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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 June 30, 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 June 30, 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
Part I. Financial Information Page
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition as of June 30, 2000 3
(unaudited), December 31, 1999, and June 30, 1999 (unaudited)
Consolidated Statements of Earnings (unaudited) for the three 4
months and six months ended June 30, 2000 and June 30, 1999
Consolidated Statements of Cash Flows (unaudited) for the 5
six months ended June 30, 2000 and June 30, 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
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GLB BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999 JUNE 30, 1999
Assets (UNAUDITED) (UNAUDITED)
-------------------- ---------------------- --------------------
<S> <C> <C> <C>
Cash and due from banks $5,970,831 $5,972,557 $6,789,363
Federal funds sold 11,773,987 14,506,895 22,548,160
-------------------- ---------------------- --------------------
Total Cash and Cash Equivalents 17,744,818 20,479,452 29,337,523
Securities Available for Sale 3,653,065 3,732,250 3,207,719
Securities Held to Maturity 1,983,135 2,000,233 2,004,384
Loans, net of allowance for loan losses 96,310,895 87,412,502 74,675,723
Stock in Federal Home Loan Bank of Cincinnati, at cost 572,600 552,700 533,500
Premises and equipment, net 3,168,108 3,233,718 3,108,350
Intangibles, net 686,793 699,565 708,394
Other assets 1,112,594 963,256 934,859
-------------------- ---------------------- --------------------
Total Assets $125,232,008 $119,073,676 $114,510,452
==================== ====================== ====================
Liabilities and Shareholders' Equity
Liabilities
Non-interest bearing demand deposits $17,454,470 $16,526,276 $16,193,021
Interest bearing demand deposits 9,487,485 9,116,668 8,815,192
Savings accounts 45,913,995 41,940,268 38,047,033
Certificate of deposit accounts 14,964,710 14,561,451 14,898,776
-------------------- ---------------------- --------------------
Total Deposits 87,820,660 82,144,663 77,954,022
Advances from the Federal Home Loan Bank 10,500,000 10,500,000 10,500,000
Accrued expenses and other liabilities 766,405 800,208 631,106
-------------------- ---------------------- --------------------
Total Liabilities 99,087,065 93,444,871 89,085,128
-------------------- ---------------------- --------------------
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 2,231,234 1,648,221 1,158,030
Accumulated Other Comprehensive Loss (573,771) (506,896) (220,186)
-------------------- ---------------------- --------------------
Total Shareholders' Equity 26,144,943 25,628,805 25,425,324
-------------------- ---------------------- --------------------
Total Liabilities and Shareholders' Equity $125,232,008 $119,073,676 $114,510,452
==================== ====================== ====================
</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 JUNE 30, SIX MONTHS ENDED JUNE 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Income:
Loans $1,968,161 $1,497,502 $3,832,371 $2,824,100
Federal funds sold 189,375 257,622 379,846 553,758
Securities 79,883 59,172 155,404 115,394
---------- ---------- ---------- ----------
Total Interest Income 2,237,419 1,814,296 4,367,621 3,493,252
Interest Expense:
Deposits 635,447 572,703 1,262,845 1,117,340
FHLB Advances 169,755 143,047 339,510 269,454
---------- ---------- ---------- ----------
Total Interest Expense 805,202 715,750 1,602,355 1,386,794
---------- ---------- ---------- ----------
Net Interest Income 1,432,217 1,098,546 2,765,266 2,106,458
Provision for loan losses 60,000 39,000 105,000 69,000
---------- ---------- ---------- ----------
Net Interest Income After Provision 1,372,217 1,059,546 2,660,266 2,037,458
