FFLC BANCORP, INC.
800 NORTH BOULEVARD, WEST
P.O. BOX 490420
LEESBURG, FLORIDA 34749-0420
(352) 787-3311
March 31, 2004
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
FFLC Bancorp, Inc. (the "Company") to be held on May 13, 2004, at the Leesburg
Community Building, 109 E. Dixie Avenue, Leesburg, Florida, at 2:00 p.m.
As described in the enclosed Proxy Statement, the election of three
directors and the ratification of the appointment of auditors for fiscal 2004
are scheduled to be presented for stockholder action at the Annual Meeting.
There will also be a report on the operations of First Federal Savings Bank of
Lake County (the "Bank"), the wholly-owned subsidiary of the Company. Detailed
information concerning the activities and operating performance of the Bank
during the fiscal year ended December 31, 2003, is contained in the 2003 Annual
Report to Stockholders, which accompanies the Proxy Statement. Directors and
officers of the Company, as well as representatives of the Company's independent
auditors, will be present to respond to any questions which stockholders may
have.
The Board of Directors of the Company has determined that approval of the
matters to be considered at the meeting is in the best interests of the Company
and its stockholders. For the reasons set forth in the Proxy Statement, the
Board unanimously recommends a vote "FOR" each matter to be considered.
We hope you will be able to attend the Annual Meeting in person. Whether
or not you expect to attend, we urge you to sign, date and return the enclosed
proxy card so that your shares will be represented.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I wish to thank you for your support and interest. I look
forward to seeing you at the Annual Meeting.
Sincerely,
Stephen T. Kurtz
President and Chief Executive Officer
FFLC BANCORP, INC.
800 NORTH BOULEVARD, WEST
P.O. BOX 490420
LEESBURG, FLORIDA 34749-0420
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 13, 2004
-------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ( the
"Annual Meeting") of FFLC Bancorp, Inc. (the "Company") will be held at the
Leesburg Community Building, 109 E. Dixie Avenue, Leesburg, Florida, on May 13,
2004, at 2:00 p.m. Eastern time.
A Proxy Statement and proxy card for the Annual Meeting are enclosed. The
Annual Meeting is being held for the purpose of considering and voting upon the
following matters:
1 The election of three directors for terms of three years, each;
2. The ratification of the appointment of Hacker Johnson & Smith PA as
independent auditors of the Company for the fiscal year ending
December 31, 2004; and
3. Such other matters as may properly come before the meeting, and at
any adjournments thereof.
Pursuant to the Bylaws of the Company, the Board of Directors has fixed
March 15, 2004, as the voting record date for determining stockholders entitled
to notice of and to vote at the Annual Meeting and any adjournments thereof.
Only holders of the common stock of the Company as of the close of business on
that date will be entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. In the event there are not sufficient votes for a quorum
or to approve or ratify any of the foregoing proposals at the time of the Annual
Meeting, the Company may adjourn the Annual Meeting in order to permit the
Company to solicit additional proxies. A list of stockholders entitled to vote
at the Annual Meeting will be available at 800 North Boulevard, West, Leesburg,
Florida, for a period of ten days prior to the Annual Meeting and will also be
available for inspection at the Annual Meeting.
By Order of the Board of Directors
Sandra L. Rutschow
Secretary
Leesburg, Florida
March 31, 2004
EACH STOCKHOLDER, WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING,
IS REQUESTED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
FFLC BANCORP, INC.
800 NORTH BOULEVARD, WEST
P.O. BOX 490420
LEESBURG, FLORIDA 34749-0420
(352) 787-3311
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PROXY STATEMENT
-------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
May 13, 2004
-------------------------------------------
Solicitation and Voting of Proxies
This Proxy Statement is being furnished to stockholders of FFLC Bancorp,
Inc. (the "Company") in connection with the solicitation of proxies by the Board
of Directors for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Thursday, May 13, 2004, at 2:00 p.m., Eastern time, at
the Leesburg Community Building, 109 E. Dixie Avenue, Leesburg, Florida, and at
any adjournments thereof. The 2003 Annual Report to Stockholders, containing the
consolidated financial statements for the fiscal year ended December 31, 2003,
and a proxy card accompany this Proxy Statement which is first being mailed to
stockholders on or about March 31, 2004.
Regardless of the number of shares of common stock owned, it is important
that stockholders be represented by proxy or be present in person at the Annual
Meeting. Stockholders are requested to vote by completing the enclosed proxy
card and returning it, signed and dated, in the enclosed postage-paid envelope.
Stockholders are urged to indicate the way they wish to vote in the spaces
provided on the proxy card. Proxies solicited by the Board of Directors of the
Company will be voted in accordance with the directions given therein. Where no
instructions are indicated, signed proxies will be voted FOR the election of
each of the nominees for director named in this Proxy Statement, and FOR the
ratification of Hacker Johnson & Smith PA as independent auditors for the fiscal
year ending December 31, 2004.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if any
that may properly come before the Annual Meeting or any adjournments thereof.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. However, if you are a stockholder whose
shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the Annual Meeting.
1
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. Proxies may also be solicited personally or by mail,
telephone, or telegraph by the Company's directors, officers and regular
employees, without additional compensation therefor. The Company will also
request persons, firms and corporations holding shares in their names, or in the
name of their nominees, which are beneficially owned by others, to send proxy
material to and obtain proxies from such beneficial owners, and will reimburse
such holders for their reasonable expenses in doing so.
Householding of Proxy Statements
The Securities and Exchange Commission has adopted rules that permit
companies to mail a single proxy statement to two or more shareholders sharing
the same address--a practice known as "householding." Householding provides
greater convenience to shareholders and saves the Company money by reducing
excess printing and mailing costs. You may have been identified as living at the
same address as another Company shareholder. If this is the case and unless the
Company receives contrary instructions from you, we will continue to "household"
your proxy statement and annual report for the reasons stated above.
If you are a shareholder at a shared address to which a single copy of
both the proxy statement and the annual report has been delivered, Registrar and
Transfer Company, the Company's transfer agent, has undertaken to deliver a
separate copy of this proxy statement and the annual report to you promptly upon
written or oral request. If you are such a shareholder and you would like to
receive your own copy of this proxy statement and the annual report, please
contact Registrar and Transfer Company either by phone at (800) 368-5948, by fax
at (908) 497-2318, by e-mail at info@rtco.com, or by mail at 10 Commerce Drive,
Cranford, New Jersey 07016-3572, and indicate that you are a shareholder at a
shared address and would like an additional copy of each document.
If, on the other hand, you are a multiple shareholder sharing an address
and are receiving multiple copies of this proxy statement, please contact
Registrar and Transfer Company at the phone number or address listed above and
all shareholders at the shared address can request that only a single copy be
mailed to your address in the future. If you are the beneficial owner, but not
the recordholder, of Company shares and wish to receive a copy of this proxy,
you will need to contact your broker and request that your broker send you a
copy of the proxy statement and the annual report.
