<PAGE> 1
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, 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: 0-29400
INVESTORSBANCORP, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1854234
--------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation)
W239 N1700 Busse Road
P.O. Box 190 53072-0190
Pewaukee, Wisconsin ----------
------------------- (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (414) 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 8, 1998, the Issuer had 1,000,000 shares of $0.01 par value Common
Stock issued and outstanding.
<PAGE> 2
INVESTORSBANCORP, INC.
FORM 10-QSB INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of March 31, 1998
(Unaudited) and December 31, 1997 .....................3
Consolidated Statement of Income - For the
Quarter Ended March 31, 1998 (Unaudited) ..............4
Consolidated Statement of Cash Flows - For the
Quarter Ended March 31, 1998 (Unaudited) ..............5
Notes to the Consolidated Financial Statements
(Unaudited)............................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................7-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.........................................14
Item 2. Changes in Securities.....................................14
Item 3. Defaults Upon Senior Securities...........................14
Item 4. Submission of Matters to a Vote of Security Holders.......14
Item 5. Other Information.........................................14
Item 6. Exhibits and Reports on Form 8-K..........................14
Signatures.......................................15
2
<PAGE> 3
INVESTORSBANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
<S> <C> <C>
ASSETS
Cash and due from banks $ 687,720 $ 1,248,803
Federal funds sold 6,742,000 4,544,000
------------- ------------
CASH AND CASH EQUIVALENTS 7,429,720 5,792,803
Trading securities 2,275,000 -
Loans, less allowance for loan losses of $184,755 and $96,060, 18,290,806 9,510,494
respectively
Fixed assets, net 121,884 124,159
Accrued interest and other assets 771,085 612,315
------------- ------------
TOTAL ASSETS $ 28,888,495 $ 16,039,771
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $ 1,265,066 $ 2,087,484
Interest bearing 20,364,596 6,774,156
------------- ------------
TOTAL DEPOSITS 21,629,662 8,861,640
Accrued interest payable and other liabilities 403,976 291,131
------------- ------------
TOTAL LIABILITIES 22,033,638 9,152,771
------------- ------------
SHAREHOLDERS' EQUITY
Preferred stock, $0.01 par value; shares authorized 1,000,000; - -
no shares issued and outstanding
Common stock, $0.01 par value; shares authorized 10,000 10,000
9,000,000; shares issued and outstanding 1,000,000
Additional paid in capital 6,979,900 6,979,900
Retained deficit (135,043) (102,900)
------------- ------------
TOTAL SHAREHOLDERS' EQUITY 6,854,857 6,887,000
------------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 28,888,495 $ 16,039,771
============= ============
</TABLE>
3
<PAGE> 4
INVESTORSBANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INTEREST INCOME:
Interest and fees on loans $ 408,186
Interest on trading securities 19,066
Interest on federal funds sold 79,931
-------------
TOTAL INTEREST INCOME 507,183
-------------
INTEREST EXPENSE - interest on deposits 197,782
-------------
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 309,401
PROVISION FOR LOAN LOSSES 88,695
-------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 220,706
-------------
OTHER OPERATING INCOME:
Service charges 2,287
Management service fee 190,452
Other income 1,921
-------------
TOTAL OTHER OPERATING INCOME 194,660
-------------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 348,364
Occupancy expenses 22,216
Equipment expenses 15,577
Other expenses 110,652
-------------
TOTAL OTHER OPERATING EXPENSES 496,809
-------------
LOSS BEFORE INCOME TAXES (81,443)
INCOME TAX BENEFIT 49,300
-------------
NET LOSS $ (32,143)
=============
Basic loss per share $ (0.03)
Diluted loss per share $ (0.03)
</TABLE>
4
<PAGE> 5
INVESTORSBANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR PERIOD ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (32,143)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation 6,320
Provision for loan loss 88,695
Amortization of organizational costs 12,183
Provision (benefit) for deferred taxes (49,300)
(Increase) decrease in assets:
Interest receivable (32,833)
Other assets (88,820)
Increase (decrease) in liabilities:
Accrued interest 63,373
Other liabilities 49,472
-------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 16,947
-------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of available for sale securities 3,775,000
Purchase of available for sale securities (6,050,000)
Purchases of furniture and equipment (4,045)
Net increase in loans (8,869,007)
-------------
NET CASH USED IN INVESTING ACTIVITIES (11,148,052)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 12,768,022
-------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 12,768,022
-------------
Net increase in cash and cash equivalents 1,636,917
Cash and cash equivalents, beginning of period 5,792,803
-------------
CASH AND DUE FROM BANKS, END OF PERIOD $ 7,429,720
=============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 134,408
Income taxes $ 50
</TABLE>
5
<PAGE> 6
INVESTORSBANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
NOTE 1: Organization
InvestorsBancorp, Inc. (the "Company") was incorporated under Wisconsin law on
June 12, 1996, to be the holding company of InvestorsBank, a Wisconsin state
bank located in Pewaukee, Wisconsin (the "Bank"). The Bank commenced business on
September 8, 1997.
