ITEM 1. BUSINESS
TIB Financial Corp. (the "Company"), Key Largo, Florida, was incorporated as a Florida business corporation in February 1996, for the purpose of becoming a bank holding company by acquiring all of the common stock of TIB Bank of the Keys (the "Bank"), Key Largo, Florida. Following the receipt of approval from the Board of Governors of the Federal Reserve System (the "Federal Reserve"), the Company became a bank holding company within the meaning of the Bank Holding Company Act of 1956 (the "Act") upon the acquisition of all of the Common Stock of the Bank on August 31, 1996. Effective August 31, 2000, the Company became a financial holding company.
The Company is authorized to engage in any activity permitted by law to a Florida corporation, subject to applicable Federal regulatory restrictions on the activities of financial holding companies.
The Bank was incorporated under the laws of the State of Florida on December 28, 1973, for the purpose of conducting the business of commercial banking. The Bank commenced commercial banking operations on February 1, 1974. The deposits at the Bank are insured up to applicable limits by the Federal Deposit Insurance Corporation (the "FDIC").
The Bank conducts a general commercial banking business in its primary service area of Monroe County and Dade County, Florida, emphasizing the banking needs of individuals, professionals and business customers. The Company and the Bank conduct business from the main office of the Bank located at 99451 Overseas Highway, Key Largo, Florida 33037. The Bank also conducts business from its other twelve branch locations throughout the Florida Keys from Key Largo to Key West and South Miami-Dade County Florida.
The principal business of the Bank is to attract deposits from the public and to use such deposits to make real estate, business and consumer loans in its primary service area. As of December 31, 2000, the Bank had total assets of approximately $439.3 million, total deposits of approximately $392.4 million and total shareholders' equity of approximately $26.2 million.
The Bank offers a full range of deposit services that are typically available from financial institutions, including NOW accounts, money market checking accounts, demand accounts, savings accounts, certificates of deposit and other time deposits. In addition, retirement accounts such as Individual Retirement Accounts are available from the Bank. The Bank pays interest on its deposit accounts and certificates competitive with other financial institutions in its primary service area.
The Bank seeks to concentrate its deposits and loan efforts within Monroe and South Miami-Dade Counties, Florida, its primary service area. The primary factors in competing for deposits are interest rates, the range of financial services
offered, service, convenience of office locations and flexible office hours. Direct competition for such deposits comes from other commercial banks, savings institutions, credit unions, brokerage firms and money market funds.
The Bank's lending philosophy is to make loans, taking into consideration the safety of the Bank's depositors' funds, the preservation of the Bank's liquidity, the interest of the Company's shareholders, and the welfare of the community. Interest income from the Bank's lending operations is a principal component of the Bank's income, so therefore prudent lending is essential for the prosperity of the Bank.
The primary factors in competing for loans are interest rates, loan origination fees and the range of lending services offered. Competition for origination of loans normally comes from other commercial banks, savings institutions, credit unions and mortgage banking firms. Such entities may have competitive advantages as a result of greater resources and higher lending limits (by virtue of their greater capitalization). There are also smaller financial institutions that compete for the same market. The Bank seeks to attract customers with its products and services which are tailored to the needs of the customers. Management seeks to emphasize a high degree of personalized client service in order to be able to better meet the banking needs of its customers.
The Bank's loan portfolio at December 31, 2000 contained approximately 81% real estate mortgage loans, 12% commercial loans, 3% consumer loans, and 4% home equity loans. The Bank's gross loan to deposit ratio at December 31, 2000 was approximately 80.4%.
In addition to interest income from the Bank's lending operations, the other major sources of income for the Bank are fees collected on loans, interest on investment securities, service charges on deposit accounts, gains on sales of government guaranteed loans, and merchant bankcard processing income. The principal expenses of the Bank are interest paid on deposits, employee compensation, office expenses, and other overhead expenses.
The Bank engages through a wholly-owned subsidiary, TIB Investment & Insurance Center, Inc. ("TIB Investment"), in the retail sale of nondeposit investment products such as variable and fixed rate annuities, mutual funds and other products. The Bank has entered into an agreement with Linsco/Private Ledger Corp., a third-party provider which trains and supervises employees of the Bank or TIB Investment in the sale of these products from various offices of the Bank.
The Bank also engages through a wholly-owned subsidiary, TIB Government Loan Specialists, Inc., in the origination and sale of the government guaranteed portion of loans that qualify for government guaranteed loan programs such as those offered by the Small Business Administration and the U.S. Department of Agriculture Rural Development Business and Industry Program.
The Company has a 30% interest in ERAS JV, a company that specializes in cash item processing for depository institutions and customized software for the financial services industry. In October 2000, the Company purchased Keys Insurance Agency of Monroe County, Inc. Keys Insurance Agency, Inc. (the new name subsequent to the purchase) has three offices in the Florida Keys and brokers a full line of commercial and residential hazard insurance coverages as well as life and health insurance and annuities.
The Bank's business plan relies principally upon local advertising and promotional activity and upon personal contacts by its directors, officers and shareholders to attract business and to acquaint potential customers with the Bank's personalized services. The Bank emphasizes a high degree of personalized client service in order to be able to provide for each customer's banking needs. The Bank's marketing approach emphasizes the advantages of dealing with an independent, locally-owned and managed state chartered bank to meet the particular needs of consumers, professionals and business customers in the community. All banking services are continually evaluated with regard to their profitability and efforts are made to modify the Bank's business plan if deemed appropriate.
EMPLOYEES
As of December 31, 2000, the Bank employed 193 full-time employees and 13 part-time employees, and the insurance agency employed 17 full-time employees and one part-time employee. Except for the officers of the Bank who
presently serve as officers of the Company, the Company does not have any employees. The Company and its subsidiaries are not a party to any collective bargaining agreement, and management believes the Company and its subsidiaries enjoy satisfactory relations with its employees.
SUPERVISION AND REGULATION
REGULATION OF THE BANK. The operations of the Bank are subject to state and federal statutes applicable to state chartered banks whose deposits are insured by the FDIC, and also to the regulations of the Florida Department of Banking and Finance (the "DBF") and the FDIC. Such statutes and regulations relate to, among other things, required reserves, investments, loans, mergers and consolidations, branching, issuances of securities, payment of dividends, payment of interest rates, establishment of branches and other aspects of the Bank's operations. Under the provisions of the Federal Reserve Act, the Bank is subject to certain restrictions on any extensions of credit to the Company or, with certain exceptions, other affiliates, and on the taking of such stock or securities as collateral on loans to any borrower. In addition, the Bank is prohibited from engaging in certain tie-in arrangements in connection with any extension of credit or the providing of any property or service. Florida law permits banks to branch on a statewide basis. Therefore, the Bank has the ability to expand from its market presence in Monroe and Miami-Dade counties into other markets in Florida.
The FDIC has adopted risk-based capital guidelines for all FDIC insured state chartered banks that are not members of the Federal Reserve System. These guidelines require all banks to maintain a minimum ratio of total capital to risk weighted assets of 8 percent (of which at least 4 percent must consist of Tier 1 capital). Tier 1 capital of state chartered banks (as defined in regulations) generally consists of (i) common stockholders equity; (ii) noncumulative perpetual preferred stock and related surplus; and (iii) minority interests in the equity accounts of consolidated subsidiaries.
In addition, the FDIC adopted a minimum ratio of Tier 1 capital to total assets of banks. This capital measure is generally referred to as the leverage capital ratio. The FDIC has established a minimum leverage capital ratio of 3 percent if the FDIC determines that the institution is not anticipating or experiencing significant growth and has well-diversified risk, including no undue interest rate exposure, excellent asset quality, high liquidity, good earnings and, in general, is considered a strong banking organization, rated Composite 1 under the Uniform Financial Institutions Rating System. Other financial institutions are expected to maintain leverage capital at least 100 to 200 basis points above the minimum level. At December 31, 2000, the Bank exceeded the minimum Tier 1, risk-based and leverage capital ratios. The table which follows set forth certain capital information for the Bank as of December 31, 2000.
CAPITAL ADEQUACY (Dollars in thousands) December 31, 2000
(1) Represents the highest regular minimum requirement. Institutions that are contemplating acquisitions or anticipating or experiencing significant growth may be required to maintain a substantially higher leverage ratio. See below regarding the consequences of failing to meet specified capital standards.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") contains "prompt corrective action" provisions which established among other things, the following five capital standard categories for depository institutions: (i) well capitalized, (ii) adequately capitalized, (iii) undercapitalized, (iv) significantly undercapitalized and (v) critically undercapitalized. FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions depending on the category in which an institution is classified. Each of the federal banking agencies has issued uniform regulations, which, among other things, define the capital levels described above. Under the regulations, a bank is considered "well capitalized" if it (i) has a total risk-based capital ratio of 10% or greater, (ii) has a Tier 1 risk-based capital ratio of 6% or greater, (iii) has a leverage ratio of 5% or greater, and (iv) is not subject to any order or written directive to meet and maintain a specific capital level for any capital measure. An "adequately capitalized" bank is defined as one that has (i) a total risk-based capital ratio of 8% or greater, (ii) a Tier 1 risk-based capital ratio of 4% or greater and (iii) a leverage ratio of 4% or greater. An "undercapitalized" bank is defined as one that has a total risk-based capital ratio of less than 8%, (ii) a Tier I risk-based capital ratio of less than 4% or (iii) a leverage ratio of less than 3%. A "significantly undercapitalized" bank is defined as one that has a total risk-based capital ratio of less than 6%, a Tier 1 risk-based capital ratio of less than 3% or a leverage ratio of less than 3% and a bank is "critically undercapitalized" if the bank has a leverage ratio equal to or less than 2%. The applicable federal regulatory agency for a bank that is "well capitalized" may reclassify it as "adequately capitalized" or "undercapitalized" and subject the institution to the supervisory actions applicable to the next lower capital category, if it determines that the Bank is in an unsafe or unsound condition or deems the bank to be engaged in an unsafe or unsound practice and not to have corrected the deficiency. As of December 31, 2000, the Bank met the definition of a "well capitalized" institution.
"Undercapitalized" depository institutions, among other things, are subject to growth limitations, are prohibited, with certain exceptions, from making capital distributions, are limited in their ability to obtain funding from a Federal Reserve Bank and are required to submit a capital restoration plan. The federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution's capital. In addition, for a capital restoration plan to be acceptable, the depository institution's parent holding company must guarantee that the institution will comply with such capital restoration plan and provide appropriate assurances of performance. If a depository institution fails to submit an acceptable plan, including if the holding company refuses or is unable to make the guarantee described in the previous sentence, it is treated as if it is "significantly undercapitalized". Failure to submit or implement an acceptable capital plan also is grounds for the appointment of a conservator or a receiver. "Significantly undercapitalized" depository institutions may be subject to a number of additional requirements and restrictions such as orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets, and cessation of receipt of deposits from correspondent banks. "Critically undercapitalized" institutions, among other things, are prohibited from making any payments of principal and interest on subordinated debt, and are subject to the appointment of a receiver or conservator.
