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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] 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 000-24255
GLB BANCORP INC.
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(Exact Name of Registrant as Specified in its Charter)
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Ohio 31-1529973
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(State or Other Jurisdiction of (I.R.S. Employer Identification No,)
Incorporation of Organization)
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7001 Center Street, Mentor , Ohio 44060
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(Address of Principal Executive Offices) (Zip Code)
(440) 974-0000
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(Registrant's Telephone Number, including Area Code)
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
requirements for the past 90 days. YES [ ] NO [X ]
As of June 3, 1998, there were 2,133,906 shares of the Registrant's Common Stock
outstanding.
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GLB BANCORP INC.
TABLE OF CONTENTS
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Part I. Financial Information Page
Item 1. Consolidated Financial Statements
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Consolidated Statements of Financial Condition 3
as of March 31, 1998 (unaudited) and
March 31, 1997 (unaudited)
Consolidated Statements of Income for the three months ended 4
March 31, 1998 (unaudited) and March 31, 1997(unaudited)
Consolidated Statements of Cash Flows for the three months 5
ended 5 March 31, 1998 (unaudited) and March 31,
1997(unaudited)
Notes to unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Conditions 7
and Results of Operations
Part II. Other Information 9
Signatures 11
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GLB BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In actual dollars, unaudited)
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<CAPTION>
March 31, 1998 March 31, 1997
Assets
<S> <C> <C>
Cash and due from banks $6,841,268 $2,373,082
Federal Funds sold 6,402,000 2,275,000
Total Cash and Cash Equivalents 13,243,268 4,648,082
Investment Securities 1,017,604 1,143,265
Loans, net of allowance for loan losses 54,653,607 41,734,952
Stock in Federal Home Loan Bank of Cincinnati,cost 435,300 405,300
Premises and equipment, net 2,864,691 2,595,569
Intangibles, net 527,444 557,233
Other assets 434,203 460,796
Total Assets $73,176,117 $51,545,197
============================ ==========================
Liabilities and Shareholder's Equity
Liabilities
Non-interest bearing demand deposits $12,834,520 $6,376,031
Interest bearing demand deposits 4,520,634 3,012,203
Savings accounts 29,776,480 22,749,230
Certificates 11,205,831 7,892,376
Total Deposits 58,337,465 40,029,840
Advances from the Federal Home Loan Bank 7,500,000 5,000,000
Accrued expenses and other liabilities 400,481 375,180
Total Liabilities 66,237,946 45,405,020
Shareholder's Equity
Common Stock, no par value,
10,000,000 shares authorized; 638,906 and
596,342 shares issued and outstanding 1,597,265 1,490,855
Additional paid-in capital 4,973,208 4,667,642
Accumulated earnings (deficit) 367,698 (18,320)
Total Shareholder's Equity 6,938,171 6,140,177
Total Liabilities and Shareholder's Equity $73,176,117 $51,545,197
============================ ==========================
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GLB BANCORP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In actual dollars, unaudited)
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Three Months Ended March 31,
1998 1997
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Interest Income:
Loans $1,140,840 $869,580
Federal funds sold 81,033 68,244
Investment securities 23,024 25,630
Total Interest Income 1,244,897 963,454
Interest Expense:
Deposits 452,524 327,963
FHLB advance 125,445 83,836
Total Interest Expense 577,969 411,799
Net Interest Income 666,928 551,655
Provision for loan losses 30,000 21,000
Net Interest Income After Provision 636,928 530,655
Non-Interest Income:
Service charges on demand deposits 33,908 31,702
Loan fees 36,108 52,779
Other service charges and fees 33,212 37,019
Gain/(loss) on sale of assets 52,391 0
Total Non-Interest Income 155,619 121,500
Non-Interest Expense:
Compensation and related benefits 303,601 284,274
Office occupancy and equipment, net 112,350 97,995
Professional fees 39,540 10,090
Advertising 15,358 15,283
Amortization of intangibles 27,179 21,741
Ohio franchise tax 25,434 21,750
Data processing 34,790 21,887
Office supplies and printing 16,733 14,609
FDIC deposit insurance 1,487 692
Other operating expense 47,253 63,964
