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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1998
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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 ____
Commission file number: 0-29400
INVESTORSBANCORP, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1854234
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
W239 N1700 Busse Road
P.O. Box 190
Pewaukee, Wisconsin 53072-0190
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 523-1000
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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.
Yes X No
-- --
As of November 13, 1998, the Issuer had 1,000,000 shares of $0.01 par value
Common Stock issued and outstanding.
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INVESTORSBANCORP, INC.
FORM 10-QSB INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of September 30, 1998 (Unaudited) and December
31, 1997 .......................................................................................3
Consolidated Statement of Income - For the Three and Nine Months Ended
September 30, 1998 (Unaudited) .................................................................4
Consolidated Statement of Cash Flows - For the Nine Months Ended September 30,
1998 (Unaudited) ...............................................................................5
Notes to the Consolidated Financial Statements (Unaudited)......................................6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................7-15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................................................................16
Item 2. Changes in Securities...................................................................................16
Item 3. Defaults Upon Senior Securities.........................................................................16
Item 4. Submission of Matters to a Vote of Security Holders.....................................................16
Item 5. Other Information.......................................................................................16
Item 6. Exhibits and Reports on Form 8-K........................................................................16
Signatures.....................................................................................17
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INVESTORSBANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
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1998 1997
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ASSETS
Cash and due from banks $ 1,293,739 $ 1,248,803
Federal funds sold 5,935,000 4,544,000
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CASH AND CASH EQUIVALENTS 7,228,739 5,792,803
Available for sale securities 8,385,000 --
Loans, less allowance for loan losses of $307,763 and
$96,060, respectively 37,663,294 9,510,494
Fixed assets, net 126,171 124,159
Accrued interest and other assets 839,641 612,315
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TOTAL ASSETS $ 54,242,845 $ 16,039,771
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LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $ 3,035,688 $ 2,087,484
Interest bearing 43,537,524 6,774,156
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TOTAL DEPOSITS 46,573,212 8,861,640
Accrued interest payable and other liabilities 672,342 291,131
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TOTAL LIABILITIES 47,245,554 9,152,771
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SHAREHOLDERS' EQUITY
Preferred stock, $0.01 par value; shares authorized
1,000,000; no shares issued and outstanding -- --
Common stock, $0.01 par value; shares authorized
9,000,000; shares issued and outstanding 1,000,000 10,000 10,000
Additional paid in capital 6,979,900 6,979,900
Retained earnings (deficit) 7,391 (102,900)
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TOTAL SHAREHOLDERS' EQUITY 6,997,291 6,887,000
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 54,242,845 $ 16,039,771
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INVESTORSBANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
3 MONTHS ENDED 9 MONTHS ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
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1998 1998 1997
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INTEREST INCOME:
Interest and fees on loans $ 737,043 $ 1,623,587 $ 852
Interest on available for sale securities 118,618 205,630 --
Interest on federal funds sold 93,406 272,801 29,251
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TOTAL INTEREST INCOME 949,067 2,102,018 30,103
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INTEREST EXPENSE - INTEREST ON DEPOSITS 536,174 1,132,314 2,517
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NET INTEREST INCOME BEFORE PROVISION FOR
LOAN LOSSES 412,893 969,704 27,586
PROVISION FOR LOAN LOSSES 75,692 211,703 1,500
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NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 337,201 758,001 26,086
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OTHER OPERATING INCOME:
Service charges 5,481 11,752 45
Service release premiums 127,790 328,458 --
Management service fee 197,087 575,028 --
Other income 6,236 8,070 54,947
----------- ----------- -----------
TOTAL OTHER OPERATING INCOME 336,594 923,308 54,992
----------- ----------- -----------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 417,439 1,107,849 81,356
Occupancy expenses 22,799 65,437 4,764
Equipment expenses 12,469 43,167 --
Other expenses 123,052 354,981 55,579
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TOTAL OTHER OPERATING EXPENSES 575,759 1,571,434 141,699
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 98,036 109,875 (60,621)
INCOME TAX EXPENSE (BENEFIT) 24,625 (416) (23,800)
----------- ----------- -----------
