10-Q/A 1 flabanks10qa.txt QUARTERLY REPORT FOR FLORIDA BANKS, INC. FORM 10-Q/A Amendment No.1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ----- EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ----- EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number 0-24683 FLORIDA BANKS, INC. (Exact name of registrant as specified in its charter) FLORIDA 58-2364573 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5210 BELFORT ROAD, SUITE 310 JACKSONVILLE, FL 32256 (Address of principal executive offices) (904) 332-7770 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes |_| No |X| Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Title Outstanding COMMON STOCK, $.01 PAR VALUE 6,814,928 OUTSTANDING AT NOVEMBER 21, 2003 PER SHARE -1- EXPLANATORY NOTE This Amendment on Form 10-Q/A to the Florida Banks, Inc. Quarterly Report on Form 10-Q for the period ended September 30, 2003 is being filed solely for the purpose of refiling the consolidated condensed financial statements (the "Financial Statements") required by Part I, Item I. The original filing of the Financial Statements contained formatting errors which caused certain financial information to be transposed. -2- PART I. Financial Information, Item 1. Financial Statements FLORIDA BANKS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ September 30, December 31, ASSETS 2003 2002 CASH AND DUE FROM BANKS $ 118,456,915 $ 26,964,504 FEDERAL FUNDS SOLD AND REPURCHASE AGREEMENTS 47,485,000 62,515,000 ------------- ------------- Total cash and cash equivalents 165,941,915 89,479,504 INVESTMENT SECURITIES: Available for sale, at fair value (cost $42,164,012 and $50,155,158 at September 30, 2003 and December 31, 2002) 42,358,807 50,930,650 Held to maturity, at cost (fair value $0 and $229,475 at September 30, 2003 and December 31, 2002) 227,925 Other investments 3,304,050 2,493,350 ------------- ------------- Total investment securities 45,662,857 53,651,925 MORTGAGE LOANS HELD FOR SALE 71,182,230 54,674,248 LOANS: Commercial real estate 415,558,472 313,120,588 Commercial 162,614,539 166,122,230 Residential mortgage 33,143,631 23,080,140 Consumer 51,029,440 45,859,704 Credit card and other loans 2,248,192 2,791,678 ------------- ------------- Total loans 664,594,274 550,974,340 Allowance for loan losses (8,587,417) (7,263,029) Net deferred loan fees (710,077) (519,271) ------------- ------------- Net loans 655,296,780 543,192,040 PREMISES AND EQUIPMENT, NET 4,921,669 5,466,332 ACCRUED INTEREST RECEIVABLE 2,396,520 2,375,102 DEFERRED INCOME TAXES, NET 4,232,535 3,908,751 DERIVATIVE INSTRUMENTS 1,777,685 2,321,643 OTHER REAL ESTATE OWNED 652,500 652,500 OTHER ASSETS 13,014,116 343,505 ------------- ------------- TOTAL ASSETS $ 965,078,807 $ 756,065,550 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY DEPOSITS: Noninterest-bearing demand $ 100,602,517 $ 141,395,150 Interest-bearing demand 83,795,480 52,803,427 Regular savings 83,706,296 66,940,672 Money market accounts 29,140,737 19,210,512 Time $100,000 and over 422,955,846 314,852,717 Other time 91,429,118 69,707,230 ------------- ------------- Total deposits 811,629,994 664,909,708 REPURCHASE AGREEMENTS SOLD 43,513,648 4,653,878 OTHER BORROWED FUNDS 19,919,686 9,921,898 ACCRUED INTEREST PAYABLE 2,858,417 2,377,963 MANDATORY MORTGAGE FORWARD DELIVERY CONTRACTS 1,072,391 TRUST PREFERRED SECURITIES 20,000,000 ACCOUNTS PAYABLE AND ACCRUED EXPENSES 9,683,856 4,765,136 ------------- ------------- Total liabilities 908,677,992 686,628,583 ------------- ------------- COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY TRUST 16,473,092 ---------- SHAREHOLDERS' EQUITY: Series C Preferred Stock, $100.00 par value, 50,000 shares authorized, 50,000 5,000,000 5,000,000 shares issued and outstanding Common stock, $.01 par value; 30,000,000 shares authorized; 6,814,628 and 6,768,362 shares issued, respectively 68,147 67,684 Additional paid-in capital 52,874,202 52,287,390 Accumulated deficit (deficit of $8,434,137 eliminated upon quasi-reorganization on December 31, 1995) (1,663,028) (4,874,873) Accumulated other comprehensive income, net of tax 121,494 483,674 ------------- ------------- Total shareholders' equity 56,400,815 52,963,875 ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 965,078,807 $ 756,065,550 ============= =============
