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 September 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 000-24907
IBL BANCORP, INC.
(Exact name of small business issuer as specified in its charter)
LOUISIANA 72 - 1421499
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23910 RAILROAD AVENUE, PLAQUEMINE, LOUISIANA
70764 (Address of principal executive offices)
Issuer's telephone number, including area code: (225) 687-6337
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Shares of common stock, par value $.01 per share, outstanding as of October
30, 1998: 210,870
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
<PAGE>
IBL Bancorp, Inc.
Form 10-QSB
Quarter Ended September 30, 1998
PART I - FINANCIAL INFORMATION
Interim Financial Information required by Rule 10-01 of Regulation S-X and Item
303 of Regulation S-B is included in this Form 10-QSB as referenced below:
Item 1 - Financial Statements
Consolidated Statements Of Financial Condition At September 30, 1998
(Unaudited) and December 31, 1997 ......................................... 3
Consolidated Statements Of Income and Comprehensive Income (Unaudited) For
the Three and Nine Months Ended September 30, 1998 and September 30, 1997.. 4
Consolidated Statements Of Changes in Equity (Unaudited) For The Nine
Months Ended September 30, 1998 and 1997 .................................. 6
Consolidated Statements Of Cash Flows (Unaudited) For the Nine Months Ended
September 30, 1998 and 1997 ............................................... 7
Notes to Consolidated Financial Statements ................................ 9
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ................... 11
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings ............................................ 17
Item 2 - Changes in Securities and Use of Proceeds .................... 17
Item 3 - Defaults Upon Senior Securities .............................. 17
Item 4 - Submission of Matters to a Vote of Security Holders .......... 17
Item 5 - Other Information ............................................ 17
Item 6 - Exhibits and Reports on Form 8-K ............................. 18
Signatures ................................................................ 19
2
<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, 1998 and December 31, 1997
September 30, December 31,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and amounts due from depository institutions .... $ 185,652 $ 142,714
Interest-bearing deposits in other institutions ...... 3,104,375 967,494
------------ ------------
Total cash ......................................... 3,290,027 1,110,208
------------ ------------
Investment securities held-to-maturity (estimated
market value $15,085) ............................... -- 15,152
Mortgage-backed securities held-to-maturity (esti-
mated market value $1,891,748 and $2,374,282) ....... 1,887,451 2,385,948
Mortgage-backed securities available-for-sale (amor-
tized cost $1,609,071 and $1,943,217) ............... 1,618,534 1,947,685
------------ ------------
Total investment securities ........................ 3,505,985 4,348,785
------------ ------------
Loans receivable ..................................... 16,919,704 16,722,127
Less allowance for loan losses ....................... 408,621 403,768
------------ ------------
Loans receivable, net .............................. 16,511,083 16,318,359
------------ ------------
Premises and equipment, net .......................... 160,629 163,330
Federal Home Loan Bank stock, at cost ................ 168,400 363,100
Accrued interest receivable .......................... 79,047 80,394
Other assets ......................................... 37,295 10,822
------------ ------------
Total assets ....................................... $ 23,752,466 $ 22,394,998
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits ............................................. $ 20,219,635 $ 20,026,417
Advances from Federal Home Loan Bank ................. -- 610,000
Advances by borrowers for taxes and insurance ........ 11,459 15,004
Federal income taxes payable ......................... 37,981 47,657
Other liabilities and deferrals ...................... 143,371 73,960
------------ ------------
Total liabilities .................................. 20,412,446 20,773,038
------------ ------------
Commitments and contingencies ........................ -- --
------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, 1998 and December 31, 1997
