-----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, B+bfg4iC1X+xj5LKw39cYbs7kz+JL0OoqZTOQv8eq7cJ/MEpO7hIWC5HYFZHNb9N QoKnX5gZ5v493K70tfS/AA== 0001116502-02-000536.txt : 20020426 0001116502-02-000536.hdr.sgml : 20020426 ACCESSION NUMBER: 0001116502-02-000536 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020426 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: 1934 Act SEC FILE NUMBER: 000-24433 FILM NUMBER: 02621638 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 pointe-10qsb.txt 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 March 31, 2002 [ ] 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 2,082,778 shares - -------------------------------------- ------------------------------- (class) Outstanding at April 25, 2002 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 March 31, 2002 (unaudited) and at December 31, 2001...................................................2 Condensed Consolidated Statements of Earnings - Three Months ended March 31, 2002 and 2001 (unaudited)...................................................3 Condensed Consolidated Statement of Changes in Stockholders' Equity - Three Months ended March 31, 2002 (unaudited)............................................................4 Condensed Consolidated Statements of Cash Flows - Three Months ended March 31, 2002 and 2001 (unaudited).................................................5-6 Notes to Condensed Consolidated Financial Statements (unaudited).........................................7-8 Review by Independent Certified Public Accountants.........................................................9 Report on Review by Independent Certified Public Accountants..............................................10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..............................................................................11-13 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..........................................14 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS..................................................................................14 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................................15-16 SIGNATURES.....................................................................................................17
POINTE FINANCIAL CORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
AT ---------------------------- MARCH 31, DECEMBER 31, ASSETS 2002 2001 --------- ---------- (UNAUDITED) Cash and due from banks ......................................................... $ 6,972 9,313 Interest-bearing deposits with banks ............................................ 3,823 31,342 --------- --------- Total cash and cash equivalents .......................................... 10,795 40,655 Securities available for sale ................................................... 61,678 54,233 Loans, net of allowance for loan losses of $2,556 in 2002 and $2,407 in 2001 .... 224,555 223,379 Loans held for sale ............................................................. 197 446 Accrued interest receivable ..................................................... 2,059 1,779 Premises and equipment, net ..................................................... 3,433 3,465 Federal Home Loan Bank stock, at cost ........................................... 2,900 2,900 Federal Reserve Bank stock, at cost ............................................. 479 479 Foreclosed real estate .......................................................... 250 -- Deferred income tax asset ....................................................... 483 483 Branch acquisition intangible asset ............................................. 3,397 3,461 Other assets .................................................................... 2,287 2,115 --------- --------- Total .................................................................... $ 312,513 333,395 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Noninterest-bearing demand deposits .......................................... 46,416 41,197 Savings and NOW deposits ..................................................... 20,671 20,056 Money-market deposits ........................................................ 57,853 60,539 Time deposits ................................................................ 92,137 104,033 --------- --------- Total deposits ........................................................... 217,077 225,825 Official checks .............................................................. 1,360 2,094 Other borrowings ............................................................. 18,839 30,094 Advances from Federal Home Loan Bank ......................................... 45,000 45,000 Accrued interest payable ..................................................... 672 849 Advance payments by borrowers for taxes and insurance ........................ 477 284 Other liabilities ............................................................ 464 702 --------- --------- Total liabilities ........................................................ 283,889 304,848 --------- --------- Stockholders' equity: Preferred stock .............................................................. -- -- Common stock ................................................................. 24 23 Additional paid-in capital ................................................... 24,445 24,110 Retained earnings ............................................................ 7,830 7,535 Accumulated other comprehensive loss ......................................... (582) (17) Treasury stock, at cost ...................................................... (3,000) (3,000) Stock incentive plan ......................................................... (93) (104) --------- --------- Total stockholders' equity ............................................... 28,624 28,547 --------- --------- Total .................................................................... $ 312,513 333,395 ========= =========
