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 March 31, 2003
--------------
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
(State or other (I.R.S. Employer Identification No.)
jurisdiction of incorporation)
W239 N1700 Busse Road
Waukesha, Wisconsin 53188-1160
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (262) 523-1000
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 May 9, 2003, the Issuer had 990,529 shares of $0.01 par value common stock
issued and outstanding.
INVESTORSBANCORP, INC.
FORM 10-QSB INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2003 (Unaudited) and
December 31, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Consolidated Statements of Income - For the Three Months
Ended March 31, 2003 and 2002 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Changes in Shareholders' Equity - For the
Three Months Ended March 31, 2003 and 2002 (Unaudited). . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows - For the Three Months Ended
March 31, 2003 and 2002 (Unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Notes to the Consolidated Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . .7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Item 3. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . .17
Item 5 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
INVESTORSBANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2003 December 31, 2002
-------------- -----------------
(Unaudited)
ASSETS
Cash and due from banks $ 3,522,671 $ 2,819,527
Available for sale securities - stated at fair value 1,676,272 1,983,567
Loans, less allowance for loan losses of $2,023,576 and
$1,986,076 in 2003 and 2002, respectively 164,043,003 154,516,551
Loans held for sale 1,716,250 1,188,075
Premises and equipment, net 2,524,158 2,527,165
Cash surrender value of life insurance 1,204,920 1,134,908
Accrued interest receivable and other assets 3,768,184 3,570,156
------------- -------------
Total assets $ 178,455,458 $ 167,739,949
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand $ 8,786,781 $ 8,498,777
Savings and NOW 36,102,166 38,249,871
Other Time 91,093,178 89,192,094
------------- -------------
Total Deposits 135,982,125 135,940,742
Federal funds purchased 8,450,000 1,475,000
Other borrowings 15,950,000 13,600,000
Guaranteed preferred beneficial interest in the
company's junior subordinated debt 5,000,000 5,000,000
Accrued interest payable and other liabilities 1,145,438 1,367,413
------------- -------------
Total Liabilities 166,527,563 157,383,155
------------- -------------
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 1,000,000 shares
authorized, none issued -- --
Common stock, $0.01 par value; 9,000,000 shares
authorized, 1,050,000 shares issued 11,204 10,500
Surplus 8,316,188 7,316,900
Retained earnings 4,618,298 4,047,189
Treasury stock, 123,016 shares in 2002 and 110,000
shares in 2001, respectively, at cost (1,017,795) (1,017,795)
------------- -------------
Total shareholders' equity 11,927,895 10,356,794
------------- -------------
Total liabilities and shareholders' equity $ 178,455,458 $ 167,739,949
============= =============
3
INVESTORSBANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2003 2002
---------- ----------
INTEREST INCOME:
Interest and fees on loans $2,134,791 $1,888,602
Interest on investment securities - taxable 12,930 22,922
Interest on federal funds sold 111 375
---------- ----------
TOTAL INTEREST INCOME 2,147,832 1,911,899
INTEREST EXPENSE:
Interest on deposits 654,924 778,607
Interest on federal funds purchased 14,387 6,091
Interest on other borrowings 65,487 49,932
Interest on guaranteed preferred beneficial interest
in the company's junior subordinated debt 64,768 --
---------- ----------
TOTAL INTEREST EXPENSE 799,566 834,630
NET INTEREST INCOME BEFORE PROVISION FOR
LOAN LOSSES 1,348,266 1,077,269
Provision for loan losses 41,432 93,750
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 1,306,834 983,519
---------- ----------
NONINTEREST INCOME:
Service fees 49,894 40,949
Management service fees 229,849 261,006
Gain on sale of loans 179,708 73,453
Increase in cash surrender value of life insurance 16,618 2,346
Other income 38,661 1,671
---------- ----------
TOTAL NONINTEREST INCOME 514,730 379,425
---------- ----------
NONINTEREST EXPENSES:
Salaries 515,068 375,304
Employee benefits 175,994 135,799
Occupancy 22,347 28,731
Furniture and equipment expenses 41,129 32,732
Data processing services 40,162 36,848
Other expenses 157,843 139,567
---------- ----------
TOTAL NONINTEREST EXPENSES 952,543 748,981
---------- ----------
INCOME BEFORE INCOME TAXES 869,021 613,963
Less applicable income taxes 297,912 212,215
---------- ----------
Net income $ 571,109 $ 401,748
========== ==========
PER SHARE AMOUNTS:
BASIC EARNINGS PER SHARE $ 0.62 $ 0.43
========== ==========
DILUTED EARNINGS PER SHARE $ 0.58 $ 0.41
========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED 982,218 981,084
========== ==========
4
INVESTORSBANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
Total
Common Retained Treasury Shareholders'
Stock Surplus Earnings Stock Equity
------- ---------- ---------- ----------- -----------
BALANCES, December 31, 2001 $10,500 $7,316,900 $2,374,996 $ (810,981) $ 8,891,415
Net income for
first three months of 2002 -- -- 401,748 -- 401,748
------- ---------- ---------- ----------- -----------
BALANCES, March 31, 2002 $10,500 $7,316,900 $2,776,744 $ (810,981) $ 9,293,163
======= ========== ========== =========== ===========
BALANCES, December 31, 2002 $10,500 $7,316,900 $4,047,189 $(1,017,795) $10,356,794
Net income for
first three months of 2003 -- -- 571,109 -- 571,109
Issuance of 70,422 shares
of common stock 704 999,288 -- -- 999,992
------- ---------- ---------- ----------- -----------