(continued)
September 30, December 31,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Preferred stock $.01 par, 2,000,000 shares authorized -- --
Common stock - $.01 par, 5,000,000 shares authorized,
210,870 shares issued and outstanding ............... 2,109 --
Additional paid-in capital ........................... 1,744,811 --
Unearned ESOP shares ................................. (168,690) --
Retained earnings - substantially restricted ......... 1,755,544 1,619,011
Accumulated other comprehensive income................ 6,246 2,949
---------- ----------
Total equity.................................... 3,340,020 1,621,960
----------- -----------
Total liabilities and equity.................... $23,752,466 $22,394,998
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
Three Months Ended September 30, 1998 and 1997
Nine Months Ended September 30, 1998 and 1997
--Three months ended--- ---Nine months ended---
September 30, September 30, September 30, September 30
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans....................... $ 348,942 $ 352,860 $ 1,082,912 $ 1,028,674
Mortgage-backed securities.. 52,585 64,093 171,274 189,726
FHLB stock and other
securities................. 2,639 5,542 10,911 15,275
Deposits.................... 22,594 14,916 52,228 53,314
---------- ---------- ---------- ----------
Total interest income..... 426,760 437,411 1,317,325 1,286,989
---------- ---------- ---------- ----------
INTEREST EXPENSE
Deposits
Interest-bearing demand
deposit accounts.......... 22,026 17,661 70,171 52,512
Passbook savings accounts.. 29,416 27,797 79,580 72,016
Certificate of deposit
accounts.................. 182,504 185,395 533,492 559,444
---------- ---------- ---------- ----------
Total interest on deposits 233,946 230,853 683,243 683,972
Advances from Federal Home
Loan Bank.................. - - 11,284 -
---------- ---------- ---------- ----------
Total interest expense.... 233,946 230,853 694,527 683,972
---------- ---------- ---------- ----------
Net interest income....... 192,814 206,558 622,798 603,017
Provision for losses on
loans...................... 3,000 12,000 17,960 35,000
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOSSES ON
LOANS...................... 189,814 194,558 604,838 568,017
---------- ---------- ---------- ----------
NON-INTEREST INCOME
Service charges on deposit
accounts................... 23,936 17,676 64,871 53,688
Other....................... 3,389 8,273 10,318 23,120
---------- ---------- ---------- ----------
Total non-interest income. 27,325 25,949 75,189 76,808
---------- ---------- ---------- ----------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
Three Months Ended September 30, 1998 and 1997
Nine Months Ended September 30, 1998 and 1997
(continued)
--Three months ended--- ---Nine months ended---
September 30, September 30, September 30, September 30
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NON-INTEREST EXPENSES
Salaries, other compensation
and related benefits....... $ 89,215 $ 82,570 $ 253,461 $ 250,102
Occupancy expense........... 6,446 6,712 19,198 23,128
Furniture and equipment
expense.................... 6,167 6,191 18,275 21,849
Deposit insurance premium... 3,092 3,184 9,301 7,163
Data processing............. 15,721 12,980 55,307 40,498
Legal and other professional 7,200 7,200 21,600 18,905
Advertising................. 4,052 3,531 12,789 11,145
Office supplies and postage. 8,907 5,276 24,571 20,502
Other general and
administrative expenses.... 13,946 11,702 43,149 41,080
---------- ---------- ---------- ----------
Total non-interest
expenses................. 154,746 139,346 457,651 434,372
---------- ---------- ---------- ----------
INCOME BEFORE PROVISION FOR
FEDERAL INCOME TAXES....... 62,393 81,161 222,376 210,453
PROVISION FOR FEDERAL INCOME
TAXES...................... 25,274 26,682 85,843 76,070
---------- ---------- ---------- ----------
NET INCOME.................. 37,119 54,479 136,533 134,383
---------- ---------- ---------- ----------
Other comprehensive income, before tax:
Unrealized holding gains
(losses) on securites
arising during the period 9,267 7,908 4,995 6,898
Income tax expense (benefit)
related to unrealized
holding gains (losses)... 3,150 2,689 1,698 2,515
---------- ---------- ---------- ----------
Other comprehensive income
(loss), net of tax effects. 6,117 5,219 3,297 4,383
---------- ---------- ---------- ----------