---------- ---------- ---------- ----------
Non-Interest Income:
Service charges on demand deposits 82,070 48,907 160,953 92,706
Loan fees 75,307 64,058 133,922 113,576
Other service charges and fees 53,314 44,409 98,763 78,320
Gain on sale of loans 15,003 16,042 20,955 24,888
---------- ---------- ---------- ----------
Total Non-Interest Income 225,694 173,416 414,593 309,490
Non-Interest Expense:
Compensation and related benefits 513,614 450,562 1,041,769 886,065
Office occupancy and equipment, net 240,039 186,613 475,960 355,457
Professional fees 38,310 37,626 69,007 64,628
Advertising 32,232 23,028 50,369 48,950
Amortization of intangibles 26,074 25,024 48,592 49,188
Ohio franchise tax 31,500 38,250 64,250 76,262
Data processing 63,154 45,084 122,968 85,317
Office supplies and printing 47,735 48,241 79,042 77,397
FDIC deposit insurance 4,109 1,949 8,166 3,680
Credit card processing 27,613 19,173 51,521 32,963
Year 2000 expenses 0 11,945 7,223 17,499
Acquisition expenses 0 158,894 0 158,894
Other operating expenses 80,052 70,138 157,900 138,245
---------- ---------- ---------- ----------
Total Non-Interest Expenses 1,104,432 1,116,527 2,176,767 1,994,545
---------- ---------- ---------- ----------
Income Before Income Tax Expense 493,479 116,435 898,092 352,403
Federal and State Income Tax Expense 172,836 45,010 315,079 131,353
---------- ---------- ---------- ----------
Net Income $ 320,643 $ 71,425 $ 583,013 $ 221,050
========== ========== ========== ==========
Earnings per share basic and diluted $ 0.15 $ 0.03 $ 0.27 $ 0.10
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements
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GLB BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $583,013 $221,050
Adjustments required to reconcile net income to net cash
Provided by operating activities:
Amortization of intangibles 48,592 49,189
Depreciation 149,753 126,047
Premium amortization and discount accretion, net (11,010) 3,358
Net deferred loan origination fees (9,716) 25,210
Origination of loans held for sale (2,622,464) (3,965,951)
Proceeds from sale of loans held for sale 2,612,172 3,949,129
Gain on sale of loans (20,955) (24,888)
Provision for loan losses 105,000 69,000
Origination of mortgage servicing rights (35,820) (65,559)
Increase in other assets (113,328) (204,551)
Decrease in accrued expenses and other liabilities (33,803) (27,862)
---------- ----------
Net cash provided by operating activities: 651,434 154,172
---------- ----------
Cash flows from investing activities:
Purchases of investment securities available for sale (23,700) (754,653)
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 (19,900) (74,500)
Origination of loans, net of principal collected (8,962,430) (14,397,762)
Purchases of premises and equipment (84,143) (530,142)
---------- ----------
Net cash used in investing activities: (9,062,065) (15,757,057)
---------- ----------
Cash flows from financing activities:
Net increase in deposits 5,675,997 9,298,896
Cash payment for FHLB advances 0 1,500,000
---------- ----------
Net cash provided by financing activities: 5,675,997 10,798,896
---------- ----------
Net decrease in cash and cash equivalents (2,734,634) (4,803,989)
Cash and cash equivalents at beginning of period 20,479,452 34,141,512
---------- ----------
Cash and cash equivalents at end of period $17,744,818 $29,337,523
=========== ===========
Supplemental disclosure of cash flow information
Interest paid on deposits and borrowings $1,610,040 $1,378,872
Income taxes paid $280,000 $201,000
</TABLE>
See accompanying notes to financial statements
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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 June 30,
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 six months ended June 30, 2000 and
1999, respectively.