NET INCOME $ 73,411 $ 110,291 $ (36,821)
=========== =========== ==========
Basic income per share $ 0.07 $ 0.11 $ (0.04)
Diluted income per share $ 0.07 $ 0.11 $ (0.04)
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CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
9 MONTHS ENDED PERIOD ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 110,291 $ (36,821)
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation 19,237 2,030
Provision for loan loss 211,703 1,500
Amortization of organizational costs 36,550 2,376
Provision (benefit) for deferred taxes (416) --
Net increase in available for sale securities (8,385,000) --
(Increase) decrease in assets:
Interest receivable (131,286) (404)
Other assets (132,174) (228,070)
Increase (decrease) in liabilities:
Accrued interest 285,297 2,171
Other liabilities 95,914 27,628
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NET CASH USED IN OPERATING ACTIVITIES (7,889,884) (229,590)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Furniture and Equipment (21,249) (131,871)
Net increase in loans (28,364,503) (603,155)
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NET CASH USED IN INVESTING ACTIVITIES (28,385,752) (735,026)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 37,711,572 2,170,723
Proceeds from issuance of common stock, net -- 6,989,900
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 37,711,572 9,160,623
Net increase in cash and cash equivalents 1,435,936 8,196,007
Cash and cash equivalents, beginning of period 5,792,803 --
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,228,739 $ 8,196,007
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INVESTORSBANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
NOTE 1: Organization
InvestorsBancorp, Inc. (the "Company") was incorporated under Wisconsin law on
June 12, 1996, to be the holding company of InvestorsBank, a Wisconsin state
bank located in Pewaukee, Wisconsin (the "Bank"). The Bank commenced business on
September 8, 1997.
NOTE 2: Accounting Policies
Basis of Presentation -- The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to Form
10-QSB. 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 of the Company, all adjustments
necessary to present fairly the financial position and the results of operations
and cash flows have been made. Such adjustments consisted only of normal
recurring items. Operating results for the three months and nine months ended
September 30, 1998 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1998. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1997.
Principles of Consolidation - The consolidated financial statements as of and
for the period presented include the accounts of the Company and the Bank, its
wholly owned subsidiary. All significant intercompany accounts and transactions
have been eliminated in the consolidated financial statements.
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion provides additional analysis of the financial
statements and should be read in conjunction with this information. This
discussion focuses on significant factors that affected the Company's earnings
during the quarter ended September 30, 1998. As of September 30, 1998, the Bank
was the only subsidiary of the Company and its operations contributed all of the
revenue and expenses for the quarter.
The period ended September 30, 1997 reflects only 23 days of operations. A
comparison with the same period for 1998 is therefore not meaningful and has not
been included in the following discussions.
RESULTS OF OPERATIONS
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
During the quarter ended September 30, 1998, the Company reported a net income
of $73,411, or $0.07 per share (basic).
NET INTEREST INCOME
Total interest income for the quarter was $949,067, which consisted of $737,043
of interest and fees on loans, $93,406 of interest on federal funds sold and
$118,618 of interest on available for sale securities. Management anticipates
that interest income will continue to grow along with the loan portfolio and
other assets of the Company.
Interest expense on deposits for the quarter was $536,174, which will also
increase as deposits grow. Net interest income amounted to $412,893 for the
quarter ended September 30, 1998.
PROVISION FOR LOAN LOSSES
At September 30, 1998, the allowance for loan losses was $307,763, of which
$75,692 was charged against earnings in the quarter ended September 30, 1998.
The allowance for loan losses is established through a provision for loan losses
charged to expense. Loans are charged against the allowance for loan losses when
management believes that the collectibility of the principal is unlikely. The
allowance is an amount that management believes will be adequate to absorb
possible losses on existing loans that may become uncollectible, based on
evaluation of the collectibility of loans and prior loan loss experience. The
evaluations take into consideration such factors as changes in the nature and
volume of the loan portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may affect the borrower's
ability to pay. While management uses the best information available to make its
evaluation, future adjustments to the allowance may be necessary if there are
significant changes in economic conditions. Impaired loans are measured based on
the present value of expected future cash flows discounted at the loan's
effective interest rate or, as a practical expedient, at the loan's observable
market price or the fair value of the collateral if the loan is collateral
dependent. A loan is impaired when it is probable the creditor will be unable to
collect all contractual principal and interest payments due in accordance with
the terms of the loan agreement.
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There were no loan charge-offs or recoveries or any impaired loans for the
quarter ended September 30, 1998.