Comprehensive income........ $ 43,236 $ 59,698 $ 139,830 $ 138,766
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Nine Months Ended September 30, 1998 and 1997
Retained Accumulated
Earnings - Other
Additional Unearned Substan- Compre-
Common Paid-In ESOP tially hensive Total
Stock Capital Shares Restricted Income Equity
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996, AS PREVIOUSL
REPORTED................................. $ - $ - $ - $ 1,477,100 $ (1,333)$ 1,475,767
Prior period adjustment................... - - - (21,833) - (21,833)
---------- ---------- ---------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1996, AS RESTATED... 0 0 0 1,455,267 (1,333) 1,453,934
COMPREHENSIVE INCOME
Net income................................ - - - 134,383 - 134,383
Other comprehensive income, net of tax
Unrealized losses on securities......... - - - - 4,383 4,383
---------- ---------- ---------- ---------- ---------- ----------
BALANCE, SEPTEMBER 30, 1997 (Unaudited)... $ 0 $ 0 $ 0 $ 1,589,650 $ 3,050 $ 1,592,700
========== ========== ========== ========== ========== ==========
BALANCE, DECEMBER 31, 1997, AS PREVIOUSLY
REPORTED................................. $ - $ - $ - $ 1,638,709 $ 2,949 $ 1,641,658
Prior period adjustment................... - - - (19,698) - (19,698)
---------- ---------- ---------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1997, AS RESTATED... 0 0 0 1,619,011 2,949 1,621,960
COMPREHENSIVE INCOME
Net income............................... - - - 136,533 - 136,533
Other comprehensive income, net of tax
Unrealized losses on securities......... - - - - 3,297 3,297
---------- ---------- ---------- ---------- ---------- ----------
0 0 0 1,755,544 6,246 1,761,790
Proceeds from issuance of common stock.... 2,109 1,744,811 - - - 1,746,920
Acquisition of unearned ESOP shares....... - - (168,690) - - (168,690)
---------- ---------- ---------- ---------- ---------- ----------
BALANCE, SEPTEMBER 30, 1998 (Unaudited)... $ 2,109 $ 1,744,811 $ (168,690) $ 1,755,544 $ 6,246 $ 3,340,020
========== ========== ========== ========== ========== ==========
</TABLE>
Accompanying notes are an integral part of these financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1998 and 1997
---Nine months ended---
September 30,September 30
1998 1997
(Unaudited) (Unaudited)
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................................ $ 136,533 $ 134,383
---------- ----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation........................................ 15,944 19,350
Provision for loan losses........................... 18,000 36,000
Provision for deferred federal income tax credit.... (26,107) (4,481)
Amortization of net premium on investment and
mortgage-backed securities......................... 22,567 13,339
Net discount charged on installment loans........... 35,379 34,043
Net loan fees deferred (recognized)................. (1,539) 838
Stock dividends from Federal Home Loan Bank......... (10,300) (15,300)
Net decrease in interest receivable................. 1,347 4,855
Net decrease (increase) in other assets............. (18,444) 12,229
Net decrease in interest payable.................... (453) (14,252)
Net increase (decrease) in federal income taxes
payable............................................ (9,676) 42,377
Net increase in other liabilities................... 85,791 28,595
---------- ----------
Total adjustments................................. 112,509 157,593
---------- ----------
Net cash provided by operating activities............. 249,042 291,976
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans receivable...................... (244,564) (946,891)
Purchases of securities available-for-sale............ (119,776) (270,227)
Principal payments received on mortgage-backed
securities available-for-sale........................ 442,431 181,336
Purchase of securities held-to-maturity............... - (154,850)
Principal payments received on mortgage-backed
securities held-to-maturity.......................... 487,421 396,685
Maturity of U.S. government obligation................ 15,152 -
Purchases of office property and equipment............ (13,243) (8,382)
Proceeds from sale of Federal Home Loan Bank stock.... 205,000 -
---------- ----------
Net cash provided by (used in) investing activities.. 772,421 (802,329)
---------- ----------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1998 and 1997
(continued)
---Nine months ended---
September 30,September 30