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 MARCH 31, ----------------------- 2002 2001 ---------- ---------- (UNAUDITED) Interest income: Loans ............................................ $ 4,168 3,973 Securities available for sale .................... 955 846 Other interest-earning assets .................... 71 86 ---------- ---------- Total interest income ....................... 5,194 4,905 ---------- ---------- Interest expense: Deposits ......................................... 1,289 1,748 Borrowings ....................................... 728 805 ---------- ---------- Total interest expense ...................... 2,017 2,553 ---------- ---------- Net interest income .................................. 3,177 2,352 Provision for loan losses ................... 471 150 ---------- ---------- Net interest income after provision for loan losses .. 2,706 2,202 ---------- ---------- Noninterest income: Service charges on deposit accounts .............. 378 238 Loan servicing fees .............................. 8 11 Net realized gains on sale of securities ......... 253 50 Loan correspondent fees .......................... 33 46 Other ............................................ 89 137 ---------- ---------- Total noninterest income .................... 761 482 ---------- ---------- Noninterest expenses: Salaries and employee benefits ................... 1,408 1,077 Occupancy expense ................................ 560 290 Advertising and promotion ........................ 101 86 Professional fees ................................ 95 53 Federal deposit insurance premiums ............... 10 8 Data processing .................................. 170 123 Amortization of intangible asset ................. 64 -- Other ............................................ 495 349 ---------- ---------- Total noninterest expenses .................. 2,903 1,986 ---------- ---------- Earnings before income taxes ................ 564 698 Income taxes ......................................... 166 238 ---------- ---------- Net earnings ................................ $ 398 460 ========== ========== Earnings per share: Basic ............................................ $ .19 .23 ========== ========== Diluted .......................................... $ .19 .23 ========== ========== Weighted-average shares outstanding for basic ........ 2,063,652 2,027,199 ========== ========== Weighted-average shares outstanding for diluted ...... 2,106,453 2,039,195 ========== ========== Dividends per share .................................. $ .05 .05 ========== ========== See Accompanying Notes to Condensed Consolidated Financial Statements 3 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 2002 (IN THOUSANDS)
ACCUMULATED OTHER COMPRE- ADDITIONAL STOCK HENSIVE TOTAL COMMON PAID-IN INCENTIVE TREASURY RETAINED INCOME STOCKHOLDERS' STOCK CAPITAL PLAN STOCK EARNINGS (LOSS) EQUITY ------- ------- ------- ------- ------- ------- ------- Balance at December 31, 2001 ....................... $ 23 24,110 (104) (3,000) 7,535 (17) 28,547 ------- Comprehensive loss: Net earnings (unaudited) ...................... -- -- -- -- 398 -- 398 Net change in unrealized loss on securities available for sale, net of taxes (unaudited) .................. -- -- -- -- -- (565) (565) ------- Comprehensive loss (unaudited) ..................... (167) ------- Exercise of employee stock options (unaudited) ................................... 1 337 -- -- -- -- 338 Shares committed to participants in stock incentive plan (unaudited) ........... -- -- 9 -- -- -- 9 Committed shares cancelled in stock incentive plan (unaudited) .................... -- (2) 2 -- -- -- -- Cash dividends paid (unaudited) .................... -- -- -- -- (103) -- (103) ------- ------- ------- ------- ------- ------- ------- Balance at March 31, 2002 (unaudited) ................................... $ 24 24,445 (93) (3,000) 7,830 (582) 28,624 ======= ======= ======= ======= ======= ======= =======