Note 3. COMPREHENSIVE INCOME
The Corporation's comprehensive income for the three months and six months ended
June 30, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JUNE 30,
2000 1999
--------------------- ---------------------
<S> <C> <C>
Net Income $320,643 $ 71,425
Other comprehensive income:
Change in unrealized loss on securities
available for sale, net of tax 15,611 ( 100,273)
--------------------- ---------------------
Comprehensive income/(loss) $336,254 ($ 28,848)
FOR THE SIX MONTHS ENDED JUNE 30,
2000 1999
--------------------- ---------------------
Net Income $583,013 $221,050
Other comprehensive income:
Change in unrealized loss on securities
available for sale, net of tax (66,875) ( 227,378)
--------------------- ---------------------
Comprehensive income/(loss) $516,138 ($ 6,328)
</TABLE>
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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 $125,232,008 at June 30, 2000, compared to
$119,073,676 at December 31, 1999, an increase of 5.2%. Growth on the balance
sheet of the Corporation was slower than prior periods with loans increasing
10.2% and deposits increasing 6.9% for the six months ended June 30, 2000
compared to loans increasing 23.8% and deposits increasing 13.5% for the six
months ended June 30, 1999. The Federal Reserve Bank Board's actions to raise
the Fed Funds rate five times since the beginning of the year has definitely
slowed the economy. Decreasing loan volume has been characterized by commercial
loan customers advancing from the stage of shopping for loan rates to
transacting fewer loans due to customers deciding to wait to purchase homes.
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 its required commitments as of June 30, 2000.
CAPITAL RESOURCES
Shareholders' equity was $26,144,943 at June 30, 2000 and $25,628,805 at
December 31, 1999. Net income for the six months ended June 30, 2000 of $583,013
was offset by the change in unrealized losses on securities available for sale
of $66,875, net of taxes, recorded as a component of accumulated other
comprehensive loss.
RESULTS OF OPERATIONS
Net Income: The Corporation had net income of $320,643 for the three months
ended June 30, 2000, compared to $71,425 for the three months ended June 30,
1999 , an increase of 348.9%. The Corporation had net income of $583,013 for the
six months ended June 30, 2000, compared to $221,050 for the six months ended
June 30, 1999, an increase of 163.7%.Return on average assets (ROA) for the six
months ended June 30, 2000 was 0.96%, compared to 0.42% for the six months ended
June 30, 1999. Return on average equity (ROE) for the six months ended June 30,
2000 was 4.49%, compared to 1.73% for the six months ended June 30, 1999. ROA
and ROE have increased partially due to the prior year results including
$158,894 in acquisition expenses.
Interest Income: Interest income was $2,237,419 for the three months ended June
30, 2000, compared to $1,814,296 for the three months ended June 30, 1999, an
increase of 23.3%. Interest income was $4,367,621 for the six months ended June
30, 2000, compared to $3,493,252 for the six months ended June 30, 1999, an
increase of 25.0%. Interest income increased largely due to new loan volume and
increases in rates on loans using the index, prime. The Bank currently has $15.7
million in loans tied to prime which would have adjusted upward with each of the
fed fund rate increases. Since the growth in deposits has been 3.3% lower than
loans, Fed Fund income has decreased 31.4% with the Bank using Fed Funds to fund
loans and operations.
Interest Expense: Interest expense was $805,202 for the three months ended June
30, 2000, compared to $715,750 for the three months ended June 30, 1999, an
increase of 12.5%. Interest expense was $1,602,355 for the six months ended June
30, 2000, compared to $1,386,794 for the six months ended June 30, 1999, an
increase of 15.5%. This increase was due to normal fluctuations in existing
account balances and the continued opening of new deposit accounts with current
and new customers. The staff at Great Lakes Bank has opened over 2,500 new
accounts in the last six months. Interest expense also increased due to an
additional FHLB advance
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of $3 million purchased in May 1999 with one month of expense in the prior
period compared to six months in the current period. The Bank typically does not
borrow funds, instead it tries to match its loan and deposit growth as much as
is possible in today's market.
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 $60,000 for the three months ended June 30, 2000 compared to $39,000
for the three months ended June 30, 1999. The provision for loan losses was
$105,000 for the six months ended June 30, 2000 compared to $69,000 for the six
months ended June 30, 1999. The increase in the provision for loan losses was
principally a result of increased loan volume. Net charge-offs for the three
months ended June 30, 2000 were $4,273 compared to $3,674 in net charge-offs for
the three months ended June 30, 1999. Net charge-offs for the six months ended
June 30, 2000 were $34,303 compared to $5,865 in net charge-offs for the six
months ended June 30, 1999. The increase in net charge-offs for the six months
ended June 30, 2000 is largely due to one customer in our consumer loan
portfolio. The non-performing assets as a percent of total assets was 0.05% at
June 30, 2000 compared to 0.11% at June 30, 1999.