Total Non-Interest Expense 623,725 552,285
Income Before Federal Income Tax 168,822 99,870
Federal Income Tax Expense (Benefit) 65,840 38,949
Net Income $102,982 $60,921
Earnings per share basic and diluted $.17 $.10
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GLB BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In actual dollars, unaudited)
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Three Months Ended March 31,
1998 1997
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Cash flows from operating activities:
Net income $102,982 $60,921
Adjustments required to reconcile net income to net
cash provided by operating activities:
Amortization of intangibles 27,179 21,741
Depreciation 45,669 38,680
Premium amortization and discount accretion, net 803 (881)
Net deferred loan origination fees 33,467 (59)
Loss on sale of securities 0 0
Gain on sale of loans (52,391) 0
Provision for loan losses 30,000 21,000
Gain on disposal of premises and equipment 0 0
Origination of mortgage servicing rights (22,700) 0
(Increase)/decrease in other assets 47,903 (88,063)
Increase/(decrease) in accrued expenses and other
liabilities (290,397) (370,375)
Net cash provided by operating activities: (77,485) (317,036)
Cash flows from investing activities:
Purchases of investment securities (999,107) (500,000)
Maturities and payments of investment securities 1,600,000 500,101
Proceeds from sales of investment securities 0 0
Proceeds from sale of loans 3,336,811 0
Purchase of FHLB stock (7,600) (6,800)
Origination of loans, net of principal collected (4,904,043) (3,122,222)
Purchases of premises and equipment (264,430) (52,554)
Disposals of premises and equipment 0 0
Net cash used in investing activities: (1,238,369) (3,181,475)
Cash flows from financing activities:
Cash proceeds from issuance of common stock 480,000 40,000
Payments for public offering expenses (73,024) 0
Net increase in deposits 6,325,549 (2,222,689)
Cash proceeds from FHLB advances 0 0
Net cash provided by financing activities 6,732,525 (2,182,689)
Net increase/(decrease) in cash and cash equivalents 5,416,671 (5,681,200)
Cash and cash equivalents at beginning of year 7,826,597 10,329,282
Cash and cash equivalents at end of year $13,243,268 $4,648,082
Supplemental disclosure of cash flow information
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GLB BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. BASIS OF PRESENTATION
GLB Bancorp, Inc. (the Corporation) is a one-bank holding company that owns all
of the outstanding common stock of Great Lakes Bank (the Bank). The Corporation
was incorporated under Ohio law in March 1997 with the reorganization of the
Bank completed in September 1997.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with 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. However, such information reflects
all adjustments (consisting solely of normal recurring adjustments) which are,
in the opinion of management, necessary for a fair statement of results for the
interim periods.
The results of operations and cash flows reported for the three months ended
March 31, 1998 are not necessarily indicative of the results to be expected for
the year ending December 31, 1998. The unaudited consolidated financial
statements and notes included herein should be read in conjunction with the
audited financial statements and notes for the year ending December 31, 1997,
contained in the Corporation's 1997 Annual Report and the Company's most recent
filing of it's registration statement on May 12, 1998.
Note 2 EARNINGS PER SHARE
Earnings per share is computed in accordance with Statement of Financial
Accounting Standards FAS 128. This calculation was based on 623,063 and 594,609
weighted average shares outstanding during the three month periods ended March
31, 1998 and 1997.
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GLB BANCORP, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
FORWARD-LOOKING STATEMENTS
This report may contain certain "forward-looking statements". The Company
desires to take advantage of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995 with respect to all forward- looking
statements. The words "believe", "expect", "anticipate", "estimate", "project",
and similar expressions are intended to identify forward-looking statements. The
Company's ability to predict the results or effect of future plans is inherently
uncertain. Factors which could affect actual results include interest rate
trends, the economic climate in the Company's market area and the country, loan
delinqency rates, and changes in federal and state regulations. These factors
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements.