BALANCES, March 31, 2003 $11,204 $8,316,188 $4,618,298 $(1,017,795) $11,927,895
======= ========== ========== =========== ===========
5
INVESTORSBANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
-------------------------------
2003 2002
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 571,109 $ 401,748
Adjustments to reconcile net income to net
cash flows from operating activities
Depreciation 19,013 18,640
Gain on sale of loans (179,708) (73,453)
Provision for loan losses 41,432 93,750
Net change in
Loans due to origination and sale of loans
held for sale (348,467) (375,547)
Accrued interest receivable and other assets (146,440) 74,113
Accrued interest payable and other liabilities (221,975) (190,714)
------------ -----------
NET CASH FLOWS FROM OPERATING ACTIVITIES (265,036) (51,463)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Federal Home Loan Bank stock (121,600) --
Activity in available for sale securities
Maturities, prepayments, sales and calls 307,295 1,214,935
Net increase in loans (9,567,884) (666,628)
Additions to premises and equipment (16,006) (182)
------------ -----------
NET CASH FLOWS FROM INVESTING ACTIVITIES (9,398,195) 548,125
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 41,383 (831,679)
Net change in federal funds purchased 6,975,000 (590,000)
Proceeds from other borrowings 2,350,000 --
Proceeds from issuance of common stock 999,992 --
------------ -----------
NET CASH FLOWS FROM FINANCING ACTIVITIES 10,366,375 (1,421,679)
------------ -----------
Net Change in Cash and Cash Equivalents 703,144 (925,017)
Cash and Cash Equivalents - Beginning of year 2,819,527 2,004,926
------------ -----------
Cash and Cash Equivalents - End of period $ 3,522,671 $ 1,079,909
============ ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest $ 580,603 $ 766,908
Cash paid for income taxes $ -- $ --
6
INVESTORSBANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(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.
Investors Business Credit, Inc. was incorporated under Nevada law on September
19, 2000, as a wholly-owned subsidiary of the Bank to hold and manage certain
loans and securities of the Bank. A portion of the Bank's loan portfolio was
sold to the investment subsidiary as of October 20, 2000.
InvestorsBancorp Capital Trust I (the "Trust") was incorporated under Delaware
law on June 20, 2002, as a wholly-owned subsidiary of the Company to issue and
sell Capital Trust I Floating Rate Cumulative Trust Preferred Securities. The
Company issued a debenture to the Trust in exchange for the proceeds from the
sale of the securities (as described in Note 4) on June 27, 2002.
On March 26, 2003, the Company announced that its Board of Directors had
unanimously authorized a "going private" transaction by which George Schonath,
the Company's president and chief executive officer, and his family will become
the sole shareholders of the Company. As a result of this transaction, shares
held by all other shareholders will be converted into the right to receive
$14.20 per share in cash. The transaction will be structured as a cash-out
merger with a wholly-owned subsidiary of the Company formed for this purpose.
Upon completion of the merger, the Company's common stock will no longer be
listed on the OTC Bulletin Board and the registration of its securities with the
Securities and Exchange Commission will be terminated.
NOTE 2. ACCOUNTING POLICIES
Basis of Presentation - The accompanying unaudited consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information and
the instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the
opinion of management of the Company, all adjustments necessary to present
fairly the financial position as of March 31, 2003 and December 31, 2002 and the
results of operations for the three months ended March 31, 2003 and 2002 and
cash flows for the three months ended March 31, 2003 and 2002 have been made.
Such adjustments consisted only of normal recurring items. Operating results for
the period ended March 31, 2003 are not necessarily indicative of the results
that may be expected for the year ended December 31, 2003. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted. The accounting policies followed by the
Company are set forth in Note 1 to the Company's consolidated financial
statements contained in the Company's 2002 Annual Report on Form 10-KSB. 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, 2002.
Principles of Consolidation - The consolidated financial statements as of and
for the period presented include the accounts of the Company, the Trust, and the
Bank, its wholly-owned subsidiaries. The accounts of the Bank also include the
accounts of its wholly owned subsidiary, Investors Business Credit, Inc. All
significant intercompany accounts and transactions have been eliminated in the
consolidated financial statements.
The consolidated income of the Company is principally from the income of its
wholly-owned subsidiary, the Bank. The subsidiary Bank grants commercial,
residential and consumer loans and accepts deposits from customers primarily in
southeastern Wisconsin. The subsidiary Bank is subject to competition from other
financial institutions and nonfinancial institutions providing financial
products. Additionally, the Company and the subsidiary Bank are
7
subject to the regulations of certain regulatory agencies and undergo periodic
examination by those regulatory agencies.
In preparing consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the balance sheet and reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates. Material estimates that are particularly
susceptible to significant change in the near term relate to the determination
of the allowance for loan losses, deferred tax assets, and loan servicing
rights.