Under FDICIA, the FDIC is permitted to provide financial assistance to an insured bank before appointment of a conservator or receiver only if (i) such assistance would be the least costly method of meeting the FDIC's insurance obligations, (ii) grounds for appointment of a conservator or a receiver exist or are likely to exist, (iii) it is unlikely that the bank can meet all capital standards without assistance and (iv) the bank's management has been competent, has complied with applicable laws, regulations, rules and supervisory directives and has not engaged in any insider dealing, speculative practice or other abusive activity.
The Bank is also subject to, among other things, the provisions of the Equal Credit Opportunity Act (the "ECOA") and the Fair Housing Act (the "FHA"), both of which prohibit discrimination based on race or color, religion, national origin, sex, and familial status in any aspect of a consumer or commercial credit or residential real estate transaction. The Department of Housing and Urban Development, the Department of Justice (the "DOJ"), and all of the federal banking agencies have issued an Interagency Policy Statement on discrimination in Lending which provides guidance to financial institutions as to what the agencies consider in determining whether discrimination exists, how the agencies
will respond to lending discrimination, and what steps lenders might take to prevent discriminatory lending practices.
REGULATION OF THE COMPANY. The Company is a bank holding company within the meaning of the Act. As a bank holding company, the Company is required to file with the Federal Reserve an annual report and such additional information as the Board may require pursuant to the Act. The Federal Reserve may also make examinations of the Company and each of its subsidiaries. Bank holding companies are required by the Act to obtain approval from the Federal Reserve prior to acquiring, directly or indirectly, ownership or control of more than 5% of the voting shares of a bank or merging with another bank holding company.
Recent legislation has significantly increased the right of an eligible bank holding company, called a "financial holding company," to engage in a full range of financial activities, including insurance and securities activities, as well as merchant banking and other financial services. On August 31, 2000, the Federal Reserve Bank approved the Company's election to become a financial holding company. The Company thus has expanded financial affiliation opportunities as long as the Bank remains a "well-capitalized" and well-managed" depository institution and has at least a "satisfactory" rating under the Community Reinvestment Act of 1997 (the "CRA"). As of December 31, 2000, the Bank met all three criteria for the Company's continued qualification as a financial holding company.
As a bank holding company, the Company is subject to capital adequacy guidelines established for bank holding companies by the Federal Reserve. The minimum required ratio for total capital to risk weighted assets is 8 percent (of which at least 4 percent must consist of Tier 1 capital). Tier 1 capital (as defined in regulations of the Federal Reserve) consists of common and qualifying preferred stock and minority interests in equity accounts of consolidated subsidiaries, less goodwill and other intangible assets required to be deducted under the Federal Reserve's guidelines. The Federal Reserve's guidelines apply on a consolidated basis to bank holding companies with total consolidated assets of $150 million or more. For bank holding companies with less than $150 million in total consolidated assets, the guidelines apply on a bank only basis, unless the bank holding company is engaged in nonbanking activity involving significant leverage or has significant amount of debt outstanding that is held by the general public. The Federal Reserve has stated that risk based capital guidelines establish minimum standards and that bank holding companies generally are expected to operate well above the minimum standards.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking Act"), subject to certain restrictions, allows adequately capitalized and managed bank holding companies to acquire existing banks across state lines, regardless of state statutes that would prohibit acquisitions by out-of-state institutions. Further, a bank holding company may consolidate interstate bank subsidiaries into branches and a bank may merge with an unaffiliated bank across state lines to the extent that the applicable states authorize such transactions. The Interstate Banking Act generally prohibits an interstate acquisition (other than the initial entry into a state by a bank holding company) that would result in either the control of more than (i) 10% of the total amount of insured deposits in the United States, or (ii) 30% of the total insured deposits in the home state of the target bank, unless such 30% limitation is waived by the home state on a basis which does not discriminate against out-of-state institutions. As a result of this legislation, the Company may become a candidate for acquisition by, or may itself seek to acquire, banking organizations located in other states.
Florida has enacted the Florida Interstate Branching Act (the "Florida Branching Act"), which permits interstate branching through merger transactions under the Interstate Banking Act. Under the Florida Branching Act, with the prior approval of the DBF, a Florida bank may establish, maintain and operate one or more branches in a state other than the State of Florida pursuant to a merger transaction in which the Florida bank is the resulting bank. In addition, the Florida Branching Act provides that one or more Florida banks may enter into a merger transaction with one or more out-of-state banks, and an out-of-state bank resulting from such transaction may maintain and operate the branches of the Florida bank that participated in such merger. An out-of-state bank, however, is not permitted to acquire a Florida bank in a merger transaction unless the Florida bank has been in existence and continuously operated for more than three years.
The Riegle Community Development and Regulatory Improvement Act of 1994 (the "Improvement Act") provides for the creation of a community development financial institutions' fund to promote economic revitalization in community development. Banks and thrift institutions are allowed to participate in such community development banks. The
Improvement Act also contains (i) provisions designed to enhance small business capital formation and to enhance disclosure with regard to high cost mortgages for the protection of consumers, and (ii) more than 50 regulatory relief provisions that apply to banks and thrift institutions, including the coordination of examinations by various federal agencies, coordination of frequency and types of reports financial institutions are required to file and reduction of examinations for well capitalized institutions.
Federal Reserve policy requires a bank holding company to act as a source of financial strength and to take measures to preserve and protect bank subsidiaries in situations where additional investments in a troubled bank may not otherwise be warranted. In addition, under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), where a bank holding company has more than one bank or thrift subsidiary, each of the bank holding company's subsidiary depository institutions is responsible for any losses to the FDIC as a result of an affiliated depository institution's failure. As a result, a bank holding company may be required to loan money to its subsidiaries in the form of capital notes or other instruments which qualify as capital under regulatory rules. However, any loans from the holding company to such subsidiary banks likely will be unsecured and subordinated to such bank's depositors and perhaps to other creditors of the bank. In addition, a bank holding company may be required to provide additional capital to any additional banks it acquires as a condition to obtaining the approvals and consents of regulatory authorities in connection with such acquisitions.
The Federal Reserve has adopted certain provisions implementing The Economic Growth and Regulatory Paperwork Reduction Act of 1996. Among other things, these provisions reduce the notice and application requirements applicable to bank and nonbank acquisitions and de novo expansion by well-capitalized and well-managed bank holding companies; expand the list of nonbanking activities permitted to bank holding companies; reduce certain limitations on previously permitted activities; and amend Federal Reserve anti-tying restrictions to allow banks greater flexibility to package products and services with their affiliates.
The Company and the Bank are subject to Section 23A of the Federal Reserve Act, which limits a bank's "covered transactions" (generally, any extension of credit or purchase of assets) with any single affiliate to no more than 10% of a bank's capital and surplus. Covered transactions with all affiliates combined are limited to no more than 20% of a bank's capital and surplus. All covered and exempt transactions between a bank and its affiliates must be on terms and conditions consistent with safe and sound banking practices, and a bank and its subsidiaries are prohibited from purchasing low quality assets from the bank's affiliates. Finally, Section 23A requires that all of a bank's extensions of credit to an affiliate be appropriately secured by collateral. The Company and the Bank are also subject to Section 23B of the Federal Reserve Act, which further limits transactions among affiliates. Sections 22(g) and 22(h) of the Federal Reserve Act and implementing regulations also prohibit extensions of credit by a state non-member bank (such as the Bank) to its directors, executive officers and controlling shareholders on terms which are more favorable than those afforded other borrowers, and impose limits on the amounts of loans to individual affiliates and all affiliates as a group.
The Company and the Bank are subject to the provisions of the CRA and the federal banking agencies' regulations issued thereunder. Under the CRA, all banks and thrifts have a continuing and affirmative obligation, consistent with its safe and sound operation to help meet the credit needs for their entire communities, including low- and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions, nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA requires a depository institution's primary federal regulator, in connection with its examination of the institution, to assess the institution's record of assessing and meeting the credit needs of the community served by that institution, including low- and moderate-income neighborhoods. The regulatory agency's assessment of the institution's record is made available to the public. In the case of a bank holding company applying for approval to acquire a bank or other bank holding company, the Federal Reserve will assess the records of each subsidiary depository institution of the applicant bank holding company, and such records may be the basis for denying the application.
The evaluation system used to judge an institution's CRA performance consists of three tests: a lending test; an investment test; and a service test. Each of these tests will be applied by the institution's primary federal regulator taking into account such factors as: (i) demographic data about the community; (ii) the institution's capacity and constraints; (iii) the institution's product offerings and business strategy; and (iv) data on the prior performance of the
institution and similarly-situated lenders.
In addition, a financial institution has the option of having its CRA performance evaluated based on a strategic plan of up to five years in length that it had developed in cooperation with local community groups. In order to be rated under a strategic plan, the institution is required to obtain the prior approval of its federal regulator.
The interagency CRA regulations provide that an institution evaluated under a given test will receive one of five ratings for the test: outstanding, high satisfactory, low satisfactory, needs to improve, or substantial non-compliance. An institution will receive a certain number of points for its rating on each test, and the points are combined to produce an overall composite rating of either outstanding, satisfactory, needs to improve, or substantial non-compliance. Under the agencies' rating guidelines, an institution that receives an "outstanding" rating on the lending test will receive an overall rating of at least "satisfactory", and no institution can receive an overall rating of "satisfactory" unless it receives a rating of at least "low satisfactory" on its lending test. In addition, evidence of discriminatory or other illegal credit practices would adversely affect an institution's overall rating. Under the new regulations, an institution's CRA rating would continue to be taken into account by its primary federal regulator in considering various types of applications. As a result of the Bank's most recent CRA examination in July 1998, the Bank received an "outstanding" CRA rating.
The United States Congress and the Florida Legislature periodically consider and adopt legislation that results in, and could further result in, deregulation, among other matters, of banks and other financial institutions. Such legislation could modify or eliminate current prohibitions with other financial institutions, including mutual funds, securities brokerage firms, insurance companies, banks from other states and investment banking firms. The effect of any such legislation on the business of the Company or the Bank cannot be accurately predicted. The Company cannot predict what legislation might be enacted or what other implementing regulations might be adopted, and if enacted or adopted, the effect thereof.
On November 12, 1999, the Gramm-Leach-Bliley Act was enacted which reforms and modernizes certain areas of financial services regulation. As discussed above, the law permits the creation of new financial services holding companies that can offer a full range of financial products under a regulatory structure based on the principle of functional regulation. The legislation eliminates the legal barriers to affiliations among banks and securities firms, insurance companies, and other financial services companies. The law also provides financial organizations with the opportunity to structure these new financial affiliations through a holding company structure or a financial subsidiary. The law reserves the role of the Federal Reserve Board as the supervisor for bank holding companies. At the same time, the law also provides a system of functional regulation which is designed to utilize the various existing federal and state regulatory bodies. The law also sets up a process for coordination between the Federal Reserve Board and the Secretary of the Treasury regarding the approval of new financial activities for both bank holding companies and national bank financial subsidiaries.
