as: (i) demographic data about the community; (ii) the institution's capacity and constraints; (iii) the institution's product offerings and business strategy; and (iv) data on the prior performance of the institution and similarly-situated lenders. In addition, a financial institution has the option of having its CRA performance evaluated based on a strategic plan of up to five years in length that it had developed in cooperation with local community groups. In order to be rated under a strategic plan, the institution is required to obtain the prior approval of its federal regulator. The interagency CRA regulations provide that an institution evaluated under a given test will receive one of five ratings for the test: outstanding, high satisfactory, low satisfactory, needs to improve, or substantial non-compliance. An institution will receive a certain number of points for its rating on each test, and the points are combined to produce an overall composite rating of either outstanding, satisfactory, needs to improve, or substantial non-compliance. Under the agencies' 6 10 rating guidelines, an institution that receives an "outstanding" rating on the lending test will receive an overall rating of at least "satisfactory", and no institution can receive an overall rating of "satisfactory" unless it receives a rating of at least "low satisfactory" on its lending test. In addition, evidence of discriminatory or other illegal credit practices would adversely affect an institution's overall rating. Under the new regulations, an institution's CRA rating would continue to be taken into account by its primary federal regulator in considering various types of applications. As a result of the Bank's most recent CRA examination in July 1998, the Bank received an "outstanding" CRA rating. The United States Congress and the Florida Legislature periodically consider and adopt legislation that results in, and could further result in, deregulation, among other matters, of banks and other financial institutions. Such legislation could modify or eliminate current prohibitions with other financial institutions, including mutual funds, securities brokerage firms, insurance companies, banks from other states and investment banking firms. The effect of any such legislation on the business of the Company or the Bank cannot be accurately predicted. The Company cannot predict what legislation might be enacted or what other implementing regulations might be adopted, and if enacted or adopted, the effect thereof. On November 12, 1999, President Clinton signed into law the Gramm-Leach-Bliley Act which reforms and modernizes certain areas of financial services regulation. The law permits the creation of new financial services holding companies that can offer a full range of financial products under a regulatory structure based on the principle of functional regulation. The legislation eliminates the legal barriers to affiliations among banks and securities firms, insurance companies, and other financial services companies. The law also provides financial organizations with the opportunity to structure these new financial affiliations through a holding company structure or a financial subsidiary. The new law reserves the role of the Federal Reserve Board as the supervisor for bank holding companies. At the same time, the law also provides a system of functional regulation which is designed to utilize the various existing federal and state regulatory bodies. The law also sets up a process for coordination between the Federal Reserve Board and the Secretary of the Treasury regarding the approval of new financial activities for both bank holding companies and national bank financial subsidiaries. The law also includes a minimum federal standard of financial privacy. Financial institutions are required to have written privacy policies that must be disclosed to customers. The disclosure of a financial institution's privacy policy must take place at the time a customer relationship is established and not less than annually during the continuation of the relationship. The act also provides for the functional regulation of bank securities activities. The law repeals the exemption that banks were afforded from the definition of "broker," and replaces it with a set of limited exemptions that allow the continuation of some historical activities performed by banks. In addition, the act amends the securities laws to include banks within the general definition of dealer. Regarding new bank products, the law provides a procedure for handling products sold by banks that have securities elements. In the area of Community Reinvestment Act activities, the law generally requires that financial institutions address the credit needs of low-to-moderate income individuals and neighborhoods in the communities in which they operate. Bank regulators are required to take the Community Reinvestment Act ratings of a bank or of the bank subsidiaries of a holding company into account when acting upon certain branch and bank merger and acquisition applications filed by the institution. Under the law, financial holding companies and banks that desire to engage in new financial activities are required to have satisfactory or better Community Reinvestment Act ratings when they commence the new activity. Most of the provisions of the law take effect on November 12, 1999, with other provisions being phased in over a one to two year period thereafter. It is anticipated that the effects of the law, while providing additional flexibility to bank holding companies and banks, may result in additional affiliation of different financial services providers, as well as increased competition, resulting in lower prices, more convenience, and greater financial products and services available to consumers. COMPETITION The banking business is highly competitive. The Bank competes with other commercial banks that conduct operations in its primary service area. Banks generally compete with other financial institutions through the banking products and services offered, the pricing of services, the level of service provided, the convenience and availability of services, and the degree of expertise and the personal manner in which services are offered. The Bank encounters strong competition from most of the financial 7 11 institutions in the Bank's primary service area. In the conduct of certain areas of its banking business, the Bank also competes with credit unions, consumer finance companies, insurance companies, money market mutual funds and other financial institutions, some of which are not subject to the same degree of regulation and restrictions imposed upon the Bank. Many of these competitors have substantially greater resources and lending limits than the Bank has and offer certain services, such as trust services, that the Bank does not provide presently. Management believes that personalized service and competitive pricing will provide it with a method to compete effectively in the primary service area. MONETARY POLICY Earnings of the Company are affected by domestic and foreign economic conditions, particularly by the monetary and fiscal policies of the United States government and its agencies. The Federal Reserve has an important impact on the operating results of banks and other financial institutions through its power to implement national monetary policy. The methods used by the Federal Reserve include setting the reserve requirements of banks, establishing the discount rate on bank borrowings and conducting open market transactions in United States Government securities. FDIC INSURANCE ASSESSMENTS The FDIC has regulations that provide for a risk-based premium system which requires higher assessment rates for banks which the FDIC determines pose greater risks to the BIF. Under the regulations, banks pay an assessment depending upon risk classification. Although the regulations were adopted by the FDIC as final regulations, the Board of the FDIC will consider whether changes in economic and industry conditions require adjustments in the range of assessment rates to be charged in future years. To arrive at risk-based assessments, the FDIC places each bank in one of nine risk categories using a two step process based on capital ratios and on other relevant information. Each bank is assigned to one of three groups (well capitalized, adequately capitalized, or under capitalized) based on its capital ratios. The FDIC has also assigned each bank to one of three subgroups based upon an evaluation of the risk posed by the bank. The three subgroups include (i) banks that are financially sound with only a few minor weaknesses, (ii) those banks with weaknesses which, if not corrected, could result in significant deterioration of the bank and increased risk to the BIF, and (iii) those banks that pose a substantial probability of loss to the BIF unless corrective action is taken. These supervisory evaluations modify premium rates within each of the three capital groups with the result being the nine risk categories and assessment rates based on a summary multiplier. The Bank has been informed by the FDIC that it has been classified as well capitalized and in the lowest risk category and will be assessed accordingly for 2000. STATISTICAL INFORMATION Certain statistical information is found in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K. ITEM 2. PROPERTIES The Company conducts its business operations through the principal executive and operations office of the Company and the Bank located on an approximately 1.3 acre site at 99451 Overseas Highway, Key Largo, Monroe County, Florida. The main offices of the Bank at 99451 Overseas Highway are housed in a two-story building, owned by the Bank and containing approximately 13,275 square feet of finished space used for offices and operations and seven teller windows in the Bank lobby. The building also has two drive-up teller windows and an automated teller machine with 24-hour a day access. The Bank's ten branches are located at 28 N.E. 18th Street in Homestead; 777 Krome Avenue in Homestead; 103330 Overseas Highway in Key Largo; 91980 Overseas Highway in Tavernier; 80900 Overseas Highway in Islamorada; 11401 Overseas Highway in Marathon Shores; 2348 Overseas Highway in Marathon; 30400 Overseas Highway in Big Pine Key; 8 12 330 Whitehead Street in Key West; and 3618 N. Roosevelt Drive in Key West; Florida. The main office and branch properties are owned by the Bank. The Bank also owns two other properties. The Bank owns a one-story building containing approximately 5,000 square feet on a one-half acre lot located at 100210 Overseas Highway, Key Largo. This building is partly leased to another business and the remainder of the building is being renovated for a training center and office space. The Bank owns a three-story building at 228 Atlantic Boulevard, Key Largo, Florida, consisting of approximately 3,000 square feet that is utilized by the Bank primarily for the loan operations, human resources and marketing departments. ITEM 3. LEGAL PROCEEDINGS While the Company and the Bank are from time to time parties to various legal proceedings arising in the ordinary course of their business, management believes after consultation with legal counsel that there are no proceedings threatened or pending against the Company or the Bank that will, individually or in the aggregate, have a material adverse effect on the consolidated results of operations or financial condition of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of security holders during the Company's fourth quarter of the fiscal year ended December 31, 1999. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS As of December 31, 1999, there were 409 registered shareholders of record and 4,395,137 shares of the Company's common stock outstanding. On June 18, 1997, the Company's $0.10 par value common Stock became listed on the Nasdaq National Market System under the symbol "TIBB." Prior thereto, the Company's common stock had not been traded on an established trading market, so there had been limited trading. The following table sets forth, for the periods indicated, the high and low sale prices per share for the Company's common stock on the Nasdaq National Market:
Quarter Ended 1999 1998 - ------------- --------------------- ---------------------- High Low High Low ------ ------ ------ ------ March 31 $11.38 $10.38 $14.38 $12.13 June 30 11.50 10.00 14.88 12.19 September 30 11.00 9.38 12.50 10.56 December 31 11.63 9.50 11.38 10.00
For the year ended December 31, 1999, the Company paid cash dividends to shareholders in the amount of $.1025 per share for the first three quarters and $.1050 per share for the last quarter ($.4125 in the aggregate). For the year ended December 31, 1998, the Company paid cash dividends to shareholders in the amount of $.10 per share for the first three quarters and $.1025 per share for the last quarter ($.4025 in the aggregate). The only source of funds presently available to the Company for the payment of cash dividends is dividends from the Bank. Certain regulatory requirements restrict the amount of dividends that can be paid to the Company by the Bank without obtaining the prior approval of the appropriate regulatory authorities. Information regarding restrictions on the ability of the Bank to pay dividends to the Company is contained in Note 12 of the "Notes to Consolidated Financial Statements" contained in Item 8 hereof. The Company expects that comparable cash dividends will continue to be paid in the future, although no assurance can be given that further dividends will be declared by the Company, or if declared, what the amount of the dividends will be. 9 13 In the fourth quarter of 1998 the Company purchased 50,000 shares of common stock through one of its market makers at an average price of $11.16 per share. Also, the Company authorized the purchase of an additional 50,000 shares beginning in the first quarter of 1999. In 1999, 45,000 of these shares were repurchased at an average price of $10.97 per share. The remaining 5,000 shares were repurchased in the first quarter of 2000 at an average cost of $10.32. ITEM 6. SELECTED FINANCIAL DATA The selected consolidated financial data presented below as of and for the years ended December 31, 1999, 1998, 1997, 1996, and 1995 is unaudited and has been derived from the Consolidated Financial Statements of the Company and its subsidiaries, and from records of the Company. During 1996, TIB Financial Corp. ("Company") was formed providing for a reorganization whereby TIB Bank of the Keys ("Bank") became a wholly-owned subsidiary of TIB Financial Corp. The transaction was accounted for on a historical cost basis similar to a pooling of interest and, accordingly, the following selected consolidated financial data was prepared as if the reorganization occurred January 1, 1995. The information presented below should be read in conjunction with the Consolidated Financial Statements and related notes, and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AS OF DECEMBER 31, - ---------------------------------------------------------------------------------------------------------------------------- Balance Sheet Data 1999 1998 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------- Total Assets $392,129 $355,476 $277,959 $241,051 $219,567 Investment Securities 60,362 66,001 54,690 50,878 60,961 Gross Loans 290,614 246,668 186,279 165,151 139,061 Allowance for loan losses 2,997 2,517 2,202 1,930 1,701 Deposits 346,904 325,057 248,822 204,984 192,458 Stockholders' Equity 28,302 26,568 24,564 22,621 21,063 YEAR ENDED DECEMBER 31, - ---------------------------------------------------------------------------------------------------------------------------- Statement of Income Data 1999 1998 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------- Interest income 27,906 23,706 20,558 18,503 17,525 Interest expense 11,299 9,915 7,876 6,507 6,253 Net interest income 16,607 13,791 12,682 11,996 11,272 Provision for loan losses 540 360 300 240 135 Net interest income after provision for loan losses 16,067 13,431 12,382 11,756 11,137 Non-interest income 7,167 6,376 5,319 3,784 3,273 Non-interest expense 16,741 14,480 12,776 10,748 9,818 Income tax expense 2,327 1,886 1,719 1,589 1,591 Cumulative effect of change in accounting principle, net of tax benefit 47 - - - - Net Income 4,119 3,441 3,206 3,203 3,001 Per Share Data (1) - ------------------------------------------------------ Book value per share at year end $6.44 $6.04 $5.62 $5.23 $4.95 Basic earnings per share 0.94 0.78 0.74 0.75 0.71 Diluted earnings per share 0.91 0.74 0.70 0.72 0.69 Basic weighted average common equivalent shares outstanding 4,388,336 4,415,949 4,354,547 4,280,712 4,246,218 Diluted weighted average common equivalent shares outstanding 4,543,784 4,624,380 4,602,375 4,424,676 4,352,838 Dividends declared $0.4125 $0.4025 $0.40 $0.39 $0.25
10 14 Ratios 1999 1998 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------- Return on average assets 1.07% 1.10% 1.25% 1.40% 1.40% Return on average equity 15.05% 13.31% 13.52% 15.89% 17.00% Average equity/average assets 7.11% 8.23% 9.22% 8.79% 8.23% Net interest margin 4.78% 4.88% 5.42% 5.83% 5.85% Dividend payout ratio 43.95% 51.65% 54.33% 52.12% 35.37% Non-performing assets/total loans and other real estate 0.71% 0.21% 0.15% 0.26% 0.06% Allowance for loan losses/total loans 1.03% 1.02% 1.18% 1.17% 1.22% Allowance for loan losses/nonperforming assets 145.25% 483.28% 806.73% 448.84% 2,074.39% Non-interest expense/net interest income and non-interest income 70.42% 71.80% 70.98% 68.11% 67.50%