FINANCIAL STATEMENTS
The Company's total assets were $73,176,117 at March 31, 1998, compared to
$51,545,197 at March 31, 1997, an increase of 41.9%. This increase was primarily
the result of an $18.3 million increase in deposits which were used to fund a
net increase of $12.9 million in loan growth. In addition $2.5 million was
borrowed from the Federal Home Loan Bank of Cincinnati. The remainder of the
funds were invested in federal funds sold.
LIQUIDITY
The maintenance of an adequate level of liquidity is necessary to ensure
sufficient funds are available to meet customer loan demand, deposit
withdrawals, and expenses. The primary sources of funds are deposits, principal
and interest payments on loans, proceeds of loan sales, federal funds, and FHLB
borrowings.
CAPITAL RESOURCES
Shareholder's equity was $6,938,171 at March 31, 1998 and $6,140,177 at March
31, 1997, an increase of $797,994 or 13.0%.. The increase is due partially to an
increase in net income and partially to stock sales before the Company went
public. The Company sold 18,800 shares for cash in a private offering concluded
in 1998. Of those 18,800 shares 400 were sold in late 1997 and therefore are
included in shares outstanding at December 31, 1997. Additionally, the Company
sold 23,764 shares privately in 1998 in exchange for property that will be used
for a new branch in 1998. Further, the Board of Directors authorized a 2 for 1
common stock split whereby one additional share of common stock was issued on
March 18, 1998 for every share owned of record as of March 17, 1998. This stock
split was retroactively restated in the financial statements.
RESULTS OF OPERATION
Net Interest Income: GLB BANCORP, INC. (the Company) had net income of $102,982
for the first quarter ended March 31, 1998, compared to $60,921 for the first
quarter ended March 31, 1997 which represented a 69.0% increase. The gain was
caused primarily by an increase in average earning assets of $14.2 million and
increase of non-interest income through gains on the sale of loans to the
Federal Home Loan Mortgage Corporation. These increases were offset by an
increase in average interest bearing liabilities of 5.5 million and increase in
non-interest expense.
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Interest Income: Interest income was $1,244,897 for the first quarter ended
March 31, 1998, compared to $963,454 for the first quarter ended March 31, 1997,
an increase of $281,443 or 29.2%. This increase was due primarily to the
increase in average loan balances resulting from increased loan demand.
Interest Expense: Interest expense was $577,969 for the first quarter ended
March 31, 1998, compared to $411,799 for the first quarter ended March 31, 1997,
an increase of $166,170 or 40.4%. This increase was due primarily to the
increase in average deposit balances and the increase in borrowed money from the
Federal Home Loan Bank of Cincinnati.
Provision for Loan Losses: The provision for loan losses is based upon
management's assessment of relevant factors, including types and amounts of
nonperforming loans, historical and anticipated loss experience on such types of
loans, and current and projected economic conditions. The provision for loan
losses was $30,000 for the first quarter ended March 31, 1998, compared to
$21,000 for the first quarter ended March 31, 1997. The increase in the
provision was principally a result of increased loan volume since net loan
chargeoffs remain nominal with $5,000 for the first quarter of 1998 and $2,000
for the first quarter of 1997. Additionally, non-performing assets as a
percentage of total assets were .21% at March 31, 1998 compared to .26% at
March 31, 1997.
Non-Interest Income: Non-interest income was $155,619 for the first quarter
ended March 31, 1998 and $121,500 for the first quarter ended March 31, 1997, an
increase of $34,119 or 28.1%. This increase was largely due to gain on sale of
loans while non-interest income in the March 31, 1997 quarter reflected a larger
than normal amount of fees collected on merchant credit cards.