If your shares are not registered in your own name, an intermediary other
than Registrar and Transfer Company may be responsible for "householding" your
proxy statement. If that is the case, and you want to obtain a separate copy of
the proxy statement and annual report, please contact Registrar and Transfer
Company either by phone at (800) 368-5948, by fax at (908) 497-2318, by e-mail
at info@rtco.com, or by mail at 10 Commerce Drive, Cranford, New Jersey
07016-3572, indicate that you are a shareholder at a shared address and request
an additional copy of each document. Since Registrar and Transfer has no record
of your stock ownership, it will be necessary for you to provide Registrar and
Transfer Company with your name and address and it will be necessary to identify
who is the recordholder of your shares.
2
If your shares and those of another shareholder sharing an address are not
registered in your own names, and you are receiving multiple copies of the proxy
statement and annual report, please contact your recordholder. All shareholders
at the shared address can request the record holder to mail only a single copy
to your address in the future.
Voting Securities
The securities which may be voted at this Annual Meeting consist of shares
of common stock of the Company, par value $.01 per share (the "Common Stock"),
with each share entitling its owner to one vote on each matter to be voted on at
the Annual Meeting, except as indicated below. There is no cumulative voting for
the election of directors.
The close of business on March 15, 2004, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof. The total number of shares of the Company's Common Stock
outstanding on the Record Date (exclusive of Treasury shares) was 5,397,554
shares.
The presence, in person or by proxy, of at least a majority of the total
number of shares of Common Stock outstanding and entitled to vote (after giving
effect to the limitation described below, if applicable) is necessary to
constitute a quorum at the Annual Meeting. In the event there are not sufficient
votes for a quorum, or to approve or ratify any matter being presented, at the
time of the Annual Meeting, the Annual Meeting may be adjourned in order to
permit the further solicitation of proxies.
In accordance with the provisions of the Company's Certificate of
Incorporation, record holders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote with respect to the shares held in excess of the Limit. A person or
entity is deemed to beneficially own shares owned by an affiliate of, as well as
persons acting in concert with, such person or entity. The Company's Certificate
of Incorporation authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the Limit, including determining
whether persons or entities are acting in concert, and (ii) to demand that any
person who is reasonably believed to beneficially own stock in excess of the
Limit supply information to the Company to enable the Board to implement and
apply the Limit.
As to the election of Directors, the proxy card being provided by the
Board of Directors enables a shareholder to vote "FOR" the election of the
nominees proposed by the Board, or to "WITHHOLD AUTHORITY" to vote for one or
more of the nominees being proposed. Under Delaware law and the Company's
Certificate of Incorporation and Bylaws, directors are elected by a plurality of
votes cast, without regard to either (i) broker non-votes, or (ii) proxies as to
which authority to vote for one or more of the nominees being proposed is
withheld. Consequently, votes that are withheld in the election of directors and
broker non-votes will have no effect on the election.
As to other matters that may properly come before the Annual Meeting, by
checking the appropriate box, a shareholder may: (i) vote "FOR" the item; (ii)
vote "AGAINST" the item; or (iii) ABSTAIN from voting on such item. Under the
Company's Certificate of Incorporation and
3
Bylaws, other matters shall be determined by a majority of the votes cast
affirmatively or negatively, without regard to (a) broker non-votes, or (b)
proxies marked "ABSTAIN" as to that matter unless otherwise required by law.
Proxies solicited hereby will be returned to the Company, and will be
tabulated by inspectors of election designated by the Board, who will not be
employed by, or be a director of, the Company or any of its affiliates.
Participants in the Bank's KESOP
If you participate in the First Federal Savings Bank of Lake County
Employee Stock Ownership Plan and 401(k) Plan (the "KESOP"), you will receive a
voting authorization form that reflects all shares you may vote under this plan.
Under the terms of the KESOP, all shares held by the KESOP are voted by the
trustee, but each participant in the KESOP may direct the trustee as to the
manner in which shares of Company common stock allocated to each participant's
account are to be voted. Allocated shares for which no voting instructions are
received will be voted by the trustee in the same proportion as shares for which
the trustee has received voting instructions. The deadline for returning your
voting instructions to the trustee is April 16, 2004.
Corporate Governance
The Company has established a Nomination and Corporate Governance
Committee and periodically reviews its corporate governance policies and
procedures to ensure that the Company meets the highest standards of ethical
conduct, reports results with accuracy and transparency and maintains full
compliance with the laws, rules and regulations that govern the Company's
operations. As part of that periodic corporate governance review, the Board of
Directors reviews and adopts corporate governance policies and practices for the
Company.
Code of Ethics and Business Conduct
The Company has adopted a Code of Ethics and Business Conduct that is
designed to promote the highest standards of ethical conduct by the Company's
directors, executive officers and employees. The Code requires that the
Company's directors, executive officers and employees avoid conflicts of
interest, comply with all laws and other legal requirements, conduct business in
an honest and ethical manner and otherwise act with integrity and in the
Company's best interest. Under the terms of the Code, directors, executive
officers and employees are required to report any conduct that they believe in
good faith to be an actual or apparent violation of the Code of Ethics and
Business Conduct.
A copy of the Code of Ethics and Business Conduct will be furnished
without charge to stockholders of record upon written request to FFLC Bancorp,
Inc., Ms. Sandra L. Rutschow, Secretary, P.O. Box 490420, Leesburg, Florida
34749-0420.
4
Security Ownership of Certain Beneficial Owners
Persons and groups owning in excess of five percent of the Company's
Common Stock are required to file certain reports regarding such ownership with
the Company and with the Securities and Exchange Commission ("SEC"), in
accordance with the Securities Exchange Act of 1934 (the "Exchange Act"). The
following table sets forth information regarding persons known to be beneficial
owners of more than five percent of the Company's outstanding Common Stock as of
February 29, 2004.
Amount and Nature of
Name and Address Beneficial Percent of
Title of Class of Beneficial Owner Ownership Class
-------------- ------------------- --------- -----
Common Stock First Federal Savings Bank of Lake 529,703 9.81%
County Employee Stock Ownership and
401(k)Plan(1)
800 North Boulevard, West
Leesburg, Florida 34748
Common Stock First Manhattan Co. (2) 306,995 6.30%
437 Madison Avenue
New York, New York 10022
----------------
(1) A committee of management has been appointed by the Board of Directors
(the "Retirement Committee") to administer the KESOP, and the Bank of New
York, an unaffiliated corporation, serves as trustee for the KESOP (the
"KESOP Trustee"). The KESOP Trustee must vote all allocated shares held in
the KESOP in accordance with the instructions of the participating
employees. As of the record date, all shares of the Common Stock in the
KESOP had been allocated.
(2) The information furnished is derived from a Schedule 13G/A filed by the
First Manhattan Co. on February 12, 2004, and a Schedule 13D filed by
First Manhattan Co. on October 29, 1996, as the general partner of First
Save Associates, L.P.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Board of Directors currently consists of eight directors and is
divided into three classes. Each of the eight members of the Board of Directors
of the Company also serves on the Board of Directors of First Federal Savings
Bank of Lake County (the "Bank"). Directors are elected for classified terms of
three years, each, with the term of office of only one class of directors
expiring in each year. Directors serve until their successors are elected and
qualified.
