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 June 30, 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 August 4,
1999: 210,870
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]
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IBL Bancorp, Inc.
Form 10-QSB
Quarter Ended June 30, 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
June 30, 1999 (Unaudited) and December 31, 1998 3
Consolidated Statements Of Income and Comprehensive Income (Unaudited)
For the Three and Six Months Ended June 30, 1999 and 1998 4
Consolidated Statements Of Changes in Shareholders' Equity (Unaudited)
For The Six Months Ended June 30, 1999 and 1998 6
Consolidated Statements Of Cash Flows (Unaudited)
For the Six Months Ended June 30, 1999 and 1998 7
Notes to Consolidated Financial Statements 8
Item 2 - Management's Discussion and Analysis or Plan
of Operations 10
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
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<TABLE>
<CAPTION>
IBL BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 1999 and December 31, 1998
June 30,
1999 December 31,
(Unaudited) 1998
------------ ------------
<S> <C> <C>
ASSETS
Cash and amounts due from depository institutions ...... $ 314,369 $ 177,068
Interest-bearing deposits in other institutions ........ 3,486,160 1,681,430
------------ ------------
Total cash ........................................... 3,800,529 1,858,498
------------ ------------
Time deposits .......................................... 1,401,000 795,000
------------ ------------
Mortgage-backed securities held-to-maturity (estimated
market value $2,354,528 and $2,116,824) ............... 2,401,604 2,122,507
Mortgage-backed securities available-for-sale (amortized
cost $1,844,685 and $1,454,057) ....................... 1,822,593 1,453,613
------------ ------------
Total investment securities .......................... 4,224,197 3,576,120
------------ ------------
Loans receivable ....................................... 18,280,726 17,620,600
Less allowance for loan losses ......................... 402,329 411,621
------------ ------------
Loans receivable, net ................................ 17,878,397 17,208,979
------------ ------------
Premises and equipment, net ............................ 143,764 154,179
Federal Home Loan Bank stock, at cost .................. 175,300 170,800
Accrued interest receivable ............................ 98,353 74,242
Other assets ........................................... 77,561 40,200
------------ ------------
Total assets ......................................... $ 27,799,101 $ 23,878,018
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 1999 and December 31, 1998
(continued)
June 30,
1999 December 31,
(Unaudited) 1998
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits ............................................... $ 23,763,858 $ 19,898,684
Advances from Federal Home Loan Bank ................... 495,000 495,000
Advances by borrowers for taxes and insurance .......... 13,948 12,781
Federal income taxes payable ........................... -- 39,388
Other liabilities and deferrals ........................ 75,299 49,570
------------ ------------
Total liabilities .................................... 24,348,105 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 ............................. 1,739,674 1,740,254
Unearned ESOP shares ................................... (156,038) (165,971)
Retained earnings - substantially restricted ........... 1,879,832 1,806,496
Accumulated other comprehensive loss ................... (14,581) (293)
------------ ------------
Total stockholders' equity ........................... 3,450,996 3,382,595
------------ ------------
Total liabilities and stockholders' equity ........... $ 27,799,101 $ 23,878,018
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<TABLE>
<CAPTION>
IBL BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
Three and six months ended June 30, 1999 and 1998
---Three months ended--- ---Six months ended---
06/30/99 06/30/98 06/30/99 06/30/98
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans....................................... $ 374,670 $ 360,401 $ 731,743 $ 733,970
Mortgage-backed securities.................. 56,890 55,568 111,341 118,689
FHLB stock and other securities............. 2,266 2,705 4,582 8,272
Deposits.................................... 42,501 17,396 73,550 29,634
---------- ---------- ---------- ----------
Total interest income..................... 476,327 436,070 921,216 890,565
---------- ---------- ---------- ----------
INTEREST EXPENSE
Deposits
Interest-bearing demand deposit accounts... 22,706 32,337 41,041 48,145
Passbook savings accounts.................. 24,184 26,560 47,937 50,164
Certificate of deposit accounts............ 179,401 167,529 353,956 350,988
---------- ---------- ---------- ----------
Total interest on deposits................ 226,291 226,426 442,934 449,297
