UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
[ ] 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 April
30, 1999: 210,870
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
<PAGE>
IBL Bancorp, Inc.
Form 10-QSB
Quarter Ended March 31, 1999
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
Page
Consolidated Statements Of Financial Condition At
March 31, 1999 (Unaudited) and December 31, 1998....................... 3
Consolidated Statements Of Income and Comprehensive Income (Unaudited)
For the Three Months Ended March 31, 1999 and 1998...................... 4
Consolidated Statements Of Changes in Shareholders' Equity (Unaudited)
For The Three Months Ended March 31, 1999 and 1998....................... 6
Consolidated Statements Of Cash Flows (Unaudited) For the
Three Months Ended March 31, 1999 and 1998............................... 7
Notes to Consolidated Financial Statements............................... 8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 10
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings............................................ 16
Item 2 - Changes in Securities and Use of Proceeds.................... 16
Item 3 - Defaults Upon Senior Securities.............................. 16
Item 4 - Submission of Matters to a Vote of Security Holders.......... 16
Item 5 - Other Information............................................ 16
Item 6 - Exhibits and Reports on Form 8-K............................. 16
Signatures................................................................ 17
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<TABLE>
<CAPTION>
IBL BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, 1999 and December 31, 1998
March 31,
1999 December 31,
(Unaudited) 1998
------------ ------------
<S> <C> <C>
Assets
Cash and amounts due from depository institutions ....... $ 226,905 $ 177,068
Interest-bearing deposits in other institutions ......... 2,997,458 1,681,430
------------ ------------
Total cash ............................................ 3,224,363 1,858,498
------------ ------------
Time deposits ........................................... 1,301,000 795,000
------------ ------------
Mortgage-backed securities held-to-maturity (estimated
market value $2,213,181 and $2,116,824) ............... 2,232,180 2,122,507
Mortgage-backed securities available-for-sale (amortized
cost $1,358,648 and $1,454,057) ....................... 1,354,274 1,453,613
------------ ------------
Total investment securities ........................... 3,586,454 3,576,120
------------ ------------
Loans receivable ........................................ 17,879,481 17,620,600
Less allowance for loan losses .......................... 399,329 411,621
------------ ------------
Loans receivable, net ................................. 17,480,152 17,208,979
------------ ------------
Premises and equipment, net ............................. 148,429 154,179
Federal Home Loan Bank stock, at cost ................... 173,100 170,800
Accrued interest receivable ............................. 83,436 74,242
Other assets ............................................ 54,157 40,200
------------ ------------
Total assets .......................................... $ 26,051,091 $ 23,878,018
============ ============
</TABLE>
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<TABLE>
<CAPTION>
IBL BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, 1999 and December 31, 1998
March 31,
1999 December 31,
(Unaudited) 1998
------------ ------------
<S> <C> <C>
LIABILITIES AND EQUITY
Deposits ................................................ $ 22,037,160 $ 19,898,684
Advances from Federal Home Loan Bank .................... 495,000 495,000
Advances by borrowers for taxes and insurance ........... 14,467 12,781
Federal income taxes payable ............................ 25,246 39,388
Other liabilities and deferrals ......................... 63,802 49,570
------------ ------------
Total liabilities ..................................... 22,635,675 20,495,423
------------ ------------
Commitments and contingencies ........................... -- --
------------ ------------
Preferred stock $.01 par, 2,000,000 shares authorized ... -- --
Common stock - $.01 par, 5,000,000 shares authorized,
210,870 shares issued .................................. 2,109 2,109
Additional paid-in capital .............................. 1,740,254 1,740,254
Unearned ESOP shares .................................... (163,195) (165,971)
Retained earnings - substantially restricted ............ 1,838,900 1,806,496
Accumulated other comprehensive loss .................... (2,652) (293)
------------ ------------
Total equity .......................................... 3,415,416 3,382,595
------------ ------------
Total liabilities and equity .......................... $ 26,051,091 $ 23,878,018
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