NOTE 3. SUBSEQUENT EVENT
On April 10, 2003, the Company borrowed $5.0 million of subordinated debt
through a pool issued by CitiGroup Global Markets Inc. (formerly, Salomon Smith
Barney, Inc.). The debt has a ten year term and matures on April 7, 2013. The
proceeds from this transaction will be used by the Company for the proposed
going private transaction. Interest is payable quarterly and is based on the
three month LIBOR rate plus 320 basis points and resets quarterly.
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 that information. The
discussion focuses on significant factors that affected the Company's earnings
for the periods ended March 31, 2003 and 2002. The Bank and its operations
contributed substantially all of the revenue and expense during those periods.
Included in the operations of the Bank are the activities of its wholly-owned
subsidiary, Investors Business Credit, Inc.
Results of Operations
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND MARCH 31, 2002
During the quarter ended March 31, 2003, the Company reported net income of
$571,000, or $0.58 per share (diluted), as compared to net income of $402,000,
or $0.41 per share (diluted), for the quarter ended March 31, 2002. The increase
in profitability was primarily attributable to a 26% increase in the earning
assets. With mortgage interest rates near historically low levels, there was a
15% increase in mortgage loans during the first quarter of 2003. The Company
does not anticipate that this level of residential mortgage loan sales will be
sustained throughout the remainder of the year. Average earning assets were
$163.37 million for the first quarter of 2003 as compared to $129.34 million for
the first quarter of 2002.
Net Interest Income
Net interest income is the difference between interest income, including fees on
loans, and interest expense, and is the largest contributing factor to net
income for the Company. Net interest income increased $0.27 million when
comparing the quarter ended March 31, 2003 to the quarter ended March 31, 2002.
Total interest income increased 13% to $2.15 million for the first quarter of
2003 from $1.91 million for the first quarter of 2002. The increase in interest
income was due to an increase in average loans outstanding of $37.04 million
when comparing the quarter ended March 31, 2003 to the quarter ended March 31,
2002. Interest and fee income on loans totaled $2.14 million for the three
months ended March 31, 2003 and $1.89 million for the three months ended March
31, 2002. Interest earned on investment securities and federal funds sold
totaled $13,000 compared to $23,000 for the same periods due to a 63% decrease
in the average balances. The majority of interest income on loans is derived
from the commercial and commercial real estate loan portfolios which comprised
approximately 70% of average outstanding loans at March 31, 2003 and 78% of
average outstanding loans at March 31, 2002. While the direction of future
interest rates, competition, and other factors may have a significant impact,
management anticipates interest income will continue to increase proportionately
with the projected growth of the portfolio.
8
Interest expense decreased 4% to $800,000 for the quarter ended March 31, 2003
from $835,000 for the quarter ended March 31, 2002 due to lower interest rates
for money market accounts and time deposits. However, the average balance of the
interest bearing liabilities increased 30% in comparing the quarter ended March
31, 2003 to the quarter ended March 31, 2002. The average balance at March 31,
2003 for interest bearing deposits increased $14.40 million and the average
balance for other borrowings and federal funds purchased increased by $19.84
million over the same period a year ago in order to fund the Bank's loan growth.
Interest expense consists predominantly of interest paid on certificates of
deposit, which totaled $786,000 for the first quarter of 2003 and $693,000 for
the first quarter of 2002. Interest rate swap income of $242,000 in the first
quarter of 2003 and $150,000 in the first quarter of 2002 is used to offset
interest expense on certificates of deposit. Interest on deposits also includes
interest paid on money market accounts and NOW accounts which totaled $111,000
for the first quarter of 2003 and $236,000 for the first quarter of 2002.
Interest expense on other borrowings and federal funds purchased totaled
$145,000 compared to $56,000 for the same periods.
As presented in the following schedule, the Company's interest rate spread was
3.16% for the first quarter of 2003 compared to 3.06% for the first quarter of
2002, a 10 basis point increase. The rate paid on total interest bearing
liabilities decreased more than the decrease in the yield on earning assets. The
yield on average earning assets decreased 66 basis points and the average rate
paid on interest bearing liabilities decreased 76 basis points due to decreases
in interest rates.