(1) Stock splits in 1997 and 1996 have been retroactively reflected in the per share data and weighted-average common equivalent and diluted shares outstanding as if they occurred January 1, 1995. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION During 1996, TIB Financial Corp. ("Company") was formed providing for a reorganization whereby TIB Bank of the Keys ("Bank") became a wholly-owned subsidiary of TIB Financial Corp. The transaction was accounted for on a historical cost basis similar to a pooling of interests and, accordingly, Selected Financial Data, Management's Discussion and Analysis of Financial Condition and Results of Operations, and the Consolidated Financial Statements have been restated to reflect the reorganization as occurring at the beginning of the first period presented. In 1997, the Bank formed two subsidiaries, the first on June 13, 1997, when the Bank acquired the assets of Small Business Consultants, Inc., a Florida corporation specializing in the government guaranteed loan consulting business. On July 31, 1997, the Bank formed TIB Investment & Insurance Center, Inc. for the purpose of selling investment products to the public. The Company has a 30% interest in ERAS JV, a joint venture computer software, item processing, and network management company. ERAS JV currently processes the cash items and provides network management services for the bank. In March 1996, TIB Bank of the Keys declared a two-for-one stock split which was distributed on May 14, 1996, to shareholders of record on May 2, 1996. On February 25, 1997, TIB Financial Corp. declared a three-for-one stock split which was distributed on March 18, 1997, to shareholders of record on February 25, 1997. In the Selected Financial Data, Management's Discussion and Analysis of Financial Condition and Results of Operations, and the Consolidated Financial Statements, all per share amounts, number of shares outstanding and market prices have been restated to reflect these stock splits as if they occurred at the beginning of the first period presented. In 1999, the Bank had a very successful year generating loans for the Bank's portfolio. These loans were predominately residential and commercial real estate secured. This additional leveraging of the balance sheet, from a loan to deposit ratio of 75.9% at December 31, 1998 to a ratio of 83.8% at December 31, 1999, helped offset the continuing industry trend of declining net interest margins. The increasing interest rate environment slowed down the residential real estate refinancing activity in 1999 versus 1998 and that lowered the fee income generated in this area. A smaller number of transactions lowered the fees generated in the government loan area along with the investment services subsidiary. The Bank believes it is important to have a varied mix of non-interest fee generating areas since unique factors can negatively affect individual profit centers. 11 15 PERFORMANCE OVERVIEW The Company achieved record net income of $4.1 million in 1999 representing a $678,000 or a 19.7% increase over the prior year. Management attributes the results to a 17.7% increase in interest income primarily caused by strong loan growth, along with a 12.4% increase in non-interest income, offset by a 14.0% increase in interest expense, and a 15.6% increase in non-interest expenses. Net income of $3.4 million in 1998 represented a $235,000 or 7.3% increase over 1997. Reported basic earnings per share for 1999 was $.94 compared to $.78 in 1998. Basic weighted-average common equivalent shares outstanding in 1999 were 4,388,336 compared to 4,415,949 in 1998. This decrease resulted from the Company stock repurchases, which were partially offset by the exercise of stock options and the award of compensation paid through the issuance of common stock. Diluted earnings per share for 1999 was $0.91 compared to $0.74 in 1998. Diluted weighted-average common equivalent shares outstanding in 1999 were 4,543,784 compared to 4,624,380 in 1998. Total assets of the Company at December 31, 1999 were $392.1 million compared to $355.5 million at the previous year end, reflecting an increase of 10.3%. Asset growth was funded by an increase in deposits of 6.7%, or $21.8 million in 1999 and a $10 million advance from the Federal Home Loan Bank. The Company's total loan volume increased 17.8%, or $43.9 million, to $290.6 million at year end 1999 compared to $246.7 million at December 31, 1998. During the last four years, the Company's loans outstanding have grown at a rate of 20.2% compounded annually. Net interest income in 1999 increased 20.4%, or $2.8 million, to $16.6 million from $13.8 million reported in 1998. The Company's interest margin declined from 4.88% to 4.78%. This decline resulted from the Company's decision to remain aggressive in an increasingly competitive deposit and loan market. Non-performing assets increased to 0.71% of total loans from 0.21% at year end 1998. Non-interest income increased $791,000 to $7.2 million in 1999. The increase in other income is attributed to an increase of $654,000 in merchant bankcard processing income; an increase of $220,000 in service charges on deposit accounts; a $180,000 increase in revenues, net of goodwill amortization from investment in ERAS Joint Venture; a $150,000 increase in other income; and a one time gain on the sale of the insurance company option for $312,000; offset by a $122,000 decrease in fees on mortgage loans sold at origination; a $189,000 decrease in commissions on retail sales of investment products; a $284,000 decrease in gain on sale of government guaranteed loans; and a $130,000 decrease in net investment security gains. Net interest income in 1998 increased 8.7%, or $1.1 million, to $13.8 million from $12.7 million reported in 1997. The Company experienced an increase in non-interest expenses of $2.3 million in 1999, or 15.6 % over 1998. The major areas of increased expenses relate to interchange fees and other expenses for processing merchant bankcard transactions, computer services, supplies, amortization of purchased deposits, charge-off of unamortized leasehold improvements, and the additional operating costs associated with the two new branches established in 1998. RESULTS OF OPERATIONS The following table summarizes the balance sheet and results of operations including selected financial performance ratios of the Company for the three years ended December 31:
DOLLARS IN THOUSAND, EXCEPT PER SHARE DATA AS OF DECEMBER 31, - ---------------------------------------------------------------------------------------------------------- Balance Sheet Data 1999 1998 1997 - ---------------------------------------------------------------------------------------------------------- Total Assets $392,129 $355,476 $277,959 Investment Securities 60,362 66,001 54,690 Gross Loans 290,614 246,668 186,279 Allowance for loan losses 2,997 2,517 2,202 Deposits 346,904 325,057 248,822 Stockholders' Equity 28,302 26,568 24,564
12 16
YEAR ENDED DECEMBER 31, - ---------------------------------------------------------------------------------------------------------- Statement of Income Data 1999 1998 1997 - ---------------------------------------------------------------------------------------------------------- Interest income $27,906 $23,706 $20,558 Interest expense 11,299 9,915 7,876 Net interest income 16,607 13,791 12,682 Provision for loan losses 540 360 300 Net interest income after provision for loan losses 16,067 13,431 12,382 Non-interest income 7,167 6,376 5,319 Non-interest expense 16,741 14,480 12,776 Income tax expense 2,327 1,886 1,719 Cumulative effect of change in accounting principle, net of tax benefit 47 - - Net Income 4,119 3,441 3,206 Per Share Data (1) (2) - ------------------------------------------------------ Book value per share at year end 6.44 6.04 5.62 Basic earnings per share 0.94 0.78 0.74 Diluted earnings per share 0.91 0.74 0.70 Basic weighted average common equivalent shares outstanding 4,388,336 4,415,949 4,354,547 Diluted weighted average common equivalent shares outstanding 4,543,784 4,624,380 4,602,375 Dividends declared $0.4125 $0.4025 $0.40 Ratios (2) - ------------------------------------------------------ Return on average assets 1.07% 1.10% 1.25% Return on average equity 15.05% 13.31% 13.52% Average equity/average assets 7.11% 8.23% 9.22% Net interest margin 4.78% 4.88% 5.42% Dividend payout ratio 43.95% 51.65% 54.33% Non-performing assets/total loans and other real estate 0.71% 0.21% 0.15% Allowance for loan losses/total loans 1.03% 1.02% 1.18% Non-interest expense/net interest income and non-interest income 70.42% 71.80% 70.98%
(1) Stock splits in 1997 have been retroactively reflected in per share data and weighted average common equivalent and diluted shares outstanding as if they occurred as of the earliest date presented. (2) Averages are derived from daily balances. NET INTEREST INCOME Net interest income, the primary source of revenue for the Company, is a function of the yield earned on average interest-earning assets and the rate paid on average interest-bearing liabilities. Changes in net interest income from period to period reflect the increases or decreases in average interest-earning assets, interest-bearing liabilities and the interest rate spread which is affected by the degree of mismatch in maturity and repricing characteristics of the Company's interest-earning assets and interest-bearing liabilities. Net interest income on a tax equivalent basis increased 19.3% to $16.8 million in 1999 as compared to 1998. Net interest margin decreased only 10 basis points to 4.78%. The decrease in the yield in earning assets was similar to the 13 17 decrease in the cost of interest bearing liabilities. One factor that restrained the decrease in yield of earning assets was a change in mix. A relatively larger proportion of higher yielding loans in 1999 compared to 1998 helped moderate the overall yield decrease in these assets overall. Loan volume representing the majority of the change in average earning assets increased $58.8 million while average investment securities volumes increased $300,000. Average interest-bearing liabilities increased 22.6% or $51.4 million over 1998. Average increases in time and savings deposits of $23.9 million were accompanied by a large increase of $23.9 million in money market accounts. Net interest income on a tax equivalent basis, increased 9.2% to $14.1 million in 1998, as compared to 1997. Net interest margin decreased 54 basis points to 4.88%. In 1998, the Company continued to aggressively price both loan and deposit products in order to gain market share and enhance overall customer relationships. The Company's desire to provide one-stop shopping for a customers' complete financial services needs requires competitive pricing for all product offerings. The introduction of a high rate money market account in 1997, and its continued success in 1998 though increasing the average costs of funds, continued to bring in substantial new deposits from both new and existing customers of the Bank. These new deposits funded an average interest-earning asset increase of 21.2%, or $50.6 million. Loan volume represented the majority of this change in average earning assets increasing $27.0 million while average investment securities volumes increased $17.6 million. Average interest-bearing liabilities increased 22.7%, or $42.1 million, over 1997. Average decreases in time and savings deposits of $6.4 million were more than offset by the large increase of $44.0 million in money market accounts. The following table sets forth information with respect to the average balances, interest income and average yield by major categories of assets; the average balances, interest expense and average rate by major categories of liabilities; the average balances of noninterest-earning assets, noninterest-bearing liabilities and stockholders' equity; and net interest income, interest rate spread, and net interest margin for the years ended December 31, 1999, 1998 and 1997. 14 18 AVERAGE BALANCE SHEETS
1999 1998 1997 ---- ---- ---- AVERAGE INCOME/ YIELDS AVERAGE INCOME/ YIELDS AVERAGE INCOME/ YIELDS (Dollars in thousands) BALANCES EXPENSE RATES BALANCES EXPENSE RATES BALANCES EXPENSE RATES -------- ------- ------ -------- ------- ------ -------- ------- ------ ASSETS Interest-earning assets: Loans (1) $264,124 22,926 8.68% $205,319 $ 18,746 9.13% $178,317 $ 17,019 9.54% Investment securities - taxable 62,321 3,741 6.00% 59,136 3,676 6.22% 44,857 2,706 6.03% Investment securities - tax exempt (2) 7,044 562 7.98% 9,929 851 8.57% 6,576 605 9.21% Interest bearing deposits in other banks 6,494 316 4.86% -- -- -- -- -- -- Federal funds sold 11,420 552 4.84% 14,060 721 5.13% 8,054 433 5.38% -------- ------- -------- -------- -------- -------- Total interest-earning assets 351,403 28,097 8.00% 288,444 23,994 8.32% 237,804 20,763 8.73% -------- ------- -------- -------- -------- -------- Non-interest-earning assets: Cash and due from banks 14,925 11,196 7,307 Investment in ERAS 809 165 -- Premises and equipment, net 13,105 10,295 8,754 Allowances for loan losses (2,751) (2,347) (2,058) Other assets 7,321 6,466 5,261 -------- -------- -------- Total non-interest earning assets 33,409 25,775 19,264 -------- -------- -------- Total assets 384,812 314,219 257,068 -------- -------- -------- LIABILITIES & STOCKHOLDERS' EQUITY Interest-bearing liabilities: Interest bearing deposits: NOW accounts 35,247 436 1.24% 32,198 459 1.43% 28,122 393 1.40% Money market 123,506 5,149 4.17% 99,567 4,832 4.85% 55,543 2,692 4.85% Savings deposits 25,893 610 2.36% 23,005 570 2.48% 28,474 778 2.73% Other time deposits 91,666 4,983 5.44% 70,671 3,976 5.63% 71,565 3,949 5.52% -------- ------- -------- -------- -------- -------- Total interest-bearing deposits 276,312 11,178 4.05% 225,441 9,837 4.36% 183,704 7,812 4.25% Other interest-bearing liabilities: Other borrowings 422 37 8.68% -- -- -- -- -- -- Short-term borrowings 1,685 84 4.99% 1,609 78 4.85% 1,274 64 5.02% -------- ------- -------- -------- -------- -------- Total interest-bearing liabilities 278,419 11,299 4.06% 227,050 9,915 4.37% 184,978 7,876 4.26% -------- ------- -------- -------- -------- -------- Non-interest bearing liabilities and stockholders' equity: Demand deposits 74,806 58,058 46,323 Other liabilities 4,223 3,248 2,054 Stockholders' equity 27,364 25,863 23,713 -------- -------- -------- Total non-interest bearing liabilities and stockholders' equity 106,393 87,169 72,090 -------- -------- -------- Total liabilities and stockholders' equity 384,812 314,219 257,068 ======== ======== ======== Interest rate spread 3.94% 3.95% 4.47% ==== ==== ==== Net interest income $16,798 $14,079 $12,887 ------- ------- ------- Net interest margin (3) 4.78% 4.88% 5.42% ==== ==== ====
15 19 (1) Average loans include non-performing loans. Interest on loans includes loan fees of $140,590 in 1999, $74,966 in 1998 and $83,918 in 1997. (2) Interest income and rates include the effects of a tax equivalent adjustment using a Federal tax rate of 34% in adjusting tax exempt interest on tax exempt investment securities to a fully taxable basis. (3) Net interest margin is net interest income divided by average total interest-earning assets. CHANGES IN NET INTEREST INCOME The table below details the components of the changes in net interest income for the last two years. For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volumes, changes due to rates, with the changes in both volumes and rates allocated to these two categories based on the proportionate absolute changes in each category.
1999 compared to 1998 (1) 1998 compared to 1997 (1) Due to changes in Due to changes in -------------------------------------------------------------------------------- (In thousands) Net Net Average Average Increase Average Average Increase INTEREST INCOME Volume Rate (Decrease) Volume Rate (Decrease) - ---------------------------------------------------------------------------------------------------------------------- Loans $5,143 $(963) $4,180 $2,484 $(757) $1,727 Investment Securities (2) 20 (244) (224) 1,153 63 1,216 Interest bearing deposits in other banks 316 - 316 - - - Federal Funds sold (130) (39) (169) 309 (21) 288 ----------- ----------- ----------- ------------- ----------- ------------ Total interest income 5,349 (1,246) 4,103 3,946 (715) 3,231 ----------- ----------- ----------- ------------- ----------- ------------ INTEREST EXPENSE NOW Accounts 41 (64) (23) 58 8 66 Money Market 1,056 (739) 317 2,140 - 2,140 Savings deposits 69 (29) 40 (141) (67) (208) Other time deposits 1,145 (138) 1,007 (50) 77 27 Other borrowings 37 - 37 - - - Short-term borrowings 4 2 6 20 (6) 14 ----------- ----------- ----------- ----------- ------------ ------------ Total interest expense 2,352 (968) 1,384 2,027 12 2,039 ----------- ----------- ----------- ----------- ------------ ------------ Change in net interest income $2,997 $(278) $2,719 $1,919 $(727) $1,192 =========== =========== =========== =========== ============ ============
(1) The change in interest due to both rate and volume has been allocated to the volume and rate components in proportion to the relationship of the dollar amounts of the absolute change in each. (2) Interest income includes the effects of a tax equivalent adjustment using a federal tax rate of 34% in adjusting tax exempt interest on tax exempt investment securities to a fully taxable basis. 16 20 NON-INTEREST INCOME The following table presents the principal components of non-interest income for the years ended December 31, 1999, 1998, and 1997.