The names of the three nominees for election to the Board of Directors are
set forth below, along with certain other information concerning such
individuals and the other members of the Board as of February 29, 2004.
Management believes that such nominees will stand for election and will serve if
elected as directors. However, if any person nominated by the Board of Directors
fails to stand for election or is unable to accept election, the proxies will be
voted for the election of such other person as the Board of Directors may
recommend.
5
Unless authority to vote for the directors is withheld, it is intended that the
shares represented by the enclosed proxy card, if executed and returned, will be
voted FOR the election of all nominees proposed by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES NAMED
IN THIS PROXY STATEMENT.
Information with Respect to the Nominees, Continuing Directors and Executive
Officers
The following table sets forth, as of February 29, 2004, the names of the
nominees, the continuing directors, and the named executive officers of the
Company as well as their ages; a brief description of their recent business
experience, including present occupations and employment; certain directorships
held by each; the year in which each became a director of the Bank and the year
in which his term as director of the Company expires. This table also sets forth
the amount of Common Stock and the percentage thereof beneficially owned as of
February 29, 2004, by each director and all directors and executive officers as
a group as of that date.
Expiration Shares of
Name and Principal of Common Stock Ownership as
Occupation at Present Director Term as Beneficially a Percent of
and for Past Five Years Age Since(1) Director Owned(2)(4) Class
Nominees:
Howard H. Hewitt 66 2000 2004 86,215(3) 1.57%
Mr. Hewitt is the President and CEO of
Hewitt Contracting Company, Inc., a
highway and heavy construction company
which builds highways, bridges and
utilities and is engaged in land
development.
H.D. Robuck, Jr. 56 1997 2004 154,656(3) 2.82%
Mr. Robuck is a practicing attorney and
the Chief Executive Officer of Romac
Lumber Company, a Lake County based
supplier of construction materials.
Stephen T. Kurtz 50 1990 2004 157,309(5) 2.87%
Mr. Kurtz is the President and Chief
Executive Officer of the Company. He
also serves as President and Chief
Executive Officer and a director of the
Bank.
----------------------------------------
Continuing Directors:
James P. Logan 55 1990 2005 72,303(3) 1.32%
A director of the Bank, he is President
and owner of Logan Sitework
Contractors, Inc., a firm primarily
involved in the residential
construction industry.
6
Ted R. Ostrander, Jr. 55 1995 2005 31,000(3) __*
A director of the Bank, he is President
of Lassiter-Ware, Inc., an insurance
agency.
Claron D. Wagner 72 1987 2006 87,777(3) 1.60%
A director of the Bank, he is
President, Woody Wagner, Inc. Former
partner in Wagner Construction
Company.
Paul K. Mueller 52 1993 2006 163,765(5) 2.98%
Mr. Mueller is the Executive Vice
President and Treasurer of the
Company. He also serves as the
Executive Vice President, Treasurer and
Chief Operations Officer and a director
of the Bank.
Joseph J. Junod 67 1987 2006 51,511(3) __*
A director of the Bank, Mr. Junod
retired in 1991 as the general manager
of Avesta Sheffield Pipe, Wildwood,
Florida.
Executive Officer
Who Is Not A Director
Sandra L. Rutschow 64 - - 51,496(5) __*
Secretary and Vice President of the
Bank and Secretary of the Company.
All directors and executive 856,032 15.59%
officers as a group (nine persons)
-----------------------
*Does not exceed 1.0% of the Company's Common Stock.
(1) Includes years of service as a director of the Company's predecessor, the
Bank.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting or dispositive power as to shares
reported.
(3) Includes 30,207 options granted to each Outside Director serving on
January 4, 1994, under the FFLC Bancorp, Inc. 1993 Stock Option Plan for
Outside Directors all of which became immediately exercisable upon the
date of grant (January 4, 1994), 3,552 options of 7,553 granted to
Director Ostrander on January 26, 1995 upon his election as a director,
and 7,553 options granted to Director Robuck on December 31, 1997, upon
his election as a director. On December 19, 2003, 6,053 shares remaining
from the 1993 Plan were granted to the Outside Directors and were
immediately exercisable.
(4) Includes a total of 75,471 options granted to three outside directors
under the FFLC Bancorp, Inc. 1993 Stock Option Plan for Outside Directors,
which are currently exercisable.
(5) Includes 4,018, 4,000 and 1,000 shares subject to options granted to
Messrs. Kurtz, Mueller and Mrs. Rutschow, respectively, which become
exercisable December 19, 2004.
7
Meetings of the Board of Directors and Committees of the Board of the Company
The Board of Directors of the Company conducts its business through
meetings of the Board and through the activities of its committees. The Board of
Directors of the Company meets monthly and may have additional meetings as
needed. The Board of Directors of the Company, held 12 meetings in 2003. All of
the directors of the Company attended at least 75% in the aggregate of the total
number of the Company's board meetings held and committee meetings on which such
director served during fiscal 2003. The Board of Directors of the Company
maintains committees, the nature and composition of which are described below:
The Executive Committee consists of all members of the Board of Directors.
The purpose of this Committee is to review matters pertaining to day-to-day
operations, including review of operational policies and procedures and loan
approval. During fiscal 2003, this Committee met 11 times.
During 2003, the Company established a separately designated, standing
Audit Committee consisting of three outside Directors of the Company, Messrs.
Logan (Chairman), Ostrander and Junod, each of whom is an independent director
as independence is defined in the listing standards of the NASDAQ. Each member
of the Audit Committee also meets the requirements for independence contained in
Regulation 240.10A-3 of the Securities and Exchange Commission. The Board has
determined that the Audit Committee has one member serving on the Audit
Committee, Joseph Junod, who is an Audit Committee Financial Expert as that term
is used in Item 401 (h) of Regulation S-K of the Securities and Exchange
Commission. The Audit Committee selects and engages the independent auditors,
meets with and administers the engagement of the independent auditors, and
evaluates policies and procedures relating to auditing functions and internal
controls. This Committee held 6 meetings in fiscal 2003. For further
information, with respect to the Audit Committee and its members, please see the
Report of the Audit Committee on page 16.
The Nomination and Corporate Governance Committee has been established as
a separately designated standing committee. For 2004, the Committee is comprised
of Messrs. Hewitt, Junod, Logan and Ostrander, each of whom meets the recently
adopted requirements for independence in the listing standards for the NASDAQ
National Market System. The Committee operates under a charter approved by the
Board of Directors of the Company, a copy of which is available on the Company's
website, www.1stfederal.com. The committee will consider nominees recommended by
stockholders, but has not actively solicited or received any such nominations in
recent years. In considering prospective nominees, the Committee will consider
the prospect's relevant financial and business experience, familiarity with and
participation in the Bank's market area, the integrity and dedication of the
prospect, his independence and other factors the Committee deems relevant. The
Committee will apply the same criteria to nominees recommended by security
holders as those recommended by management. Nominations by stockholders must
comply with certain procedural and informational requirements set forth in the
Company's Bylaws. See "Advance Notice of Business to be Conducted at an Annual
Meeting." The Nominating Committee met on February 12, 2004.
