<PAGE>
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 Quarter Ended March 31, 1998
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 0-21687
IFB HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 43-1760023
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
522 Washington Street, Chillicothe, Missouri 64601
- ---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (660) 646-3733
--------------
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 ( )
Indicate the number of shares outstanding of each of the issuer's common stock
as of the latest practicable date.
Class Outstanding at March 31, 1998
- ----------------------------- -----------------------------
Common stock, $01 par value 592,523
<PAGE>
IFB HOLDINGS, INC.
FORM 10-QSB
Index
Part I. Financial Information
- --------------------------------
Item 1 Financial Statements Page
-----
Consolidated Statements of Financial Condition as of
March 31, 1998 (Unaudited) and June 30, 1997................... 2
Consolidated Statements of Income for the Three Months
and Nine Months ended March 31, 1998 and 1997 (Unaudited)...... 3
Consolidated Statements of Changes in Stockholders' Equity
for the Nine Months ended March 31, 1998 (Unaudited)........... 4
Consolidated Statements of Cash Flows for the Nine Months
ended March 31, 1998 and 1997 (Unaudited)...................... 5
Notes to Unaudited Consolidated Financial Statements........... 7
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 10
Part II. Other Information
- ----------------------------------------------
Item 1 Legal Proceedings.............................................. 16
Item 2 Changes in Securities.......................................... 16
Item 3 Default 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
Signature Page........................................................... 17
<PAGE>
IFB HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
At At
March 31, June 30,
1998 1997
----------- --------
(Unaudited)
(In Thousands)
<S> <C> <C>
ASSETS
Cash on hand and noninterest-earning deposits $ 552 $ 581
Interest-earning deposits in other institutions 1,938 2,422
Investment securities:
Securities available-for-sale at fair value 5,493 4,760
Securities held-to-maturity at amortized cost 715 2,209
Mortgage-backed and related securities
available-for-sale, at fair value 26,391 18,501
Loans receivable, net 34,193 29,962
Accrued interest receivable 573 446
Investment required by law:
FHLB and FRB stock, at cost 1,410 897
Premises and equipment 424 357
Other assets 68 85
------- -------
Total assets $71,757 $60,220
======= =======
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
Deposits $35,593 $34,980
Federal Home Loan Bank advances 26,504 16,265
Advances from borrowers for taxes and insurance 16 33
Income taxes payable 267 144
Accrued expenses and other liabilities 191 157
------- -------
Total liabilities 62,571 51,579
------- -------
Preferred stock, $.01 par value;
authorized 100,000 shares; none outstanding - -
Common stock, $.01 par value; authorized 900,000
shares, issued 592,523 shares at March 31, 1998
and June 30, 1997 59 59
Additional paid-in capital 5,493 5,477
Retained earnings, substantially restricted 3,911 3,559
Less:
Common stock acquired by the ESOP (386) (421)
Unrealized gain (loss) on securities
available-for-sale, net of applicable
deferred income taxes 109 (33)
------- -------
Total stockholders' equity 9,186 8,641
------- -------
Total liabilities and stockholders' equity $71,757 $60,220
======= =======
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements
2
<PAGE>
IFB HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
----------- ----------
1998 1997 1998 1997
---- ---- ---- ----
(In thousands (In thousands
except share data) except share data)
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $ 710 $ 581 $ 2,040 $ 1,761
Investment securities 114 74 335 194
Mortgage-backed and
related securities 409 266 1,120 848
Other interest-earning
assets 18 40 44 71
-------- -------- -------- --------
Total interest income 1,251 961 3,539 2,874
-------- -------- -------- --------
Interest expense:
Deposits 400 393 1,200 1,217
FHLB Advances 359 163 948 560
-------- -------- -------- --------
Total interest expense 759 556 2,148 1,777
-------- -------- -------- --------
Net interest income 492 405 1,391 1,097
Provision for loan losses 2 - 66 -
-------- -------- -------- --------
Net interest income
after provision for
loan losses 490 405 1,325 1,097
-------- -------- -------- --------
Noninterest income:
Fees and service charges 49 49 158 159
Gain on sales of
mortgage-backed
securities - 5 43 14
Other 12 9 28 31
-------- -------- -------- --------
Total noninterest
income 61 63 229 204
