<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
of the Securities and Exchange Act of 1934
For the Quarter Ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
of the Securities Exchange Act of 1934
For the transition period from ______ to _____
Commission File No. (0-16163)
INVESTORS BANK CORP.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 41-1566301
- - ---------------- ----------
(state or other jurisdiction of (IRS employer
incorporation or reorganization) identification
number)
200 East Lake Street, Wayzata, MN 55391
----------------------------------------------------------
(Address of Principal Executive Offices Including Zip Code)
(612) 475-8500
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period and the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 3,490,406 at July
31, 1994. ---------
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
INVESTORS BANK CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three months ended Six months ended
June 30 June 30
----------------------- --------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest on loans $ 14,373,845 $ 13,678,163 $ 28,113,843 $ 26,388,260
Interest on cash and investments 580,889 605,241 1,227,865 1,145,236
Interest and dividends on other assets 335,221 263,173 668,993 516,998
----------- ----------- ----------- -----------
TOTAL INTEREST INCOME 15,289,955 14,546,577 30,010,701 28,050,494
----------- ----------- ----------- -----------
INTEREST EXPENSE:
Interest on deposits 5,343,150 4,861,675 10,324,530 9,887,427
Interest on borrowings 3,415,721 3,137,594 6,640,818 5,770,533
----------- ----------- ----------- -----------
TOTAL INTEREST EXPENSE 8,758,871 7,999,269 16,965,348 15,657,960
----------- ----------- ----------- -----------
NET INTEREST INCOME 6,531,084 6,547,308 13,045,353 12,392,534
PROVISION FOR LOAN LOSSES 106,000 171,025 223,800 360,325
----------- ----------- ----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 6,425,084 6,376,283 12,821,553 12,032,209
NONINTEREST INCOME:
Mortgage banking 2,742,574 2,987,269 6,192,704 5,995,781
Loan servicing fees 1,308,009 567,898 2,615,188 1,391,556
Commissions on title insurance sales 89,058 269,721 303,171 355,749
Commissions on annuity sales 189,481 148,163 349,392 328,220
Other 306,138 195,450 500,288 461,091
----------- ----------- ----------- -----------
TOTAL NONINTEREST INCOME 4,635,260 4,168,501 9,960,743 8,532,397
----------- ----------- ----------- -----------
NONINTEREST EXPENSE:
Employee compensation and benefits 3,777,112 3,784,880 7,952,380 7,087,121
Occupancy and equipment 990,710 909,862 1,995,559 1,792,070
Advertising 352,310 305,690 620,628 485,690
Federal deposit insurance premiums 342,501 255,255 685,002 587,085
Other 1,424,494 1,214,956 2,834,662 2,398,885
----------- ----------- ----------- -----------
TOTAL NONINTEREST EXPENSE 6,887,127 6,470,643 14,088,231 12,350,851
----------- ----------- ----------- -----------
EARNINGS BEFORE INCOME TAX EXPENSE AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 4,173,217 4,074,141 8,694,065 8,213,755
INCOME TAX EXPENSE 1,724,258 1,633,915 3,581,524 3,292,431
----------- ----------- ----------- -----------
NET EARNINGS BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 2,448,959 2,440,226 5,112,541 4,921,324
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 125,000
----------- ----------- ----------- -----------
NET EARNINGS $ 2,448,959 $ 2,440,226 $ 5,112,541 $ 5,046,324
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET EARNINGS AVAILABLE FOR COMMON
STOCKHOLDERS $ 2,240,206 $ 2,198,262 $ 4,695,036 $ 4,562,398
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
EARNINGS PER COMMON SHARE:
BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $0.60 $0.61 $1.26 $1.23
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 0.00 0.00 0.00 0.03
---- ---- ---- ----
NET EARNINGS $0.60 $0.61 $1.26 $1.26
----- ----- ----- -----
----- ----- ----- -----
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES 3,726,339 3,626,563 3,731,568 3,612,795
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESTORS BANK CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1994 1993
-------------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 18,323,100 $ 58,314,515
Investment securities 27,995,403 27,778,989
Mortgage loans held for sale 43,104,203 88,351,696
Mortgage loans 768,185,387 698,895,887
Consumer loans 106,460,479 91,124,400
Federal Home Loan Bank stock 16,250,000 16,250,000
Capitalized servicing rights 4,132,887 4,425,281
Office properties and equipment 16,273,256 15,731,333
Accrued interest receivable 4,379,947 3,653,453
Foreclosed real estate 5,168,301 6,674,799
Prepaid income taxes 632,810
Other assets 7,360,477 5,884,713