Three months ended March 31, 1999 and 1998
1999 1998
(Unaudited) (Unaudited)
<S> <C> <C>
INTEREST INCOME
Loans ............................................ $357,073 $373,609
Mortgage-backed securities ....................... 54,451 63,121
FHLB stock and other securities .................. 2,316 5,567
Deposits ......................................... 31,049 12,238
-------- --------
Total interest income .......................... 444,889 454,535
-------- --------
INTEREST EXPENSE
Deposits
Interest-bearing demand deposit accounts ........ 18,335 15,808
Passbook savings accounts ....................... 23,753 23,604
Certificate of deposit accounts ................. 174,555 183,459
-------- --------
Total interest on deposits ..................... 216,643 222,871
Advances from Federal Home Loan Bank ............. 5,702 6,923
-------- --------
Total interest expense ......................... 222,345 229,794
-------- --------
Net interest income ............................ 222,544 224,741
Provision for losses on loans .................... 3,140 12,000
-------- --------
NET INTEREST INCOME AFTER PROVISION FOR
LOSSES ON LOANS ................................. 219,404 212,741
-------- --------
NON-INTEREST INCOME
Service charges on deposit accounts .............. 18,389 20,871
Other ............................................ 3,306 3,701
-------- --------
Total non-interest income ...................... 21,695 24,572
-------- --------
NON-INTEREST EXPENSES
Compensation and benefits ........................ 94,145 87,087
Occupancy ........................................ 6,059 4,656
Furniture and equipment .......................... 7,599 6,477
Deposit insurance premium ........................ 3,215 3,124
Data processing .................................. 19,028 14,261
Legal and other professional ..................... 13,239 7,200
Advertising ...................................... 3,510 5,176
Office supplies and postage ...................... 9,015 11,369
Other general and administrative ................. 18,211 18,832
-------- --------
Total non-interest expenses .................... 174,021 158,182
-------- --------
</TABLE>
Continued. . .
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<PAGE>
<TABLE>
<CAPTION>
1999 1998
(Unaudited) (Unaudited)
---------- ----------
<S> <C> <C>
INCOME BEFORE PROVISION FOR INCOME TAXES.......... $ 67,078 $ 79,131
PROVISION FOR INCOME TAXES........................ 26,766 26,461
---------- ----------
NET INCOME........................................ $ 40,312 $ 52,670
========== ==========
Basic earnings per share.......................... $ .21 $ -
========== ==========
COMPREHENSIVE INCOME
Net income........................................ $ 40,312 $ 52,670
Other comprehensive income:
Unrealized holding losses on
securities during the period.......... . . . . (3,574) (5,998)
Income tax benefit related to
unrealized holding losses...................... (1,215) (2,039)
---------- ----------
Other comprehensive loss, net of
tax effects..................................... (2,359) (3,959)
---------- ----------
Comprehensive income.............................. $ 37,953 $ 48,711
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Three months ended March 31, 1999 and 1998
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, 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. - - - 1,619,011 2,949 1,621,960
-------- --------- --------- ---------- --------- ---------
COMPREHENSIVE INCOME (Unaudited)
Net income . . . . . . . . . . . . . . . - - - 52,670 - 52,670
Other comprehensive income, net of tax
Unrealized losses on securities. . . . - - - - (3,959) (3,959)
-------- --------- --------- ---------- --------- ---------
Comprehensive income . . . . . . . . . - - - 52,670 (3,959) 48,711
-------- --------- --------- --------- --------- ---------
BALANCE, MARCH 31, 1998 (Unaudited). . . $ - $ - $ - $ 1,671,681 $ (1,010) $ 1,670,671
========= ========== ========== ========== ========= ==========
BALANCE, DECEMBER 31, 1998 $ 2,109 $ 1,740,254 $ (165,971) $ 1,806,496 $ (293) $ 3,382,595
COMPREHENSIVE INCOME (Unaudited)
Net income . . . . . . . . . . . . . . . - - - 40,312 - 40,312
Other comprehensive income, net of tax
Unrealized losses on securities. . . . - - - - (2,359) (2,359)
-------- --------- --------- --------- --------- ---------
Comprehensive income . . . . . . . . . - - - 40,312 (2,359) 37,953
-------- --------- --------- --------- --------- ---------
ESOP shares released for allocation. . . - - 2,776 - - 2,776
Dividends. . . . . . . . . . . . . . . . - - - (7,908) - (7,908)
-------- --------- --------- -------- -------- ---------
BALANCE, MARCH 31, 1999 (Unaudited). . . $ 2,109 $ 1,740,254 $ (163,195) $ 1,838,900 $ (2,652) $ 3,415,416
========= ========== ========== ========== ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1999 and 1998
1999 1998