-------- -------- -------- --------
Noninterest expense:
Compensation and benefits 178 167 515 493
Occupancy and equipment 31 26 83 79
SAIF deposit insurance
premiums 5 1 16 277
Other 69 62 228 167
-------- -------- -------- --------
Total noninterest
expense 283 256 842 1,016
-------- -------- -------- --------
Income (loss) before
income taxes 268 212 712 285
Income tax expense 105 82 285 112
-------- -------- -------- --------
Net income (loss) $ 163 $ 130 $ 427 $ 173
======== ======== ======== ========
Earnings per share:
Basic $.29 $.24 $.77 $.32
======== ======== ======== ========
Weighted average number of
shares outstanding:
Basic 552,665 547,333 551,480 547,333
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements
3
<PAGE>
IFB HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Unrealized
Gain (Loss)
Securities
Available-
For-Sale,
Net of
Common Applicable
Additional Stock Deferred
Common Paid-In Retained Acquired Income
Stock Capital Earnings by ESOP Taxes Total
------ ---------- -------- -------- ------ -----
(In thousands)
Nine Months Ended
- -----------------
March 31, 1998
- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1997 $ 59 $5,477 $3,559 $(421) $(33) $8,641
Additions (deductions) for
the nine months ended
March 31, 1998
Net income - - 427 - - 427
Dividends declared (75) (75)
Allocation of ESOP
shares - 16 - 35 - 51
Unrealized gain on
securities available-for-
sale, net of deferred
Income tax of $48,000 - - - - 142 142
---------- -------- -------- ------- ----- --------
Balance, March 31, 1998 $ 59 $5,493 $3,911 $(386) $109 $9,186
====== ====== ======= ====== ===== =======
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements
4
<PAGE>
IFB HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
---------
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) $ 427 $ 43
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Net loss (gain) on sale of investments (43) (9)
Depreciation 39 30
Provision for loan loss 66 -
Amortization of premiums and discounts and loan fees 4 24
ESOP expense 51 28
Changes in:
Decrease (increase) in interest receivable (127) 78
Decrease (increase) in other assets 17 31
Increase (decrease) in income tax payable 123 (36)
Increase (decrease) in other liabilities 32 40
------- ------
Net cash provided by operating activities 589 229
------- ------
Cash flow from investing activities:
Loans purchased (3,956) ( 626)
(Increase) decrease in loans, net (298) 342
Proceeds from sales of available-for-sale mortgage-backed
and related securities 2,311 1,857
Proceeds from sales of available-for-sale investment
securities 499 -
Proceeds from maturities of investment securities 2,999 -
Purchase of available-for-sale investment securities (2,601) (138)
Purchase of available-for-sale mortgage-backed
and related securities (13,523) (1,485)
Principal collected on repayments and maturities of
available-for-sale mortgage-backed and related securities 3,326 1,418
Purchase of FHLB and FRB stock (513) (50)
Purchase of equipment (106) (4)
------- ------
Net cash provided (used) by investing activities (11,862) 1,314
------- ------
Cash flows from financing activities:
Dividends paid (75) -
Net proceeds from issuance of common stock - 5,048
Net increase (decrease) in deposits 613 (1,073)
Net increase (decrease) in advances from
borrowers for taxes and insurance (17) (27)
Proceeds from FHLB advances 27,675 9,450
Principal payments on FHLB advances (17,436) (11,727)
------- ------
Net cash provided (used) by financing activities 10,760 1,671
------- ------
Increase (decrease) in cash and cash equivalents (513) 3,214
Cash and cash equivalents at beginning of period 3,003 2,080
------- ------
Cash and cash equivalents at end of period $2,490 $5,294
======= ======
</TABLE>
5
<PAGE>
IFB HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Supplemental cash flow disclosures:
Cash paid for:
Interest $1,177 $681
====== =====
Income Taxes $ 246 $ 72
====== =====
Noncash activity:
Loans transferred to real estate owned $ - $ -
====== =====
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements
6
<PAGE>
IFB HOLDINGS, INC. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Generally Accepted Accounting Principles
(GAAP) for interim financial information and with the instructions to
Form 10-QSB and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by GAAP for
complete financial statements. In the opinion of management, all
adjustments (consisting of only normal recurring accruals) necessary
for a fair presentation have been included. The results of operations
and other data for the three and nine month periods ended March 31,
1998 are not necessarily indicative of results that may be expected
for the entire fiscal year ending June 30, 1998.