The law also includes a minimum federal standard of financial privacy. Financial institutions are required to have written privacy policies that must be disclosed to customers. The disclosure of a financial institution's privacy policy must take place at the time a customer relationship is established and not less than annually during the continuation of the relationship. The act also provides for the functional regulation of bank securities activities. The law repeals the exemption that banks were afforded from the definition of "broker," and replaces it with a set of limited exemptions that allow the continuation of some historical activities performed by banks. In addition, the act amends the securities laws to include banks within the general definition of dealer. Regarding new bank products, the law provides a procedure for handling products sold by banks that have securities elements. In the area of Community Reinvestment Act activities, the law generally requires that financial institutions address the credit needs of low-to-moderate income individuals and neighborhoods in the communities in which they operate. Bank regulators are required to take the Community Reinvestment Act ratings of a bank or of the bank subsidiaries of a holding company into account when acting upon certain branch and bank merger and acquisition applications filed by the institution. Under the law, financial holding companies and banks that desire to engage in new financial activities are required to have satisfactory or better CRA ratings when they commence the new activity.
Once a bank holding company has filed a declaration of its intent to be a financial holding company, as long as there is no action by the Federal Reserve Board giving notice that it is not eligible, the company may proceed to engage in the
activities and enter into the affiliations under an expanded authority conferred by the law. The holding company does not need prior approval from the Federal Reserve Board to engage in activities that the law identifies as financial in nature or that the Federal Reserve Board has determined to be financial in nature or incidental thereto by order or regulation. The law retains the basic structure of the Bank Holding Company Act. Thus, a bank holding company that is not eligible for the expanded powers of a financial holding company, is subject to the provisions of the Bank Holding Company Act which limits the activities that are authorized and defined as closely related to banking activities. The law also addresses the consequences of when a financial holding company that has exercised the expanded authority fails to maintain its eligibility to be a financial holding company. The Federal Reserve Board may impose such limitations on the conduct or activities of a noncompliant financial holding company or any affiliate of that company as the Board determines to be appropriate under the circumstances and consistent with the purposes of the law.
COMPETITION
The banking business is highly competitive. The Bank competes with other commercial banks that conduct operations in its primary service area.
Banks generally compete with other financial institutions through the banking products and services offered, the pricing of services, the level of service provided, the convenience and availability of services, and the degree of expertise and the personal manner in which services are offered. The Bank encounters strong competition from most of the financial institutions in the Bank's primary service area. In the conduct of certain areas of its banking business, the Bank also competes with credit unions, consumer finance companies, insurance companies, money market mutual funds and other financial institutions, some of which are not subject to the same degree of regulation and restrictions imposed upon the Bank. Many of these competitors have substantially greater resources and lending limits than the Bank has and offer certain services, such as trust services, that the Bank does not provide presently. Management believes that personalized service and competitive pricing will provide it with a method to compete effectively in the primary service area.
MONETARY POLICY
Earnings of the Company are affected by domestic and foreign economic conditions, particularly by the monetary and fiscal policies of the United States government and its agencies. The Federal Reserve has an important impact on the operating results of banks and other financial institutions through its power to implement national monetary policy. The methods used by the Federal Reserve include setting the reserve requirements of banks, establishing the discount rate on bank borrowings and conducting open market transactions in United States Government securities.
FDIC INSURANCE ASSESSMENTS
The FDIC has adopted a risk-based assessment system for insured depository institutions that takes into account the risks attributable to different categories and concentrations of assets and liabilities. The system assigns an institution to one of three capital categories: (a) well capitalized (b) adequately capitalized and (c) undercapitalized. These three categories are substantially similar to the prompt corrective action categories described above, with the "undercapitalized" category including institutions that are undercapitalized, significantly undercapitalized, and critically undercapitalized for prompt corrective action purposes. An institution is also assigned by the FDIC to one of three supervisory subgroups within each capital group. The supervisory subgroup to which an institution is assigned is based on a supervisory evaluation provided to the FDIC by the institution's primary federal regulator and information which the FDIC determines to be relevant to the institution's financial condition and the risk posed to the deposit insurance funds (which may include, if applicable, information provided by the institution's state supervisor). An institution's insurance assessment rate is then determined based on the capital category and supervisory category to which it is assigned.
The FDIC may terminate insurance of deposits upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order, or condition imposed by the FDIC.
Based on the Bank's risk classification, the Bank was not required to pay an assessment for deposit insurance in 2000, nor will it be required to pay a deposit insurance assessment in 2001. The Bank was required to pay the special interim Bank Insurance Fund Financing Corporation ("FICO") assessments in 2000 and will also be required to pay this assessment in 2001. During the fourth quarter of 2000, the annualized rate for this assessment was .0212 percent of Bank deposits, and for the first quarter of 2001, the annualized rate will be .0196 percent.
STATISTICAL INFORMATION
Certain statistical information is found in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K.
ITEM 2.
ITEM 2. PROPERTIES
The Company conducts its business operations through the principal executive and operations office of the Company and the Bank located on an approximately 1.3 acre site at 99451 Overseas Highway, Key Largo, Monroe County, Florida. The main offices of the Bank at 99451 Overseas Highway are housed in a two-story building, owned by the Bank and containing approximately 13,275 square feet of finished space used for offices and operations and seven teller windows in the Bank lobby. The building also has two drive-up teller windows and an automated teller machine with 24-hour a day access.
The Bank's other eleven branches are located at 600 North Homestead Boulevard in Homestead; 831 NE 8th Street in Homestead; 777 North Krome Avenue in Homestead; 103330 Overseas Highway in Key Largo; 91980 Overseas Highway in Tavernier; 80900 Overseas Highway in Islamorada; 11401 Overseas Highway in Marathon Shores; 2348 Overseas Highway in Marathon; 30400 Overseas Highway in Big Pine Key; 330 Whitehead Street in Key West; and 3618 N. Roosevelt Drive in Key West, Florida. The main office and branch properties are owned by the Bank, with the exception of the 831 NE 8th Street location which is leased.
The Bank also owns three other properties. The Bank owns a one-story building containing approximately 5,000 square feet on a one-half acre lot located at 100210 Overseas Highway, Key Largo. This building is partly leased to another business and the remainder of the building is used by the Company as a training center and office space. The Bank owns a three-story building at 228 Atlantic Boulevard, Key Largo, Florida, consisting of approximately 3,000 square feet that is utilized by the Bank primarily for the loan operations, human resources and marketing departments. The Bank also owns a building located at 28 N.E. 18th Street in Homestead that is used for office space.
The insurance agency leases its three locations located at 98150 Overseas Highway in Key Largo; 5800 Overseas Highway in Marathon; and 805 Peacock Plaza in Key West.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
While the Company and the Bank are from time to time parties to various legal proceedings arising in the ordinary course of their business, management believes after consultation with legal counsel that there are no proceedings threatened or pending against the Company or the Bank that will, individually or in the aggregate, have a material adverse effect on the consolidated results of operations or financial condition of the Company.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the Company's fourth quarter of the fiscal year ended December 31, 2000.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of December 31, 2000, there were 386 registered shareholders of record and 3,902,410 shares of the Company's common stock outstanding. On June 18, 1997, the Company's $0.10 par value common Stock became listed on the Nasdaq National Market System under the symbol "TIBB." Prior thereto, the Company's common stock had not been traded on an established trading market, so there had been limited trading. The following table sets forth, for the periods indicated, the high and low sale prices per share for the Company's common stock on the Nasdaq National Market:
For the year ended December 31, 2000, the Company paid cash dividends to shareholders in the amount of $.105 per share for the first three quarters and $.1075 per share for the last quarter ($.4225 in the aggregate). For the year ended December 31, 1999, the Company paid cash dividends to shareholders in the amount of $.1025 per share for the first three quarters and $.105 per share for the last quarter ($.4125 in the aggregate). The only source of funds presently available to the Company for the payment of cash dividends is dividends from the Bank. Certain regulatory requirements restrict the amount of dividends that can be paid to the Company by the Bank without obtaining the prior approval of the appropriate regulatory authorities. Information regarding restrictions on the ability of the Bank to pay dividends to the Company is contained in Note 12 of the "Notes to Consolidated Financial Statements" contained in Item 8 hereof. The Company expects that comparable cash dividends will continue to be paid in the future, although no assurance can be given that further dividends will be declared by the Company, or if declared, what the amount of the dividends will be.
In the fourth quarter of 1998 the Company purchased 50,000 shares of common stock through one of its market makers at an average price of $11.16 per share. Also, the Company authorized the purchase of an additional 50,000 shares beginning in the first quarter of 1999. In 1999, 45,000 of these shares were repurchased at an average price of $10.97 per share. The remaining 5,000 shares were repurchased in the first quarter of 2000 at an average cost of $10.32. In July 2000, the Company repurchased 525,000 shares of common stock from the Company's largest shareholder at a cost of $10 per share.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data presented below as of and for the years ended December 31, 2000, 1999, 1998, 1997, and 1996 is unaudited and has been derived from the Consolidated Financial Statements of the Company and its subsidiaries, and from records of the Company. During 1996, TIB Financial Corp. ("Company") was formed providing for a reorganization whereby TIB Bank of the Keys ("Bank") became a wholly-owned subsidiary of the Company. The transaction was accounted for on a historical cost basis similar to a pooling of interest and, accordingly, the following selected consolidated financial data was prepared as if the reorganization occurred January 1, 1996. The information presented below should be read in conjunction with the Consolidated Financial Statements and related notes, and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
(1) Stock splits in 1997 and 1996 have been retroactively reflected in the per share data and weighted-average common equivalent and diluted shares outstanding as if they occurred January 1, 1996.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
During 1996, TIB Financial Corp. ("Company") was formed providing for a reorganization whereby TIB Bank of the Keys ("Bank") became a wholly-owned subsidiary of the Company. The transaction was accounted for on a historical cost basis similar to a pooling of interests and, accordingly, Selected Financial Data, Management's Discussion and Analysis of Financial Condition and Results of Operations, and the Consolidated Financial Statements have been restated to reflect the reorganization as occurring at the beginning of the first period presented. In 1997, the Bank formed two subsidiaries, the first on June 13, 1997, when the Bank acquired the assets of Small Business Consultants, Inc., a Florida corporation specializing in the government guaranteed loan consulting business. On July 31, 1997, the Bank formed TIB Investment & Insurance Center, Inc. for the purpose of selling investment products to the public. The Company has a 30% interest in ERAS JV, a joint venture computer software, item processing, and network management company. ERAS JV currently processes the cash items and provides network management services for the bank.
On February 25, 1997, TIB Financial Corp. declared a three-for-one stock split which was distributed on March 18, 1997, to shareholders of record on February 25, 1997. In the Selected Financial Data, Management's Discussion and Analysis of Financial Condition and Results of Operations, and the Consolidated Financial Statements, all per share amounts, number of shares outstanding and market prices have been restated to reflect these stock splits as if they occurred at the beginning of the first period presented.
