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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, 2000
[ ] 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)
Ohio 31-1529973
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation of Organization)
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 [ X ] NO [ ]
As of March 31, 2000, there were 2,133,906 shares of the Registrant's Common
Stock outstanding.
Transitional Small Business Disclosure Format Yes No X
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GLB BANCORP, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Part I. Financial Information Page
<S> <C> <C>
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition as of March 31, 2000 3
(unaudited), December 31, 1999, and March 31, 1999 (unaudited)
Consolidated Statements of Earnings (unaudited) for the three months ended 4
March 31, 2000 and March 31, 1999
Consolidated Statements of Cash Flows (unaudited) for the
three months ended 5 March 31, 2000 and March 31, 1999
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition 7
and Results of Operations
Part II. Other Information 9
Signatures 10
</TABLE>
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GLB BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
Assets 2000 1999 1999
-------------------- ------------------- --------------------
<S> <C> <C> <C>
Cash and due from banks $4,175,575 $5,972,557 $4,484,180
Federal funds sold 13,012,250 14,506,895 21,506,167
-------------------- ------------------- --------------------
Total Cash and Cash Equivalents 17,187,825 20,479,452 25,990,347
Securities Available for Sale 3,629,048 3,732,250 3,236,915
Securities Held to Maturity 1,975,955 2,000,233 2,006,075
Loans, net of allowance for loan losses 91,546,882 87,412,502 67,436,716
Stock in Federal Home Loan Bank of Cincinnati, at cost 562,300 552,700 466,900
Premises and equipment, net 3,169,838 3,233,718 2,813,940
Intangibles, net 688,861 699,565 691,885
Other assets 1,138,396 963,256 819,778
-------------------- ------------------- --------------------
Total Assets $119,899,105 $119,073,676 $103,462,556
==================== =================== ====================
Liabilities and Shareholders' Equity
Liabilities
Non-interest bearing demand deposits $15,521,175 $16,526,276 $10,945,528
Interest bearing demand deposits 8,104,755 9,116,668 6,313,744
Savings accounts 45,124,072 41,940,268 37,777,272
Certificate of deposit accounts 14,111,251 14,561,451 14,756,908
-------------------- ------------------- --------------------
Total Deposits 82,861,253 82,144,663 69,793,452
Advances from the Federal Home Loan Bank 10,500,000 10,500,000 7,500,000
Accrued expenses and other liabilities 729,163 800,208 714,932
-------------------- ------------------- --------------------
Total Liabilities 94,090,416 93,444,871 78,008,384
-------------------- ------------------- --------------------
Shareholders' Equity
Common Stock, no par value,
10,000,000 shares authorized;
2,133,906 shares issued and outstanding 5,334,765 5,334,765 5,334,765
Additional Paid-In Capital 19,152,715 19,152,715 19,152,715
Retained Earnings 1,910,591 1,648,221 1,086,605
Accumulated Other Comprehensive Loss (589,382) (506,896) (119,913)
-------------------- ------------------- --------------------
Total Shareholders' Equity 25,808,689 25,628,805 25,454,172
-------------------- ------------------- --------------------
Total Liabilities and Shareholders' Equity $119,899,105 $119,073,676 $103,462,556
==================== =================== ====================
</TABLE>
See accompanying notes to financial statements.
