SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
0-26248 34-1800830
- ------------------------------------- -------------------------------------
(Commission File No.) (IRS Employer I.D. No.)
INDUSTRIAL BANCORP, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
OHIO
- -------------------------------------------------------------------------------
(State of jurisdiction or incorporation)
211 North Sandusky Street, Bellevue, Ohio 44811
- --------------------------------------------- ------------------------------
(Address of principal executive office) (Zip Code)
(419) 483-3375
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding as of November 4, 1997:
5,152,800 common shares, no par value
1
INDUSTRIAL BANCORP, INC.
Form 10-Q/A
For the Quarter ended September 30, 1997
Part I - Financial Information
Item 1: Financial Statements
Interim financial information required by Rule 10-01 of Regulation
S-X is included in this Form 10-Q/A as referenced below:
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Shareholders' Equity 5
Condensed Consolidated Statements of Cash Flow 6
Notes to Consolidated Financial Statements 7
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
Part II - Other Information 11
Signatures 12
2
INDUSTRIAL BANCORP, INC.
Consolidated Balance Sheets
(Unaudited, $ in thousands except per share data)
09/30/97 12/31/96
--------- ---------
ASSETS
Cash and noninterest-bearing deposits $ 1,347 $ 1,312
Interest-bearing demand deposits 1,352 2,101
Overnight deposits 6,000 4,000
----------------------
Cash and cash equivalents 8,699 7,413
Investment securities available for sale, at fair value 23,707 23,236
Investment securities held to maturity
(fair value: 1997 -- $511; 1996 -- $608) 472 561
Federal Home Loan Bank stock 2,885 2,645
Loans receivable, net 311,118 285,803
Office properties and equipment, net 5,026 5,029
Accrued interest receivable 1,947 1,784
Other assets 262 142
----------------------
Total assets $ 354,116 $ 326,613
======================
LIABILITIES
Deposits $ 269,565 $ 259,074
Federal Home Loan Bank advances 21,000 2,000
Accrued interest payable and other liabilities 2,703 3,435
----------------------
Total liabilities 293,268 264,509
SHAREHOLDERS' EQUITY
Common stock, no par value, 10,000,000 shares
authorized; 5,554,500 shares issued 34,669 34,669
Additional paid-in capital 1,791 1,669
Retained earnings 33,858 31,803
Treasury stock, at cost: 381,700 shares at 9/30/97,
50,000 shares at 12/31/96 (5,074) (634)
Unearned employee stock ownership plan shares (3,640) (3,974)
Unearned compensation (1,885) (2,279)
Unrealized gain on securities available for sale 1,129 850
----------------------
Total shareholders' equity 60,848 62,104
----------------------
Total liabilities and shareholders' equity $ 354,116 $ 326,613
======================
Book value per share $ 11.76 $ 11.28
3
INDUSTRIAL BANCORP, INC.
Consolidated Statements of Income
(Unaudited, $ in thousands except per share data)
Three months ended Nine months ended
-------------------- -------------------
09/30/97 09/30/96 09/30/97 09/30/96
-------- -------- -------- --------
Interest income
Interest and fees on loans $ 6,544 $ 5,816 $ 18,992 $ 17,117
Interest and dividends on investment securities 402 443 1,202 1,358
Interest on deposits 138 73 319 578
-------------------------------------------
Total interest income 7,084 6,332 20,513 19,053
Interest expense
Interest on deposits 3,330 3,011 9,617 8,730
Interest on FHLB advances 327 - 650 -
-------------------------------------------
Total interest expense 3,657 3,011 10,267 8,730
-------------------------------------------
Net interest income 3,427 3,321 10,246 10,323
Provision for loan losses 45 45 141 135
-------------------------------------------
Net interest income after provision for loan losses 3,382 3,276 10,105 10,188
Noninterest income
Service fees and other charges 112 95 315 268
Other 8 9 28 31
-------------------------------------------
Total noninterest income 120 104 343 299
Noninterest expense
Salaries and employee benefits 814 2,346 2,314 3,814
State franchise tax 192 208 570 623
Federal deposit insurance premiums 41 1,651 93 1,919
Occupancy and equipment 95 80 262 246
Data processing 91 90 275 266
Depreciation 74 75 209 198
Other 323 337 1,004 1,042
-------------------------------------------
Total noninterest expense 1,630 4,787 4,727 8,108
-------------------------------------------
Income before income tax 1,872 (1,407) 5,721 2,379
Provision for income tax 642 55 1,988 1,337
-------------------------------------------
Net income $ 1,230 $(1,462) $ 3,733 $ 1,042
===========================================
Earnings per share $ 0.25 $ (0.29) $ 0.75 $ 0.20
4
INDUSTRIAL BANCORP, INC.