During 2000, the Company participated in two significant capital transactions and completed two acquisitions. The first capital transaction was with the Company entering into an agreement with the Company's largest shareholder effective July 1, 2000, to purchase 525,000 shares of the Company's common stock in exchange for four subordinated debt instruments of the Company totaling $5,250,000. The interest rate on the notes is 13%, with interest payments required quarterly. The principal balance is payable in full on October 1, 2010, the maturity date of the notes. The notes can be prepaid by the Company at par any time after July 1, 2003. The debt issued by the Company qualifies as Tier 2 capital at the holding company level under applicable regulatory capital guidelines. The stock acquired in this transaction along with the shares of treasury stock already repurchased, were retired. The primary effect of this transaction was a reduction in retained earnings of the Company by $6,290,562. The Company believes the negative effect on earnings due to the interest expenses from these notes is more than offset by the long term anti-dilutive benefits to the remaining shareholders.
The second capital transaction occurred on September 7, 2000, when the Company participated in a pooled offering of trust preferred securities in the amount of $8 million. The Company formed TIBFL Statutory Trust I, a wholly-owned statutory trust subsidiary for the purpose of issuing the trust preferred securities. The trust used the proceeds from the issuance of the trust preferred securities to acquire junior subordinated notes of the Company. The trust preferred securities essentially mirror the debt securities, carrying a cumulative preferred dividend at a fixed rate equal to the 10.6% interest rate on the debt securities. The debt securities and the trust preferred securities each have 30-year lives. The trust preferred securities and the debt securities are callable by the Company or the Trust, at their respective option after ten years, and at varying premiums and sooner in specific events, subject to prior approval by the Federal Reserve Board, if then required. The Company has treated the trust preferred securities as Tier 1 capital for federal regulatory purposes (see Item 1 above). This transaction allows the Company the capital to grow and pursue limited acquisition opportunities without the dilutive effect of other capital sources. Again the Company has incurred additional interest expense which is offset by investable cash and the further opportunities afforded from being able to report this obligation as Tier 1 capital.
The first acquisition was consummated on October 31, 2000, when the Company purchased Keys Insurance Agency of Monroe County, Inc. Keys Insurance Agency has three offices in the Keys and offers a full line of commercial and residential coverage as well as life, health and annuities. The purchase price of the agency was $2,200,000. This was comprised of $220,000 in the Company's common stock, $1,650,000 in cash, and $330,000 in cash to be paid over a three year period subject to the agency's ability to achieve certain earnings thresholds. The acquisition
of the agency is not expected to have a material impact on the financial statements of the Company in the first year of operation. This transaction entailed the booking of $2.2 million in goodwill since, as is commonly the case, the insurance agency had relatively little in tangible assets.
The other significant increase in intangible assets came from the second acquisition. On December 18, 2000, the Bank acquired from Republic Security Bank two branch banks in South Miami-Dade County, Florida. One branch was a stand alone facility and the other was an in store branch in an Albertson's market. Loans, principally residential real estate, in the amount of $8.1 million were acquired along with $22.4 million in deposit liabilities. The premium paid for the deposits averaged 6.7% and resulted in a core deposit intangible to be recorded in the amount of $1.5 million.
Also of importance in December 2000 was the securitization of approximately $23 million in first mortgage adjustable rate residential loans by the bank. The effect of this transaction was to remove this amount from the loan section of the balance sheet and increase the amount in investment securities available for sale. This enhanced the liquidity of these assets and added a Freddie Mac guarantee to their eventual collection. Further, this allowed the provision for loan losses to be decreased relative to prior years since a significant amount of loans were removed.
The Company received notification from the Federal Reserve Bank that the Company's election to become a financial holding company was approved effective August 31, 2000. As a financial holding company, the Company may engage in activities that are financial in nature or incidental to a financial activity.
On February 15, 2001, the Bank purchased property at 850 6th Avenue N., in Naples Florida. It is intended that this property which cost $2,267,000 will be converted to an ownership interest in the first floor of an office building located on this site. This facility will be operated as a bank branch and is expected to be completed in early 2002. Two other branch locations in the southwest Florida market have been leased and are expected to be opened in 2001.
PERFORMANCE OVERVIEW
The Company achieved record net income of $4.2 million in 2000 representing a $104,000 or a 2.5% increase over the prior year. Management attributes the results to a 15.4% increase in interest income primarily caused by strong loan growth, along with a 6.6% increase in non-interest income, offset by a 30.8% increase in interest expense, and a 7.7% increase in non-interest expenses. Net income of $4.1 million in 1999 represented a $678,000 or 19.7% increase over 1998.
Basic earnings per share for 2000 was $1.02 compared to $.94 in 1999. Basic weighted-average common equivalent shares outstanding in 2000 were 4,140,234 compared to 4,388,336 in 1999. This decrease resulted from the Company stock repurchases, which were partially offset by the exercise of stock options.
Diluted earnings per share for 2000 was $0.99 compared to $0.91 in 1999. Diluted weighted-average common equivalent shares outstanding in 2000 were 4,274,155 compared to 4,543,784 in 1999.
Total assets of the Company at December 31, 2000 were $439.3 million compared to $392.1 million at the previous year end, reflecting an increase of 12.0%. Asset growth was funded by an increase in deposits of 13.1%, or $45.5 million in 2000. The Company's total loan volume increased 8.6%, or $25.0 million, to $315.6 million at year end 2000 compared to $290.6 million at December 31, 1999. In December 2000, $23 million in first mortgage adjustable rate residential loans were securitized by the Bank. The effect of this transaction was to remove this amount from the loan section of the balance sheet and increase the amount in investment securities available for sale.
Net interest income in 2000 increased 4.9%, or $808,000, to $17.4 million from $16.6 million reported in 1999. The Company's interest margin declined from 4.78% to 4.74%. This decline resulted from the Company's decision to remain aggressive in a competitive deposit and loan market. Non-performing assets increased to 0.80% of total loans at December 31, 2000 from 0.71% at year end 1999. Non-interest income increased $470,000 to $7.6 million
in 2000. The increase in other income is attributed to an increase of $863,000 in merchant bankcard processing income; an increase of $102,000 in service charges on deposit accounts; a $142,000 increase in other income; a $61,000 increase in fees on mortgage loans sold at origination; a $42,000 increase in commissions on retail investment services; a $154,000 increase in commissions on sales by Keys Insurance Agency, Inc.; a $147,000 decrease from equity in income, net of goodwill amortization, from the Company's investment in ERAS Joint Venture; a $435,000 decrease in gain on sale of government guaranteed loans; and a $312,000 decrease in gain on sale of insurance company option.
Net interest income in 1999 increased 20.4%, or $2.8 million, to $16.6 million from $13.8 million reported in 1998.
The Company experienced an increase in non-interest expenses of $1.3 million in 2000, or 7.7 % over 1999. The major area of increased expenses relate to interchange fees and other expenses for processing merchant bankcard transactions.
RESULTS OF OPERATIONS
The following table summarizes the balance sheet and results of operations including selected financial performance ratios of the Company for the three years ended December 31:
(1) Averages are derived from daily balances.
NET INTEREST INCOME
Net interest income, the primary source of revenue for the Company, is a function of the yield earned on average interest-earning assets and the rate paid on average interest-bearing liabilities. Changes in net interest income from period to period reflect the increases or decreases in average interest-earning assets, interest-bearing liabilities and the interest rate spread which is affected by the degree of mismatch in maturity and repricing characteristics of the Company's interest-earning assets and interest-bearing liabilities.
The prime rate began 2000 at 8.5% and by June it had risen to 9.5% due to changes in the Federal Funds Rate which were matched by all the major banks in the key lending rate. The majority of the Bank's loans are tied to the Prime Rate and most of those reset within every six months. Therefore 2000 saw increasing yields in the loan portfolio which were matched by increased funding costs. The average yield on interest earning assets rose 73 basis points in 2000 to 8.73% from 8.00% in 1999. The average cost of interest bearing deposits rose from 4.05% in 1999 to 4.87% in 2000 or 82 basis points. However, the interest cost resulting from the note given in exchange for the stock repurchase and the interest cost from the issuance of trust preferred securities increased the rate of all interest-bearing liabilities so that the interest rate spread decreased 22 basis points, from 3.94% in 1999 to 3.72% in 2000. A small decrease in nonearning assets and a small increase in non-interest bearing liabilities helped to keep the decrease in net interest margin to only 4 basis points, from 4.78% in 1999 to 4.74% in 2000.
Net interest income on a tax equivalent basis increased 19.3% to $16.8 million in 1999 as compared to 1998. Net interest margin decreased only 10 basis points to 4.78%. The decrease in the yield in earning assets was similar to the decrease in the cost of interest bearing liabilities. One factor that restrained the decrease in yield of earning assets was a change in mix. A relatively larger proportion of higher yielding loans in 1999 compared to 1998 helped moderate the overall yield decrease in these assets overall. Loan volume representing the majority of the change in average earning assets increased $58.8 million while average investment securities volumes increased $300,000. Average interest-bearing liabilities increased 22.6% or $51.4 million over 1998. Average increases in time and savings deposits of $23.9 million were accompanied by a large increase of $23.9 million in money market accounts.
The following table sets forth information with respect to the average balances, interest income and average yield by major categories of assets; the average balances, interest expense and average rate by major categories of liabilities; the average balances of noninterest-earning assets, noninterest-bearing liabilities and stockholders' equity; and net interest income, interest rate spread, and net interest margin for the years ended December 31, 2000, 1999 and 1998.
AVERAGE BALANCE SHEETS
(1) Average loans include non-performing loans. Interest on loans includes loan fees of $58,494 in 2000, $140,590 in 1999 and $74,966 in 1998. (2) Interest income and rates include the effects of a tax equivalent adjustment using a Federal tax rate of 34% in adjusting tax exempt interest on tax exempt investment securities to a fully taxable basis. (3) Net interest margin is net interest income divided by average total interest-earning assets.
CHANGES IN NET INTEREST INCOME
The table below details the components of the changes in net interest income for the last two years. For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volumes, changes due to rates, with the changes in both volumes and rates allocated to these two categories based on the proportionate absolute changes in each category.
(1) The change in interest due to both rate and volume has been allocated to the volume and rate components in proportion to the relationship of the dollar amounts of the absolute change in each. (2) Interest income includes the effects of a tax equivalent adjustment using a federal tax rate of 34% in adjusting tax exempt interest on tax exempt investment securities to a fully taxable basis.
NON-INTEREST INCOME
The following table presents the principal components of non-interest income for the years ended December 31, 2000, 1999, and 1998.
The Company's continued emphasis on non-interest income remains a primary focus. Over the past three years, the Company has increased non-interest income from $6.4 million to $7.6 million or approximately 19.8%. The 2000 growth in non-interest income of $471,000 over 1999 resulted from the Company's sources of this income coming from a broad range of individual profit centers that can grow in total even when unique factors can limit the results from some areas. Specifically, gains on sales of government guaranteed loans decreased due to several factors including the low premiums being offered for certain types of loans due to high historical prepayment rates. Also, the insurance company option sold in 1999 was a one time event and therefore was not repeated in 2000. More than offsetting these items were the continuing expansion of the merchant credit card processing business and the commission income from the last two months in 2000 in which the Company owned Keys Insurance Agency.
