UNITED STATES
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, 2006
--------------
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. 1-31655
IBT Bancorp, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Pennsylvania 25-1532164
- ---------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
309 Main Street, Irwin, Pennsylvania 15642
- ------------------------------------ -----
(Address of principal executive offices) (Zip Code)
(724) 863-3100
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(Registrant's telephone number, including area code)
NA
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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. [X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
Number of shares of Common Stock outstanding as of May 09, 2006: 2,954,080
IBT BANCORP, INC.
Contents
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Pages
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements............................................................................ 2
Consolidated balance sheets at March 31, 2006
(unaudited) and December 31, 2005............................................................... 2
Consolidated statements of income (unaudited) for the three months
ended March 31, 2006 and 2005 .................................................................. 3
Consolidated statements of cash flows (unaudited) for the three months
ended March 31, 2006 and 2005................................................................... 4
Notes to consolidated financial statements...................................................... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................................................... 6
Item 3. Quantitative and Qualitative Disclosures About Market Risk...................................... 11
Item 4. Controls and Procedures......................................................................... 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................................................... 12
Item 1A. Risk Factors.................................................................................... 12
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds..................................... 12
Item 3. Defaults upon Senior Securities................................................................. 13
Item 4. Submission of Matters to a Vote of Security-Holders............................................. 13
Item 5. Other Information............................................................................... 13
Item 6. Exhibits........................................................................................ 13
Signatures...................................................................................................... 15
CONSOLIDATED BALANCE SHEETS
IBT BANCORP, INC. AND SUBSIDIARY
March 31, 2006 December 31, 2005
-------------- ------------------
(unaudited) (unaudited)
-------------- ------------------
ASSETS
Cash and due from banks $ 18,374,973 $ 15,063,970
Interest-bearing deposits in banks 199,369 435,970
Federal funds sold 4,950,000 -
Certificates of deposit 100,000 100,000
Securities available for sale 200,231,601 195,993,449
Federal Home Loan Bank stock, at cost 5,482,300 5,469,600
Loans, net 450,965,563 442,225,344
Premises and equipment, net 5,534,321 5,624,572
Other assets 20,518,402 20,237,792
------------- -------------
Total Assets $ 706,356,529 $ 685,150,697
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest bearing $ 82,584,241 $ 83,846,681
Interest-bearing 444,119,758 436,639,077
------------- -------------
Total deposits 526,703,999 520,485,758
Repurchase agreements 32,952,404 18,442,703
Accrued interest and other liabilities 6,200,629 4,022,118
Federal funds purchased - 12,468,000
FHLB advances 78,990,242 68,651,125
------------- -------------
Total liabilities 644,847,274 624,069,704
Stockholders' Equity
Capital stock, par value $1.25 per share,
50,000,000 shares authorized, 3,023,799
shares issued, 2,954,080 and 2,955,455 shares
outstanding at March 31, 2006 and
December 31, 2005, respectively 3,779,749 3,779,749
Surplus 1,227,680 1,231,444
Retained earnings 59,763,942 58,931,230
Accumulated other comprehensive income (859,955) (512,029)
------------- -------------
63,911,416 63,430,394
Less: Treasury stock, at cost (2,402,161) (2,349,401)
------------- -------------
Total stockholders' equity 61,509,255 61,080,993
------------- -------------
Total Liabilities and Stockholders' Equity $ 706,356,529 $ 685,150,697
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
2
CONSOLIDATED STATEMENTS OF INCOME
IBT BANCORP, INC. AND SUBSIDIARY
Three Months Ended March 31,