Three Months Ended Three Months Ended
March 31, 2003 March 31, 2002
------------------ ------------------
Average Related Yield Average Related Yield
Balance Interest Rate Balance Interest Rate
------------ ------------ ------------ ------------ ------------ ------------
Earning Assets:
Federal Funds Sold $ 45,556 $ 111 0.99% $ 102,056 $ 375 1.49%
Taxable Securities 1,747,045 12,930 3.00% 4,709,813 22,922 1.97%
Loans (a)(b) 161,575,745 2,134,791 5.36% 124,531,283 1,888,602 6.15%
------------ ------------ ------------ ------------ ------------ ------------
Total Earning Assets $163,368,346 $ 2,147,832 5.33% $129,343,152 $ 1,911,899 5.99%
Interest Bearing
Liabilities:
NOW Accounts $ 3,162,947 $ 6,125 0.79% $ 1,912,009 $ 6,694 1.42%
Money Market 33,907,689 105,066 1.26% 48,699,395 228,771 1.91%
Time Deposits 88,651,983 543,733 2.49% 60,713,969 543,142 3.63%
Federal Funds Purchased 3,644,611 14,387 1.60% 1,169,944 6,091 2.11%
Other Borrowings 20,365,000 130,255 2.59% 3,000,000 49,932 6.75%
------------ ------------ ------------ ------------ ------------ ------------
Total Interest Bearing $149,732,230 $ 799,566 2.17% $115,495,317 $ 834,630 2.93%
Liabilities
Interest Spread $ 1,348,266 3.16% $ 1,077,269 3.06%
Interest Margin $ 1,348,266 3.35% $ 1,077,269 3.38%
Provision for Loan Losses
The allowance for loan losses is established through a provision for loan losses
charged to expense. The allowance increased to $2.02 million as of March 31,
2003 from $1.99 million as of December 31, 2002 due primarily to an increase in
total loans and as of March 31, 2003, was approximately 1.2% of total loans, net
of residential mortgage loans held for sale on the secondary market. A loan loss
provision of $41,000 was expensed in the quarter ended March 31, 2003 as
compared to $94,000 during the quarter ended March 31, 2002.
The Bank has a relatively high percentage of commercial and commercial real
estate loans, most of which are extended to small or medium-sized businesses. At
the present time, management believes the allowance for loan
9
losses is at a level commensurate with the overall risk exposure of the loan
portfolio. However, should the economic climate continue to be depressed,
certain borrowers may experience difficulty and the level of non-performing
loans, charge-offs, and delinquencies could rise and require further increases
in the provision.
The majority of risk in the loan portfolio lies in commercial loans which
include commercial real estate loans. Accordingly, the Bank allocated $1.68
million (or 83% of the loan loss reserve total) to these loans, which comprised
70% of the loan portfolio. The Bank also allocated $177,000 (or approximately 9%
of the loan loss reserve total) to residential mortgages, which comprised about
28% of the loan portfolio. Approximately $166,000 of the reserve for loan losses
is unallocated. The unallocated amount is determined based on management's
judgment which considers, among other things, the risk of error in the specific
allocations, economic conditions and trends, loan portfolio concentrations, the
size of individual credit relationships, regulatory directives and other
factors. Continued softness in the industrial manufacturing sector of the
economy, in particular, has adversely impacted a number of the Company's
commercial loan customers. Management believes it is prudent to maintain a
moderate level of unallocated reserves given the weakness in the manufacturing
sector and uncertainty in the future direction of the economy. 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.
Impaired loans totaled $2.90 million and represented 1.7% of the loan portfolio
at March 31, 2003. Three commercial loans, secured by real estate, totaling
$2.13 million accounted for 74% of the impaired loan total. The gross interest
income which would have been recorded during the quarter ended March 31, 2003,
had the non-accruing loans been current in accordance with their original terms
was $56,000. The amount of interest income from non-accruing loans that was
collected and included in net income was $51,000. Loans are returned to accrual
status when the principal and interest amounts contractually due are brought
current and future payments are reasonably assured.
During the quarter ended March 31, 2003, loan charge-offs totaled $5,500 and
recoveries totaled $1,500. There were no loan charge-offs or recoveries during
the quarter ended March 31, 2002. Management, to the best of its knowledge, is
not aware of any other significant loans, group of loans or segments of the
portfolio where there are serious doubts as to the ability to repay their debt.
While a comprehensive analysis of the allowance for loan losses is somewhat
problematic due to the Company's relatively short history, management believes
that the allowance was at an adequate level at March 31, 2003 based on the
composition of the portfolio as well as regulatory guidelines. Management
recognizes there are significant estimates in the process and the ultimate
losses could be significantly different from those currently estimated.
The following table summarizes the Company's nonperforming loans as of March 31,
2003 and December 31, 2002. The decrease in past due loans from December 31,
2002 to March 31, 2003 was attributable to $0.66 million of matured loans being
paid off or refinanced during 2003 and the remaining loan of $0.65 million was
transferred to non-accrual loans. One commercial loan was restructured during
the quarter ended March 31, 2003.
Nonperforming Loans 3/31/2003 12/31/2002
- ------------------- --------- ----------
Nonaccrual Loans $2,895,751 $2,093,434
Accruing Loans Past Due 90 Days or More (1) $ -- $1,310,560
Restructured Loans (2) $ 664,761 $ --
(1) Loans are generally placed on nonaccrual status when contractually past
due 90 days or more, unless management based upon the facts and
circumstances does not feel it is necessary to put the specific loan on
nonaccrual status.
(2) Loans are considered restructured when the terms are modified due to a
deterioration in the financial condition of the borrower.
10
Non-Interest Income and Expenses
Non-interest income for the quarter ended March 31, 2003 totaled $515,000 as
compared to $379,000 for the quarter ended March 31, 2002, a 36% increase.