The unaudited consolidated financial statements include the accounts
of IFB Holdings, Inc. (the "Holding Company") and its wholly-owned
subsidiary, Investors Federal Bank, National Association, (the
"Bank"), and the Bank's wholly-owned subsidiary, Investors Federal
Service Corporation for the nine months ended March 31, 1998. The
consolidated financial statements for the prior periods include
accounts of the Bank and its subsidiaries. Material intercompany
accounts and transactions have been eliminated in consolidation.
(2) Conversion to Stock Ownership and National Bank
The Board of Directors of the Bank, on September 23, 1996,
unanimously adopted a Plan of Conversion pursuant to which the Bank
converted from a federally chartered mutual savings bank to a
federally chartered stock savings bank, with the concurrent formation
of the Holding Company. The Holding Company, on December 30, 1996,
sold 592,523 shares of common stock at $10.00 per share during the
subscription offering. The proceeds from the conversion, after
recognizing conversion expenses and underwriting costs of
approximately $403,000, were $5,522,000 and are recorded as common
stock and additional paid in capital on the accompanying unaudited
consolidated statement of financial condition. The Holding Company
utilized approximately $2,762,000 of the net proceeds to purchase all
of the capital stock of the Bank.
On January 30, 1997, the Bank changed its charter from a federally
chartered savings bank to a national bank.
The Bank has established for eligible employees an Employee Stock
Ownership Plan ("ESOP") in connection with the conversion. The ESOP
borrowed $474,010 from the Holding Company and purchased 47,401 common
shares issued in the conversion. The Bank is making the scheduled
discretionary cash contributions to the ESOP sufficient to service the
amount borrowed. To date, the Bank has made payments of $132,750
($88,150 principal) to the Holding Company. The $385,860 ESOP
obligation ($474,010 in stock issued by the Holding Company on
December 30, 1996 less the principal payments made by the Bank) is
reflected in the accompanying consolidated financial statements as a
charge to unearned compensation and a credit to common stock and paid-
in capital. The unamortized balance of unearned compensation is shown
as a deduction of stockholders' equity. The unpaid balance of the
ESOP loan is eliminated in consolidation.
7
<PAGE>
(3) Earnings Per Share
Earnings per share (EPS) computations follow SFAS No. 128 which is
effective for financial statements issued for periods ending after
December 15, 1997. Basic EPS have been determined by dividing net
income for the period (numerator) by the weighted-average number of
common shares outstanding during the period (denominator). Weighted-
average common shares include allocated ESOP shares. Unallocated ESOP
shares are not used in basic EPS calculations.
(4) Commitments and Contingencies
Commitments to originate and purchase mortgage loans of $900,000 at
March 31, 1998, represent amounts which the Bank plans to fund within
the normal commitment period of thirty to ninety days. As of March
31, 1998, the Bank had no commitments to purchase mortgage-backed
securities, CMOs or investment securities. The Bank had no
commitments outstanding to sell mortgage loans, mortgage-backed
securities, CMOs or investment securities at March 31, 1998.