In 2003, the Compensation Committee of the Company consisted of Directors
Wagner, Junod, Logan, Ostrander, Robuck and Hewitt. The Compensation Committee
is responsible for the 2003 Compensation Committee Report on Executive
Compensation. The Committee
8
establishes compensation for the Chief Executive Officer and the Executive
Vice-President and Treasurer and reviews the compensation for the other officers
and employees and the profit sharing program, when necessary. The Compensation
Committee met 3 times during 2003.
Directors' Compensation
Fees. Directors do not receive fees from the Company for service on the
Company's Board. In 2003, the monthly retainer for service on the Board of
Directors of the Bank was $900. Directors are paid additional fees of $200 per
member for attendance at meetings of the Bank's Executive Committee held on days
other than when the Board of Directors meets and $100 for Audit Committee, Loan
Committee and Bylaws Committee meetings. Messrs. Kurtz and Mueller, officers of
the Company, do not receive fees for serving as directors of the Company.
1993 Stock Option Plan for Outside Directors. The Company maintains the
FFLC Bancorp, Inc., 1993 Stock Option Plan for Outside Directors (the
"Directors' Option Plan"). The Directors' Option Plan provides that each outside
director serving on the Board of Directors as of the effective date of the plan
and each subsequent outside director appointed or elected to the Board will be
granted an option to purchase 7,553 shares of Company common stock. All options
granted under the Directors' Option Plan expire upon the earlier of 20 years
following the date of grant or one year following the date the optionee ceases
to be a Director for any reason other than removal for cause.
Recognition and Retention Plan for Outside Directors. The Bank maintains
the First Federal Savings Bank of Lake County Recognition and Retention Plan for
Outside Directors (the "Directors' RRP"). The Directors' RRP provides that each
outside director serving on the Board as of the effective date of the plan and
each subsequent outside director will receive a stock award for 3,021 shares of
restricted Company common stock (if available under the plan). The Awards vest
in three equal annual installments commencing 15 months after the effective date
of the award. Awards are nontransferable and nonassignable. .
Executive Compensation
The report of the compensation committee and the stock performance graph
shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933 (the "Securities Act") or the Securities Exchange Act of
1934 (the "Exchange Act"), except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
Compensation Committee Report on Executive Compensation. Under rules
established by the Securities and Exchange Commission ("SEC"), the Company is
required to provide certain data and information in regard to the compensation
and benefits provided to the Company's Chief Executive Officer and other
executive officers of the Company. The disclosure requirements for the Chief
Executive Officer and other executive officers include the use of tables and a
report explaining the rationale and considerations that led to fundamental
executive compensation decisions affecting those individuals. In fulfillment of
that requirement, the Compensation Committee, at the direction of the Board of
Directors, has prepared the following report for inclusion in this proxy
statement.
9
In 2003, the Compensation Committee was made up of all outside directors
of the Company and was responsible for determining annual compensation levels
for the Chief Executive Officer and the Executive Vice President and Treasurer.
The Compensation Committee also is responsible for determining the amount to be
contributed to the Bank's profit sharing plan, which is distributed to all
full-time employees who have completed at least one year of service.
The Compensation Committee generally meets three times each year. In
December, the Compensation Committee reviews management recommendations for
officer compensation. The Compensation Committee determines salary levels after
reviewing published surveys of compensation paid to executives performing
similar duties with institutions of comparable asset size and geographic
location. Specifically, the Committee utilizes the salary survey of the Florida
Bankers Association, the survey of America's Community Bankers and the SNL
Executive Compensation Review. In addition, the Compensation Committee considers
available executive compensation data of other local, publicly traded financial
institutions. In making those compensation decisions, the Compensation Committee
also considers the earnings and condition of the Bank, the contribution of each
executive officer to the success of the Bank and the results of any supervisory
examination of the Bank.
At the meeting held on December 18, 2003, and, based upon the criteria
listed above, the Compensation Committee increased the salary of Stephen T.
Kurtz, the President and Chief Executive Officer, from $197,800 to $247,800, an
increase of 25%. At that same meeting, the salary of Paul K. Mueller, Executive
Vice President and Treasurer was increased from $156,300 to $160,998, a 3%
increase.
The Compensation Committee also meets in June and in November to consider
the funding of the Bank's profit sharing plan. The profit sharing plan is
generally funded based upon the overall profitability of the Bank with profit
sharing plan distributions made in June and December. All full-time personnel
with at least one year of service are eligible to participate in the profit
sharing plan. Distribution of funds to employees under the profit sharing plan
is based upon salary and job performance.
Compensation Committee of the Company
Claron D. Wagner
James P. Logan
Joseph J. Junod
Ted R. Ostrander, Jr.
H.D. Robuck, Jr.
Howard H. Hewitt
Stock Performance Graph. The following graph shows a comparison of
cumulative total shareholder return on the Company's Common Stock, based on the
market price of the Common Stock assuming reinvestment of dividends, with the
cumulative total return of companies in the Nasdaq National Market, the Nasdaq
Bank Index and the SNL OTC Bank Index and the SNL Thrift Index for the period
beginning on December 31, 1998, and ending on December 31,2003. This is the last
year the Company will be able to present the NASDAQ Bank Index for comparison.
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Period Ending
---------------------------------------------------------------------
Index 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
-----------------------------------------------------------------------------------------------
FFLC Bancorp, Inc. 100.00 96.24 96.90 139.64 203.37 301.81
NASDAQ - Total US 100.00 185.95 113.19 89.65 61.67 92.90
NASDAQ Bank Index* 100.00 96.15 109.84 118.92 121.74 156.62
SNL OTC Bank Index 100.00 96.08 110.92 120.73 124.18 160.28
SNL Thrift Index 100.00 81.69 130.44 139.42 166.32 235.45
* Source: CRSP, Center for Research in Security Prices, Graduate School of
Business, The University of Chicago 2004. Used with permission. All rights
reserved. crsp.com.
11
Summary Compensation Table. The following table sets forth the cash
compensation paid by the Bank, for services rendered during the fiscal years
ended December 31, 2003, 2002 and 2001, to the Chief Executive Officer and to
the Executive Vice President and Treasurer, who were the only executive officers
to receive compensation in salary and profit sharing in excess of $100,000 in
the fiscal year ended December 31, 2003.