See notes to condensed financial statements -3- FLORIDA BANKS, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) ----------------------------------------------------------------------------------------------------------------------------------- Three-Month Period Ended Nine-Month Period Ended September 30, September 30, --------------------------- -------------------------- 2003 2002 2003 2002 ----------- ----------- ----------- ---------- INTEREST INCOME: Loans, including fees $10,753,474 $ 8,208,741 $30,772,718 $23,386,476 Investment securities 300,696 570,382 1,018,185 1,716,879 Federal funds sold 160,348 287,774 383,008 647,361 ----------- ----------- ----------- ----------- Total interest income 11,214,518 9,066,897 32,173,911 25,750,713 ----------- ----------- ----------- ----------- INTEREST EXPENSE: Deposits 3,907,489 3,899,450 11,548,058 10,839,723 Repurchase agreements 85,346 128,367 292,620 379,825 Interest on Trust Preferred Securities 245,612 245,612 Borrowed Funds 186,023 98,299 460,937 323,402 ----------- ----------- ----------- ----------- Total interest expense 4,424,470 4,126,116 12,547,227 11,542,950 ----------- ----------- ----------- ----------- NET INTEREST INCOME 6,790,048 4,940,781 19,626,684 14,207,763 PROVISION FOR LOAN LOSSES 599,433 699,286 2,452,158 2,107,236 ----------- ----------- ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 6,190,615 4,241,495 17,174,526 12,100,527 ----------- ----------- ----------- ----------- NONINTEREST INCOME: Service fees 621,412 431,390 1,738,148 1,200,908 Gain on sale of mortgage loans 1,626,442 6,966,677 Mortgage loan processing fees 441,418 1,777,049 Mortgage loan origination fees 330,686 150,445 853,712 322,577 Gain on sale of commercial loans 42,888 42,888 Other noninterest income 308,471 130,366 844,682 294,471 ----------- ----------- ----------- ----------- Total noninterest income 3,328,429 755,089 12,180,268 1,860,844 ----------- ----------- ----------- ----------- NONINTEREST EXPENSE: Salaries and benefits 5,069,423 2,799,217 16,573,806 7,510,262 Occupancy and equipment 699,905 532,467 1,981,662 1,505,757 Data processing 288,184 224,260 825,418 621,456 Dividends on preferred securities of subsidiary trusts 205,126 425,835 428,866 Other 1,633,397 817,120 4,460,959 2,414,724 ----------- ----------- ----------- ----------- Total noninterest expense 7,690,909 4,578,190 24,267,680 12,481,065 ----------- ----------- ----------- ----------- INCOME BEFORE PROVISION FOR INCOME TAXES 1,828,135 418,394 5,087,114 1,480,306 PROVISION FOR INCOME TAXES 654,973 152,950 1,751,981 557,039 ----------- ----------- ----------- ----------- NET INCOME 1,173,162 265,444 3,335,133 923,267 ----------- ----------- ----------- ----------- PREFERRED STOCK DIVIDENDS (63,014) (186,987) (140,058) ----------- ----------- ----------- ----------- NET INCOME APPLICABLE TO COMMON SHARES $ 1,110,148 $ 265,444 $ 3,148,146 $ 783,209 =========== =========== =========== =========== INCOME PER COMMON SHARE: Basic $ 0.16 $ 0.04 $ 0.46 $ 0.12 =========== =========== =========== =========== Diluted $ 0.16 $ 0.04 $ 0.45 $ 0.12 =========== =========== =========== ===========
See notes to condensed financial statements. -4- FLORIDA BANKS, INC. CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ Preferred Stock Common Stock Additional ------------------------------------------------------------- Paid-In Shares Par Value Shares Par Value Capital BALANCE, JANUARY 1, 2002 102,283 $6,955,244 5,677,660 $56,777 $44,964,967 Comprehensive income: Net income Unrealized gain on available for sale investment securities, net of tax of $144,482 Comprehensive income Conversion of Series B Preferred Stock into common stock (102,283) (6,955,244) 1,022,830 10,228 6,945,016 Exercise of stock options 7,063 71 46,401 Issuance of common stock under Employee Stock Purchase Plan 41,133 411 210,359 Issuance of restricted stock 19,676 197 120,647 Issuance of Series C Preferred Stock, net 50,000 5,000,000 Series B Preferred Stock dividends paid ________ __________ _________ _________ ___________ BALANCE, DECEMBER 31, 2002 50,000 5,000,000 6,768,362 67,684 52,287,390 Comprehensive income: Net income Unrealized