Advances from Federal Home Loan Bank........ 5,702 4,361 11,404 11,284
---------- ---------- ---------- ----------
Total interest expense.................... 231,993 230,787 454,338 460,581
---------- ---------- ---------- ----------
Net interest income....................... 244,334 205,283 466,878 429,984
Provision for losses on loans............... 2,720 3,000 5,860 14,960
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR
LOSSES ON LOANS............................ 241,614 202,283 461,018 415,024
---------- ---------- ---------- ----------
NON-INTEREST INCOME
Service charges on deposit accounts......... 20,779 20,064 39,168 40,935
Other....................................... 5,586 3,228 8,892 6,929
---------- ---------- ---------- ----------
Total non-interest income................. 26,365 23,292 48,060 47,864
---------- ---------- ---------- ----------
NON-INTEREST EXPENSES
Compensation and benefits................... 92,654 77,159 186,799 164,246
Occupancy .................................. 6,740 8,096 12,799 12,752
Furniture and equipment .................... 6,115 5,631 13,714 12,108
Deposit insurance premium................... 3,083 3,085 6,298 6,209
Data processing............................. 19,607 22,027 38,635 36,288
Legal and other professional................ 31,292 7,200 44,531 14,400
Advertising................................. 3,428 3,561 6,938 8,737
Office supplies and postage................. 6,682 4,295 15,697 15,664
Other general and administrative............ 25,922 13,669 44,133 32,501
---------- ---------- ---------- ----------
Total non-interest expenses............... 195,523 144,723 369,544 302,905
---------- ---------- ---------- ----------
</TABLE>
Continued. . .
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<PAGE>
<TABLE>
<CAPTION>
---Three months ended--- ---Six months ended---
06/30/99 06/30/98 06/30/99 06/30/98
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INCOME BEFORE PROVISION FOR INCOME TAXES.... $ 72,456 $ 80,852 $ 139,534 $ 159,983
PROVISION FOR INCOME TAXES.................. 23,616 34,108 50,382 60,569
---------- ---------- ---------- ----------
NET INCOME.................................. $ 48,840 $ 46,744 $ 89,152 $ 99,414
========== ========== ========== ==========
Basic earnings per share.................... $ .25 $ - $ .46 $ -
========== ========== ========== ==========
COMPREHENSIVE INCOME
Net income.................................. $ 48,840 $ 46,744 $ 89,152 $ 99,414
Other comprehensive income
Unrealized holding gains (losses) on
securities during the period............. (18,074) 1,726 (21,648) (4,272)
Income tax expense (benefit) related to
unrealized holding gains (losses)........ (6,145) 587 (7,360) (1,452)
---------- ---------- ---------- ----------
Other comprehensive income (loss), net of
tax effects............................... (11,929) 1,139 (14,288) (2,820)
---------- ---------- ---------- ----------
Comprehensive income........................ $ 36,911 $ 47,883 $ 74,864 $ 96,594
========== ========== ========== ==========
</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
Six months ended June 30, 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 ............................... -- -- -- 99,414 -- 99,414
Other comprehensive income, net of tax
Unrealized losses on securities ........ -- -- -- -- (2,820) (2,820)
----------- ----------- ----------- ----------- ----------- -----------
Comprehensive income ................... -- -- -- 99,414 (2,820) 96,594
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, JUNE 30, 1998 (Unaudited) ....... $ -- $ -- $ -- $ 1,718,425 $ 129 $ 1,718,554
=========== =========== =========== =========== =========== ===========
BALANCE, DECEMBER 31, 1998 ............... $ 2,109 $ 1,740,254 $ (165,971) $ 1,806,496 $ (293) $ 3,382,595
COMPREHENSIVE INCOME (Unaudited)
Net income ............................... -- -- -- 89,152 -- 89,152
Other comprehensive income, net of tax
Unrealized losses on securities ........ -- -- -- -- (14,288) (14,288)
----------- ----------- ----------- ----------- ----------- -----------
Comprehensive income ................... -- -- -- 89,152 (14,288) 74,864
----------- ----------- ----------- ----------- ----------- -----------
ESOP shares released for allocation ...... -- (580) 9,933 -- -- 9,353
Dividends ................................ -- -- -- (15,816) -- (15,816)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, JUNE 30, 1999 (Unaudited) ....... $ 2,109 $ 1,739,674 $ (156,038) $ 1,879,832 $ (14,581) $ 3,450,996
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<TABLE>
<CAPTION>
IBL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 1999 and 1998
1999 1998
(Unaudited) (Unaudited)
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................................... $ 89,152 $ 99,414
---------- ----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation........................................... 10,415 10,499