3
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GLB BANCORP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
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<S> <C> <C>
Interest Income:
Loans $1,864,210 $1,326,597
Federal funds sold 190,471 296,137
Securities 75,521 56,222
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Total Interest Income 2,130,202 1,678,956
Interest Expense:
Deposits 627,398 544,637
FHLB Advances 169,755 126,407
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Total Interest Expense 797,153 671,044
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Net Interest Income 1,333,049 1,007,912
Provision for loan losses 45,000 30,000
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Net Interest Income After Provision 1,288,049 977,912
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Non-Interest Income:
Service charges on demand deposits 78,883 43,798
Loan fees 58,615 49,518
Other service charges and fees 45,449 33,912
Gain on sale of loans 5,952 8,846
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Total Non-Interest Income 188,899 136,074
Non-Interest Expense:
Compensation and related benefits 528,155 435,503
Office occupancy and equipment, net 235,921 168,844
Professional fees 30,697 27,002
Advertising 18,137 25,922
Amortization of intangibles 22,518 24,164
Ohio franchise tax 32,750 38,012
Data processing 59,814 40,233
Office supplies and printing 31,307 29,156
FDIC deposit insurance 4,057 1,732
Credit card processing 24,908 13,789
Year 2000 expenses 7,223 5,555
Other operating expenses 76,848 59,105
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Total Non-Interest Expenses 1,072,335 869,017
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Income Before Income Tax Expense 404,613 244,969
Federal and State Income Tax Expense 142,243 95,343
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Net Income $ 262,370 $ 149,626
========== ==========
Earnings per share basic and diluted $ 0.12 $ 0.07
========== ==========
</TABLE>
See accompanying notes to financial statements
4
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GLB BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net income $262,370 $149,626
Adjustments required to reconcile net income to net cash
Provided by operating activities:
Amortization of intangibles 22,518 24,164
Depreciation 75,060 61,775
Premium amortization and discount accretion, net (3,830) 1,667
Net deferred loan origination fees (14,418) (249)
Origination of loans held for sale (664,647) (1,484,809)
Proceeds from sale of loans held for sale 658,277 1,474,453
Gain on sale of loans (5,952) (8,846)
Provision for loan losses 45,000 30,000
Origination of mortgage servicing rights (11,814) (24,025)
Increase in other assets (130,724) (89,470)
Increase (decrease) in accrued expenses and other liabilities (71,045) 1,970
--------------- ---------------
Net cash provided by operating activities: 160,795 136,256
--------------- ---------------
Cash flows from investing activities:
Purchases of investment securities available for sale (23,700) (629,583)
Purchases of investment securities held to maturity (471,892) 0
Maturities and payments of securities held to maturity 500,000 0
Purchase of FHLB stock (9,600) (7,900)
Origination of loans, net of principal collected (4,152,640) (7,116,804)
Purchases of premises and equipment (11,180) (171,460)
--------------- ---------------
Net cash used in investing activities: (4,169,012) (7,925,747)
--------------- ---------------
Cash flows from financing activities:
Net increase in deposits 716,590 1,138,326
Cash payment for FHLB advances 0 (1,500,000)
--------------- ---------------
Net cash provided by (used in) financing activities: 716,590 (361,674)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents (3,291,627) (8,151,165)
Cash and cash equivalents at beginning of period 20,479,452 34,141,512
--------------- ---------------
Cash and cash equivalents at end of period $17,187,825 $25,990,347
=============== ===============
Supplemental disclosure of cash flow information:
Interest paid on deposits and borrowings $801,280 $662,856
Income taxes paid $90,000 $75,000
</TABLE>
See accompanying notes to financial statements
5
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GLB BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
GLB Bancorp, Inc. is a one-bank holding company that owns all of the outstanding
common stock of Great Lakes Bank (the Bank). The Corporation, a consolidation of
the holding company and the bank, 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 period ended March 31,
2000 are not necessarily indicative of the results to be expected for the year
ending December 31, 2000. The unaudited consolidated financial statements and
notes included herein should be read in conjunction with the audited
consolidated financial statements and notes for the year ended December 31,
1999, contained in the Corporation's 1999 Annual Report and the Corporation's
Form 10-KSB filed for December 31, 1999.
Note 2. EARNINGS PER SHARE
Basic and diluted earnings per share were computed based on 2,133,906 weighted
average number of shares outstanding for the three months ended March 31, 2000
and 1999, respectively.
Note 3. COMPREHENSIVE INCOME
The Corporation's comprehensive income for the three months ended March 31, 2000
and 1999 are as follows:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
2000 1999
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<S> <C> <C>
Net Income $262,370 $149,626
Other comprehensive income:
Change in unrealized loss on securities
available for sale, net of tax ( 82,486) ( 127,105)
---------------- ---------------
Comprehensive income $179,884 $22,521
</TABLE>
6
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GLB BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This report may contain certain "forward-looking statements". The Corporation
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
Corporation'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 Corporation's market area and the
country, loan delinquency 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.
