SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 June 30, 2001
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OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to .
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Commission File No. 0-25903
IBT Bancorp, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Pennsylvania 25-1532164
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(State of incorporation or organization) (I.R.S. employer identification no.)
309 Main Street, Irwin, Pennsylvania 15642
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(Address of principal executive offices) (zip code)
(724) 863-3100
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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
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Number of shares of Common Stock outstanding as of August 01, 2001: 2,992,081
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IBT BANCORP, INC.
Contents
Pages
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements..............................................................................
Consolidated statements of financial condition (unaudited) at June 30, 2001
and December 31, 2000........................................................................... 1
Consolidated statements of operations (unaudited) for the three months
ended June 30, 2001 and 2000 ................................................................... 2
Consolidated statements of cash flows (unaudited) for the three months
ended June 30, 2001 and 2000.................................................................... 3
Notes to financial statements................................................................... 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................................................... 6
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................................... 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.............................................................................. 14
Item 2. Changes in Securities and Use of Records....................................................... 14
Item 3. Defaults upon Senior Securities................................................................ 14
Item 4. Submission of Matters to a Vote of Security-Holders............................................ 14
Item 5. Other Information.............................................................................. 14
Item 6. Exhibits and Reports on Form 8-K............................................................... 14
Signatures..................................................................................................... 15
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
IBT BANCORP, INC. AND SUBSIDIARY
June 30, 2001 December 31, 2000
------------------ ------------------
ASSETS
Cash and due from banks $ 11,644,333 $ 12,877,327
Interest-bearing deposits in banks 5,312,933 4,740,068
Federal funds sold 30,992,000 4,129,000
Certificates of deposit 100,000 2,700,000
Securities available for sale 160,904,628 165,909,886
Federal Home Loan Bank stock, at cost 2,101,800 1,964,300
Loans, net 296,709,782 291,914,060
Premises and equipment, net 4,760,287 4,899,777
Other assets 5,970,684 7,245,015
------------------ ------------------
Total Assets $ 518,496,447 $ 496,379,433
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest bearing $ 66,223,694 $ 64,316,265
Interest-bearing 356,384,472 345,322,197
------------------ ------------------
Total deposits 422,608,166 409,638,462
Repurchase agreements 11,230,830 9,022,190
Accrued interest and other liabilities 5,026,531 5,104,200
Long-term debt 32,000,000 28,000,000
------------------ ------------------
Total liabilities 470,865,527 451,764,852
Stockholders' Equity
Capital stock, par value $1.25 per share, 50,000,000 shares authorized,
3,023,799 shares issued, 2,992,081 and 3,001,923 shares outstanding at
June 30, 2001 and
December 31, 2000, respectively 3,779,749 3,779,749
Surplus 2,073,102 2,073,102
Retained earnings 41,350,595 39,261,880
Accumulated other comprehensive income 1,348,789 189,326
------------------ ------------------
48,552,235 45,304,057
Less: Treasury stock, at cost (921,315) (689,476)
------------------ ------------------
Total stockholders' equity 47,630,920 44,614,581
------------------ ------------------
Total Liabilities and Stockholders' Equity $ 518,496,447 $ 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 June 30, Six Months Ended June 30,
2001 2000 2001 2000
----------------- ---------------- --------------- ---------------
(unaudited) (unaudited)
Interest Income
Loans, including fees $ 6,098,737 $ 5,549,809 $ 12,151,299 $ 10,905,192
Investment securities 2,547,678 2,590,769 5,289,235 5,131,232
Federal funds sold 239,447 124,696 316,784 137,834
----------------- ---------------- --------------- ---------------
Total interest income 8,885,862 8,265,274 17,757,318 16,174,258
Interest Expense
Deposits 3,864,434 3,390,258 7,814,642 6,623,740
Long-term debt 454,656 390,809 878,884 724,214
Repurchase agreements 106,968 84,862 203,217 156,488