(Unaudited) (Unaudited)
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................................... $ 40,312 $ 52,670
---------- ----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation........................................... 5,750 5,745
Provision for loan losses.............................. 3,140 12,000
ESOP contribution...................................... 2,776 -
Provision for deferred federal income tax ............. - 1,346
Amortization of net premium on investment and
mortgage-backed securities............................ 4,522 7,071
Net discount charged (realized) on installment loans... (26,013) 11,079
Net loan fees deferred ................................ 1,018 1,109
Stock dividends from Federal Home Loan Bank............ (2,300) (5,300)
Net decrease (increase) in interest receivable......... (9,194) 1,921
Net increase in other assets........................... (12,742) (8,067)
Net decrease in interest payable....................... (10,964) (1,503)
Net decrease in income taxes payable.................. (14,142) (22,552)
Net increase (decrease) in other liabilities........... 14,234 (5,657)
---------- ----------
Total adjustments.................................... (43,915) (2,808)
---------- ----------
Net cash provided by (used in) operating activities...... (3,603) 49,862
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans receivable......................... (259,818) (123,474)
Principal payments received on mortgage-backed
securities available-for-sale........................... 93,066 127,037
Purchases of securities held-to-maturity................. (200,000) -
Proceeds from sale of foreclosed assets.................. 10,500 -
Principal payments received on mortgage-backed
securities held-to-maturity............................. 88,504 185,210
Purchases of office property and equipment............... - (2,018)
Certificates of deposits acquired........................ (506,000) -
---------- ----------
Net cash provided by (used in) investing activities...... (773,748) 186,755
---------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1999 and 1998
1999 1998
(Unaudited) (Unaudited)
---------- ----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposit accounts......................... 2,149,438 508,926
Net increase (decrease) in advances by borrowers for
taxes and insurance..................................... 1,686 (605)
Cash dividends..... ..................................... (7,908) -
Repayment of advances from Federal Home Loan Bank........ - (157,900)
---------- ----------
Net cash provided by financing activities................ 2,143,216 350,421
---------- ----------
NET INCREASE IN CASH..................................... 1,365,865 587,038
Cash - beginning of year................................. 1,858,498 1,110,208
---------- ----------
Cash - end of year....................................... $ 3,224,363 $ 1,697,246
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE>
IBL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 1999
A: BASIS OF PRESENTATION
The accompanying consolidated financial statements for the period ended
March 31, 1999 include the accounts of IBL Bancorp, Inc. (the "Company") and its
wholly owned subsidiary, Iberville Building and 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 Louisiana 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 by the 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 OFI 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 was 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 footnotes necessary for a complete presentation of
financial position, results of operations and
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<PAGE>
A: BASIS OF PRESENTATION (Continued)
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
months ended March 31, 1999 are not necessarily indicative of the results to be
expected for the year ending December 31, 1999.
B: 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 the ESOP debt.
The debt is being repaid based on a ten-year amortization and the shares are
being released for allocation to active employees quarterly 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 applied to the ESOP debt and recorded
as a reduction of unearned ESOP shares. ESOP compensation expense was $2,776 for
the three months ended March 31, 1999 based on the quarterly release of shares.
C: EARNINGS PER SHARE
The computation of basic earnings per share for March 31,1999 includes
reported net income in the numerator and the weighted average number of shares
outstanding of 194,428 in the denominator, which consist of the average number
of shares issued, 210,870, less the average number of unearned ESOP shares
during the period, 16,442.
Earnings per share for periods prior to September 30, 1998 is not
considered meaningful as the Conversion was not completed until September 30,
1998.