Management service fees were the largest component of non-interest income
totaling $230,000 for the quarter ended March 31, 2003 compared to $261,000 for
the quarter ended March 31, 2002. The Company charges The Middleton Doll
Company, an affiliate of the Company, a management fee for salaries and employee
benefits of common management, as well as a loan servicing fee based on total
loans and leases under management. The decrease in the fee income is a result of
a decrease in Middleton Doll's total loans and leased properties. The gain on
sale of loans, which are received from the sale of residential mortgages
originated for the secondary market totaled $180,000 for the quarter ended March
31, 2003 compared to $73,000 for the quarter ended March 31, 2002. The
refinancing of residential mortgages continued to be strong during the first
quarter of 2003, however, the Company does not anticipate that this level of
residential mortgage loan sales will be sustained throughout the remainder of
the year. Service charges related to deposit accounts increased $9,000, cash
surrender value of a keyman life insurance policy increased $14,000, building
rental income increased $34,000 due to the building purchase in October of 2002,
and other income increased $3,000 over the same period in 2002.
Non-interest expense increased 27% to $953,000 for the three months ended March
31, 2003 as compared to $749,000 for the three months ended March 31, 2002.
Salaries and employee benefits totaled $691,000 for the three months ended March
31, 2003 and $511,000 for the three months ended March 31, 2002. These amounts
included salaries that were reimbursed through the management service fee noted
above. The exercise of stock options during the first quarter of 2003 resulted
in a $95,000 increase in salary expense and retirement benefits increased
$33,000 when compared to the first quarter of 2002. Other operating expenses,
which include occupancy and fixed asset expense, data processing fees,
advertising, investor communications, and professional fees were $261,000
compared to $238,000, a 10% increase. Legal expenses relating to ongoing
collection efforts regarding commercial loans increased $24,000 over last year.
Amounts provided for income tax expense 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 basis 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 primarily to tax exempt
interest income, tax differences in the allowance for loan losses and
charge-offs, non-accrual interest and depreciation.
For the quarter ended March 31, 2003, the Company recorded federal and state
income tax expense of $298,000 and had a deferred tax asset of $979,000. For the
quarter ended March 31, 2002, the Company recorded a federal and state income
tax expense of $212,000 and had a deferred tax asset of $850,000. Management
believes it is more likely than not that the deferred tax asset will be fully
realized. The effective rate for the expense for income taxes for the quarters
ended March 31, 2003 and 2002 was 34%.
FINANCIAL CONDITION
The Company reported total assets of $178.46 million as of March 31, 2003 versus
$167.74 million as of December 31, 2002, a 6% increase. Cash and due from banks
increased to $3.52 million as of March 31, 2003 from $2.82 million at December
31, 2002.
The Company's investment securities portfolio decreased to $1.68 million as of
March 31, 2003 from $1.98 million at December 31, 2002 in order to fund loan
growth. Investment securities consist of money market mutual fund balances as
well as taxable variable rate demand notes secured by irrevocable letters of
credit issued by federally insured, domestic financial institutions. Although
the notes have a long term maturity structure, the interest rate is adjustable
weekly and the holder has the option to liquidate the security at 100% of par
value within seven days upon proper notice. The cost value of these notes
approximates market value. These instruments provide the Company with ready
liquidity to provide for loan funding requirements. Management believes that the
investment portfolio is adequately diversified.
11
As of March 31, 2003, loans were $166.07 million compared to $156.50 million as
of December 31, 2002. Residential mortgage loans originated for sale on the
secondary market totaled an additional $1.72 million as of March 31, 2003
compared to $1.19 million as of December 31, 2002. Excluding the mortgage loans
originated for sale, the allowance for loan losses remained at approximately
1.2% of gross loans, totaling $2.02 million at March 31, 2003 and $1.99 million
at year end 2002. In addition to loans outstanding, the Bank has entered into
off-balance-sheet financial instruments consisting of commitments to extend
credit, commitments under credit card arrangements, commercial letters of credit
and standby letters of credit. Such financial instruments are recorded in the
financial statements when they are funded or related fees are incurred or
received. The Company had gross unfunded loan commitments outstanding totaling
$23.67 million as of March 31, 2003.
The following table summarizes the distribution of the Company's loan portfolio
expressed in dollar amounts and as a percentage of the total portfolio as of
March 31, 2003 and December 31, 2002.
March 31, 2003 December 31, 2002
---------------------------- ----------------------------
Amount Percent Amount Percent
------------ ------------ ------------ ------------
Commercial $ 32,516,564 19.58% $ 28,279,734 18.07%
Real Estate:
Construction 9,123,854 5.50% 8,661,420 5.53%
Commercial 76,136,084 45.85% 77,072,033 49.25%
Agricultural 388,141 0.23% 394,138 0.25%
Residential 45,750,744 27.55% 39,905,008 25.50%
Industrial Revenue Bonds
and Municipals 1,092,117 0.66% 1,114,434 0.71%
Leasing Finance Receivable 490,739 0.29% 580,850 0.37%
Installment and Consumer 243,336 0.15% 345,010 0.22%
Other 325,000 0.19% 150,000 0.10%
------------ ------------ ------------ ------------
Total Loans $166,066,579 100.00% $156,502,627 100.00%
============ ============ ============ ============
Other assets at March 31, 2003 totaled $7.50 million compared to $7.23 million
at December 31, 2002. Other assets at March 31, 2003 included net building,
furniture and equipment of $2.52 million, accrued interest receivable on loans
of $905,000, deferred tax assets of $979,000, trust legal and placement fees of
$158,000, Federal Home Loan bank stock of $802,000, cash surrender value on a
life insurance policy of $1.20 million, fair market value of interest rate swaps
of $815,000, and other miscellaneous assets of $109,000.