----------------- ---------------- --------------- ---------------
Total interest expense 4,426,058 3,865,929 8,896,743 7,504,442
----------------- ---------------- --------------- ---------------
Net Interest Income 4,459,804 4,399,345 8,860,575 8,669,816
Provision for Loan Losses 100,000 75,000 175,000 150,000
----------------- ---------------- --------------- ---------------
Net Interest Income after Provision
for Loan Losses 4,359,804 4,324,345 8,685,575 8,519,816
Other Income (Losses)
Service fees 456,510 421,958 838,846 796,999
Investment security gains 160,486 -- 236,132 --
Investment security losses -- (106,974) (2,188) (106,974)
Other income 409,351 427,275 752,986 721,320
----------------- ---------------- --------------- ---------------
Total other income 1,026,347 742,259 1,825,776 1,411,345
Other Expenses
Salaries 1,134,140 1,079,215 2,101,394 1,988,794
Pension and other employee benefits 291,302 283,873 583,814 575,490
Occupancy expense 283,922 257,851 563,019 516,538
Data processing expense 192,041 146,852 355,866 290,763
ATM expense 102,766 97,028 198,909 183,767
Other expenses 772,553 740,626 1,574,518 1,481,480
----------------- ---------------- --------------- ---------------
Total other expenses 2,776,724 2,605,445 5,377,520 5,036,832
----------------- ---------------- --------------- ---------------
Income Before Income Taxes 2,609,427 2,461,159 5,133,831 4,894,329
Provision for Income Taxes 726,053 804,911 1,485,292 1,586,103
----------------- ---------------- --------------- ---------------
Net Income $ 1,883,374 $ 1,656,248 $ 3,648,539 $ 3,308,226
================= ================ =============== ===============
Basic Earnings per Share $ 0.63 $ 0.55 $ 1.22 $ 1.10
================== ================= ================= ===============
Diluted Earnings per Share $ 0.63 $ 0.55 $ 1.22 $ 1.10
================== ================= ================= ===============
Dividends per Share $ 0.26 $ 0.23 $ 0.52 $ 0.46
================== ================= ================= ===============
The accompanying notes are an integral part of these
consolidated financial statements.
-2-
CONSOLIDATED STATEMENTS OF CASH FLOWS
IBT BANCORP, INC. AND SUBSIDIARY
Six Months Ended June 30,
2001 2000
--------------- ----------------
(unaudited)
--------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,648,539 $ 3,308,226
Adjustments to reconcile net cash
from operating activities:
Depreciation 296,910 275,543
Net amortization/accretion of
premiums and discounts 18,283 4,572
Net investment security (gains) losses (233,943) 106,974
Provision for loan losses 175,000 150,000
Increase (decrease) in cash due
to changes in assets and liabilities:
Other assets 1,389,665 (713,098)
Accrued interest and other liabilities (674,924) (345,528)
--------------- ----------------
Net Cash From Operating Activities 4,619,530 2,786,689
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificates of deposit (1,500,000) (100,000)
Proceeds from maturity of certificates
of deposit 4,100,000 3,000,000
Proceeds from sales of securities
available for sale 6,322,942 4,912,909
Proceeds from maturities of securities
available for sale 50,946,736 3,604,117
Purchase of securities available for sale (50,292,040) (14,001,943)
Net loans made to customers (5,086,058) (16,437,862)
Purchases of premises and equipment (157,420) (182,834)
Purchase of Federal Home Loan Bank stock (137,500) --
--------------- ----------------
Net Cash From (Used By) Investing Activities 4,196,660 (19,205,613)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 12,969,704 13,376,227
Net increase in securities sold
under repurchase agreement 2,208,640 924,811
Dividends paid (1,559,824) (1,381,133)
Federal funds purchased -- (7,000,000)
Proceeds from long-term debt 4,000,000 5,000,000
Purchase of treasury stock (231,839) (601,864)
--------------- ----------------
Net Cash From Financing Activities 17,386,681 10,318,041
--------------- ----------------
Net Change in Cash and Cash Equivalents 26,202,871 (6,100,883)
Cash and Cash Equivalents at Beginning of Period 21,746,395 19,264,567
--------------- ----------------
Cash and Cash Equivalents at End of Period $ 47,949,266 $ 13,163,684
=============== ================
The accompanying notes are an integral part of these
consolidated financial statements.
-3-
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
IBT BANCORP, INC. AND SUBSIDIARY
Period Ended June 30, 2001
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 and six months ended June 30, 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 on
Form 10-K for the year ended December 31, 2000.
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 2,996,943 and
2,999,397 for the three and six months ended June 30, 2001, respectively and
3,001,923 and 3,004,760 for the three and six months ended June 30, 2000,
respectively.
NOTE C - COMPREHENSIVE INCOME
Total comprehensive income for the three months ended June 30, 2001 and 2000 was
$1,516,357 and $1,836,076, respectively and for the six months ended June 30,
2001 and 2000 was $4,808,002 and $3,390,973, respectively.