1998 1997
(Unaudited) (Unaudited)
---------- ----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposit accounts........... $ 193,671 (182,389)
Net increase (decrease) in advances by borrowers for
taxes and insurance.................................. (3,545) 1,581
Repayment of advances from Federal Home Loan Bank..... (610,000) -
Net proceeds from sale of common stock................ 1,746,920 -
Unearned ESOP shares acquired......................... (168,690) -
---------- ----------
Net cash provided by (used in) financing activities... 1,158,356 (180,808)
---------- ----------
NET INCREASE (DECREASE) IN CASH....................... 2,179,819 (691,161)
Cash - beginning of period.......................... 1,110,208 1,808,500
---------- ----------
Cash - end of period................................ $ 3,290,027 $ 1,117,339
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
IBL Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1998
Note 1 - Basis of Presentation -
The accompanying consolidated financial statements for the period ended
September 30, 1998 include the accounts of IBL Bancorp, Inc. (the "Company") and
its wholly owned subsidiary, Iberville Building & Loan Association (the
"Association"). Currently, the business and management of IBL Bancorp, Inc. is
primarily the business and management of the Association. All significant
intercompany transactions and balances have been eliminated in the
consolidation.
On June 16, 1998, the Association incorporated IBL Bancorp, Inc. to
facilitate the conversion of the Association from mutual to stock form (the
"Conversion"). In connection with the Conversion, the Company offered its common
stock to the depositors and borrowers of the Association as of specified dates,
to an employee stock ownership plan and to members of the general public. Upon
consummation of the Conversion on September 30, 1998, all of the Association's
outstanding common stock was issued to the Company, the Company became the
holding company for the Association and the Company issued 210,870 shares of
common stock.
The Company filed a Form SB-2 with the Securities and Exchange
Commission ("SEC") on June 24, 1998, which as amended was declared effective by
the SEC on August 12, 1998. The Association filed a Form AC with the Office of
Thrift Supervision ("0TS") and the Office of Financial Institutions ("OFI") on
or about June 24, 1998. The Form AC and related offering and proxy materials, as
amended, were conditionally approved by the OTS by letters dated August 5 and
August 12, 1998 and OFI by letter dated August 14, 1998. The Company also filed
an Application H-(e) 1-S with the Midwest Regional Office of the OTS and the
Louisiana Office of Financial Institutions on or about July 1, 1998, which was
conditionally approved by the OTS by letter dated August 5, 1998 and the OFI by
letter dated August 14, 1998.
The members of the Association approved the Plan at a special meeting
held on September 22, 1998, and the subscription and community offering closed
on September 16, 1998.
The Conversion is accounted for under the pooling of interest method of
accounting. In the Conversion the Company issued 210,870 shares of common stock,
16,869 shares of which were acquired by its Employee Stock Ownership Plan, and
the Association issued 1,000 shares of $.01 par value common stock to the
Company.
The accompanying consolidated unaudited financial statements were
prepared in accordance with instructions for Form 10-QSB and, therefore, do not
include information or
9
<PAGE>
footnotes necessary for a complete presentation of financial position, results
of operations and cash flows in conformity with generally accepted accounting
principles. However, all adjustments (consisting only of normal recurring
accruals) which, in the opinion of management, are necessary for a fair
presentation of the consolidated financial statements have been included. The
results of operations for the three and nine months ended September 30, 1998 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1998.
Note 2 - Employee Stock Ownership Plan-
The Company sponsors a leveraged employee stock ownership plan (ESOP)
that covers all employees who have at least one year of service with the
Company. The ESOP shares initially were pledged as collateral for its debt. The
debt is being repaid based on a ten-year amortization and the shares are being
released for allocation to active employees annually over the ten-year period.
