-----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, U7G45JZaz2m7pYqQqB3OK7nkpYYHtaaJTiE0u1GhqRmdbSO9z8l2MrEPCstSbrSa nPQjOw+R0O8icTuJD94yEw== 0001042910-99-001408.txt : 19991029 0001042910-99-001408.hdr.sgml : 19991029 ACCESSION NUMBER: 0001042910-99-001408 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991028 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POINTE FINANCIAL CORP CENTRAL INDEX KEY: 0000917331 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 650451402 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-24433 FILM NUMBER: 99735966 BUSINESS ADDRESS: STREET 1: 21845 POWERLINE RD CITY: BOCA RATON STATE: FL ZIP: 33433 BUSINESS PHONE: 4073686300 MAIL ADDRESS: STREET 1: 21845 POWERLINE RD CITY: BOCA RATON STATE: FL ZIP: 33433 10QSB 1 QUARTERLY REPORT U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) X Quarterly report under Section 13 or 15(d) of the Securities Exchange - --- Act of 1934 For the quarterly period ended September 30, 1999 - --- Transition report under Section 13 or 15(d) of the Exchange Act For the transition period from _________ to _________ Commission file number 0-24433 ------- POINTE FINANCIAL CORPORATION ---------------------------------------------------------------- (Exact Name of Small Business Issuer as Specified in Its Charter) Florida 65-0451402 - -------------------------------- ------------------- (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 21845 Powerline Road Boca Raton, Florida 33433 ------------------------- (Address of Principal Executive Offices) (561) 368-6300 ----------------------------------------------- (Issuer's Telephone Number, Including Area Code) ---------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 --- --- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date; Common stock, par value $.01 per share 2,122,193 shares - -------------------------------------- ------------------------------- (class) Outstanding at October 25, 1999 Transitional small business disclosure format (check one): YES NO X --- --- POINTE FINANCIAL CORPORATION AND SUBSIDIARIES INDEX Part I. Financial Information
Item 1. Financial Statements Page ---- Condensed Consolidated Balance Sheets - At September 30, 1999 (unaudited) and at December 31, 1998...............................................2 Condensed Consolidated Statements of Earnings - Three and Nine Months ended September 30, 1999 and 1998 (unaudited)......................................3 Condensed Consolidated Statement of Stockholders' Equity - Nine Months ended September 30, 1999 (unaudited).........................................................4 Condensed Consolidated Statements of Cash Flows - Nine Months ended September 30, 1999 and 1998 (unaudited)..............................................5-6 Notes to Condensed Consolidated Financial Statements (unaudited)........................................7-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ...............................................................................11-16 Item 3. Quantitative and Qualitative Disclosures About Market Risk..........................................17 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K....................................................................17 SIGNATURES.....................................................................................................18
1 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets (In thousands)
At ------------------------------ September 30, December 31, ------------- ------------ Assets 1999 1998 ---- ---- (Unaudited) Cash and due from banks $ 4,128 2,866 Interest-bearing deposits with banks 3,351 605 -------- --------- Total cash and cash equivalents 7,479 3,471 Securities available for sale 48,602 51,275 Loans receivable, net of allowance for loan losses of $1,297 in 1999 and $1,078 in 1998 145,638 128,005 Loans held for sale 1,952 617 Accrued interest receivable 1,483 1,270 Premises and equipment, net 2,291 1,760 Restricted securities, at cost: Federal Home Loan Bank stock 1,500 1,235 Federal Reserve Bank stock 479 479 Foreclosed real estate 190 353 Deferred income tax asset 531 221 Other assets 883 589 --------- --------- Total $ 211,028 189,275 ========= ========= Liabilities and Stockholders' Equity Liabilities: Demand deposits 20,066 18,316 Savings and NOW deposits 12,069 12,940 Money-market deposits 41,200 38,721 Time deposits 73,705 71,235 --------- --------- Total deposits 147,040 141,212 Advances from Federal Home Loan Bank 30,000 15,000 Other borrowings 4,380 3,446 Official checks 1,239 1,248 Accrued interest payable 708 695 Advance payments by borrowers for taxes and insurance 1,391 411 Other liabilities 701 228 --------- --------- Total liabilities 185,459 162,240 --------- --------- Stockholders' equity: Preferred stock - - Common stock 23 23 Additional paid-in capital 23,759 23,324 Retained earnings 4,737 4,065 Stock incentive plan (61) - Treasury stock (1,999) - Accumulated other comprehensive income (890) (377) --------- --------- Total stockholders' equity 25,569 27,035 --------- --------- Total $ 211,028 189,275 ========= =========
