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 September 30, 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
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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
------------ ------------
Number of shares of Common Stock outstanding as of November 01, 2001: 2,985,695
---------
IBT BANCORP, INC.
Contents
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Pages
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements..............................................................................
Consolidated statements of financial condition at September 30, 2001
(unaudited) and December 31, 2000.............................................................. 1
Consolidated statements of operations (unaudited) for the three months
ended September 30, 2001 and 2000 .............................................................. 2
Consolidated statements of cash flows (unaudited) for the three months
ended September 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
IBT BANCORP, INC. AND SUBSIDIARY
September 30, 2001 December 31, 2000
------------------ -----------------
(unaudited) (unaudited)
------------------ -----------------
ASSETS
Cash and due from banks $ 11,862,650 $ 12,877,327
Interest-bearing deposits in banks 12,966,909 4,740,068
Federal funds sold 6,656,000 4,129,000
Certificates of deposit 1,206,400 2,700,000
Securities available for sale 179,263,998 165,909,886
Federal Home Loan Bank stock, at cost 2,101,800 1,964,300
Loans, net 304,951,337 291,914,060
Premises and equipment, net 4,675,254 4,899,777
Other assets 5,951,113 7,245,015
------------- -------------
Total Assets $ 529,635,461 $ 496,379,433
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest bearing $ 65,253,513 $ 64,316,265
Interest-bearing 363,603,571 345,322,197
------------- -------------
Total deposits 428,857,084 409,638,462
Repurchase agreements 10,542,555 9,022,190
Accrued interest and other liabilities 5,351,632 5,104,200
Long-term debt 35,000,000 28,000,000
------------- -------------
Total liabilities 479,751,271 451,764,852
Stockholders' Equity
Capital stock, par value $1.25 per share,
50,000,000 shares authorized,
3,023,799 shares issued, 2,985,695 and 3,001,923
shares outstanding at September 30, 2001 and
December 31, 2000, respectively 3,779,749 3,779,749
Surplus 2,073,102 2,073,102
Retained earnings 42,557,805 39,261,880
Accumulated other comprehensive income 2,558,287 189,326
------------- -------------
50,968,943 45,304,057
Less: Treasury stock, at cost (1,084,753) (689,476)
------------- -------------
Total stockholders' equity 49,884,190 44,614,581
------------- -------------
Total Liabilities and Stockholders' Equity $ 529,635,461 $ 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 Nine Months
Ended September 30, Ended September 30,
--------------------------- ----------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
(unaudited) (unaudited)
------------ ------------ ------------ ------------
Interest Income
Loans, including fees $ 6,090,559 $ 5,890,379 $ 18,241,857 $ 16,795,571
Investment securities 2,615,809 2,642,988 7,905,044 7,774,220
Federal funds sold 157,796 94,783 474,580 232,617
------------ ------------ ------------ ------------
Total interest income 8,864,164 8,628,150 26,621,481 24,802,408
Interest Expense
Deposits 3,667,390 3,823,228 11,482,032 10,446,969
Long-term debt 470,547 402,284 1,349,431 1,126,498
Repurchase agreements 99,697 92,694 302,914 249,181
------------ ------------ ------------ ------------
Total interest expense 4,237,634 4,318,206 13,134,377 11,822,648
------------ ------------ ------------ ------------
Net Interest Income 4,626,530 4,309,944 13,487,104 12,979,760
Provision for Loan Losses 90,000 75,000 265,000 225,000
------------ ------------ ------------ ------------
Net Interest Income after Provision
for Loan Losses 4,536,530 4,234,944 13,222,104 12,754,760
Other Income (Losses)
Service fees 428,143 431,788 1,266,989 1,228,787
Investment security gains 155,207 - 391,338 -
Investment security losses - - (2,188) (106,974)
Other income 458,415 332,779 1,211,402 1,054,100