NOTE 2: Accounting Policies
Basis of Presentation - The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management of the Company, all adjustments
necessary to present fairly the financial position as of March 31, 1998 and
December 31, 1997 and the results of operations and cash flows for the three
months ended March 31, 1998 have been made. Such adjustments consisted only of
normal recurring items. Operating results for the three months ended March 31,
1998 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997.
Principles of Consolidation - The consolidated financial statements as of and
for the period presented include the accounts of the Company and the Bank, its
wholly owned subsidiary. All significant intercompany accounts and transactions
have been eliminated in the consolidated financial statements.
NOTE 3: Comparative Data
The Company commenced banking operations on September 8, 1997; therefore,
comparative statements of income and cash flows for the prior periods are not
available.
6
<PAGE> 7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion provides additional analysis of the financial
statements and should be read in conjunction with this information. This
discussion focuses on significant factors which affected the Company's earnings
during the quarter ended March 31, 1998. As of March 31, 1998, the Bank was the
only subsidiary of the Company and its operations contributed all of the revenue
and expenses for the quarter.
RESULTS OF OPERATIONS
During the quarter ended March 31, 1998, the Company reported a net loss of
$32,143, or $0.03 per share (basic) due to the Company's early stage of
development.
NET INTEREST INCOME
Total interest income for the quarter was $507,183, which consisted of $408,186
of interest on loans and fees on loans, $79,931 of interest on federal funds
sold and $19,066 of interest on trading securities. Management anticipates that
interest income will continue to grow along with the loan portfolio and other
assets of the Company.
Interest expense on deposits for the quarter was $197,782, which will also
increase as deposits grow. Net interest income amounted to $309,401 for the
quarter ended March 31, 1998.
PROVISION FOR LOAN LOSSES
At March 31, 1998, the allowance for loan losses was $184,755; of which, $88,695
was charged against earnings in the quarter ended March 31, 1998. The allowance
for loan losses is established through a provision for loan losses charged to
expense. Loans are charged against the allowance for loan losses when management
believes that the collectibility of the principal is unlikely. The allowance is
an amount that management believes will be adequate to absorb possible losses on
existing loans that may become uncollectible, based on evaluation of the
collectibility of loans and prior loan loss experience. The evaluations take
into consideration such factors as changes in the nature and volume of the loan
portfolio, overall portfolio quality, review of specific problem loans, and
current economic conditions that may affect the borrower's ability to pay. While
management uses the best information available to make its evaluation, future
adjustments to the allowance may be necessary if there are significant changes
in economic conditions. Impaired loans are measured based on the present value
of expected future cash flows discounted at the loan's effective interest rate
or, as a practical expedient, at the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent. A loan is impaired
when it is probable the creditor will be unable to collect all contractual
principal and interest payments due in accordance with the terms of the loan
agreement.
There were no loan charge-offs or recoveries or any impaired loans for the
quarter ended March 31, 1998.
7
<PAGE> 8
NON-INTEREST INCOME AND EXPENSES
Other operating income for the quarter ended March 31, 1998 was $194,660. The
Bank services loans for Bando McGlocklin Capital Corporation ("BMCC"), which has
loans under management of $139,212,402 at March 31, 1998. Revenue relating to
services for BMCC was $190,452 for the quarter ended March 31, 1998. The Company
was spun-off from BMCC in September 1997 and continues to have common management
and substantially common shareholders.
Other operating expenses for the quarter ended March 31, 1998 were $496,809, and
consisted primarily of salaries and employee benefits and other operating
expenses, such as occupancy expenses, data processing, advertising, investor
communications, professional fees and directors fees. These operating expenses
include salaries that are reimbursed through the management services fee noted
above.
Amounts provided for income tax benefit are based on income reported for
financial statement purposes and do not necessarily represent amounts currently
payable under tax laws. Deferred income tax assets and liabilities are computed
quarterly for differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible amounts in the
future based on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes. The differences relate principally to operating loss
carryforwards that will be used to offset future net operating income.
For the quarter ended March 31, 1998 the Company recognized a $49,300 tax
benefit and has a deferred tax asset of $115,750 recorded as of March 31, 1998.
Management believes it is likely that the deferred tax asset will be realized.
The effective rate for the benefit for income taxes for the quarter ended March
31, 1998 was 60.67% which was primarily due to the effect of state income tax
benefit and tax exempt interest income.
FINANCIAL CONDITION
ASSETS
Total assets of the Company were $28,888,495 at March 31, 1998 and $16,039,771
at December 31, 1997, an 80% increase. Cash and due from banks was $687,720 and
federal funds sold with daily liquidity was $6,742,000 at March 31, 1998. At
December 31, 1997 the Company had cash and federal funds sold of $5,792,803.
During the quarter ended March 31, 1998 the Company began investing in variable
rate taxable 7-day put bonds backed with letters of credit from A1 rated
commercial banks. The Company had trading securities of $2,275,000 with daily
liquidity at March 31, 1998. The Company considers them liquid as they can be
put back at any time to the marketplace at par. Because the investment is
variable rate, the marked-to-market value equals par.