Annual Compensation
All Other
Compensation
Name and Principal Position Year Salary ($) Bonus ($) (1)(2)
------------------------------------- ---------------- --------------- ----------------- --------------------
Stephen T. Kurtz 2003 $197,816 $70,562 $22,237
President, Chief Executive Officer 2002 192,203 53,464 27,203
and Director 2001 180,010 27,429 18,269
Paul K. Mueller 2003 $156,297 $55,593 $22,464
Executive Vice President, 2002 151,846 45,495 26,974
Treasurer and Director 2001 146,001 23,487 18,223
---------------------
(1) Includes employer-matching contributions under the 401(k) Plan in 2003 of
$12,000, each, for Messrs. Kurtz and Mueller.
(2) Includes $10,237 for Mr. Kurtz and $10,464 for Mr. Mueller which represent
the value of allocations made in 2003 under the Bank's ESOP.
Employment Agreements. The Bank and the Company have entered into
employment agreements with Mr. Stephen T. Kurtz and Mr. Paul K. Mueller. Each
employment agreement provides for a three-year term of employment that extends
on a daily basis until either the executive, the Bank or the Company provides
written notice of non-renewal, at which time the term of the agreement becomes
fixed at three years. Under each employment agreement, the Board of Directors of
the Bank reviews the base salary of the executive annually. In addition to the
base salary, each employment agreement provides for, among other things,
participation in various employee benefit plans and stock-based compensation
programs, as well as furnishing fringe benefits available to similarly situated
executive personnel.
Each employment agreement provides for termination by the Company and the
Bank for cause, as defined in the employment agreements, at any time. If the
Company or the Bank chooses to terminate the executive's employment for reasons
other than for cause, or if the executive resigns from the Company or the Bank
after specified circumstances that would constitute constructive termination,
then the executive or, if he dies, his beneficiary, would be entitled to receive
a sum equal to the remaining payments due on the agreement, including base
salary, profit sharing and contributions that would have been made on the
executive's behalf to any employee benefit plans of the Bank and the Company
during the remaining term of his employment agreement. The Company would also
continue and/or pay for executive's life, medical, dental and disability
coverage for the remaining term of the employment agreement. Each employment
agreement restricts the executive's right to compete against the Bank or the
Company for a period of one year from the date of termination of the agreement
if executive's employment is terminated without cause, unless termination
follows a change in control.
Under the agreements, if voluntary or involuntary termination follows a
change in control of the Bank or the Company (as defined in the agreements),
executive or, in the event of his death, executive's beneficiary would be
entitled to a severance payment or liquidated damages, or
12
both, in a sum equal to three times the average of the three preceding taxable
years' "annual compensation" (as defined in the agreements). The Bank or the
Company would also continue the executive's life, medical, dental and long-term
disability coverage for thirty-six months. Even though both the Bank and Company
employment agreements provide for a severance payment if a change in control
occurs, the executives would not receive duplicative payments or benefits under
the agreements.
The maximum present value of the severance benefits under the employment
agreements is 2.99 times the executive's average annual compensation during the
five-year period preceding the effective date of the change in control (the
"base amount"). The agreements also provide for continued coverage under the
Bank's life, medical, dental and long-term disability programs for a 36-month
period following a change in control.
All reasonable costs and legal fees paid or incurred by the executive
under any dispute or question of interpretation relating to his employment
agreement are to be paid by the Bank or Company if the executive is successful
on the merits in a legal judgment, arbitration or settlement. Each employment
agreement also provides that the Bank and Company shall indemnify the executive
to the fullest extent legally allowable.
The following table provides certain information with respect to the
number of shares of Common Stock acquired on exercise of stock options and the
value realized thereon and the number of shares of Common Stock represented by
outstanding stock options held by the Named Executive Officers as of December
31, 2003. Also reported are the values for "in-the-money" options which
represent the positive spread between the exercise price of any such existing
stock options and the price of the Common Stock as of the end of the fiscal year
on December 31, 2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Securities
Underlying Unexercised
Shares Value Options at Fiscal Year End Value of Unexercised In-the-Money
Acquired on Realized (#) Options at Fiscal Year End ($)(1)
Name Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
------------------- ---------------- ------------ ---------------------------- -----------------------------------
Stephen T. Kurtz 0 0 0 / 4,018 0 / $8,076
Paul K. Mueller 0 0 0 / 4,000 0 / $8,040
--------------------------
(1) Value of unexercised in-the-money stock options equals the market value of
shares covered by in-the-money options on December 31, 2003, less the
option exercise price. Options are in-the-money if the market value of the
shares covered by the options is greater than the exercise price.
13
Compliance with Section 16 of the Exchange Act
Section 16(a) of the Securities and Exchange Act requires the Company's
executive officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the National Association of Securities Dealers, Inc., and to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that all filing requirements
applicable to its executive officers, directors and 10% stockholder were met
during 2003, except for Directors Wagner and Hewitt. As a result of
administrative errors, Mr. Wagner's trust reported the sale of 4,000 shares made
on June 16, 2003, on August 20, 2003, and Mr. Hewitt's trust reported the
purchase of 330 shares made on May 27, 2003, on June 16, 2003, the purchase of
330 shares made on July 28, 2003, on August 6, 2003, and the purchase of 734
shares made on October 20,2003, on December 1, 2003.
Transactions with Related Persons
Federal regulations generally require that loans or extensions of credit
to executive officers and directors must be made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the general public and must not involve more
than the normal risk of repayment or present other unfavorable features. In
addition, loans made to a director or executive officer in excess of the greater
of $25,000 or 5% of the Bank's capital and surplus (up to a maximum of $500,000)
must be approved in advance by a majority of the disinterested members of the
board of directors.
Except as hereafter indicated, the Bank currently makes loans to its
executive officers and directors on the same terms and conditions offered to the
general public. All loans made by the Bank to its executive officers and
directors are made in the ordinary course of business, on substantially the same
terms, including collateral, as those prevailing at the time for comparable
transactions with other persons and do not involve more than the normal risk of
collectibility or present other unfavorable features.
Claron D. Wagner, a director and Chairman of the Board of the Company, is
the President of Woody Wagner, Inc., a firm engaged in construction and in
supervision and consulting on construction. During 2003, the Company paid Woody
Wagner, Inc., a total of $733,206 for various construction projects and for the
supervision of construction projects.
H. D. Robuck, Jr., a director of the Company, is the owner and President
of H. D. Robuck, Jr., P.A., a law firm. Mr. Robuck also owns a 10% interest in
First Alliance Title, L.L.C., a 90% owned subsidiary of the Company. In 2003,
the Company paid the law firm legal fees of $124,209 and paid the law firm
$15,527 in fees for legal services provided to First Alliance Title Company.
Ted R. Ostrander, Jr., a director of the Company, is the President of
Lassiter-Ware, Inc., an insurance agency. The insurance premiums paid by the
Company to the agency during 2002 were less than 5% of the Company's gross
revenues and Mr. Ostrander has advised the Company
14
that the insurance premiums paid by the Company to the agency during 2003 were
less than 5% of the agency's gross revenues.
Ken Wagner, the son of director Claron D. Wagner, owns a 25% interest in a
construction firm, Wagner Construction Company, L.L.C. During 2003, the Company
paid a total of $784,680 to Wagner Construction Company, L.L.C. for the
construction of two bank branch offices.