------------ ------------ ------------ ------------
Total other income 1,041,765 764,567 2,867,541 2,175,913
Other Expenses
Salaries 1,025,592 961,235 3,126,987 2,950,028
Pension and other employee benefits 287,141 274,982 870,955 850,472
Occupancy expense 289,717 266,758 852,736 783,297
Data processing expense 188,001 148,500 543,866 439,263
ATM expense 97,906 100,609 296,816 284,376
Other expenses 897,472 776,967 2,471,989 2,258,447
------------ ------------ ------------ ------------
Total other expenses 2,785,829 2,529,051 8,163,349 7,565,883
------------ ------------ ------------ ------------
Income Before Income Taxes 2,792,466 2,470,460 7,926,296 7,364,790
Provision for Income Taxes 808,084 740,248 2,293,375 2,326,352
------------ ------------ ------------ ------------
Net Income $ 1,984,382 $ 1,730,212 $ 5,632,921 $ 5,038,438
============ ============ ============ ============
Basic Earnings per Share $ 0.66 $ 0.58 $ 1.88 $ 1.68
============ ============ ============ ============
Diluted Earnings per Share $ 0.66 $ 0.58 $ 1.88 $ 1.68
============ ============ ============ ============
Dividends per Share $ 0.26 $ 0.23 $ 0.78 $ 0.69
============ ============ ============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
-2-
CONSOLIDATED STATEMENTS OF CASH FLOWS
IBT BANCORP, INC. AND SUBSIDIARY
Nine Months
Ended September 30,
----------------------------
2001 2000
------------- ------------
(unaudited)
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 5,632,921 $ 5,038,438
Adjustments to reconcile net cash
from operating activities:
Depreciation 445,365 414,743
Net amortization/accretion of
premiums and discounts 45,764 3,974
Net investment security (gains) losses (389,150) 106,974
Provision for loan losses 265,000 225,000
Increase (decrease) in cash due
to changes in assets and liabilities:
Other assets 1,420,690 (620,258)
Accrued interest and other liabilities (972,895) 517,407
------------ ------------
Net Cash From Operating Activities 6,447,695 5,686,278
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificates of deposit (2,606,400) (100,000)
Proceeds from maturity of certificates
of deposit 4,100,000 3,000,000
Proceeds from sales of securities
available for sale 7,117,010 5,285,333
Proceeds from maturities of securities
available for sale 69,206,086 6,105,573
Purchase of securities available for sale (85,744,534) (21,905,952)
Net loans made to customers (13,429,065) (28,098,163)
Purchases of premises and equipment (220,842) (339,454)
Purchase of Federal Home Loan Bank stock (137,500) -
------------ ------------
Net Cash Used By Investing Activities (21,715,245) (36,052,663)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 19,218,623 37,727,022
Net increase in securities sold
under repurchase agreement 1,520,365 2,610,130
Dividends paid (2,336,996) (2,071,575)
Federal funds purchased - (7,000,000)
Proceeds from long-term debt 9,000,000 7,000,000
Repayment of long-term debt (2,000,000) -
Purchase of treasury stock (395,278) (601,864)
------------ ------------
Net Cash From Financing Activities 25,006,714 37,663,713
------------ ------------
Net Change in Cash and Cash Equivalents 9,739,164 7,297,328
Cash and Cash Equivalents at Beginning of Period 21,746,395 19,264,567
------------ ------------
Cash and Cash Equivalents at End of Period $ 31,485,559 $ 26,561,895
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
-3-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
IBT BANCORP, INC. AND SUBSIDIARY
Period Ended September 30, 2001
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited 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 nine months ended September 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 2,990,469 and
2,996,389 for the three and nine months ended September 30, 2001, respectively
and 3,001,923 and 3,003,807 for the three and nine months ended September 30,
2000, respectively.
NOTE C - COMPREHENSIVE INCOME
Total comprehensive income for the three months ended September 30, 2001 and
2000 was $3,193,880 and $2,760,938, respectively and for the nine months ended
September 30, 2001 and 2000 was $8,001,882 and $6,151,911, respectively.