-------------- -------------
TOTAL ASSETS $ 1,018,266,250 $ 1,017,085,06
-------------- -------------
-------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 621,212,556 $ 603,412,708
Notes payable 310,000,000 325,000,000
Advances and loan payments from borrowers
held under escrow 5,472,245 8,409,797
Income taxes payable 549,263
Subordinated debt 23,391,000 25,800,000
Other liabilities 6,089,680 6,760,035
-------------- -------------
TOTAL LIABILITIES 966,165,481 969,931,803
-------------- -------------
STOCKHOLDERS' EQUITY:
Preferred stock 3,036 3,036
Common stock 34,902 33,255
Additional paid-in capital 20,650,481 19,111,504
Unamortized restricted stock (1,103,153) (675,808)
Retained earnings 32,515,503 28,681,276
-------------- -------------
TOTAL STOCKHOLDERS' EQUITY 52,100,769 47,153,263
-------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,018,266,250 $1,017,085,066
-------------- --------------
-------------- -------------
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESTORS BANK CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30
-------------------------------------------
1994 1993
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $5,112,541 $5,046,324
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Depreciation and amortization 1,013,186 1,678,673
Amortization of deferred loan fees and discounts (816,140) (853,125)
Gain on sales of loan servicing rights (3,564,651) (1,773,803)
Proceeds from sales of loan servicing rights 5,252,131 2,560,729
Gain on sales of mortgage loans (2,313,276) (3,941,035)
Provision for loan and real estate losses 232,696 428,500
Prepaid income taxes 236,690 150,226
Change in:
Capitalized servicing rights (1,799,863) (1,054,701)
Accrued interest receivable (726,494) (320,342)
Interest payable on deposit accounts 810,405 (228,554)
Mortgage loans held for sale 47,560,769 (31,814,212)
Other, net (3,428,728) (1,266,538)
------------------ ------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 47,569,266 (31,387,858)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans (84,412,854) (79,945,479)
Purchase of investment securities (3,276,413) (5,675,807)
Maturities of investment securities 3,060,000 3,225,000
Purchase of FHLB stock (1,588,000)
Sale of foreclosed real estate 1,877,217 2,070,813
Increase in office properties and equipment (1,150,332) (561,706)
------------------ ------------------
NET CASH USED BY INVESTING ACTIVITIES (83,902,382) (82,475,179)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 16,989,443 35,212,947
Proceeds from FHLB advances 165,000,000 232,000,000
Repayment of FHLB advances (180,000,000) (182,000,000)
Redemption of subordinated capital notes (2,409,000)
Net proceeds from common stock transactions 977,124 85,653
Dividends on preferred stock (417,505) (483,926)
Dividends on common stock (860,809) (617,284)
Net increase (decrease) in advances and loan payments
from borrowers held under escrow (2,937,552) 987,952
------------------ ------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (3,658,299) 85,185,342
------------------ ------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (39,991,415) (28,677,695)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 58,314,515 40,179,006
------------------ ------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $18,323,100 $11,501,311
------------------ ------------------
------------------ ------------------
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Interest $16,235,310 $15,686,372
Income taxes 4,037,000 4,185,000
Noncash transfer of loans to foreclosed real estate 379,615 939,248
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
INVESTORS BANK CORP.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Investors
Bank Corp., a Delaware corporation (the Company) and its wholly owned subsidiary
Investors Savings Bank, F.S.B. (the Bank), a federally chartered savings bank
with deposits insured by the Federal Deposit Insurance Corporation (FDIC)
through the Savings Association Insurance Fund. The statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do not
include all information and footnotes necessary for a complete presentation of
financial position, results of operations, and changes in cash flows. The data
presented herein is unaudited, but in the opinion of management of the Company,
includes all adjustments, consisting only of normal recurring adjustments
necessary for a fair presentation of the financial position of the Company and
its subsidiary and the results of their operations and cash flows. The Company
believes such presentation of the financial position is adequate to make the
information presented not misleading. Results for the interim periods are not
necessarily indicative of results for the entire year.