See Accompanying Notes to Condensed Consolidated Financial Statements 4 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, ---------------------------- 2002 2001 -------- -------- (UNAUDITED) Cash flows from operating activities: Net earnings ..................................................................... $ 398 460 Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: Provision for loan losses ................................................. 471 150 Depreciation and amortization ............................................. 177 391 Net amortization of fees, premiums, discounts and other ................... 152 134 Shares committed to participants in stock incentive plan .................. 9 5 Gain on sale of securities ................................................ (253) (50) Repayments of loans held for sale ......................................... 249 9 Increase in accrued interest receivable ................................... (280) (35) Decrease (increase) in other assets ....................................... 174 (631) (Decrease) increase in official checks .................................... (734) 149 (Decrease) increase in accrued interest payable ........................... (177) 9 Decrease in other liabilities ............................................. (238) (321) -------- -------- Net cash (used in) provided by operating activities ................... (52) 270 -------- -------- Cash flows from investing activities: Purchase of securities available for sale ..................................... (50,017) (18,520) Proceeds from sale of securities available for sale ........................... 26,502 3,057 Maturities and calls of securities available for sale ......................... 14,250 14,795 Principal repayments on securities available for sale ......................... 1,096 426 Net increase in loans ......................................................... (1,976) (6,498) Purchase of premises and equipment, net ....................................... (145) (474) -------- -------- Net cash used in investing activities ................................. (10,290) (7,214) -------- -------- Cash flows from financing activities: Net (decrease) increase in deposits ........................................... (8,691) 12,368 Net (decrease) increase in other borrowings ................................... (11,255) 3,143 Increase in advance payments by borrowers for taxes and insurance ............. 193 278 Cash dividends paid on common stock ........................................... (103) (102) Proceeds from exercise of stock options ....................................... 338 -- -------- -------- Net cash (used in) provided by financing activities ................... (19,518) 15,687 -------- -------- Net (decrease) increase in cash and cash equivalents .................. (29,860) 8,743 Cash and cash equivalents at beginning of period .................................. 40,655 7,616 -------- -------- Cash and cash equivalents at end of period ........................................ $ 10,795 16,359 ======== ========
(continued) 5 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED (IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, -------------------- 2002 2001 ------- ------- (UNAUDITED) Supplemental disclosure of cash flow information: Cash paid during the period for: Interest ................................................................... $ 2,194 2,544 ======= ===== Income taxes ............................................................... $ -- 530 ======= ======= Noncash transactions: Reclassification of loans to foreclosed real estate ........................ $ 250 -- ======= ======= Accumulated other comprehensive (loss) income, change in unrealized loss on securities available for sale, net ............................. $ (565) 232 ======= ======= Activity in stock incentive plan, net ..................................... $ 11 (78) ======= =======
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 March 31, 2002 and the results of operations and cash flows for the three-month periods ended March 31, 2002 and 2001. The results of operations and other data for the three months ended March 31, 2002 are not necessarily indicative of the results to be expected for the year ending December 31, 2002. Pointe Financial Corporation (the "Holding Company") owns 100% of Pointe Bank (the "Bank"), a state-chartered commercial bank, and Pointe Financial Services, Inc. On February 12, 2002, the Bank incorporated an additional subsidiary, Will No-No, Inc., a Florida Corporation, which owns, maintains, and disposes of the Bank's foreclosed assets (collectively, the "Company"). The Bank provides a variety of community banking services to small and middle-market business and individuals through its ten banking offices located in Broward, Miami-Dade and Palm Beach counties, Florida. Pointe Financial Services, Inc. is an inactive subsidiary and Will No-No, Inc. had minimal activity during the three months ended March 31, 2002. 2. LOAN IMPAIRMENT AND LOAN LOSSES. The activity in the allowance for loan losses is as follows (in thousands):
THREE MONTHS ENDED MARCH 31, ------------------- 2002 2001 ---- ---- Balance at beginning of period.............................................. $ 2,407 1,792 Provision charged to earnings............................................... 471 150 (Charge-offs), net of recoveries............................................ (321) (39) ------ ----- - Balance at end of period.................................................... $ 2,556 1,903 ======= ===== The following summarizes the amount of impaired loans (in thousands): AT ------------------------ MARCH 31, DECEMBER 31, 2002 2001 ---- ---- Loans identified as impaired: Gross loans with related allowance for losses recorded.................. $ -- 150 Less allowance on these loans........................................... -- (150) ------- ------ Net investment in impaired loans............................................ $ -- -- ======= ======