(5) Recent Accounting Developments
The Financial Accounting Standards Board (the "FASB") recently adopted
or issued proposals and guidelines which may have a significant impact
on the accounting practices of commercial enterprises in general and
financial institutions in particular.
SFAS No. 123, Accounting for Stock-Based Compensation, is effective
for fiscal years beginning after December 15, 1995. This statement
established financial accounting and reporting standards for stock-
based employee compensation plans, including stock option plans. These
plans include all arrangements by which employees receive shares of
stock or other equity investments of the employer or where an employer
incurs liabilities to employees in amounts based on the price of the
employer's stock. This statement also applies to transactions in which
an entity issues its equity instruments to acquire goods and services
from nonemployees.
SFAS No. 130, "Reporting Comprehensive Income," will be adopted July
1, 1998. This statement provides accounting and reporting standards to
report a measure of all changes in equity of an enterprise that result
from recognized transactions and economic events of the period. The
major component of comprehensive income for the Company will be
unrealized gains and losses on certain investments in debt and equity
securities.
Management has not determined the effect on the financial position or
the results of operations that adoption of SFAS 123 and 130 will have.
(6) Director and Employee Plans
The Company's Board of Directors has approved a stock option and
incentive plan and a recognition and retention plan (RRP) which were
approved by the Company's shareholders at the Annual meeting in
November, 1997.
Stock Option and Incentive Plan
-------------------------------
The plan will be implemented for the benefit of directors, officers
and employees of the
8
<PAGE>
Company and its affiliates. The maximum number of shares to be issued
from authorized but not currently outstanding shares under the plan is
59,252 or 10% of the total shares issued in the conversion. The
exercise price of the options shall not be less than the common stock
market value at the date the options are granted.
Recognition and Retention Plan
------------------------------
The RRP would award shares authorized but not currently outstanding to
directors and to employees in key management positions in order to
provide them with a proprietary interest in the Company in a manner
designed to encourage such employees to remain with the Company. The
maximum number of shares authorized under the plan is 23,700 or 4% of
the total shares issued in the conversion.
Under the terms of the stock option and incentive plan, the effective
date of the plan was January 1, 1998. The term of the plan would be
ten years. The future impact of the plan would be to increase (1) the
number of outstanding shares of common stock, and (2) compensation
expense, and decrease (1) net income per share, and (2) book value per
share. It is not possible to quantify the effect on the financial
position or results of operations from implementing the plan at this
time.
As of March 31, 1998, no stock options or RRP award shares had been
granted.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
IFB Holdings, Inc. was organized, as a Delaware corporation, in
October 1996 at the direction of the Bank's Board of Directors to acquire all of
the capital stock that the Bank issued upon its conversion from mutual to stock
form of ownership. The business of the Holding Company consists primarily of
the business of the Bank. There are no current arrangements, understandings or
agreements to expand its business activities or make any business acquisitions.
Investors Federal Bank, National Association was originally founded in
1934 as a federally chartered savings and loan association located in
Chillicothe, Missouri under the name Chillicothe Federal Savings and Loan
Association. In 1974, the Bank changed its name to Investors Federal Savings
and Loan Association, and in 1988 the Bank changed its name to Investors Federal
Bank and Savings Association. On December 30, 1996, the Bank completed a
conversion from mutual to stock ownership. On January 30, 1997, the Bank
changed its charter to a national bank charter and its name to Investors Federal
Bank, National Association. Its deposits are insured up to the maximum
allowable amount by the Federal Deposit Insurance Corporation (the "FDIC"). The
Bank serves Livingston, Caldwell, and Daviess Counties, Missouri. The Bank
conducts business through its main office and two branches located in Hamilton
and Gallatin, Missouri.
