SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the quarterly period ended March 31, 2001
--------------
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission File No. 0-25903
IBT Bancorp, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Pennsylvania 25-1532164
- ---------------------------------------- ----------------------
(State of incorporation or organization) I.R.S. employer
identification no.)
309 Main Street, Irwin, Pennsylvania 15642
- -------------------------------------------- ----------------------
(Address of principal executive offices) (zip code)
(724) 863-3100
- --------------------------------------------------------------------------------
Issuer's telephone number, including area code
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
------------ ------------
Number of shares of Common Stock outstanding as of May 01, 2001: 2,997,403
---------
IBT BANCORP, INC.
Contents
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Pages
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements..............................................................................
Consolidated statements of financial condition at March 31, 2001
(unaudited) and December 31, 2000.............................................................. 1
Consolidated statements of operations (unaudited) for the three months
ended March 31, 2001 and 2000 .................................................................. 2
Consolidated statements of cash flows (unaudited) for the three months
ended March 31, 2001 and 2000................................................................... 3
Notes to financial statements................................................................... 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................................................... 5
Item 3. Quantitative and Qualitative Disclosures About Market Risk...................................... 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.............................................................................. 9
Item 2. Changes in Securities and Use of Records....................................................... 9
Item 3. Defaults upon Senior Securities................................................................ 9
Item 4. Submission of Matters to a Vote of Security-Holders............................................ 9
Item 5. Other Information.............................................................................. 9
Item 6. Exhibits and Reports on Form 8-K............................................................... 9
Signatures..................................................................................................... 10
CONSOLIDATED BALANCE SHEETS
IBT BANCORP, INC. AND SUBSIDIARY
March 31, 2001 December 31, 2000
--------------- -----------------
(unaudited) (unaudited)
--------------- -----------------
ASSETS
Cash and due from banks $ 11,796,275 $ 12,877,327
Interest-bearing deposits in banks 3,147,735 4,740,068
Federal funds sold 13,840,000 4,129,000
Certificates of deposit 1,600,000 2,700,000
Securities available for sale 166,286,429 165,909,886
Federal Home Loan Bank stock, at cost 1,964,300 1,964,300
Loans, net 297,768,432 291,914,060
Premises and equipment, net 4,870,192 4,899,777
Other assets 5,977,071 7,245,015
------------- -------------
Total Assets $ 507,250,434 $ 496,379,433
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest bearing $ 64,489,723 $ 64,316,265
Interest-bearing 347,570,220 345,322,197
------------- -------------
Total deposits 412,059,943 409,638,462
Repurchase agreements 9,499,038 9,022,190
Accrued interest and other liabilities 6,609,619 5,104,200
Long-term debt 32,000,000 28,000,000
------------- -------------
Total liabilities 460,168,600 451,764,852
Stockholders' Equity
Capital stock, par value $1.25, 50,000,000 shares authorized,
3,023,799 shares issued, 2,999,923 and 3,001,923
shares outstanding at March 31, 2001 and
December 31, 2000, respectively 3,779,749 3,779,749
Surplus 2,073,102 2,073,102
Retained earnings 40,246,532 39,261,880
Accumulated other comprehensive income 1,715,806 189,326
------------- -------------
47,815,189 45,304,057
Less: Treasury stock, at cost (733,355) (689,476)
------------- -------------
Total stockholders' equity 47,081,834 44,614,581
------------- -------------
Total Liabilities and Stockholders' Equity $ 507,250,434 $ 496,379,433
============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
-1-
CONSOLIDATED STATEMENTS OF INCOME
IBT BANCORP, INC. AND SUBSIDIARY
Three Months Ended March 31,
----------------------------
2001 2000
-------------- ------------
(unaudited)