The shares pledged as collateral are deducted from stockholders' equity as
unearned ESOP shares in the accompanying balance sheets.
As shares are released from collateral, the Company reports
compensation expense equal to the current market price of the shares. Dividends
on allocated ESOP shares are recorded as a reduction of retained earnings;
dividends on unallocated ESOP shares are recorded as a reduction of unearned
ESOP shares.
Note 3 - Earnings Per Share -
Earnings per share for periods prior to September 30, 1998 are not
considered meaningful as the Conversion was not completed until September 30,
1998, and the 100 shares of the Company previously held by the Association were
canceled upon consummation of the Conversion as of September 30, 1998.
IBL Bancorp, Inc. is a Louisiana corporation organized in June 1998 by the
Association for the purpose of becoming a unitary holding company of the
Association. The Company purchased all of the capital stock of the Association
issued in the Conversion in exchange for 50% of the net conversion proceeds and
retained the remaining 50% of the net conversion proceeds as its initial
capitalization. Immediately following the Conversion, the only significant
assets of the Company are the capital stock of the Association, the Company's
loan to the ESOP, and the remainder of the net Conversion proceeds retained by
the Company. Initially, the business and management of the Company will
primarily consist of the business and management of the Association. Initially,
the Company will neither own nor lease any property, but will instead use the
premises, equipment and furniture of the Association. At the present time, the
Company does not intend to employ any persons other than officers of the
Association, and the Company will utilize the support staff of the Association
from time to time. Additional employees will be hired as appropriate to the
extent the Company expands or changes its business in the future.
10
<PAGE>
IBL BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The following discussion compares the consolidated financial condition
of IBL Bancorp, Inc. and Subsidiary at September 30, 1998 to December 31, 1997
and the results of operations for the three and nine months ended September 30,
1998 with the same periods in 1997. Currently, the business and management of
IBL Bancorp, Inc. is primarily the business and management of the Association.
This discussion should be read in conjunction with the interim consolidated
financial statements and footnotes included herein.
This quarterly report on Form 10-QSB includes statements that may
constitute forward-looking statements, usually containing the words "believe",
"estimate," "expect", "intend" or similar expressions. These statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ materially from those
reflected in the forward-looking statements. Factors that could cause future
results to vary from current expectations include, but are not limited to, the
following: changes in economic conditions (both generally and more specifically
in the markets in which the Company operates); changes in interest rates,
deposit flows, loan demand, real estate values and competition; changes in
accounting principals, policies or guidelines and in government legislation and
regulation (which change from time to time and over which the Company has no
control); and other risks detailed in this quarterly report on Form 10-QSB and
the Company's other Securities and Exchange Commission filings. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
reflect management's analysis only as of the date hereof. The Company undertakes
no obligation to publicly revise these forward-looking statements to reflect
events or circumstances that arise after the date hereof.
IBL Bancorp, Inc. is the holding company for the Association.
Substantially all of the Company's assets are currently held in, and its
operations are conducted through, its sole subsidiary the Association. The
Company's business consists primarily of attracting deposits from the general
public and using such deposits to make loans for the purchase and construction
of residential properties. The Company also originates commercial real estate
loans and various types of consumer loans.
Changes in Financial Condition
The Association's total assets increased $1,358,000 or 6.1% from $22.4
million at December 31, 1997 to $23.8 million at September 30, 1998. This
increase was primarily due to increases of $192,724 in net loan receivables and
$2,179,819 in cash and cash equivalents. The increase in cash and cash
equivalents was due to consummation of the conversion on September 30, 1998.
These increases were partially offset by an aggregate decrease of $842,800 in
11
<PAGE>
securities and a redemption of Federal Home Loan Bank Stock of $194,700. The
Association continues to emphasize the origination of higher yielding loans over
the purchase of lower yielding mortgage-backed securities.