NOTE D - INVESTMENT SECURITIES
Investment securities available for sale consist of the following:
June 30, 2001
------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------------- ---------------- ---------------- ------------------
Obligations of
U.S. Government Agencies $ 60,723,573 $ 1,270,305 $ (31,460) $ 61,962,418
Obligations of State and
political sub-divisions 24,005,593 635,395 (58,003) 24,582,985
Mortgage-backed securities 63,389,347 346,049 (235,836) 63,499,560
Other securities 586,913 29,982 -- 616,895
Equity securities 10,155,627 98,014 (10,871) 10,242,770
----------------- ---------------- ---------------- ------------------
$ 158,861,053 $ 2,379,745 $ (336,170) $ 160,904,628
================= ================ ================ ==================
-4-
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Period Ended June 30, 2000
NOTE E - STOCK OPTION PLAN
In May 2001, 33,000 additional stock options were granted under the 2000 Stock
Option Plan at an exercise price of $23.00 per share. As of June 30, 2001,
94,000 stock options have been granted, of which 41,333 are exercisable. 32,333
stock options are exercisable at $24.50 per share and 9,000 are exercisable at
$23.00 per share.
-5-
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").
During June 2001, a partnership between Irwin Bank & Trust Company and
UVEST Financial Services was formed. Through this partnership the Company will
provide to its customers access to a full range of brokerage services, including
financial analysis, professional money management, stocks, bonds, mutual funds,
and annuities.
FINANCIAL CONDITION
On June 30, 2001, total assets increased $22.1 million, or 4.45%, to
$518.5 million from $496.4 million at December 31, 2000. Asset growth mainly
resulted from an increase in cash and cash equivalents of $23.6 million to $48.0
million from $24.4 million at December 31, 2000. This increase was predominantly
in federal funds sold which rose $26.9 million to $31.0 million from $4.1
million at December 31, 2000. Such increase was primarily the result of proceeds
from available for sale securities that were called and will be used in the
future to meet loan demand and purchase securities. Net loans increased $4.8
million to $296.7 million from $291.9 million at December 31, 2000. The increase
in the loan portfolio was primarily due to growth in the fixed rate one- to
four- family residential mortgage loans of $2.6 million. The Company's offering
of competitive market interest rates fueled this growth. Such increases were
offset by a net decrease of $5.0 million in available for sale securities to
$160.9 million from $165.9 million at December 31, 2000 and by a $1.2 million
decline in other assets.
At June 30, 2001, total liabilities increased $19.1 million, or 4.23%,
to $470.9 million from $451.8 million at December 31, 2000. This increase was
primarily the result of
-6-
interest-bearing deposits, which rose $11.1 million from $345.3 million at
December 31, 2000. The growth was mainly the result of increases in interest
bearing checking accounts of $4.9 million, savings accounts of $4.3 million, and
money market accounts of $2.4 million. Such increases were offset by a net
decrease of $3.0 million in certificate of deposit accounts. These net decreases
were primarily due to 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.
Non-interest bearing deposits increased $1.9 million to $66.2 million
at June 30, 2001 from $64.3 million at December 31, 2000. Such increases reflect
additions to non-interest bearing deposits of $13.1 million offset by $11.2
million in investments in repurchase products. The Company offers its corporate
customers an investment product fashioned in the form of a repurchase agreement.
Under the terms of the agreement, deposits in designated demand accounts of the
customer are put into an investment vehicle which is used daily to purchase an
interest in designated U.S. Government or Agencies' securities. The Company in
turn agrees to repurchase these investments on a daily basis and pay the
customer the daily interest earned based on the current market rate. At June 30,
2001, repurchase agreements totalled $11.2 million.
Long-term borrowings 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 loan demand.
At June 30, 2001, total stockholders' equity increased $3.0 million to
$47.6 million from $44.6 million at December 31, 2000. The increase was due to
net income of $3.6 million for the period and an increase of $1.1 million in
accumulated other comprehensive income, offset by the purchase of $232,000 of
Company stock, and dividends paid of $1.6 million. 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 June 30, 2001 the Company repurchased 31,718
shares.