See Accompanying Notes to Condensed Consolidated Financial Statements. 2 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (Dollars in thousands, except share amounts)
Three Months Ended Nine Months Ended September 30, September 30, --------------------- ------------------- 1999 1998 1999 1998 ---- ---- ---- ---- (Unaudited) (Unaudited) Interest income: Loans receivable $ 3,186 2,614 9,130 7,763 Securities available for sale 624 728 1,843 1,604 Securities held to maturity - 45 - 271 Other interest-earning assets 58 25 80 57 ------------ ------------- ----------- ------------- Total interest income 3,868 3,412 11,053 9,695 ------------ ------------- ----------- ------------- Interest expense: Deposits 1,357 1,478 3,944 4,366 Borrowings 444 211 1,102 481 ------------ ------------- ----------- ------------- Total interest expense 1,801 1,689 5,046 4,847 ------------ ------------- ----------- ------------- Net interest income 2,067 1,723 6,007 4,848 Provision for loan losses 165 630 475 795 ------------ ------------- ----------- ------------- Net interest income after provision for loan losses 1,902 1,093 5,532 4,053 ------------ ------------- ----------- ------------- Noninterest income: Service charges on deposit accounts 171 151 489 542 Loan servicing fees 15 16 43 45 Net gains from sale of loans - 58 32 158 Net realized gains on sale of securities - 162 38 164 Other 75 96 270 295 ------------ ------------- ----------- ------------- Total noninterest income 261 483 872 1,204 ------------ ------------- ----------- ------------- Noninterest expenses: Salaries and employee benefits 849 713 2,452 2,122 Occupancy expense 303 252 843 745 Advertising and promotion 76 64 252 224 Professional fees 88 24 212 73 Federal deposit insurance premiums 15 15 46 43 Data processing 95 81 256 206 Other 321 255 922 708 ------------ ------------- ----------- ------------- Total noninterest expenses 1,747 1,404 4,983 4,121 ------------ ------------- ----------- ------------- Earnings before income taxes 416 172 1,421 1,136 Income taxes 154 65 526 416 ------------ ------------- ----------- ------------- Net earnings $ 262 107 895 720 ============ ============= =========== ============= Earnings per share: Basic $ .12 .05 .40 .41 ============ ============= =========== ============= Diluted $ .12 .05 .40 .40 ============ ============= =========== ============= Weighted-average shares outstanding for basic 2,139,107 2,257,631 2,235,876 1,678,214 ============ ============= =========== ============= Weighted-average shares outstanding for diluted 2,151,429 2,298,178 2,246,541 1,712,307 ============ ============= =========== ============= Dividends per share $ .05 - .10 - ============ ============= =========== =============
See Accompanying Notes to Condensed Consolidated Financial Statements 3
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statement of Stockholders' Equity Nine Months Ended September 30, 1999 (Dollars in thousands) Accumulated Other Additional Stock Compre- Total Preferred Common Paid-In Incentive Treasury Retained hensive Stockholders' Stock Stock Capital Plan Stock Earnings Income Equity ----- ----- ------- ---- ----- -------- ------ ------ Balance at December 31, 1998 $ - 23 23,324 - - 4,065 (377) 27,035 ------ Comprehensive income: Net earnings (unaudited) - - - - - 895 - 895 Net change in unrealized loss on securities available for sale, net of tax of $310 (unaudited) - - - - - - (513) (513) ------ Comprehensive income (unaudited) 382 ------ Proceeds from issuance of common stock, exercise of stock options (25,458 shares) (unaudited) - - 258 - - - - 258 Dividends paid on common stock (unaudited) - - - - - (223) - (223) Issuance of common stock to directors as compensation, (11,228 shares) (unaudited) - - 109 - - - - 109 Shares issued in stock incentive plan (6,935 shares) (unaudited) - - 68 (68) - - - - Shares committed to participants in incentive plans (unaudited) - - - 7 - - - 7 Purchase of treasury stock (188,400 shares) (unaudited) - - - - (1,999) - - (1,999) ---- --- --------- ---- ----- ------- ---- ------ Balance at September 30, 1999 (unaudited) $ - 23 23,759 (61) (1,999) 4,737 (890) 25,569 ==== === ========= ==== ===== ======= ==== ======
See Accompanying Notes to Condensed Consolidated Financial Statements 4