In accordance with applicable regulations, the Bank extends credit to its
directors and executive officers pursuant to a benefit program that is widely
available to employees of the Bank and does not give preference to any executive
officer or director over other employees of the Bank. Set forth below is certain
information relating to loans made pursuant to that benefit program in excess of
$60,000 made to executive officers and directors which were outstanding at
December 31, 2003.
Balance as of
Date of Loan or Original December 31,
Name Modification Amount 2003 Note Rate Market Rate
----------------------- ------------------ --------------- ---------------- -------------- ---------------
Ted R. Ostrander 06/28/02 $560,000 $549,956 6.00% 6.50%
James P. Logan 09/20/01 $160,000 $ 74,268 6.25% 6.50%
H.D. Robuck, Jr. 01/04/02 $259,795 $206,661 6.00% 6.50%
Report of the Audit Committee
The Audit Committee of the Board of Directors is responsible for
selecting, evaluating and engaging the independent accountants, administering
the engagement of the independent auditors and otherwise assisting the Board in
fulfilling its responsibility to the shareholders relating to corporate
accounting, reporting practices and the quality and integrity of the financial
reports of the Company. Additionally, the Audit Committee reviews the
independence of the auditors and their annual audit. As presently constituted,
the Audit Committee is comprised of 3 directors, each of whom is independent
under NASDAQ's current listing standards. In addition, each member of the Audit
Committee meets the requirements for independence contained in Regulation
240.10A-3 of the Securities and Exchange Commission. The Audit Committee acts
under a written charter adopted by the Board of Directors, which was amended in
2003. A copy of the Amended Charter of the Audit Committee is attached as
Appendix A to this proxy statement.
The Audit Committee reviewed and discussed the annual financial statements
with management and the independent accountants. As part of this process,
management represented to the Audit Committee that the financial statements were
prepared in accordance with generally accepted accounting principles. The Audit
Committee also received and reviewed written disclosures and a letter from the
accountants concerning their independence as required under applicable standards
for auditors of public companies. The Audit Committee discussed with the
accountants the contents of such materials, the accountant's independence and
the additional matters required under Statement on Auditing Standards No. 61.
Based on such review and discussions, the Audit Committee recommended that the
Board of Directors include the audited consolidated financial statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 2003, for
filing with the Securities and Exchange Commission.
15
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee has established a policy and procedure to require the
Audit Committee's pre-approval before the independent auditor is engaged to
render any audit or non-audit service to the Company.
Complaints
The Audit Committee has established procedures for the receipt, retention,
and treatment of complaints received regarding accounting, internal accounting
controls and auditing matters and the confidential, anonymous submission by
employees of the Company of concerns regarding questionable accounting or
auditing matters. Persons seeking to utilize those procedures or to comment on
such matters should telephone 1-866-292-2087.
James P. Logan, Chairman
Ted R. Ostrander, Jr.
Joseph J. Junod
PROPOSAL 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's financial statements as of December 31, 2002 and 2003 and
for each of the years in the three-year period ended December 31, 2003 were
audited by Hacker Johnson & Smith PA. That same firm has been selected by the
Audit Committee to perform the independent audit duties for 2004 for the Company
and the Bank and the Board of Directors has ratified that selection.
A representative of Hacker Johnson & Smith PA will be present at the
Annual Meeting, will be given an opportunity to make a statement if so desired
and will be available to respond to appropriate questions from stockholders
present at the Annual Meeting.
Unless marked to the contrary, the shares represented by the enclosed
Proxy, if executed and returned, will be voted FOR ratification of the
appointment of Hacker Johnson & Smith PA as the independent auditors of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF HACKER JOHNSON & SMITH PA AS THE INDEPENDENT AUDITORS OF THE
COMPANY.
16
ADDITIONAL INFORMATION
Stockholder Proposals
To be considered for inclusion in the Company's proxy statement in
connection with the annual meeting of stockholders to be held following fiscal
year ending December 31, 2003, a stockholder proposal must be received by the
Secretary of the Company, at the address set forth on the first page of this
Proxy Statement, no later than November 30, 2003. Any shareholder proposal
submitted to the Company will be subject to SEC Rule 14a-8 under the Exchange
Act.
Stockholder Communication
The Board of Directors has developed the following procedure for
stockholders to send communications to the board of directors or to individual
members of the Board. All communications from stockholders should be sent to
FFLC Bancorp, Inc., 800 North Boulevard West, Post Office Box 490420, Leesburg,
FL 34749-0420.
Communications regarding financial or accounting policies should be made
to the attention of James P. Logan, Chairman of the Audit Committee. Other
communications to the Board of Directors should be made to the attention of
Sandra L. Rutschow, Corporate Secretary of the Company. Communications to
individual members of the Board should also be sent directly to the individual
director at the Company's address.
All communications sent to the Chairman of the Audit Committee and those
sent to an individual director will go directly to such individuals and will not
be screened or reviewed by Company or Bank personnel. Any communication sent to
the Board to the attention of Mrs. Rutschow will be reviewed by her to ensure
that the communication relates to the business of the Company before being
reviewed by the Board of Directors.
Advance Notice of Business to be Conducted at an Annual Meeting
The Bylaws of the Company provide an advance notice procedure for certain
business, or nominations to the Board of Directors, to be brought before an
annual meeting. In order for a stockholder to properly bring business before an
annual meeting, or to propose a nominee to the Board, the stockholder must give
written notice to the Secretary of the Company not less than ninety (90) days
before the date fixed for such meeting; provided, however, that in the event
that less than one hundred (100) days notice or prior public disclosure of the
date of the meeting is given or made, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the Annual Meeting was mailed or
such public disclosure was made. The notice must include the stockholder's name,
record address, and number of shares owned by the stockholder, and describe
briefly the proposed business, the reasons for bringing the business before the
Annual Meeting, and any material interest of the stockholder in the proposed
business. In the case of nominations to the Board, certain information regarding
the nominee must be provided. Nothing in this paragraph shall be deemed to
require the Company to include in its proxy statement and proxy relating to an
annual meeting any stockholder proposal which does not meet all of the
requirements for inclusion established by the SEC in effect at the time such
proposal is received.
17
Other Matters that may Properly Come Before the Meeting
The Board of Directors knows of no business that will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy card to vote the shares represented thereby on such matters in accordance
with their best judgment.
INDEPENDENT AUDITORS
The independent public accounting firm of Hacker Johnson & Smith PA has
acted as the independent auditors of the Company and the Bank for 2003.
Audit Fees
Hacker Johnson & Smith PA billed the Company aggregate fees of $62,500 for
fiscal year 2002 and $68,500 for fiscal year 2003 for professional services
rendered for the audit of the Company's annual consolidated financial statements
and for the reviews of the condensed consolidated financial statements included
in the Company's Forms 10-Q for the year ended December 31, 2003.
Audit-Related Fees
The Company did not pay Hacker Johnson & Smith PA any Audit-Related Fees
for fiscal years 2002 or 2003.