-9-
<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 March 31, 1999 to December 31, 1998 and
the results of operations for the three months ended March 31, 1999 with the
same period in 1998. 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 principles, 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 Company's total assets increased $2,173,000 or 9.1% from $23.9
million at December 31, 1998 to $26.1 million at March 31, 1999. This increase
was primarily due to increases of $271,000 in net loan receivables, $506,000 in
time deposits and $1,366,000 in cash and cash equivalents. The increase in cash
and cash equivalents was due primarily to the Association beginning to receive
deposits from various local government entities.
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<PAGE>
The Association's total classified assets for regulatory purposes at
March 31, 1999 (excluding loss assets specifically reserved for) amounted to
$562,000, all of which was classified as substandard. The largest classified
asset at March 31, 1999 consisted of a $113,000 adjustable-rate residential
loan. The remaining $449,000 of substandard assets at March 31, 1999 consisted
of 13 residential mortgage loans totaling $385,000 and 11 consumer loans
totaling $64,000.
Interest-bearing deposits in other institutions increased by $1,316,000
or 78.3% from $1,681,000 at December 31, 1998 to $2,997,000 at March 31, 1999.
This increase was primarily due to the increased deposits the Association
received.
Time deposits increased by $506,000 from $795,000 at December 31, 1998
to $1,301,000 at March 31, 1999. This increase was primarily due to the purchase
of short-term certificates of deposit funded by increases in the Association's
deposit growth and proceeds remaining from the stock conversion.
Management anticipates using this increased liquidity to fund
additional loan growth and has staggered the maturities of time deposits to
provide for additional liquidity needs.
The mortgage-backed securities portfolio increased by $10,000 or 0.3%
from $3,576,000 at December 31, 1998 to $3,586,000 at March 31, 1999.
The demand for mortgage loans in the Association's market area
increased during the past three months. The net loan portfolio increased
$271,000 or 1.6% from $17,209,000 at December 31, 1998 to $17,480,000 at March
31,1999. This increase consisted mainly of single family residential mortgage
loans.
Deposits increased by $2,138,000 or 10.7% from $19,899,000 at December
31,1998 to $22,037,000 at March 31, 1999. This increase is primarily due to the
Association beginning to receive deposits from various local government
entities.
Total stockholders' equity increased by $33,000 during the past three
months. Net income of $40,000 and a $3,000 decrease in unearned ESOP shares
increased stockholders' equity during the period. Net income was offset by the
payment of a quarterly dividend totaling $8,000 and an increase of $2,000 in
unrealized losses on available-for-sale investment securities during this
period. Stockholders' equity at March 31, 1999 totaled $3,415,000 or 13.1% of
total assets compared to equity of $3,383,000 or 14.2% of total assets at
December 31, 1998.
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 and
borrowings. 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 extent, on the level of its non-interest income,
provision for loan losses, non-interest expense and income taxes. In the three
months ended March 31,1999 and 1998, net interest income after provision for
loan losses exceeded total non-interest expense. Total non-interest
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<PAGE>
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 $12,000 or 23.5% in the quarter ended March 31,
1999 compared to the respective 1998 period. The decrease in the March 31,1999
quarter was due to a decrease in interest income of $10,000, a decrease in
non-interest income of $3,000 and an increase in non-interest expense of
$16,000. These factors were primarily offset by a decline in the provision for
loan losses of $9,000 and a decrease in total interest expense of $7,000.
The $2,000 decrease in net interest income in the first quarter of 1999
was due to a decrease in the average interest rate spread from 3.40% in the
quarter ended March 31, 1998, to 3.11% in the first quarter of 1999. The average
rate on deposits decreased from 4.41% in the first quarter of 1998 to 4.06% in
the first quarter of 1999, while the average yield on interest-earning assets
decreased from 7.83% to 7.19% 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. In addition
average yield was higher in the first quarter of 1998 partly due to the
recognition of $17,000 interest received on a non-accruing loan that was brought
current.
Total interest income decreased by $10,000 or 2.1% in the quarter ended
March 31, 1999 from the comparable 1998 period. Interest income in the first
quarter of 1998 was higher partly due to the recognition of $17,000 received on
a non-accruing loan that was brought current.