NOTE 2. INVESTMENT SECURITIES
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES, as of January 1, 1994. Under SFAS No. 115, the Company must
classify its debt and marketable equity securities in one of three categories:
trading, available for sale, or held to maturity. Trading securities are bought
and held principally for the purpose of selling them in the near term.
Securities available for sale include securities that management intends to use
as part of its asset/liability strategy or that may be sold in response to
changes in interest rate, changes in prepayment risk, the need to increase
regulatory capital, or similar factors. The Company has the ability and intent
to hold its securities to maturity. Accordingly, there are no securities held
in a trading account or available for sale and the adoption of SFAS No. 115 had
no impact on the Company's consolidated financial statements as of January 1,
1994.
<PAGE>
NOTE 3. IMPAIRED LOANS
The Company adopted the provisions of SFAS No. 114, "ACCOUNTING BY
CREDITORS FOR IMPAIRMENT OF A LOAN", as of January 1, 1994. SFAS No. 114
specifies how reserves for losses related to "impaired" loans should be
measured. A loan is considered impaired if it is probable that the Company will
be unable to collect all amounts due according to the contractual terms of the
loan agreement. When a loan is impaired, the Company will measure the amount of
impairment based on the present value of expected future cash flows, the loan's
observable market price or the fair value of any collateral. If foreclosure is
probable, the Company shall measure impairment based on the fair value of the
collateral. SFAS No. 114 does not apply to large groups of small balance,
homogeneous loans that are collectively evaluated for impairment. The adoption
of SFAS No. 114 had no effect on the consolidated financial statements as of
January 1, 1994.
NOTE 4. RESERVES FOR LOAN LOSSES
Included in mortgage loans are reserves for losses of $2,741,114 and
$2,414,254 at June 30, 1994 and December 31, 1993, respectively. Included in
consumer loans are reserves for losses of $457,224 and $566,332 at June 30, 1994
and December 31, 1993.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Investors Bank Corp.'s (the Company) net earnings were $2.4 million for the
three months ended June 30, 1994. Net earnings were also $2.4 million for the
second quarter of 1993. Net earnings for common shareholders were $2.2 million
for both the 1994 and 1993 second quarter. Earnings per share were $.60 for the
1994 second quarter compared to $.61 per share on 100 thousand fewer average
outstanding shares in the same quarter of 1993. For the first six months of
1994, the Company's net earnings before cumulative effect of accounting change
were $5.1 million, a 4% increase from the $4.9 million for the same period in
1993. Earnings per share were $1.26 for both six month periods. The 1993
period included $.03 per share from recognition of the cumulative effect of a
change in accounting method to comply with Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes". Comparing the second
quarters of 1994 and 1993, an increase in noninterest income in the 1994 quarter
was offset by increases in noninterest expenses. For the six month periods
ending June 30, 1994 and 1993, net interest income and noninterest income both
increased and were only partially offset by increased noninterest expense.
Net interest income for the second quarters of 1994 and 1993 was
approximately equal at $6.5 million despite a 12% increase in average interest-
earning assets to $936 million from $837 million. The additional interest
income generated by the larger amount of interest-earning assets in the 1994
quarter was offset by a decline in the interest margin from 3.12% in the 1993
quarter to 2.78% in the 1994 quarter. For the six months ended June 30, 1994,
net interest income was $13.0 million, up 5% from the same period in 1993.
Average interest-earning assets increased 17% to $931 million for the first six
months of 1994 compared to $798 million for the same period in 1993. The
additional interest income generated by the increased average interest-earning
assets was more than enough to offset the decline in interest margin from 3.08%
to 2.78% between the 1993 and 1994 periods.
Growth in average interest-earning assets was due primarily to increases in
adjustable rate mortgage loans (ARMs) and consumer loans partially offset by a
reduction in mortgage loans held for sale. The Company's mortgage banking
operation originated significant amounts of ARMs in the latter months of 1993
and during the first six months of 1994 because of increased demand for these
products. The demand for ARM loans increased more significantly in 1994 as
interest rates on fixed rate long term mortgages increased. The Company's
average ARM portfolio increased $123 million to $691 million between the second
quarters of 1993 and 1994. Between the same periods, average consumer home
equity loans increased $26 million through promotional efforts by the Company.