Consolidated Statements of Shareholders' Equity
(Unaudited, $ in thousands)
Total
shareholders'
equity
-------------
Balance at January 1, 1996 $ 81,055
Net income 1,042
Capital distribution declared (19,441)
($3.50 per share)
Cash dividends declared (1,278)
($.25 per share)
Employee Stock Ownership Plan:
Accounting for capital distribution on unallocated shares 1,553
Shares released 371
Management Recognition Plan:
Shares purchased (2,630)
Change in unrealized gain on securities available for sale (31)
--------
Balance at September 30, 1996 $ 60,641
========
Balance at January 1, 1997 $ 62,104
Net income 3,733
Purchase of treasury stock (4,440)
(331,700 shares)
Cash dividends declared (1,678)
($.34 per share)
Employee Stock Ownership Plan:
Shares released 456
Management Recognition Plan:
Compensation earned 394
Change in unrealized gain on securities available for sale 279
--------
Balance at September 30, 1997 $ 60,848
========
5
INDUSTRIAL BANCORP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, $ in thousands)
Nine months ended
----------------------
09/30/97 09/30/96
--------- ---------
Cash flows from operating activities
Net income $ 3,733 $ 1,042
Adjustments to reconcile net income to net cash from
operating activities (595) 2,077
---------------------
Net cash from operating activities 3,138 3,119
Cash flows from investing activities
Investment securities available for sale:
Purchases (9,033) (5,910)
Proceeds from maturities 9,000 7,500
Mortgage-backed securities principal repayments 90 152
Net increase in loans (24,984) (17,854)
FHLB stock purchases (92) (69)
Properties and equipment expenditures, net (206) (555)
---------------------
Net cash from investing activities (25,225) (16,736)
Cash flows from financing activities
Capital distribution to shareholders - (19,071)
Purchase of Management Recognition Plan shares - (2,630)
Net increase in deposits 10,491 16,219
Proceeds from FHLB advances 25,000 -
Repayments of FHLB advances (6,000) -
Purchase of treasury stock (4,440) -
Cash dividends paid (1,678) (1,150)
---------------------
Net cash from financing activities 23,373 (6,632)
---------------------
Net change in cash and cash equivalents 1,286 (20,249)
Cash and cash equivalents at beginning of period 7,413 26,711
---------------------
Cash and cash equivalents at end of period $ 8,699 $ 6,462
=====================
6
INDUSTRIAL BANCORP, INC.
Notes to Consolidated Financial Statements
(Unaudited)
Summary of Significant Accounting Policies
These interim financial statements are presented in accordance with the
SEC's rules for quarterly financial information without audit and reflect all
adjustments which, in the opinion of management, are necessary to present
fairly the financial position of Industrial Bancorp, Inc. (the "Company") and
its wholly owned subsidiary, The Industrial Savings and Loan Association (the
"Association"), at September 30, 1997 and the results of operations and cash
flows for the periods presented. All such adjustments are normal and recurring
in nature. All significant intercompany accounts and transactions have been
eliminated in consolidation. The accompanying condensed financial statements do
not purport to contain all the necessary disclosures required by generally
accepted accounting principles that might otherwise be necessary in the
circumstances and should be read in conjunction with the financial statements
included in the 1996 Annual Report of Industrial Bancorp, Inc. The results of
the nine months presented are not necessarily representative of the results of
operations and cash flows which may be expected for the entire year.
Earnings Per Share
Earnings per common share for 1997 have been computed based on 4,918,115
and 4,988,083 weighted average number of common shares outstanding during the
quarter and nine months ended September 30, 1997, respectively. Earnings per
common share for 1996 have been computed based on 5,138,568 and 5,127,345
weighted average number of common shares outstanding during the quarter and
nine months ended September 30, 1996, respectively. Employee Stock Ownership
Plan shares that have been released, or committed to be released, to
participants are considered outstanding for earnings per share purposes.
Commitments and Contingencies
As of September 30, 1997, commitments to originate loans and loans in
process to be funded in six months or less totaled $18.5 million.
7
INDUSTRIAL BANCORP, INC.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Financial Condition
- -------------------
Total assets increased $27.5 million to $354.1 million at September 30,
1997 from $326.6 million at December 31, 1996. The increase in total assets is
primarily attributable to $25.3 million growth in net loans receivable during
the first nine months of 1997. Cash and cash equivalents also increased to $8.7
million at September 30, 1997 from $7.4 million at December 31, 1996.
Liquidity, which amounted to 5.68% at September 30, 1997, exceeded the
regulatory requirement.
Asset growth was funded by deposit growth of $10.5 million and $19.0
million in additional advances from the Federal Home Loan Bank of Cincinnati
("FHLB"). Total deposits were $269.6 million at September 30, 1997, compared to
$259.1 million at December 31, 1996. The Company intends to continue to fund
loan demand in excess of deposit growth with advances from the FHLB. At
September 30, 1997, the undisbursed portion of construction loans totaled $9.9
million.
Despite net income of $3.7 million for the first nine months of 1997,
total shareholders' equity decreased slightly to $60.8 million at September 30,
1997 from $62.1 million at December 31, 1996, primarily as a result of treasury
share purchases. The Company has repurchased 331,700 shares of its common stock
through the first nine months of 1997, at a cost of $4.4 million. These
repurchases include 123,975 shares acquired as part of the Company's second 5%
buyback program initiated in August 1997.