STATEMENTS OF FINANCIAL CONDITION
The Corporation's total assets were $119,899,105 at March 31, 2000, compared to
$119,073,676 at December 31, 1999, an increase of 0.7%. Growth on the balance
sheet of the Corporation was slower than prior periods with loans increasing
4.7% during the first quarter and savings increasing 0.9%. The Bank, as well as
other financial institutions has been affected by the Federal Reserve Boards
actions to raise the Fed Fund rate twice this year. Although their actions may
be helpful in combating inflation, the customer seeking a loan may decide to
wait to borrow funds in-case lending rates decrease in the near future.
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 and other correspondent banking arrangements. The Corporation feels
it has adequate resources to fund it's required commitments as of March 31,
2000.
CAPITAL RESOURCES
Shareholders' equity was $25,808,689 at March 31, 2000 and $25,628,805 at
December 31, 1999. Net income for the three months ended March 31, 2000 of
$262,370 was offset by the change in unrealized gains on securities available
for sale of ($82,486), net of taxes, recorded as a component of accumulated
other comprehensive income.
RESULTS OF OPERATIONS
Net Income: The Corporation had net income of $262,370 for the three months
ended March 31, 2000, compared to $149,626 for the three months ended March 31,
1999 , an increase of 75.4%. Return on average assets (ROA) for the three months
ended March 31, 2000 was 0.88%, compared to 0.58% for the three months ended
March 31, 1999. Return on average equity (ROE) for the three months ended March
31, 2000 was 4.08%, compared to 2.34% for the three months ended March 31, 1999.
The Corporation expects ROA and ROE to reach a level closer to its peers when
its strategy to open offices county-wide has been completed. The Corporation
would have a larger customer base, which could increase profits at that time.
Interest Income: Interest income was $2,130,202 for the three months ended March
31, 2000, compared to $1,678,956 for the three months ended March 31, 1999, an
increase of 26.9%. Interest income increased largely due to an increase in loan
interest income with loan volume increasing 35.8% from March 31, 1999 to March
31, 2000. Naturally, Federal fund interest income decreased 35.7% with the Bank
using these types of funds to supplement deposit balances in funding the loan
volume.
Interest Expense: Interest expense was $797,153 for the three months ended March
31, 2000, compared to $671,044 for the three months ended March 31, 1999, an
increase of 18.8%. This increase was due primarily to an increase in deposits of
18.7% while the cost of funds decreased from 4.22% for the three months ended
March 31, 1999 to 4.16% for the three months ended March 31, 2000 as higher
interest bearing certificates rolled to lower rates. Additionally, borrowing
interest increased 34.3% with the Bank purchasing an FHLB bank advance for $3
million.
7
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Provision for Loan Losses: The provision for loan losses is based upon
management's assessment of relevant factors, including types and amounts of
non-performing loans, historical and anticipated loss experience on such types
of loans, current, and projected economic conditions. The provision for loan
losses was $45,000 for the three months ended March 31, 2000 compared to $30,000
for the three months ended March 31, 1999. Net chargeoffs for the three months
ended March 31, 2000 were $30,030 compared to $2,191 in net chargeoffs for the
three months ended March 31, 1999. The current quarter's chargeoffs are in the
consumer loan portfolio. Non-performing assets as a percent of total assets was
0.19% at March 31, 2000 compared to 0.03% at March 31, 1999. The increase is
largely due to an increase in non-performing commercial loans.
Non-Interest Income: Non-interest income was $188,899 for the three months ended
March 31, 2000 and $136,074 for the three months ended March 31, 1999, an
increase of 38.8%. The increase was largely due to an increase in checking
account balances and new volumes. These accounts generated an 80.1% increase in
service charges on DDA accounts, conversely producing a minimal amount of losses
and write-offs of DDA accounts which were expensed to other operating expenses
on the income statement.