Total interest expense decreased by $7,000 or 3.2% for the quarter
ended March 31, 1999 from the comparable 1998 period. This decrease was
primarily due to a $6,000 decrease in total interest on deposits caused by
reductions of rates paid by the Association on its deposit accounts and a $1,000
reduction on interest paid on Federal Home Loan Bank of Dallas advances.
The provision for losses decreased by $9,000 for the March 31, 1999
quarter from the comparable 1998 period. At March 31, 1999, the Association's
total non-accruing loans amounted to $241,000. The allowance for loan losses
amounted to $399,000 at March 31, 1999, representing 2.23% of the total loans
held in portfolio and 165.56% of total non-accruing loans at such date. The
analysis of the provision for loan losses led to the conclusion that the
allowance for loan losses was sufficient in light of the modest charge-offs of
$15,000 in the first quarter of 1999 and current asset quality of the loan
portfolio.
Non-interest income decreased by $3,000 or 11.7% in the three months
ended March 31, 1999 from the comparable 1998 period. The decline in the quarter
was primarily due to a decrease in service charges on deposit accounts.
Non-interest expenses increased in the quarter ended March 31, 1999 by
$16,000 or 10.0% over the comparable 1998 period. The increase in the quarter
was due to increases of $7,000 in compensation and benefits, $5,000 in data
processing and $6,000 in legal and other professional expenses. These increases
in non-interest expenses were partially offset by a $2,000 decrease in office
supplies and postage.
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<PAGE>
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. At
March 31, 1999, the Association's liquidity was 17.1% or $2.9 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%, 4.0%, and 8.0%
respectively. At March 31, 1999, the Association's tangible and core capital
both amounted to $2.7 million or 10.67% of adjusted total assets of $25.4
million, and the Association's risk-based capital amounted to $2.9 million or
22.44% of adjusted risk-weighted assets of $12.8 million.
As of March 31, 1999, 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 ......................... $2,713 $2,716 $2,716
Additional Capital Items:
General Valuation Allowances ..... -- -- 162
------ ------ ------
Regulatory Capital Computed .......... 2,713 2,716 2,878
Minimum Capital Requirement .......... 381 1,018 1,026
------ ------ ------
Regulatory Capital Excess ............ $2,332 $1,698 $1,852
====== ====== ======
Regulatory Capital as a
Percentage ...................... 10.67% 10.67% 22.44%
Minimum Capital Required
as a Percentage ................. 1.50% 4.00% 8.00%
------ ------ ------
Regulatory Capital as a
Percentage in Excess
of Requirements .................. 9.17% 6.67% 14.44%
====== ====== ======
</TABLE>
Based on the above capital ratios, the Association meets the criteria
for a "well capitalized" institution at March 31, 1999. The Association's
management believes that under the current regulations, the Association will
continue to meet its minimum capital requirements
-13-
<PAGE>
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.
The Year 2000
In accordance with the federal regulatory pronouncements, the
Association's Year 2000 plan addressed issues involving awareness, assessment,
renovation, validation, implementation and contingency planning. These phases
are discussed below.
Awareness and Assessment. The Association's Vice President was appointed Year
2000 Compliance Officer, responsible for the coordination of the Association's
efforts to becoming Year 2000 compliant. In addition a Year 2000 Committee was
created consisting of the President, Vice President and an outside board member,
to help address Year 2000 issues.
Management has conducted an assessment of the Association's hardware,
software and other computer-controlled systems. In addition, management has
identified and developed an inventory of the Association's technological
components and vendors.
Renovation Phase. The Association's data processing and items processing are
both handled by two independent third party data centers, and both centers have
indicated that they have completed their renovation process. The main software
program used by the Association has been certified by its vendor to be Year 2000
compliant. The Association's hardware has been reported Year 2000 compliant by
its provider however management is currently having the hardware reviewed by an
outside consultant to ensure that any equipment in question of being Year 2000
compliant is replaced in a timely manner.