The Bank began a program to originate and sell conforming fixed rate residential mortgages to the secondary market in late 1994 and the Bank generated over $50 million in residential mortgages in 1998, 1999 and 2000. Approximately 60% of the annual volume was conforming fixed rate residential loans that were sold immediately to the secondary market. Approximately 40% of the annual production represents conforming adjustable rate loans that are placed in the Bank's portfolio. This represents a shift from prior years as the inverted yield curve caused more customers to opt for fixed rate loans since the pricing was similar to adjustable rate products. The Bank originates these loans utilizing industry standards for documentation and procedures in order for them to be suitable for sale as a back-up source for liquidity. In 1999 and 2000 none was sold, however, approximately $23 million of seasoned adjustable rate loans were securitized in 2000. The Bank retained this security interest so that most of this yield will benefit the Company in the future.
NON-INTEREST EXPENSES
The following table represents the principal components of non-interest expenses for the years ended December 31, 2000, 1999, and 1998.
Over the past three years the Company has opened additional locations and hired appropriate additional personnel to build an infrastructure which will enhance the Bank's customer service and facilitate growth. The Company experienced an increase in non-interest expenses of $1.3 million in 2000, or 7.7% over 1999. The majority of this increase related to the cost involved to process merchant credit cards and was more than offset by the income derived from this activity. Some of the salary and benefit increase, $134,000, is due to the two months which the Company owned Keys Insurance Agency at the end of 2000.
The Company experienced an increase in non-interest expenses of $2.3 million in 1999, or 15.6% over 1998. The major areas of increased expenses related to merchant bank card expenses for processing merchant bankcard transactions, computer services, supplies, amortization of purchased deposits, charge-off of unamortized leasehold improvements, and the additional operating costs, including salary and employee benefits, associated with the new branches established in July 1998 and September 1998. Bankcard costs are volume driven and are more than offset by higher revenues reported in other income. Computer services and supplies reflect the costs associated with the larger number and activity in account relationships and approximately $41,000 in Y2K preparedness testing. The premium paid in the acquisition of the branch deposits in Homestead required $145,000 in current charges to intangible amortization expense for the year ended December 31, 1999, compared to $36,000 in 1998. Finally, there was a $134,000 charge taken in the second quarter of 1999 related to the write-off of the unamortized leasehold improvements associated with the leased facility that was abandoned upon the opening of the newly constructed branch in Key West.
PROVISION FOR INCOME TAXES
The provision for income taxes includes federal and state income taxes. The effective income tax rates for the years ended December 31, 2000, 1999 and 1998 were 36.8%, 35.8%, and 35.4%, respectively. The fluctuations in effective tax rates reflect the effect of the differences in deductibility of certain expenses.
LOAN PORTFOLIO
The Company is located in the Florida Keys and south Miami-Dade County and the region's primary industry is tourism. Commercial loan demand therefore is significant for resort, hotel, restaurant, marina and related real estate secured property loans. The Company serves this market by offering long-term adjustable rate financing to the
owners of these types of properties for acquisition and improvements thereon. These loans are often $1 million or larger and are prospects for government guarantee programs or traditional participation agreements. The nature of government programs such as the Small Business Administration is generally geared toward long term adjustable rate financing.
Monroe County has the highest cost of living of any county in Florida and this is driven in large part by the scarce and expensive real estate whose value is supported by various construction restrictions and environmental considerations. This also serves to maintain and enhance collateral values on loans secured by property in this market. The Company has grown in commercial loans by aggressively serving its market. The quality of the Company's credit administration along with the stable real estate values have kept loan losses at low levels.
Loans are expected to produce higher yields than investment securities and other interest earning assets (assuming that credit losses are not excessive). Thus the absolute volume of loans and the volume as a percentage of total earning assets are important determinants of the net interest margin. Net loans outstanding increased to $311.8 million at year end 2000 as compared to $286.9 million at year end 1999, an increase of 8.7%. Of this amount, real estate mortgage loans increased 5.2% from $242.3 million to $254.9 million. Commercial real estate mortgage loans accounted for much of this increase, growing from $150.4 million to $170.3 million at the respective year ends. The Company maintains a posture of originating commercial loans with rates that fluctuate with the prime lending rate and residential loans with rates that fluctuate with the one year treasury index. At December 31, 2000, 83.3% of the total loan portfolio had floating or adjustable rates.
The following table presents the composition of the Company's loan portfolio at December 31:
The maturity distribution of the Company's loan portfolio at December 31, 2000 was as follows:
(a) $5,995 of this amount relates to residential real estate construction loans that have been approved for permanent financing but are still under construction. The remaining amount relates to commercial real estate construction loans.
ALLOWANCE AND PROVISION FOR LOAN LOSSES
The allowance for loan losses represents a reserve for potential losses in the loan portfolio. The adequacy of the allowance for loan losses is evaluated periodically based on a review of all significant loans, with particular emphasis on non-accruing, past due, and other loans that management believes require special attention.
For problem loans, management's review of the adequacy of the allowance for loan losses consists of an evaluation of the financial strengths of the borrower, the related collateral, and the effects of economic conditions. General reserves against the remaining loan portfolio are based on analysis of historical loan loss ratios, loan charge-offs, delinquency trends, and previous collection experience, along with an assessment of the effects of external economic conditions.
The provision for loan losses is a charge to income in the current period to replenish the allowance and maintain it at a level that management has determined to be adequate to absorb estimated losses in the loan portfolio. The Company's provision for loan losses for 2000 was $332,000 as compared to $540,000 in 1999, reflecting the Company's growth in loans outstanding and negligible charge-offs. The Company's provision for loan losses for 1999 was $540,000 as compared to $360,000 in 1998.
The allowance for loan losses represented 1.04% of total loans at December 31, 2000 compared to 1.03% and 1.02% at year end 1999 and 1998, respectively. The determination of the adequacy of the allowance for loan losses is based on management's judgment about factors affecting loan quality; collectability and assumptions about the economy. Management considers the year end allowance appropriate and adequate to cover possible losses in the loan portfolio; however, management's judgment is based upon a number of assumptions about future events, which are believed to be reasonable, but which may or may not prove valid. Thus, there can be no assurance that charge-offs in future periods will not exceed the allowance for loan losses or that additional increases in the allowance for loan losses will not be required. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.
Transactions in the allowance for loan losses are summarized for the years ended December 31,
Management considers the adequacy of the allowance for loan losses in its entirety, however, to comply with regulatory reporting requirements, management has allocated the allowance for loans losses as shown in the table below into components by loan type at each year end. Management does not intend to imply that actual future charge-offs will necessarily follow the allocations described below.
NON-PERFORMING ASSETS
Non-performing assets include non-accrual loans, accruing loans contractually past due 90 days or more, restructured loans, and other real estate. Loans are placed on non-accrual status when management has concerns relating to the ability to collect the loan principal and interest and generally when such loans are 90 days or more past due.
Non-performing assets for the five years ended December 31, were:
The loss of income associated with non-performing loans for the five years ended December 31, were:
The Company adopted the provisions of Statement of Financial Accounting Standards No. 114 (SFAS 114) "Accounting by Creditors for Impairment of a Loan" as amended by Statement of Financial Accounting Standards No. 118 (SFAS 118), "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosure" on January 1, 1995. The Company has no loans which were considered impaired under the provisions of SFAS 114.
There were no restructured loans at December 31, 2000, 1999, 1998, 1997, or 1996.
LIQUIDITY AND RATE SENSITIVITY
Liquidity represents the ability to provide steady sources of funds for loan commitments and investment activities, as well as to provide sufficient funds to cover deposit withdrawals and payments of debt, off-balance sheet obligations and operating obligations. Funds can be obtained from operations by converting assets to cash, by attracting new deposits, by borrowing, by raising capital and other ways.
Major sources of increases in cash and cash equivalents are as follows for the three years ending December 31:
The Bank has a $7.5 million line of credit from its principal correspondent and a repurchase agreement with another financial institution which allows borrowing up to 95% of the market valuation of securities pledged for this purpose. The majority of the Company's unpledged securities could be used as collateral for this agreement. Further, the Bank has invested in Federal Home Loan Bank stock for the purpose of establishing credit lines with the Federal Home Loan Bank. The credit availability to the Bank is equal to 14% of the Bank's total assets as reported on the most recent quarterly financial information submitted to the Bank's regulators. The credit availability approximated $61.0 million at December 31, 2000. Borrowings against this line of credit are collateralized by the Bank's one-to-four family residential mortgage loans. In 1999, a $10 million advance was made which matured on January 24, 2000. An $8 million advance and a $7 million advance were made and repaid during the year 2000.
Scheduled maturities and paydowns of loans and investment securities are a continual source of liquidity. Also, many adjustable rate residential real estate loans originated are salable in the secondary mortgage market at par or better and therefore provide a secondary source for liquidity.
At December 31, 2000, the Bank's gross loan to deposit ratio was 80.4% compared to a ratio of 83.8% at December 31, 1999. Management monitors and assesses the adequacy of the Company's liquidity position on a monthly basis to ensure that sufficient sources of liquidity are maintained and available.
Under state banking law, regulatory approval will be required if the total of all dividends declared in any calendar year by the Bank exceeds the Bank's net profits to date for that year combined with its retained net profits for the preceding two years. Retained earnings of the Bank available for payment of dividends without prior regulatory approval at December 31, 2000 is approximately $6,481,000. These dividends represent the Company's primary source of liquidity.
The Company's interest rate sensitivity position at December 31, 2000 is presented in the table below.
(A) 40% of outstanding balance considered repricable immediately and 60% repricable in the furthest time period.
(B) Savings Deposits considered repricable in the one year time horizon.
The Company is cumulatively asset sensitive in the over 5 years time frame and cumulatively liability sensitive in each of the 3 month or less, 4 to 6 months, and 7 to 12 month timeframes. In the 1 to 5 year range the Company is very close to neutral in cumulative rate sensitivity. Certain liabilities such as NOW and passbook savings accounts, while technically subject to immediate repricing in response to changing market rates, historically do not reprice as quickly nor to the extent as other interest sensitive accounts. Therefore, to include the entire balance of these liability accounts in the earliest repricing period would be unrealistic. To compensate for the fact that changes in general market interest rates will not be fully reflected in changes in NOW rates, only 40% of NOW balances is included as immediately rate sensitive based on the Company's own and industry repricing experience. Also, passbook savings will not reprice as quickly as market rates and therefore the repricing of savings deposits is included in the 7 to 12 month repricing period, based on the Company's repricing experience. Because of non-interest bearing liabilities, total interest-earning assets are substantially greater than the total interest-bearing liabilities and therefore over time the effects on net interest income from changes in asset yield will be greater than the change in expense from liability cost. Accordingly, if market interest rates should eventually decrease, the net interest margin should decrease. Conversely, if rates increase the net interest margin would over time increase.