(In thousands) 1999 1998 1997 - --------------------------------------------------------------------------------------------------------- Credit card processing income $2,828 $2,174 $2,109 Gains on sales of mortgage loans - - 119 Gross gains on sales of government guaranteed loans 704 988 440 Fees on mortgage loans sold at origination 339 461 364 Revenues, net of goodwill amortization, from investment in ERAS Joint Venture 179 (1) - SBA servicing income 106 94 58 Service charge income 1,951 1,732 1,640 Gain on sale of insurance company option 312 - - Net gains on sales of investment securities 1 131 11 Retail investment services income 230 419 319 Other 517 378 259 ============= ============== =============== Total non-interest income $7,167 $6,376 $5,319 ============= ============== ===============
The Company's continued emphasis on non-interest income remains a primary focus. Over the past three years, the Company has increased non-interest income from $5.3 million to $7.2 million or approximately 34.7%. 1999 growth in non-interest income of $791,000 over 1998 resulted from the Company's sources of this income coming from a broad range of individual profit centers that can grow in total even when unique factors can limit the results from some areas. In particular, fees on mortgage loans sold at origination declined in 1999 due to the increased market interest rate environment which substantially reduced the mortgage re-finance market that was strong in 1998. Also, gains on sales of government guaranteed loans were reduced in 1999 versus 1998 due to several factors including a decline in premiums paid on certain types of loans due to a history of high prepayment rates for those borrowers. This category is comprised of relatively small numbers of significant transactions. This causes the gains recognized to vary widely on a quarter to quarter basis and even the yearly results will fluctuate depending on the timing and size of just one or two large transactions. Retail investment services income dropped $189,000 from 1998 to 1999 due to a change in investment advisors and the transitional period that necessitated. More than offsetting these decreases were significant gains in credit card processing income, revenues from our investment in ERAS Joint Venture, service charge and servicing income, and other smaller categories that include debit card and ATM fees. The Bank began a program to originate and sell conforming fixed rate residential mortgages to the secondary market in late 1994 and the Bank has generated over $50 million in residential mortgages in 1997, 1998 and 1999. Approximately 40% of the annual volume was conforming fixed rate residential loans that are sold immediately to the secondary market. Approximately 60% of the annual production represents conforming adjustable rate loans that are placed in the Bank's portfolio. At the end of 1994 the Bank began to originate these loans utilizing industry standards for documentation and procedures in order for them to be suitable for sale as a back-up source for liquidity. From time to time the Bank sells a portion of these loans to confirm their use as a back up source of liquidity. In 1998 and 1999 none was sold. In 1997, $5.9 million of the Bank's portfolio of adjustable rate mortgages were sold in the secondary market for a gain of $119,000. The Company may seek to retain most of this portfolio production as the yield may be of benefit for years to come. Additionally, effective cross-selling of other bank products around this and other activities has contributed to the Bank's growth in its deposit base. NON-INTEREST EXPENSES The following table represents the principal components of non-interest expenses for the years ended December 31, 1999, 1998, and 1997. 17 21
(In thousands) 1999 1998 1997 - -------------------------------------------------------------------------------------------------- Salary and employee benefits 7,592 7,159 6,505 Merchant bank card expenses 2,085 1,592 1,501 Occupancy 1,381 1,130 918 Equipment 1,253 1,119 907 Accounting, legal, and other professional 483 510 512 Computer services 1,395 861 597 Postage, courier and armored car 421 325 285 Marketing and community relations 458 496 417 Taxes - non building 62 45 41 Operating supplies 426 398 339 Director's fees 160 152 149 FDIC and state assessments 109 90 77 Charge-off of unamortized leasehold improvements 134 - - Amortization of intangibles 177 96 47 Other operating expenses 605 507 482 ======= ======= ======== Total non-interest expenses $16,741 $14,480 $ 12,777 ======= ======= ========
The Company has over the three year periods of 1997, 1998, and 1999 expanded non-interest expense in an effort to build an infrastructure which will position the Bank in a quality customer service mode and a growth perspective. The Company experienced an increase in non-interest expenses of $2.3 million in 1999, or 15.6 % over 1998. The major areas of increased expenses relate to merchant bank card expenses for processing merchant bankcard transactions, computer services, supplies, amortization of purchased deposits, charge-off of unamortized leasehold improvements, and the additional operating costs, including salary and employee benefits, associated with the new branches established in July 1998 and September 1998. Bankcard costs are volume driven and are more than offset by higher revenues reported in other income. Computer services and supplies reflect the costs associated with the larger number and activity in account relationships and approximately $41,000 in Y2K preparedness testing. The premium paid in the acquisition of the branch deposits in Homestead required $145,000 in current charges to intangible amortization expense for the year ended December 31, 1999, compared to $36,000 in 1998. Finally, there was a $134,000 charge taken in the second quarter of 1999 related to the write-off of the unamortized leasehold improvements associated with the leased facility that was abandoned upon the opening of the newly constructed branch in Key West. In 1998, non-interest expense increased by 13.3% or $1.7 million as compared to 1997 due primarily to the costs of servicing a larger base of customers. Specifically, the establishment of two branch offices in the Company's new service area of South Dade County required expenditures for additional personnel and occupancy related costs. Further, the overall growth in customers to 36,995 accounts of all types at year end 1998 from 31,251 accounts at year end 1997, required additional personnel and data processing type expenditures. Equipment costs increased $212,000 in 1998 substantially resulting from upgrades of computer workstations and network systems. These upgrades enhance performance and capabilities while also being part of year 2000 preparedness. The increase in computer services costs in 1998 was direclty attributable to the significant increase in bank accounts processed. PROVISION FOR INCOME TAXES The provision for income taxes includes federal and state income taxes. The effective income tax rates for the years ended December 31, 1999, 1998 and 1997 were 35.8%, 35.4%, and 34.9%, respectively. The fluctuations in effective tax rates reflects the effect of the differences in timing or deductibility of certain expenses. LOAN PORTFOLIO The Company is located in the Florida Keys and the primary industry is tourism. Commercial loan demand 18 22 therefore is significant for resort, hotel, restaurant, marina and related real estate secured property loans. The Company serves this market by offering long-term adjustable rate financing to the owners of these types of properties for acquisition and improvements thereon. These loans are often $1 million or larger and are good candidates for government guarantee programs or traditional participation agreements. The nature of government programs such as the Small Business Administration is generally geared toward long term adjustable rate financing. Monroe County has the highest cost of living of any county in Florida and this is driven in large part by the scarce and expensive real estate. This also serves to maintain and enhance collateral values on loans secured by property in this market. The Company has grown in commercial loans by aggressively serving its market. The quality of the Company's credit administration along with the stable real estate values have kept loan losses at low levels. Loans are expected to produce higher yields than investment securities and other interest earning assets (assuming that credit losses are not excessive). Thus the absolute volume of loans and the volume as a percentage of total earning assets are important determinants of the net interest margin. Net loans outstanding increased to $286.9 million as compared to $243.8 million at year end 1998, an increase of 17.7%. Of this amount, loans secured by real estate increased from $212.3 million to $251.7 million. Commercial loans accounted for much of this increase, growing from $164.4 million to $182.8 million at the respective year ends. Consumer loans increased from $13.8 to $16.2 million at December 31, 1999. The Company maintains a posture of originating commercial loans with rates that fluctuate with the prime lending rate and residential loans with rates that fluctuate with the one year treasury index. At December 31, 1999, 83.7% of the total loan portfolio had floating or adjustable rates. The following table presents the composition of the Company's loan portfolio at December 31:
(Dollars in thousands) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------ Commercial, financial & agricultural $182,762 $164,354 $123,974 $115,110 $ 93,423 Construction loans 9,182 5,960 10,011 7,391 5,441 Residential real estate 82,422 62,544 42,599 35,097 35,947 Consumer loans 16,248 13,810 9,695 7,554 4,250 Less: unearned income (733) (370) (533) (607) (691) Less: allowance for loan loss (2,997) (2,517) (2,202) (1,930) (1,701) ============================================================ Net loans $286,884 $243,781 $183,544 $162,615 $136,669 ============================================================
The maturity distribution of the Company's loan portfolio at December 31, 1999 was as follows:
Loans maturing ------------------------------------------------ Within 1 to 5 After 5 (Dollars in thousands) 1 Year Years Years Total - ------------------------------------------------------------------------------------------------------------ Commercial, financial & agricultural $29,539 $23,720 $129,503 $182,762 Construction Loans 9,182 - - 9,182 Residential real estate 188 982 81,252 82,422 Consumer loans 1,707 7,280 7,261 16,248 ------------------------------------------------ Total Loans $40,616 $31,982 $218,016 $290,614 ================================================
Loans maturing ------------------------------------------------ Within 1 to 5 After 5 (Dollars in thousands) 1 Year Years Years Total - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Loans with: Predetermined interest rates $6,880 $17,411 $23,117 $47,408 Floating or adjustable rates 33,736 14,571 194,899 243,206 ------------------------------------------------ Total Loans $40,616 $31,982 $218,016 $290,614 ================================================
19 23 ALLOWANCE AND PROVISION FOR LOAN LOSSES The allowance for loan losses represents a reserve for potential losses in the loan portfolio. The adequacy of the allowance for loan losses is evaluated periodically based on a review of all significant loans, with particular emphasis on non-accruing, past due, and other loans that management believes require special attention. For problem loans, management's review of the adequacy of the allowance for loan losses consists of an evaluation of the financial strengths of the borrower, the related collateral, and the effects of economic conditions. General reserves against the remaining loan portfolio are based on analysis of historical loan loss ratios, loan charge-offs, delinquency trends, and previous collection experience, along with an assessment of the effects of external economic conditions. The provision for loan losses is a charge to income in the current period to replenish the allowance and maintain it at a level that management has determined to be adequate to absorb estimated losses in the loan portfolio. The Company's provision for loan losses for 1999 was $540,000 as compared to $360,000 in 1998, reflecting the Company's strong growth in loans outstanding and negligible charge-offs. The Company's provision for loan losses for 1998 was $360,000 as compared to $300,000 in 1997. The allowance for loan losses represented 1.03% of total loans at December 31, 1999 compared to 1.02% and 1.18% at year end 1998 and 1997, respectively. The determination of the adequacy of the allowance for loan losses is based on management's judgment about factors affecting loan quality; collectability and assumptions about the economy. Management considers the year end allowance appropriate and adequate to cover possible losses in the loan portfolio; however, management's judgment is based upon a number of assumptions about future events, which are believed to be reasonable, but which may or may not prove valid. Thus, there can be no assurance that charge-offs in future periods will not exceed the allowance for loan losses or that additional increases in the allowance for loan losses will not be required. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination. 20 24 Transactions in the allowance for loan losses are summarized for the years ended December 31,
(In thousands) 1999 1998 1997 1996 1995 - ---------------------------------------- ------ ------ ------ ------ ------ Analysis of allowance for loan losses: Balance at beginning of year $2,517 $2,202 $1,930 $1,701 $1,567 Charge-offs: Commercial, Financial & Agricultural 35 14 -- -- -- Residential Real Estate -- 14 -- -- -- Consumer Loans 73 54 40 12 1 ------ ------ ------ ------ ------ Total charge-offs 108 82 40 12 1 Recoveries: Commercial, Financial & Agricultural -- 3 -- -- -- Residential Real Estate -- -- -- -- -- Consumer Loans 48 34 12 1 -- ------ ------ ------ ------ ------ Total recoveries 48 37 12 1 -- ------ ------ ------ ------ ------ Net charge-offs 60 45 28 11 1 ------ ------ ------ ------ ------ Provision for loan losses 540 360 300 240 135 ------ ------ ------ ------ ------ Allowance for loan losses at end of year $2,997 $2,517 $2,202 $1,930 $1,701 ====== ====== ====== ====== ====== Ratio of net charge-offs to average net loans outstanding 0.02% 0.02% 0.02% 0.01% 0.00% ====== ====== ====== ====== ======
Management considers the adequacy of the allowance for loan losses in its entirety, however, to comply with regulatory reporting requirements, management has allocated the allowance for loans losses as shown in the table below into components by loan type at each year end. Management does not intend to imply that actual future charge-offs will necessarily follow the allocations described below.
(In thousands) 1999 1998 1997 1996 1995 - ------------------------ ------------------ ------------------ ------------------- ------------------- ------------------ Allowance % of Allowance % of Allowance % of Allowance % of Allowance % of $ Loans $ Loans $ Loans $ Loans $ Loans ---------- ------- ---------- ------- ----------- ------- ---------- ------- ----------- ------ Commercial, Financial & Agricultural 2,066 62.8 1,853 66.6 1,631 66.5 1,456 69.6 1,318 67.2 Construction Loans - 3.2 0 2.4 0 5.4 0 4.5 0 3.9 Residential Real Estate 685 28.4 463 25.4 400 22.9 367 21.3 324 25.8 Consumer Loans 246 5.6 201 5.6 171 5.2 107 4.6 59 3.1 ====== ====== ======= ====== ======= ====== ======= ====== ======= ====== 2,997 100% 2,517 100% 2,202 100% 1,930 100% 1,701 100% ====== ====== ======= ====== ======= ====== ======= ====== ======= ======
21 25 NON-PERFORMING ASSETS
(Dollars in thousands) 1999 1998 1997 1996 1995 - ------------------------------------------------- ------ ------ ------ ------ ------ Loans 90 days past due 1,993 -- -- -- -- Loans on nonaccrual 70 521 273 430 82 Other Real Estate Owned -- -- -- -- -- ====== ==== ==== ==== === Total non-performing assets $2,063 $521 $273 $430 $82 ====== ==== ==== ==== === Percentage of total loans and other real estate 0.71% 0.21% 0.15% 0.26% 0.06%
If the collectibility of interest on a loan appears doubtful, the accrual thereof is discontinued. Nonaccrual loans totaled $70,000, $521,000, $273,000, $430,000 and $82,000 at December 31, 1999, 1998, 1997, 1996, and 1995, respectively. If such loans had been on a full-accrual basis, interest income would have been approximately $1,000, $32,000, $16,000, $16,000 and $3,000 higher in 1999, 1998, 1997, 1996 and 1995, respectively. Interest income recognized on these loans totaled approximately $5,000, $21,000, $14,000, $27,000 and $5,000, respectively. There were no restructured loans at December 31, 1999, 1998, 1997, 1996 or 1995. The Company adopted the provisions of Statement of Financial Accounting Standards No. 114 (SFAS 114) "Accounting by Creditors for Impairment of a Loan" as amended by Statement of Financial Accounting Standards No. 118 (SFAS 118), "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosure" on January 1, 1995. The Company had no loans which were considered impaired under the provisions of SFAS 114. LIQUIDITY AND RATE SENSITIVITY Liquidity represents the ability to provide steady sources of funds for loan commitments and investment activities, as well as to provide sufficient funds to cover deposit withdrawals and payments of debt, off-balance sheet obligations and operating obligations. Funds can be obtained from operations by converting assets to cash, by attracting new deposits, by borrowing, by raising capital and other ways. Major sources of increases in cash and cash equivalents are as follows for the three years ending December 31:
1999 1998 1997 ------------ ------------ ------------ Provided by operating activities $ 7,434,885 $ 3,303,781 $ 4,745,371 Used by investing activities (41,369,121) (64,486,841) (27,123,436) Provided by financing activities 31,396,873 61,055,510 33,287,415 ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents $ (2,537,363) $ (127,550) $ 10,909,350
The Bank has a $7.5 million line of credit from its principal correspondent and a repurchase agreement with another financial institution which allows borrowing up to 95% of the market valuation of securities pledged for this purpose. The majority of the Company's unpledged securities could be used as collateral for this agreement. Further, 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 equal to 14% of the Bank's total assets as reported on the most recent quarterly financial information submitted to the Bank's regulators. The credit availability approximated $54.7 million at December 31, 1999. Borrowings against this line of credit are collateralized by the Bank's one-to-four family residential mortgage loans. In 1999, a $10 million advance was made which matured on January 24, 2000. Scheduled maturities and paydowns of loans and investment securities are a continual source of liquidity. Also, many adjustable rate residential real estate loans originated since 1995 are salable in the secondary mortgage market at par or better and therefore provide a secondary source for liquidity. 22 26 At December 31, 1999, the Bank's gross loan to deposit ratio was 83.8% compared to a ratio of 75.9% at December 31, 1998. Management monitors and assesses the adequacy of the Company's liquidity position on a monthly basis to ensure that sufficient sources of liquidity are maintained and available. Under state banking law, regulatory approval will be required if the total of all dividends declared in any calendar year by the Bank exceeds the Bank's net profits to date for that year combined with its retained net profits for the preceding two years. Retained earnings of the Bank available for payment of dividends without prior regulatory approval at December 31, 1999 is approximately $7,211,000. These dividends represent the Company's primary source of liquidity. The Company's interest rate sensitivity position at December 31, 1999 is presented in the table below.