-------------- ------------
Interest Income
Loans $ 6,052,561 $ 5,355,383
Investment securities 2,741,558 2,540,463
Federal funds sold 77,337 13,138
----------- -----------
Total interest income 8,871,456 7,908,984
Interest Expense
Deposits 3,950,209 3,233,483
Long-term debt 424,228 333,405
Repurchase agreements 96,249 71,626
----------- -----------
Total interest expense 4,470,686 3,638,514
----------- -----------
Net Interest Income 4,400,770 4,270,470
Provision for Loan Losses 75,000 75,000
----------- -----------
Net Interest Income after Provision
for Loan Losses 4,325,770 4,195,470
Other Income (Losses)
Service fees 382,336 375,041
Investment security gains 75,646 -
Investment security losses (2,188) -
Other income 343,620 294,045
----------- -----------
Total other income 799,414 669,086
Other Expenses
Salaries 967,254 909,579
Pension and other employee benefits 292,512 291,617
Occupancy expense 279,098 258,687
Data processing expense 163,824 143,911
ATM expense 96,144 86,739
Other expenses 801,962 740,854
----------- -----------
Total other expenses 2,600,794 2,431,387
----------- -----------
Income Before Income Taxes 2,524,390 2,433,169
Provision for Income Taxes 759,238 781,192
----------- -----------
Net income $ 1,765,152 $ 1,651,977
=========== ===========
Basic Earnings per share $ 0.59 $ 0.55
=========== ===========
Diluted Earnings per share $ 0.59 $ 0.55
=========== ===========
Dividends per Share $ 0.26 $ 0.23
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
-2-
CONSOLIDATED STATEMENTS OF CASH FLOWS
IBT BANCORP, INC. AND SUBSIDIARY
Three Months ended March 31,
------------------------------
2001 2000
-------------- --------------
(unaudited)
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,765,152 $ 1,651,977
Adjustments to reconcile net cash
from operating activities:
Depreciation 148,455 136,343
Net amortization/accretion of
premiums and discounts (8,242) 5,163
Net investment security gains (73,458) --
Provision for loan losses 75,000 75,000
Increase (decrease) in cash due to
changes in assets and liabilities:
Other assets 946,952 (341,825)
Accrued interest and other liabilities 719,050 224,740
------------ ------------
Net Cash From Operating Activities 3,572,909 1,751,398
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificates of deposit (1,500,000) --
Proceeds from maturity of certificates
forofadeposit 2,600,000 3,000,000
Proceeds from sales of securities
available for sale 6,067,942 --
Proceeds from maturities of securities
available for sale 20,884,965 2,972,717
Purchase of securities available for sale (24,934,901) (6,043,990)
Net loans made to customers (5,608,380) (4,996,269)
Purchases of premises and equipment (118,870) (49,304)
------------ ------------
Net Cash Used By Investing Activities (2,609,244) (5,116,846)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 2,421,481 7,015,541
Net increase in securities sold
under repurchase agreements 476,848 354,098
Dividends (780,500) (690,691)
Federal funds purchased -- (7,000,000)
Proceeds from long-term debt 8,000,000 5,000,000
Repayment of long-term debt (4,000,000) --
Purchase of treasury stock (43,879) (601,864)
------------ ------------
Net Cash From Financing Activities 6,073,950 4,077,084
------------ ------------
Net Change in Cash and Cash Equivalents 7,037,615 711,636
Cash and Cash Equivalents at
Beginning of Period 21,746,395 19,264,567
------------ ------------
Cash and Cash Equivalents at
End of Period $ 28,784,010 $ 19,976,203
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
-3-
IBT BANCORP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments consisting
of normal recurring accruals considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 2001 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2001 or any future interim period. The interim financial
statements should be read in conjunction with the financial statements and
footnotes thereto included in IBT Bancorp, Inc. and subsidiary Annual Report or
Form 10-K for the year ended December 31, 2000.
Certain previously reported items have been reclassified to conform to the
current period's classifications. The reclassifications have no effect on total
assets, total liabilities and stockholders' equity, or net income.
NOTE B - EARNINGS PER SHARE
Earnings per share are calculated on the basis of the weighted average
number of shares outstanding. The weighted average shares outstanding was
3,001,879 and 3,007,597 for the three months ended March 31, 2001 and 2000,
respectively.
NOTE C - COMPREHENSIVE INCOME
Total comprehensive income for the three months ended March 31, 2001 and
2000 was $3,291,632 and $1,554,896, respectively.