Even in the near term, the $52,497 one year cumulative negative sensitivity gap exaggerates the probable effects on earnings in a rising rate environment for two reasons. First, the liabilities subject to repricing are predominately not indexed to any specific market rate and therefore offer the Company the opportunity to delay or diminish any rate repricings. Second, a static gap model does not factor the effects of growing volumes which would likely include greater additional rate sensitive assets than rate sensitive liabilities.
Interest-earning assets and other time deposits are presented based on their contractual terms. It is anticipated that run off in any deposit category will be approximately offset by new deposit generation. Since the Company has experienced steady growth in deposits, no net run off in any deposit category is assumed in the interest rate sensitivity table. It is the Company's policy to maintain its cumulative one year gap ratio in the -20% to +10% range. At December 31, 2000, the Company was within this range with a one year cumulative sensitivity ratio of -13.3%.
INVESTMENT PORTFOLIO
Contractual maturities of investment securities (amortized cost) at December 31, 2000 are shown below. Expected maturities differ from contractual maturities because borrowers may have the right to call or repay obligations without call or prepayment penalties.
Yield by classification of investment securities at December 31, 2000 (amortized cost) was as follows:
(A) Weighted average yields on tax-exempt obligations have been computed by grossing up actual tax-exempt income to a fully taxable equivalent basis using a federal tax rate of 34%.
(B) Represents investment in common stock of Independent Bankers' Bank of Florida stock which pays no dividends and an investment in the Federal Home Loan Bank of Atlanta.
The following table presents the amortized cost, market value, unrealized gains, and unrealized losses for the major categories of the Company's investment portfolio for each reported period:
DEPOSITS
The following table presents the average amount outstanding and the average rate paid on deposits by the Company for the years ended December 31, 2000, 1999, and 1998.
The following table presents the maturity of the Company's time deposits at December 31, 2000:
CAPITAL ADEQUACY
There are various primary measures of capital adequacy for banks and financial holding companies such as risk based capital guidelines and the leverage capital ratio. See "Business-Supervision and Regulation - Capital Regulations."
As of December 31, 2000, the Bank exceeded its required levels of capital for a bank categorized by the FDIC as well capitalized under the regulatory framework for prompt corrective action. The Bank's risk-based capital ratio of
Tier 1 capital to risk-weighted assets was 10.4%, its risk-based ratio of total capital to risk-weighted assets was 11.4%, and its leverage ratio was 8.2%. See Note 12 to the Consolidated Financial Statements.
INFLATION
Inflation has an important impact on the growth of total assets in the banking industry and causes a need to increase equity capital higher than normal levels in order to maintain an appropriate equity to assets ratio. The Company has been able to maintain an adequate level of equity, as previously mentioned and copes with the effects of inflation by managing its interest rate sensitivity gap position through its asset/liability management program, and by periodically adjusting its pricing of services and banking products to take into consideration current costs.
ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 133 requires companies to recognize all derivatives contracts as either assets or liabilities in the balance sheet and to measure them at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. SFAS 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 2000 (as amended by SFAS 138), however, early adoption was allowed. Historically, the Company has not entered into derivatives contracts either to hedge existing risks or for speculative purposes. The Company adopted the new standard as of July 1, 1998. The effect on the financial statements at July 1, 1998 which resulted from the transfer of approximately $11.9 million in investment securities from the held to maturity category to the available for sale category was an increase in other comprehensive income market valuation reserve of approximately $176,000.
Effective January 1, 1999, the Company adopted American Institute of Certified Public Accountants Statement of Position 98-5 (SOP 98-5), "Reporting the Costs of Start-Up Activities." SOP 98-5 applies to all non-governmental entities and requires that costs of start-up activities and organization costs be expensed as incurred. Prior to 1999, the Company capitalized organization costs and amortized them to expense over a five year period. The Company recorded a charge net of tax of $47,047 in 1999 as the cumulative effect of this accounting change.
SELECTED QUARTERLY DATA
The following is a summary of unaudited quarterly results for 2000 and 1999:
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
All financial institutions have financial instruments which are subject to market risk comprised of interest rate risk, foreign currency exchange rate risk, commodity price risk and other relevant market risks, such as equity price risks. The Company has assessed its market risk as predominately interest rate risk.
The following interest rate sensitivity analysis information as of December 31, 2000 was developed using simulation analysis of the Bank's sensitivity to changes in net interest income under varying assumptions for changes in market interest rates. Specifically, the model derives expected interest income and interest expense resulting from an immediate and parallel shift in the yield curve in the amounts shown.
These rate changes are matched with known repricing intervals and assumptions for new growth net of expected prepayments. The assumptions are based primarily on experience in the Bank's market under varying rate environments. The imbedded options that the Bank's loan customers possess to refinance are considered for purposes of this analysis and cause the larger decreases in income in a declining rate scenario versus the income increases in the same size rising rate scenario.
This analysis intentionally exaggerates interest sensitivity. For the sake of simplicity and comparability, an immediate change in rates is assumed. However, any significant change in actual market rates would probably be phased in over an extended period of time. This phase in would reduce the net interest income effects for any absolute change in rates.
The Bank attempts to retain interest rate neutrality by generating mostly adjustable rate loans and managing the securities and Fed Funds positions to offset the repricing characteristics of the deposit liabilities.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, notes thereto and report of independent certified public accountants thereon included on the following pages are incorporated herein by reference.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders TIB Financial Corp. Key Largo, Florida
We have audited the accompanying consolidated balance sheets of TIB Financial Corp. and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the three years ended December 31, 2000. These consolidated financial statements are the responsibility of TIB Financial Corp.'s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of TIB Financial Corp. and subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America.
/S/ BDO SEIDMAN, LLP BDO Seidman, LLP
February 16, 2001 Atlanta, Georgia
TIB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
See accompanying notes to consolidated financial statements.
TIB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
See accompanying notes to consolidated financial statements.
TIB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Continued)
See accompanying notes to consolidated financial statements.
TIB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
TIB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Continued)
See accompanying notes to consolidated financial statements.
TIB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
TIB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
TIB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
TIB Financial Corp. and subsidiaries provide full-service commercial banking services in Monroe and South Dade counties, Florida.
The accounting and reporting policies of TIB Financial Corp. and subsidiaries conform to generally accepted accounting principles and to general practices within the banking industry. The following is a summary of the more significant of these policies.
USE OF ESTIMATES AND ASSUMPTIONS
The consolidated financial statements have been prepared in conformity with generally accepted accounting principles. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies may require additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of TIB Financial Corp. (Parent Company) and its wholly-owned subsidiaries, TIB Bank of the Keys (Bank), Keys Insurance Agency, Inc., TIB Software and Services, Inc., and TIBFL Statutory Trust I (see note 8), collectively known as the "Company". All significant intercompany accounts and transactions have been eliminated in consolidation.
In 1998, the Parent Company's subsidiary, TIB Software and Services, Inc., acquired a 30 percent interest in ERAS Joint Venture (the "Venture"), a general partnership, in exchange for consideration of $791,216. Goodwill associated with the transaction totaled $637,614 and is being amortized over a period of ten years. The investment in the Venture is being accounted for using the equity method. The Venture's primary business is item processing and the design, development, installation and maintenance of accounting software for financial institutions. ERAS Joint Venture is the Bank's item processor. Payments of approximately $868,000 and $1,204,000 were made to the Venture in 2000 and 1999, respectively.
On October 31, 2000, the Company purchased Keys Insurance Agency of Monroe County, Inc. which was 100% owned by a company director. Keys Insurance Agency, Inc. (the new name subsequent to the purchase) has three offices in the Florida Keys and brokers a full line of commercial and residential hazard insurance coverages as well as life and health insurance and annuities. The purchase price for the net assets of the agency was $2,200,000 which consisted primarily of intangible assets. The consideration consisted of $220,000 of Company common stock (21,463 shares), $1,650,000 in cash (paid at closing), and $330,000 in cash to be paid over a three-year period subject to the agency's ability to achieve certain earning thresholds. This acquisition was recorded using the purchase method of accounting.
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INVESTMENT SECURITIES
Investment securities which management has the ability and intent to hold to maturity are reported at cost, adjusted for amortization of premium and accretion of discount. Investment securities available for sale are reported at fair value, with unrealized gains and losses reported as a separate component of stockholders' equity, net of the related tax effect. Other investments are reported at cost, and accordingly, earnings are reported when interest is accrued or when dividends are received.
Premium and discount on all investment securities are amortized (deducted) and accreted (added), respectively, to interest income on the effective-yield method over the period to the earlier of a call date or the maturity of the related securities. Premium and discount on mortgage-backed securities are amortized (deducted) and accreted (added), respectively, to interest income on the effective interest method over the period to maturity of the related securities, taking into consideration assumed prepayment patterns.
Gains or losses on disposition are computed by the specific identification method for all securities.
LOANS
Loans are reported at the gross amount outstanding, reduced by net deferred loan fees and a valuation allowance for loan losses. Interest income on loans is recognized over the terms of the loans based on the unpaid daily principal amount outstanding. If the collectibility of interest appears doubtful, accrual thereof is discontinued. Loan origination fees, net of direct loan origination costs, are deferred and recognized as income over the life of the related loan on a level-yield basis. Gains on sales of government guaranteed loans are recognized as income when the sales occur.
The majority of fixed rate mortgage loans are originated by the Bank and sold to a third party immediately without recourse. All fees are recognized as income at the time of the sale.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through a provision for loan losses charged to expense. The allowance represents an amount which, in management's judgment, will be adequate to absorb probable losses on existing loans that may become uncollectible. Management's judgment in determining the adequacy of the allowance is based on evaluations of the collectibility of loans and takes into consideration such factors as changes in the nature and volume of the loan portfolio, current economic conditions that may affect the borrower's ability to pay, overall portfolio quality and review of specific problem loans. Periodic revisions are made to the allowance when circumstances which necessitate such revisions become known. Recognized losses are charged to the allowance for loan losses, while subsequent recoveries are added to the allowance.
The Bank accounts for impaired loans in accordance with Statement of Financial Accounting Standards No. 114 (SFAS 114), "Accounting by Creditors for Impairment of a Loan," as amended by Statement of Financial Accounting Standards No. 118 (SFAS 118), "Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosure." Management, considering current information and events regarding the borrowers' ability to repay their obligations, generally considers a loan to be impaired when it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan. When a loan is considered to be impaired, the amount of the impairment is measured based on the present value of expected future cash flows discounted at the note's effective interest rate. Impairment losses are included in the allowance for loan losses through a charge to the provision. Cash receipts on impaired loans are applied to reduce the principal amount of such loans until the principal has been recovered and are recognized as interest income, thereafter.
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PREMISES AND EQUIPMENT
Premises and equipment are reported at cost less accumulated depreciation. For financial reporting purposes, depreciation is computed using primarily the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are charged to operations as incurred, while major renewals and betterments are capitalized. For Federal income tax reporting purposes, depreciation is computed using primarily accelerated methods.
OTHER REAL ESTATE
Other real estate represents property acquired through in-substance foreclosure, foreclosure, or in settlement of loans and is reported at the lower of cost or fair value less estimated selling expenses. Losses incurred in the acquisition of foreclosed properties are charged against the allowance for loan losses at the time of foreclosure. Subsequent write-downs of other real estate are charged against the current period's operations.