Total deposits increased to $135.98 million at March 31, 2003 from $135.94
million as of year end 2002. Indexed money market accounts decreased 7% to
$32.64 million as of March 31, 2003 from $35.24 million as of December 31, 2002
primarily due to decreases in interest rates. Time certificates of deposit
increased slightly to $91.09 million as of March 31, 2003 from $89.19 million as
of year end. Time deposits include brokered CDs with terms ranging from six
months to five and one-half years and totaled $60.57 million and $57.05 million
as of March 31, 2003 and December 31, 2002, respectively. In order for the
Company to facilitate continued loan growth, management expects to continue to
issue brokered CDs and to competitively price its retail money market and
certificate of deposit products. Other deposits as of March 31, 2003 included
non-interest bearing accounts totaling $8.79 million and interest bearing
checking accounts (NOW accounts) of $3.46 million.
In addition to deposits, the Company periodically borrows funds via its
correspondent banking relationships. As of March 31, 2003, the Bank had
purchased $8.45 million in federal funds and borrowed $15.95 million from the
Federal Home Loan Bank of Chicago. Trust preferred securities debt of $5.0
million was obtained during 2002.
Other liabilities decreased to $1.15 million as of March 31, 2003 from $1.37
million at December 31, 2002. Other liabilities as of March 31, 2003, consisted
primarily of accrued interest payable of $816,000, accrued income taxes of
$200,000, accrued expenses payable of $94,000, and other miscellaneous
liabilities of $36,000.
12
CAPITAL RESOURCES
Capital ratios applicable to the Bank and the Company at March 31, 2003 and
December 31, 2002 were as follows:
Total Capital to Tier I Capital to Tier I Capital to
Risk Weighted Assets Risk Weighted Assets Average Assets
---------------------------- ---------------------------- -----------------------------
Regulatory Capital
Requirements:
Minimum at 3/31/03 $12,256,895 8.0% $ 6,128,448 4.0% $ 6,817,683 4.0%
Well-capitalized at 3/31/03 $15,321,119 10.0% $ 9,192,671 6.0% $ 8,522,104 5.0%
At March 31, 2003
Bank $17,319,714 11.3% $15,405,961 10.1% $15,405,961 9.1%
Company $18,844,373 12.3% $15,903,859 10.4% $15,903,859 9.3%
At December 31, 2002
Bank $16,614,979 11.3% $14,779,437 10.1% $14,779,437 9.0%
Company $17,197,472 11.7% $13,809,057 9.4% $13,809,057 8.4%
Management intends to maintain capital levels in excess of minimums established
by the regulatory authorities. The Company exceeds all regulatory requirements
regarding the maintenance of capital and was categorized as "well capitalized"
under the regulatory framework for capital adequacy as of March 31, 2003 and
December 31, 2002.
The Company expects that all earnings 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, accommodate possible deposit withdrawals, and take
advantage of interest rate market opportunities in a cost effective manner.
Although primary sources of funds are deposits and repayments of loan principal,
the Company also maintains a significant level of liquid assets to provide for
potential funding needs. In addition to cash balances as of March 31, 2003, the
Company held $1.68 million of marketable securities and $1.72 million of
residential mortgage loans originated and intended for sale in the secondary
market. Should an immediate need for funds arise, these assets may be readily
liquidated with nominal risk of principal loss.
Additionally, the Company has access to various off-balance sheet sources of
funds. Currently, the Company has correspondent banking relationships with three
institutions which collectively have approved federal funds lines for the Bank
totaling $13.0 million, of which $8.45 million was outstanding at March 31,
2003. The Company also has the ability to sell loan participations to
correspondents and affiliates. Further, the Company has the ability to acquire
funds via the brokered certificate of deposit market. Management has
periodically issued certificates of deposit through approved brokers as market
conditions dictate to fill funding gaps. The Bank has been approved with the
Federal Reserve Bank of Chicago to borrow funds from the Discount Window on a
secured basis. This will allow the Bank to borrow up to $10 million on a
short-term basis in the event of an unexpected liquidity shortfall. The actual
amount the Bank will be able to borrow will depend on total capital and on the
amount of assets the Bank will pledge. Currently, the Bank has pledged enough
assets to borrow up to $10 million. In 2002, the Bank became a member of the
Federal Home Loan Bank of Chicago ("FHLB of Chicago") and as of March 31, 2003,
the Bank had purchased $801,600 worth of FHLB of Chicago stock. The stock, along
with the loans that were pledged at March 31, 2003, allowed the Bank to borrow
up to approximately $18.2 million from the FHLB of Chicago of which $15.95
million was outstanding at March 31, 2003. Management believes that current
liquidity levels are sufficient to meet anticipated loan demand as well as to
absorb potential deposit withdrawals.