Tax Fees
Hacker Johnson & Smith PA billed the Company $7,500 for fiscal year 2002
and $8,000 for fiscal year 2003 for tax related services.
All Other Fees
The Company did not pay Hacker Johnson & Smith PA any Other Fees for
fiscal years 2002 or 2003.
Audit Committee Determination
The Audit Committee of the Board of Directors has considered and
determined that the independent auditors did not provide other non-audit
services to the Company that would be incompatible with maintaining the
auditor's independence.
Please Return Your Proxy Card.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are present at the Annual
Meeting and wish to vote your shares in person, your proxy may be revoked by
voting at the Annual Meeting.
18
A copy of the Form 10-K (without exhibits) for the year ended December 31,
2003, as filed with the SEC, will be furnished without charge to stockholders of
record upon written request to FFLC Bancorp, Inc., Ms. Sandra L. Rutschow,
Secretary, P.O. Box 490420, Leesburg, Florida 34749-0420. The Form 10-K can also
be accessed through the Bank's World-Wide Web Internet Site at
"http://www.1stfederal.com".
By Order of the Board of
Directors
Sandra L. Rutschow
Secretary
Leesburg, Florida
March 31, 2004
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO SIGN AND PROMPTLY
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
19
Appendix A
FFLC BANCORP, INC.
CHARTER - AUDIT COMMITTEE
Mission Statement
The mission of the audit committee (the "Audit Committee") of FFLC
Bancorp, Inc., (the "Company") is to assist the Board of Directors of the
Company (the "Board") in overseeing all material aspects of financial reporting,
internal control, and audit functions, placing particular emphasis on the
qualitative aspects of financial reporting, on compliance with applicable legal,
ethical, and regulatory requirements, on ensuring the objectivity and clarity of
the financial statements and on evaluating the risks inherent in the operations
of the Company. To carry out its mission, the committee must maintain strong,
positive working relationships with management, with independent and internal
auditors, counsel, and other Audit Committee advisors.
Organization
The Audit Committee will be comprised of three or more directors as
determined annually by the Board, each of whom shall satisfy the definition of
independent director for Audit Committee members as defined in the qualitative
listing requirements for the Nasdaq Stock Market, and applicable Securities and
Exchange Commission rules and regulations. All members of the Audit Committee
must be financially literate at the time of appointment. They must have the
ability to read and understand fundamental financial statements, including the
Company's balance sheet, income statement and cash flow statement. In addition,
at least one member of the Audit Committee shall have past employment in finance
or accounting, requisite professional certification in accounting, or any other
comparable experience or background which results in the individual's financial
sophistication, including having been a chief executive officer, chief financial
officer or other senior officer with oversight responsibilities. The members of
the Audit Committee will be elected by the Board on an annual basis.
Functions
The primary functions of the Audit Committee are: to be directly
responsible for the appointment, compensation and oversight of the Company's
independent accountants; to review and be responsible for the integrity of the
financial reports and other financial information to be provided by the Company
to any governmental body or to the public, including any certification, report,
opinion or review performed by the Company's independent accountants; to assure
the Company's compliance with legal and regulatory requirements; to determine
the independent accountant's qualifications and independence; to provide for the
performance of the Company's
A-1
internal audit functions; to review the system of internal controls and
disclosure procedures regarding finance, accounting, legal compliance and ethics
that management and the Board have established; to oversee the Company's
auditing, accounting and financial reporting processes generally; and to provide
for the preparation of information required by the rules of the Securities and
Exchange Commission to be included in the Company's annual reports and proxy
statements.
Responsibilities
In carrying out its responsibilities, the Audit Committee recognizes that
its policies and procedures must be flexible in order to react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the Company are in accordance with
applicable requirements and of the highest quality. To fulfill its
responsibilities and duties the Audit Committee shall:
1. Provide an open avenue of communication between management, the
independent auditor, the internal auditors and the Board.
2. Meet at least quarterly to review the Company's financial statements. At
the request of the Audit Committee, or at the request of the independent
auditors, a representative of the independent auditors will attend a
meeting of the Audit Committee. At any meeting attended by management and
the independent auditors or by regulatory examiners, management will be
excused from a portion of the meeting to permit the Audit Committee to
meet in closed session with the auditors or examiners. At any meeting, a
majority of the members of the Audit Committee shall constitute a quorum.
3. Keep written minutes for all meetings.
4. Review with the independent auditor and internal auditors the work to be
performed by each to assure completeness of coverage, the reduction of
redundant efforts and the effective use of audit resources.
5. Review all significant risks or exposures to the Company found during
audits performed by the independent auditor or the internal auditors and
ensure that items of concern are discussed with management. From those
discussions, assess and report to the Board regarding how the findings
should be addressed.
6. Review recommendations from the independent auditor and internal auditors
regarding internal controls and other matters relating to the accounting
policies and procedures of the Company.
7. Following each meeting of the Audit Committee, the chairman of the
committee will submit a report to the Board including any recommendations
that the Committee deems appropriate.
8. Ensure that the independent auditor discusses with the Audit Committee its
judgment about the quality of the Company's accounting principles as
applied in the financial
A-2
statements. The discussion should include such issues as the clarity of
the financial disclosures of the Company and the auditor's judgment as to
the degree of aggressiveness or conservatism of the accounting principles
and underlying estimates of the Company and other significant decisions
made by management in preparing the financial disclosures.
9. Review the audited annual financial statements of the Company and the
independent auditor's opinion regarding such financial statements,
including a review of the nature and extent of any significant changes in
accounting principles.
10. Arrange for the independent auditor to be available to the full Board at
least annually to discuss the results of the annual audit and the audited
financial statements that are a part of the annual report to shareholders.
11. Review with management, the independent auditor, the internal auditors and
legal counsel, legal and regulatory matters that may have a material
impact on the financial statements.
12. Review with management and the independent auditor all interim financial
reports to be filed pursuant to the Securities Exchange Act of 1934.
13. Generally discuss earnings releases and financial information.
14. Select the independent auditor, considering independence and
effectiveness, and be ultimately responsible for the compensation and
oversight of the independent auditor engaged for the purpose of preparing
or issuing an audit report or related work, and be responsible for the
resolution of disagreements between management and the auditor regarding
financial reporting. Each registered public accounting firm engaged for
the purpose of preparing or issuing an audit report or related work shall
report directly to the Audit Committee. The Audit Committee shall be
responsible for confirming the independence of the independent auditor and
shall require the independent auditor to disclose in writing all
relationships that, in the auditor's professional judgment, may reasonably
bear on the auditor's ability to perform the audit independently and
objectively.
15. Review the performance of the independent auditor.
16. Review the activities, organizational structure and qualifications of the
internal auditors. The Audit Committee should also review and concur in
the appointment, replacement, reassignment, or dismissal of the internal
auditors.