(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 MARCH 31, ------------------- 2002 2001 ----- ---- Average net investment in impaired loans.................................... $ - 75 ===== == Interest income recognized on impaired loans................................ $ - - ===== ===== Interest income received on impaired loans.................................. $ - - ===== =====
3. EARNINGS PER SHARE. Basic earnings per share represents earnings available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to earnings that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding stock options, and are determined using the treasury stock method. Earnings per common share have been computed based on the following (dollars in thousands):
THREE MONTHS ENDED MARCH 31, -------------------- 2002 2001 ---- ---- Net earnings applicable to common stock 398 460 ========= ========= Weighted-average number of common shares outstanding 2,063,652 2,027,199 Effect of dilutive options 42,801 11,996 --------- --------- Weighted-average number of common shares outstanding used to calculate diluted earnings per common share 2,106,453 2,039,195 ========= =========
4. REGULATORY CAPITAL. The Bank is required to maintain certain minimum regulatory capital requirements. The following is a summary at March 31, 2002 of the regulatory capital requirements and the Bank's actual capital on a percentage basis:
REGULATORY ACTUAL REQUIREMENT ------ ----------- Total capital to risk-weighted assets........................................... 11.84% 8.00% Tier I capital to risk-weighted assets.......................................... 10.68% 4.00% Tier I capital to total assets - leverage ratio................................. 7.33% 4.00%
8 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Hacker, Johnson & Smith PA, the Company's independent certified public accountants, have made a limited review of the financial data as of March 31, 2002, and for the three-month periods ended March 31, 2002 and 2001 presented in this document, in accordance with standards established by the American Institute of Certified Public Accountants. Their report furnished pursuant to Article 10 of Regulation S-X is included herein. 9 REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors Pointe Financial Corporation Boca Raton, Florida: We have reviewed the accompanying condensed consolidated balance sheet of Pointe Financial Corporation and subsidiaries (the "Company") as of March 31, 2002, and the related condensed consolidated statements of earnings and cash flows for the three-month periods ended March 31, 2002 and 2001, and the condensed consolidated statement of changes in stockholders' equity for the three-month period ended March 31, 2002. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 2001, and the related consolidated statements of earnings, changes in stockholders' equity and cash flows for the year then ended (not presented herein); and in our report dated January 16, 2002 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2001, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. HACKER, JOHNSON & SMITH PA Tampa, Florida April 10, 2002 10 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMPARISON OF MARCH 31, 2002 AND DECEMBER 31, 2001 LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of cash during the three months ended March 31, 2002 was from net deposit inflows of $8.7 million, an increase in other borrowings of $11.3 million and proceeds from the sale, maturity and call of securities available for sale of $40.8 million. Cash was used primarily for net loan originations of $1.7 million and the purchase of securities totaling $50.0 million. At March 31, 2002, the Company had outstanding commitments to originate loans of $10.2 million and time deposits of $79.4 million that mature in one year or less. It is expected that these requirements will be funded from the sources described above. At March 31, 2002, the Bank exceeded its regulatory liquidity requirements. The following table shows selected rates for the periods ended or at the dates indicated:
THREE MONTHS THREE MONTHS ENDED YEAR ENDED ENDED MARCH 31, DECEMBER 31, MARCH 31, 2002 2001 2001 -------- --------- --------- Average equity as a percentage of average assets......................................... 8.90% 9.20% 10.63% Equity to total assets at end of period...................... 9.16% 8.56% 10.48% Return on average assets (1)................................. .49% .55% .73% Return on average equity (1)................................. 5.53% 6.02% 6.83% Noninterest expense to average assets (1).................... 3.59% 3.38% 3.13% Nonperforming loans and foreclosed real estate to total assets at end of period.......................... .24% .31% .85%
(1) Annualized for the three months ended March 31, 2002 and 2001. 11 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES RESULTS OF OPERATIONS: The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost; (iii) net interest/dividend income; (iv) interest-rate spread; (v) net interest margin; and (vi) ratio of average interest-earning assets to average interest-bearing liabilities.