loss on available for sale investment securities, net of tax of $218,516 Comprehensive income Issuance of common stock under Employee Stock Purchase Plan 30,935 309 222,835 Exercise of stock warrants 12,800 128 127,872 Series C Preferred Stock offering costs (10,677) Exercise of stock options and issue of stock grants 2,531 26 246,782 Series C Preferred Stock dividends paid ________ __________ _________ _________ ___________ BALANCE, September 30, 2003 (Unaudited) 50,000 $5,000,000 6,814,628 $ 68,147 $52,874,202 Accumulated Other Comprehensive Accumulated (loss) income Deficit Net of Tax Total BALANCE, JANUARY 1, 2002 $(6,079,156) $ 244,202 $ 46,142,034 Comprehensive income: Net income 1,467,058 1,467,058 Unrealized gain on available for sale investment securities, net of tax of $144,482 239,472 239,472 ______________ Comprehensive income 1,706,530 Conversion of Series B Preferred Stock into common stock Exercise of stock options 46,472 Issuance of common stock under Employee Stock Purchase Plan 210,770 Issuance of restricted stock 120,844 Issuance of Series C Preferred Stock, net 5,000,000 Series B Preferred Stock dividends paid (262,775) (262,775) ___________ _____________ ______________ BALANCE, DECEMBER 31, 2002 (4,874,873) 483,674 52,963,875 Comprehensive income: Net income 3,335,133 3,335,133 Unrealized loss on available for sale investment securities, net of tax of $218,516 (362,180) (362,180) Comprehensive income 2,972,953 Issuance of common stock under Employee Stock Purchase Plan 223,144 Exercise of stock warrants 128,000 Series C Preferred Stock offering costs (10,677) Exercise of stock options and issue of stock grants 246,808 Series C Preferred Stock dividends paid (123,288) (123,288) ___________ _____________ ______________ BALANCE, September 30, 2003 (Unaudited) $(1,663,028) $ 121,494 $ 56,400,815 =========== ============= ==============
See notes to condensed financial statements. -5- FLORIDA BANKS, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ Nine-Month Period Ended September 30, ----------------------------------- OPERATING ACTIVITIES: 2003 2002 ---------------------------------- Net income $ 3,335,133 $ 923,267 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 655,150 579,343 Reinvested dividends on investment securities (90,301) (116,826) Deferred income tax provision (benefit) (105,268) 537,751 Accretion of premium on investments, net (689,170) (37,177) Amortization of premium on loans 67,945 95,356 Loss on sale of available for sale investment securities 3,967 Provision for loan losses 2,452,158 2,107,236 Loss on foreign currency translation 124,139 41,675 Gain on derivative instruments (86,120) (43,056) Increase in mortgage loans held for sale (16,507,982) Increase in accrued interest receivable (21,418) (631,637) Decrease (increase) in accrued interest payable 480,454 (297,601) (Increase) decrease in other assets (635,231) 40,488 Increase in other liabilities 4,918,720 1,053,929 ------------- ------------- Net cash (used in) provided by operating activities (6,101,791) 4,256,715 ------------- ------------- INVESTING ACTIVITIES: Proceeds from sales, paydowns and maturities of investment securities: Available for sale 28,861,721 16,271,660 Held to maturity 227,925 2,360,879 Purchases of investment securities: Available for sale (20,091,102) (28,528,240) Other investments (810,700) (188,800) Net increase in loans held for investment (114,524,353) (113,968,736) Increase in bank owned life insurance (10,333,757) Proceeds from sale of other real estate owned 242,979 Proceeds from sale of premises and equipment 1,089,326 Purchases of premises and equipment (1,200,453) (2,629,460) ------------- ------------- Net cash used in investing activities (116,781,393) (126,439,718) ------------- ------------- FINANCING ACTIVITIES: Net decrease in demand deposits, money market accounts and savings accounts 16,895,269 20,754,787 Net increase in time deposits 129,825,017 88,726,347 Increase in repurchase agreements 38,859,770 37,603,204 Increase (decrease) in borrowed funds 9,597,788 (2,405,911) Proceeds from FHLB advances 400,000 3,000,000 Preferred stock offering costs (10,677) Proceeds from exercise of stock options and issuance of stock grants 246,808 115,643 