INTANGIBLE ASSETS
Intangible assets include amounts for excess servicing fees on government guaranteed loans, deposit base premiums and goodwill. Excess servicing rights are being amortized over the expected life of the related loan. Effective January 1, 1999, the Company changed its method of accounting for organization costs to expense these costs in the period incurred. Prior to 1999, the Company capitalized organization costs and amortized them to expense over a five-year period. This change in accounting method was made to comply with AICPA Statement of Position 98-5 (SOP 98-5). The Company recorded a charge net of tax of $47,047 in 1999 as the cumulative effect of this accounting change. The deposit base premiums are being amortized using the straight-line method over an estimated life of 10 years. Goodwill is amortized over varying periods, from 10 to 15 years, using the straight-line method.
Long-lived assets, including certain fixed assets and intangibles, are evaluated regularly for other-than-temporary impairment. If circumstances suggest that the value of such assets may be impaired and a write-down would be material, an assessment of recoverability is performed prior to any write-down. Impairment on intangibles is evaluated at each balance sheet date or whenever events or changes in circumstances indicate that the carrying amount should be assessed. Impairment, if any, is recognized through a valuation allowance with a corresponding charge recorded in the income statement.
INCOME TAXES
The tax effects of transactions is recorded at current tax rates in the periods the transactions are reported for financial statement purposes. Deferred income taxes are established for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. The Company files its tax returns on a consolidated basis.
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EARNINGS PER COMMON SHARE
Basic earnings per common share has been computed based on the weighted average number of common shares outstanding of 4,140,234, 4,388,336 and 4,415,949 in 2000, 1999 and 1998. Diluted earnings per share has been computed based upon the weighted average number of equivalent common shares of 4,274,155, 4,543,784 and 4,624,380 in 2000, 1999 and 1998. The effect of stock options, as described in Note 12, is the sole common stock equivalent for purposes of calculating diluted earnings per common share.
STOCK-BASED COMPENSATION
As provided by SFAS 123, the Company has elected to continue applying the provisions of APB 25 in determining its accounting relative to stock-based compensation. Accordingly, when the price of an option granted is equal to its fair market value on the date of grant, no compensation expense is recorded. The Company has adopted the SFAS 123 requirement that a company disclose the pro forma net income and pro forma earnings per share for the years ending December 31, 2000, 1999 and 1998, as if the alternative fair-value-based accounting method in SFAS 123 had been used in determining net income.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company uses the following methods and assumptions in estimating fair values of financial instruments (see Note 16):
Cash and cash equivalents - The carrying amount of cash and cash equivalents approximates fair value.
Investment securities - The fair value of investment securities held to maturity and available for sale is estimated based on bid quotations received from independent pricing services. The carrying amount of other investments approximates fair value.
Loans - Fair values are calculated by discounting the contractual cash flows using estimated market discount rates which reflect the credit and interest rate risk inherent in the loan, or by using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.
Deposits - The fair value of deposits with no stated maturity, such as demand, NOW and money market, and savings accounts, is equal to the amount payable on demand at year-end. The fair value of certificates of deposit is based on the discounted value of contractual cash flows using the rates currently offered for deposits of similar remaining maturities.
Short-term borrowings - The carrying amount of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings maturing within 30 days approximates fair value.
Subordinated notes payable and trust preferred securities - The fair values of subordinated notes payable and trust preferred securities are calculated by discounting the future payments (considering call and prepayment options) using a spread to the 10 year and 30 year treasury note rates, respectively, in effect at December 31, 2000.
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Off-balance-sheet instruments - The fair value of commitments to extend credit to fund commercial, consumer, real estate-construction and real estate-mortgage loans and to fund standby letters of credit is equal to the amount of commitments outstanding at December 31, 2000. This is based on the fact that the Company generally does not offer lending commitments or standby letters of credit to its customers for long periods, and therefore, the underlying rates of the commitments approximate market rates.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold.
RECLASSIFICATIONS
Certain reclassifications have been made in the 1999 and 1998 financial statements to conform with the 2000 presentation.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities." SFAS 133 requires companies to recognize all derivative contracts as either assets or liabilities in the balance sheet and to measure them at fair value. Historically, the Company has not entered into derivative contracts either to hedge existing risks or for speculative purposes. The Company adopted the new standard as of July 1, 1998. The effect on the consolidated financial statements at July 1, 1998, which resulted from the transfer of investment securities, with an amortized cost of $11,898,815, from the held-to-maturity category to the available-for-sale category, was an increase in the other comprehensive income market valuation reserve of approximately $176,000.
2. CASH AND DUE FROM BANKS
A bank is required to maintain average reserve balances with the Federal Reserve Bank, on deposit with national banks or in cash. The Bank's average reserve requirement as of December 31, 2000, was approximately $555,000. The Bank maintained cash balances, which were adequate to meet this requirement.
3. INVESTMENT SECURITIES
The amortized cost and estimated market value of investment securities held to maturity are as follows:
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The amortized cost and estimated market value of investment securities available for sale are as follows:
Other investments consist of stock in the Independent Bankers' Bank of Florida and the Federal Home Loan Bank of Atlanta.
The amortized cost and estimated market value of investment securities held to maturity and available for sale at December 31, 2000, by contractual maturity, are shown as follows. Expected maturities differ from contractual maturities because borrowers may have the right to call or repay obligations without call or prepayment penalties.
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Proceeds from sales of investment securities available for sale during 2000, 1999 and 1998, respectively, were $4,562,500, $13,033,497 and $9,966,994 with net gains of $0, $643 and $129,537. Maturities and principal repayments of investment securities available for sale during 2000, 1999 and 1998 were $1,853,574, $4,013,932 and $2,979,575, respectively. Net gains realized from calls and mandatory redemptions of held-to-maturity securities during 2000, 1999 and 1998 were $0, $0 and $1,448, respectively.
Investment securities having carrying values of approximately $18,810,000 and $14,239,000 at December 31, 2000 and 1999, respectively, were pledged to secure public funds on deposit, securities sold under agreements to repurchase, and other purposes as required by law.
In 2000, the Company acquired mortgage-backed securities totalling $23,199,518, resulting from its securitization of $23,199,518 of single family residential mortgage loans. The investments are reflected as available for sale and were recorded at the unpaid principal balance of the loans, an amount less than fair market value. Accordingly, no gain or loss was recognized.
4. LOANS
Major classifications of loans are as follows:
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Substantially all loans are made to borrowers in the Bank's primary market area of Monroe and South Dade counties, in which the primary industry is tourism.
Nonaccrual loans and loans defined as impaired under SFAS 114 at December 31, 2000 and 1999 totalled $502,774 and $69,701, respectively.
The Bank has made a loan originally totaling $10,000,000 to construct a lumber mill near Pensacola, Florida. $6,400,000 had been sold by the Bank to other lenders. The loan was partially guaranteed as to principal and interest by the U.S. Department of Agriculture (USDA). In addition to business real estate and equipment, the loan is collateralized by the business owner's interest in a trust. Under provisions of the trust agreement, beneficiaries cannot receive trust assets until November 2010. At December 31, 2000, the loan was past due greater than 90 days but is still maintained as an accruing loan because of the USDA guarantee. Management believes the value of all assets pledged as collateral for this loan substantially exceeds the unpaid amount. The loan is in the process of foreclosure, and no loss is anticipated.
The following is an analysis of the allowance for loan losses:
5. PREMISES AND EQUIPMENT
Premises and equipment consisted of the following:
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company is obligated under operating leases for office and ATM location space. The leases expire in periods varying from one to seventeen years, and some have renewal options for subsequent periods. Future minimum lease payments are as follows at December 31, 2000:
Rental expense for the years ended December 31, 2000, 1999 and 1998, was approximately $54,000, $66,000 and $93,000, respectively.
6. TIME DEPOSITS
At December 31, 2000, the scheduled maturities of time deposits are as follows:
7. SHORT-TERM BORROWINGS
Short-term borrowings include federal funds purchased, securities sold under agreements to repurchase, advances from the Federal Home Loan Bank, and a Treasury, tax and loan note option.
The Bank has unsecured lines of credit for federal funds purchased from other banks totaling $7,500,000 at December 31, 2000. Securities sold under agreements to repurchase include a wholesale agreement with a correspondent bank which is collateralized by a U.S. Treasury note and agreements with commercial account holders whereby the Bank sweeps the customer's accounts on a daily basis and pays interest on these amounts. Borrowings under these agreements are collateralized by investment securities.
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Bank accepts Treasury, tax and loan deposits from certain commercial depositors and remits these deposits to the appropriate government authorities. The Bank can hold up to $1,700,000 of these deposits more than a day under a note option agreement with its regional Federal Reserve bank and pay interest on those funds held. The Bank pledges certain investment securities against this account.
In 1998, the Bank invested in Federal Home Loan Bank stock for the purpose of establishing credit lines with the Federal Home Loan Bank. The credit availability to the Bank is equal to 14 percent of the Bank's total assets as reported on the most recent quarterly financial information submitted to the regulators. The credit availability approximated $61.0 million at December 31, 2000. Any advances are secured by the Bank's one-to-four-family residential mortgage loans. In 1999, a $10 million advance was made, which matured on January 24, 2000. An $8 million advance and a $7 million advance were made and repaid during the year 2000.
The following table reflects the average daily outstanding, year-end outstanding, maximum month-end outstanding and the weighted average rates paid for each of the four categories of short-term borrowings:
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. OTHER BORROWINGS
LINE OF CREDIT
At December 31, 1999 the Company had $2,000,000 available under a revolving line of credit with Independent Bankers' Bank of Florida. At December 31, 1999, the Company had $659,625 outstanding under this line of credit. Amounts outstanding under the line of credit bear interest equal to the prime rate published in The Wall Street Journal minus .5 percent, which is subject to change daily. The interest rate in effect at December 31, 1999, was 8.0 percent. Interest is payable quarterly, and the principal is due April 2001. The revolving line of credit was renewed and extended in 2000. The credit availability was increased to $3,000,000. No amount was outstanding under this line at December 31, 2000. Amounts outstanding under the line bear interest equal to the prime rate published in The Wall Street Journal minus one percent, which is subject to change daily. Interest is payable quarterly, and any principal is due on demand or on December 21, 2002. This credit facility is secured by 100 percent of the outstanding shares of TIB Bank of the Keys and requires, among other things, that the Bank maintain a minimum Tier 1 capital ratio of 5.8 percent through December 31, 2000. After this time the ratio increases to 6 percent.
SUBORDINATED NOTES PAYABLE
The Company entered into an agreement with the Company's largest shareholder effective July 1, 2000, to purchase 525,000 shares of the Company's common stock in exchange for four subordinated notes payable of the Company totalling $5,250,000. The interest rate on the notes payable is 13% per annum, with interest payments required quarterly. The principal balance is payable in full on October 1, 2010, the maturity date of the notes payable. The notes payable can be prepaid by the Company at par any time after July 1, 2003.