Non-Interest Expense: Non-interest expense was $1,072,335 for the three months
ended March 31, 2000 and $869,017 for the three months ended March 31, 1999, an
increase of 23.4%. The largest components of non-interest expense are
compensation and related benefits, office occupancy, and data processing.
Compensation increased 21.3% with the normal annual pay increases and the
additional employees necessary to staff three more offices. Office occupancy
increased 39.7% with all the expenses necessary for the new offices opened last
year. Also, data processing increased 48.7% with new data transmission line
charges and additional service charges based on higher volumes of savings and
loan accounts. The costs from our on-line provider increase as the Bank's size
increases. The benefit to the customer is substantial in our market area since
our customers' bank activity updates to their accounts with in seconds, allowing
for accurate and timely account updating.
The effective tax rate for the three months ended March 31,2000 was 35.2%
compared to 38.9% for the three months ended March 31,1999.
ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and
Hedging Activities with an effective date for all fiscal quarters of fiscal
years beginning after June 15, 1999, which was amended by (SFAS) No. 137 which
changed the effective date to fiscal years beginning after June 15, 2000. This
Statement establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that an entity recognize
derivatives as either assets or liabilities at fair value with gains or losses
determined depending on the intended use of the derivative and it's resulting
designation. This Statement should not be applied retroactively to prior period
financial statements. At the present time, the Corporation does not feel there
will be an impact on the Corporation's consolidated financial statements as a
result of the adoption of SFAS No.133, as the Corporation does not currently
engage in derivative activities.
FUTURE DEVELOPMENTS
To date, the Corporation has successfully dealt with the Year 2000 date change.
The Corporation will continue to monitor all core business processes and mission
critical systems in order to identify and address any future problems.
Through March 31, 2000, the Corporation spent $7,223 with any additional costs
expected to be insignificant.
8
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GLB BANCORP, INC.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS-Not applicable
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS-Not Applicable
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES- Not Applicable
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS-Not Applicable
ITEM 5 - OTHER INFORMATION-Not Applicable
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-k
Exhibits
27 Financial Data Schedule
No report on Form 8-K was filed during the three months ended
March 31, 2000.
9
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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.
By: /s/ Richard T. Flenner, Jr. Date: May 9, 2000
---------------------------------------- ------------
Richard T. Flenner, Jr., President
Chief Executive Officer and Director
By: /s/ Cheryl J. Mihitsch Date: May 9, 2000
------------------------------------------ ------------
Cheryl J. Mihitsch
Principal Financial and Accounting Officer
10
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,172,560
<INT-BEARING-DEPOSITS> 3,015
<FED-FUNDS-SOLD> 13,012,250
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,629,048
<INVESTMENTS-CARRYING> 1,975,955
<INVESTMENTS-MARKET> 1,937,158
<LOANS> 91,546,882
<ALLOWANCE> 640,341
<TOTAL-ASSETS> 119,899,105
<DEPOSITS> 82,861,253
<SHORT-TERM> 10,500,000
<LIABILITIES-OTHER> 729,163
<LONG-TERM> 0
0
0
<COMMON> 5,334,765
<OTHER-SE> 20,473,924
<TOTAL-LIABILITIES-AND-EQUITY> 119,899,105
<INTEREST-LOAN> 1,864,210
<INTEREST-INVEST> 75,521
<INTEREST-OTHER> 190,471
<INTEREST-TOTAL> 2,130,202
<INTEREST-DEPOSIT> 627,398
<INTEREST-EXPENSE> 797,153
<INTEREST-INCOME-NET> 1,333,049
<LOAN-LOSSES> 45,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,072,335
<INCOME-PRETAX> 404,613
<INCOME-PRE-EXTRAORDINARY> 404,613
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 262,370
<EPS-BASIC> .12
<EPS-DILUTED> .12
<YIELD-ACTUAL> 7.72
<LOANS-NON> 142,111
<LOANS-PAST> 80,244
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 192,589
<ALLOWANCE-OPEN> 625,371
<CHARGE-OFFS> 32,070
<RECOVERIES> 2,041
<ALLOWANCE-CLOSE> 640,341
<ALLOWANCE-DOMESTIC> 640,341
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