13
Asset/Liability Management
The primary function of asset/liability management is to identify, measure and
control the extent to which changes in interest rates, commodity prices or
equity prices adversely impact a financial institution's earnings or economic
capital. The Company's strategy is to optimize and stabilize net income across a
wide range of interest rate cycles while maintaining adequate liquidity and
conforming to all applicable capital and other regulatory requirements.
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 liabilities. Changes in net
interest income also arise from changes in the mix of interest earning assets
and interest bearing liabilities.
In the normal course of business, the Bank engages in off-balance sheet activity
to hedge interest rate risk. As of March 31, 2003, the Company had eight
interest rate swap agreements outstanding with a notional value totaling $51.0
million structured as a hedge of specific fixed-rate deposits whose terms
approximate the terms of the swap agreement. The swap agreements are structured
so that the Company receives a fixed interest rate and pays a variable rate
based upon LIBOR. These instruments allow management to more closely balance the
repricing opportunities of the Company's assets and liabilities and thereby,
reduces potential interest rate risk exposure. Although swaps reduce interest
rate risk, the potential for profit or loss on interest rate swaps still exists
depending upon fluctuations in interest rates. The Company's interest rate swaps
are classified as fair value hedges with a fair market value of $815,000 at
March 31, 2003.
Financial Accounting Standard Board Statement No. 107, "Disclosures About Fair
Value of Financial Instruments", requires disclosure of fair value information
about financial instruments, whether or not recognized in the balance sheet, for
which it is practicable to estimate that value. In cases where quoted market
prices are not available, fair values are based on estimates using present value
or other valuation techniques. Those techniques are significantly affected by
the assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument.
Impact of Inflation and Changing Prices
Unlike most industries, virtually all of the assets and liabilities of the
Company are monetary in nature. As a result, interest rates have a more
significant impact on the Company's performance and results of operations than
the effect of general levels of inflation. Interest rates do not necessarily
move in the same direction or magnitude as the prices of goods and services as
measured by the Consumer Price Index. As discussed previously, the Company's
interest rate gap position in conjunction with the direction of the movement in
interest rates is an important factor in the Company's operating results.
Significant Accounting Policies
Allowance for Loan Losses. Loans are charged against the allowance for
loan losses when management believes that the collectibility of the principal is
unlikely. Subsequent recoveries, if any, are credited to the allowance. The
allowance is an amount that management believes will be adequate to absorb
possible losses relating to specifically identified loans that may become
uncollectible based on evaluations as well as possible losses inherent in the
balances of the loan portfolio. 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 repay. In accordance with
FASB Statements 5 and 114, an allowance is provided for losses that have been
incurred as of the balance sheet date and is based on past events and current
economic conditions, and does not include the effects of expected losses on
specific loans or groups of loans that are related to future events or expected
changes in economic conditions.
Impaired Loans. A loan is impaired when, based on current information
and events, management does not expect to collect all amounts due according to
the contractual terms of the loan agreement in the normal course of business. A
loan is also impaired when the loan contract is restructured by extending the
due date of either principal or interest payments or by reducing the interest
rate on the loan. A loan is not impaired during a period of delay in payment if
management expects to collect all amounts due including accrued interest at the
contractual interest rate for the period of the delay.
14
Fair Value of Financial Instruments. Financial Accounting Standard
Board Statement No. 107, "Disclosures About Fair Value of Financial
Instruments", requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it is
practicable to estimate that value. In cases where quoted market prices are not
available, fair values are based on estimates using present value or other
valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument.
Derivative Instruments. The Company has adopted FAS 133, "Accounting
for Derivative Instruments and Hedging Activities" as amended by FAS 137
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement 133", and FAS 138, "Accounting for Certain
Derivative Instruments and certain Hedging Activities". These statements require
the Company to designate all derivative instruments as either fair value hedges
or cash flow hedges and to record the hedge on the balance sheet at its fair
market value. The net gain/loss on instruments classified as cash flow hedges
are reported as changes in other comprehensive income. The net gain/loss on
instruments classified as fair value hedges are reported as increases/decreases
in current year earnings.
Special Note Concerning Forward-looking Statements
This document (including information incorporated by reference)
contains, and future oral and written statements of the Company and its
management may contain, forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 with respect to the financial
condition, results of operations, plans, objectives, future performance and
business of the Company. Forward-looking statements, which may be based upon
beliefs, expectations and assumptions of the Company's management and on
information currently available to management, are generally identifiable by the
use of words such as "believe," "expect," "anticipate," "plan," "intend,"
"estimate," "may," "will," "would," "could," "should" or other similar
expressions. Additionally, all statements in this document, including
forward-looking statements, speak only as of the date they are made, and the
Company undertakes no obligation to update any statement in light of new
information or future events.
A number of factors, many of which are beyond the ability of the
Company to control or predict, could cause actual results to differ materially
from those in its forward-looking statements. These factors include, among
others, the following: (i) the strength of the local and national economy; (ii)
the economic impact of future terrorist attacks and threats or acts of war and
the response of the United States to any such attacks or threats; (iii) changes
in state and federal laws, regulations and governmental policies concerning the
Company's general business; (iv) changes in interest rates and prepayment rates
of the Company's assets; (v) increased competition in the financial services
sector and the inability to attract new customers; (vi) changes in technology
and the ability to develop and maintain secure and reliable electronic systems;
(vii) the loss of key executives or employees; (viii) changes in consumer
spending; (ix) unexpected results of acquisitions; (x) unexpected outcomes of
existing or new litigation involving the Company; and (xi) changes in accounting
policies and practices. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements. Additional information concerning the Company and its business,
including additional factors that could materially affect the Company's
financial results, is included in the Company's filings with the Securities and
Exchange Commission.