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) Nine Months Ended September 30, 1999 1998 ---- ---- (Unaudited) Cash flows from operating activities: Net earnings $ 895 720 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for loan losses 475 795 Depreciation 329 245 Net amortization of fees, premiums, discounts and other (26) 185 Shares committed to incentive plan participants 7 - Common stock issued as compensation for services 109 170 Gain on sale of securities (38) (164) Gain on sale of loans (32) (158) Gain on sale of foreclosed real estate (6) (40) Net originations of loans held for sale (1,751) (549) Proceeds from sale of loans held for sale 449 5,150 Increase in other assets (294) (10) Increase in accrued interest receivable (213) (345) Decrease in official checks (9) (698) Increase in accrued interest payable 13 70 Increase in other liabilities 473 248 -------- ------- Net cash provided by operating activities 381 5,619 -------- ------- Cash flows from investing activities: Purchases of securities available for sale (25,124) (45,007) Purchases of securities held to maturity - (2,100) Proceeds from sale of securities 17,083 24,847 Principal repayments on securities available for sale 2,068 324 Principal repayments on securities held to maturity - 259 Maturities and calls of securities available for sale 7,705 1,450 Net increase in loans (18,006) (18,547) Proceeds from sale of foreclosed real estate 248 390 Net increase in restricted securities (265) (144) Purchase of premises and equipment, net (860) (163) -------- ------- Net cash used in investing activities (17,151) (38,691) -------- ------- Cash flows from financing activities: Net increase in demand, savings, NOW and money-market deposits 3,358 7,997 Net increase in time deposits 2,470 1,311 Net increase in advances from Federal Home Loan Bank 15,000 10,600 Net increase in other borrowings 934 1,565 Increase in advance payments by borrowers for taxes and insurance 980 941 Net proceeds from issuance of preferred stock - 10 Net proceeds from issuance of common stock - 12,196 Proceeds from exercise of stock options 258 - Dividends paid on common stock (223) - Purchase of treasury stock (1,999) - -------- ------- Net cash provided by financing activities 20,778 34,620 -------- ------- (continued) 5 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows, Continued (In thousands) Nine Months Ended September 30, 1999 1998 ---- ---- (Unaudited) Net increase in cash and cash equivalents 4,008 1,548 Cash and cash equivalents at beginning of period 3,471 2,575 ------- ------- Cash and cash equivalents at end of period $ 7,479 4,123 ======= ======= Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 5,033 4,777 ======= ======= Income taxes $ 288 130 ======= ======= Noncash transactions: Reclassification of loans receivable to foreclosed real estate $ 181 610 ======= ======= Loans originated for sale of foreclosed real estate $ 101 - ======= ======= Accumulated other comprehensive income, net change in unrealized loss on securities available for sale, net of tax $ (513) (143) ======= ======= Stock dividends paid on preferred stock $ - 27 ======= ======= Transfer of securities from held to maturity category to available for sale category $ - 8,456 ======= =======
See Accompanying Notes to Condensed Consolidated Financial Statements. 6 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited) 1. General. In the opinion of the management of Pointe Financial Corporation, the accompanying condensed consolidated financial statements contain all adjustments (consisting principally of normal recurring accruals) necessary to present fairly the financial position at September 30, 1999, the results of operations for the three- and nine-month periods ended September 30, 1999 and 1998 and cash flows for the nine-month periods ended September 30, 1999 and 1998. The results of operations for the three and nine months ended September 30, 1999 are not necessarily indicative of the results to be expected for the year ending December 31, 1999. Pointe Financial Corporation (the "Holding Company") was incorporated under the laws of the State of Florida in September 1993. The Holding Company's principal business is conducted through Pointe Bank (the "Bank"), a state-chartered commercial bank. The Holding Company and the Bank are collectively referred to as the "Company." The Bank provides a wide range of community banking services to small and middle-market business and individuals through its five banking offices located in Broward, Miami-Dade and Palm Beach counties, Florida. 2. Loan Impairment and Loan Losses. The activity in the allowance for loan losses is as follows (in thousands):
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 1999 1998 1999 1998 ---- ---- ---- ---- Balance at beginning of period $ 1,281 983 1,078 848 Provision charged to earnings 165 630 475 795 (Charge-offs), net of recoveries (149) (452) (256) (482) ------- ----- ----- ----- Balance at end of period $ 1,297 1,161 1,297 1,161 ======= ===== ===== =====
The following summarizes the amounts of impaired loans, a majority of which are collateral dependent (in thousands):
At September 30, At December 31, ---------------- --------------- 1999 1998 ---- ---- Loans identified as impaired: Gross loans with related allowance for losses recorded $ 440 2,473 Less: Allowances on these loans (220) (407) ----- ----- Net investment in impaired loans $ 220 2,066 ===== ===== (continued)
7 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited), Continued 2. Loan Impairment and Loan Losses, Continued. The average net investment in impaired loans and interest income recognized and received on impaired loans is as follows (in thousands):