17. Be authorized to retain independent counsel and other advisers as the
Audit Committee deems necessary to carry out its duties and to assist it
in the conduct of any investigation. In connection therewith, the Audit
Committee shall be provided appropriate funding, as determined by the
Audit Committee, for the payment of accountants and advisors.
A-3
18. Establish procedures for (1) the receipt, retention and treatment of
complaints regarding accounting, internal accounting controls, or auditing
matters, and (2) the confidential and anonymous submission by employees of
concerns regarding questionable accounting or auditing matters.
19. Approve, in advance, all permissible audit and non-audit services to be
provided by the independent auditor. Such approval process will ensure
that the independent auditor does not provide any non-audit service to the
Company that is prohibited by law or regulation.
20. Set clear hiring policies for hiring employees or former employees of the
independent auditors.
21. Review all related-party transactions.
In addition to the responsibilities identified above, the Audit Committee
will review this Charter on an annual basis to assure that it remains adequate
to address the responsibilities of the Committee. Further, the Committee will
disclose statement to stockholders in each annual proxy whether it satisfied the
responsibilities during the prior year in compliance with the Charter, and will
provide a copy of the Charter either in the annual report to shareholders or as
an appendix to the proxy statement unless a copy has been provided within the
past three years.
Adopted February 26, 2004
A-4
|X| PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE FFLC BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS 1. The election as directors of all With-
MAY 13, 2004 nominees listed below (except as For hold Except
2:00 p.m. marked to the contrary): |_| |_| |_|
The undersigned hereby appoints the official proxy
committee, consisting of each member of the Board of FFLC Howard H. Hewitt H. D. Robuck, Jr. Stephen T. Kurtz
Bancorp, Inc. (the "Company"), each with full power of
substitution, to act as attorneys and proxies for the
undersigned, and to vote all shares of Common Stock of the (INSTRUCTION: To withhold authority to vote for any
Company which the undersigned is entitled to vote only at individual nominee, mark "Except" and write that nominee's
the Annual Meeting of Stockholders, to be held at the name in the space provided below.)
Leesburg Community Building, 109 E. Dixie Avenue,
Leesburg, Florida, on May 13, 2004, at 2:00 p.m., and at
any and all adjournments thereof, as follows: ------------------------------------------------------------
2. The approval of Hacker, Johnson For Against Abstain
& Smith PA as the Company's |_| |_| |_|
independent auditors for the
fiscal year ending December 31,
2004.
3. On such other matters as may properly come before
the meeting and at any adjournment thereof in
accordance with their best judgment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH
OF THE LISTED PROPOSALS.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
This proxy is revocable and will be voted as
directed, but if no instructions are specified, this proxy
will be voted FOR each of the proposals listed. If any
------------ other business is presented at the Annual Meeting, this
Date proxy will be voted by those named in this proxy in their
best judgment. At the present time, the Board of Directors
Please be sure to sign and date knows of no other business to be presented at the Annual
this Proxy in the box below Meeting.
---------------------------------------------------------
The signer acknowledges receipt from the Company
prior to the execution of this proxy of a Notice of
Meeting and of a Proxy Statement dated March 31, 2004, as
------Stockholder sign above--Co-holder (if any) sign----- well as a copy of FFLC Bancorp's 2003 Annual Report.
above
Please sign exactly as your name appears on this
Stockholder Assistance card. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If
Stockholders requiring a change of address, records shares are held jointly, each holder should sign, but the
or information lost certificates or dividend checks signature of one holder is sufficient, unless contested.
should contact FFLC Bancorp's transfer agent:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
800-368-5948
[First Federal Savings Bank of Lake County Letterhead]
Dear KSOP Participant:
On behalf of the Board of Directors of FFLC Bancorp, Inc. (the "Company"),
I am forwarding the attached vote authorization form provided for the purpose of
conveying your voting instructions to the Bank of New York, as trustee for the
First Federal Savings Bank of Lake County Employee Stock Ownership Plan and
401(k) Plan ("KSOP"), on the proposals to be presented at the 2004 Annual
Meeting of Stockholders of FFLC Bancorp, Inc., to be held on May 13, 2004. We
have posted the Notice and Proxy Statement for the Annual Meeting and the
Company's Annual Report to Stockholders in the FFLC section on First Federal's
website at http://www.1stfederal.com, and you can retrieve them from there on
your office computer.
As a participant in the KSOP, you are entitled to direct the vote of all
shares of Company common stock credited to your account as of March 15, 2004,
the Annual Meeting Record Date. If you do not direct the KSOP Trustee as to how
to vote the shares of Company common stock credited to your KSOP account, or
your voting instructions are not received by the KSOP Trustee by April 16, 2004,
the KSOP Trustee will vote your shares in a manner calculated to most accurately
reflect the instructions it receives from other participants subject to its
fiduciary duties.
In order to direct the voting of the shares of Company common stock
credited to your KSOP account, please complete and sign the attached vote
authorization form and return it in the enclosed envelope no later than April
16, 2004. Your vote will not be revealed, directly or indirectly, to any
officer, employee or director of the Company or First Federal Savings Bank of
Lake County. An independent third party will tabulate the voting instructions
and provide the KSOP Trustee with the results.
Sincerely,
/s/ Brenda M. Grubb
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Brenda M. Grubb
Human Resources Manager
NAME:_______________________________________
(Print Name)
VOTE AUTHORIZATION FORM
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I, the undersigned, understand that the Bank of New York, as Trustee is the
holder of record and custodian of all shares attributable to me of FFLC Bancorp,
Inc. (the "Company") common stock under the First Federal Savings Bank of Lake
County Employee Stock Ownership and 401(k) Plan. Further, I understand that my
voting instructions are solicited on behalf of the Company's Board of Directors
for the Annual Meeting of Stockholders on May 13, 2004.
Accordingly, you are to vote all shares attributable to me as follows:
1. The election as directors of all nominees listed (except as marked to
the contrary below)
Howard H. Hewitt and H.D. Robuck, Jr. and Stephen T. Kurtz
FOR VOTE WITHHELD FOR ALL EXCEPT
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[_] [_] [_]
INSTRUCTION:To withhold authority to vote for any individual nominee,
mark "For All Except" and write that nominee's name in the space provided below:
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2. The approval of Hacker, Johnson & Smith PA as the Company's
independent auditors for the fiscal year ending December 31, 2004.
FOR AGAINST ABSTAIN
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[_] [_] [_]
The Trustee is hereby authorized to vote any shares held in trust and
attributable to me as indicated above. I understand that if I sign this form
without indicating specific instructions, shares attributable to me will be
voted FOR the listed proposals and FOR other matters as recommended by the Board
of Directors.
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Date Signature
Please date, sign exactly as your name appears and return this form in the
enclosed envelope.
The signer acknowledges receipt from the Company prior to the execution of
this Vote Authorization Form of a Notice of Meeting and of a Proxy Statement
dated March 31, 2004, as well as a copy of FFLC Bancorp's 2003 Annual Report.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS
This authorization form is revocable and will be voted as directed, but if
no instructions are specified, these shares will be voted FOR each of the
proposals listed.