3 months 4 to 6 7 to 12 1 to 5 Over 5 (Dollars in thousands) or less Months Months years Years Total - --------------------------------------- --------- -------- -------- -------- ------- ------- Interest-earning assets: Loans $ 106,435 $ 22,775 $ 22,417 $ 79,134 $59,853 $290,614 Investment securities-taxable -- 3,999 5,989 17,280 26,352 53,620 Investment securities-tax exempt -- 708 250 172 5,612 6,742 Federal funds sold 2,658 -- -- -- -- 2,658 Note receivable -- -- 264 438 -- 702 --------- -------- -------- -------- ------- -------- Total interest-bearing assets 109,093 27,482 28,920 97,024 91,817 354,336 --------- -------- -------- -------- ------- -------- Interest-bearing liabilities: NOW accounts (A) 13,567 -- -- -- 20,350 33,917 Money Market 110,267 -- -- -- -- 110,267 Savings Deposits (B) -- -- 24,582 -- -- 24,582 Other time deposits 22,822 22,043 22,143 38,829 -- 105,837 Short-term borrowings 11,712 -- -- -- -- 11,712 Other borrowings 660 -- -- -- -- 660 --------- -------- -------- -------- ------- -------- Total interest-bearing liabilities 159,028 22,043 46,725 38,829 20,350 286,975 --------- -------- -------- -------- ------- -------- Interest sensitivity gap (49,935) 5,439 (17,805) 58,195 71,467 67,361 ========= ======== ======== ======== ======= ======== Cumulative interest sensitivity gap $ (49,935) $(44,496) $(62,301) $ (4,106) $67,361 $ 67,361 ========= ======== ======== ======== ======= ======== Cumulative sensitivity ratio (14.1%) (12.6%) (17.6%) (1.2%) 19.0% 19.0% ========= ======== ======== ======== ======= ========
(A) 40% of outstanding balance considered repricable immediately and 60% repricable in the furthest time period. (B) Savings Deposits considered repricable in the one year time horizon. The Company is cumulatively asset sensitive in the over 5 years time frame and cumulatively liability sensitive in each of the 3 month or less, 4 to 6 months, and 7 to 12 month timeframes. In the 1 to 5 year range the Company is very close to neutral in cumulative rate sensitivity. Certain liabilities such as NOW and passbook savings accounts, while technically subject to immediate repricing in response to changing market rates, historically do not reprice as quickly nor to the extent as other interest sensitive accounts. Therefore, to include the entire balance of these liability accounts in the earliest repricing method would be unrealistic. To compensate for the fact that changes in general market interest rates will not be fully reflected in changes in NOW rates, only 40% of NOW balances is included as immediately rate sensitive based on the Company's own and industry repricing experience. Also, passbook savings will not reprice as quickly as market rates and therefore the repricing of savings deposits is 23 27 included in the 7 to 12 month repricing period, based on the Company's repricing experience. Because of non-interest bearing liabilities, total interest-earning assets are substantially greater than the total interest-bearing liabilities and therefore over time the effects on net interest income from changes in asset yield will be greater than the change in expense from liability cost. Accordingly, if market interest rates should eventually decrease, the net interest margin should decrease. Conversely, if rates increase the net interest margin would over time increase. Even in the near term, the $62,301,000 one year cumulative negative sensitivity gap exaggerates the probable effects on earnings in a rising rate environment for two reasons. First, the liabilities subject to repricing are predominately not indexed to any specific market rate and therefore offers the Company the opportunity to delay or diminish any rate repricings. Second, a static gap model does not factor the effects of growing volumes which would likely include greater additional rate sensitive assets than rate sensitive liabilities. Interest-earning assets and other time deposits are presented based on their contractual terms. It is anticipated that run off in any deposit category will be approximately offset by new deposit generation. Since the Company has experienced steady growth in deposits, no net run off in any deposit category is assumed in the interest rate sensitivity table. It is the Company's policy to maintain its cumulative one year gap ratio in the -15% to +15% range. At year end 1999, the Company was slightly outside this range with a one year cumulative sensitivity ratio of -17.6%. This reflected in part some special circumstances related to Y2K, including a decrease in normal liquidity which the Company believes to be a unique event. INVESTMENT PORTFOLIO Contractual maturities of investment securities (amortized cost) at December 31, 1999 are shown below. Expected maturities differ from contractual maturities because borrowers may have the right to call or repay obligations without call or prepayment penalties.
After 1 Year After 5 Years Mortgaged Within 1 Year Within 5 Years Within 10 Years After 10 Years Backed -------------------- -------------------- -------------------- ------------------- ---------- (Dollars in thousands) Amount Yield Amount Yield Amount Yield Amount Yield Amount - ------------------------------------- ---------- --------- ---------- --------- ---------- --------- ---------- -------- ---------- Securities Held to Maturity: U.S. Treasury Securities $ 9,988 6.25% $ 101 5.50% U.S. Gov't Sponsored Agencies 8,000 6.03% $25,163 6.19% Other $1,189 6.74% --------- ------- --------- ------- --------- ------- --------- ------ --------- Total held to maturity 9,988 6.25% 8,101 6.02% 25,163 6.19% 1,189 6.74% -- --------- ------- --------- ------- --------- ------- --------- ------ --------- Securities Available for sale: U.S. Treasury Securities 7,806 5.25% States and municipals (A) 943 10.91% 169 7.96% 3,579 7.07% 2,238 7.09% Mortgaged Backed Securities $1,644 --------- ------- --------- ------- --------- ------- --------- ------ --------- Total available for sale 943 10.91% 7,975 5.31% 3,579 7.07% 2,238 7.09% 1,644 --------- ------- --------- ------- --------- ------- --------- ------ --------- Total $10,931 6.65% $16,076 5.67% $28,742 6.30% $3,427 6.97% $1,644 ========= ======= ========= ======= ========= ======= ========= ====== =========
24 28 Yield by classification of investment securities at December 31, 1999 (amortized cost) was as follows:
(Dollars in thousands) Yield Totals - ------------------------------------------ ----------- ----------- Securities Held to Maturity: U.S. Treasury Securities 6.24% $ 10,089 U.S. Gov't Sponsored Agencies 6.15% 33,163 Other (B) 6.74% 1,189 ----------- ---------- Total held to maturity 6.19% 44,441 ----------- ---------- Securities Available for Sale: U.S. Treasury Securities 5.25% 7,806 States and municipals (A) 7.62% 6,929 Mortgaged Backed Securities 5.58% 1,644 ----------- ---------- Total available for sale 6.29% 16,379 ----------- ---------- Total 6.21% $ 60,820 =========== ==========
(A) Weighted average yields on tax-exempt obligations have been computed by grossing up actual tax-exempt income to a fully taxable equivalent basis using a federal tax rate of 34%. (B) Represents investment in common stock of Independent Bankers' Bank of Florida stock which pays no dividends and an investment in the Federal Home Loan Bank of Atlanta. The following table presents the amortized cost, market value, unrealized gains, and unrealized losses for the major categories of the Company's investment portfolio for each reported period: (Dollars in thousands) Held to Maturity - December 31, 1999
Amortized Unrealized Unrealized Market Cost Gains Losses Value --------- ----------- ---------- ------- U.S. Treasury Securities $10,089 $ 18 $ 3 $10,104 U.S. Government agencies and corporations 33,163 -- 2,164 30,999 Other investments 1,189 -- -- 1,189 ------- ---------- ------- ------- $44,441 $ 18 $ 2,167 $42,292 ======= ========== ======= ======= Available for Sale - December 31, 1999 Amortized Unrealized Unrealized Market Cost Gains Losses Value --------- ----------- ---------- ------- U.S. Treasury Securities $ 7,806 $ -- $ 248 $ 7,558 States and political subdivisions 6,929 40 227 6,742 Mortgage-backed securities 1,644 1 23 1,622 ------- ---------- ------- ------- $16,379 $ 41 $ 498 $15,922 ======= ========== ======= =======
25 29
Held to Maturity - December 31, 1998 Amortized Unrealized Unrealized Market Cost Gains Losses Value --------- ---------- ---------- ------- U.S. Treasury Securities $14,083 $248 $ -- $14,331 U.S. Government agencies and corporations 33,161 177 109 33,229 Other investments 908 -- -- 908 ------- ---- ------- ------- $48,152 $425 $ 109 $48,468 ======= ==== ======= ======= Available for Sale - December 31, 1998 Amortized Unrealized Unrealized Market Cost Gains Losses Value --------- ---------- ---------- ------- U.S. Treasury Securities $ 5,022 $ 21 $ -- $ 5,043 States and political subdivisions 8,114 219 -- 8,333 Mortgage-backed securities 4,022 4 12 4,014 Other debt securities 450 8 -- 458 ------- ---- ------- ------- $17,608 $252 $ 12 $17,848 ======= ==== ======= ======= Held to Maturity - December 31, 1997 Amortized Unrealized Unrealized Market Cost Gains Losses Value --------- ---------- ---------- ------- U.S. Treasury Securities $15,978 $157 $ -- $16,135 States and political subdivisions 7,374 293 -- 7,667 U.S. Government agencies and corporations 12,001 21 15 12,007 Other investments 865 -- -- 865 ------- ---- ------- ------- $36,218 $471 $ 15 $36,674 ======= ==== ======= ======= Available for Sale - December 31, 1997 Amortized Unrealized Unrealized Market Cost Gains Losses Value --------- ---------- ---------- ------- U.S. Treasury Securities $ 9,044 $ -- $ 34 $ 9,010 Mortgage-backed securities 9,056 20 88 8,988 Other debt securities 450 23 -- 473 ------- ---- ------- ------- $18,550 $ 43 $ 122 $18,471 ======= ==== ======= =======
DEPOSITS The following table presents the average amount outstanding and the average rate paid on deposits by the Company for the years ended December 31, 1999, 1998, and 1997.
1999 1998 1997 Average Average Average Average Average Average (Dollars in thousands) Amount Rate Amount Rate Amount Rate - ----------------------------- ----------- ----------- ----------- ----------- ----------- ------------ Noninterest-bearing deposits $ 74,806 $ 58,058 $ 46,323 Interest-bearing deposits NOW Accounts 35,247 1.24% 32,198 1.43% 28,122 1.40% Money market 123,506 4.17% 99,567 4.85% 55,543 4.85% Savings deposit 25,893 2.36% 23,005 2.48% 28,474 2.73% Other time deposits 91,666 5.44% 70,671 5.63% 71,565 5.52% ---------- ---------- ---------- ---------- ---------- ---------- Total $351,118 3.19% $283,499 3.47% $230,027 3.40% ========== ========== ========== ========== ========== ==========
26 30 The following table presents the maturity of the Company's time deposits at December 31, 1999:
Deposits Deposits $100,000 Less than (Dollars in thousands) and Greater $100,000 Total - ---------------------- ------------- ----------- ---------- Months to maturity: 3 or less $9,621 $12,324 $21,945 4 to 6 11,667 10,494 22,161 7 through 12 9,662 12,574 22,236 Over 12 15,024 24,471 39,495 --------- ---------- ----------- Total $45,974 $59,863 $105,837 ========= ========== ===========
CAPITAL ADEQUACY There are various primary measures of capital adequacy for banks and bank holding companies such as risk based capital guidelines and the leverage capital ratio. See "Business-Supervision and Regulation Capital Regulations." As of December 31, 1999, the Bank exceeded its required levels of capital for a Bank categorized by the FDIC as well capitalized under the regulatory framework for prompt corrective action. The Bank's risk-based capital ratio of Tier 1 capital to risk-weighted assets was 9.2%, its risk-based ratio of total capital to risk-weighted assets was 10.2%, and its leverage ratio was 7.1%. See Note 12 to the Consolidated Financial Statements. INFLATION Inflation has an important impact on the growth of total assets in the banking industry and causes a need to increase equity capital higher than normal levels in order to maintain an appropriate equity to assets ratio. The Company has been able to maintain an adequate level of equity, as previously mentioned and copes with the effects of inflation by managing its interest rate sensitivity gap position through its asset/liability management program, and by periodically adjusting its pricing of services and banking products to take into consideration current costs. 1999 ACCOUNTING PRONOUNCEMENTS 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, 2000, 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 adopted the new standard as of July 1, 1998. The effect on the financial statements at July 1, 1998 which resulted from the transfer of approximately $11.9 million in investment securities from the held to maturity category to the available for sale category was an increase in other comprehensive income market valuation reserve of approximately $176,000. Effective January 1, 1999, the Company adopted American Institute of Certified Public Accountants Statement of Position 98-5 (SOP 98-5), "Reporting the Costs of Start-Up Activities." SOP 98-5 applies to all non-governmental entities and requires that costs of start-up activities and organization costs be expensed as incurred. Prior to 1999, 27 31 the Company capitalized organization costs and amortized them to expense over a five year period. The Company recorded a charge net of tax of $47,047 in 1999 as the cumulative effect of this accounting change. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK All financial institutions have financial instruments which are subject to market risk comprised of interest rate risk, foreign currency exchange rate risk, commodity price risk and other relevant market risks, such as equity price risks. The Company has assessed its market risk as predominately interest rate risk. The following interest rate sensitivity analysis information as of December 31, 1999 was developed using simulation analysis of the Bank's sensitivity to changes in net interest income under varying assumptions for changes in market interest rates. Specifically, the model derives expected interest income and interest expense resulting from an immediate and parallel shift in the yield curve in the amounts shown. These rate changes are matched with known repricing intervals and assumptions for new growth net of expected prepayments. The assumptions are based primarily on experience in the Bank's market under varying rate environments. The imbedded options that the Bank's loan customers possess, to refinance, are not considered significant for purposes of this analysis given the large majority of adjustable rate loans in the portfolio. This analysis intentionally exaggerates interest sensitivity. For the sake of simplicity and comparability, an immediate change in rates is assumed. However, any significant change in actual market rates would probably be phased in over an extended period of time. This phase in would reduce the net interest income effects for any absolute change in rates. The Bank attempts to retain interest rate neutrality by generating mostly adjustable rate loans and managing the securities and Fed Funds positions to offset the repricing characteristics of the deposit liabilities. This process continues to be challenged by the continued popularity of the indexed money market account. The growth of this account as an interest sensitive liability, immediately repriceable, has caused the Bank to be liability sensitive in the very short term and to a lesser extent cumulatively through a one year horizon.