Three Months Ended Nine Months Ended September 30, September 30, ----------------------- ---------------------- 1999 1998 1999 1998 ---- ---- ---- ---- Average investment in impaired loans $ 220 1,260 220 1,261 ===== ====== ===== ====== Interest income recognized on impaired loans $ - 19 - 92 ===== ====== ===== ====== Interest income received on impaired loans $ - 19 - 92 ===== ====== ===== ======
See note 5 for a discussion relating to the decrease in impaired loans at September 30, 1999. 3. Earnings Per Share. Earnings per share of common stock has been computed on the basis of the weighted-average number of shares of common stock outstanding. For purposes of calculating diluted earnings per share, because there was no active trading market until June 12, 1998, for the Company's common stock, the average book value per share was used through that date. Average quoted market prices were used after June 12, 1998. For the three and nine months ended September 30, 1999 and 1998 outstanding stock options are considered dilutive securities for purposes of calculating diluted earnings per share. The following table presents the calculations of earnings per share ($ in thousands, except per share amounts).
Three Months Ended September 30, ----------------------------------------------------------------------------------- 1999 1998 --------------------------------------- ----------------------------------------- Earnings Shares Per Share Earnings Shares Per Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount ----------- ------------- ------ ----------- ------------- ------ Basic Earnings Per Share: Net earnings available to common stockholders $ 262 2,139,107 $ .12 $ 107 2,257,631 $ .05 === === Effect of dilutive securities- Incremental shares from assumed exercise of options utilizing the treasury stock method 12,322 40,547 ------ ------ Diluted Earnings Per Share: Net earnings available to common stockholders and assumed conversions $ 262 2,151,429 $ .12 $ 107 2,298,178 $ .05 === ========= === === ========= ===
8 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited), Continued 3. Earnings Per Share, Continued
Nine Months Ended September 30, ----------------------------------------------------------------------------------- 1999 1998 --------------------------------------- ----------------------------------------- Earnings Shares Per Share Earnings Shares Per Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount ----------- ------------- ------ ----------- ------------- ------ Basic Earnings Per Share: Net earnings $ 895 $ 720 Less preferred stock dividends - (27) ----- --- Net earnings available to common stockholders 895 2,235,876 $ .40 693 1,678,214 $ .41 === === Effect of dilutive securities- Incremental shares from assumed exercise of options utilizing the treasury stock method 10,665 34,093 ----------- ---------- Diluted Earnings Per Share: Net earnings available to common stockholders and assumed conversions $ 895 2,246,541 $ .40 $ 693 1,712,307 $ .40 === ========= === === ========= ===
4. Regulatory Capital. The Bank is required to maintain certain minimum regulatory capital requirements. The following is a summary at September 30, 1999 of the regulatory capital requirements and the Bank's actual capital on a percentage basis:
Regulatory Actual Requirement ------ ----------- Total capital to risk-weighted assets 17.23% 8.00% Tier I capital to risk-weighted assets 16.26% 4.00% Tier I capital to total assets - leverage ratio 10.26% 4.00%
9 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited), Continued 5. Other Events. In March of 1999 the Company entered into an agreement whereby the mortgage and note supporting a significant nonaccrual residential real estate loan were assigned without recourse. Net proceeds from the transaction reduced the Company's nonperforming assets by $1.2 million thus reducing the ratio of nonperforming loans and foreclosed real estate to total assets from 1.60% at December 31, 1998 to .62% at September 30, 1999. 6. New Branches. During March 1999, the Company signed a contract to purchase land for a branch site in Coral Springs, Florida. Construction is expected to begin during the fourth quarter of 1999 and the branch is expected to be open late in the first quarter of 2000. 7. Stock Repurchase Program. In May 1999, the Company's Board of Directors approved a Stock Repurchase Program ("SRP"). The SRP has been allocated $2.0 million and the Company has repurchased 188,400 shares in treasury stock. The Company's net cost was approximately $2.0 million through September 30, 1999. On June 25, 1999, the Company filed the appropriate notification with NASDAQ reducing the number of outstanding shares of common stock by more than five percent. 