The Association is required by the Office of Thrift Supervision to
maintain certain minimum levels of tangible, core, and risk-based capital. The
following table presents the Association's regulatory capital position at
September 30, 1997:
($ in thousands)
Minimum Required For
Actual Capital Adequacy Purposes
------------------ -------------------------
Total capital (to risk weighted assets) $ 57,100 30.02% $ 15,215 8.00%
Core capital (to adjusted total assets) $ 55,451 15.72% $ 10,581 3.00%
Tangible capital (to adjusted total assets) $ 55,451 15.72% $ 5,290 1.50%
8
INDUSTRIAL BANCORP, INC.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
- ---------------------
Net income for the three and nine months ended September 30, 1997 was
$1.2 million and $3.7 million, respectively. Accounting for two significant
events during the third quarter of 1996 caused the Company to record a net loss
of $1.5 million and net income of $1.0 million for the three months and nine
months ended September 30, 1996, respectively. These events consist of a
special assessment levied by the Federal Deposit Insurance Corporation ("FDIC")
upon institutions with deposits insured through the Savings Association
Insurance Fund ("SAIF") amounted to a pre-tax expense of $1.5 million and an
expense related to the 1996 return of capital related to unallocated ESOP
shares amounted to $1.5 million during the quarter ended September 30, 1996.
Net interest income was $106,000 more and $77,000 less for the three and
nine months ended September 30, 1997, respectively, than for the comparable
periods in 1996. Interest earned on short-term deposits preceding the $19.4
million return of capital in May of 1996 and interest paid on an increasing
amount of FHLB advances are the primary reasons for the decline in net interest
income during the first nine months of 1997.
Total interest income was $752,000 and $1.5 million more for the three
and nine months ended September 30, 1997, respectively, than for the comparable
periods in 1996. These increases were primarily the result of an increased
average balance in net loans receivable, which resulted in increases of
$728,000 and $1.9 million in interest and fees on loans for the three and nine
months ended September 30, 1997, respectively. Interest on deposits with other
financial institutions amounted to $578,000 for the nine months ended September
30, 1996 compared to $319,000 for the comparable period in 1997, as a result of
the investment in short-term funds preceding the $19.4 million special return
of capital distribution in May of 1996.
Total interest expense was $646,000 and $1.5 million more for the three
and nine months ended September 30, 1997, respectively, than for the same
periods in 1996. Somewhat higher rates of interest paid on increased average
interest-bearing deposit balances have driven the interest paid on deposits
higher by $319,000 and $887,000 for the three and nine months ended September
30, 1997, respectively, than for the comparable periods in 1996. The cost of
FHLB advances, of which the Association had none during the first nine months
of 1996, amounted to $327,000 and $650,000 for the three and nine months ended
September 30, 1997, respectively.
9
INDUSTRIAL BANCORP, INC.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The provision for loan losses was $45,000 and $141,000 for the three and
nine months ended September 30, 1997, respectively, based upon management's
assessment of reasonably foreseeable losses inherent in the loan portfolio for
each period.
Noninterest income for the three and nine months ended September 30, 1997
was $120,000 and $343,000, respectively, compared to $104,000 and $299,000
recorded for the same periods in 1996, due primarily to higher service fee
income on an increased average balance of deposits.
Noninterest expense was $1.6 million and $4.7 million for the three and
nine months ended September 30, 1997, respectively, compared to $4.8 million
and $8.1 million for the three and nine months ended September 30, 1996,
respectively. Noninterest expense in 1996 included a combined $3.0 million of
expense for the FDIC special assessment and ESOP expense related to the 1996
return of capital. Excluding, and due to, the assessment for the SAIF
recapitalization in 1996, the level of federal deposit insurance premiums has
been reduced to $41,000 for the third quarter of 1997 from $140,000 for the
comparable quarter in 1996.
Salaries and employee benefits expense for the quarter and nine months
ended September 30, 1997 amounted to $814,000 and $2.3 million, respectively,
compared to $2.3 million and $3.8 million for the quarter and nine months ended
September 30, 1996, respectively, which included $1.5 million of ESOP expense
related to the 1996 return of capital.
10
INDUSTRIAL BANCORP, INC.
Form 10-Q
Other Information
Part II
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
On October 2, 1997, the Company's Board of Directors declared a
quarterly dividend of $0.14 per common share, an increase of $0.02
over the $0.12 per common share dividend declared in the prior
quarter.
Item 6. Exhibits and Reports on Form 8-K
Not applicable.
11
INDUSTRIAL BANCORP, INC.
Form 10-Q
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: 11/12/97 By: /s/ Lawrence R. Rhoades
------------ -----------------------
Lawrence R. Rhoades
Chairman of the Board and
Chief Financial Officer
Date: 11/12/97 By: /s/ David M. Windau
------------ ------------------------
David M. Windau
President and
Chief Executive Officer
12