Loans at March 31, 1998 were $18,475,561, which included commercial and
residential loans. Loans increased $8,869,007 or 92% from December 31, 1997. The
allowance for loan losses was $184,755 or 1% of gross loans at March 31, 1998.
In addition to loans outstanding, the Company had unfunded loan commitments of
$5,711,630 as of March 31, 1998. Loan demand continued to be strong for both
commercial and residential loans. The Company's home equity line has been
8
<PAGE> 9
designed to be very competitive with those of other banks in the area.
Other assets at March 31, 1998 were $771,085 and at December 31, 1997 they were
$612,315. As of March 31, 1998 other assets consisted of organizational and
start up costs of $220,330, which are being amortized over a sixty-month period.
It also included an excess servicing asset of $204,667 relating to loans sold to
a third party, a receivable for $77,151 to a related company, a deferred tax
asset of $115,750, interest receivable of $91,967 and other assets of $61,220.
LIABILITIES
Deposits at March 31, 1998 were $21,629,662 compared to $8,861,640 at December
31, 1997, a 144% increase. The March 31, 1998 deposits consisted of $1,265,066
in non-interest bearing accounts and $20,364,596 in interest bearing accounts.
Other liabilities at March 31, 1998 were $403,976 and $291,131 at December 31,
1997. As of March 31, 1998 other liabilities consisted of a retained loan
discount on loans sold to third parties of $210,169. In addition, it included
participation principal and interest payments of $31,962, accrued expenses
payable of $64,357, accrued interest payable of $77,663 and other liabilities of
$19,825.
As of February 1, 1998, the Bank established a $3,000,000 revolving note with
one of its correspondent banks. At March 31, 1998, there was no outstanding
balance on the note.
CAPITAL RESOURCES
During 1997, the Company issued 1,000,000 shares of common stock at $7.00 per
share. The Company incurred $10,100 in stock issuance costs that were netted
against additional paid in capital.
The Federal Reserve Board (the "FRB") has established risk-based capital
guidelines that must be observed by bank holding companies and banks. Under
these guidelines, total qualifying capital is categorized into two components -
Tier I and Tier II capital. Tier I capital generally consists of common
shareholders' equity, perpetual preferred stock (subject to limitations) and
minority interest in subsidiaries. Subject to limitations, Tier II capital
includes certain other preferred stock and debentures, and a portion of the
reserve for loan losses. These ratios are expressed as a percentage of
risk-adjusted assets, which include various risk-weighted percentages of
off-balance sheet exposures, as well as assets on the balance sheet.
The Bank has committed to the FDIC that it will maintain a Tier I capital to
total assets ratio of not less than 8% for the first three years of operations
starting September 8, 1997.
9
<PAGE> 10
Capital ratios applicable to the Bank and the Company at March 31, 1998 and
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
TOTAL RISK- TIER I RISK-
BASED BASED LEVERAGE
CAPITAL CAPITAL RATIO
------- ------- -----
<S> <C> <C> <C>
Regulatory Capital Requirements:
Minimum 8.00% 4.00% 4.00%
Well-capitalized 10.00% 6.00% 5.00%
At March 31, 1998:
Bank 29.6% 28.8% 28.9%
Company 29.6% 28.8% 28.9%
At December 31, 1997:
Bank 64.9% 64.0% 55.8%
Company 64.9% 64.0% 55.8%
</TABLE>
The Company expects that its capital ratios will decline in the future as assets
grow; however, management intends to maintain its ratios at levels at or above
those established by regulatory agencies for well-capitalized institutions.
The applications for a bank charter and federal deposit insurance stated that
the Bank would retain its earnings during the first three years of operations.
As such, the Company will pay no dividends to the shareholders during that
period. The Company expects that all Company and Bank earnings, if any, will be
retained to finance the growth of the Company and the Bank and that no cash
dividends will be paid for the foreseeable future.
LIQUIDITY
The liquidity of a financial institution reflects its ability to provide funds
to meet loan requests, to accommodate possible outflows in deposits and to take
advantage of interest rate market opportunities. Funding of loan requests,
providing for liability outflows, and management of interest rate fluctuations
require continuous analysis in order to match the maturities of specific types
of categories of short-term loans and investments with specific types of
deposits and borrowings. Financial institution liquidity is thus normally
considered in terms of the nature and mix of the institution's sources and uses
of funds. As of March 31, 1998, the Company had $9,704,720 available to meet
future demand. Management believes that current liquidity levels are sufficient.
ASSET/LIABILITY MANAGEMENT
Closely related to liquidity management is the management of interest-earning
assets and interest-bearing liabilities. The Company manages its rate
sensitivity position to avoid wide swings in net interest margins and to
minimize risk due to changes in interest rates.
10
<PAGE> 11
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.
The Company does not expect to experience any significant fluctuations in its
net interest income as a consequence of changes in interest rates.