----------------------------
2006 2005
---------- ----------
(unaudited)
Interest Income
Loans, including fees $7,214,485 $6,724,232
Investment securities 2,202,385 2,005,579
Federal funds sold 1,472 8,220
---------- ----------
Total interest income 9,418,342 8,738,031
Interest Expense
Deposits 2,891,101 2,317,160
FHLB advances 757,706 729,507
Repurchase agreements 177,905 64,946
Federal funds purchased 183,934 15,011
---------- ----------
Total interest expense 4,010,646 3,126,624
---------- ----------
Net Interest Income 5,407,696 5,611,407
Provision for Loan Losses 300,000 300,000
---------- ----------
Net Interest Income after Provision
for Loan Losses 5,107,696 5,311,407
Other Income
Service fees 872,154 848,221
Investment security gains 255,000 81,111
Increase in cash surrender value of life insurance 110,287 107,515
Debit card fees 196,513 175,075
Other income 410,599 412,748
---------- ----------
Total other income 1,844,553 1,624,670
Other Expenses
Salaries 1,543,630 1,407,008
Pension and other employee benefits 577,611 471,504
Occupancy expense 413,466 433,749
Data processing expense 267,321 236,007
Pennsylvania shares tax 150,785 131,643
Advertising expense 62,929 59,575
Other expenses 1,021,921 970,675
---------- ----------
Total other expenses 4,037,663 3,710,161
---------- ----------
Income Before Income Taxes 2,914,586 3,225,916
Provision for Income Taxes 604,147 901,770
---------- ----------
Net Income $2,310,439 $2,324,146
========== ==========
Basic Earnings per Share $ 0.78 $ 0.79
========== ==========
Diluted Earnings per Share $ 0.78 $ 0.78
========== ==========
Dividends per Share $ 0.50 $ 0.46
========== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF CASH FLOWS
IBT BANCORP, INC. AND SUBSIDIARY
Three Months Ended March 31,
----------------------------
2006 2005
------------ ------------
(unaudited)
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,310,439 $ 2,324,146
Adjustments to reconcile net cash
from operating activities:
Depreciation 204,000 244,548
Increase in cash surrender value of insurance (110,287) (107,515)
Net amortization/accretion of
premiums and discounts 111,912 227,780
Investment security gains (255,000) (81,111)
Provision for loan losses 300,000 300,000
Increase (decrease) in cash due
to changes in assets and liabilities:
Other assets 13,097 290,624
Accrued interest and other liabilities 2,178,511 1,719,028
------------ ------------
Net Cash From Operating Activities 4,752,672 4,917,500
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities
available for sale 2,565,000 -
Proceeds from maturities of securities
available for sale 7,512,912 12,892,904
Purchase of securities available for sale (14,776,895) (14,645,746)
Net (increase) decrease in loans (8,967,646) 6,940,362
Purchases of premises and equipment (113,749) (98,219)
Proceeds from sales of Federal Home Loan Bank stock 2,372,000 2,022,300
Purchase of Federal Home Loan Bank stock (2,384,700) (1,629,000)
------------ ------------
Net Cash (Used By) From Investing Activities (13,793,078) 5,482,601
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 6,218,241 (2,908,336)
Net increase in securities sold
under repurchase agreements 14,509,701 4,372,924
Dividends paid (1,477,727) (1,359,509)
Proceeds from FHLB advances 12,000,000 -
Repayment of FHLB advances (1,660,883) (399,188)
Federal funds purchased (12,468,000) -
Exercised stock options (3,764) -
Purchase Treasury stock (52,760) -
------------ ------------
Net Cash From (Used By) Financing Activities 17,064,808 (294,109)
------------ ------------
Net Change in Cash and Cash Equivalents 8,024,402 10,105,992
Cash and Cash Equivalents at Beginning of Period 15,499,940 16,187,171
------------ ------------
Cash and Cash Equivalents at End of Period $ 23,524,342 $ 26,293,163
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
IBT BANCORP, INC. AND SUBSIDIARY
Period Ended March 31, 2006
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 and 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, 2006 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2006 or any future interim period. The interim financial statements should be
read in conjunction with the financial statements and footnotes thereto included
in the IBT Bancorp, Inc. and subsidiary Annual Report on Form 10-K for the year
ended December 31, 2005.
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 2,954,922 for
the three months ended March 31, 2006 and 2,955,455 for the three months ended
March 31, 2005.
NOTE C - COMPREHENSIVE INCOME
Total comprehensive income for the three months ended March 31, 2006 and 2005
was $1,962,513 and $1,079,787, respectively.