THREE MONTHS ENDED MARCH 31, ------------------------------------------------------------- 2002 2001 ----------------------------- -------------------------- INTEREST AVERAGE INTEREST AVERAGE AVERAGE AND YIELD/ AVERAGE AND YIELD/ BALANCE DIVIDENDS RATE BALANCE DIVIDENDS RATE ------- --------- ---- ------- --------- ---- ($ IN THOUSANDS) Interest-earning assets: Loans.................................... $ 222,850 4,168 7.48% $ 177,604 3,973 8.95% Securities............................... 73,672 955 5.19 53,165 846 6.37 Other interest-earning assets (1)........ 8,800 71 3.23 9,154 86 3.76 --------- ------- -------- ------- Total interest-earning assets........ 305,322 5,194 6.80 239,923 4,905 8.18 ------- ------- Noninterest-earning assets (2)........... 18,271 13,534 ------- -------- Total assets......................... $ 323,593 $ 253,457 ========= ========= Interest-bearing liabilities: Savings and NOW deposits................. 19,882 36 .72 12,496 45 1.44 Money-market deposits.................... 61,167 299 1.96 37,688 382 4.05 Time deposits............................ 97,305 954 3.92 88,008 1,321 6.00 Borrowings (3)........................... 69,696 728 4.18 54,869 805 5.87 --------- ------- --------- ------- Total interest-bearing liabilities... 248,050 2,017 3.25 193,061 2,553 5.29 ------- ------- Demand deposits.......................... 42,524 30,265 Noninterest-bearing liabilities.......... 4,221 3,186 Stockholders' equity..................... 28,798 26,945 --------- --------- Total liabilities and stockholders' equity........................... $ 323,593 $ 253,457 ========= ========= Net interest income......................... $ 3,177 $ 2,352 ======= ======= Interest-rate spread (4).................... 3.55% 2.89% ==== ==== Net interest margin (5)..................... 4.16% 3.92% ==== ==== Ratio of average interest-earning assets to average interest-bearing liabilities..... 1.23 1.24 ========= =========
- ---------- (1) Includes interest-bearing deposits, federal funds sold, Federal Home Loan Bank stock and Federal Reserve Bank stock. (2) Includes nonaccrual loans. (3) Includes advances from Federal Home Loan Bank and investment repurchase agreements. (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 COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001 GENERAL. Net earnings for the three months ended March 31, 2002 were $398,000 or $.19 basic and diluted earnings per share compared to net earnings of $460,000 or $.23 basic and diluted earnings per share for the three months ended March 31, 2001. The decrease in the Company's net earnings was primarily due to an increase in noninterest expenses and the provision for loan losses, partially offset by an increase in net interest income and noninterest income. INTEREST INCOME AND EXPENSE. Interest income increased by $289,000, or 5.89%, from $4.9 million for the three months ended March 31, 2001 to $5.2 million for the three months ended March 31, 2002. Interest income on loans increased $195,000 primarily due to an increase in the average loan portfolio balance from $177.6 million for the three months ended March 31, 2001 to $222.9 million for the comparable period in 2002, partially offset by a decrease in the average yield from 8.95% in 2001 to 7.48% in 2002. Interest on securities increased $109,000 primarily due to an increase in the average securities portfolio balance from $53.2 million in 2001 to $73.7 million in 2002, partially offset by a decrease in the weighted-average yield of 1.18%. Interest expense on deposits decreased to $1.3 million for the three months ended March 31, 2002 from $1.7 million for the three months ended March 31, 2001. Interest expense on deposits decreased due to a decrease in the average rate paid on deposits from 5.06% in 2001 to 2.89% in 2002, partially offset by an increase in the average balance from $138.2 million in 2001 to $178.4 million in 2002. Interest expense on borrowings decreased $77,000 to $728,000 for the three months ended March 31, 2002 from $805,000 for the three months ended March 31, 2001. Interest expense on borrowings decreased due to a decrease in the weighted-average rate paid for the three months ended March 31, 2002 compared to the same period in 2001, partially offset by an increase in the average balance of borrowings outstanding from $54.9 million in 2001 to $69.7 million in 2002. 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 $471,000 for the three months ended March 31, 2002 compared to $150,000 for the comparable period in 2001. Management believes the balance in the allowance for loan losses of $2.6 million at March 31, 2002 is adequate. NONINTEREST INCOME. Noninterest income increased $279,000 primarily due to an increase in service charges on deposit accounts of $140,000 and an increase in realized gains of the sale of securities of $203,000 for the three months ended March 31, 2002 when compared to the same period in 2001. NONINTEREST EXPENSES. Noninterest expenses increased $917,000 for the three months ended March 31, 2002 compared to the same period in 2001, primarily due to increases in salaries and employee benefits of $331,000, occupancy expense of $270,000, amortization of an intangible asset of $64,000, and other expenses of $146,000 which relates to the Company's overall expansion plans which included the acquisition of branches in 2001. PROVISION FOR INCOME TAXES. The income tax provision for the three months ended March 31, 2002 was $166,000 (an effective rate of 29.4%) compared to $238,000 (an effective rate of 34.1%) for the comparable 2001 period. 