NOTE D - INVESTMENT SECURITIES
Investment securities available for sale consist of the following:
March 31, 2001
--------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------------------------------------------------------------
Obligations of
U.S. Government Agencies $ 73,551,036 1,537,527 (6,950) $ 75,081,613
Obligations of State and
political sub-divisions 18,365,060 734,267 (35,380) 19,063,947
Mortgage-backed securities 61,815,417 365,660 (106,093) 62,074,984
Other securities 798,667 29,293 - 827,960
Equity securities 9,156,541 87,384 (6,000) 9,237,925
--------------------------------------------------------------
$ 163,686,721 $ 2,754,131 $ (154,423) $ 166,286,429
==============================================================
-4-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 contains safe
harbor provisions regarding forward-looking statements. When used in this
discussion, the words "believes", "anticipate", "contemplates", "expects", and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected. Those risks and
uncertainties include changes in interest rates, risks associated with the
effect of opening a new branch, the ability to control costs and expenses, and
general economic conditions. IBT Bancorp, Inc. undertakes no obligation to
publicly release the results of any revisions to those forward looking
statements which may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
GENERAL
IBT Bancorp, Inc. is a bank holding company headquartered in Irwin,
Pennsylvania, which provides a full range of commercial and retail banking
services through its wholly owned banking subsidiary, Irwin Bank & Trust Co.
(collectively, the "Company").
FINANCIAL CONDITION
On March 31, 2001, total assets increased $10.8 million, or 2.18%, to
$507.2 million from $496.4 million at December 31, 2000. The growth in assets
resulted primarily from the net increase of $7.0 million in cash and cash
equivalents (primarily federal funds sold) and $5.9 million in net loans. The
increase in the growth of assets was offset by a $1.3 million decline in other
assets. At December 31, 2000, other assets included a receivable for an
investment security that was called on December 30, 2000 but the proceeds were
not received by year end.
The increase in the loan portfolio was primarily due to the growth of
the fixed rate one- to four- family residential mortgage loans of $3.7 million.
The Company's loan portfolio continues to grow due to the Company's offering of
competitive market interest rates. Additionally, net cash and cash equivalents
increased during the quarter in order to meet anticipated future loan demand.
At March 31, 2001, total liabilities increased $8.4 million, or 1.86%,
to $460.2 million from $451.8 million at December 31, 2000. This increase was
primarily the result of additional long-term borrowings, which rose $4.0 million
from $28.0 million at December 31, 2000. Such borrowings were fixed rate loans
from Federal Home Loan Bank used to fund the current loan demand. Additionally,
interest-bearing deposits increased $2.3 million to $347.6 million at March 31,
2001 from $345.3 million at December 31, 2000. The growth is primarily the
result of increases in interest bearing checking accounts of $4.7
-5-
million and increases in savings accounts of $2.4 million. The increases were
offset by a net decrease of $5.0 million in certificate of deposit accounts.
Such net decreases primarily reflected certificates of deposit of Municipalities
which were not renewed. Total interest bearing deposit growth was attributed to
depositors maintaining higher balances and an increase in the number of deposit
accounts.
At March 31, 2001, total stockholders' equity increased $2.5 million to
$47.1 million from $44.6 million at December 31, 2000. The increase was due to
net income of $1.8 million for the period and an increase of $1.5 million in
accumulated other comprehensive income, offset by the purchase of $44,000 of
Company stock, and dividends paid of $781,000. Accumulated other comprehensive
income increased as a result of changes in the net unrealized gain on the
available for sale securities due to fluctuations in interest rates. Because of
interest rate volatility, the Company's accumulated other comprehensive income
could materially fluctuate for each interim period and year-end. See Note D to
the condensed consolidated financial statements. As previously reported, the
Company plans to purchase up to 151,100 shares of the Company's common stock. As
of March 31, 2001 the Company repurchased 23,876 shares.
RESULTS OF OPERATIONS
Net income. Net income for the three months ended March 31, 2001
increased $100,000, or 5.9%, to $1.8 million from $1.7 million for the
comparable three month period in 2000. The increase for the three months ended
March 31, 2001 was the result of higher net interest income and other income
offset by increases in other expenses.