The Bank's business strategy is to operate as a well-capitalized,
profitable and independent community financial institution dedicated to home-
mortgage lending and to providing quality service to its customers. The Bank
intends to implement this strategy by (i) closely monitoring the needs of its
customers and providing quality service; (ii) maintaining asset quality; (iii)
utilizing investments in mortgage-backed securities and other investment
securities to invest excess funds and to increase net interest income; (iv)
maintaining capital in excess of the regulatory requirements; (v) attempting to
increase the Bank's earnings; and (vi) managing interest rate risk by
attempting to match asset and liability maturities and rates.
The earnings of the Bank depend primarily on its net interest income,
which is the difference between interest earned on its loans and investments and
the interest paid on its interest-bearing liabilities, consisting of deposits
and FHLB advances. The Bank, like other financial institutions, is subject to
interest-rate risk to the degree that its interest-earning assets mature or
reprice at different times, or on different bases, than its interest-bearing
liabilities. The Bank's operating results are also affected by the amount of
its noninterest income, including gain on the sales of investments, service
charges, and other income. Non-interest expense consists primarily of employee
compensation, occupancy expenses, FDIC insurance premiums and other general and
administrative expenses. The Bank's operating results are significantly
affected by general economic and competitive conditions, in particular, the
changes in market interest rates, government policies and actions by regulatory
authorities.
Capability of the Bank's Data Processing Hardware to Accommodate the Year 2000
Like many financial institutions, the Bank relies upon computers for
the daily conduct of its business and for data processing generally. There is
concern among industry experts that on January 1, 2000 computers will be unable
to "read" the new year and there may be widespread computer malfunctions. The
Bank has formed a Year 2000 Committee to initiate and implement the Year 2000
project, policies, document readiness of the Bank to accommodate Year 2000
processing and to track and test progress towards full compliance. The Bank is
in the process of ensuring that external vendors and servicers are adequately
addressing the system and software issues related to the Year 2000 by obtaining
written system certifications that the systems are fully Year 2000 compliant or
that the vendor has a plan to become fully compliant in the near future.
Beginning in the third quarter of 1998, the Bank will coordinate end-to-end
tests with primary vendors, which will allow the
10
<PAGE>
Bank to simulate daily processing on sensitive century dates. In the evaluation,
the Bank will ensure that critical operations will continue if vendors are
unable to achieve the Year 2000 requirements. The Bank does not expect costs to
make their computer system Year 2000 compliant to materially affect operations.
Liquidity and Capital Resources
The Company's most liquid assets are cash and cash equivalents, which
includes short-term investments. The levels of these assets are dependent on
the Bank's lending, investing, operating, and deposit activities during any
given period. At March 31, 1998 and June 30, 1997, cash and cash equivalents
totalled $2.5 million and $3 million, respectively.
The Bank's primary sources of funds are deposits, FHLB advances,
repayments on loans, the maturity of investment securities and income from
operations. While maturity and scheduled amortization of loans and investment
securities are predictable sources of funds, deposit inflows and mortgage
prepayments are greatly influenced by local conditions, general interest rates
and regulatory changes.
The primary investment activity of the Bank is the origination and
purchase of mortgage loans. Another investment activity of the Bank is the
investment of funds in U.S. agency bonds, mortgage-backed securities,
collateralized mortgage obligations and FHLB overnight funds. During periods
when the Bank's loan demand is limited, the Bank may purchase short-term
investment securities to obtain a higher yield than otherwise available.
At March 31, 1998, the Bank had outstanding loan commitments of
$900,000. The Bank anticipates it will have sufficient funds available to meet
its commitments. Certificates of deposit that were scheduled to mature in one
year or less at March 31, 1998 were $14.0 million. Management believes that a
significant portion of such deposits will remain with the Bank.