(Dollars in thousands) Interest Rates Decrease Interest Rates Interest Rates Increase 200 BP 100 BP Remain Constant 100 BP 200BP Budget ----------------------------------------------------------------- 2000 Interest Income $29,118 $30,425 $31,735 $ 33,037 $ 34,344 2000 Interest Expense 10,906 12,340 13,811 15,206 16,639 ------- ------- ------- -------- -------- Net Interest Income 18,212 18,085 17,924 17,831 17,705 ------- ------- ------- -------- -------- Change in net income after tax vs. budget $ 180 $ 101 -- $ (58) $ (137)
28 32 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements, notes thereto and report of independent certified public accountants thereon included on the following pages are incorporated herein by reference.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page ---- Report of Independent Certified Public Accountants (BDO Seidman, LLP)............................................30 Independent Auditors Report (Bricker & Melton, PA)...............................................................31 Consolidated Balance Sheets for the Years Ended December 31, 1999 and 1998 ................................................................................32 Consolidated Statements of Income for the Years Ended December 31, 1999, 1998 and 1997..................................................................33-34 Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1999, 1998 and 1997 .................................................................35-36 Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997 .......................................................................37-38 Notes to Consolidated Financial Statements for the Years Ended December 31, 1999, 1998 and 1997 .............................................................39-64
29 33 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors and Stockholders TIB Financial Corp. Key Largo, Florida We have audited the accompanying consolidated balance sheets of TIB Financial Corp. and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of income, changes in stockholders' equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of TIB Financial Corp.'s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The consolidated financial statements of TIB Financial Corp. and subsidiaries for the year ended December 31, 1997 were audited by Bricker & Melton, P.A., whose practice was combined with our Firm and whose report dated February 13, 1998 expressed an unqualified opinion on those statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the 1999 and 1998 consolidated financial statements referred to above present fairly, in all material respects the consolidated financial position of TIB Financial Corp. and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. BDO SEIDMAN, LLP February 18, 2000 Atlanta, Georgia 30 34 INDEPENDENT AUDITORS' REPORT The Board of Directors and Stockholders TIB Financial Corp. Key Largo, Florida We have audited the accompanying consolidated statements of income, changes in stockholders' equity and cash flows of TIB Financial Corp. and subsidiaries for the year ended December 31, 1997. These consolidated financial statements are the responsibility of TIB Financial Corp.'s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of TIB Financial Corp. and subsidiaries for the year ended December 31, 1997, in conformity with generally accepted accounting principles. BRICKER & MELTON, P.A. February 13, 1998 Duluth, Georgia 31 35 TIB FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 1998 - ----------------------------------------------------------------------------------------------------------------------- ASSETS Cash and due from banks (Note 2) $ 19,506,372 $ 18,136,735 Federal funds sold 2,658,000 6,565,000 Investment securities held to maturity (market value of $42,292,323 and $48,467,772, respectively) (Note 3) 44,440,836 48,152,543 Investment securities available for sale (Note 3) 15,921,641 17,848,010 Investment in ERAS Joint Venture 968,760 789,752 Loans, net of deferred loan fees (Notes 4, 11 and 13) 289,880,721 246,298,179 Less: Allowance for loan losses (Note 4) 2,996,532 2,517,234 - ----------------------------------------------------------------------------------------------------------------------- Loans, net 286,884,189 243,780,945 Premises and equipment, net (Note 5) 14,318,646 12,880,360 Intangible assets, net 1,534,509 1,791,780 Other assets (Note 9) 5,896,378 5,530,725 - ----------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $392,129,331 $355,475,850 ======================================================================================================================= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits (Note 6): Noninterest-bearing demand $ 72,300,414 $ 68,370,649 Interest-bearing demand and money market 144,183,661 157,277,190 Savings 24,582,207 24,245,585 Time deposits of $100,000 or more 45,974,452 24,693,379 Other time deposits 59,862,786 50,469,928 - ----------------------------------------------------------------------------------------------------------------------- Total deposits 346,903,520 325,056,731 Short-term borrowings (Note 7) 11,712,056 669,569 Other borrowings (Note 8) 659,625 -- Other liabilities (Note 9) 4,551,972 3,182,016 - ----------------------------------------------------------------------------------------------------------------------- Total liabilities 363,827,173 328,908,316 - ----------------------------------------------------------------------------------------------------------------------- COMMITMENTS AND CONTINGENT LIABILITIES (Note 13) STOCKHOLDERS' EQUITY (Note 12) Common stock - $.10 par value: 7,500,000 shares authorized, 4,490,137 and 4,449,795 shares issued 449,014 444,979 Surplus 7,554,967 7,202,321 Retained earnings 21,634,649 19,328,022 Accumulated other comprehensive income (loss) - market valuation reserve on investment securities available for sale (Note 3) (285,000) 150,000 Less: Treasury stock, 95,000 and 50,000 shares, at cost (1,051,472) (557,788) - ----------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 28,302,158 26,567,534 - ----------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $392,129,331 $ 355,475,850 =======================================================================================================================
See accompanying notes to consolidated financial statements. 32 36 TIB FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1999 1998 1997 - ----------------------------------------------------------------------------------------------------------------------- INTEREST INCOME Loans, including fees $22,926,064 $18,745,954 $17,019,190 Investment securities: U.S. Treasury securities 1,383,929 1,282,611 1,679,344 U.S. Government agencies and corporations 2,262,314 2,288,922 962,435 States and political subdivisions, tax-exempt 370,885 561,784 399,619 Other investments 94,633 105,386 63,886 Interest-bearing deposits in other banks 315,380 1,204 -- Federal funds sold 552,254 720,606 433,300 - ----------------------------------------------------------------------------------------------------------------------- Total interest income 27,905,459 23,706,467 20,557,774 - ----------------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE Interest-bearing demand and money market 5,585,313 5,291,184 3,084,772 Savings 609,892 570,408 777,784 Time deposits of $100,000 or more 1,895,312 1,428,832 1,371,237 Other time deposits 3,087,796 2,546,736 2,578,490 Short-term borrowings 120,575 78,114 63,873 - ----------------------------------------------------------------------------------------------------------------------- Total interest expense 11,298,888 9,915,274 7,876,156 - ----------------------------------------------------------------------------------------------------------------------- NET INTEREST INCOME 16,606,571 13,791,193 12,681,618 PROVISION FOR LOAN LOSSES (Note 4) 540,000 360,000 300,000 - ----------------------------------------------------------------------------------------------------------------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 16,066,571 13,431,193 12,381,618 - ----------------------------------------------------------------------------------------------------------------------- OTHER INCOME Service charges on deposit accounts 1,951,185 1,731,523 1,640,033 Investment securities gains, net (Note 3) 643 130,985 10,664 Merchant bank card processing income 2,827,876 2,174,057 2,109,363 Equity in income (loss), net of goodwill amortization, from investment in ERAS Joint Venture 179,008 (1,465) -- Gain on sale of government guaranteed loans 704,398 988,465 439,768 Gain on sale of mortgage loans -- -- 118,863 Fees on mortgage loans sold at origination 338,796 461,126 363,973 Retail investment services 230,492 419,333 319,286 Gain on sale of insurance company option (Note 13) 312,375 -- -- Other income 622,501 472,054 317,454 - ----------------------------------------------------------------------------------------------------------------------- Total other income 7,167,274 6,376,078 5,319,404 - ----------------------------------------------------------------------------------------------------------------------- OTHER EXPENSE Salaries and employee benefits (Note 10) 7,592,034 7,158,584 6,504,945 Net occupancy expense 2,634,230 2,248,425 1,825,207 Other expense (Note 15) 6,514,673 5,073,466 4,446,412 - ----------------------------------------------------------------------------------------------------------------------- Total other expense 16,740,937 14,480,475 12,776,564 - ----------------------------------------------------------------------------------------------------------------------- INCOME BEFORE INCOME TAX EXPENSE 6,492,908 5,326,796 4,924,458 INCOME TAX EXPENSE (Note 9) 2,327,100 1,885,800 1,718,600 - ----------------------------------------------------------------------------------------------------------------------- NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE $ 4,165,808 $ 3,440,996 $ 3,205,858 =======================================================================================================================
(Continued) See accompanying notes to consolidated financial statements. 33 37 TIB FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Continued)
YEARS ENDED DECEMBER 31, 1999 1998 1997 - ---------------------------------------------------------------------------------------------------------------------- NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE $4,165,808 $3,440,996 $3,205,858 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE FOR DEFERRED ORGANIZATION COSTS, NET OF TAX BENEFIT OF $28,300 (Note 1) (47,047) -- -- - ---------------------------------------------------------------------------------------------------------------------- NET INCOME $4,118,761 $3,440,996 $3,205,858 ====================================================================================================================== BASIC EARNINGS PER COMMON SHARE (Note 1) INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE $ .95 $ .78 $ .74 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE FOR DEFERRED ORGANIZATION COSTS, NET OF TAX (.01) -- -- - ---------------------------------------------------------------------------------------------------------------------- BASIC EARNINGS PER COMMON SHARE $ .94 $ .78 $ .74 ====================================================================================================================== DILUTED EARNINGS PER COMMON SHARE (Note 1) INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE $ .92 $ .74 $ .70 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE FOR DEFERRED ORGANIZATION COSTS, NET OF TAX (.01) -- -- - ---------------------------------------------------------------------------------------------------------------------- DILUTED EARNINGS PER COMMON SHARE $ .91 $ .74 $ .70 ======================================================================================================================
See accompanying notes to consolidated financial statements. 34 38 TIB FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Accumulated Other Comprehensive Income (Loss)- Comprehensive Retained Treasury Market Valuation Common Total Income Earnings Stock Reserve Stock Surplus - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE, December 31, 1996 $22,620,917 $16,207,233 $ -- $(158,751) $432,236 $6,140,199 Comprehensive income: Net income 3,205,858 $3,205,858 3,205,858 -- -- -- -- Other comprehensive income, net of tax expense of $65,658: Net market valuation adjustment on securities available for sale 112,372 112,372 -- -- -- -- -- Less: reclassification adjustment for gains included in net income (2,621) (2,621) -- -- -- -- -- ---------- Other comprehensive income, net of tax -- 109,751 -- -- 109,751 -- -- ---------- Comprehensive income -- $3,315,609 -- -- -- -- -- ========== Exercise of stock options 273,266 -- -- -- -- 4,959 268,307 Income tax benefit from stock options exercised 98,566 -- -- -- -- -- 98,566 Cash dividends declared, $.40 per share (1,744,801) -- (1,744,801) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE, December 31, 1997 24,563,557 -- 17,668,290 -- (49,000) 437,195 6,507,072 Comprehensive income: Net income 3,440,996 $3,440,996 3,440,996 -- -- -- -- Other comprehensive income, net of tax expense of $120,000: Net market valuation adjustment on securities available for sale 103,831 103,831 -- -- -- -- -- Add: cumulative adjustment related to adoption of SFAS 133 and related reclassification of certain securities from held-to- maturity to available-for-sale 176,000 176,000 -- -- -- -- -- Less: reclassification adjustment for gains included in net income (80,831) (80,831) -- -- -- -- -- ---------- Other comprehensive income, net of tax -- 199,000 -- -- 199,000 -- -- ---------- Comprehensive income -- $3,639,996 -- -- -- -- -- ========== ====================================================================================================================================
See accompanying notes to consolidated financial statements. (Continued) 35 39 TIB FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (Continued)
Accumulated Other Comprehensive Income (Loss)- Comprehensive Retained Treasury Market Valuation Common Total Income Earnings Stock Reserve Stock Surplus - ------------------------------------------------------------------------------------------------------------------------------------ Exercise of Stock Options $ 349,892 $ -- $ -- $ -- $ 6,117 $ 343,775 Income Tax Benefit from stock options exercised 138,566 -- -- -- -- 138,566 Compensation paid through issuance of common stock 214,575 -- -- -- 1,667 212,908 Purchase of treasury stock (557,788) -- (557,788) -- -- -- Cash dividends declared, $.4025 per share (1,781,264) (1,781,264) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE, DECEMBER 31, 1998 26,567,534 19,328,022 (557,788) 150,000 444,979 7,202,321 Comprehensive income: Net income 4,118,761 $4,118,761 4,118,761 Other comprehensive income, net of tax benefit of $262,000: Net market valuation adjustment on securities available for sale (434,599) (434,599) -- -- -- -- -- Less: reclassification adjustment for gains included in net income (401) (401) -- -- -- -- -- ---------- Other comprehensive income, net of tax -- (435,000) -- -- (435,000) -- -- ---------- Comprehensive income -- $3,683,761 -- -- -- -- -- ========== Exercise of stock options 143,279 -- -- -- 2,368 140,911 Income tax benefit from stock options exercised 30,065 -- -- -- -- 30,065 Compensation paid through issuance of common stock 183,337 -- -- -- 1,667 181,670 Purchase of treasury stock (493,684) -- (493,684) -- -- -- Cash dividends declared, $.4125 per share (1,812,134) (1,812,134) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE, DECEMBER 31, 1999 $28,302,158 $21,634,649 $(1,051,472) $(285,000) $ 449,014 $7,554,967 ====================================================================================================================================
See accompanying notes to consolidated financial statements. 36 40 TIB FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 4,118,761 $ 3,440,996 $ 3,205,858 Adjustments to reconcile net income to net cash provided by operating activities: Net amortization of investments 208,576 6,309 81,707 Amortization of intangible assets 176,957 96,487 46,833 Depreciation of premises and equipment 1,213,707 1,022,160 798,295 Gain on sale of insurance company option (312,375) -- -- Proceeds from sale of insurance company option 100,000 -- -- Cumulative effect of change in accounting principle 75,347 -- -- Write-off of unamortized leasehold improvements 133,546 -- -- Provision for loan losses 540,000 360,000 300,000 Deferred income tax (benefit) (65,268) (47,655) (87,997) Deferred net loan fees (127,054) (162,260) (74,024) Investment securities (gains), net (643) (130,985) (10,664) Compensation paid through issuance of common stock 183,337 214,575 -- Equity in (income) loss, net of goodwill amortization from investment in ERAS Joint Venture (179,008) 1,465 -- Gain on sales of premises and equipment (6,930) (2,540) (3,002) Gains on sales of government guaranteed loans, net (704,398) (988,465) (439,768) Gains on sales of mortgage loans -- -- (118,863) (Increase) decrease in intangible assets 4,967 (27,348) (69,025) (Increase) decrease in other assets 685,853 (1,166,768) 810,778 Increase in other liabilities 1,389,510 687,810 305,243 - ------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 7,434,885 3,303,781 4,745,371 - ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investment securities held to maturity (281,160) (44,813,928) (27,870,735) Purchases of investment securities available for sale (16,033,126) -- -- Sales of investment securities available for sale 13,033,497 9,966,994 5,083,984 Repayments of principal and maturities of investment securities available for sale 4,013,932 2,979,575 13,004,356 Maturities of investment securities held to maturity 4,000,000 21,000,000 6,075,000 Proceeds from sales of government guaranteed loans 7,000,644 11,458,514 7,400,314 Proceeds from sales of mortgage loans -- -- 6,062,024 Investment in ERAS Joint Venture -- (791,216) -- Purchase of Small Business Consultants, Inc. -- -- (275,000) Net cash received in purchase of branch -- 9,665,577 -- Loans originated or acquired, net of principal repayments (50,302,436) (70,904,605) (34,058,909) Purchases of premises and equipment (2,818,385) (3,053,387) (2,578,505) Sales of premises and equipment 17,913 5,635 34,035 - ------------------------------------------------------------------------------------------------------------------------ Net cash used by investing activities $(41,369,121) $(64,486,841) $(27,123,436) ========================================================================================================================
See accompanying notes to consolidated financial statements. 37 41 TIB FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
YEARS ENDED DECEMBER 31, 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase $ 1,042,487 $ (1,337,609) $(9,084,248) Net increase (decrease) in demand, money market and savings accounts (8,827,142) 61,394,697 56,341,652 Advances on short-term borrowings 10,659,625 -- -- Time deposits accepted, net of repayments 30,673,931 2,973,798 (12,503,413) Proceeds from exercise of stock options 143,279 349,892 273,266 Treasury stock repurchased (493,684) (557,788) -- Cash dividends paid (1,801,623) (1,767,480) (1,739,842) - ------------------------------------------------------------------------------------------------------------------------ Net cash provided by financing activities 31,396,873 61,055,510 33,287,415 - ------------------------------------------------------------------------------------------------------------------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,537,363) (127,550) 10,909,350 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 24,701,735 24,829,285 13,919,935 - ------------------------------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS AT END OF YEAR $22,164,372 $ 24,701,735 $24,829,285 ======================================================================================================================== SUPPLEMENTAL DISCLOSURES OF CASH PAID: Interest $10,806,350 $ 9,678,662 $ 7,871,906 Income taxes 2,591,041 1,745,000 1,637,000
Subsequent to the adoption of Statement of Financial Accounting Standards No. 133 (SFAS 133), in July 1998, investment securities held to maturity totaling $11,898,815 were transferred to investment securities available for sale. In 1998, the Company purchased the banking facilities and assumed the deposit base of another bank located in Homestead, Florida. Net cash received in connection with the acquisition is calculated as follows: Deposit and other liabilities assumed $11,919,139 Less cash paid for: Premises and equipment (818,140) Core deposit premium (1,435,422) - ------------------------------------------------------------------------------------------------------------------------ $ 9,665,577 ========================================================================================================================