Non-Interest Income: Non-interest income was $225,694 for the three months ended
June 30, 2000 and $173,416 for the three months ended June 30, 1999, an increase
of 30.1%. Non-interest income was $414,593 for the six months ended June 30,
2000 and $309,490 for the six months ended June 30, 1999, an increase of 34.0%.
The increase was largely due to collection of overdraft charges which increased
with more accounts being opened. In a rising rate environment, customers began
to experience increased difficulty in paying their bills, generating for the
Bank a 73.6% increase in service charges on the demand deposit accounts. Other
service charges and fees increased 26.1% with the Bank placing a higher emphasis
on collection of fees already in place from the customer. Also, in August 1999
the Bank raised its ATM non-customer service charges from 75cents to 95 cents
with the six months ended June 30, 2000 having the full effect of that change.
Non-Interest Expense: Non-interest expense was $1,104,432 for the three months
ended June 30, 2000 and $1,116,527 for the three months ended June 30, 1999, a
decrease of 1.1%. Non-interest expense was $2,176,767 for the six months ended
June 30, 2000 and $1,994,545 for the six months ended June 30, 1999, an increase
of 9.1%. The largest components of non-interest expense are office occupancy,
data processing, and credit card processing. For the six months ended June 30,
2000 compared to the six months ended June 30, 1999, office occupancy increased
33.9%, data processing increased 44.1%, and credit card processing increased
59.3%. At June 30, 2000, the Bank had six full months of rental expense for the
three offices opened last year and two months of additional expense for the new
office in Madison, Ohio (which has an anticipated opening date of August 2000).
Also in 1999, the Bank was offsetting its occupancy expenses with rental income
received for leased office space at a rate of $5,000 per month. The Bank decided
to discontinue the lease to allow its operations to expand. Also, data
processing increased with new data transmission line charges for the new offices
opened and additional service charges based on higher volumes of savings and
loan accounts. Credit card processing increased with the Bank focusing branch
customer sales on merchant credit card processing. Additionally during the six
months ended June 30, 1999, the Bank had expensed acquisition costs totaling
$158,894.
The effective tax rate for the six months ended June 30,2000 was 35.1% compared
to 37.3% for the six months ended June 30,1999.
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 its 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.
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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
On April 18, 2000, the Company held its Annual Meeting of Shareholders.
Each of the eleven directors were elected to serve as directors until
the 2001 Annual Meeting of Shareholders.
James A Brown For: 1,947,251 Against:0 Abstain:27,750
Richard T. Flenner Jr. For: 1,945,751 Against:0 Abstain:29,250
James V. Fryan For: 1,947,251 Against:0 Abstain:27,750
George C. Lott For: 1,945,251 Against:0 Abstain:29,750
George X. Mechir For: 1,945,251 Against:0 Abstain:29,750
Jerome T. Osborne For: 1,908,251 Against:0 Abstain:66,750
Richard M. Osborne For: 1,908,251 Against:0 Abstain:66,750
Edward R. Pike For: 1,946,351 Against:0 Abstain:28,650
Thomas J. Smith For: 1,946,851 Against:0 Abstain:28,150
Joseph T. Svete For: 1,947,251 Against:0 Abstain:27,750
Thomas E. Wheeler For: 1,911,351 Against:0 Abstain:63,650
Ratification of the selection of KPMG LLP to serve as the Company"s
independent auditors for the fiscal year ending December 31, 2000.
For: 1,964,113 Against: 6,350 Abstain: 4,538
Broker non-votes were zero.
Total shares equal 2,133,906 with 1,975,001 shares voted and 158,905
shares not-voted.
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
June 30, 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: August 11, 2000
---------------------------------------- ---------------
Richard T. Flenner, Jr., President
Chief Executive Officer and Director
By: /s/ Cheryl J. Mihitsch Date: August 11, 2000
------------------------------------------ ----------------
Cheryl J. Mihitsch
Principal Financial and Accounting Officer
10