NOTE D - INVESTMENT SECURITIES
Investment securities available for sale consist of the following:
September 30, 2001
---------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------- ------------- ------------- -------------
Obligations of
U.S. Government Agencies $ 70,139,577 $ 1,719,529 $ - $ 71,859,106
Obligations of State and
political sub-divisions 31,234,733 1,121,244 (18,292) 32,337,685
Mortgage-backed securities 63,078,086 999,057 (32,545) 64,044,598
Other securities 699,650 44,601 - 744,251
Equity securities 10,235,806 54,466 (11,914) 10,278,358
------------- ------------- ------------- -------------
$ 175,387,852 $ 3,938,897 $ (62,751) $ 179,263,998
============= ============= ============= =============
-4-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Period Ended September 30, 2001
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 September 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").
FINANCIAL CONDITION
On September 30, 2001, total assets increased $33.2 million, or 6.7%,
to $529.6 million from $496.4 million at December 31, 2000. Asset growth
resulted from increases in securities available for sale of $13.4 million to
$179.3 million from $165.9 million, net loans of $13.1 million to $305.0 million
from $291.9 million and cash and cash equivalents of $9.8 million to $31.5
million from $21.7 million at December 31, 2000. The increase in securities
available for sale reflected $85.7 million of purchases, $2.9 million of
unrealized gains, offset by $76.3 million in proceeds from sales and maturities
of such securities. The increase in cash and cash equivalents was predominantly
in interest-bearing deposits in banks which rose $8.3 million to $13.0 million
from $4.7 million at December 31, 2000. Such increase was primarily the result
of certificates of deposit, maturing in less than thirty days, which the Company
purchased to offset certain time deposits with similar maturities. The increase
in the loan portfolio was primarily due to growth in real estate secured
commercial loans of $6.0 million and fixed rate one- to four- family residential
mortgage loans of $3.8 million. The Company's offering of competitive market
interest rates continues to fuel this growth.
At September 30, 2001, total liabilities increased $28.0 million, or
6.2%, to $479.8 million from $451.8 million at December 31, 2000. This increase
was primarily the result of interest-bearing deposits, which rose $18.3 million
to $363.6 million from $345.3 million at December 31, 2000. The growth was
mainly the result of increases in interest bearing checking accounts of $7.6
million, certificate of deposit accounts of $6.5 million, and
-6-
savings accounts of $3.8 million. 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 $1.0 million to $65.3 million
at September 30, 2001 from $64.3 million at December 31, 2000. Such increases
reflect additions to non-interest bearing deposits of $11.5 million offset by
$10.5 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
September 30, 2001, repurchase agreements totaled $10.5 million.
Long-term debt rose $7.0 million to $35.0 million at September 31, 2001
from $28.0 million at December 31, 2000. Such borrowings consisted of fixed rate
loans from the Federal Home Loan Bank that were used to fund loan demand.
At September 30, 2001, total stockholders' equity increased $5.3
million to $49.9 million from $44.6 million at December 31, 2000. The increase
was due to net income of $5.6 million for the period and an increase of $2.4
million in accumulated other comprehensive income (net of income taxes), offset
by the purchase of $396,000 of Company stock, and dividends paid of $2.3
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 September 30, 2001 the
Company repurchased 38,104 shares.
RESULTS OF OPERATIONS
Net income. Net income for the three months ended September 30, 2001
increased $254,000, or 14.7%, to $2.0 million from $1.7 million for the
comparable three month period in 2000. Net income for the nine months ended
September 30, 2001 increased $595,000 to $5.6 million from $5.0 million for the
comparable nine month period in 2000. The increases for the three and nine
months ended September 30, 2001 was the result of higher net interest income and
other income offset by increases in other expenses.