YEAR 2000
The federal banking regulators have issued several statements providing guidance
to financial institutions on the steps the regulators expect financial
institutions to take to become Year 2000 compliant. Each of the federal banking
regulators is also examining the financial institutions under its jurisdiction
to assess each institution's compliance with the outstanding guidance. If an
institution's progress in addressing the Year 2000 problem is deemed by its
primary federal regulator to be less than satisfactory, the institution will be
required to enter into a memorandum of understanding with the regulator which
will, among other things, require the institution to promptly develop and submit
an acceptable plan for becoming Year 2000 compliant and to provide periodic
reports describing the institution's progress in implementing the plan. Failure
to satisfactorily address the Year 2000 problem may also expose a financial
institution to other forms of enforcement action that its primary federal
regulator deems appropriate to address the deficiencies in the institution's
Year 2000 remediation program.
The Company utilizes and is dependent upon data processing systems and software
to conduct its business. The data processing systems and software include those
developed and maintained by the Company's data processing provider and purchased
software which is run on in-house computer networks. In 1997, the Company
initiated a review and assessment of all hardware and software to confirm that
it will function properly in the year 2000. The Company's data processing
provider and those vendors who have been contacted indicate that their hardware
and/or software will be Year 2000 compliant by the end of 1998. This will allow
time for compliance testing. Additionally, alarms, heating and cooling systems
and other computer-controlled mechanical devices on which the Company relies
have been evaluated. Those found not to be in compliance will be modified or
replaced with a compliant product. While there will be some expenses incurred
during the next two years, the Company has not identified any situations at this
time that will require material cost expenditures to become fully compliant. An
unknown element at this time is the impact of the Year 2000 on the Company's
borrowing customers and their ability to repay. The Company has initiated a
program to communicate with key bank customers to ensure they are properly
prepared for the year 2000 and will not suffer serious adverse consequences.
Nevertheless, if not properly addressed, Year 2000 related computer issues could
result in interruptions to the operations of the Bank and have a material
adverse effect on the Company's results of operations.
11
<PAGE> 12
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income," which
establishes standards for reporting of comprehensive income and its components.
This statement is effective for the Company for the year ending December 31,
1998. This statement requires that entities classify items of other
comprehensive income by their nature in a financial statement and display the
accumulated balance of other comprehensive income separately from retained
earnings and surplus in the equity section of a statement of financial
condition. Comprehensive income is comprised of net income and "other
comprehensive income." Other comprehensive income includes charges or credits to
equity that are not the result of transactions with the entities' shareholders.
Currently, no items of other comprehensive income result from activities of the
Company. The Company believes that in the future it will have items of other
comprehensive income as it begins to invest a portion of its funds in debt
securities classified as available for sale and the unrealized net gains and
losses are classified in stockholders' equity.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 "Disclosures about Segments of an
Enterprise and Related Information", ("SFAS No. 131") which establishes
standards for the way the Company reports information about its operating
segments in its annual report to shareholders and certain selected information
about its operating segments in interim reports to shareholders. The Company
believes it operates as a single reportable segment under the criteria
established by SFAS No. 131; accordingly, this new statement is not expected to
affect the way the Company currently reports its financial information. In
addition, SFAS No. 131 also requires certain additional disclosures on an
enterprise-wide basis primarily related to geographic information and revenue
from major customers. The Company does not believe that these enterprise-wide
disclosures will be applicable. This statement is effective for fiscal years
beginning after December 15, 1997.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains certain forward looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act. The Company intends such forward-looking statements to be covered
by the safe harbor provisions for forward-looking statements contained in the
Private Securities Reform Act of 1995, and is including this statement for
purposes of these safe harbor provisions. Forward-looking statements, which are
based on certain assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of the words
"believe," "expect," "intend," "anticipate," "estimate," "project," or similar
expressions. The Company's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. Factors which could have a
material adverse affect on the operations and future prospects of the Company
and the subsidiaries include, but are not limited to, changes in: interest
rates, general economic conditions guidelines, including the condition of the
local real estate market, legislative/regulatory changes, monetary and fiscal
policies of the U.S. Government, including policies of the U.S. Treasury and the
Federal Reserve Board, a the quality or composition of the
12
<PAGE> 13
loan or investment portfolios, demand for loan products, deposit flows,
competition, demand for financial services in the Company's market area and
accounting principles, policies. These risks and uncertainties should be
considered in evaluating forward-looking statements and undue reliance should
not be placed on such statements.