The Association's total classified assets for regulatory purposes at
September 30 1998 (excluding loss assets specifically reserved for) amounted to
$550,000, all of which was classified as substandard. The largest classified
asset at September 30, 1998 consisted of a $114,000 adjustable-rate residential
loan. The remaining $436,000 of substandard assets at September 30, 1998
consisted of 12 residential mortgage loans totaling $375,000 and ten consumer
loans totaling $61,000.
Interest-bearing deposits in other institutions increased by
$2,137,000 or 22.1% from $967,000 at December 31, 1997 to $3,104,000 at
September 30, 1998. This increase was primarily due to the sale of IBL Bancorp
Inc. stock.
The mortgage-backed securities portfolio decreased by $842,800 or 19.4%
from $4,349,000 at December 31, 1997 to $3,505,985 at September 30, 1998, as
purchases of these securities declined and repayments increased in the first
nine months of 1998.
The demand for mortgage loans in the Association's market area
increased during the past nine months. The net loan portfolio increased $192,724
or 1.2% from $16,318,000 at December 31, 1997 to $16,511,000 at September
30,1998.
Deposits increased by $193,000 or 1.0% from $20,026,000 at December
31,1997 to $20,220,000 at September 30, 1998. This increase consisted mainly of
single family residential mortgage loans.
Total stockholders' equity increased by $1.7 million during the past
nine months. Net income of $137,000 and the $1.7 million net proceeds from the
sale of common stock increased equity during the period. Stockholders' equity at
September 30, 1998 totaled $3.3 million compared to equity of $1.6 million at
December 31, 1997.
12
<PAGE>
Regulatory Capital
As of September 30, 1998, the Association's unaudited regulatory
capital requirements are as indicated in the following table:
<TABLE>
<CAPTION>
(In Thousands)
TANGIBLE CORE RISK-BASED
CAPITAL CAPITAL CAPITAL
------- ------- -------
<S> <C> <C> <C>
GAAP Capital ......................... $3,340 $3,334 $3,334
Additional Capital Items:
General Valuation Allowances ..... -- -- 152
------ ------ ------
Regulatory Capital Computed .......... 3,340 3,334 3,486
Minimum Capital Requirement .......... 355 717 961
------ ------ ------
Regulatory Capital Excess ............ 2,985 $2,617 $2,525
====== ====== ======
Regulatory Capital as a
Percentage ...................... 14.08% 14.08% 27.76%
Minimum Capital Required
as a Percentage ................. 1.50% 3.00% 8.00%
------ ------ ------
Regulatory Capital as a
Percentage in Excess
of Requirements .................. 12.58% 11.08% 19.76%
====== ====== ======
</TABLE>
Based on the above capital ratios, the Association meets the criteria
for a "well capitalized" institution at September 30, 1998. The Association's
management believes that under the current regulations, the Association will
continue to meet its minimum capital requirements in the foreseeable future.
However, events beyond the control of the Association, such as increased
interest rates or a downturn in the economy of the Association's area, could
adversely affect future earnings and consequently, the ability of the
Association to continue to exceed its future minimum capital requirements.
Results of Operations
The profitability of the Company depends primarily on its net interest
income, which is the difference between interest and dividend income on
interest-earning assets, principally loans, mortgage-backed securities, and
investment securities, and interest expense on interest-bearing deposits. Net
interest income is dependent upon the level of interest rates and the extent to
which such rates are changing. The Company's profitability also is dependent, to
a lesser
13
<PAGE>
extent, on the level of its non-interest income, provision for loan losses,
non-interest expense and income taxes. In each of the three and nine months
ended September 30, 1998, net interest income before provision for loan losses
exceeded total non-interest expense. Total non-interest expense consists of
general, administrative and other expenses, such as compensation and benefits,
furniture and equipment expense, federal insurance premiums, and miscellaneous
other expenses.