Provision for loan losses.............................. 5,860 15,000
ESOP contribution...................................... 9,353 -
Provision for deferred federal income tax credit....... (2,666) (27,791)
Amortization of net premium on investment and mortgage-
backed securities..................................... 9,086 15,723
Net discount charged (realized) on installment loans... (7,658) 18,594
Net loan fees deferred ................................ 1,677 2,396
Stock dividends from Federal Home Loan Bank............ (4,500) (7,800)
Net increase in interest receivable.................... (24,111) (8,215)
Net increase in other assets........................... (9,303) (69,298)
Net increase (decrease) in interest payable............ (539) 4,997
Net decrease in income taxes payable.................. (57,420) (8,613)
Net increase in other liabilities...................... 32,720 6,044
---------- ----------
Total adjustments.................................... (37,086) (48,464)
---------- ----------
Net cash provided by operating activities................ 52,066 50,950
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans receivable......................... (679,797) (639,022)
Purchases of securities available-for-sale............... (629,796) (119,776)
Principal payments received on mortgage-backed securities
available-for-sale...................................... 235,106 310,522
Purchases of securities held-to-maturity................. (450,495) -
Proceeds from sale of foreclosed assets.................. 10,500 -
Principal payments received on mortgage-backed securities
held-to-maturity........................................ 166,374 341,980
Purchases of office property and equipment............... - (2,728)
Certificates of deposits acquired........................ (606,000) -
Proceeds from sale of Federal Home Loan Bank stock....... - 205,000
---------- ----------
Net cash provided by (used in) investing activities...... (1,954,108) 95,976
---------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IBL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 1999 and 1998
(continued)
1999 1998
(Unaudited) (Unaudited)
---------- ----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposit accounts......................... 3,865,713 1,017,019
Net decrease in advances by borrowers for taxes
and insurance........................................... (5,824) (2,918)
Cash dividends..... ..................................... (15,816) -
Repayment of advances from Federal Home Loan Bank........ - (610,000)
---------- ----------
Net cash provided by financing activities................ 3,844,073 404,101
---------- ----------
NET INCREASE IN CASH..................................... 1,942,031 551,027
Cash - beginning of period............................... 1,858,498 1,110,208
---------- ----------
Cash - end of period..................................... $3,800,529 $1,661,235
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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IBL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 1999
A: BASIS OF PRESENTATION
The accompanying consolidated financial statements for the period ended
June 30, 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 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 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 six
months ended June 30, 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
released for allocation to active employees annually. 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 $9,353 for
the six months ended June 30, 1999.
C: EARNINGS PER SHARE
The computation of basic earnings per share includes reported net income in the
numerator and the weighted average number of shares outstanding of 194,635 for
the six months ended June 30, 1999 and 194,840 for the three months then ended
in the denominator.
Earnings per share for periods prior to September 30, 1998 are not considered
meaningful as the Conversion was not completed until September 30, 1998.
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<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 June 30, 1999 to December 31, 1998 and
the results of operations for the three and six months ended June 30, 1999 with
the same periods 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 $3,921,000 or 16.4% from $23.9
million at December 31, 1998 to $27.8 million at June 30, 1999. This increase
was primarily due to increases of $669,000 in net loan receivables, $606,000 in
time deposits, $648,000 in investment securities and $1,942,000 in cash and cash
equivalents. The increase in cash and cash equivalents was due primarily to the
Association beginning to participate in deposits from various local government
entities and a single large deposit of $1,250,000. These deposits received from
other entities were then put into deposits at other institutions.