Preferred dividends paid (123,288) (262,775) Proceeds from exercise of stock warrants 128,000 Proceeds from issuance of trust preferred securities, net 3,526,908 7,718,016 ------------- ------------- Net cash provided by financing activities 199,345,595 155,249,311 ------------- ------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 76,462,411 33,066,308 CASH AND CASH EQUIVALENTS: Beginning of period 89,479,504 73,989,159 ------------- ------------- End of period $ 165,941,915 $ 107,055,467 ============= ============= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for interest $ 12,066,773 $ 11,840,551 ============= ============= Cash paid for income taxes $ 2,043,449 $ ============= ============= NONCASH FINANCING ACTIVITIES: Proceeds from demand deposits used to purchase shares of common stock under Employee Stock Purchase Plan $ 223,144 $ 210,771 ============= =============
See notes to condensed financial statements. -6- FLORIDA BANKS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 (UNAUDITED) -------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION Florida Banks, Inc. (the "Company") was incorporated October 15, 1997 to become a bank holding company and acquire First National Bank of Tampa (the "Bank"). On August 4, 1998, the Company completed its initial public offering and its merger (the "Merger") with the Bank pursuant to which the Bank was merged with and into Florida Bank No.1, N.A., a wholly-owned subsidiary of the Company, and renamed Florida Bank, N.A. The condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission related to interim financial statements. These unaudited condensed consolidated financial statements do not include all disclosures provided in the annual financial statements. The condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report to Shareholders incorporated by reference into the Company's Form 10-K for the year ended December 31, 2002. All adjustments of a normal recurring nature which, in the opinion of management, are necessary to fairly present the results of the interim periods have been made. Results of operations for the three and nine-month periods ended September 30, 2003 are not necessarily indicative of the results to be expected for the full year. The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. 2. EARNINGS PER COMMON SHARE The following is a reconciliation of the denominator used in the computation of basic and diluted earnings per common share. Three-Month Period Ended Nine-Month Period Ended September 30, September 30, -------------------------------- ------------------------------- 2003 2002 2003 2002 --------------- --------------- -------------- -------------- Weighted average number of common shares outstanding - Basic 6,812,029 6,751,156 6,793,479 6,335,832 Incremental shares from the assumed conversion of stock options 256,823 97,729 201,625 85,233 --------- --------- --------- --------- Total - Diluted 7,068,852 6,848,885 6,995,104 6,421,065 ========= ========= ========= =========
The incremental shares from the assumed conversion of stock options for the three and nine-month periods ended September 30, 2003 and 2002 were determined using the treasury stock method, under which the assumed proceeds were equal to (1) the amount that the Company would receive upon exercise of the options plus (2) the amount of tax benefit that would be credited to additional paid-in capital assuming exercise of the options. The assumed proceeds are used to purchase outstanding common shares at the Company's average market value for the period. -7- FLORIDA BANKS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 (UNAUDITED) (Continued) -------------------------------------------------------------------------------- 3. DERIVATIVE INSTRUMENTS The following instruments qualify as derivatives as defined by Statement of Accounting Standards No. 133 ("SFAS No. 133"), Accounting for Derivative Instruments and Hedging Activities, as amended: September 30, 2003 ----------------------------------- Contract/Notional Fair Amount Value Interest rate swap agreements $ 148,500,000 $ 1,889,225 Foreign currency swap agreements $ 2,000,000 $ (111,540) Commitments to fund mortgage loans $ 58,748,408 $ 334,918 Interest