Non-Interest Expense: Non-interest expense was $623,725 for the first quarter
ended March 31, 1998 and $552,285 for the first quarter of 1997, an increase of
$71,440 or 12.9%. The increase was a result of expenses related to the new
branch facility expected to be opened in the third quarter of 1998 and normal
first quarter merit raises.
ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board ("FASB") issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information" with an
effective date for years beginning after December 15, 1997. It redefines how
operating segments are determined and requires disclosure of certain financial
and descriptive information about the Company's operating segments. Additionally
requiring that comparative information from earlier periods be restated to
conform to the requirements of this standard. The adoption of this statement is
not expected to be material to the Company.
FUTURE DEVELOPMENTS
Year 2000 Problem: The Company is aware of the current concerns throughout the
business community of reliance upon computer software programs that do not
properly recognize the year 2000 in date formats, commonly referred to as the
"Year 2000 Problem". The Company's primary data processing function is
undertaken pursuant to a contract with an electronic data processing firm that
services banking institutions nationwide. Based upon ongoing discussions with
the Company's electronic data processing provider, the Company currently expects
that it's Year 2000 computer compliance will be achieved principally pursuant to
that contract. Also confirmations from other outside primary vendors that plans
have been developed or are in process by them to address this issue associated
with the Year 2000 Problem have been received. The Company does not expect the
Year 2000 Problem to materially affect the Company's financial condition or
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results of operation, and the Company likewise does not expect costs associated
with prevention or remediation of the Year 2000 Problem to be material.
GLB BANCORP, INC.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Not applicable
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
Proceeds from the public stock offering were $15.6 million at May 31,
1998 net of expenses with estimated additional proceeds from the over-allotment
option exercised by the underwriters, Roney Capital Markets yielding
approximately $2.3 million in June 1998. The Company intends to use the $17.9
net proceeds from the Offering, from time to time, to finance its growth
strategy, including (i) external growth through selected acquisitions of other
community banks (or other financial institutions) and / or branch offices and
(ii) internal growth through the expansion of its existing branch network by
opening new branches in selected communities. Prior to any such uses, the net
proceeds will be and are invested in high quality, short term, liquid
investments. In addition, the Company may contribute up to $1,500,000 of the net
proceeds to the Bank to support the Bank's lending activities. All of the
foregoing uses are, however, subject to change, and the Company's management
will have discretion to employ the net proceeds in any manner management deems
to be in the Company's best interest in light of the Company's business strategy
and banking industry and economic conditions generally.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES- Not Applicable
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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On February 17, 1998, the Company held its Annual Meeting of
Shareholders. Each of the eleven directors were elected to terms
expiring in 1999
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Jerome T. Osborne For: 241,510 Against: 0 Abstain: 0
Richard M. Osborne For: 241,510 Against: 0 Abstain: 0
Richard T. Flenner Jr. For: 241,510 Against: 0 Abstain: 0
James V. Fryan For: 241,510 Against: 0 Abstain: 0
George C. Lott For: 241,510 Against: 0 Abstain: 0
George X. Mechir For: 241,510 Against: 0 Abstain: 0
Marian Rose Nathan For: 241,510 Against: 0 Abstain: 0
Edward R. Pike For: 241,510 Against: 0 Abstain: 0
Thomas J. Smith For: 241,510 Against: 0 Abstain: 0
Joseph T. Svete For: 241,510 Against: 0 Abstain: 0
Thomas E. Wheeler For: 241,510 Against: 0 Abstain: 0
The Articles of Incorporation were amended for the purpose of increasing the number of authorized
shares of Common Stock, without par value, from 500,000 to 10,000,000 shares.
For: 240,510 Against: 600 Abstain: 400
The Articles of Incorporation were amended for the purpose of authorizing issuance of 2,000,000
shares of Serial Preferred Stock, without par value.
For: 241,110 Against: 200 Abstain: 200
The Company adopted a Stock Option and Incentive Plan to be completed in 1998.