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<PAGE>
Interest-bearing deposits in other institutions increased by
$1,805,000 or 107.3% from $1,681,000 at December 31, 1998 to $3,486,000 at June
30, 1999. This increase was primarily due to the increased deposits the
Association received.
Time deposits increased by $606,000 or 76.2% from $795,000 at December
31, 1998 to $1,401,000 at June 30, 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 $648,000 or 18.1%
from $3,576,000 at December 31, 1998 to $4,224,000 at June 30, 1999, due to
purchases of $865,000 in the first half of 1999.
The demand for mortgage loans in the Association's market area
increased during the past six months. The net loan portfolio increased $669,000
or 3.9% from $17,209,000 at December 31, 1998 to $17,878,000 at June 30, 1999.
This increase consisted mainly of single- family residential mortgage loans.
Deposits increased by $3,865,000 or 19.4% from $19,899,000 at December
31,1998 to $23,764,000 at June 30, 1999. This increase is primarily due to the
Association beginning to participate in deposits from various local government
entities and a single large deposit of $1,250,000.
Total stockholders' equity increased by $68,000 during the past six
months. Net income of $89,000 and a $10,000 decrease in unearned ESOP shares
increased stockholders' equity during the period. These factors were offset by
the payment of two quarterly dividends totaling $16,000, an increase of $14,000
in unrealized losses on available-for-sale investment securities and a decrease
of $1,000 in additional paid-in capital during this period. Stockholders' equity
at June 30, 1999 totaled $3,451,000 or 12.4% of total assets compared to
stockholders' equity of $3,383,000 or 14.2% of total assets at December 31,
1998.
The Association's total classified assets for regulatory purposes at
June 30, 1999 (excluding loss assets specifically reserved for) amounted to
$410,000, all of which was classified as substandard. The largest classified
asset at June 30, 1999 consisted of a $73,000 adjustable-rate residential loan.
The remaining $337,000 of substandard assets at June 30, 1999 consisted of 10
residential mortgage loans totaling $300,000 and 7 consumer loans totaling
$37,000.
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
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<PAGE>
expense and income taxes. In the six months ended June 30, 1999 and 1998, net
interest income after 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 increased by $2,000 or 4.5% in the quarter ended June 30,
1999 and decreased by $10,000 or 10.3% in the six months ended June 30, 1999
compared to the respective 1998 periods. The increase in the June 30, 1999
quarter was due to an increase in interest income of $40,000, an increase in
non-interest income of $3,000 and a decrease in provision for income taxes of
$10,000. These factors were primarily offset by an increase in non-interest
expenses of $51,000. The decreased net income for the six-month period ending
June 30, 1999 was primarily due to a $67,000 increase in non-interest expenses.
This increase in non-interest expense was partially offset by an increase in net
interest income after provision for loan losses of $46,000 and a decrease in
provision for income taxes of $10,000.
The $39,000 increase in net interest income in the second quarter of
1999 was primarily due to increases in interest-earning assets funded by
increased deposits. The higher average balances were partially offset by a
decrease in the average interest rate spread from 3.13% in the quarter ended
June 30, 1998 to 3.05% in the second quarter of 1999. The average rate on
interest-bearing liabilities decreased from 4.47% in the second quarter of 1998
to 4.00% in the second quarter of 1999, while the average yield on
interest-earning assets decreased from 7.60% to 7.05% 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.
The $37,000 increase in net interest income in the first six months of
1999 compared to the first six months of 1998 was also primarily due to
increases in interest-earning assets funded by increased deposits. The higher
average balances were partially offset by a decrease in the average interest
rate spread from 3.28% in the six-month period ending June 30, 1998 to 3.10% in
the six-month period ending June 30, 1999. The average rate on interest-bearing
liabilities decreased from 4.45% in the first six months of 1998 to 4.01% in the
first six months of 1999, while the average yield on interest-earning assets
decreased from 7.73% to 7.11% 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 increased by $40,000 or 9.2% in the quarter ended
June 30, 1999 and increased $31,000 or 3.4% for the six months ended June 30,
1999 over the comparable 1998 periods due to higher balances, offset by lower
yields.