RESULTS OF OPERATIONS
Net income. Net income for the three months ended June 30, 2001
increased $200,000, or 11.76%, to $1.9 million from $1.7 million for the
comparable three month period in 2000. Net income for the six months ended June
30, 2001 increased $300,000 to $3.6 million from $3.3 million for the comparable
six month period in 2000. The
-7-
increases for the three and six months ended June 30, 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 June 30,
2001 increased $600,000 to $8.9 million from $8.3 million for the comparable
three month period in 2000. The increase was mainly attributed to an increase in
average loans of $29.0 million and average securities available for sale of
$15.0 million offset by a 38 basis point decrease in the yield on average
interest earning assets to 7.21% for the three months ended June 30, 2001 from
7.59% for the comparable three month period in 2000. Interest income for the six
months ended June 30, 2001 increased $1.6 million to $17.8 million from $16.2
million for the comparable six month period in 2000. The increase was primarily
attributed to an increase in average loans of $30.0 million and average
securities available for sale of $16 million offset by a 21 basis point decrease
in the yield on average interest earning assets to 7.33% for the first six
months of 2001 from 7.54% for the comparable six month period in 2000. See
"Average Balance Sheet and Rate/Volume Analysis"
Interest expense. Interest expense for the three months ended June 30,
2001 increased $500,000 to $4.4 million from $3.9 million for the comparable
three month period in 2000. The increase was primarily attributed to an increase
in average certificates of deposit of $32.0 million coupled with a 10 basis
point increase in average cost of funds to 4.47% for the three months ended June
30, 2001 from 4.37% for the comparable three month period in 2000. Interest
expense for the six months ended June 30, 2001 increased $1.4 million to $8.9
million from $7.5 million for the comparable six month period in 2000. Such
increases were primarily the result of an increase in average certificates of
deposit of $34.0 million coupled with a 25 basis point increase in average cost
of funds to 4.56% for the first six months of 2001 from 4.31% for the comparable
six month period in 2000. See "Average Balance Sheet and Rate/Volume Analysis"
-8-
Average Balance Sheet
The following table sets forth certain information relating to the company for
the periods indicated. The 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 June 30, Three Months Ended June 30,
---------------------------------- ---------------------------------
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) $301,070 $ 6,099 8.10% $271,660 $ 5,550 8.17%
Investment securities available for sale (2) 169,792 2,548 6.00% 155,371 2,591 6.67%
Other interest-earning assets (5) 22,346 239 4.29% 8,726 125 5.72%
-------- -------- -------- --------
Total interest earning assets $493,208 $ 8,886 7.21% $435,757 $ 8,266 7.59%
-------- -------- ------ -------- -------- ------
Non-interest earning assets 19,096 21,660
-------- --------
Total assets $512,304 $457,417
======== ========
Interest-bearing liabilities:
Money market accounts 56,039 464 3.31% 57,296 568 3.97%
Certificates of Deposit 202,563 2,936 5.80% 170,983 2,321 5.43%
Other liabilities 137,396 1,026 2.99% 125,229 977 3.12%
-------- -------- -------- --------
Total interest-bearing liabilities $395,998 $ 4,426 4.47% $353,508 $ 3,866 4.37%
-------- -------- ------ -------- -------- ------
Non-interest-bearing liabilities 68,844 65,288
-------- --------
Total liabilities $464,842 $418,796
-------- --------
Retained Earnings (6) 47,462 38,621
-------- --------
Total liabilities and stockholders' equity $512,304 $457,417
======== ========
Net interest income $ 4,460 $ 4,400
======== ========
Interest rate spread (3) 2.74% 3.21%
====== ======
Net yield on interest-earning assets (4) 3.62% 4.04%
====== ======
Ratio of average interest-earning assets
to average interest-bearing liabilities 124.55% 123.27%
====== ======
(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) Consists of federal funds sold.
(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.
-9-
Average Balance Sheet
The following table sets forth certain information relating to the company for
the periods indicated. The 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.
Six Months Ended June 30, Six Months Ended June 30,
--------------------------------- ----------------------------------
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) $299,518 $ 12,151 8.11% $269,717 $ 10,905 8.09%
Investment securities available for sale (2) 170,778 5,289 6.19% 154,532 5,131 6.64%
Other interest-earning assets (5) 14,148 317 4.48% 4,862 138 5.68%
-------- -------- -------- --------
Total interest earning assets $484,444 $ 17,757 7.33% $429,111 $ 16,174 7.54%
-------- -------- ------ -------- -------- ------
Non-interest earning assets 18,928 21,079
-------- --------
Total assets $503,372 $450,190
======== ========
Interest-bearing liabilities:
Money market accounts 55,168 967 3.50% 56,813 1,111 3.91%
Certificates of Deposit 202,607 5,951 5.87% 169,211 4,504 5.32%
Other liabilities 132,320 1,979 2.99% 122,439 1,890 3.09%
-------- ------- -------- -------
Total interest-bearing liabilities $390,095 $ 8,897 4.56% $348,463 $ 7,505 4.31%
-------- -------- ------ -------- -------- ------
Non-interest-bearing liabilities 67,182 63,316
-------- --------
Total liabilities $457,277 $411,779
-------- --------
Retained Earnings (6) 46,095 38,411
-------- --------
Total liabilities and stockholders' equity $503,372 $450,190
======== ========
Net interest income $8,860 $8,669
====== ======
Interest rate spread (3) 2.77% 3.23%
====== ======
Net yield on interest-earning assets (4) 3.66% 4.04%
====== ======
Ratio of average interest-earning
assets to average interest-bearing
liabilities 124.19% 123.14%
====== ======
(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) Consists of federal funds sold.