NON-INTEREST INCOME AND EXPENSES
Other operating income for the quarter ended September 30, 1998 was $336,594.
The Bank services loans for Bando McGlocklin Capital Corporation ("BMCC"), which
had loans and leased properties under management of $146,069,276 at September
30, 1998. Revenue relating to services for BMCC was $197,087 for the quarter
ended September 30, 1998. The Company was spun-off from BMCC in September 1997
and continues to have common management. In addition, service release fees
received primarily from the sale of first mortgages in the secondary market was
$127,790 for the three months ended September 30, 1998.
Other operating expenses for the quarter ended September 30, 1998 were $575,759,
and consisted primarily of salaries and employee benefits and other operating
expenses, such as occupancy expenses, data processing, advertising, investor
communications, professional fees and directors' fees. These operating expenses
include salaries that are reimbursed through the management services fee noted
above.
Amounts provided for income tax expense or benefit are based on income reported
for financial statement purposes and do not necessarily represent amounts
currently payable under tax laws. Deferred income tax assets and liabilities are
computed quarterly for differences between the financial statement and tax bases
of assets and liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the periods in
which the differences are expected to affect taxable income. As changes in tax
laws or rates are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes. The differences relate principally to
tax exempt interest income and operating loss carryforwards that will be used to
offset future net operating income.
For the quarter ended September 30, 1998, the Company recorded a $24,625 tax
expense and had a deferred tax asset of $66,866 recorded as of September 30,
1998. Management believes it is likely that the deferred tax asset will be
realized. The effective rate for the expense for income taxes for the quarter
ended September 30, 1998 was 25.0%, which was primarily due to the effect of the
tax exempt interest income.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
During the nine months ended September 30, 1998, the Company reported a net
income of $110,291, or $0.11 per share (basic).
NET INTEREST INCOME
Total interest income for the period was $2,102,018, which consisted of
$1,623,587 of interest and fees on loans, $272,801 of interest on federal funds
sold and $205,630 of interest on available for sale securities. Management
anticipates that interest income will continue to grow along with the loan
portfolio and other assets of the Company.
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Interest expense on deposits for the nine months ended was $1,132,314, which
will also increase as deposits grow. Net interest income amounted to $969,704
for the nine months ended September 30, 1998.
PROVISION FOR LOAN LOSSES
At September 30, 1998, the allowance for loan losses was $307,763, of which
$211,703 was charged against earnings in the nine months ended September 30,
1998. There were no loan charge-offs or recoveries or any impaired loans for the
nine months ended September 30, 1998.
NON-INTEREST INCOME AND EXPENSES
Other operating income for the nine months ended September 30, 1998 was
$923,308. Revenue relating to services for BMCC was $575,028 for the nine months
ended September 30, 1998. The Company was spun-off from BMCC in September 1997
and continues to have common management. In addition, service release fees
received primarily from the sale of first mortgages in the secondary market was
$328,458 for the nine months ended September 30, 1998.
Other operating expenses for the nine months ended September 30, 1998 were
$1,571,434, and consisted primarily of salaries and employee benefits and other
operating expenses, such as occupancy expenses, data processing, advertising,
investor communications, professional fees and directors' fees. These operating
expenses include salaries that are reimbursed through the management services
fee noted above.
For the nine months ended September 30, 1998 the Company recorded a $416 tax
benefit and had a deferred tax asset of $66,866 recorded as of September 30,
1998. Management believes it is likely that the deferred tax asset will be
realized.
FINANCIAL CONDITION
ASSETS
Total assets of the Company were $54,242,845 at September 30, 1998 and
$16,039,771 at December 31, 1997, a 238% increase. Cash and due from banks was
$1,293,739 and federal funds sold with daily liquidity were $5,935,000 at
September 30, 1998. At December 31, 1997, the Company had cash and federal funds
sold of $5,792,803. During the quarter ended March 31, 1998, the Company began
investing in variable rate taxable 7-day put bonds backed with letters of credit
from A1 rated commercial banks. The Company had available for sale securities
with daily liquidity of $8,385,000 at September 30, 1998. The Company considers
them liquid as they can be put back at any time to the marketplace at par.
Because the investment is variable rate, the marked-to-market value equals par.
Loans at September 30, 1998 were $37,971,057, which included commercial and
residential loans. Loans increased $28,364,503 or 295% from December 31, 1997.