Offsetting a portion of the ARM and consumer loan growth was a drop in average
mortgage loans held for sale of $48 million. The current interest rate
environment supports demand for ARM loans and the Company expects additional
growth in ARMs in the next few months as well as continued growth in consumer
loans from planned promotional efforts.
<PAGE>
Reductions in net interest margins between the second quarter and first six
months of 1993 and the same periods in 1994 were caused primarily by significant
drops in the yields on interest-earning assets. Asset yields declined 41 basis
points between the second quarters of 1993 and 1994 and 59 basis points between
the same six month periods, reflecting the repricing of ARM loans indexed to
market rates, the payoff of higher yielding ARM loans and the addition of new
ARM loans at lower initial yields. The Company believes this trend has stopped
and that ARM yields will begin to climb as they reprice upward due to the
increase in market rates during the first two quarters of 1994. Liability costs
declined 7 basis points between the 1993 and 1994 second quarters and 27 basis
points between the first six month periods of 1993 and 1994. Between the six
month periods, deposit costs declined 28 basis points and Federal Home Loan Bank
(FHLB) advance costs were 10 basis points less as both repriced at lower rates.
However, this trend also has moderated. Between the second quarters of 1993 and
1994, deposit costs declined 15 basis points but FHLB advances increased 31
basis points. The Company's FHLB advances generally reprice more rapidly than
deposits. Overall, the Company expects moderate increases during the remainder
of 1994 in its spread and margin as a result of recent increases in market
interest rates.
The provision for loan losses was $106 thousand in the second quarter of
1994 compared to $171 thousand for the same quarter a year ago. For the six
months ended June 30, 1994 and 1993, the provisions were $224 thousand and $360
thousand, respectively. Based on management's review of the loan portfolio, the
1994 provisions were required only to increase general reserves to accommodate
for the Company's loan growth.
Noninterest income for the 1994 second quarter increased 11% to $4.6
million from $4.2 million in the year ago quarter. For the six months ended
June 30, 1994 noninterest income was $10.0 million, a 17% increase from the $8.5
million for the first six months of 1993. The increases for both periods
resulted primarily from increased loan servicing fee income.
Mortgage banking, the most significant source of noninterest income,
decreased 8% between the June quarters to $2.7 million, but was up 3% to $6.2
million for the first six months of 1994 compared to the same period last year.
Mortgage banking income consists primarily of gain on sale of mortgage loans and
gain on sale of loan servicing rights.
Gain on sales of mortgage loans declined substantially to $804 thousand in
the 1994 second quarter from $2.8 million in the 1993 second quarter. For the
first six months of 1994 the gain on sales of mortgage loans was $2.3 million
compared to $3.9 million for the same 1993 period. The decreases in income
reflect the significantly reduced amounts of mortgage loans sold in the 1994
periods which in turn result from reduced mortgage originations as market
interest rates have risen since 1993. In addition, pricing gains on refinanced
loans were significantly higher for the prior year periods.
<PAGE>
To compensate for the reduced income from gain on sales of mortgage loans,
the Company sold increased amounts of loan servicing rights. While no loan
servicing rights were sold in the second quarter of 1993, the Company sold $178
million in servicing rights during the 1994 second quarter for a gain of $1.8
million. For the first six months of 1994, the Company generated income of $3.6
million on the sales of $342 million in servicing rights compared to income of
$1.8 million on sales of $139 million in the first six months of 1993. Although
the Company has sold more servicing rights in 1994, market pricing for these
rights has been less favorable than in 1993.
While the Company's strategy is to continue generating mortgage banking
income, the amounts of such income are affected by external factors such as
market pricing, general demand for mortgage products and the competitive
environment in the markets in which it originates mortgages. Because of the
increase in market interest rates in 1994, mortgage refinancing activity has
declined to a very low level and has significantly reduced the amount of loans
generated by the Company's mortgage banking activity. As a result, the Company
expects reduced amounts of sales of mortgage loans and reduced gross additions
to its portfolio of loans serviced for others.