Total interest expense increased by $1,000 or .5% for the quarter
ended June 30, 1999 and decreased $6,000 or 1.4% for the six months ended June
30, 1999 compared to the comparable 1998 periods. The increase in the quarter
period was primarily due to an increase in Federal Home Loan Bank advances. The
decrease in the six-month period was primarily due to a $6,000 decrease in total
interest on deposits due to a decline in the average rate paid from 4.40% in the
first half of 1998 to 4.00% in the first half of 1999.
The provision for loan losses decreased by $300 for the quarter and
decreased $9,000 for the six months ended June 30, 1999 from the comparable 1998
periods. At June 30, 1999, the
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Association's total non-accruing loans amounted to $186,000. The allowance for
loan losses amounted to $402,000 at June 30, 1999, representing 2.2% of the
total loans held in portfolio and 216.8% 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 no charge-offs in the
quarter ended June 30, 1999 and the current asset quality of the loan portfolio.
Non-interest income increased by $3,000 or 13.2% in the quarter ended
June 30, 1999 and increased $200 or .4% in the six months ended June 30, 1999
from the comparable 1998 periods. The increase in the quarter was primarily due
to an increase in commissions on credit insurance and an increase in service
charges on deposit accounts.
Non-interest expenses increased by $51,000 or 35.1% in the quarter
ended June 30, 1999 and increased by $67,000 or 22.0% in the six months ended
June 30, 1999 over the comparable 1998 periods. The increase in the quarter was
primarily due to increases of $24,000 in legal and other professionals, $15,000
in compensation and benefits, $12,000 in general and administrative and $2,000
in office supplies and postage. The increases in non-interest expenses were
partially offset by a $2,000 decrease in data processing. The increase in the
six-month period was primarily due to increases of $30,000 in legal and other
professional, $23,000 in compensation and benefits, $12,000 in general and
administrative, $2,000 in data processing and $2,000 in furniture and equipment
expenses. These increases in non-interest expenses were partially offset by a
$2,000 decrease in advertising.
The increase of $30,000 in legal and other professional expense for the
six months ended June 30, 1999 was primarily caused by increased legal and
accounting fees associated with the preparation of our first year end reports as
a public entity. Of this increase, $13,000 was costs associated with accounting
work preformed in 1999 for our 1998 annual audit.
The increase of $23,000 in compensation and benefits for the six months
ended June 30, 1999 was primarily due to increases of $9,000 in other employee
benefits, $6,000 in contributions to employee retirement plan, $5,000 in
compensation of officers and employees and $5,000 in ESOP contributions
expenses. These increases where partially offset by a decrease of $2,000 in
compensation of directors. The $9,000 increase in other employee benefits in the
six month period ending June 30, 1999 is partially inflated due to the receipt
of a $5,000 rebate of premiums from our employee health insurance carrier during
the same period in 1998.
The decrease in the provision for income taxes is due primarily to the
reduction in before tax earnings and the varying tax effects in the prior period
relating to the gain on the sale of FHLB stock, the recognition of interest on
non-accrual loans brought current and the adjustment of tax reserves for bad
debts.
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
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<PAGE>
withdrawable deposit accounts and borrowings payable in one year or less. At
June 30, 1999, the Association's liquidity was 19.3% or $3.4 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 June 30, 1999, the Association's tangible and core capital both
amounted to $2.8 million or 10.14% of adjusted total assets of $27.2 million,
and the Association's risk-based capital amounted to $2.9 million or 21.81% of
adjusted risk-weighted assets of $13.4 million.