8. Dividend Policy. In May 1999, the Company's Board of Directors approved a dividend policy. On May 4, 1999, the Company declared a $.05 per share dividend to common stockholders as of May 15, 1999 which was paid on June 1, 1999 based on earnings of the Company during the three months ended March 31, 1999. On July 23, 1999, the Company declared an additional $.05 per share dividend to common stockholders as of August 17, 1999, which was paid on September 1, 1999 based on earnings of the Company during the three months ended June 30, 1999. 9. Incentive Stock Plan. During April 1999, the Company awarded 6,935 shares of restricted common stock to employees under the 1998 Incentive Compensation and Stock Award Plan. Four years following the date of grant, these restricted stock awards become entirely vested. The Company is amortizing these restricted stock awards into salaries and employee benefits using the straight-line method of amortization over the four-year period. From the date awarded, the employees are entitled to dividends paid on common stock and may vote these shares. 10 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Comparison of September 30, 1999 and December 31, 1998 Liquidity and Capital Resources The Company's primary source of cash during the nine months ended September 30, 1999 was from a net increase in advances from Federal Home Loan Bank of $15.0 million and proceeds from the sale of securities of $17.1 million. Cash was used primarily for net loan originations of $18.3 million and the purchase of securities totaling $25.4 million. At September 30, 1999, the Company had outstanding commitments to originate loans of $14.5 million. Scheduled maturities of certificates of deposit due to mature in one year or less totaled $41.7 million. Management believes the Company has adequate resources to fund all of its commitments using available resources and that, if desired, certificates of deposit rates can be adjusted to attract deposits in a changing rate environment. At September 30, 1999, the Bank exceeded its regulatory liquidity requirements. The following table shows selected ratios for the periods ended or at the dates indicated:
Nine Months Nine Months Ended Year Ended Ended September 30, December 31, September 30, 1999 1998 1998 ------------ ------------ -------------- Average equity as a percentage of average assets 13.33% 12.19% 11.34% Equity to total assets at end of period 12.12% 14.28% 14.66% Return on average assets (1) .60% .61% .57% Return on average equity (1) 4.49% 5.02% 5.05% Noninterest expense to average assets (1) 3.33% 3.27% 3.25% Nonperforming loans and foreclosed real estate to total assets at end of period .62% 1.60% 1.89%
- ------------------ (1) Annualized for the nine months ended September 30, 1999 and 1998. 11 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost; (iii) net interest/dividend income; (iv) interest-rate spread; (v) net interest margin; and (vi) ratio of average interest-earning assets to average interest-bearing liabilities.
Three Months Ended September 30, ------------------------------------------------------------------ 1999 1998 ------------------------------------------------------------------ Interest Average Interest Average Average and Yield/ Average and Yield/ Balance Dividends Rate Balance Dividends Rate ------- --------- ---- ------- --------- ---- ($ in Thousands) Interest-earning assets: Loans $ 148,524 3,186 8.58% $ 118,368 2,614 8.83% Securities 44,683 624 5.59 53,851 773 5.74 Other interest-earning assets (1) 4,400 58 5.27 1,754 25 5.70 --------- ------- --------- ------- Total interest-earning assets 197,607 3,868 7.83 173,973 3,412 7.85 ------- ------- Noninterest-earning assets (2) 9,293 8,021 --------- --------- Total assets $ 206,900 $ 181,994 ========= ========= Interest-bearing liabilities: Savings and NOW deposits 12,016 45 1.50 11,079 41 1.48 Money-market deposits 40,556 387 3.82 41,303 468 4.53 Time deposits 71,078 925 5.21 66,728 969 5.81 Borrowings (3) 34,708 444 5.12 16,082 211 5.25 -------- ------- ------- ------- Total interest-bearing liabilities 158,358 1,801 4.55 135,192 1,689 5.00 ------- ------- Demand deposits 19,475 16,633 Noninterest-bearing liabilities 3,591 3,465 Stockholders' equity 25,476 26,704 --------- --------- Total liabilities and stockholders' equity $ 206,900 $ 181,994 ========= ========= Net interest income $ 2,067 $ 1,723 ======= ===== Interest-rate spread (4) 3.28% 2.85% ==== ==== Net interest margin (5) 4.18% 3.96% ==== ==== Ratio of average interest-earning assets to average interest-bearing liabilities 1.25 1.29 ==== ====
- --------------------- (1) Includes interest-bearing deposits and federal funds sold. (2) Includes nonaccrual loans. (3) Includes advances from Federal Home Loan Bank, investment repurchase agreements and federal funds purchased. (4) Interest-rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities. (5) Net interest margin is net interest income divided by average interest-earning assets. 12 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost; (iii) net interest/dividend income; (iv) interest-rate spread; (v) net interest margin; and (vi) ratio of average interest-earning assets to average interest-bearing liabilities.