rate swap agreements at September 30, 2003 consist of twenty-one agreements, which effectively convert the interest rate on certain certificates of deposit from a fixed rate to a variable rate to more closely match the interest rate sensitivity of the Company's assets and liabilities. The Company has designated and assessed the derivatives as highly effective fair value hedges, as defined by SFAS No. 133. Additionally, the Company entered into a foreign currency swap agreement during the first quarter of 2001 that does not qualify for hedge accounting under SFAS No. 133. Accordingly, all changes in the fair value of the foreign currency swap agreement are reflected in the earnings of the Company. The Company recognized a loss of $1,422 and a gain of $8,660, respectively, during the three- and nine-month periods ended September 30, 2003 as a result of changes in the fair value of the foreign currency agreement and the related translation adjustment. The Company has adopted the provisions of the Derivatives Implementation Group, Implementation Issue C13, When a Loan Commitment is Included in the Scope of Statement No. 133 ("DIG C13"). DIG C13 requires that loan commitments that relate to the origination or acquisition of mortgage loans that will be held for resale must be accounted for as derivative instruments in accordance with SFAS No. 133. The fair value of commitments to fund mortgage loans is included in mortgage loans held for sale. 4. PREFERRED STOCK On December 31, 2002, the Company issued 50,000 shares of Series C preferred stock for $100.00 per share to a single shareholder through a private placement. The Series C preferred stock is not convertible or redeemable, except as a result of a change in control. Non-cumulative dividends accrue at five percent annually and are payable quarterly in arrears. In the event of any liquidation, dissolution or winding up of affairs of the Company, holders of Series C preferred stock at the time shall receive $100.00 per share plus an amount equal to accrued and unpaid dividends thereon through and including the date of distribution prior to any distribution to holders of common stock. The liquidation preference at September 30, 2003 was $5,061,643. -8- FLORIDA BANKS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 (UNAUDITED) (Continued) -------------------------------------------------------------------------------- Subject to regulatory approval, the Company intends to exchange all of the Series C preferred stock for shares of Series D preferred stock, which will be substantially similar to the Series C preferred stock, except the Series D preferred stock will be immediately converted into 500,000 shares of the Company's common stock. The preferred shareholder intends to formally apply for the necessary regulatory approvals for this exchange. 5. RECENT ACCOUNTING PRONOUNCEMENTS In November 2002, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Guarantees of Indebtedness of Others. This Interpretation addresses the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees. In addition, the Interpretation clarifies the requirements related to the recognition of a liability by a guarantor at the inception of a guarantee for the obligations that the guarantor has undertaken in issuing the guarantee. The Company adopted the disclosure requirements of FIN 45 for the fiscal year ended December 31, 2002, and the recognition provisions on January 1, 2003. Adoption of FIN 45 did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest Entities. This Interpretation applies to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. FIN 46 applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise held a variable interest that is acquired on or before January 31, 2003. The Company adopted FIN 46 as of July 31, 2003. Adoption of FIN 46 did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (SFAS 149). SFAS 149 amends and clarifies the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. In addition, the statement clarifies when a contract is a derivative and when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS 149 is generally effective prospectively for contracts entered into or modified, and hedging relationships designated, after