The Company's servicing fee income was $1.3 million in the June 1994
quarter compared to $568 thousand in the June 1993 quarter. The increase
results both from a 21% increase in average loans serviced for others to $1.3
billion and elimination of the need to adjust servicing fee income for higher
than anticipated prepayments. In the June 1993 quarter servicing fee income was
reduced $414 thousand by such adjustments. Servicing fee income for the first
six months of 1994 was $2.6 million, an 88% increase from the $1.4 million of
servicing fee income in the first six months of 1993. Between these periods,
average loans serviced for others increased 27%. The 1993 servicing fee income
was adjusted by $617 thousand for higher than anticipated prepayments. Because
of the significantly reduced mortgage refinancing activity in 1994, the Company
does not anticipate that significant adjustments to its servicing fee income
will be required during 1994. Because of the continued sales of loan servicing
rights and the reduced level of mortgage originations, the Company does not
expect the portfolio of loans serviced for others to increase during the last
half of 1994.
The other categories of noninterest income declined in total 5% to $585
thousand in the 1994 second quarter. Income from commissions on title insurance
sales was reduced because of the Company's reduced mortgage originations. For
the first six months of 1994, the other categories of noninterest income were
$1.2 million, almost the same as for the 1993 period, as slight reductions in
title insurance commission were offset by slight increases in annuity sales and
other income.
Noninterest expense was $6.9 million for the June 1994 quarter, a 6%
increase compared to the same quarter last year. Employee compensation and
benefits were almost the same between quarters as the cost of staff added to
support new banking offices was offset by staff reductions in the mortgage
banking operation. Occupancy and equipment increased $81 thousand from the
costs of three banking offices opened in late 1993 and a new mortgage banking
office opened in early 1994. Advertising increased $47 thousand from greater
promotional efforts. The Federal deposit insurance premium expense was $87
thousand greater in the 1994 quarter because the 1993 quarter benefited from a
$75 thousand refund from the FDIC. The Company expects that its deposit
insurance premium rate will remain at 23 basis points for the remainder of 1994.
Other expenses were $210 thousand higher because of increased data processing
expenses and greater than normal foreclosure expenses on commercial real estate.
<PAGE>
FINANCIAL CONDITION
Total assets of the Company were $1.0 billion at June 30, 1994, which was
the same level as at December 31, 1993. Cash and cash equivalents declined $40
million reflecting reduced liquidity levels at June 30, 1994. During the six
months ended June 30, 1994, $48 million was provided by operating activities
primarily by the reduction in mortgage loans held for sale which in turn was the
result of reduced mortgage banking originations. Cash was applied in investing
activities to fund an $84 million increase in loans. Of the increase, $69
million was in ARM loans and $15 million was in consumer home equity loans.
Financing activities used a net $4 million in cash. FHLB advances were reduced
by $15 million. Maximum FHLB borrowings were $325 million during the period
and were incurred during January 1994. Deposits increased by $17 million
primarily in certificates of deposits as customers responded to promotional
efforts. As part of its continuing effort to increase deposits, the Company has
acquired land in the St. Paul area and plans to build and open a branch in late
1994 or early 1995. Additional cash was used to repay $2.4 million in
subordinated notes prior to its original maturity. The current market interest
rate environment has increased demand for the Company's ARM loan products and
the Company expects increases during the next few months in its ARM portfolio.
While the Company continues to promote its deposit products and expects deposit
growth from its twelve existing offices, it plans to continue using advances
from the FHLB as a funding source when necessary.
Nonperforming assets were $6.2 million at June 30, 1994, down from $8.6
million at December 31, 1993. The Company has disposed of approximately $1.6
million in properties including one commercial real estate property for $1.0
million. Nonperforming residential real estate loans were at an unusually low
$1.0 million at June 30, 1994 which accounts for the remaining decrease in
nonperforming assets. Through sales during the remainder of 1994, the Company
expects continued reduction of nonperforming commercial real estate assets,
which were $3.6 million at June 30, 1994.
The Company intends to support the Bank's efforts to maintain a capital
level adequate to support its projected growth as well as maintain its "well
capitalized" status. Approximately $3.0 million in funds attained during the
$23 million December 1992 subordinated debt offering remains in the parent
company and is available for future capital needs.
At June 30, 1994, the Bank met each of the three regulatory capital
standards to continue to be classified as a "well capitalized" institution. The
following is a summary of the Bank's capital position:
<TABLE>
<CAPTION>
<S> <C>
Tier 1 leverage (core) capital standard:
Adjusted total assets $1,015,871,126
Tier 1 capital 69,305,184
Tier 1 capital ratio 6.82%
Tier 1 risk based capital standard:
Risk adjusted total assets $607,716,288
Tier 1 capital 69,305,184
Tier 1 risk based capital ratio 11.40%
<PAGE>
Risk based capital standard:
Risk adjusted assets $607,716,288
Risk based capital 72,138,608
Risk based capital ratio 11.87%
</TABLE>
Management believes the Bank will continue to meet all three "well
capitalized" standards in 1994.