The allowance for loan losses was $307,763 or 0.8% of gross loans at September
30, 1998, as compared to $96,060 or 1% of gross loans at December 31, 1997. In
addition to loans outstanding, the Company had unfunded loan
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commitments of $22,175,933 as of September 30, 1998, although the Bank has
participated $10,154,214 of the total to BMCC. Loan demand continued to be
strong for both commercial and residential loans. The Company's home equity line
has been designed to be very competitive with those of other banks in the area.
Other assets at September 30, 1998 and December 31, 1997 were $839,641 and
$612,315, respectively. As of September 30, 1998, other assets consisted of
organizational and start up costs of $195,963, which are being amortized over a
sixty-month period. It also included an excess servicing asset of $194,219
relating to loans sold to a third party, a receivable for $88,453 to a related
company, a deferred tax asset of $66,866, interest receivable of $190,420 and
other assets of $103,720.
LIABILITIES
Deposits at September 30, 1998 were $46,573,212 compared to $8,861,640 at
December 31, 1997, a 426% increase. The September 30, 1998 deposits consisted of
$3,035,688 in non-interest bearing accounts and $43,537,524 in interest bearing
accounts. The Bank pays a very competitive interest rate on its money market
accounts, and as a result, approximately 65% of the total deposits were money
market accounts as of September 30, 1998. During December 1997, the Bank began
aggressively marketing its money market rate.
Other liabilities at September 30, 1998 were $672,342 and were $291,131 at
December 31, 1997. As of September 30, 1998, other liabilities consisted of a
retained loan discount on loans sold to third parties of $199,905. In addition,
it included participation principal and interest payments of $28,672, accrued
expenses payable of $123,805, accrued interest payable of $299,586 and other
liabilities of $20,374.
The Bank has a $3,000,000 revolving note with one of its correspondent banks. At
September 30, 1998, there was no outstanding balance on the note.
CAPITAL RESOURCES
During 1997, the Company issued 1,000,000 shares of common stock at $7.00 per
share. The Company incurred $10,100 in stock issuance costs that were netted
against additional paid in capital.
The Federal Reserve Board (the "FRB") has established risk-based capital
guidelines that must be observed by bank holding companies and banks. Under
these guidelines, total qualifying capital is categorized into two components -
Tier I and Tier II capital. Tier I capital generally consists of common
shareholders' equity, perpetual preferred stock (subject to limitations) and
minority interest in subsidiaries. Subject to limitations, Tier II capital
includes certain other preferred stock and debentures, and a portion of the
reserve for loan losses. These ratios are expressed as a percentage of
risk-adjusted assets, which include various risk-weighted percentages of
off-balance sheet exposures, as well as assets on the balance sheet.
The Bank has committed to the FDIC that it will maintain a Tier I capital to
total assets ratio of not less than 8% for the first three years of operations
starting September 8, 1997.
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Capital ratios applicable to the Bank and the Company at September 30, 1998 and
December 31, 1997 were as follows:
TOTAL RISK- TIER I RISK
BASED BASED LEVERAGE
CAPITAL CAPITAL RATIO
-------------- -------------- --------------
Regulatory Capital Requirements:
Minimum 8.00% 4.00% 4.00%
Well-capitalized 10.00% 6.00% 5.00%
At September 30, 1998:
Bank 13.9% 13.3% 14.1%
Company 13.9% 13.3% 14.1%
At December 31, 1997:
Bank 64.9% 64.0% 55.8%
Company 64.9% 64.0% 55.8%
The Company expects that its capital ratios will decline in the future as assets
grow; however, management intends to maintain its ratios at levels at or above
those established by regulatory agencies for well-capitalized institutions.
The applications for a bank charter and federal deposit insurance stated that
the Bank would retain its earnings during the first three years of operations.
As such, the Company will pay no dividends to the shareholders during that
period. The Company expects that all Company and Bank earnings, if any, will be
retained to finance the growth of the Company and the Bank and that no cash
dividends will be paid for the foreseeable future.
LIQUIDITY
The liquidity of a financial institution reflects its ability to provide funds
to meet loan requests, to accommodate possible outflows in deposits and to take
advantage of interest rate market opportunities. Funding of loan requests,
providing for liability outflows, and management of interest rate fluctuations
require continuous analysis in order to match the maturities of specific types
of categories of short-term loans and investments with specific types of
deposits and borrowings. Financial institution liquidity is thus normally
considered in terms of the nature and mix of the institution's sources and uses
of funds. Management believes that current liquidity levels are sufficient.