Nine Months Ended September 30, ---------------------------------------------------------------------- 1999 1998 ---------------------------------------------------------------------- Interest Average Interest Average Average and Yield/ Average and Yield/ Balance Dividends Rate Balance Dividends Rate ------- --------- ---- ------- --------- ---- ($ in Thousands) Interest-earning assets: Loans $ 141,801 9,130 8.58% $ 114,246 7,763 9.06% Securities 45,725 1,843 5.37 43,165 1,875 5.79 Other interest-earning assets (1) 2,102 80 5.07 1,352 57 5.62 --------- -------- --------- ------ Total interest-earning assets 189,628 11,053 7.77 158,763 9,695 8.14 -------- ------ Noninterest-earning assets (2) 9,649 8,904 --------- --------- Total assets $ 199,277 $ 167,667 ========= ========= Interest-bearing liabilities: Savings and NOW deposits 12,591 141 1.49 10,915 126 1.54 Money-market deposits 39,928 1,121 3.74 39,557 1,360 4.58 Time deposits 68,462 2,682 5.22 66,852 2,880 5.74 Borrowings (3) 29,256 1,102 5.02 12,018 481 5.34 -------- -------- --------- ------ Total interest-bearing liabilities 150,237 5,046 4.48 129,342 4,847 5.00 -------- ----- Demand deposits 19,229 15,465 Noninterest-bearing liabilities 3,242 3,855 Stockholders' equity 26,569 19,005 --------- --------- Total liabilities and stockholders' equity $ 199,277 $ 167,667 ========= ========= Net interest income $ 6,007 $ 4,848 ======== ===== Interest-rate spread (4) 3.29% 3.14% ==== ==== Net interest margin (5) 4.22% 4.07% ==== ==== Ratio of average interest-earning assets to average interest-bearing liabilities 1.26 1.23 ==== ====
- ---------------------- (1) Includes interest-bearing deposits, federal funds sold and securities purchased under agreements to resell. (2) Includes nonaccrual loans. (3) Includes advances from Federal Home Loan Bank, investment repurchase agreements and federal funds purchased. (4) Interest-rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities. (5) Net interest margin is net interest income divided by average interest-earning assets. 13 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Comparison of the Three Months Ended September 30, 1999 and 1998 Results of Operations: General. Net earnings for the three months ended September 30, 1999 were $262,000 or $.12 basic and diluted earnings per share compared to net earnings of $107,000 or $.05 basic and diluted earnings per share for the three months ended September 30, 1998. This increase in the Company's net earnings was primarily due to an increase in net interest income and a decrease in the provision for loan losses, partially offset by an increase in noninterest expense and a decrease in noninterest income. Interest Income and Expense. Interest income increased by $456,000, or 13.4% from $3.4 million for the three months ended September 30, 1998 to $3.9 million for the three months ended September 30, 1999. Interest income on loans increased $572,000, or 21.9% primarily due to an increase in the average loan portfolio balance from $118.4 million for the three months ended September 30, 1998 to $148.5 million for the comparable period in 1999, partially offset by a decrease in the average yield from 8.83% in 1998 to 8.58% in 1999. Interest expense on deposits decreased $121,000 or 8.2%, to $1.4 million for the three months ended September 30, 1999 from $1.5 million for the three months ended September 30, 1998. Interest expense on deposits decreased due to a decrease in the average rate paid on deposits from 4.96% in 1998 to 4.39% in 1999, partially offset by a increase in the average balance of deposits from $119.1 million during 1998 to $123.7 million during 1999. Interest expense on borrowings increased $233,000 to $444,000 for the three months ended September 30, 1999 from $211,000 for the three months ended September 30, 1998. Interest expense on borrowings increased due to a increase in the average balance from $16.1 million to $34.7 million for three months ended September 30, 1998 compared to the same period in 1999, partially offset by a decrease in the average rate paid of borrowings from 5.25% to 5.12% over the same period. Provision for Loan Losses. The provision for loan losses is charged to earnings to bring the total allowance to a level deemed appropriate by management and is based upon historical experience, the volume and type of lending conducted by the Company, industry standards, the amount of nonperforming loans, general economic conditions, particularly as they relate to the Company's market areas, and other factors related to the collectibility of the Company's loan portfolio. The provision was $165,000 for the three months ended September 30, 1999 compared to $630,000 for the comparable period in 1998. This decrease was due to a decrease in net charge-offs from $452,000 in 1998 compared to $149,000 over the same period in 1999. The increase in net charge-offs in 1998 relate to one loan of which $440,000 was charged-off. Management