For: 240,910 Against: 200 Abstain: 400
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Ratification of the selection of KPMG Peat Marwick LLP to serve as the
Company's independent auditors for the fiscal year ending December 31,
1998.
For: 241,510 Against: 0 Abstain: 0
ITEM 5 - OTHER INFORMATION-Not Applicable
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-k
Exhibits
3 i Articles of Incorporation and Code of Regulations filed as
exhibits to Form SB-2 (File No. 333-48387), is incorporated
herein by reference.
4 Not Applicable
10A Material Contract: Indenture of Lease dated March 1, 1998
between Richard M. Osborne, Trustee, and Great Lakes Bank, for
the new branch facility at 50 South Park Place,
Painesville,Ohio filed as an exhibit to Form SB-2 (File No.
333-48387), is incorporated herein by reference.
10B Material Contract: Indenture of Lease dated May 1, 1997
between Richard M. Osborne, Trustee, and Great Lakes Bank, for
the branch facility at 29933 Euclid Avenue, Wickliffe, Ohio
filed as an exhibit to Form SB-2 (File No. 333-48387), is
incorporated herein by reference.
10C Material Contract: Indenture of Lease dated March 1, 1998
between Great Lakes Bank and OsAir for the lease of certain
space in the Bank's main office facility at 7001 Center
Street, Mentor, Ohio filed as an exhibit to Form SB-2 (File
No. 333-48387), is incorporated herein by reference.
10D Material Contract: Federal Home Loan Bank of Cincinnati
Blanket Agreement for Advances and Security Agreement, dated
July 22, 1996 filed as an exhibit to Form SB-2 (File No. 333-
48387), is incorporated herein by reference.
11 Statement re computation of per-share earnings-Not Applicable
15 Letter re unaudited interim financial statements-Not
Applicable
18 Letter re change in accounting principles-Not Applicable
19 Report furnished to security holders-Not Applicable
22 Published report regarding matters submitted to vote of
security holders-Not Applicable
23 Consents of experts and council (excluding accountants)-Not
Applicable
24 Power of Attorney-Not Applicable
27 Financial Data Schedule
No report on Form 8-K was filed during the quarter ended March 31, 1998.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GLB BANCORP, INC.
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By: /s/ Richard T. Flenner, Jr. Date: June 26, 1998
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Richard T. Flenner, Jr., President
Chief Executive Officer and Director
By: /s/ Cheryl J. Mihitsch, Treasurer Date: June 26, 1998
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Cheryl J. Mihitsch
Principal Financial and Accounting Officer
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<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 6,841,268
<INT-BEARING-DEPOSITS> 16
<FED-FUNDS-SOLD> 6,402,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 1,017,604
<INVESTMENTS-MARKET> 1,018,750
<LOANS> 54,653,607
<ALLOWANCE> 427,288
<TOTAL-ASSETS> 73,176,117
<DEPOSITS> 58,337,465
<SHORT-TERM> 7,500,000
<LIABILITIES-OTHER> 400,481
<LONG-TERM> 0
0
0
<COMMON> 1,597,265
<OTHER-SE> 5,340,906
<TOTAL-LIABILITIES-AND-EQUITY> 73,176,117
<INTEREST-LOAN> 1,140,840
<INTEREST-INVEST> 23,024
<INTEREST-OTHER> 81,033
<INTEREST-TOTAL> 1,244,897
<INTEREST-DEPOSIT> 452,524
<INTEREST-EXPENSE> 577,969
<INTEREST-INCOME-NET> 666,928
<LOAN-LOSSES> 30,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 623,725
<INCOME-PRETAX> 168,822
<INCOME-PRE-EXTRAORDINARY> 168,822
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 102,982
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
<YIELD-ACTUAL> 8.13
<LOANS-NON> 82,490
<LOANS-PAST> 75,748
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 402,534
<CHARGE-OFFS> 8,014
<RECOVERIES> 2,768
<ALLOWANCE-CLOSE> 427,288
<ALLOWANCE-DOMESTIC> 427,288
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
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