Interest income. Interest income for the three months ended March 31,
2001 increased $1.0 million to $8.9 million from $7.9 million for the comparable
three month period in 2000. The increase in the current three month period was
primarily attributed to an increase in average loans of $30.0 million and
average investment securities available for sale of $19.3 million offset by a 4
basis point decrease in the yield on average interest earning assets to 7.46%
for the first three months of 2001 from 7.50% for the comparable three month
period in 2000. See "Average Balance Sheet and Rate/Volume Analysis"
Interest expense. Interest expense for the three months ended March 31,
2001 increased $900,000 to $4.5 million from $3.6 million for the comparable
three month period in 2000. Such increases were primarily the result of an
increase in average certificates of deposit of $35.2 million coupled with a 42
basis point increase in average cost of funds to 4.66% for the first three
months of 2001 from 4.24% for the comparable three month period in 2000. See
"Average Balance Sheet and Rate/Volume Analysis"
-6-
Average Balance Sheet
The following table sets forth certain information relating to the Company for
the periods indicated. Average yields and costs are derived by dividing income
or expense on an annualized basis by the average balance of assets or
liabilities, respectively, for the periods presented. Average balances are
derived from average daily balances.
Three Months Ended March 31, Three Months Ended March 31,
------------------------------------------- ----------------------------------------
2001 2000
------------------------------------------- ----------------------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
--------- --------- ---------- --------- ---------- ----------
(In Thousands) (In Thousands)
Interest-earning assets:
Loans receivable (1) (7) $ 297,797 $ 6,053 8.13% $ 267,807 $ 5,355 8.00%
Investment securities available for sale (2) 172,068 2,741 6.37% 152,774 2,540 6.65%
Other interest-earning assets (5) 5,879 77 5.26% 992 13 5.24%
--------- ------- --------- -------
Total interest earning assets $ 475,744 $ 8,871 7.46% $ 421,573 $ 7,908 7.50%
--------- ------- ------ --------- -------
Non-interest earning assets 18,622 21,175
--------- ---------
Total assets $ 494,366 $442,748
========= ========
Interest-bearing liabilities:
Money market accounts 54,280 502 3.70% 56,327 543 3.86%
Certificates of Deposit 202,648 3,015 5.95% 167,427 2,183 5.22%
Other liabilities 127,188 953 3.00% 119,654 912 3.05%
--------- ------- --------- -------
Total interest-bearing liabilities $ 384,116 $ 4,470 4.65% $ 343,408 $ 3,638 4.24%
--------- ------- ------ --------- -------
Non-interest-bearing liabilities 65,388 61,373
--------- ---------
Total liabilities $ 449,504 $ 404,781
--------- ---------
Retained Earnings (6) 44,862 37,967
--------- ---------
Total liabilities and stockholders' equity $ 494,366 $ 442,748
========= =========
Net interest income $ 4,401 $ 4,270
======= =======
Interest rate spread (3) 2.81% 3.26%
====== ======
Net yield on interest-earning assets (4) 3.70% 4.05%
====== ======
Ratio of average interest-earning
assets to average interest-bearing
liabilities 123.85% 122.76%
====== ======
(1) Average balances include non-accrual loans, and are net of deferred loan
fees.
(2) Includes interest-bearing deposits in other financial institutions.
(3) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(4) Net yield on interest-earning assets represents net interest income as a
percentage of average interest earning assets. (5) Includes federal funds
sold of $5,879 and $992, respectively.
(6) Includes capital stock, surplus and accumulated other comprehensive income.
(7) For both periods presented, interest income includes business manager
income, which was previously classified as other non-interest income.
-7-
The table below sets forth certain information regarding changes in
interest income and interest expenses of the Company for the periods indicated.
For each category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in volume
(changes in average volume multiplied by old rate); and (ii) changes in rates
(changes in rate multiplied by old average volume).
Three Month Period ended March 31, 2001
---------------------------------------
2001 vs. 2000
---------------------------------------
Increase (Decrease)
Due to
Volume Rate Net
---------------------------------------
(In Thousands)
Interest income:
Loans receivable 600 98 698
Investment securities available for sale 321 (120) 201
Other interest earning assets 64 0 64
--- ---- ---
Total interest-earning assets 985 (22) 963
=== ==== ===
Interest expense:
Money market accounts (20) (21) (41)
Certificates of deposit 459 373 832
Other liabilities 57 (16) 41
--- ---- ---
Total interest-bearing liabilities 496 336 832
--- ---- ---
Net change in interest income 487 (358) 131
=== ==== ===
Provision for loan losses. For the three months ended March 31, 2001
and the comparable three month period in 2000, the provision for loan losses was
$75,000. The evaluation for determining the provision includes evaluations of
concentrations of credit, past loss experience, current economic conditions,
amount and composition of the loan portfolio (including loans being specifically
monitored by management), estimated fair value of underlying collateral, loan
commitments outstanding, delinquencies, and other information available at such
times.