June 30, 2003. The Company adopted SFAS 149 effective July 1, 2003. Adoption of SFAS 149 did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. -9- FLORIDA BANKS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 (UNAUDITED) (Continued) -------------------------------------------------------------------------------- In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (SFAS 150). SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity, and imposes certain additional disclosure requirements. The provisions of SFAS 150 are generally effective for financial instruments entered into or modified after May 31, 2003. Additionally, the Company must apply the provisions of SFAS 150 to all financial instruments on July 1, 2003. Upon the adoption of SFAS 150, the company's obligated manditorily redeemable preferred securities of subsidiary trusts have been reclassified from mezzanine equity to debt. The dividends related to these securities after July 1, 2003 are reflected as interest expense on a prospective basis. At September 30, 2003, the Company had $20.0 million outstanding as company obligated manditorily redeemable preferred securities of subsidiary trusts. The Company paid dividends related to those instruments of approximately $246 thousand (classified as interest expense) and $671 thousand (six months classified as noninterest expense and three months classified as interest expense) for the three- and nine-month periods ended September 30, 2003, respectively. 6. GUARANTEES The Company issues standby letters of credit to provide credit support for some creditors in case of default. As of September 30, 2003, the carrying amount of the liability was $10,544 and the maximum potential payment was $10,477,317. 7. SEGMENT REPORTING Prior to October 1, 2002, the Company had one reporting segment. In October 2002, the Company started a mortgage banking division which is managed as a segment. Accordingly, from October 2002 forward, the Company has two reporting segments, the commercial bank and the mortgage bank. The commercial bank segment provides its commercial customers such products as working capital loans, equipment loans and leases, commercial real estate loans and other business related products and services. This segment also offers mortgage loans to principals of its commercial customers. The mortgage bank segment originates mortgage loans through a network of third party mortgage brokers and sells these loans (on a wholesale basis) into the secondary market. -10- FLORIDA BANKS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 (UNAUDITED) (Continued) -------------------------------------------------------------------------------- Information about reportable segments, and reconciliation of such information to the consolidated financial statements as of and for the three-month period ended September 30, 2003 follows: Commercial Mortgage Intersegment Consolidated Bank Bank Other Eliminations Total ---------------- ------------------ ----------------- ------------------ ---------------- Net interest income $ 5,904,673 $ 1,168,988 $ (283,613) $ 6,790,048 Noninterest income 1,231,200 2,067,860 29,369 3,328,429 Provision for loan losses 599,433 599,433 Noninterest expense 4,415,916 2,539,801 735,192 7,690,909 Income (loss) before taxes 2,120,524 697,047 (989,436) 1,828,135 Assets 884,565,054 73,919,602 84,457,735 (77,863,584) $965,078,807 Expenditures for additions to premises and equipment 209,904 84,134 84,184 378,222
Information about reportable segments, and reconciliation of such information to the consolidated financial statements as of and for the nine-month period ended September 30, 2003 follows: Commercial Mortgage Intersegment Consolidated Bank Bank Other Eliminations Total -------------- ------------- -------------- ---------------- --------------- Net interest income $ 16,859,541 $ 2,957,577 $ (190,434) $ 19,626,684 Noninterest income 3,119,861 8,743,726 56,999 11,920,586 Provision for loan losses 2,452,158 2,452,158 Noninterest expense 12,886,749 8,276,138 3,104,793 24,267,680 Income (loss) before taxes 4,900,177 3,425,165 (3,238,228) 5,087,114 Assets 884,565,054 73,919,602 84,457,735 (77,863,584) $965,078,807 Expenditures for additions to premises and equipment 667,234 378,085 155,134 $ 1,200,453