TRUST PREFERRED SECURITIES
On September 7, 2000, the Company participated, at an amount of $8,000,000, in a pooled offering of trust preferred securities. The Company formed TIBFL Statutory Trust I (the "Trust") a wholly-owned statutory trust subsidiary for the purpose of issuing the trust preferred securities. The Trust used the proceeds from the issuance of the trust preferred securities to acquire junior subordinated notes of the Company. The trust preferred securities essentially mirror the debt securities, carrying a cumulative preferred dividend at a fixed rate equal to the 10.6% interest rate on the debt securities. The debt securities and the trust preferred securities each have 30-year lives. The trust preferred securities and the debt securities are callable by the Company or the Trust, at their respective option after ten years, and at varying premiums and sooner in specific events, subject to prior approval by the Federal Reserve Board, if then required. The Company has treated the trust preferred securities as Tier 1 capital for federal regulatory purposes (see Note 12).
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. INCOME TAXES
The following are the components of income tax expense as provided:
A reconciliation of income tax computed at the Federal statutory income tax rate to total income taxes is as follows:
The following summarizes the tax effects of temporary differences which comprise the net deferred tax asset:
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. EMPLOYEE BENEFIT PLAN
The Bank maintains an Employee Stock Ownership Plan that covers all employees who are qualified as to age and length of service. Three types of contributions can be made to the Plan by the Bank and participants: basic voluntary contributions which are discretionary contributions made by all participants; a matching contribution, whereby the Bank will match 25 percent of salary reduction contributions up to 4 percent of compensation, not to exceed a maximum contribution of $1,000 per employee; and an additional discretionary contribution made by the Bank allocated to the accounts of participants on the basis of total relative compensation. The Bank contributed $213,000, $181,000 and $171,000 to the plan in 2000, 1999 and 1998, respectively. As of December 31, 2000, the Plan contained approximately 166,000 shares of the Company's common stock.
11. RELATED PARTY TRANSACTIONS
As of December 31, 2000 and 1999, the Bank had direct and indirect loans outstanding to certain of its officers, directors and their related business interests which aggregated $11,048,944 and $10,755,516, respectively. During 2000, additions to such loans totaled $2,843,743. Loan repayments totaled $2,550,315. These loans were made in the ordinary course of business with normal credit terms, including interest rates and collateral requirements prevailing at the time for comparable transactions with other borrowers. These individuals and their related interests also maintain customary demand and time deposit accounts with the Bank. In July 2000, the Company purchased 525,000 shares of common stock from the Company's largest shareholder (see Notes 8 and 14). In October 2000, the Company purchased Keys Insurance Agency of Monroe County, Inc. from a Company director (see Note 1). The Company leases office space in a building owned by a company director. Annual rental expense is $34,800 under the lease (see Note 5).
12. STOCKHOLDERS' EQUITY
The Company and the Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements result in certain discretionary actions by regulators that could have an effect on the Company's operations. The regulations require the Company and the Bank to meet specific capital adequacy guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company's capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
As of December 31, 2000, the most recent notification from the Federal Deposit Insurance Corporation and the Federal Reserve Board categorized the Bank and the Company, respectively, as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since those notifications that management believes has changed the Company's or the Bank's category. To be considered well capitalized and adequately capitalized (as defined) under the regulatory framework for prompt corrective action, the Company and Bank must maintain minimum Tier 1 leverage, Tier 1 risk-based, and total risk-based ratios as set forth in the following tables. The actual capital amounts and ratios are also presented in the following tables.
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Management believes, as of December 31, 2000, that the Company and the Bank meet all capital requirements to which it is subject.
Under state banking law, regulatory approval will be required if the total of all dividends declared in any calendar year by the Bank exceeds the Bank's net profits to date for that year combined with its retained net profits for the preceding two years. Retained earnings of the Bank available for payment of dividends to the Company without prior regulatory approval at December 31, 2000, is approximately $6,481,000.
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
STOCK OPTION PLAN
Under the Bank's 1994 Incentive Stock Option and Nonstatutory Stock Option Plan ("the Plan") as amended and restated as of August 31, 1996, the Company may grant stock options to persons who are now or who during the term of the Plan become directors, officers, or key executives as defined by the Plan. Stock options granted under the Plan may either be incentive stock options or nonqualified stock options for federal income tax purposes. The Board of Directors of the Company may grant nonqualified stock options to any director, and incentive stock options or nonqualified stock options to any officer, key executive, administrative, or other employee including an employee who is a director of the Company. Subject to the provisions of the Plan, the maximum number of shares of common stock of the Company that may be optioned or sold is 978,000 shares. Such shares may be treasury, or authorized but unissued, shares of common stock of the Company. If options granted under the Plan expire or terminate for any reason without having been exercised in full, the shares not purchased shall again be available for option for the purposes of the Plan.
The exercise price for common stock under each nonqualified stock option must equal 100 percent of the fair market value of the stock at the time the option is granted. The exercise price for stock under each incentive stock option shall not be less than 100 percent of the fair market value of the stock at the time the option is granted. The exercise price under an incentive stock option granted to a person owning stock representing more than 10 percent of the common stock must equal at least 110 percent of the fair market value at the date of grant, and such option is not exercisable until five years from the date the incentive stock option was granted. The Board of Directors may, at its discretion, provide that an option not be exercised in whole or in part for any period or periods of time as specified in the option agreements. No option may be exercised after the expiration of ten years from the date it is granted.
The Company applies APB 25 and related Interpretations in accounting for its stock-based compensation plan. Accordingly, no compensation cost has been recognized. Had compensation cost for the Company's stock-based compensation plan been determined based on the fair value at the grant dates for awards under the plan consistent with the method of SFAS 123, the Company's net income and earnings per share would have been the pro forma amounts indicated as follows:
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The fair value of each option is estimated as of the date of grant using the Black-Scholes Option Pricing Model and the following weighted average assumptions for options granted in 2000 and 1999:
A summary of the status of the Company's fixed stock option plan as of and for the three years ended December 31, 2000, is presented below:
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes information about fixed stock options outstanding:
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. COMMITMENTS AND CONTINGENCIES
The Bank is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.
The Bank's exposure to credit loss in the event of nonperformance by the customer on the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amounts of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. At December 31, 2000 and 1999, total commitments to extend credit were approximately $30,630,000 and $34,203,000, respectively, in unfunded loan commitments.
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Since most of the letters of credit are expected to expire without being drawn upon, they do not necessarily represent future cash requirements. At December 31, 2000 and 1999, commitments under standby letters of credit aggregated approximately $935,000 and $858,000, respectively. In 2000 and 1999, the Bank was not required to perform on a standby letter of credit.
The Bank evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the borrower. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, residential real estate and income-producing commercial properties on those commitments for which collateral is deemed necessary.
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 1998, the Parent Company had directly guaranteed to the Bank $3,000,000 of a $6,000,000 loan to Winter Park Insurance Investments, Inc.. In connection with this guarantee, the Parent Company had the option to purchase $3,000,000 of the debt from the Bank and convert such debt to a 50 percent ownership in Winter Park Insurance Investments, Inc. during a 36-month period beginning in October 1998. The loan matures in October 2001. In November 1999, the Parent Company sold this option to Winter Park Insurance Investments, Inc. and the parent company was released from its guaranty of the loan. The terms of the sale included a $100,000 payment at closing and $300,000 annually at the anniversary date of the sale for each of the next three years, for a total of $1,000,000. For accounting purposes, $312,375 was recognized as income on the sale.
14. STOCK REPURCHASES
On September 22, 1998, the Company's Board of Directors voted to repurchase 50,000 shares of the Company's stock in 1998. This repurchase resulted in 50,000 outstanding shares of treasury stock, at a cost of $557,788 at December 31, 1998. In addition, on December 15, 1998, the Company's Board of Directors voted to repurchase up to 50,000 shares of the Company's stock in 1999. 45,000 of these shares were purchased in 1999 at a cost of $493,684. The remaining 5,000 shares were repurchased in 2000 at a cost of $51,590. In July 2000, the Company purchased 525,000 shares of common stock from the Company's largest shareholder at a cost of $10 per share (see Note 8).
15. SUPPLEMENTAL FINANCIAL DATA
Components of other expense in excess of 1 percent of total interest and other income are as follows:
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. FAIR VALUES OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments are as follows:
17. SEGMENT REPORTING
TIB Financial Corp. has three reportable segments: community banking, merchant bank card processing, and government guaranteed loan sales and servicing. The community banking segment's business is to attract deposits from the public and to use such deposits to make real estate, business and consumer loans in its primary service area. The merchant bank card processing segment processes credit card transactions for local merchants. The government guaranteed loan segment originates and sells the guaranteed portion of loans that qualify for such guarantees, such as those offered by the Small Business Administration and the U.S. Department of Agricultural Rural Development Business and Industry Program.
The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies. The Company evaluates performance based on profit or loss from operations before income taxes.
The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different marketing strategies. The government guaranteed loan segment was acquired as a unit, and management at the time of the acquisition was retained.
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. CONDENSED FINANCIAL INFORMATION OF TIB FINANCIAL CORP.
CONDENSED BALANCE SHEETS (Parent Only)
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED STATEMENTS OF INCOME (Parent Only)
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED STATEMENTS OF CASH FLOWS (Parent Only)
TIB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 2000, the Company purchased 525,000 shares of the Company's common stock in exchange for four subordinated debt instruments of the Company totalling $5,250,000.
In 2000, the Company purchased Keys Insurance Agency of Monroe County, Inc. The purchase price for the net assets of the agency was $2,200,000 which consisted primarily of intangible assets. The consideration consisted of $220,000 of Company common stock (21,643 shares), $1,650,000 in cash (paid at closing), and $330,000 in cash to be paid over a three-year period subject to the agency's ability to achieve certain earning thresholds. Net cash paid in connection with the acquisition is calculated as follows:
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the caption "Election of Directors", "Management", and "Filings Under Section 16(A) Beneficial Ownership Reporting Compliance" in the Proxy Statement to be utilized in connection with the Company's 2001 Annual Shareholders Meeting is incorporated herein by reference.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the caption "Compensation of Executive Officers and Directors" in the Proxy Statement to be utilized in connection with the Company's 2001 Annual Shareholders Meeting is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the caption "Principal Shareholders" in the Proxy Statement to be utilized in connection with the Company's 2001 Annual Shareholders Meeting is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the caption "Certain Relationships and Related Transactions" in the Proxy Statement to be utilized in connection with the Company's 2001 Annual Shareholders Meeting is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
The consolidated financial statements, notes thereto and independent auditors' report thereon, filed as part hereof, are listed in Item 8.
2. FINANCIAL STATEMENT SCHEDULES
Financial Statement schedules have been omitted as the required information is not applicable or the required information has been incorporated in the consolidated financial statements and related notes incorporated by reference herein.
3. EXHIBITS
(B) REPORTS ON FORM 8-K
The Company did not file any current reports on Form 8-K during the fourth quarter of 2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on March 27, 2001.
TIB FINANCIAL CORP.
By: /s/ Edward V. Lett --------------------- Edward V. Lett President, CEO, & Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 27, 2001.