believes the balance in the allowance for loan losses of $1.3 million at September 30, 1999 is adequate. Noninterest Income. Noninterest income decreased $222,000 primarily due to decreases of $162,000 in net realized gains on sale of securities and $58,000 in net gains from sale of loans for the three months ended September 30, 1999 when compared to the same period in 1998. Noninterest Expenses. Noninterest expenses increased $343,000 over the three month period from the previous year, primarily due to increases in salaries and employee benefits of $136,000, occupancy expense of $51,000 and professional fees of $64,000 relating to the overall growth of the Company. Provision for Income Taxes. The income tax provision for the three months ended September 30, 1999 was $154,000 (an effective rate of 37.0%) compared to $65,000 (an effective rate of 37.8%) for the comparable 1998 period. 14 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Comparison of the Nine Months Ended September 30, 1999 and 1998 Results of Operations: General. Net earnings for the nine months ended September 30, 1999 were $895,000 or $.40 basic and diluted earnings per share compared to net earnings of $720,000 or $.41 basic earnings per share ($.40 diluted earnings per share) for the nine months ended September 30, 1998. This increase in the Company's net earnings was primarily due to an increase in net interest income, partially offset by an increase in noninterest expenses. Interest Income and Expense. Interest income increased by $1.4 million or 14.0% from $9.7 million for the nine months ended September 30, 1998 to $11.1 million for the nine months ended September 30, 1999. Interest income on loans increased $1.4 million, or 17.6% primarily due to an increase in the average loan portfolio balance of $27.6 million from $114.2 million for the nine months ended September 30, 1998 to $141.8 million for the comparable period in 1999, partially offset by a decrease in the average yield from 9.06% in 1998 to 8.58% in 1999. Interest expense on deposits decreased $422,000, or 9.7% from $4.4 million for the nine months ended September 30, 1998 to $3.9 million for the nine months ended September 30, 1999. Interest expense on deposits decreased due to a decrease in the weighted average rate paid from 4.96% in 1998 to 4.34% in 1999, partially offset by an increase in the average balance, from $117.3 million in 1998 to $121.0 million in 1999. Interest expense on borrowings increased $621,000 to $1.1 million for the nine months ended September 30, 1999 from $481,000 for the nine months ended September 30, 1998. Interest expense on borrowings increased due to a increase in the average balance from $12.0 million during 1998 to $29.3 million during 1999, partially offset by a decrease in the weighted-average rate paid from 5.34% for the nine months ended September 30, 1998 to 5.02% for the same period in 1999. Provision for Loan Losses. The provision for loan losses is charged to earnings to bring the total allowance to a level deemed appropriate by management and is based upon historical experience, the volume and type of lending conducted by the Company, industry standards, the amount of nonperforming loans, general economic conditions, particularly as they relate to the Company's market areas, and other factors related to the collectibility of the Company's loan portfolio. The provision decreased from $795,000 for the nine months ended September 30, 1998 to $475,000 for the nine months ended September 30, 1999. The decrease was due to net charge-offs of $256,000 in 1999 compared to $482,000 over the same period in 1998. The increase in net charge-offs in 1998 related to one loan of which $440,000 was charged-off. Management believes the balance in the allowance for loan losses of $1.3 million at September 30, 1999 is adequate. Noninterest Income. Noninterest income decreased $332,000 primarily due to decreases of $126,000 on net realized gains on sales of securities and $126,000 in net gains from sale of loans during the nine months ended September 30, 1999 when compared to the comparable period in 1998. Noninterest Expense. Noninterest expense increased $862,000 for the nine months ended September 30, 1999 compared to the same period in 1998 primarily due to increases of $330,000 in salaries and employee benefits, occupancy expense of $98,000, professional fees of $139,000 and other noninterest expense of $214,000 relating to the overall growth of the Company. Provision for Income Taxes. The income tax provision for the nine months ended September 30, 1999 was $526,000 (an effective rate of 37.0%) compared to $416,000 (an effective rate of 36.6%) for the comparable 1998 period. 