13 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. The Company does not engage in trading or hedging activities and does not invest in interest-rate derivatives or enter into interest rate swaps. Management actively monitors and manages its interest rate risk exposure. The primary objective in managing interest-rate risk is to limit, within established guidelines, the adverse impact of changes in interest rates on the Company's net interest income and capital, while adjusting the Company's asset-liability structure to obtain the maximum yield-cost spread on that structure. Management relies primarily on its asset-liability structure to control interest rate risk. However, a sudden and substantial increase in interest rates could adversely impact the Company's earnings, to the extent that the interest rates borne by assets and liabilities do not change at the same speed, to the same extent, or on the same basis. There have been no significant changes in the Company's market risk exposure since December 31, 2001. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There are no material pending legal proceeding to which Pointe Financial Corporation or any of its subsidiaries is a party or to which any of their property is subject. 14 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed as part of this report.* 2.1 Plan of Merger and Merger Agreement dated February 14, 1997 by and between Pointe Federal Savings Bank and Pointe Bank (Exhibit 2.1 to the Registrant's Form SB-2 Registration Statement, File No. 333-49835, as initially filed with the Securities and Exchange Commission on April 9, 1998 [the "Registration Statement"]). 3.1 Articles of Incorporation of the Registrant (Exhibit 3.1 to the Registration Statement). 3.2 By-Laws of the Registrant (Exhibit 3.2 to the Registration Statement). 4.1 Specimen Common Stock Certificate (Exhibit 4.1 to the Registration Statement).* 10.1** 1994 Non-Statutory Stock Option Plan (Exhibit 10.1 to the Registration Statement). 10.2** Deferred Compensation Plan (Exhibit 10.2 to the Registration Statement). 10.3 Office Lease Agreement dated October 8, 1986 by and between Centrum Pembroke, Inc. and Flamingo Bank (Exhibit 10.3 to the Registration Statement). 10.4 Lease dated as of July 15, 1992 between Konrad Ulmer and Pointe Savings Bank (Exhibit 10.4 to the Registration Statement). 10.5 Lease Agreement dated January 23, 1995 by and between Hollywood Associates VI and Pointe Bank (Exhibit 10.5 to the Registration Statement). 10.6 Credit Agreement dated August 18, 1997 between Independent Bankers' Bank of Florida and Pointe Bank (Exhibit 10.6 to the Registration Statement). 10.7 Credit Agreement dated October 14, 1997 between SunTrust Bank/Miami, N.A. and Pointe Bank (Exhibit 10.7 to the Registration Statement). 10.8 Agreement for Advances and Security Agreement with Blanket Floating Lien dated November 24, 1997 between Pointe Bank and the Federal Home Loan Bank of Atlanta (Exhibit 10.8 to the Registration Statement). 10.9 Equipment Sales and Software License Agreements between Information Technology, Inc. and Pointe Financial Corporation (Exhibit 10.9 to the Registration Statement). 10.10 Master Equipment Lease Agreement dated May 7, 1997 between Leasetec Corporation and Pointe Financial Corporation (Exhibit 10.10 to the Registration Statement). 15 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K, CONTINUED 10.11*** Letter Agreement dated March 9, 1995 between Pointe Financial Corporation and R. Carl Palmer, Jr. (Exhibit 10.11 to the Registration Statement). 10.12** 1998 Incentive Compensation and Stock Award Plan (Exhibit 10.12 to the Registration Statement). 10.13*** Employment agreement between the Company and R. Carl Palmer, Jr. (Exhibit 10.13 to the 1999 Form 10-K filed February 23, 2000). 10.15*** Employment agreement between the Company and Bradley R. Meredith (Exhibit 10.15 to the 1999 Form 10-K filed February 23, 2000). 10.16 Branch Purchase and Deposit Assumption Agreement by and between Pointe Bank and Republic Bank dated January 4, 2001, Amendment included (Exhibit 10.16 to the Form 10-QSB filed May 8, 2001). 11.1 Statement regarding calculation of earnings per common share (included in Note 3 to the Condensed Consolidated Financial Statements). 21.1 Subsidiaries of the Registrant (included in the Audited Consolidated Financial Statements in the 2001 Form 10-K). * Exhibits followed by a parenthetical reference are incorporated herein by reference from the documents described therein. ** Exhibits 10.1, 10.2, 10.11 and 10.12 are compensatory plans or arrangements. *** Contracts with Management. (b) Reports on Form 8-K The Company did not file any Form 8-K's during the three months ended March 31, 2002. 16 POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 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: April 25, 2002 By: /s/ R. Carl Palmer, Jr. - -------------------- ---------------------------------------- R. Carl Palmer, Jr., President and Chief Executive Officer Date: April 25, 2002 By: /s/ Bradley R. Meredith - -------------------- ---------------------------------------- Bradley R. Meredith, Senior Vice President and Chief Financial Officer 17 -----END PRIVACY-ENHANCED MESSAGE-----