Under federal law, the Bank is required to meet certain leverage and
risk-based capital requirements. The leverage ratio requires a minimum ratio of
"Tier 1 capital" to adjusted total assets. At March 31, 1998, the Bank exceeded
both of the capital requirements. The Bank's capital ratios were: 9.09%
leverage capital and 22.09% risk-based capital. The Bank had "Tier 1 capital"
of $6.2 million at March 31, 1998 and risk-based capital of $6.5 million.
Financial Condition
Total assets increased $11.5 million, or 19.2%, to $71.7 million at
March 31, 1998 from $60.2 million at June 30, 1997. Mortgage-backed and related
securities increased $7.9 million, or 42.6%, from $18.5 million at June 30,
1997, to $26.4 million at March 31, 1998. Loans receivable increased $4.2
million, or 14.1%, from $30 million at June 30, 1997, to $34.2 million at March
31, 1998. FHLB and FRB stock increased $513,000, or 57.2%, from $897,000 at
June 30, 1997, to $1.4 million at March 31, 1998. The increases were funded
primarily from an increase in FHLB advances of $10.2 million, or 63%, from $16.3
million at June 30, 1997, to $26.5 million at March 31, 1998, which reflected
management's asset/liability strategy of seeking to earn the spread between the
yield earned on adjustable-rate earning assets and the rates paid on the FHLB
advances. In addition, investment securities decreased $761,000, from $7.0
million at June 30, 1997, to $6.2 million at March 31, 1998. Interest-earning
deposits in other institutions decreased $484,000, or 20%, from $2.4 million to
$1.9 million at March 31, 1998.
Total liabilities increased $10.9 million, or 21.3%, from $51.6
million at June 30, 1997, to $62.6 million at March 31, 1998. The increase was
primarily the result of the increases in FHLB advances and an increase in
deposits of $613,000, or 1.8% from $35 million at June 30, 1997, to $35.6
million at March 31, 1998.
11
<PAGE>
Total equity increased $545,000, or 6.3%, from $8.6 million at June
30, 1997 to $9.2 million at March 31, 1998. The increase was due primarily to
net income for the nine months ended March 31, 1998, of $427,000 and a decrease
in unrealized loss on securities available-for-sale, net of deferred income tax
of $142,000.
Asset Quality
The Bank regularly reviews interest earning assets to determine proper
valuation. Management's monitoring of the asset portfolio includes reviews of
historical loss experience, known and inherent risks in the portfolio, the value
of any underlying collateral, prospective economic conditions and the regulatory
environment. The Bank's non-accrual loans increased from $224,000 at June 30,
1997 to $248,000 at March 31, 1998.
The table on the following page sets forth information regarding the
Bank's non-accrual loans and foreclosed real estate at the dates indicated. The
Bank discontinues accruing interest on delinquent loans no later than ninety
days past due. At March 31, 1998, the Bank had no restructured loans within the
meaning of Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 15.
12
<PAGE>
IFB HOLDINGS, INC.
Asset Quality
March 31, June 30,
1998 1997
---- ----
(In thousands)
Non-accrual mortgage loans
delinquent more than 90 days $ 141 $ 203
Non-accrual other loans
delinquent more than 90 days 107 21
------- -------
Total non-performing loans $ 248 $ 224
Real estate owned and in-
substance foreclosed loans,
net of allowance 0 0
------- -------
Total non-performing assets $ 248 $ 224
======= =======
Non-performing loans to
total loans 0.72% 0.75%
==== ====
Non-performing assets to
total assets 0.35% 0.37%
==== ====
Allowance for loan losses
to non-performing loans 124.19% 127.23%
====== ======
13
<PAGE>
Results of Operations
Comparisons of quarterly results in this section are between the three
month periods ended March 31, 1998, and March 31, 1997 and between the nine
month periods then ended.
General
Net income for the third quarter ended March 31, 1998 was $163,000, an
increase of $33,000 from the $130,000 net income for the third quarter ended
March 31, 1997.
Net income for the nine months ended March 31, 1998, was $427,000, an increase
of $254,000, or 146.8% from the $173,000 net income for the comparable period
ended March 31, 1997.