15 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Year 2000 Issues Management of the Holding Company is acutely aware of the Year 2000 issue and has an ongoing program designed to ensure that its operational and financial systems, and those of its commercial bank subsidiary, will not be adversely affected by Year 2000 software failures, due to processing errors arising from calculations using the Year 2000 date. The Bank's Data Processing Steering Committee has been assigned the Year 2000 compliance issue. The Committee meets quarterly or as needed to assess the extent to which the Bank and its outside vendors may be adversely affected by the Year 2000 problem system failures. The Committee has prepared and is responsible for monitoring the Vendor Status Report which identifies the vendors and equipment that have been determined to be Year 2000 sensitive. As of September 30, 1999, the Bank had received written assurances from all of the materially significant companies listed on the Vendor Status Report indicating that their systems are Year 2000 compliant. Based on current estimates, the Bank does not expect to incur a material amount of expenses through December 31, 1999 on its program to redevelop, replace or repair its computer applications to make them "Year 2000 compliant." It is recognized that any Year 2000 compliance failures could result in additional expense to the Bank. While management is diligently working to assure Year 2000 compliance, compliance by the Bank is largely dependent upon compliance by vendors, primarily in the area of on-line data processing. Management is requiring its computer system and software vendors to represent that the products are, or will be, Year 2000 compliant, and has planned a program for testing for compliance. The most significant vendor to the Bank, which provides the software support for the in-house system, Information Technology, Inc., has completed their testing process. The Bank has and will continue to participate in the testing and verification of Year 2000 related changes made by that vendor. Although management believes that the Bank's system will be Year 2000 compliant, a written contingency plan has been developed to address problems that might be caused from Year 2000 system failures. 16 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk is the risk of loss from adverse changes in market prices and rates. The Company's market risk arises primarily from interest-rate risk inherent in its lending and deposit taking activities. The Company has little or no risk related to trading accounts, commodities or foreign exchange. Management actively monitors and manages its interest-rate risk exposure. The primary objective in managing interest-rate risk is to limit, within established guidelines, the adverse impact of changes in interest rates on the Company's net interest income and capital, while adjusting the Company's asset-liability structure to obtain the maximum yield-cost spread on that structure. Management relies primarily on its asset-liability structure to control interest rate risk. However, a sudden and substantial increase in interest rates could adversely impact the Company's earnings, to the extent that the interest rates borne by assets and liabilities do not change at the same speed, to the same extent, or on the same basis. There have been no significant changes in the Company's market risk exposure since December 31, 1998. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (numbered in accordance with Item 601 of Regulation S-B) 27. Financial Data Schedule (for SEC use only) (b) On October 20, 1999, the Company filed a Form 8-K. The filing increased the authorized amount of capital to be used for the stock repurchase program to $3,000,000 and announced the declaration of a $.05 dividend for the quarter ending September 30, 1999. 17 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION SIGNATURES In accordance with 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. POINTE FINANCIAL CORPORATION (Registrant) Date: October 25, 1999 By: /s/ R. Carl Palmer, Jr. ------------------------- --------------------------------------- R. Carl Palmer, Jr., President and Chief Executive Officer Date: October 25, 1999 By: /s/ Bradley R. Meredith ------------------------- --------------------------------------- Bradley R. Meredith, Senior Vice President and Chief Financial Officer 18 EX-27 2 FDS
9 This schedule contains summary financial information extracted from Form 10-QSB for the period ended September 30, 1999 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 4,128 3,351 0 0 48,602 0 0 148,887 1,297 211,028 147,040 4,380 4,039 30,000 23 0 0 25,546 211,028 9,130 1,843 80 11,053 3,944 5,046 6,007 475 38 4,983 1,421 895 0 0 895 .40 .40 4.22 1,108 428 0 1,529 1,078 260 4 1,297 0 0 0 (1) Includes short-term investments and interest-bearing deposits with banks. (2) Other expense includes: salaries and employee benefits of $2,452, occupancy and equipment of $843, and other expenses which totaled $1,688. (3) Items are only disclosed on an annual basis in the Company's Form 10-K, and are, therefore, not included in this Financial Data Schedule.
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