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY
AVERAGE BALANCE SHEET
<TABLE>
<CAPTION>
FOR QUARTER
ENDED
March 31, 1998
--------------
<S> <C>
Cash and due from banks $ 844,004
Federal Funds sold 6,092,178
Trading Securities 1,370,833
Loans:
Commercial 4,161,989
Real Estate Mortgages 5,410,123
Industrial Revenue Bonds 4,431,681
Installment and consumer 68,404
Less allowance for loan losses (131,722)
-----------
Net loans 13,940,475
Fixed assets 125,234
Other assets 658,721
-----------
Total assets $23,031,445
===========
Demand deposits $ 1,381,051
Interest bearing deposits
Checking 496,066
Money market 10,943,534
Time deposits 3,052,583
-----------
Total Deposits 15,873,234
Other liabilities 339,491
-----------
Total liabilities 16,212,725
Equity capital 6,818,720
-----------
Total liabilities and capital $23,031,445
===========
</TABLE>
13
<PAGE> 14
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Company or its subsidiary is a party.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
4 Stand-alone revolving note dated February 1,
1998 with Firstar Bank Milwaukee, N.A. and
InvestorsBank.
11 Statement Regarding Computation of Per Share
Earnings
27 Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company
during the quarter ended March 31, 1998.
14
<PAGE> 15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
INVESTORSBANCORP, INC.
(Registrant)
/s/
----------------------------------
Date: May 8, 1998 George R. Schonath
President
/s/
----------------------------------
Susan J. Hauke
Chief Accounting Officer
15
<PAGE> 1
[FIRSTAR LOGO]
FOR BANK USE ONLY Reviewed by
-----------------
Due
------------------------
Customer # Loan #
----------------- ------------
STAND-ALONE REVOLVING NOTE
$3,000,000 February 1, 1998
- ------------------ ----------------
FOR VALUE RECEIVED, the undersigned borrower (the "Borrower"),
promises to pay to the order of Firstar Bank Milwaukee, N.A. (the "Bank"), the
principal sum of Three Million and 00/100
Dollars ($3,000,000), payable February 1, 1999.
The Bank will make advances to the Borrower from time to time up to the
aggregate amount of $3,000,000. The Borrower may, prior to the maturity date
or termination as described below, borrow, repay and reborrow such amount from
the Bank.
1. INTEREST. The unpaid balance under this Note will bear interest at
a rate equal to the prime rate of interest announced by the Bank and in effect
from time to time, with the rate hereon changing as and when such prime rate
changes minus .75%.
2. PAYMENT SCHEDULE. Interest is payable monthly commencing on the
first day of the first month after the Borrower borrows any amount under this
Note, and continuing on the same day of each consecutive month thereafter.
Principal and all accrued interest is due and payable on February 1, 1999.
3. PAID-IN-FULL PERIOD. / / If checked here, all revolving loans
under this Note must be paid in full for a period of at least n/a consecutive
days during each fiscal year.
4. CLOSING FEE. / / If checked here, the Borrower will pay the Bank a
one-time closing fee of $ n/a contemporaneously with execution of this Note.
This fee is in addition to all other fees, expenses and other amounts due
hereunder.
5. LATE PAYMENT FEE. Subject to applicable law, if any payment is not
made on or before its due date, the Bank may collect a delinquency charge of 2%
of the unpaid amount. Collection of the late payment fee shall not be deemed
to be a waiver of the Bank's right to declare a default hereunder.
6. CALCULATION OF INTEREST. Interest will be computed for the actual
number of days principal is unpaid, using a daily factor obtained by dividing
the stated interest rate by 360.
7. DEFAULT INTEREST RATE. Principal amounts remaining unpaid after
the maturity thereof, whether at fixed maturity or by reason of acceleration of
maturity, shall bear interest from and after maturity until paid at a rate of
2% per annum plus the rate otherwise payable hereunder.
8. MAXIMUM RATE. In no event will the interest rate hereunder exceed
that permitted by applicable law. If any interest or other charge is finally
determined by a court of competent jurisdiction to exceed the maximum amount
permitted by law, the interest or charge shall be reduced to the maximum
permitted by law, and the Bank may credit any excess amount previously
collected against the balance due or refund the amount to the Borrower.
Page 1 of 4
<PAGE> 2
9. FINANCIAL INFORMATION. The Borrower will (i) maintain accounting
records in accordance with generally recognized and accepted principles of
accounting consistently applied throughout the accounting periods involved;
(ii) provide the Bank with such information concerning its business affairs and
financial condition (including insurance coverage) as the Bank may reasonably
request; and (iii) without request, provide the Bank with annual financial
statements prepared by an accounting firm acceptable to the Bank within 120
days of the end of each fiscal year.
10. CREDIT BALANCES; SETOFF. As additional security for the payment
of the obligations described in this Note or any document securing or related
to the loan evidenced by this Note (collectively the "Loan Documents"), and
any other obligations of the Borrower to the Bank of any nature whatsoever
(collectively the "Obligations"), the Borrower hereby grants to the Bank a
security interest in, a lien on and an express contractual right to set off
against all depository account balances, cash and any other property of the
Borrower now or hereafter in the possession of the Bank and the right to refuse
to allow withdrawals from any account (collectively "Setoff"). The Bank may,
at any time upon the occurrence of a default hereunder (notwithstanding any
notice requirements or grace/cure periods under this or other agreements
between the Borrower and the Bank) Setoff against the Obligations whether or
not the Obligations (including future installments) are then due or have been
accelerated, all without any advance or contemporaneous notice or demand of any
kind to the Borrower, such notice and demand being expressly waived.