See accompanying notes to consolidated financial statements. 38 42 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES TIB Financial Corp. and subsidiaries provide full-service commercial banking services in Monroe and South Dade counties, Florida. The accounting and reporting policies of TIB Financial Corp. and subsidiaries conform to generally accepted accounting principles and to general practices within the banking industry. The following is a summary of the more significant of these policies. USE OF ESTIMATES AND ASSUMPTIONS The consolidated financial statements have been prepared in conformity with generally accepted accounting principles. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies may require additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination. BASIS OF PRESENTATION The consolidated financial statements include the accounts of TIB Financial Corp. (Parent Company) and its wholly-owned subsidiaries, TIB Bank of the Keys (Bank) and TIB Software and Services, Inc., collectively known as the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. In 1998, the Parent Company's subsidiary, TIB Software and Services, Inc., acquired a 30 percent interest in ERAS Joint Venture (the "Venture"), a general partnership, in exchange for consideration of $791,216. Goodwill associated with the transaction totaled $637,614 and is being amortized over a period of ten years. The investment in the Venture is being accounted for using the equity method. The Venture's primary business is item processing and the design, development, installation and maintenance of accounting software for financial institutions. ERAS Joint Venture is the Bank's item processor, and in 1999, payments of approximately $1,204,000 were made to the Venture. INVESTMENT SECURITIES Investment securities which management has the ability and intent to hold to maturity are reported at cost, adjusted for amortization of premium and accretion of discount. Investment securities available for sale are reported at fair value, with unrealized gains and losses reported as a separate component of stockholders' equity, net of the related tax effect. Other investments are reported at cost, and accordingly, earnings are reported when interest is accrued or when dividends are received. 39 43 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Premium and discount on all investment securities are amortized (deducted) and accreted (added), respectively, to interest income on the effective-yield method over the period to the earlier of a call date or the maturity of the related securities. Premium and discount on mortgage-backed securities are amortized (deducted) and accreted (added), respectively, to interest income on the effective interest method over the period to maturity of the related securities, taking into consideration assumed prepayment patterns. Gains or losses on disposition are computed by the specific identification method for all securities. 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, 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 sales occur. The majority of fixed rate mortgage loans are originated by the Bank and sold to a third party immediately without recourse. All fees are recognized as income at the time of the sale. 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 known. Recognized losses are charged to the allowance for loan losses, while subsequent recoveries are added to the allowance. The Bank accounts for impaired loans in accordance with Statement of Financial Accounting Standards No. 114 (SFAS 114), "Accounting by Creditors for Impairment of a Loan," as amended by Statement of Financial Accounting Standards No. 118 (SFAS 118), "Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosure." Management, considering current information and events regarding the borrowers' ability to repay their obligations, considers a loan to be impaired when it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan. When a loan is considered to be impaired, the amount of the impairment is measured based on the present value of expected future cash flows discounted at the note's effective interest rate. Impairment losses are included in the allowance for loan losses through a charge to the provision. Cash receipts on impaired 40 44 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS loans are applied to reduce the principal amount of such loans until the principal has been recovered and are recognized as interest income, thereafter. PREMISES AND EQUIPMENT Premises and equipment are reported at cost less accumulated depreciation. For financial reporting purposes, depreciation is computed using primarily the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are charged to operations as incurred, while major renewals and betterments are capitalized. For Federal tax reporting purposes, depreciation is computed using primarily accelerated methods. OTHER REAL ESTATE Other real estate represents property acquired through in-substance foreclosure, foreclosure, or in settlement of loans and is reported at the lower of cost or fair value less estimated selling expenses. Losses incurred in the acquisition of foreclosed properties are charged against the allowance for loan losses at the time of foreclosure. Subsequent write-downs of other real estate are charged against the current period's operations. INTANGIBLE ASSETS Intangible assets include amounts for excess servicing fees on government guaranteed loans, organizational expenses, deposit base premiums and goodwill. Excess servicing rights are being amortized over the expected life of the related loan. Effective January 1, 1999, the Company changed its method of accounting for organization costs to expense these costs in the period incurred. Prior to 1999, the Company capitalized organization costs and amortized them to expense over a five-year period. This change in accounting method was made to comply with AICPA Statement of Position 98-5 (SOP 98-5). The Company recorded a charge net of tax of $47,047 in 1999 as the cumulative effect of this accounting change. The deposit base premium is being amortized using the straight-line method over an estimated life of 10 years. Goodwill is amortized over varying periods, from 10 to 15 years, using the straight-line method. Long-lived assets, including certain fixed assets and intangibles, are evaluated regularly for other-than-temporary impairment. If circumstances suggest that the value of such assets may be impaired and a write-down would be material, an assessment of recoverability is performed prior to any write-down. Impairment on intangibles is evaluated at each balance sheet date or whenever events or changes in circumstances indicate that the carrying amount should be assessed. Impairment, if any, is recognized through a valuation allowance with a corresponding charge recorded in the income statement. INCOME TAXES The tax effects of transactions is recorded at current tax rates in the periods the transactions are reported for financial statement purposes. Deferred income taxes are established for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. The Company files its tax returns on a consolidated basis. 41 45 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS EARNINGS PER COMMON SHARE Basic earnings per common share has been computed based on the weighted average number of common shares outstanding of 4,388,336, 4,415,949 and 4,354,547 in 1999, 1998 and 1997. Diluted earnings per share has been computed based upon the weighted average number of equivalent common shares of 4,543,784, 4,624,380 and 4,602,375 in 1999, 1998 and 1997. The effect of stock options, as described in Note 12, is the sole common stock equivalents for purposes of calculating diluted earnings per common share. 42 46 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS STOCK-BASED COMPENSATION As provided by SFAS 123, the Company has elected to continue applying the provisions of APB 25 in determining its accounting relative to stock-based compensation. Accordingly, when the price of an option granted is equal to its fair market value on the date of grant, no compensation expense is recorded. The Company has adopted the SFAS 123 requirement that a company disclose the pro forma net income and pro forma earnings per share for the years ending December 31, 1999, 1998 and 1997, as if the alternative fair-value-based accounting method in SFAS 123 had been used in determining net income. FAIR VALUES OF FINANCIAL INSTRUMENTS The Company uses the following methods and assumptions in estimating fair values of financial instruments (see Note 16): Cash and cash equivalents - The carrying amount of cash and cash equivalents approximates fair value. Investment securities - The fair value of investment securities held to maturity and available for sale is estimated based on bid quotations received from independent pricing services. The carrying amount of other investments approximates fair value. Loans - For variable rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values. For all other loans, fair values are calculated by discounting the contractual cash flows using estimated market discount rates which reflect the credit and interest rate risk inherent in the loan, or by using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Deposits - The fair value of deposits with no stated maturity, such as demand, NOW and money market, and savings accounts, is equal to the amount payable on demand at year-end. The fair value of certificates of deposit is based on the discounted value of contractual cash flows using the rates currently offered for deposits of similar remaining maturities. Short-term borrowings - The carrying amount of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings maturing within 30 days approximates fair value. Off-balance-sheet instruments - The fair value of commitments to extend credit to fund commercial, consumer, real estate-construction and real estate-mortgage loans and to fund standby letters of credit is equal to the amount of commitments outstanding at December 31, 1999. This is based on the fact that the Company generally does not offer lending commitments or standby letters of credit to its customers for long periods, and therefore, the underlying rates of the commitments approximate market rates. CASH AND CASH EQUIVALENTS For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold. 43 47 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS RECLASSIFICATIONS Certain reclassifications have been made in the 1998 and 1997 financial statements to conform with the 1999 presentation. ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities." SFAS 133 requires companies to recognize all derivative contracts as either assets or liabilities in the balance sheet and to measure them at fair value. Historically, the Company has not entered into derivative contracts either to hedge existing risks or for speculative purposes. The Company adopted the new standard as of July 1, 1998. The effect on the consolidated financial statements at July 1, 1998, which resulted from the transfer of investment securities, with an amortized cost of $11,898,815, from the held-to-maturity category to the available-for-sale category, was an increase in the other comprehensive income market valuation reserve of approximately $176,000. 2. CASH AND DUE FROM BANKS A bank is required to maintain average reserve balances with the Federal Reserve Bank, on deposit with national banks or in cash. The Bank's average reserve requirement as of December 31, 1999, was approximately $1,500,000. The Bank maintained cash balances which were adequate to meet this requirement. 3. INVESTMENT SECURITIES The amortized cost and estimated market value of investment securities held to maturity are as follows:
AMORTIZED UNREALIZED UNREALIZED MARKET DECEMBER 31, 1999 COST GAINS LOSSES VALUE ----------------------------------------------------------------------------------------------------------------------- U.S. Treasury securities $10,088,880 $17,913 $ 2,508 $10,104,285 U.S. Government agencies and corporations 33,162,696 - 2,163,918 30,998,778 Other investments 1,189,260 - - 1,189,260 ----------------------------------------------------------------------------------------------------------------------- $44,440,836 $17,913 $2,166,426 $42,292,323 =========================================================================================================================
44 48 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AMORTIZED UNREALIZED UNREALIZED MARKET DECEMBER 31, 1998 COST GAINS LOSSES VALUE ---------------------------------------------------------------------------------------------------------------------- U.S. Treasury securities $14,083,195 $247,542 $ -- $14,330,737 U.S. Government agencies and corporations 33,161,248 177,062 109,375 33,228,935 Other investments 908,100 -- -- 908,100 - ----------------------------------------------------------------------------------------------------------------------- $48,152,543 $424,604 $109,375 $48,467,772 =======================================================================================================================
The amortized cost and estimated market value of investment securities available for sale are as follows:
AMORTIZED UNREALIZED UNREALIZED MARKET DECEMBER 31, 1999 COST GAINS LOSSES VALUE ---------------------------------------------------------------------------------------------------------------------- U.S. Treasury securities $ 7,806,262 $ -- $248,432 $ 7,557,830 States and political subdivisions 6,929,169 39,690 226,861 6,741,998 Mortgage-backed securities 1,643,210 1,135 22,532 1,621,813 ---------------------------------------------------------------------------------------------------------------------- $16,378,641 $40,825 $497,825 $15,921,641 ======================================================================================================================
AMORTIZED UNREALIZED UNREALIZED MARKET DECEMBER 31, 1998 COST GAINS LOSSES VALUE ----------------------------------------------------------------------------------------------------------------------- U.S. Treasury securities $ 5,021,513 $ 21,437 $ -- $ 5,042,950 States and political subdivisions 8,114,069 219,112 -- 8,333,181 Mortgage-backed securities 4,022,557 4,020 12,379 4,014,198 Other debt securities 449,871 7,810 -- 457,681 ----------------------------------------------------------------------------------------------------------------------- $17,608,010 $252,379 $12,379 $17,848,010 ======================================================================================================================
Other investments consist of stock in the Independent Bankers' Bank of Florida and the Federal Home Loan Bank of Atlanta. Other debt securities consist of corporate debt. The amortized cost and estimated market value of investment securities held to maturity and available for sale at December 31, 1999, by contractual maturity, are shown as follows. Expected maturities differ from contractual maturities because borrowers may have the right to call or repay obligations without call or prepayment penalties. 45 49 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INVESTMENT SECURITIES INVESTMENT SECURITIES HELD TO MATURITY AVAILABLE FOR SALE ------------------------------- --------------------------------- AMORTIZED MARKET AMORTIZED MARKET DECEMBER 31, 1999 COST VALUE COST VALUE --------------------------------------------------------------------------------------------------------------------- Due in one year or less $ 9,988,240 $10,005,660 $ 943,194 $ 958,254 Due after one year through five years 8,100,103 7,937,695 7,975,543 7,729,530 Due after five years through ten years 25,163,233 23,159,708 3,579,240 3,501,363 Due after ten years -- -- 2,237,454 2,110,681 Other investments 1,189,260 1,189,260 -- -- Mortgage-backed securities -- -- 1,643,210 1,621,813 --------------------------------------------------------------------------------------------------------------------- $44,440,836 $42,292,323 $16,378,641 $15,921,641 =====================================================================================================================
Proceeds from sales of investment securities available for sale during 1999, 1998 and 1997, respectively, were $13,033,497, $9,966,994 and $5,083,984 with gross gains of $643, $129,537 and $4,201 and no gross losses. Maturities and principal repayments of investment securities available for sale during 1999, 1998 and 1997 were $4,013,932, $2,979,575 and $13,004,356, respectively. Gross gains realized from calls and mandatory redemptions of held-to-maturity securities during 1999, 1998 and 1997 were $0, $1,448 and $6,463, respectively. Investment securities having carrying values of approximately $14,239,000 and $13,261,000 at December 31, 1999 and 1998, respectively, were pledged to secure public funds on deposit, securities sold under agreements to repurchase, and other purposes as required by law. The Bank's pledged securities are held in safekeeping. 4. LOANS Major classifications of loans are as follows:
DECEMBER 31, 1999 1998 ------------------------------------------------------------------------------------ Commercial, financial and agricultural $182,581,460 $163,798,992 Real estate--construction 9,182,378 5,960,092 Real estate--individual 82,421,833 62,544,350 Installment and simple interest individual 16,248,303 13,810,146 Other 179,924 554,830 ------------------------------------------------------------------------------------ Total loans 290,613,898 246,668,410 Net deferred loan fees 733,177 370,231 ------------------------------------------------------------------------------------ Loans, net of deferred loan fees $289,880,721 $246,298,179 ====================================================================================
46 50 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Substantially all loans are made to borrowers in the Bank's primary market area of Monroe and South Dade counties, in which the primary industry is tourism. At December 31, 1999 and 1998, the Bank had approximately $251,686,000 and $212,269,000 of loans secured by real estate. Nonaccrual loans and loans defined as impaired under SFAS 114 at December 31, 1999 and 1998 were not material. The Bank has made a loan originally totaling $10,000,000 to construct a lumber mill near Pensacola, Florida. $6,400,000 had been sold by the Bank to other lenders. The loan was partially guaranteed as to principal and interest by the U.S. Department of Agriculture (USDA). In addition to business real estate and equipment, the loan is collateralized by the business owner's interest in a trust. Under provisions of the trust agreement, beneficiaries cannot receive trust assets until November 2010. At December 31, 1999, the loan was past due greater than 90 days but is still maintained as an accruing loan because of the USDA guarantee. Management believes the value of all assets pledged as collateral for this loan substantially exceeds the unpaid amount. The loan is in the process of foreclosure, and no loss is anticipated. The following is an analysis of the allowance for loan losses:
YEARS ENDED DECEMBER 31, 1999 1998 1997 -------------------------------------------------------------------------------------------------------- Balance, beginning of year $2,517,234 $2,201,974 $1,929,719 Provision charged to expense 540,000 360,000 300,000 Loans charged off (108,413) (82,020) (39,514) Recoveries of loans previously charged off 47,711 37,280 11,769 -------------------------------------------------------------------------------------------------------- Balance, end of year $2,996,532 $2,517,234 $2,201,974 ========================================================================================================
5. PREMISES AND EQUIPMENT Premises and equipment consisted of the following:
DECEMBER 31, 1999 1998 ------------------------------------------------------------------------------------ Land $ 4,994,840 $ 3,220,536 Buildings 8,803,085 7,820,544 Furniture, fixtures and equipment 7,016,710 6,154,871 Construction in progress 92,009 1,411,247 ------------------------------------------------------------------------------------ 20,906,644 18,607,198 Less accumulated depreciation (6,587,998) (5,726,838) ------------------------------------------------------------------------------------ Premises and equipment, net $14,318,646 $12,880,360 ====================================================================================
47 51 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Bank is obligated under operating leases for office and ATM location space. The leases expire in periods varying from one to eighteen years, and some have renewal options for subsequent periods. Future minimum lease payments are as follows at December 31, 1999:
YEARS ENDING DECEMBER 31, - -------------------------------------------------------------------------------- 2000 $ 34,959 2001 26,359 2002 25,959 2003 18,276 2004 10,368 Thereafter 124,417 - -------------------------------------------------------------------------------- $ 240,338 ================================================================================
Rental expense for the years ended December 31, 1999, 1998 and 1997, was approximately $66,000, $93,000 and $79,000, respectively. 6. TIME DEPOSITS At December 31, 1999, the scheduled maturities of time deposits are as follows:
YEARS ENDING DECEMBER 31, - -------------------------------------------------------------------------------- 2000 $ 66,342,455 2001 20,647,909 2002 10,417,276 2003 4,656,337 2004 and thereafter 3,773,261 - -------------------------------------------------------------------------------- $105,837,238 ================================================================================
7. SHORT-TERM BORROWINGS Short-term borrowings include federal funds purchased, securities sold under agreements to repurchase, advances from the Federal Home Loan Bank, and a Treasury, tax and loan note option. The Bank has unsecured lines of credit for federal funds purchased from other banks totaling $7,500,000 at December 31, 1999. Securities sold under agreements to repurchase include a wholesale agreement with a correspondent bank which is collateralized by a U.S. Treasury note and agreements with commercial account holders whereby the Bank sweeps the customer's 48 52 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS accounts on a daily basis and pays interest on these amounts. Borrowings under these agreements are collateralized by investment securities. The Bank accepts Treasury, tax and loan deposits from certain commercial depositors and remits these deposits to the appropriate government authorities. The Bank can hold up to $1,700,000 of these deposits more than a day under a note option agreement with its regional Federal Reserve bank and pay interest on those funds held. The Bank pledges certain investment securities against this account. 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 equal to 14 percent of the Bank's total assets as reported on the most recent quarterly financial information submitted to the regulators. The credit availability approximated $54.7 million at December 31, 1999. Any advances are secured by the Bank's one-to-four-family residential mortgage loans. In 1999, a $10 million advance was made, which matured on January 24, 2000. No advances were made on this credit line in 1998. The following table reflects the average daily outstanding, year-end outstanding, maximum month-end outstanding and the weighted average rates paid for each of the four categories of short-term borrowings:
Years ended December 31, 1999 1998 - -------------------------------------------------------------------------------------------------------- FEDERAL FUNDS PURCHASED: Balance: Average daily outstanding $ 204,123 $ 334,398 Year-end outstanding -- -- Maximum month-end outstanding 455,000 3,169,000 Rate: Weighted average 5.9% 5.9% SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (WHOLESALE AND RETAIL): Balance: Average daily outstanding $ 472,657 $ 466,813 Year-end outstanding 425,478 371,004 Maximum month-end outstanding 596,504 371,004 Rate: Weighted average 4.5% 4.9% TREASURY, TAX AND LOAN NOTE OPTION: Balance: Average daily outstanding $ 730,354 $ 808,629 Year-end outstanding 1,286,578 298,565 Maximum month-end outstanding 1,700,000 1,700,000 Rate: Weighted average 4.6% 4.4% ADVANCE FROM THE FEDERAL HOME LOAN BANK: Balance: Average daily outstanding $ 277,778 $ -- Year-end outstanding 10,000,000 -- Maximum month-end outstanding 10,000,000 -- Rate: Weighted average 6.1% --
49 53 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. OTHER BORROWINGS The Company has $2,000,000 available under a revolving line of credit with Independent Bankers' Bank of Florida. At December 31, 1999, the Company had $659,625 outstanding under this line of credit. Amounts outstanding under the line of credit bear interest equal to the prime rate published in The Wall Street Journal minus .5 percent, which is subject to change daily. The interest rate in effect at December 31, 1999, was 8.0 percent. Interest is payable quarterly, and the principal is due April 2001. This credit facility is secured by 100 percent of the outstanding shares of TIB Bank of the Keys and requires, among other things, that the Bank maintain a minimum Tier 1 capital ratio of 6 percent at all times throughout the term of the loan. 9. INCOME TAXES The following are the components of income tax expense as provided:
Years ended December 31, 1999 1998 1997 - -------------------------------------------------------------------------------------------------------- Current income tax provision Federal $ 2,075,781 $ 1,674,965 $ 1,569,264 State 288,287 258,490 237,333 - -------------------------------------------------------------------------------------------------------- 2,364,068 1,933,455 1,806,597 Deferred income tax provision (benefit) (65,268) (47,655) (87,997) - -------------------------------------------------------------------------------------------------------- $ 2,298,800 $ 1,885,800 $ 1,718,600 ========================================================================================================
A reconciliation of income tax computed at the Federal statutory income tax rate to total income taxes is as follows:
Years ended December 31, 1999 1998 1997 - -------------------------------------------------------------------------------------------------------- Pretax income $ 6,417,561 $ 5,326,796 $ 4,924,458 ======================================================================================================== Income taxes computed at Federal statutory tax rate $ 2,182,000 $ 1,811,000 $ 1,674,000 Increase (decrease) resulting from: Tax-exempt interest rate (117,600) (170,400) (123,000) State income taxes 199,900 170,600 157,000 Other, net 34,500 74,600 10,600 - -------------------------------------------------------------------------------------------------------- $ 2,298,800 $ 1,885,800 $ 1,718,600 ========================================================================================================
50 54 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following summarizes the tax effects of temporary differences which comprise the net deferred tax asset:
December 31, 1999 1998 - -------------------------------------------------------------------------------------------------- Allowance for loan losses $ 981,709 $ 801,493 Organization costs 17,707 -- Unrealized losses on securities available for sale 172,000 -- - -------------------------------------------------------------------------------------------------- Total gross deferred tax assets 1,171,416 801,493 - -------------------------------------------------------------------------------------------------- Sale of option to acquire equity interest in an insurance company (99,649) -- Accumulated depreciation (438,277) (397,181) Gain on building swap (79,151) (81,349) Unrealized gains on securities available for sale -- (90,000) Other (4,419) (10,311) - -------------------------------------------------------------------------------------------------- Total gross deferred tax liabilities (621,496) (578,841) - -------------------------------------------------------------------------------------------------- Net deferred tax asset $ 549,920 $ 222,652 ==================================================================================================
10. EMPLOYEE BENEFIT PLAN The Bank maintains an Employee Stock Ownership Plan that covers all employees who are qualified as to age and length of service. Three types of contributions can be made to the Plan by the Bank and participants: basic voluntary contributions which are discretionary contributions made by all participants; a matching contribution, whereby the Bank will match 25 percent of salary reduction contributions up to 4 percent of compensation, not to exceed a maximum contribution of $1,000 per employee; and an additional discretionary contribution made by the Bank allocated to the accounts of participants on the basis of total relative compensation. The Bank contributed $181,000, $171,000 and $161,000 to the plan in 1999, 1998 and 1997, respectively. As of December 31, 1999, the Plan contained approximately 134,000 shares of the Company's common stock. 11. RELATED PARTY TRANSACTIONS As of December 31, 1999 and 1998, the Bank had direct and indirect loans outstanding to certain of its officers, directors and their related business interests which aggregated $16,182,001 and $12,356,737, respectively. During 1999, additional loans and credit line extensions totaled $6,188,175. Loan repayments totaled $2,362,911. These loans were made in the ordinary course of business with normal credit terms, including interest rates and collateral requirements prevailing at the time for comparable transactions with other borrowers. These individuals and their related interests also maintain customary demand and time deposit accounts with the Bank. 51 55 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. STOCKHOLDERS' EQUITY The Company and the Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements result in certain discretionary actions by regulators that could have an effect on the Company's operations. The regulations require the Company and the Bank to meet specific capital adequacy guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company's capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. As of December 31, 1999, the most recent notification from the Federal Deposit Insurance Corporation and the Federal Reserve Board categorized the Bank and the Company, respectively, as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since those notifications that management believes has changed the Company's or the Bank's category. To be considered well capitalized and adequately capitalized (as defined) under the regulatory framework for prompt corrective action, the Company and Bank must maintain minimum Tier 1 leverage, Tier 1 risk-based, and total risk-based ratios as set forth in the following tables. The actual capital amounts and ratios are also presented in the following tables.
ADEQUATELY WELL CAPITALIZED CAPITALIZED DECEMBER 31, 1999 REQUIREMENT REQUIREMENT ACTUAL - ----------------------------------------------------------------------------------------------------------------------- AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO ------ ----- ------ ----- ------ ----- Tier 1 Capital (to Average Assets) Consolidated => $18,721,000 => 5.0% $11,233,000 3.0% $27,130,000 7.3% Bank => 18,642,000 => 5.0% 11,185,000 3.0% 26,406,000 7.1% Tier 1 Capital (to Risk Weighted Assets) Consolidated => $17,378,000 => 6.0% $11,585,000 4.0% $27,130,000 9.4% Bank => 17,296,000 => 6.0% 11,531,000 4.0% 26,406,000 9.2% Total Capital (to Risk Weighted Assets) Consolidated => $28,963,000 => 10.0% $23,170,000 8.0% $30,127,000 10.4% Bank => 28,827,000 => 10.0% 23,062,000 8.0% 29,403,000 10.2%
52 56 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ADEQUATELY WELL CAPITALIZED CAPITALIZED DECEMBER 31, 1998 REQUIREMENT REQUIREMENT ACTUAL ----------------------------------------------------------------------------------------------------------------------- AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO Tier 1 Capital (to Average Assets) Consolidated => $15,711,000 => 5.0% $9,427,000 3.0% $24,731,000 7.9% Bank => 15,688,000 => 5.0% 9,413,000 3.0% 23,676,000 7.6% Tier 1 Capital (to Risk Weighted Assets) Consolidated => $15,217,000 => 6.0% $10,145,000 4.0% $24,731,000 9.8% Bank => 15,163,000 => 6.0% 10,108,000 4.0% 23,676,000 9.4% Total Capital (to Risk Weighted Assets) Consolidated => $25,362,000 => 10.0% $20,290,000 8.0% $27,248,000 10.7% Bank => 25,271,000 => 10.0% 20,217,000 8.0% 26,193,000 10.4%
Management believes, as of December 31, 1999, that the Company and the Bank meet all capital requirements to which it is subject. Under state banking law, regulatory approval will be required if the total of all dividends declared in any calendar year by the Bank exceeds the Bank's net profits to date for that year combined with its retained net profits for the preceding two years. Retained earnings of the Bank available for payment of dividends to the Company without prior regulatory approval at December 31, 1999, is approximately $7,211,000. STOCK OPTION PLAN 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 Board of Directors of the Company 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 common stock of the Company that may be optioned or sold is 978,000 shares. Such shares may be treasury, or authorized but unissued, shares of common stock of the Company. In no event shall the number of options outstanding at any time exceed 20 percent of the Company's currently outstanding common stock. The exercise price for common stock under each nonqualified stock option must equal 100 percent of the fair market value of the stock at the time the option is granted. The exercise price for stock under each incentive stock option shall not be less than 100 percent of the fair market value of the stock at the time the option is granted. The exercise price under an incentive stock option granted to a person owning stock representing more than 10 percent of the common stock must equal at least 110 percent of the fair market value at the date of grant, and such option is not exercisable until five years from the date the incentive stock option was granted. 53 57 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Board of Directors may, at its discretion, provide that an option not be exercised in whole or in part for any period or periods of time as specified in the option agreements. No option may be exercised after the expiration of ten years from the date it is granted. The Company applies APB 25 and related Interpretations in accounting for its stock-based compensation plan. Accordingly, no compensation cost has been recognized. Had compensation cost for the Company's stock-based compensation plan been determined based on the fair value at the grant dates for awards under the plan consistent with the method of SFAS 123, the Company's net income and earnings per share would have been the pro forma amounts indicated as follows:
Years ended December 31, 1999 1998 1997 ------------------------------------------------------------------------------------------- Net income As reported $4,118,761 $ 3,440,996 $ 3,205,858 Pro forma 4,046,650 3,362,204 3,163,751 Basic earnings per common share As reported $ .94 .78 $ .74 Pro forma .92 .76 .73 Diluted earnings per common share As reported $ .91 $ .74 $ .70 Pro forma .89 .73 .69
The fair value of each option is estimated as of the date of grant using the Black-Scholes Option Pricing Model and the following weighted average assumptions for options granted in 1999 and 1998:
1999 1998 1997 ------------------------------------------------------------------------------------------- Dividend yield 3.9% 3.3% 3.0% Risk-free interest rate 4.7% TO 6.0% 4.7% to 5.6% 5.4% to 7.0% Expected lives 9 YEARS 9 years 9 years Volatility .38 .41 .48
54 58 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A summary of the status of the Company's fixed stock option plan as of and for the three years ended December 31, 1999, is presented below:
EXERCISE PRICE WEIGHTED AVERAGE SHARES RANGE EXERCISE PRICE - ----------------------------------------------------------------------------------------------------------------------- BALANCE, December 31, 1996 606,300 $ 5.49 - $ 9.00 $ 6.11 Granted 125,300 9.00 - 14.50 12.16 Exercised (49,590) 5.49 - 8.33 5.51 Expired (42,000) 5.49 - 9.00 6.57 - ---------------------------------------------------------------------------------------------------------------------- BALANCE, December 31, 1997 640,010 5.49 - 14.50 7.31 Granted 75,500 10.88 - 14.00 13.10 Exercised (61,175) 5.49 - 9.00 5.72 Expired (43,250) 5.49 - 13.50 7.84 - ---------------------------------------------------------------------------------------------------------------------- BALANCE, December 31, 1998 611,085 5.49 - 14.50 8.15 Granted 23,000 10.75 - 11.25 11.03 Exercised (23,675) 5.49 - 9.00 5.67 Expired (18,000) 5.49 - 13.63 9.90 - ---------------------------------------------------------------------------------------------------------------------- BALANCE, December 31, 1999 592,410 $ 5.49 - $14.50 8.31 ====================================================================================================================== Options exercisable at December 31, 1999 247,760 Options exercisable at December 31, 1998 221,985 Options exercisable at December 31, 1997 224,510 Weighted average fair value of options granted during 1999 $ 3.66 Weighted average fair value of options granted during 1998 $ 5.05 Weighted average fair value of options granted during 1997 $ 5.60 ======================================================================================================================
55 59 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes information about fixed stock options outstanding:
DECEMBER 31, 1999 - ---------------------------------------------------------------------------------------------------------------------- OUTSTANDING OPTIONS OPTIONS EXERCISABLE ----------------------------------------------------- ---------------------------------- Weighted Average Weighted Weighted Range of Number Remaining Average Number Average Exercise Outstanding at Contractual Exercise Exercisable at Exercise Price December 31, 1999 Life Price December 31, 1999 Price - ---------------------------------------------------------------------------------------------------------------------- $5.49 - $5.50 276,710 5.0 $ 5.49 155,510 $ 5.49 6.23 30,000 5.6 6.23 30,000 6.23 8.33 - 9.00 114,200 6.5 8.60 34,400 8.62 10.75 - 13.25 47,500 8.8 11.62 2,450 12.17 13.50 - 14.50 124,000 7.8 13.56 25,400 13.64 - ---------------------------------------------------------------------------------------------------------------------- 592,410 6.2 $ 8.31 247,760 $ 6.92 ======================================================================================================================
DECEMBER 31, 1998 - ---------------------------------------------------------------------------------------------------------------------- OUTSTANDING OPTIONS OPTIONS EXERCISABLE ----------------------------------------------------- ---------------------------------- Weighted Average Weighted Weighted Range of Number Remaining Average Number Average Exercise Outstanding at Contractual Exercise Exercisable at Exercise Price December 31, 1998 Life Price December 31, 1998 Price --------------------------------------------------------------------------------------------------------------------- $5.49 - $5.50 304,585 6.0 $ 5.49 153,985 $ 5.49 6.23 30,000 6.6 6.23 30,000 6.23 8.33 - 9.00 120,200 7.6 8.62 23,900 8.65 10.88 - 13.25 25,500 9.4 12.22 -- -- 13.50 - 14.50 130,800 8.8 13.56 14,100 13.72 --------------------------------------------------------------------------------------------------------------------- 611,085 7.1 $ 8.15 221,985 $ 6.45 ---------------------------------------------------------------------------------------------------------------------
56 60 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 - ------------------------------------------------------------------------------------------------------------------------------- OUTSTANDING OPTIONS OPTIONS EXERCISABLE --------------------------------------------------------- ----------------------------------------- WEIGHTED AVERAGE WEIGHTED WEIGHTED RANGE OF NUMBER REMAINING AVERAGE NUMBER AVERAGE EXERCISE OUTSTANDING AT CONTRACTUAL EXERCISE EXERCISABLE AT EXERCISE PRICE DECEMBER 31, 1997 LIFE PRICE DECEMBER 31, 1997 PRICE - ------------------------------------------------------------------------------------------------------------------------------- $ 5.49 - $ 5.50 380,610 7.0 $ 5.49 178,410 $ 5.49 6.23 30,000 7.6 6.23 30,000 6.23 8.33 - 9.00 142,600 8.5 8.60 16,100 8.63 13.50 - 14.50 86,800 9.6 13.56 - - - ------------------------------------------------------------------------------------------------------------------------------- 640,010 7.7 $ 7.31 224,510 $ 5.82 ===============================================================================================================================