Interest Income
Interest income for the third quarter ended March 31, 1998, was $1.3
million, an increase of $290,000, or 30.2%, compared to $961,000 for the
third quarter ended March 31, 1997. Interest income for the nine months ended
March 31, 1998, was $3.5 million, an increase of $665,000, or 23.1% as compared
to the nine months ended March 31, 1997. Interest on loans receivable increased
$129,000, or 22.2%, from $581,000 for the third quarter ended March 31, 1997, to
$710,000 for the same period ended March 31, 1998. Interest on loans receivable
increased $279,000, or 15.8%, from $1.8 million for the nine months ended March
31, 1997, to $2 million for the nine months ended March 31, 1998. Interest on
investment securities increased $40,000, or 54.1%, from $74,000 for the three
months ended March 31, 1997, to $114,000 for the three months ended March 31,
1998. Interest on investment securities increased $141,000 or 72.7%, from
$194,000 for the nine months ended March 31, 1997, to $335,000 for the nine
months ended March 31, 1998. Interest on mortgage-backed and related securities
increased $143,000, or 53.8%, from $266,000 for the quarter ended March 31,
1997, to $409,000 for the quarter ended March 31, 1998. Interest on mortgage-
backed and related securities increased $272,000, or 32.1%, from $848,000 for
the nine months ended March 31, 1997, to $1.1 million for the nine months ended
March 31, 1998. The increases are primarily the result of the increases in the
average balances of investment securities, mortgage-backed and related
securities, and loans receivable outstanding during the three and nine months
ended March 31, 1998, as compared to the three and nine months ended March 31,
1997.
Interest Expense
Interest expense for the third quarter ended March 31, 1998 was
$759,000 as compared to $556,000 for the quarter ended March 31, 1997, an
increase of $203,000, or 36.5%. Interest expense for the nine months ended March
31, 1998, was $2.1 million as compared to $1.8 million for the nine months ended
March 31, 1997, an increase of $371,000 or 20.9%. Interest on advances from
FHLB was $359,000 for the three months ended March 31, 1998, as compared to
$163,000 for the same period ended March 31, 1997, an increase of $196,000 or
120.2%. Interest on advances increased $388,000, or 69.3%, from $560,000 for
the nine months ended March 31, 1997 to $948,000 for the nine months ended March
31, 1998. The increase was due to an increase in the amount of advances
outstanding during the three month and nine month periods ended March 31, 1998,
as compared to the three and nine month periods ended March 31, 1997.
Interest on deposits remained fairly stable for the three and nine month periods
ended March 31, 1998, as compared to March 31, 1997.
Net Interest Income
Net interest income before provisions for loan losses was $492,000 for
the third quarter ended March 31, 1998, as compared to $405,000 for the third
quarter ended March 31, 1997, an increase of $87,000 or 21.5%. Net interest
income before provisions for loan losses was $1.4 million for the nine months
ended March 31, 1998, an increase of $294,000, or 26.8%, as compared to the $1.1
million for the nine months ended March 31, 1997.
14
<PAGE>
Provision for Loan Losses
The provision for loan losses increased $2,000 for the three months
ended March 31, 1998, as compared to the three months ended March 31, 1997. The
provision for loan losses increased $66,000 for the nine months ended March 31,
1998, compared to the nine months ended March 31, 1997.
Noninterest Income
There was little change in noninterest income for the quarter ended
March 31, 1998, compared to the quarter ended March 31, 1997. Noninterest
income was $229,000 for the nine months ended March 31, 1998, an increase of
$25,000, or 12.3%, compared to $204,000 for the nine months ended March 31,
1997. The increase was primarily due to an increase in gain on the sales of
mortgage-backed securities of $29,000, or 207% for the nine months ended March
31, 1998, as compared to the same period ended March 31, 1997.