ASSET/LIABILITY MANAGEMENT
Closely related to liquidity management is the management of interest-earning
assets and interest-bearing liabilities. The Company manages its rate
sensitivity position to avoid wide swings in net interest margins and to
minimize risk due to changes in interest rates.
Changes in net interest income, other than volume related changes, arise when
interest rates on assets reprice in a time frame or interest rate environment
that is different from the repricing period for
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liabilities. Changes in net interest income also arise from changes in the mix
of interest earning assets and interest-bearing liabilities.
The Company does not expect to experience any significant fluctuations in its
net interest income as a consequence of changes in interest rates.
YEAR 2000
The federal banking regulators recently issued guidelines establishing minimum
safety and soundness standards for achieving Year 2000 compliance. The
guidelines, which took effect October 15, 1998 and apply to all FDIC-insured
depository institutions, establish standards for developing and managing Year
2000 project plans, testing remediation efforts and planning for contingencies.
The guidelines are based upon guidance previously issued by the agencies under
the auspices of the Federal Financial Institutions Examination Council (the
"FFIEC"), but are not intended to replace or supplant the FFIEC guidance which
will continue to apply to all federally insured depository institutions.
The guidelines were issued under section 39 of the Federal Deposit Insurance
Act, as amended (the "FDIA"), which requires the federal banking regulators to
establish standards for the safe and sound operation of federally insured
depository institutions. Under section 39 of the FDIA, if an institution fails
to meet any of the standards established in the guidelines, the institution's
primary federal regulator may require the institution to submit a plan for
achieving compliance. If an institution fails to submit an acceptable compliance
plan, or fails in any material respect to implement a compliance plan that has
been accepted by its primary federal regulator, the regulator is required to
issue an order directing the institution to cure the deficiency. Such an order
is enforceable in court in the same manner as a cease and desist order. Until
the deficiency cited in the regulator's order is cured, the regulator may
restrict the institution's rate of growth, require the institutions to increase
its capital, restrict the rates the institution pays on deposits or require the
institution to take any action the regulator deems appropriate under the
circumstances. In addition to the enforcement procedures established in section
39 of the FDIA, noncompliance with the standards established by the guidelines
may also be grounds for other enforcement action by the federal banking
regulators, including cease an desist orders and civil money penalty
assessments.
The Year 2000 has posed a unique set of challenges to those industries reliant
on information technology. As a result of methods employed by early programmers,
many software applications and operation programs may be unable to distinguish
the Year 2000 from the Year 1900. If not effectively addressed, this problem
could result in the production of inaccurate data, or, in the worst cases, the
inability of the systems to continue to function altogether. Financial
institutions are particularly vulnerable due to the industry's dependence on
electronic data processing systems.
In 1997, the Company moved into a newly constructed building. The move helped to
make the Year 2000 problem manageable because most of the Company's systems were
new purchases and the Year 2000 problem was factored into the Company's
decisions. The move also started the process of identifying the hardware and
software issues required to assure Year 2000 compliance. The Company began by
assessing the issues related to the Year 2000 and the potential for those issues
to adversely affect the Company's operations.
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The Company has established a Year 2000 management committee to deal with this
issue. It is the mission of this committee to identify areas subject to
complication related to the Year 2000 and to initiate remedial measures designed
to eliminate any adverse effects on the Company's operations. The committee has
identified all mission-critical software and hardware that may be adversely
affected by the Year 2000 and has required vendors to represent that the systems
and products provided are or will be Year 2000 compliant.
The Company licenses all software used in conducting its business from third
party vendors. None of the Company's software has been internally developed. The
Company has developed a comprehensive list of all software, all hardware and all
service providers used by the Company. Every vendor has been contacted regarding
the Year 2000 issue. The vendor of the primary software in use at the Company
released its Year 2000 complaint software in September 1998. Testing at the
Company, using test scripts developed by the vendor, was completed on October 3,
1998. The vendor will be conducting ongoing proxy testing and seminars and will
report its progress monthly to the Company using a management report. Members of
the committee have joined a peer user group. In addition, the Company continues
to monitor all other major vendors of services to the Company for Year 2000
issues in order to avoid shortages of supplies and services in the coming
months.