-11- FLORIDA BANKS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 (UNAUDITED) (Continued) -------------------------------------------------------------------------------- The accounting policies of the segments are the same as those described in the summary of significant accounting policies found in Note 1 of the Company's consolidated financial statements for the years ended December 31, 2002, 2001 and 2000 filed in conjunction with the Company's annual report on form 10-K for the year ended December 31, 2002. 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 segment appeals to different markets and accordingly requires different technology and marketing strategies. The Company derives a majority of its revenues from interest income and gain on sale of mortgage loans and the chief operating decision maker relies primarily on net income before taxes to assess the performance of the segments and make decisions about resources to be allocated to the segments. Therefore, the segments are reported above using net income before taxes. The Company does not allocate income taxes to the segments. The Company does not have operating segments other than those reported. Parent Company financial information is included in the Other category in the table above and is deemed to represent an overhead function rather than an operating segment. The Company does not have a single external customer from which it derives 10 percent or more of its revenues and operates in one geographical area. 8. STOCK OPTIONS Pursuant to the disclosure requirements of SFAS No. 148, the following table provides an expanded reconciliation for all periods presented that adds back to reported net income the recorded expense under Accounting Principles Board Opinion No. 25, net of related income tax effects, deducts the total fair value expense under SFAS No. 123, net of related income tax effects and shows the reported and pro forma earnings per share amounts. -12- FLORIDA BANKS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 (UNAUDITED) (Continued) -------------------------------------------------------------------------------- Three-Month Period Ended Nine-Month Period Ended September 30, September 30, ------------------------------ ------------------------------ 2003 2002 2003 2002 Net income applicable to common shares As reported $ 1,110,148 $ 265,444 $ 3,148,146 $ 783,209 Total stock-based employee compensation cost included in the determination of net income, net of related tax effects 57,425 18,843 144,537 56,528 Total stock-based employee compensation cost determined under fair value method for all awards, net of related tax effects (44,770) (53,363) (133,089) (160,088) ----------- ----------- ----------- ----------- Pro forma net income applicable to common shares $ 1,122,803 $ 230,924 $ 3,159,594 $ 679,649 =========== =========== =========== =========== Earnings per share - Basic As reported $ 0.16 $ 0.04 $ 0.46 $ 0.12 Pro forma $ 0.16 $ 0.03 $ 0.47 $ 0.11 Earnings per share - Diluted As reported $ 0.16 $ 0.04 $ 0.45 $ 0.12 Pro forma $ 0.16 $ 0.03 $ 0.45 $ 0.11 Shares used for computation Basic 6,812,029 6,751,156 6,793,479 6,335,832 Diluted 7,068,852 6,848,885 6,995,104 6,421,065
9. SUBSEQUENT EVENT On October 2, 2003, the Company announced it was postponing the planned public offering of its common stock for which it filed a registration statement with the Securities and Exchange Commission on July 16, 2003. However, the Company will re-evaluate its capital plans during the remainder of 2003 and early 2004, and may raise additional capital through an underwritten public offering or otherwise. -13- SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Florida Banks, Inc. Date: November 25, 2003 By: /s/ Charles E. Hughes, Jr. -------------------------- Charles E. Hughes, Jr. President and Chief Executive Officer Date: November 25, 2003 By: /s/ T. Edwin Stinson, Jr. ------------------------- T. Edwin Stinson, Jr. Chief Financial Officer -14- Exhibits. 31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-15(e) and 15d-15(e), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-15(e) and 15d-15(e), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. -15-