-7-
Interest income. Interest income for the three months ended September
30, 2001 increased $236,000 to $8.9 million from $8.6 million for the comparable
three month period in 2000. The increase was mainly attributed to an increase in
average loans of $20.0 million and average securities available for sale of
$24.9 million offset by a 66 basis point decrease in the yield on average
interest earning assets to 7.02% for the three months ended September 30, 2001
from 7.68% for the comparable three month period in 2000. Interest income for
the nine months ended September 30, 2001 increased $1.8 million to $26.6 million
from $24.8 million for the comparable nine month period in 2000. The increase
was primarily attributed to an increase in average loans of $26.5 million and
average securities available for sale of $19.2 million offset by a 37 basis
point decrease in the yield on average interest earning assets to 7.22% for the
first nine months of 2001 from 7.59% for the comparable nine month period in
2000. See "Average Balance Sheet and Rate/Volume Analysis"
Interest expense. Interest expense for the three months ended September
30, 2001 decreased $80,000 to $4.2 million from $4.3 million for the comparable
three month period in 2000. The change was primarily attributed to a 51 basis
point decrease in average cost of funds to 4.18% for the three months ended
September 30, 2001 from 4.69% for the comparable three month period in 2000
offset by a $21.2 million increase in certificates of deposit and a $17.6
million increase in other interest-bearing liabilities. Interest expense for the
nine months ended September 30, 2001 increased $1.3 million to $13.1 million
from $11.8 million for the comparable nine month period in 2000. Such increases
were primarily the result of an increase in average certificates of deposit of
$29.3 million and average other interest-bearing deposits of $12.4 million.
Average cost of funds for the nine months ended September 30, 2001 remained
relatively constant as compared to the nine 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 September 30, Three Months Ended September 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) $ 305,154 $ 6,090 7.98% $ 285,204 $ 5,890 8.26%
Investment securities available for sale (2) 183,299 2,616 5.71% 158,402 2,643 6.67%
Other interest-earning assets (5) 16,960 158 3.72% 5,802 95 6.53%
--------- -------- --------- --------
Total interest earning assets $ 505,413 $ 8,864 7.02% $ 449,408 $ 8,628 7.68%
========= ======== ========= ========
Non-interest earning assets 18,504 22,889
--------- ---------
Total assets $ 523,917 $ 472,297
========= =========
Interest-bearing liabilities:
Money market accounts 55,045 408 2.96% 56,134 587 4.18%
Certificates of Deposit 207,625 2,824 5.44% 186,430 2,732 5.86%
Other liabilities 143,047 1,005 2.81% 125,459 999 3.19%
--------- -------- --------- --------
Total interest-bearing liabilities $ 405,717 $ 4,237 4.18% $ 368,023 $ 4,318 4.69%
Non-interest-bearing liabilities 69,926 64,501
--------- ---------
Total liabilities $ 475,643 $ 432,524
========= =========
Retained Earnings (6) 48,274 39,773
--------- ---------
Total liabilities and stockholders' equity $ 523,917 $ 472,297
========= =========
Net interest income $ 4,627 $ 4,310
========= ========
Interest rate spread (3) 2.84% 2.99%
====== ======
Net yield on interest-earning assets (4) 3.66% 3.84%
====== ======
Ratio of average interest-earning
assets to average interest-bearing
liabilities 124.57% 122.11%
====== ======
(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.
Nine Months Ended September 30, Nine Months Ended September 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) $ 301,360 $ 18,242 8.07% $ 274,821 $ 16,796 8.15%
Investment securities available for sale (2) 174,883 7,905 6.03% 155,638 7,774 6.66%
Other interest-earning assets (5) 15,114 474 4.18% 5,164 233 6.01%
--------- --------- --------- --------
Total interest earning assets $ 491,357 $ 26,621 7.22% $ 435,623 $ 24,803 7.59%
========= ========= ========= ========
Non-interest earning assets 18,986 21,979
--------- ---------
Total assets $ 510,343 $ 457,602
========= =========
Interest-bearing liabilities:
Money market accounts 55,132 1,374 3.32% 56,589 1,698 4.00%
Certificates of Deposit 204,288 8,775 5.73% 174,966 7,235 5.51%
Other liabilities 135,927 2,985 2.93% 123,450 2,890 3.12%
--------- -------- --------- --------
Total interest-bearing liabilities $ 395,347 $ 13,134 4.43% $ 355,005 $ 11,823 4.44%
Non-interest-bearing liabilities 68,063 63,627
--------- ---------
Total liabilities $ 463,410 $ 418,632
========= =========
Retained Earnings (6) 46,933 38,970
--------- ---------
Total liabilities and stockholders' equity $ 510,343 $ 457,602
========= =========
Net interest income $ 13,487 $ 12,980
======== ========
Interest rate spread (3) 2.79% 3.15%
====== ======
Net yield on interest-earning assets (4) 3.66% 3.97%
====== ======
Ratio of average interest-earning
assets to average interest-bearing
liabilities 124.29% 122.71%
====== ======
(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
iiindicated. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to (i) cchanges in
volume (changes in average volume multiplied by old rate); (ii) changes in rates
(changes in rate multiplied by average volume).