The Company will continue to monitor its allowance for loan losses and
make future adjustments to the allowance through the provision for loan losses
as economic conditions dictate. Management continues to offer a wider variety of
loan products coupled with the continued success of changing the mix of the
products offered in the loan portfolio from lower yielding loans (i.e., one- to
four-family loans) to higher yielding loans (i.e., equity loans, multi-family
(five or more units) buildings, and commercial (nonresidential mortgages).
Although the Company maintains its allowance for loan losses at a level that it
considers to be adequate to provide for the inherent risk of loss in its loan
portfolio, there can be no assurance that future losses will not exceed
estimated amounts or that additional provisions for loan losses will not be
required in future periods due to the higher degree of credit risk which might
result from the change in the mix of the loan portfolio.
Other income. Total other income for the three months ended March 31,
2001 increased $130,000 to $799,000 from $669,000 for the comparable three month
period in 2000. The increase in other income for the three months ended March
31, 2001 is primarily due to $73,000 of net investment securities gains which
were not reflected in the previous year period and $49,000 in other income. Of
the total net investment securities gains, $47,000 of such gains resulted from
investment securities purchased at a discount which were called prior to
maturity. Other income increased primarily due to fees generated from customer
usage of the debit card.
Other expense. Total other expense for the three months ended March 31,
2001 increased $200,000 to $2.6 million from $2.4 million for the comparable
three month period in 2000. The increase is primarily due to increased
employment, occupancy, and data processing expenses. Salary, pension, and other
employee benefit costs increased $59,000, or 4.9% in 2001. Such increases were
the result of normal merit increases and increased staff. Occupancy expense
increased $20,000, or 7.7% in 2001. This increase is primarily attributable to
the opening of a new supermarket branch office in Penn Township, Westmoreland
County in June of 2000, of which such costs were not included in the prior year
period. An increase in data processing fees of $20,000, or 13.9%, in 2001 is
primarily the result of increased fees from the Company's third party processor.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no significant changes for the three months ended March 31,
2001 from the information presented in the 10K statement, under the caption
Market Risk, for the year ended December 31, 2000.
-8-
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The registrant is not engaged in any legal proceedings at the
present time. From time to time, the Bank is a party to legal
proceedings within the normal course of business wherein it
enforces its security interest in loans made by it, and other
matters of a like kind.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was held on
April 17, 2001 and the following matter was voted upon:
Proposal I- Election of directors with terms to expire in 2004
FOR WITHHELD
--- --------
Robert Rebich, jr. 2,250,911 4,580
Grant J. Shevchick 2,244,641 10,850
Charles G. Urtin 2,250,155 5,336
Proposal II - The ratification of Edwards, Sauer & Owens as
auditors.
FOR AGAINST WITHHELD
--- ------- --------
2,242,835 7,160 5,496
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(i) Articles of Incorporation of IBT Bancorp, Inc.*
3(ii) Bylaws of IBT Bancorp, Inc.*
10 Change In Control Severance Agreement with Charles G. Urtin **
10.1 Deferred Compensation Plan For Bank Directors**
10.2 Retirement Agreement Between Irwin Bank & Trust Co. And
J. Curt Gardner**
10.3 Death Benefit Only Deferred Compensation Plan For Bank Directors effective as
of January 1, 1990**
10.4 Retirement and Death Benefit Deferred Compensation Plan For Bank Directors
effective as of January 1, 1990**
10.5 2000 Stock Option Plan***
-------------------------
* Incorporated by reference to the identically
numbered exhibits of the Registrant's Form
10 (file no. 0-25903)
** Incorporated by reference to the identically
numbered exhibits of the Registrant's Form
10K for December 31, 1999.
*** Incorporated by reference to the definitive
proxy statement of the registrant filed on
March 17, 2000.
(b) None.
-9-
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.
IBT BANCORP, INC.
Date: May 14, 2001 By: /s/Charles G. Urtin
----------------------------------
Charles G. Urtin
President, Chief Executive Officer
And Chief Accounting Officer
(Duly authorized officer)