NOTE D - INVESTMENT SECURITIES
Investment securities available for sale consist of the following:
March 31, 2006
---------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------- ------------- ------------- -------------
Obligations of
U.S. Government Agencies $ 75,609,764 $ 25,940 $ (1,575,723) $ 74,059,981
Obligations of States and
political sub-divisions 57,089,629 1,272,854 (270,391) 58,092,092
Mortgage-backed securities 63,542,582 74,420 (1,887,370) 61,729,632
Other securities 197,284 - (1) 197,283
Equity securities 5,454,789 719,097 (21,273) 6,152,613
------------- ------------- ------------- -------------
$ 201,894,048 $ 2,092,311 $ (3,754,758) $ 200,231,601
============= ============= ============= =============
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", "anticipates", "contemplates", "expects", and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties which include changes
in interest rates, risks associated with the effect of opening new branches, the
ability to control costs and expenses, and general economic conditions. IBT
Bancorp, Inc. undertakes no obligation to update those forward-looking
statements 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 and
trust services through its wholly owned banking subsidiary, Irwin Bank & Trust
Co. (collectively, the "Company"). The Company's stock is traded on the American
Stock Exchange under the symbol IRW.
FINANCIAL CONDITION
At March 31, 2006 total assets increased $21.2 million to $706.4
million from $685.2 million at December 31, 2005. Asset growth was primarily due
to increases in net loans, securities available for sale, and federal funds sold
of $8.7 million, $4.2 million, and $4.9 million, respectively.
Net loans increased to $451.0 million at March 31, 2006 from $442.2
million at December 31, 2005. This change was primarily due to an increase in
real estate secured mortgage and commercial loans of $6.1 million and consumer
term loans of $2.6 million.
At March 31, 2006, securities available for sale increased $4.2 million
to $200.2 million from $196.0 million at December 31, 2005. This change was
primarily due to increases in mortgage-backed securities and obligations of
states and political sub-divisions, which posted net increases of $7.9 million
and $3.3 million, respectively offset by a net decrease in obligations of U.S.
government agencies of $4.8 million and equity securities of $2.1 million. The
Company evaluates the available-for-sale investment portfolio on an on-going
basis to maximize yield, within established risk thresholds, making purchasing
and selling decisions accordingly.
At March 31, 2006, total liabilities increased $20.7 million to $644.8
million from $624.1 million at December 31, 2005. This increase was primarily
the result of increases in repurchase agreements, FHLB advances, and
interest-bearing deposits of $14.6 million, $10.3 million, and $7.4 million,
respectively offset by a $12.5 million decrease in federal funds purchased.
Repurchase agreements increased to $33.0 million at March 31, 2006,
from $18.4 million
6
at December 31, 2005. The Company offers its corporate customers sweep accounts
where unused deposit balances are swept into an overnight repurchase agreement
yielding market rates.
FHLB advances reached $79.0 million at March 31, 2006, from $68.7
million at December 31, 2005. The increase is due to $12.0 million in additional
advances with terms ranging from six months to eighteen months and an average
cost of 5.26%. These advances will be used to fund loan demand. Offsetting the
increase were re-payments of $1.7 million.
Interest-bearing deposits increased to $444.1 million at March 31,
2006, from $436.7 million at December 31, 2005. The increase of $7.4 million was
primarily in certificates of deposit and interest-bearing checking accounts,
which increased $5.3 million and $4.5 million, respectively. The increases were
offset by a $3.1 million decrease in money market accounts. The interest rates
offered on certificates of deposit and the services and benefits bundled into
the interest-bearing checking products have been responsible for the overall
growth in interest-bearing deposits.
Non-interest bearing deposit accounts decreased to $82.6 million at
March 31, 2006, from $83.8 million at December 31, 2005. The decrease of $1.2
million is attributed to normal fluctuations, which arise due to the timing of
month-end pension and social security deposits.
At March 31, 2006 total stockholders' equity increased $400,000 to
$61.5 million from $61.1 million at December 31, 2005. The increase was
primarily due to net income of $2.3 million offset by dividends paid of $1.5
million, a decrease in accumulated other comprehensive income (net of deferred
income taxes) of $350,000, and treasury stock purchased of $53,000. Accumulated
other comprehensive income decreased as a result of changes in the net
unrealized gains/losses on securities available for sale. 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
consolidated financial statements.
RESULTS OF OPERATIONS
Net income. Net income for the three months ended March 31, 2006
decreased $14,000, or .60%, to $2,310,000, or $.78 diluted earnings per share
from $2,324,000, or $.78 diluted earnings per share, for the comparable three
month period in 2005. The decrease for the three months ended March 31, 2006 was
primarily the result of a decrease in net interest income and an increase in
other expense offset by an increase in other income.