In 1993, the Office of Thrift Supervision (OTS) issued its final
regulations on interest rate risk. Under this rule, effective January 1, 1994,
institutions deemed to have an "above normal" level of interest rate risk as
calculated by the OTS based on quarterly reports submitted by the Bank are
subject to a capital charge and must deduct a portion of that risk from total
risk based regulatory capital. At December 31, 1993, the Bank's required risk
based regulatory capital was not impacted by the interest rate risk rule. While
the Bank has not yet been notified by the OTS as to the impact of the rule on
its June 30, 1994 risk based capital, management does not believe the Bank will
be impacted by this rule during 1994.
<PAGE>
PART II.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - -----------------------------------------
(a) Exhibits
11. Computation of Earnings per Share
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INVESTORS BANK CORP.
/s/ James M. Burkholder
----------------------------------
James M. Burkholder
President
Chief Executive Officer
Dated: August 12, 1994
---------------------
<PAGE>
EXHIBIT 11
INVESTORS BANK CORP.
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
--------------------------- ---------------------------
1994 1993 (1) 1994 1993 (1)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
PRIMARY:
- - -------
Average shares outstanding 3,450,273 3,295,058 3,421,149 3,290,617
Net effect of the assumed purchase of stock
under the stock option plan based on the
treasury stock method using average
market price 198,510 279,496 227,910 276,379
Net effect of the assumed exercise of common
stock warrants based on the treasury
stock method using average market price 77,556 52,009 82,509 45,799
------------ ------------ ------------ ------------
3,726,339 3,626,563 3,731,568 3,612,795
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings before preferred stock dividends and
cumulative effect of accounting change $2,448,959 $2,440,226 $5,112,541 $4,921,324
Preferred stock dividends 208,753 241,964 417,505 483,926
------------ ------------ ------------ ------------
Earnings for common stockholders before
cumulative effect of accounting change 2,240,206 2,198,262 4,695,036 4,437,398
Cumulative effect of accounting change 125,000
------------ ------------ ------------ ------------
Net earnings available for common stockholders $2,240,206 $2,198,262 4,695,036 $4,562,398
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Per common share:
Earnings for common stockholders before
cumulative effect of accounting change $0.60 $0.61 $1.26 $1.23
Cumulative effect of accounting change 0.03
----- ----- ----- -----
Net earnings available for common stockholders $0.60 $0.61 $1.26 $1.26
----- ----- ----- -----
----- ----- ----- -----
FULLY DILUTED:
- - -------------
Average shares outstanding 3,450,273 3,295,057 3,421,149 3,290,617
Net effect of the assumed purchase of stock
under the stock option plan based on the
treasury stock method using ending
market price 198,801 283,228 228,714 286,608
Net effect of the assumed exercise of common
stock warrants based on the treasury
stock method using ending market price 77,916 55,884 82,509 55,884
------------ ------------ ------------ ------------
3,726,990 3,634,169 3,732,372 3,633,109
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings before preferred stock dividends and
cumulative effect of accounting change $2,448,959 $2,440,226 $5,112,541 $4,921,324
Preferred stock dividends 208,753 241,964 417,505 483,926
------------ ------------ ------------ ------------
Earnings for common stockholders before
cumulative effect of accounting change 2,240,206 2,198,262 4,695,036 4,437,398
Cumulative effect of accounting change 125,000
------------ ------------ ------------ ------------
Net earnings available for common stockholders $2,240,206 $2,198,262 $4,695,036 $4,562,398
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Per common share:
Earnings for common stockholders before
cumulative effect of accounting change $0.60 $0.60 $1.26 $1.23
Cumulative effect of accounting change 0.03
----- ----- ----- -----
Net earnings available for common stockholders $0.60 $0.60 $1.26 $1.26
----- ----- ----- -----
----- ----- ----- -----
<FN>
NOTE 1. Restated for the effects of the four-for-three common stock split on
December 31, 1993.
</TABLE>