Validation or Testing Phase. During 1998, the Association tested its loan set
up, loan servicing, saving deposits, saving withdrawals, checking deposits,
checking withdrawals, opening accounts, closing accounts, general ledger
activities and other transactions for Year 2000 compliance. Different critical
dates were tested in this Year 2000 environment and all went well.
During 1998, the Association acquired a cost estimate to switch to a
different data processor in the event their current processor was unable to
become year 2000 compliant in a timely manner. Based on the results of testing,
management does not believe that a switch to a new processor will be necessary.
Implementation Phase. Both the Association's third party data processor and item
processor have upgraded their systems to become Year 2000 compliant. At this
time the Association is operating on online with these updated systems.
-14-
<PAGE>
Contingency Planning. The Association has adopted contingency plans in the event
that one or more of its internal or external systems fail to operate on or after
January 1, 2000. In a worst case scenario, the Association would need to post
transactions and general ledger entries manually. This manual system would
consist of ledger cards or sheets for every loan, deposit and general ledger
account. The failure of external systems such as utility and phone companies may
also force the Association to operate on a manual processing system.
The Association has increased liquidity and staggered the maturity of
time deposits to provide for the increased liquidity needs that may arise due to
the Year 2000. The Association can also obtain Federal Home Loan Bank advances
if necessary.
Based on a review of internal bookkeeping practices and the reports by
the Association's third party data processor and software vendor that they are
Year 2000 compliant, management does not expect to incur significant additional
bookkeeping, data processing or other expenses in connection with issues related
to the Year 2000. A budget of $15,000 was set for costs associated with the Year
2000 (of which $5,000 has been incurred). After an initial review with an out
side computer consultant, management decided to increase the Year 2000 budget to
$25,000.
Status of Borrowers and Other Customers. The Association's customer base consist
primarily of individuals who use the Association's services for personal,
household or consumer uses. Management believes these customers are not likely
to individually pose material Year 2000 risks directly. It is not possible at
this time to gauge the indirect risks which could be faced if the employers of
these customers encounter unresolved Year 2000 issues. Most of the Association's
loans are residential or consumer in nature. The Association had nine commercial
loans at March 31, 1999. Management determined that these borrowers could
operate in an environment without computers and that the risk of these borrowers
adversely impacting the Association was not material.
-15-
<PAGE>
IBL Bancorp, Inc.
Form 10-QSB
Quarter Ended March 31, 1999
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 proceeds 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 useed 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 proceed 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:
There are no matters required to be reported under this item.
Item 5 - Other Information:
There are no matters required to be reported under this item.
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 March 31, 1999.
-16-
<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: May 12, 1999 By: /s/G. Lloyd Bouchereau, Jr.
---------------------------
G. Lloyd Bouchereau, Jr., President and
Chief Executive Officer
Date: May 12, 1999 By: /s/Gary K.Pruitt
----------------
Gary K. Pruitt
Secretary
-17-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 227
<INT-BEARING-DEPOSITS> 4,298
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,354
<INVESTMENTS-CARRYING> 2,405
<INVESTMENTS-MARKET> 2,386
<LOANS> 17,879
<ALLOWANCE> 399
<TOTAL-ASSETS> 26,051
<DEPOSITS> 22,037
<SHORT-TERM> 495
<LIABILITIES-OTHER> 104
<LONG-TERM> 0
0
0
<COMMON> 2
<OTHER-SE> 3,413
<TOTAL-LIABILITIES-AND-EQUITY> 26,051
<INTEREST-LOAN> 357
<INTEREST-INVEST> 57
<INTEREST-OTHER> 31
<INTEREST-TOTAL> 445
<INTEREST-DEPOSIT> 217
<INTEREST-EXPENSE> 222
<INTEREST-INCOME-NET> 223
<LOAN-LOSSES> 3
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 174
<INCOME-PRETAX> 67
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
<YIELD-ACTUAL> 3.47
<LOANS-NON> 241
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 101
<ALLOWANCE-OPEN> 412
<CHARGE-OFFS> 13
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 399
<ALLOWANCE-DOMESTIC> 90
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 309
</TABLE>