Net interest income. Net interest income declined to $5,408,000 for the
three months ended March 31, 2006 compared to $5,611,000 for the three months
ended March 31, 2005. While interest income increased 8% over the comparable
2005 quarter, interest expense increased 28%. This was due to rates paid for
deposits increasing at a rate faster than rates charged for loans. As a result,
the Company's net interest spread tightened to 2.83% from 3.13 % in the prior
year period and its net interest margin narrowed to 3.31% from 3.54%. The
narrowing of the spread and margin reflect the flattening of the yield curve
between periods, which has seen a steady increase in short-term rates while
long-term rates have remained stable. Because the loan portfolio is primarily
fixed rate, earning asset yields have not adjusted
7
as quickly to the rate environment as funding costs.
Interest income. Interest income for the three months ended March 31,
2006 increased $680,000 to $9,418,000 from $8,738,000 for the comparable three
month period in 2005. The average balance of interest earning assets increased
$18.9 million for the three months ended March 31, 2006, to $653.8 million from
$634.9 million for the comparable period in 2005, the yield on these assets
increased 26 basis points to 5.76%, for the three months ended March 31, 2006
from 5.50% for the comparable period in 2005. See "Average Balance Sheet and
Rate/Volume Analysis"
Interest expense. Interest expense for the three months ended March 31,
2006 increased $884,000 to $4,010,000 from $3,127,000 for the comparable period
in 2005. The change in interest expense was primarily attributed to an increase
of $18.7 million in the average balance of interest-bearing liabilities and a 56
basis point increase in the average cost of funds to 2.93% for the three months
ended March 31, 2006 from 2.37% for the comparable period in 2005. See "Average
Balance Sheet and Rate/Volume Analysis"
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 March 31, Three Months Ended March 31,
2006 2005
-------------------------------------- ------------------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
------------------------------------------------------------------------------
(Dollars In Thousands) (Dollars In Thousands)
Interest-earning assets:
Loans receivable (1) $ 449,608 $ 7,215 6.42% $ 436,054 $ 6,724 6.17%
Investment securities (2) 204,026 2,202 4.32% 197,348 2,006 4.07%
Federal funds sold 171 1 3.44% 1,533 8 2.14%
--------- ------- -------- ---------- -------- -------
Total interest earning assets $ 653,805 $ 9,418 5.76% $ 634,935 $ 8,738 5.50%
Non-interest earning assets (3) 36,999 38,766
--------- ----------
Total assets $ 690,805 $ 673,701
========= ==========
Interest-bearing liabilities:
Money market accounts $ 54,411 $ 279 2.05% $ 62,194 $ 214 1.37%
Certificates of Deposit 256,989 2,426 3.78% 249,222 1,932 3.10%
Other liabilities (4) 235,153 1,305 2.22% 216,452 981 1.81%
--------- ------- -------- ---------- -------- -------
Total interest-bearing liabilities $ 546,552 $ 4,010 2.94% $ 527,868 $ 3,127 2.37%
------- -------- ------- -------
8
Non-interest-bearing liabilities (3) 83,746 85,493
--------- -----------
Total liabilities $ 630,298 $ 613,361
Stockholders' equity (5) 60,507 60,340
--------- -----------
Total liabilities and
stockholders' equity $ 690,805 $ 673,701
========= ===========
Net interest income $ 5,408 $ 5,611
======= =========
Interest rate spread (6) 2.82% 3.13%
========== ==========
Net interest margin (7) 3.31% 3.54%
========== ==========
Ratio of average interest-earning
assets to average interest-bearing
liabilities 119.62% 120.28%
========== ==========
- ----------------------------------------------------------------------------------------------------------------------------
(1) Average balances include non-accrual loans, and are net of deferred loan
fees.
(2) Includes investment securities, interest-bearing deposits in other
financial institutions and FHLB stock.
(3) Includes net deferred income taxes in excess of deferred tax benefits on
AFS securities (SFAS 115), stock options (SFAS 123/148) and deferred fees
(SFAS 109).
(4) Includes FHLB advances and Federal funds purchased, and repurchase
agreements.
(5) Includes capital stock, surplus and unrealized holding gains on SFAS 115
AFS securities.
(6) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(7) Net interest margin represents net interest income as a percentage of
average interest earning assets.