Net income decreased by $17,000 or 31.5% in the quarter ended September
30, 1998 and increased by $2,000 or 1.6% in the nine months ended September 30,
1998 compared to the respective 1997 periods. The decrease in the September 30,
1998 quarter was due to a decrease in interest income of $11,000, an increase in
deposit interest expense of $3,000, and an increase in non-interest expense of
$15,000. These factors were primarily offset by a decline in the provision for
loan losses of $9,000, an increase in non-interest income of $1,000, and a
decrease in provision of federal income taxes of $2,000. The increased net
income for the first nine months of 1998 was primarily due to a $20,000 increase
in net interest income and a decline in the provision for loan losses of
$17,000. These factors were partially offset by an increase in non-interest
expense of $24,000, an increase in the provision for federal income taxes of
$10,00, and a decrease in non-interest income of $2,000.
The $14,000 decrease in net interest income in the third quarter was
due to a decrease in the average interest rate spread from 3.39% in the quarter
of September 30, 1997, to 2.90% in the September 30, 1998 quarter. The average
rate on deposits decreased from 4.57% in the third quarter of 1997 to 4.42% in
the third quarter of 1998, while the average yield on interest-earning assets
decreased from 7.96% to 7.32% over the same period. The decreased yield on
assets was primarily due to lower yields on the Association's adjustable-rate
mortgage loans and adjustable-rate mortgage-backed securities.
Total interest income decreased by $11,000 or 2.4% in the quarter ended
September 30, 1998 and increased by $30,000 or 2.3% for the nine months ended
September 30,1998 over the comparable 1997 periods.
Total interest expense increased by $3,000 or 1.3% for the quarter and
increased $11,000 or 1.6% for the nine months ended September 30, 1998 over the
comparable 1997 periods. The increase in the nine month period was primarily due
to $11,284 interest paid on Federal Home Loan Bank advances.
The provision for losses decreased by $9,000 for the quarter and
$17,000 for the nine month period ended September 30, 1998 over the comparable
1997 periods. At September 30, 1998, the Association's total non-accruing loans
amounted to $259,720. The allowance for loan losses amounted to $408,000 at
September 30, 1998, representing 2.4% of the total loans held in portfolio and
155.94% of total non-accruing loans at such date.
14
<PAGE>
Non-interest income increased by $1,000 or 5.3% in the three months
ended September 30, 1998 and declined by $2,000 or 2.1% in the nine months ended
September 30, 1998 from the comparable 1997 periods. The decline in the nine
months was primarily due to lower commissions from the sale of annuities and
credit life insurance.
Non-interest expenses increased in the quarter ended September 30,
1998 by $15,000 or 11.1% and increased by $23,300 or 5.4% in the nine months
ended September 30, 1998 over the comparable 1997 periods. The increase in the
quarter was due to an increase of $7,000 in compensation and benefits, $3,000
data processing, $3,000 supplies and $2,000 general expenses. The increase in
the nine-month period was primarily due to increases of $ 15,000 in data
processing, $3,000 in compensation and benefits, $3,000 in legal and
professional and $3,000 general and advertising.
Liquidity and Capital Resources
The Association is required under applicable federal regulations to
maintain specified levels of "liquid" investments in qualifying types of U.S.
Government, federal agency and other investments having maturities of up to five
years. Current OTS regulations require that a savings institution maintain
liquid assets of not less than 4% of its average daily balance of net
withdrawable deposit accounts and borrowings payable in one year or less, see
section 5566.2. At September 30, 1998, the Association's liquidity was 16.2% or
$2.3 million in excess of the minimum OTS requirement.
The Association is required to maintain regulatory capital sufficient to meet
tangible, core and risk-based capital ratios of 1.5%, 3.0%, and 8.0%
respectively. At September 30, 1998, the Association's tangible and core capital
both amounted to $3.3 million or 14.08% of adjusted total assets of $23.7
million, and the Association's risk-based capital amounted to $3.3 million or
29.03% of adjusted risk-weighted assets of $12.0 million.