Three Month Period Nine Month Period
ended September 30, 2001 ended September 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 412 (212) 200 1,622 (176) 1,446
Investment securities available for sale 416 (443) (27) 961 (830) 131
Other interest earning assets 182 (119) 63 447 (206) 241
----- ---- --- ----- ------ -----
Total interest-earning assets 1,010 (774) 236 3,030 (1,212) 1,818
===== ==== === ===== ====== =====
Interest expense:
Money market accounts (11) (168) (179) (44) (280) (324)
Certificates of deposit 310 (218) 92 1,212 328 1,540
Other liabilities 140 (134) 6 292 (197) 95
----- ---- --- ----- ------ -----
Total interest-bearing liabilities 439 (520) (81) 1,460 (149) 1,311
----- ---- --- ----- ------ -----
Net change in interest income 571 (254) 317 1,570 (1,063) 507
===== ==== === ===== ====== =====
-11-
Provision for loan losses. For the three and nine months ended
September 30, 2001 the provision for loan losses was $90,000 and $265,000,
respectively, compared to $75,000 and $225,000, respectively, for the three and
nine month periods ended September 30, 2000. For the nine months ended September
30, 2001, non-performing loans increased approximately $441,000 from December
31, 2000. Due to the increase in non-performing loans primarily from loans
secured by real estate, the loan loss provision for the three and nine months
ended September 30, 2001 was increased .
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 September
30, 2001 increased $277,000 to $1.0 million from $765,000 for the comparable
three month period in 2000. Total other income for the nine months ended
September 30, 2001 increased $700,000 to $2.9 million from $2.2 million for the
comparable period in 2000. The increase in other income for the three and nine
months ended September 30, 2001 is mostly due to $74,000 and $308,000,
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. Additionally, for the three months ended
September 30, 2001, the Company recognized an $81,000 gain from an equity
investment it holds as an available for sale security. Such gain reflected the
new basis in the shares that the Company received due to the acquisition of the
underlying investment in a stock for stock exchange. Other income for the three
and nine month period ended September 30, 2001 increased $125,000 and $157,000,
respectively mainly due to fees generated from customer usage of the debit card,
gains realized from the sale of mortgage loans, and income from the sale title
insurance through TA of Irwin offset by a $115,000 gain realized during the
three month period ended June 30, 2000 from the sale of the credit card
portfolio.
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Other expense. Total other expense for the three and nine month period
ended September 30, 2001 increased $257,000 and $597,000, respectively to $2.8
million and $8.2 million from $2.5 million and $7.6 million, respectively for
the comparable three and nine 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 $77,000 and $198,000
for the three and nine months ended September 30, 2001, respectively, to $1.3
million and $4.0 million, respectively, from $1.2 million and $3.8 million,
respectively for the comparable three and nine month periods in 2000. Such
increases were the result of normal merit increases and increased staff.
Occupancy expense for the three and nine months ended September 30, 2001
increased $23,000, and $70,000, respectively, to $290,000 and $853,000 from
$267,000 and $783,000, respectively, for the comparable three and nine month
periods in 2000 Such an increase for the three month period was due mainly to
increased depreciation and insurance costs. In addition, for the nine month
period the increase was 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 $39,000 and $105,000 for the three and nine months
ended September 30, 2001, respectively, to $188,000 and $544,000 from $149,000
and $439,000, respectively, for the comparable three and nine month periods in
2000, is primarily the result of increased fees from the Company's third party
processor. Other expenses for the three and nine month periods ended September
30, 2001 increased $121,000 and $214,000, respectively, to $898,000 and $2.4
million from $777,000 and $2.2 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 nine months ended September
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. Submission of Matters to a Vote of Security Holders
Not applicable.
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: November 09 , 2001 By: /s/Charles G. Urtin
----------------------------------
Charles G. Urtin
President, Chief Executive Officer
And Chief Accounting Officer
(Duly authorized officer)
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