13. COMMITMENTS AND CONTINGENCIES The Bank is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Bank's exposure to credit loss in the event of nonperformance by the customer on the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amounts of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. At December 31, 1999 and 1998, total commitments to extend credit were approximately $34,203,000 and $29,760,000, respectively, in unfunded loan commitments. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Since most of the letters of credit are expected to expire without being drawn upon, they do not necessarily represent future cash requirements. At December 31, 1999 and 1998, commitments under standby letters of credit aggregated approximately $858,000 and $902,000, respectively. In 1999 and 1998, the Bank was not required to perform on a standby letter of credit. 57 61 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Bank evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the borrower. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, residential real estate and income-producing commercial properties on those commitments for which collateral is deemed necessary. As of December 31, 1998, the Parent Company had directly guaranteed to the Bank $3,000,000 of a $6,000,000 loan to the Phoenix Group. In connection with this guarantee, the Parent Company had the option to purchase $3,000,000 of the debt from the Bank and convert such debt to a 50 percent ownership in the Phoenix Group during a 36-month period beginning in October 1998. The loan matures in October 2001. In November 1999, the Parent Company sold this option to the Phoenix Group. The terms of the sale included a $100,000 payment at closing and $300,000 annually at the anniversary date of the sale for each of the next three years, for a total of $1,000,000. For accounting purposes, $312,375 was recognized as income on the sale. 14. STOCK REPURCHASES On September 22, 1998, the Company's Board of Directors voted to repurchase 50,000 shares of the Company's stock in 1998. This repurchase resulted in 50,000 outstanding shares of treasury stock, at a cost of $557,788 at December 31, 1998. In addition, on December 15, 1998, the Company's Board of Directors voted to repurchase up to 50,000 shares of the Company's stock in 1999. 45,000 of these shares were purchased in 1999 at a cost of $493,684. 15. SUPPLEMENTAL FINANCIAL DATA Components of other expense in excess of 1 percent of total interest and other income are as follows:
Years ended December 31, 1999 1998 1997 ---------------------------------------------------------------------------------------------- Merchant bank card processing expenses $1,691,774 $1,269,411 $1,159,235 Other merchant charges 393,144 323,079 341,949 Operating supplies 425,902 397,543 338,541 Computer services 1,395,051 861,368 596,627 Legal and professional fees 482,802 510,356 511,964 Marketing and community relations 458,026 496,442 417,408 Postage, courier, and armored car 420,963 325,137 285,391
58 62 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 16. FAIR VALUES OF FINANCIAL INSTRUMENTS The estimated fair values of the Company's financial instruments are as follows:
1999 1998 -------------------------------------- ------------------------------------ CARRYING ESTIMATED Carrying Estimated December 31, VALUE FAIR VALUE Value Fair Value ----------------------------------------------------------------------------------------------------------------------- Financial assets: Cash and cash equivalents $ 22,164,000 $ 22,164,000 $ 24,702,000 $ 24,702,000 Investment securities held to maturity 44,441,000 42,292,000 48,153,000 48,468,000 Investment securities available for sale 15,922,000 15,922,000 17,848,000 17,848,000 Loans 286,884,000 281,146,000 243,781,000 244,942,000 Note receivable 702,000 702,000 - - Financial liabilities: Noncontractual deposits $241,066,000 $ 241,066,000 $ 249,893,000 $ 249,893,000 Contractual deposits 105,837,000 106,220,000 75,163,000 75,701,000 Short-term borrowings 11,712,000 11,713,000 670,000 670,000 Off-balance-sheet instruments: Undisbursed credit lines $ 34,203,000 $ 29,760,000 Standby letters of credit 858,000 902,000
17. SEGMENT REPORTING TIB Financial Corp. has three reportable segments: community banking, merchant bank card processing, and government guaranteed loan sales and servicing. The community banking segment's business is to attract deposits from the public and to use such deposits to make real estate, business and consumer loans in its primary service area. The merchant bank card processing segment processes credit card transactions for local merchants. The government guaranteed loan segment originates and sells the guaranteed portion of loans that qualify for such guarantees, such as those offered by the Small Business Administration and the U.S. Department of Agricultural Rural Development Business and Industry Program. The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies. The Company evaluates performance based on profit or loss from operations before income taxes. The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different marketing strategies. The government guaranteed loan segment was acquired as a unit, and management at the time of the acquisition was retained. 59 63 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
GOVERNMENT MERCHANT GUARANTEED YEAR ENDED COMMUNITY BANK CARD LOAN SALES ALL DECEMBER 31, 1999 BANKING PROCESSING AND SERVICING OTHER TOTAL --------------------------------------------------------------------------------------------------------------------- Interest income $ 27,905,459 $ -- $ -- $ -- $ 27,905,459 Interest expense (11,298,888) -- -- -- (11,298,888) --------------------------------------------------------------------------------------------------------------------- Net interest income 16,606,571 -- -- -- 16,606,571 Other income 3,119,910 2,827,876 809,988 230,492 6,988,266 Equity in income, net of goodwill amortization, from investment in ERAS Joint Venture -- -- -- 179,008 179,008 Depreciation and amortization (1,142,443) (53,467) (15,056) (2,741) (1,213,707) Other expense (13,054,372) (2,366,535) (398,299) (248,024) $(16,067,230) --------------------------------------------------------------------------------------------------------------------- Pretax segment profit (excluding effect of change in accounting principle) $ 5,529,666 $ 407,874 $ 396,633 $ 158,735 $ 6,492,908 ====================================================================================================================== Segment assets $390,795,676 $ 129,416 $ 223,472 $ 980,767 $392,129,331 ======================================================================================================================
60 64 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
GOVERNMENT MERCHANT GUARANTEED YEAR ENDED COMMUNITY BANK CARD LOAN SALES ALL DECEMBER 31, 1998 BANKING PROCESSING AND SERVICING OTHER TOTAL --------------------------------------------------------------------------------------------------------------------- Interest income $ 23,706,467 $ -- $ -- $ -- $ 23,706,467 Interest expense (9,915,274) -- -- -- (9,915,274) --------------------------------------------------------------------------------------------------------------------- Net interest income 13,791,193 -- -- -- 13,791,193 Other income 2,701,247 2,174,057 1,082,906 419,333 6,377,543 Equity in income, net of goodwill amortization, from Investment in ERAS Joint Venture -- -- -- (1,465) (1,465) Depreciation and amortization (956,062) (50,312) (13,728) (2,058) (1,022,160) Other expense (11,125,553) (1,798,014) (585,169) (309,579) $(13,818,315) --------------------------------------------------------------------------------------------------------------------- Pretax segment profit $ 4,410,825 $ 325,731 $ 484,009 $ 106,231 $ 5,326,796 --------------------------------------------------------------------------------------------------------------------- Segment assets $354,279,007 $ 151,917 $ 247,858 $ 797,068 $355,475,850 ---------------------------------------------------------------------------------------------------------------------
GOVERNMENT MERCHANT GUARANTEED YEAR ENDED COMMUNITY BANK CARD LOAN SALES ALL DECEMBER 31, 1997 BANKING PROCESSING AND SERVICING OTHER TOTAL --------------------------------------------------------------------------------------------------------------------- Interest income $ 20,557,774 $ -- $ -- $ -- $ 20,557,774 Interest expense (7,876,156) -- -- - (7,876,156) --------------------------------------------------------------------------------------------------------------------- Net interest income 12,681,618 -- -- -- 12,681,618 Other income 2,392,795 2,109,363 497,960 319,286 5,319,404 Depreciation and amortization (788,817) (648) (7,395) (1,435) (798,295) Other expense (10,096,971) (1,650,157) (277,440) (253,701) (12,278,269) --------------------------------------------------------------------------------------------------------------------- Pretax segment profit $ 4,188,625 $ 458,558 $ 213,125 $ 64,150 $ 4,924,458 --------------------------------------------------------------------------------------------------------------------- Segment assets $277,651,788 $ 29,003 $ 270,208 $ 7,821 $277,958,820 ---------------------------------------------------------------------------------------------------------------------
Revenues are almost exclusively derived from customers within the United States. The Company does not have a single customer that accounts for 10 percent or more the Company's revenue. 61 65 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18. CONDENSED FINANCIAL INFORMATION OF TIB FINANCIAL CORP. CONDENSED BALANCE SHEETS (Parent Only)
December 31, 1999 1998 ---------------------------------------------------------------------------------------------------------------------- ASSETS Cash on deposit with subsidiary $ 1,330 $ 118,266 Dividends and other receivables 504,358 474,424 Investment in bank subsidiary 27,579,427 25,437,549 Investment in ERAS Joint Venture 968,760 789,752 Note receivable 702,375 -- Organization expenses -- 75,347 Other assets 111,719 123,175 ---------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $29,867,969 $27,018,513 ====================================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Dividends payable $ 461,490 $ 450,979 Due to bank subsidiary 441,000 -- Advances on line of credit 659,625 -- Income taxes payable 3,696 -- ---------------------------------------------------------------------------------------------------------------------- Total liabilities 1,565,811 450,979 ---------------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Common stock 449,014 444,979 Surplus 7,554,967 7,202,321 Retained earnings 21,634,649 19,328,022 Market valuation reserve on investment securities available for sale (285,000) 150,000 Treasury stock, 95,000 and 50,000 shares, at cost (1,051,472) (557,788) ---------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 28,302,158 26,567,534 ---------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $29,867,969 $27,018,513 ======================================================================================================================
62 66 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED STATEMENTS OF INCOME (Parent Only)
Years ended December 31, 1999 1998 1997 ---------------------------------------------------------------------------------------------------------------------- OPERATING INCOME Dividend from bank subsidiary $1,464,606 $2,414,915 $1,766,229 Gain on sale of insurance company option 312,375 - - Interest income on note receivable 17,358 - - Equity in income of ERAS Joint Venture, net of goodwill amortization 179,008 (1,465) - ---------------------------------------------------------------------------------------------------------------------- Total operating income 1,973,347 2,413,450 1,766,229 ---------------------------------------------------------------------------------------------------------------------- OPERATING EXPENSE Amortization of intangibles - 28,255 28,255 Interest expense 36,555 - - Other expense 251,763 285,351 269,752 ---------------------------------------------------------------------------------------------------------------------- Total operating expense 288,318 313,606 298,007 ---------------------------------------------------------------------------------------------------------------------- Income before income tax benefit (expense) and equity in undistributed earnings of subsidiary 1,685,029 2,099,844 1,468,222 Income tax benefit (expense) (96,100) 105,200 105,400 ---------------------------------------------------------------------------------------------------------------------- Income before equity in undistributed earnings of subsidiary 1,588,929 2,205,044 1,573,622 Equity in undistributed earnings of bank subsidiary 2,576,879 1,235,952 1,632,236 ---------------------------------------------------------------------------------------------------------------------- NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGE CHANGE IN ACCOUNTING PRINCIPLE 4,165,808 3,440,996 3,205,858 Cumulative effect of change in accounting principle for deferred organization costs, net of tax benefit of $28,300 (47,047) - - ---------------------------------------------------------------------------------------------------------------------- NET INCOME $4,118,761 $3,440,996 $3,205,858 ======================================================================================================================
63 67 TIB FINANCIAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED STATEMENTS OF CASH FLOWS (Parent Only)
Years ended December 31, 1999 1998 1997 ---------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 4,118,761 $ 3,440,996 $ 3,205,858 Cumulative effect of change in accounting principle 75,347 - - Equity in undistributed earnings of bank subsidiary (2,576,879) (1,235,952) (1,632,236) Equity in income of ERAS Joint Venture, net of goodwill amortization (179,008) 1,465 - Proceeds from sale of insurance company option 100,000 - - Gain on sale of insurance company option (312,375) - - Amortization of intangibles - 28,255 28,255 Decrease (increase) in other assets 11,588 140,283 (30,752) Decrease in due to bank subsidiary (49,000) - - Increase in income taxes payable 3,696 - - ---------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1,192,130 2,375,047 1,571,125 ---------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from exercise of stock options 143,279 349,892 273,266 Cash dividends paid (1,801,623) (1,767,480) (1,739,842) Treasury stock repurchased (493,684) (557,788) - Investment in ERAS Joint Venture - (791,216) - Compensation paid through issuance of common stock 183,337 214,575 - Advances on line of credit 659,625 - - ---------------------------------------------------------------------------------------------------------------------- Net cash used by financing activities $(1,309,066) (2,552,017) (1,466,576) ---------------------------------------------------------------------------------------------------------------------- NET (DECREASE) INCREASE IN CASH (116,936) (176,970) 104,549 CASH, BEGINNING OF YEAR 118,266 295,236 190,687 ---------------------------------------------------------------------------------------------------------------------- CASH, END OF YEAR $ 1,330 $ 118,266 $ 295,236 ----------------------------------------------------------------------------------------------------------------------
64 68 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information set forth under the caption "Election of Directors", "Management", and "Filings Under Section 16(A) Beneficial Ownership Reporting Compliance" in the Proxy Statement to be utilized in connection with the Company's 2000 Annual Shareholders Meeting is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information contained under the caption "Compensation of Executive Officers and Directors" in the Proxy Statement to be utilized in connection with the Company's 2000 Annual Shareholders Meeting is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information contained under the caption "Principal Shareholders" in the Proxy Statement to be utilized in connection with the Company's 2000 Annual Shareholders Meeting is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information contained under the caption "Certain Relationships and Related Transactions" in the Proxy Statement to be utilized in connection with the Company's 2000 Annual Shareholders Meeting is incorporated herein by reference. 65 69 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (A) 1. FINANCIAL STATEMENTS The consolidated financial statements, notes thereto and independent auditors' report thereon, filed as part hereof, are listed in Item 8. 2. FINANCIAL STATEMENT SCHEDULES Financial Statement schedules have been omitted as the required information is not applicable or the required information has been incorporated in the consolidated financial statements and related notes incorporated by reference herein. 3. EXHIBITS Exhibit Numbers 3.1* Articles of Incorporation 3.2* Bylaws 4.1* Specimen Stock Certificate 10.1* Employment Contract between Edward V. Lett and TIB Bank of the Keys ** 10.2* 401(K) Savings and Employee Stock Ownership Plan ** 10.3* Employee Incentive Stock Option Plan ** 10.4* Employment Contract between Millard J. Younkers, Jr. and TIB Bank of the Keys ** 10.5* Employment Contract between Edward V. Lett and TIB Bank of the Keys (as amended September 24, 1996) ** 21.1 Subsidiaries of the Company 23.1 Consent of BDO Seidman, LLP 23.2 Consent of Bricker & Melton, P.A. 27 Financial Data Schedule * Items 3.1 through 4.1, and 10.1 through 10.6, as listed above, were previously filed by the Company as Exhibits (with the same respective Exhibit Number as indicated herein) to the Company's Registration Statements (Registration Nos. 333-03499 and 333-24101) and such documents are incorporated herein by reference. ** Represents a management contract or a compensation plan or arrangement required to be filed as an exhibit. (B) REPORTS ON FORM 8-K Not Applicable 66 70 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 on March 28, 2000. TIB FINANCIAL CORP. By: /s/ Edward V. Lett ---------------------------- Edward V. Lett President, CEO, & Director Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 28, 2000.
SIGNATURE TITLE - ------------------------------- ------------------------------------ /s/ Edward V. Lett President (Principal Executive - ------------------------------- Officer), CEO and Director Edward V. Lett /s/ B.G. Carter Director - ------------------------------ B.G. Carter /s/ Armando J. Henriquez Director - ------------------------------ Dr. Armando J. Henriquez /s/ Gretchen K. Holland Director - ------------------------------ Gretchen K. Holland /s/ James R. Lawson Director - ------------------------------ James R. Lawson /s/ Scott A. Marr Director - ------------------------------ Scott A. Marr /s/ Derek D. Martin-Vegue Director - ------------------------------ Derek D. Martin-Vegue /s/ Joseph H. Roth, Jr. Director - ------------------------------ Joseph H. Roth, Jr.
67 71 /s/ Marvin F. Schindler Director - ------------------------------ Marvin F. Schindler /s/ Richard J. Williams Director - ------------------------------ Richard J. Williams /s/ Millard J. Younkers, Jr. Director - ------------------------------ Millard J. Younkers, Jr. /s/ David P. Johnson Chief Financial Officer - ------------------------------ David P. Johnson
68 EX-21.1 2 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21.1 SUBSIDIARIES OF THE REGISTRANT The Subsidiaries of the Registrant are TIB Bank of the Keys and TIB Software and Services, Inc., Key Largo, Florida, which are wholly owned by the registrant and organized under the laws of the State of Florida. EX-23.1 3 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TIB FINANCIAL CORP. KEY LARGO, FLORIDA We hereby consent to the incorporation by reference of our report dated February 18, 2000, relating to the consolidated financial statements of TIB Financial Corp. and subsidiaries included in the Company's Annual Report on Form 10-K as of and for the years ended December 31, 1999 and 1998, in the Registration Statement on Form S-8 pertaining to the TIB Financial Corp. Incentive Stock Option Plan and Nonstatutory Stock Option Plan as Amended. /s/ BDO SEIDMAN, LLP ------------------------------------- BDO Seidman, LLP Atlanta, Georgia March 26, 2000 EX-23.2 4 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS TIB FINANCIAL CORP. KEY LARGO, FLORIDA We hereby consent to the incorporation by reference of our report dated February 13, 1998, relating to the consolidated financial statements of TIB Financial Corp. and Subsidiaries included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997, in the Registration Statement on Form S-8 pertaining to the TIB Financial Corp., Incentive Stock Option Plan and Nonstatutory Stock Option Plan, as amended. /s/ BRICKER & MELTON, P.A. ------------------------------------------ Bricker & Melton, P.A. Duluth, Georgia March 26, 2000 EX-27 5 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-K FINANCIAL STATEMENTS OF TIB FINANCIAL CORP. FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 19,502,410 3,962 2,658,000 0 15,921,641 44,440,836 42,292,323 289,880,721 2,996,532 392,129,331 346,903,520 11,712,056 4,551,972 659,625 0 0 449,014 27,853,144 392,129,331 22,926,064 4,111,761 867,634 27,905,459 11,178,313 11,298,888 16,606,571 540,000 643 16,740,937 6,492,908 4,165,808 0 47,047 4,118,761 .94 .91 4.78 69,701 1,993,343 0 0 2,517,234 108,413 47,711 2,996,532 2,996,532 0 0
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