11. ADVANCES AND PAYING PROCEDURE. The Bank is authorized and directed
to credit any of the Borrower's accounts with the Bank (or to the account the
Borrower designates in writing) for all loans made hereunder, and the Bank is
authorized to debit such account or any other account of the Borrower with the
Bank for the amount of any principal or interest due or other amount due
hereunder on the due date with respect thereto.
12. Defaults. Notwithstanding any cure periods described below, the
Borrower shall immediately notify the Bank in writing when the Borrower obtains
knowledge of the occurrence of any default specified below. Regardless of
whether the Borrower has given the required notice, the occurrence of one or
more of the following shall constitute a default.
(a) NONPAYMENT. The Borrower shall fail to pay (i) any interest due
on this Note or any fees, charges, costs, or expense under the
Loan Documents by 5 days after the same becomes due; or (ii) any
principal amount of this Note when due.
(b) NONPERFORMANCE. The Borrower or any guarantor of the
Borrower's Obligations to the Bank ("Guarantor") shall fail to
perform or observe any agreement, term, provision, condition, or
covenant (other than a default occurring under (a), (c), (d), (e),
(f) or (g) of this paragraph 12) required to be performed or
observed by the Borrower or any Guarantor hereunder or under any
other Loan Document or other agreement with or in favor of the
Bank.
(c) MISREPRESENTATION. Any financial information, statement,
certificate, representation or warranty given to the Bank by the
Borrower or any Guarantor (or any of their representatives) in
connection with entering into this Note or the other Loan
Documents and/or any borrowing thereunder, or required to be
furnished under the terms thereof, shall prove untrue or
misleading in any material respect (as determined by the Bank in
the exercise of its judgment) as of the time when given.
(d) DEFAULT ON OTHER OBLIGATIONS. The Borrower or any Guarantor
shall be in default under the terms of any loan agreement,
promissory note, lease, conditional sale contract or other
agreement, document or instrument evidencing, governing or
securing any indebtedness owing by the Borrower or any Guarantor
to the Bank or any indebtedness in excess of $10,000 owing by the
Borrower to any third party, and the period of grace, if any, to
cure said default shall have passed.
(e) JUDGMENTS. Any judgment shall be obtained against the
Borrower or any Guarantor which, together with all other
outstanding unsatisfied judgments against the Borrower (or such
Guarantor), shall exceed the sum of $10,000 and shall remain
unvacated, unbonded or unstayed for a period of 30 days following
the date of entry thereof.
(f) INABILITY TO PERFORM; BANKRUPTCY/INSOLVENCY. (i) the Borrower
or any Guarantor shall die or cease to exist; or (ii) any
Guarantor shall attempt to revoke any guaranty of the Obligations
described herein, or any guaranty becomes unenforceable in whole
or in part for any reason; or (iii) any bankruptcy, insolvency or
receivership proceedings, or an assignment for the benefit of
creditors, shall be commenced under any Federal or state law by or
against the Borrower or any Guarantor; or (iv) the Borrower or any
Guarantor shall become the subject of any out-of-court settlement
with its creditors; or (v) the Borrower or any Guarantor is unable
or admits in writing its inability to pay its debts as they
mature.
(g) ADVERSE CHANGE; INSECURITY. (i) there is a material adverse
change in the business, properties, financial condition or affairs
of the Borrower or any Guarantor, or in any collateral securing
the Obligations; (ii) the Bank in good faith deems itself
insecure.
13. TERMINATION OF LOANS; ADDITIONAL BANK RIGHTS. Upon the occurrence
of any of the events identified in paragraph 12, the Bank may at any time
(notwithstanding any notice requirement or grace/cure periods under this or
other agreements between the Borrower and the Bank) (i) immediately terminate
its obligation, if any, to make additional loans to the Borrower; (ii) Setoff;
and/or (iii) take such other steps to protect or preserve the Bank's interest in
any collateral, including without limitation, notifying account debtors to make
payments directly to the Bank, advancing funds to protect any collateral and
insuring collateral at the Borrower's expense; all without demand or notice of
any kind, all of which are hereby waived.
Page 2 of 4
<PAGE> 3
and 12(h)
14. ACCELERATION OF OBLIGATIONS. Upon the occurrence of any of the
events identified in paragraph 12(a) through 12(e) and 12(g), and the passage
of any applicable cure periods, the Bank may at any time thereafter, by written
notice to the Borrower, declare the unpaid principal balance of any
Obligations, together with the interest accrued thereon and other amounts
accrued hereunder and under the other Loan Documents, to be immediately due and
payable; and the unpaid balance shall thereupon be due and payable, all without
presentation, demand, protest or further notice of any kind, all of which are
hereby waived, and notwithstanding anything to the contrary contained herein or
in any of the other Loan Documents. Upon the occurrence of any event under
paragraph 12(f), the unpaid principal balance of any Obligations, together with
all interest accrued thereon and other amounts accrued hereunder and under the
other Loan Documents, shall thereupon be immediately due and payable, all
without presentation, demand, protest or notice of any kind, all of which are
hereby waived, and notwithstanding anything to the contrary contained herein or
in any of the other Loan Documents. Nothing contained in paragraph 12 or 13 or
this paragraph shall limit the Bank's right to Setoff as provided in this Note.