Rate / Volume Analysis
The following table shows the effect of changes in volumes and rates on
interest income and interest expense. The changes in interest income and
interest expense attributable to changes in both volume and rate have been
allocated to the changes due to rate. Tax exempt income was not recalculated on
a tax equivalent basis due to the immateriality of the change to the table
resulting from a recalculation.
Three Month Period ended March 31,
2006 vs. 2005
-----------------------------------------------
Increase (Decrease)
Due to
-----------------------------------------------
Volume Rate Net
-------------- ----------------- --------------
(Dollars In Thousands)
Interest income:
Loans receivable $ 210 $ 281 $ 491
Investment securities available for sale 67 129 196
Other interest earning assets (8) 1 (7)
----------- -------------- --------------
Total interest-earning assets 269 411 680
=========== ============== ==============
9
Interest expense:
Money market accounts (27) 92 65
Certificates of deposit 60 434 494
Other liabilities 84 240 324
----------- -------------- --------------
Total interest-bearing liabilities 117 766 883
=========== ============== ==============
Net change in net interest income $ 152 $ (355) $ (203)
=========== ============== ==============
Provision for loan losses. For the three months ended March 31, 2006 and 2005,
the provision for loan losses was $300,000. At March 31, 2006, the allowance for
loan losses equaled .82% of total loans outstanding compared to .67% at March
31, 2005. Net charge-offs as a percentage of average loans for the respective
periods were .02% and .003%.
The provision for loan losses is charged to operations to bring the
total allowance for loan losses to a level that represents management's best
estimate of the losses inherent in the portfolio, based on a monthly review by
management of the following factors:
o Historical experience
o Volume
o Type of lending conducted by the Bank
o Industry standards
o The level and status of past due and non-performing loans
o The general economic conditions in the Bank's lending area; and
o Other factors affecting the collectability of the loans in the portfolio
Large groups of homogeneous loans, such as residential real estate,
small commercial real estate loans and home equity and consumer loans are
evaluated in the aggregate using historical loss factors and other data. The
amount of loss reserve is calculated using historical loss rates, net of
recoveries on a five year rolling weighted average, adjusted for environmental,
and other qualitative factors such as industry, geographical, economic and
political factors that can effect loss rates or loss measurements Watch and
classified loans are allocated additional reserves.
Large balance and/or more complex loans such as multi-family and
commercial real estate loans may be evaluated on an individual basis and are
also evaluated in the aggregate to determine adequate reserves. As specific
loans are determined to be impaired, specific reserves are assigned based upon
collateral value, market value, if determinable, or the present value of the
estimated future cash flows of the loan.
The allowance is increased by a provision for loan loss which is
charged to expense, and
10
reduced by charge-offs, net of recoveries. Loans are placed on non-accrual
status when they are 90 days past due, unless they are adequately collateralized
and in the process of collection.
The allowance for loan losses is maintained at a level that represents
management's best estimate of losses in the portfolio at the balance sheet date.
However, there can be no assurance that the allowance for losses will be
adequate to cover losses which may be realized in the future and that additional
provisions for losses will not be required.
Other income. Total other income for the three months ended March 31,
2006 increased $220,000 to $1,845,000 from $1,625,000 for the comparable three
month period in 2005. The increase in other income for the three months ended
March 31, 2006 was primarily due to an increase in investment security gains of
$174,000. Service fees and debit card fees collected also increased $24,000 and
$21,000, respectively, from the comparable period in 2005. A growing deposit
base and increased transactions supported the additional fees collected. The
change in security gains was due to the sale of equity securities, that were
written down in December 2004.
Other expense. Total other expense for the three month period ended
March 31, 2006 increased $328,000 to $4,038,000 from $3,710,000 for the
comparable three month period in 2005. Salaries and pension and employee benefit
costs increased $137,000 and $106,000, respectively at March 31, 2006 from the
comparable period in 2005 due to annual salary increases, staff additions, and
the increased cost of funding the Company's pension plan in the low rate
environment. The balances of the increases are due to normal increases in the
cost of doing business.
Provision for income taxes. Income taxes decreased to $604,000 for the
three month period ended March 31, 2006 from $902,000 for the comparable quarter
in 2005 as a result of non-taxable security gains recorded from the sale of
equity securities and the net increase in tax free obligations of states and
political sub-divisions of $3.3 million. Although the securities were written
down, for financial reporting purposes, in December 2004, their tax basis did
not change. Due to these factors, the effective tax rate decreased to 21% for
the first quarter of 2006 from 28% for the comparable quarter in 2005.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no significant changes for the three months ended March 31,
2006 from the information presented in the 10K statement, under the caption
Market Risk, for the year ended December 31, 2005.