(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.
-10-
Rate / Volume Analysis
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); (ii) changes in rates
(changes in rate multiplied by average volume).
Three Month Period ended June 30, 2001 Six Month Period ended June 30, 2001
-------------------------------------- ------------------------------------
2001 vs. 2000 2001 vs. 2000
------------- -------------
Increase (Decrease) Increase (Decrease)
Due to Due to
------
Volume Rate Net Volume Rate Net
------ ---- --- ------ ---- ---
(In Thousands) (In Thousands)
Interest income:
Loans receivable 601 (52) 549 1,205 41 1,246
Investment securities available for sale 241 (284) (43) 540 (382) 158
Other interest earning assets 194 (80) 114 264 (85) 179
----- ---- --- ----- ---- -----
Total interest-earning assets 1,036 (416) 620 2,009 (426) 1,583
===== ==== === ===== ==== =====
Interest expense:
Money market accounts (13) (91) (104) (32) (112) (144)
Certificates of deposit 429 186 615 889 558 1,447
Other liabilities 95 (46) 49 153 (64) 89
----- ---- --- ----- ---- -----
Total interest-bearing liabilities 511 49 560 1,010 382 1,392
===== ==== === ===== ==== =====
Net change in interest income 525 (465) 60 999 (808) 191
===== ==== === ===== ==== =====
Provision for loan losses. For the three and six months ended June 30,
2001 the provision for loan losses was $100,000 and $175,000, respectively,
compared to $75,000 and $150,000, respectively, for the three and six month
periods ended June 30, 2000. For the three months ended June 30, 2001,
non-performing loans increased approximately $341,000 from March 31, 2001. Due
to the increase in non-performing loans primarily from
-11-
mortgage loans secured by real estate for the current period, the loan loss
provision for the three months ended June 30, 2001 was increased $25,000.
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
time. The Company continues 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 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 June 30,
2001 increased $300,000 to $1.0 million from $700,000 for the comparable three
month period in 2000. Total other income for the six months ended June 30, 2001
increased $400,000 to $1.8 million from $1.4 million for the comparable period
in 2000. The increase in other income for the three and six months ended June
30, 2001 is mostly due to $160,000 and $236,000, respectively, of available for
sale securities gains recognized as a result of securities originally purchased
at a discount, which were called by the issuing agencies prior to their maturity
date. Other income for the three month period ended June 30, 2001 decreased
$18,000 mainly due to a $115,000 gain realized during the three month period
ended June 30, 2000 from the sale of the credit card portfolio. Other income for
the six month period ended June 30, 2001 increased $32,000 primarily due to fees
generated from customer usage of the debit card.
Other expense. Total other expense for the three and six month period
ended June 30, 2001 increased $200,000 and $400,000, respectively to $2.8
million and $5.4 million from $2.6 million and $5.0 million, respectively for
the comparable three and six month period in 2000. The increase is primarily due
to increased employment, occupancy, data processing, and other expenses. Salary,
pension, and other employee benefit costs increased $60,000 and $110,000 for the
three and six months ended June 30, 2001, respectively, to $1.42 million and
$2.68 million, respectively, from $1.36 million and $2.57 million, respectively
for the comparable three and six month periods in 2000. Such increases were the
result of normal merit increases and increased staff. Occupancy expense for the
three and six months ended June 30, 2001 increased $26,000, and $46,000,
respectively, to $284,000 and $563,000 from $258,000 and $517,000,
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respectively, for the comparable three and six month periods in 2000. 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 the
majority of such costs were not included in the prior year period. An increase
in data processing fees of $45,000 and $65,000 for the three and six months
ended June 30, 2001, respectively, to $192,000 and $356,000 from $147,000 and
$291,000, respectively, for the comparable three and six month periods in 2000,
is primarily the result of increased fees from the Company's third party
processor. Other expenses for the three and six month periods ended June 30,
2001 increased $32,000 and $100,000, respectively, to $773,000 and $1.6 million
from $741,000 and $1.5 million for the comparable periods in 2000. Such
increases were related to the cost of doing business.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no significant changes for the six months ended June 30,
2001 from the information presented in the 10K statement, under the caption
Market Risk, for the year ended December 31, 2000.
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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. Submissions of Matter to Vote of Security Holders
Disclosed in March 31, 2001 Form 10-Q.
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.
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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: August 14, 2001 By:/s/Charles g. Urtin
----------------------------------------
Charles G. Urtin
President, Chief Executive Officer
And Chief Accounting Officer
(Duly authorized officer)
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