15. COLLATERAL. This Note is secured by any and all security
interests, pledges, mortgages or liens now or hereafter in existence granted to
the Bank to secure indebtedness of the Borrower to the Bank (unless prohibited
by law), including, without limitation, as described in the following
documents:______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
16. GUARANTIES. This Note is guaranteed by InvestorsBancorp, Inc. ___
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
17. RESTATED NOTE INFORMATION. / / If checked here, this Note is a
restatement of note(s) dated n/a, executed by the Borrower payable to
the order of the Bank in the original principal amount(s) of $ n/a and any
renewals or restatements prior to the date hereof.
18. ADDITIONAL BANK RIGHTS. Without affecting the liability of any
Borrower, endorser, surety or guarantor, the Bank may, without notice, renew or
extend the time for payment, accept partial payments, release or impair any
collateral security for the payment of this Note, or agree not to sue any party
liable on it.
19. WARRANTIES. The Borrower makes the following warranties: (A) If
the Borrower is a corporation or partnership, it is a validly existing
corporation or partnership (as applicable), in good standing under the laws of
its state of organization, and has all requisite power and authority, corporate
or otherwise, and possesses all licenses necessary, to conduct its business and
own its properties. (B) The execution, delivery and performance of this Note
and all other Loan Documents (i) are within the Borrower's power; (ii) have
been duly authorized by proper corporate or partnership action (as applicable);
(iii) do not require the approval of any governmental agency, and (iv) will not
violate any law, agreement or restriction by which the Borrower is bound. (C)
This Note and the other Loan Documents are the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance
with their terms.
20. WAIVERS; RELATIONSHIP TO OTHER DOCUMENTS. All Borrowers,
endorsers, sureties and guarantors waive presentment, protest, demand, and
notice of dishonor. The warranties, covenants and other obligations of the
Borrower (and rights and remedies of the Bank) in this Note and all related
documents are intended to be cumulative and to supplement each other.
21. EXPENSES AND ATTORNEYS' FEES. The Borrower will reimburse the
Bank and any participant in the Obligations ("Participant") for all attorneys'
fees and all other costs, fees and out-of-pocket disbursements (including fees
and disbursements of both inside counsel and outside counsel) incurred by the
Bank or any Participant in connection with the preparation, execution,
delivery, administration, defense and enforcement of this Note or any of the
other Loan Documents, including fees and costs related to any waivers or
amendments with respect thereto (examples of costs and fees include but are not
limited to fees and costs for: filing, perfecting or confirming the priority of
the Bank's lien, title searches or insurance, appraisals, environmental audits
and other reviews related to the Borrower, any collateral or the loans, if
requested by the Bank). The Borrower will also reimburse the Bank and any
Participant for all costs of collection before and after judgment, and the
costs of preservation and/or liquidation of any collateral (including fees and
disbursements of both inside and outside counsel).
22. APPLICABLE LAW AND JURISDICTION; INTERPRETATION; JOINT LIABILITY.
This Note and all other Loan Documents shall be governed by and interpreted in
accordance with the internal laws of the state where the Bank's main office is
located, except to the extent superseded by Federal law. Invalidity of any
provisions of this Note shall not affect any other provision. THE BORROWER
HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
SITUATED IN THE COUNTY OR FEDERAL JURISDICTION OF THE BANK'S LOCAL OFFICE, AND
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS,
CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS NOTE, THE COLLATERAL, ANY
OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT
AND/OR INTERPRETATION OF ANY OF THE FOREGOING. Nothing herein shall affect the
Banks's rights to serve process in any manner permitted by law, or limit the
Bank's right to bring proceedings against the Borrower in the competent courts
of any other jurisdiction or jurisdictions. This Note, the other Loan Documents
and any amendments hereto (regardless of when executed) will be deemed
effective and accepted only upon the Bank's receipt of the executed originals
thereof. If there is more than one Borrower, the liability of the Borrowers
shall be joint and several, and the reference to "Borrower" shall be deemed to
refer to all Borrowers.
Page 3 of 4
<PAGE> 4
23. COPIES; ENTIRE AGREEMENT; MODIFICATION. The Borrower hereby acknowledges
the receipt of a copy of this Note and all other Loan Documents.
IMPORTANT; READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS
OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY
ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN
AGREEMENT. THIS NOTICE SHALL ALSO BE EFFECTIVE WITH RESPECT TO ALL OTHER
CREDIT AGREEMENTS NOW IN EFFECT BETWEEN YOU AND THIS LENDER. A MODIFICATION OF
ANY OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN YOU AND THIS LENDER, WHICH
OCCURS AFTER RECEIPT BY YOU OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN
INSTRUMENT. ORAL OR IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT
ENFORCEABLE AND SHOULD NOT BE RELIED UPON.
24. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY JOINTLY AND
SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATING TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS THEREUNDER, ANY
COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR
CONNECTED THERETO. THE BORROWER AND THE BANK EACH REPRESENTS TO THE OTHER THAT
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
INVESTORBANK
------------------------------------------------
Borrower Name (Organization)
a Wisconsin state banking corporation
---------------------------------------------
By /s/ George Schonath
---------------------------------------------
Name and Title George Schonath, President
--------------------------------
By
----------------------------------------------
Name and Title
----------------------------------
Borrower Address:
------------------------------------------------------------
Borrower Telephone No.:
----------------------
Page 4 of 4
<PAGE> 5
RIDER
This Rider is made part of the Stand-Alone Revolving Note (the "NOTE")
by the undersigned borrower (the "BORROWER") in favor of Firstar Bank
Milwaukee, N.A. (the "BANK") as of the date identified below. The warranties,
covenants and other terms described below are hereby added to the Note.
1. The following is added at the end of Section 12:
(h) Regulatory Orders. The Borrower or any Guarantor enters
into any memorandum of understanding or other agreement
with any banking Regulatory Authority relating to any
unsound or unsafe banking practice or conduct or any
violation of law respecting the operation of Borrower or
Guarantor, or Borrower or Guarantor or any of their
officers, employees, or directors become the subject of a
judicial or administrative determination restraining any of
them from taking any actions of any kind in connection with
the business of Borrower or Guarantor, assessing a civil
penalty, finding that any criminal offense occurred in
connection with the operations of Borrower or Guarantor, or
suspending or removing any officer or director of Borrower
or Guarantor.
2. The following is added to Section 9 of the Note:
(iv) provide within 45 days of the end of each quarter, quarterly
call reports prepared on FFIEC forms, or any successors
thereto, of the Borrower prepared in accordance with the
guidelines of any Regulatory Authority that regulates the
Borrower; and
(v) promptly provide, after the furnishing thereof, copies of
any statement or report furnished to any other holder
of obligations of Borrower pursuant to the terms of any
indenture, loan or similar agreement and not otherwise
required to be furnished to the Bank pursuant to any clause
of this paragraph; and
(vi) promptly provide a statement of the chief financial
officer of the Borrower describing: (i) any event which,
either of itself or with the lapse of time or the giving of
notice or both, would constitute a default hereunder or under
any other material agreement to which the Borrower is a
party, together with a statement of the actions which the
Borrower proposes to take with respect thereto; and (ii) any
pending or threatened litigation or administrative
proceeding; and
(vii) promptly provide notice of any memorandum of understanding
or any other agreement with any banking regulatory
agencies, or cease and desist order, immediately after
entered into by or issued against Borrower; and
Date as of : February 1, 1998
--------------------------------.
INVESTORSBANK,
a Wisconsin state banking corporation
By: /s/ George Schonath
-----------------------------------------
Name and Title: George Schonath, President
-----------------------------
By:
-----------------------------------------
Name and Title:
-----------------------------
<PAGE> 1
EXHIBIT 11
INVESTORSBANCORP, INC. AND SUBSIDIARY
COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE
FOR PERIOD ENDED MARCH 31, 1998
(UNAUDITED)
A reconciliation of the income and shares used in computing the
basic and diluted loss per share for the quarter ended March 31,
1998 is as follows:
<TABLE>
<S> <C>
Net loss $ (32,143)
============
Determination of shares:
Weighted average common shares
outstanding (basic) 1,000,000
Assumed conversion of stock options 24,204
Weighted average common shares
outstanding (diluted) 1,024,204
============
Basic loss per common share $ (0.03)
============
Diluted loss per common share $ (0.03)
============
</TABLE>
16
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
INVESTORSBANCORP, INC. FINANCIAL STATEMENTS INCLUDED IN ITS FORM 10-Q
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 687,720
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,742,000
<TRADING-ASSETS> 2,275,000
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 18,475,561
<ALLOWANCE> 184,755
<TOTAL-ASSETS> 28,888,495
<DEPOSITS> 21,629,662
<SHORT-TERM> 0
<LIABILITIES-OTHER> 403,976
<LONG-TERM> 0
0
0
<COMMON> 6,989,900
<OTHER-SE> (135,043)
<TOTAL-LIABILITIES-AND-EQUITY> 28,888,495
<INTEREST-LOAN> 408,186
<INTEREST-INVEST> 98,997
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 507,183
<INTEREST-DEPOSIT> 197,782
<INTEREST-EXPENSE> 197,782
<INTEREST-INCOME-NET> 309,401
<LOAN-LOSSES> 88,695
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 496,809
<INCOME-PRETAX> (81,443)
<INCOME-PRE-EXTRAORDINARY> (32,143)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32,143)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
<YIELD-ACTUAL> 3.98
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 96,060
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 184,755
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 184,755
</TABLE>