As of June 30, 1999, the Association's unaudited regulatory capital
requirements are as indicated in the following table:
<TABLE>
<CAPTION>
(Dollars In Thousands)
TANGIBLE CORE RISK-BASED
CAPITAL CAPITAL CAPITAL
------- ------- -------
<S> <C> <C> <C>
GAAP Capital ......................... $2,745 $2,759 $2,759
Additional Capital Items:
General Valuation Allowances ..... -- -- 169
------ ------ ------
Regulatory Capital Computed .......... 2,745 2,759 2,928
Minimum Capital Requirement .......... 408 1,088 1,074
------ ------ ------
Regulatory Capital Excess ............ $2,337 $1,671 $1,854
====== ====== ======
Regulatory Capital as a
Percentage ...................... 10.14% 10.14% 21.81%
Minimum Capital Required
as a Percentage ................. 1.50% 4.00% 8.00%
------ ------ ------
Regulatory Capital as a
Percentage in Excess
of Requirements .................. 8.64% 6.14% 13.81%
====== ====== ======
</TABLE>
Based on the above capital ratios, the Association meets the criteria
for a "well capitalized" institution at June 30, 1999. The Association's
management believes that under the
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<PAGE>
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.
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 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 computer hardware was reported Year
2000 compliant by its provider; however, after having the hardware reviewed by
an outside consultant, management decided to replace the hardware due to its age
and quality to ensure Year 2000 compliance.
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 received a cost estimate to switch to a
different data processor in the event its 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 online with these updated systems.
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
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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 $25,000 was set for costs associated with the Year
2000 (of which $5,000 has been incurred as of June 30, 1999). In July of 1999,
$18,000 was spent for the purchase of new computer hardware.
Status of Borrowers and Other Customers. The Association's customer
base consists 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 June 30, 1999. Management determined that the risk of
Year 2000 issues regarding these borrowers adversely impacting the Association
was not material.
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<PAGE>
IBL Bancorp, Inc.
Form 10-QSB
Quarter Ended June 30, 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 the mutual to 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 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
have been invested in investment securities and other
interest-earning assets.
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 April 28, 1999, in conjunction with the Company's annual
meeting of stockholders, there were two matters submitted for a
vote of security holders. (1) The election of directors G. Lloyd
Bouchereau, Jr. and Bobby E. Stanley for a term of three year
expiring in 2002. Other directors whose term of office continued
after the meeting are; John L. Delahaye, Garry K. Pruitt, Edward
J. Steinmetz and Danny M. Strickland. (2) To ratify the
appointment of L.A. Champagne & Co., L.L.P. as the Company's
independent auditors for the year ending December 31, 1999. On
matter (1) described above votes were cast as follows for both
directors; for = 174,610, against = 0, abstain = 50, not voted =
36,210. On matter (2) described above votes were cast as
follows; for = 174,660, against = 0, abstain = 0, not voted =
36,210.
Item 5 - Other Information:
There are no matters required to be reported under this item.
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<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 June 30, 1999.
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<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: August 11, 1999 By:/s/G. Lloyd Bouchereau, Jr.
---------------------------
G. Lloyd Bouchereau, Jr., President and
Chief Executive Officer
Date: August 11, 1999 By:/s/Gary K.Pruitt
----------------
Gary K. Pruitt
Secretary
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<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0001064160
<NAME> IBL BANCORP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 314
<INT-BEARING-DEPOSITS> 4,887
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,823
<INVESTMENTS-CARRYING> 2,577
<INVESTMENTS-MARKET> 2,530
<LOANS> 18,281
<ALLOWANCE> 402
<TOTAL-ASSETS> 27,799
<DEPOSITS> 23,764
<SHORT-TERM> 495
<LIABILITIES-OTHER> 89
<LONG-TERM> 0
0
0
<COMMON> 2
<OTHER-SE> 3,448
<TOTAL-LIABILITIES-AND-EQUITY> 27,799
<INTEREST-LOAN> 732
<INTEREST-INVEST> 116
<INTEREST-OTHER> 74
<INTEREST-TOTAL> 921
<INTEREST-DEPOSIT> 443
<INTEREST-EXPENSE> 454
<INTEREST-INCOME-NET> 467
<LOAN-LOSSES> 6
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 370
<INCOME-PRETAX> 140
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 89
<EPS-BASIC> .46
<EPS-DILUTED> .46
<YIELD-ACTUAL> 3.47
<LOANS-NON> 186
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 101
<ALLOWANCE-OPEN> 399
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 402
<ALLOWANCE-DOMESTIC> 120
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 282
</TABLE>