There are three third party utilities with which the Company has an important
relationship, Ameritech, U S Exchange (phone service) and Wisconsin Electric
Company (gas and electric service). The Company will be discontinuing service in
1999 with Ameritech. The Company has not identified any practical, long-term
alternatives to relying on these companies for basic utility services. In the
event that the utilities significantly curtailed or interrupted their services
to the Company, it would have a significant adverse effect on the Company's
ability to conduct its business.
The Company also has tested all heating and air conditioning units, vault doors,
alarms systems, networks, etc. and is not aware of any significant problems with
such systems.
The Company's cumulative costs of the Year 2000 project through the third
quarter of 1998 have been $10,000. At the present time, no situations that will
require material cost expenditures to become fully compliant have been
identified. However, the Year 2000 problem is pervasive and complex and can
potentially affect any computer process. Accordingly, no assurance can be given
that Year 2000 compliance can be achieved without additional unanticipated
expenditures and uncertainties that might affect future financial results. The
estimated total cost of the Year 2000 project is currently $15,000. This
includes costs to upgrade software and replace equipment specifically for the
purpose of Year 2000 compliance and certain administrative expenditures.
It is not possible at this time to quantify the estimated future costs due to
possible business disruption caused by vendors, suppliers, customers, or even
the possible loss of electric power or phone service; however, such costs could
be a substantial.
The Company is committed to a plan for achieving compliance, focusing not only
on its own data processing systems, but also on its loan customers. The
management committee has proposed policy and procedure changes to help identify
potential risks to the Company and to gain an understanding
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of how customers are managing the risks associated with the Year 2000. The
Company is assessing the impact, if any, the Year 2000 will have on its credit
risk and loan underwriting. In connection with potential credit risk related to
the Year 2000 issue, the Company has contacted its large commercial loan
customers regarding their level of preparedness for the Year 2000.
The Company has developed contingency plans for various Year 2000 problems and
continues to revise those plans based on testing results and vendor
notifications.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains certain forward looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act. The Company intends such forward-looking statements to be covered
by the safe harbor provisions for forward-looking statements contained in the
Private Securities Reform Act of 1995, and is including this statement for
purposes of these safe harbor provisions. Forward-looking statements, which are
based on certain assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of the words
"believe," "expect," "intend," "anticipate," "estimate," "project," or similar
expressions. The Company's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. Factors which could have a
material adverse affect on the operations and future prospects of the Company
and the subsidiaries include, but are not limited to, changes in: interest
rates, general economic conditions guidelines, including the condition of the
local real estate market, legislative/regulatory changes, monetary and fiscal
policies of the U.S. Government, including policies of the U.S. Treasury and the
Federal Reserve Board, a the quality or composition of the loan or investment
portfolios, demand for loan products, deposit flows, competition, demand for
financial services in the Company's market area and accounting principles,
policies. These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such
statements.
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DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY
AVERAGE BALANCE SHEET
FOR QUARTER
ENDED
September 30,
-------------
1998
----
Cash and due from banks $ 934,641
Federal funds sold 6,904,076
Available for sale securities 8,319,457
Loans:
Commercial 10,890,090
Real Estate Mortgages 15,544,165
Industrial Revenue Bonds 4,820,825
Installment and consumer 161,339
Less allowance for loan losses (255,650)
------------
Net loans 31,160,769
Fixed assets 118,941
Other assets 738,873
------------
Total assets $ 48,176,757
============
Demand deposits $ 2,352,183
Interest bearing deposits
Checking 912,285
Money market 26,575,912
Time deposits 10,812,940
------------
Total Deposits 40,653,320
Other liabilities 591,958
------------
Total liabilities 41,245,278
Equity capital 6,931,479
------------
Total liabilities and capital $ 48,176,757
============
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PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Company or its subsidiary is a party.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
11 Statement Regarding Computation of Per
Share Earnings
27 Financial Data Schedule
(EDGAR version only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company
during the quarter ended September 30, 1998.
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SIGNATURE
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 thereunder duly authorized.
INVESTORSBANCORP, INC.
(Registrant)
/s/ George R. Schonath
----------------------------
Date: November 10, 1998 George R. Schonath
President
/s/ Susan J. Hauke
---------------------------
Date: November 10, 1998 Susan J. Hauke
Chief Accounting Officer
17