Item 4. CONTROLS AND PROCEDURES
The Company's management evaluated, with the participation of the
Company's Chief Executive Officer and Chief Financial Officer, the effectiveness
of the Company's disclosure controls and procedures, as of the end of the period
covered by this report. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective to ensure that information required
11
to be disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission's
rules and forms.
There were no changes in the Company's internal control over financial
reporting that occurred during the Company's last fiscal quarter that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Registrant is not party to any material legal proceedings at the
present time. From time to time, the Bank is a party to routine 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 1A. Not applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) Unregistered Sales of Equity Securities. Not Applicable
(b) Use of Proceeds. Not Applicable
(c) Issuer Purchases of Equity Securities.
- --------------------------- -------------------- --------------------- ----------------------- -----------------------------
(c) Total Number (d) Maximum Number
Of Shares (or Units) (or Approximate Dollar
(b) Purchased as Part Value) of Shares (or
(a) Total Number Average Price Of Publicly Units) that May Yet Be
Of Shares (or Paid per Share Announced Plans Purchased Under the
Period Units) Purchased (or Unit) or Programs* Plans or Programs
- --------------------------- -------------------- --------------------- ----------------------- -----------------------------
12
January 1 through 31 -- $ -- 68,344 82,756
- --------------------------- -------------------- --------------------- ----------------------- -----------------------------
February 1 through 28 700 38.475 69,044 82,056
- --------------------------- -------------------- --------------------- ----------------------- -----------------------------
March 1 through 31 675 37.69 69,719 81,381
- --------------------------- -------------------- --------------------- ----------------------- -----------------------------
Total 1,375 $ 38.09 69,719 81,381
- --------------------------- -------------------- --------------------- ----------------------- -----------------------------
* On November 18, 1999, the Registrant announced a stock repurchase plan for
up to 151,000 shares.
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
The following exhibits are either filed with or incorporated by
reference in this Quarterly Report on Form 10-Q:
3(i) Articles of Incorporation of IBT Bancorp, Inc.*
3(ii) Amended Bylaws of IBT Bancorp, Inc.**
4 Rights Agreement, dated as of November 18, 2003, by and between
IBT Bancorp, Inc. and Registrar and Transfer Company, as Rights
Agent.***
10 Change In Control Severance Agreement with Charles G. Urtin ****
10.1 Deferred Compensation Plan For Bank Directors****
10.2 Death Benefit Only Deferred Compensation Plan For Bank Directors
effective as of January 1, 1990****
10.3 Retirement and Death Benefit Deferred Compensation Plan For Bank
Directors effective as of January 1, 1990****
10.4 2000 Stock Option Plan*****
10.5 Irwin Bank & Trust Company Supplemental Pension Plan ******
31.1 Rule 13a-14(a) Certification of Chief Executive Officer
31.2 Rule 13a-14(a) Certification of Chief Financial Officer
32 Section 1350 Certification
_________________________
* Incorporated by reference to the identically numbered exhibits
of the Registrant's Form 10 (File No. 0-25903) filed April 29,
1999.
** Incorporated by reference to the identically numbered exhibit
of the
13
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 2002.
*** Incorporated by reference to Exhibit 4 to Amendment No. 1 to
Form 8-A (File No. 1-31655) filed November 20, 2003.
**** Incorporated by reference to the identically numbered exhibits
of the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999.
***** Incorporated by reference to Exhibit 4.1 the Registrant's
Registration Statement on Form S-8 (File No. 333-40398) filed
June 29, 2000.
****** Incorporated by reference to identically numbered exhibit to
Registrant's Annual Report on Form 10-K for fiscal year ended
December 31, 2004.
14
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 8, 2006 By: /s/Charles G. Urtin
----------------------------------
Charles G. Urtin
President, Chief Executive Officer
(Duly authorized officer)
Date: May 8, 2006 By: /s/Raymond G. Suchta
----------------------------------
Raymond G. Suchta
Chief Financial Officer
(Principal Financial Officer)
15