The Year 2000
The association has reviewed its computer and data processing issues
relating to the Year 2000 and has developed a written Year 2000 Policy as well
as written Year 2000 Contingency and Test Plans. Management believes that most
of the Association's hardware and terminals will not need to be replaced but
that certain non-critical software will need to be upgraded. The Association's
data processing is handled by an independent third party data center, and
management is monitoring the data center's progress and timetable to resolving
issues related to the Year 2000. Initial testing with the data center occurred
in September 1998 and went well. If the data center is able to become Year 2000
compliant in a timely manner, then management believes that issues relating to
the Year 2000 will not have a material adverse effect on the Company's
liquidity, capital resources or consolidated results of operations. The
Association currently estimates the total cost of becoming year 2000 compliant
to be approximately $15,000(of which $5,000 has been incurred) and expects to be
Year 2000 compliant by the end of 1998.
15
<PAGE>
In the event the third party data center is unable to become Year 2000
Compliant in a timely manner, the Association has established a contingency plan
to switch to another data center. The Association is in the process of receiving
an estimate from another data center as to the cost of conversion to their data
center. While the cost of switching to another data center have not yet been
quantified, management currently does not believe that such costs would have a
material adverse effect on the Company's liquidity, capital resources or
consolidated results of operations.
16
<PAGE>
IBL Bancorp, Inc.
Form 10-QSB
Quarter Ended September 30, 1998
PART II - OTHER INORMATION
Item 1 - Legal Proceedings:
There are no matters required to be reported under this item.
Item 2 - Changes in Securities and Use of Proceeds:
There are no matters required to be reported under sections
(a) through (c) of this item. On September 30, 1998, the
Company sold 210,870 shares of its common stock at $10.00 per
share in connection with the conversion of the Association
from a mutual to a stock form, resulting in gross proceeds of
$2,108,700. Net proceed amounted to $1,746,920, of which 50%
was used by the Company to purchase all of the Association's
common stock issued in the conversion. Of the proceeds
retained by the Company, $168,690 was used to make a loan to
the Company's Employee Stock Ownership Plan ("ESOP") in order
to fund the purchase of 16,869 shares by the ESOP in the
conversion. The remaining net proceeds retained by the Company
are being used as the Company's working capital and will be
invested in investment securities.
Item 3 - Defaults Upon Senior Securities:
There are no matters required to be reported under this item.
Item 4 -Submission of Matters to a Vote of Security Holders:
On September 22, 1998, in conjunction with the Company's
first annual meeting of stockholders, the Association as the
sole stockholder of the Company at the time executed a
Consent of Sole Stockholder approving the following: (1) the
division of the directors of the Corporation into three
classes, as follows: the first class, consisting of Messes.
Delahaye and Strickland, has a term of office expiring at the
Corporation's first annual meeting of stockholders; the
second, class consisting of Messrs. Bouchereau and Stanley,
has a term of office expiring at the Corporation's second
annual meeting of stockholders; and the third class,
consisting of Messrs. Pruitt and Steinmetz, has a term of
office expiring at the Corporation's third annual meeting of
stockholders; (2) the election of Messrs. Delahaye and
Strickland for a three-year term expiring in 2001, or until
their successors are elected and appointed; and (3) the
ratification of the appointment of L.A. Champagne & Co,
L.L.P. as the Corporation's independent public accountants
for the fiscal year ending December 31, 1998.
Item 5 - Other Information:
There are no matters required to be reported under this item.
17
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K:
(a) The following exhibit is filed herewith:
EXHIBIT NO. DESCRIPTION
----------- -----------
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant
during the quarter ended September 30, 1998.
18
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant, caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IBL BANCORP, INC.
Registrant
Date: November 10, 1998 By /s/G. Lloyd Bouchereau, Jr.
------------------------------
G. Lloyd Bouchereau, Jr.,
President and
Chief Executive Officer
Date: November 10, 1998 By: /s/Gary K.Pruitt
----------------
Gary K. Pruitt
Secretary
19
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