Noninterest Expense
Noninterest expense was $283,000 for the third quarter ended March 31,
1998, an increase of $27,000, or 10.5%, compared to $256,000 for the third
quarter ended March 31, 1997. For the nine months ended March 31, 1998,
noninterest expense was $842,000 as compared to $1 million for the nine months
ended March 31, 1997, a decrease of $174,000, or 17.1%. The decrease was
largely due to a decrease of $261,000, or 94.2%, in the amount of SAIF deposit
insurance premiums incurred in the nine months ended March 31, 1998 as compared
to the nine months ended March 31, 1997. 0n September 30, 1996, the Bank
incurred a one time SAIF assessment of approximately $226,000. In addition,
other noninterest expense increased $61,000, or 36.5% from $167,000 for the
nine months ended March 31, 1997, to $228,000 for the nine months ended March
31, 1998. The increase in other expenses was primarily due to expenses
associated with the Company operating as a publicly owned stock institution. In
addition, during the second quarter, the Bank purchased an ATM and incurred
operational expenses that it did not have during the nine months ended March 31,
1997.
Income Tax
The provision for income taxes increased $23,000, from $82,000 for
the quarter ended March 31, 1997, to $105,000 for the quarter ended March 31,
1998. The provision for income taxes increased $173,000, or 154.5%, from
$112,000 for the nine months ended March 31, 1997, to $285,000 for the nine
months ended March 31, 1998. The increases were due to increases in income for
the periods.
15
<PAGE>
IFB HOLDINGS, INC.
Part II -- Other Information
Item 1 Legal Proceedings
The Holding Company and the Bank are not involved in any pending legal
proceedings other than legal proceedings incident to the business of
the Holding Company and the Bank, which involve amounts in the
aggregate which management believes are immaterial to the financial
condition and results of operations of the Holding Company and the
Bank.
Item 2 Changes in Securities
Not applicable.
Item 3 Default upon Senior Securities
Not applicable.
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) Exhibits; Statement re: Computation of Per Share Earnings-
Exhibit 11 Financial Data Schedule--Exhibit 27
(B) Reports on Form 8-K; No reports on Form 8-K have been filed during
the quarter for which this report is filed.
16
<PAGE>
IFB HOLDINGS, INC.
Signatures
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IFB Holdings, Inc.
-------------------------------
(Registrant)
Dated April 29, 1998 /s/ Earle S. Teegarden, Jr.
-------------------------------
Earle S. Teegarden, Jr.
President and Chief Executive
Officer
(Duly Authorized Officer)
Dated April 29, 1998 /s/ Sherri Williams
-------------------------------
Sherri Williams
Chief Accounting Officer
(Principal Financial Officer)
17
<PAGE>
Exhibit 11
Statement re: Computation of Per Share Earnings
Quarter Ended
Mar. 31, 1998
-------------
1. Net income $163,000
========
2. Weighted average common shares outstanding 552,665
========
3. Basic earnings per share $ 0.29
========
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<PAGE>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 552
<INT-BEARING-DEPOSITS> 1,938
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 31,793
<INVESTMENTS-CARRYING> 715
<INVESTMENTS-MARKET> 715
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<ALLOWANCE> 308
<TOTAL-ASSETS> 71,757
<DEPOSITS> 35,593
<SHORT-TERM> 16,917
<LIABILITIES-OTHER> 479
<LONG-TERM> 5,552
0
0
<COMMON> 59
<OTHER-SE> 9,127
<TOTAL-LIABILITIES-AND-EQUITY> 71,757
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<INTEREST-TOTAL> 3,539
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<INTEREST-INCOME-NET> 1,391
<LOAN-LOSSES> 66
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<EXPENSE-OTHER> 842
<INCOME-PRETAX> 712
<INCOME-PRE-EXTRAORDINARY> 712
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 427
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
<YIELD-ACTUAL> 7.42
<LOANS-NON> 248
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 306
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 308
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