ITEM 3. CONTROLS AND PROCEDURES
Based upon an evaluation within the 90 days prior to the filing date of this
report, the Company's Chief Executive Officer and Chief Accounting Officer
concluded that the Company's disclosure controls and procedures are effective.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect the Company's internal controls
subsequent to the date of the evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
15
SCHEDULE 1
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
AVERAGE BALANCE SHEETS
For Three Months Ended For Year Ended
March 31, 2003 December 31, 2002
------------- -----------------
Cash and Due From Banks $ 2,021,084 $ 2,096,129
Federal Funds Sold 45,556 230,959
Investment Securities (Taxable) 1,747,045 3,027,752
Loans:
Commercial 30,526,162 35,246,287
Commercial Real Estate 82,732,036 70,416,856
Residential Real Estate 46,365,474 30,884,950
Industrial Revenue Bonds 1,101,133 1,153,572
Leases 539,049 757,498
Installment and Consumer 311,891 302,830
------------- -------------
Total Loans 161,575,745 138,761,993
Less: Allowance for Loan Losses (1,998,849) (2,016,798)
------------- -------------
Net Loans 159,576,896 136,745,195
Fixed Assets 2,531,101 564,068
Other Assets 4,513,301 2,816,959
------------- -------------
Total Assets $ 170,434,983 $ 145,481,062
============= =============
Demand Deposits $ 8,342,277 $ 6,859,043
Interest Bearing Deposits
NOW 3,162,947 2,003,988
Money Market 33,907,689 42,388,186
Time Deposits 88,651,983 73,501,313
------------- -------------
Total Deposits 134,064,896 124,752,530
Federal Funds Purchased 3,644,611 2,195,301
Other Borrowings 20,365,000 7,369,042
Other Liabilities 1,541,518 1,422,930
------------- -------------
Total Liabilities 159,616,025 135,739,803
Equity Capital 10,818,958 9,741,259
------------- -------------
Total Liabilities and Capital $ 170,434,983 $ 145,481,062
============= =============
16
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company
or its subsidiaries are 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
10 Indenture by and between InvestorsBancorp, Inc., and
Wilmington Trust Company, as Trustee dated April 10,
2003.
11 Statement Regarding Computation of Per Share Earnings
99.1 Chief Executive Officer Certification
99.2 Chief Accounting Officer Certification
(b) Reports on Form 8-K
A report on Form 8-K was filed on March 26, 2003, under Item
5, which reported the Company's participation in a private
offering of subordinated debt securities and the execution of
an agreement and plan of merger with a wholly-owned subsidiary
providing for a transaction which will have the effect of
causing the Company's stock to be de-registered from the
Securities and Exchange Act of 1934, as amended.
A report on Form 8-K was filed on May 2, 2003, under Item 12,
which reported the Company's financial results for the
quarterly period ended on March 31, 2003.
17
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)
Date: May 9, 2003 /s/ George R. Schonath
----------------------
George R. Schonath
Chief Executive Officer
Date: May 9, 2003 /s/ Susan J. Hauke
------------------
Susan J. Hauke
Vice President Finance and
Chief Accounting Officer
18
I, George R. Schonath, Chief Executive Officer of the Company, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
InvestorsBancorp, Inc.;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements
made, in light of the circumstances under which such
statements were made, not misleading with respect to the
period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in the Report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90
days prior to the filing date of this quarterly report
(the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the
equivalent function): (a) all significant deficiencies in
the design or operation of internal controls which could
adversely affect the registrant's ability to record,
process, summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and (b) any fraud,
whether or not material, that involves management or other
employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there
were significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to date of their evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.
Date: May 9, 2003 /s/ George R. Schonath
----------------------
George R. Schonath
Chief Executive Officer
19
I, Susan J. Hauke, Chief Accounting Officer of the Company, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
InvestorsBancorp, Inc.;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements
made, in light of the circumstances under which such
statements were made, not misleading with respect to the
period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in the Report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90
days prior to the filing date of this quarterly report
(the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the
equivalent function): (a) all significant deficiencies in
the design or operation of internal controls which could
adversely affect the registrant's ability to record,
process, summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and (b) any fraud,
whether or not material, that involves management or other
employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there
were significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to date of their evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.
Date: May 9, 2003 /s/ Susan J. Hauke
------------------
Susan J. Hauke
Vice President Finance and
Chief Accounting Officer
20
EXHIBIT INDEX
-------------
Exhibit No. Description
10 Indenture by and between InvestorsBancorp, Inc., and
Wilmington Trust Company, as Trustee dated April 10,
2003.
11 Statement Regarding Computation of Per Share Earnings
99.1 Chief Executive Officer Certification
99.2 Chief Accounting Officer Certification
21