<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
---
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1999
--------------
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 Number 0-18301
-------
IROQUOIS BANCORP, INC.
----------------------
(Exact name of Registrant as specified in its charter)
NEW YORK 16-1351101
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
115 Genesee Street, Auburn, New York 13021
------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (315) 252-9521
---------------
_________________________________________________________________
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such 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: 2,426,880 shares of common
stock on March 31, 1999.
<PAGE>
INDEX
Page No.
-------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets -
March 31, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Income -
Three Months Ended March 31, 1999 and 1998 4
Consolidated Statements of Shareholders' Equity
and Comprehensive Income
Three Months Ended March 31, 1999 and 1998 5
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1999 and 1998 6
Notes to Condensed Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
PART II OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
IROQUOIS BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
(dollars in thousands, except March 31, December 31,
share data) 1999 1998
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and due from banks $ 9,360 $ 9,571
Interest-bearing deposits and Federal funds sold 4,100 6,393
Securities available for sale, at fair value 70,623 61,431
Securities held to maturity (fair value of $47,198 in 1999 and
$47,717 in 1998) 46,745 47,056
Loans 412,410 404,092
Less allowance for loan losses 3,623 3,815
-------- --------
Loans, net 408,787 400,277
Other assets 28,172 22,692
-------- --------
Total Assets $567,787 $547,420
======== ========
Liabilities
Savings and time deposits $419,805 $412,334
Demand deposits 28,855 30,905
Borrowings 76,887 61,591
Other liabilities 3,014 4,248
-------- --------
Total Liabilities 528,561 509,078
Shareholders' Equity
Preferred Stock, $1.00 par value, 3,000,000 shares authorized,
none issued and outstanding -- --
Common Stock, $1.00 par value; 6,000,000 shares authorized;
2,426,880 and 2,409,980 shares issued and outstanding at
March 31, 1999 and December 31, 1998, respectively 2,427 2,410
Additional paid-in capital 9,590 9,303
Retained earnings 27,429 26,557
Accumulated other comprehensive income 198 490
Unallocated shares of Stock Ownership Plan (418) (418)
-------- --------
Total Shareholders' Equity 39,226 38,342
-------- --------
Total Liabilities and Shareholders' Equity $567,787 $547,420
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements
3
<PAGE>
IROQUOIS BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
- -------------------------------------------------------------------------------------------------
(dollars in thousands, except
share data) 1999 1998
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest Income:
Loans $8,041 7,927
Securities 1,657 1,617
Other 128 103
------ ------
Total Interest Income 9,826 9,647
Interest Expense:
Deposits 3,896 3,879
Borrowings 900 712
------ ------
Total Interest Expense 4,796 4,591
------ ------
Net Interest Income 5,030 5,056
Provision for loan losses 358 360
------ ------
Net Interest Income after provision
for loan losses 4,672 4,696
Net gain on sales of securities and loans 10 --
Noninterest income 777 815
Noninterest expense 3,751 3,596
------ ------
Net income before income taxes 1,708 1,915
Provision for income taxes 598 697
------ ------
Net income 1,110 1,218
Preferred stock dividend -- 111
------ ------
Net income applicable to common shares $1,110 1,107
====== ======
Earnings per share
Basic $0.46 $0.47
====== ======
Diluted 0.46 0.45
====== ======
Cash dividends declared per common share $0.l0 $0.l0
------ ------
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
<PAGE>
IROQUOIS BANCORP, INC.
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(unaudited)
Three months ended March 31, 1998:
<TABLE>
<CAPTION>
Addi- Accumulated Unallocated
tional Other Shares of
(dollars in thousands, Preferred Common Paid-In Retained Comprehensive Stock Ownership Total
except share data) Stock Stock Capital Earnings Income Plan
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1997 $49 2,389 13,793 22,868 213 (283) 39,029
- ------------------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net Income -- -- -- 1,218 -- -- 1,218
Change in net unrealized gain
on securities available for
sale, net of taxes -- -- -- -- 19 -- 19
----------------------------------------------------------------------------------------
Total comprehensive income -- -- -- 1,218 19 -- 1,237
----------------------------------------------------------------------------------------
Preferred Stock Redemption
(145 shares) (1) -- (14) -- -- -- (15)
Stock Options Exercised -- 4 51 -- -- -- 55
Cash dividends declared:
Common stock -- -- -- (237) -- -- (237)
Preferred stock -- -- -- (111) -- -- (111)
- ------------------------------------------------------------------------------------------------------------------------
Balances at March 31, 1998 $48 2,393 13,830 23,738 232 (283) 39,958
- ------------------------------------------------------------------------------------------------------------------------
Three months ended March 31, 1999:
Addi- Accumulated Unallocated
(dollars in thousands, tional Other Shares of
except share data) Preferred Common Paid-In Retained Comprehensive Stock Ownership
Stock Stock Capital Earnings Income Plan Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1998 $ -- 2,410 9,303 26,557 490 (418) 38,342
- ------------------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net Income -- -- 1,110 -- -- 1,110
Change in net unrealized gain
on securities available for
sale, net of taxes -- -- -- (292) -- (292)
----------------------------------------------------------------------------------------
Total comprehensive income -- -- -- 1,110 (292) -- 818
----------------------------------------------------------------------------------------
Stock Options Exercised 17 287 -- -- -- 304
Cash dividends declared:
Common stock -- -- (238) -- -- (238)
- ------------------------------------------------------------------------------------------------------------------------
Balances at March 31, 1999 $ -- 2,427 9,590 27,429 198 (418) 39,226
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
<PAGE>
IROQUOIS BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
- --------------------------------------------------------------------------------------------------
(dollars in thousands) 1999 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 1,110 1,218
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 358 360
Depreciation and amortization 327 321
Net gain on sales of securities and loans (10) --
Decrease (increase) in other assets 116 (167)
Decrease in other liabilities (1,234) (119)
-------- ------
Net cash provided by operating activities 667 1,613
-------- ------
Cash flows from investing activities:
Proceeds from maturities of available for sale securities 1,690 3,033
Proceeds from sales of available for sale securities 1,713 --
Proceeds from maturities of held to maturity securities 3,756 4,940
Purchases of available for sale securities (13,099) (6,521)
Purchases of held to maturity securities (3,453) (2,611)
Proceeds from sales of loans 761 496
Net increase in loans (10,250) (7,310)
Purchases of bank premises and equipment (72) (243)
Purchase of corporate owned life insurance (5,000) --
Purchase of FHLB stock -- (375)
-------- ------
Net cash used by investing activities (23,954) (8,591)
-------- ------
Cash flows from financing activities:
Net increase(decrease) in demand deposits, money market (2,556) 3,217
accounts, and savings accounts
Net increase in time deposits 7,977 6,781
Net increase(decrease) in other borrowings 9,300 (4,400)
Proceeds of long-term borrowings 9,000 11,500
Repayment of long-term borrowings (3,004) (9,504)
Cash dividends (238) (348)
Net proceeds from exercise of stock options, and related tax benefit 304 54
Redemption of Preferred stock -- (15)
-------- ------
Net cash provided by financing activities 20,783 7,285
-------- ------
Net increase(decrease) in cash and cash equivalents (2,504) 307
Cash and cash equivalents at beginning of period 15,964 13,483
-------- ------
Cash and cash equivalents at end of period 13,460 13,790
-------- ------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 4,811 4,461
Income taxes 1,402 725
Supplemental schedule of non-cash investing activities:
Additions to other real estate 623 387
</TABLE>
See accompanying notes to condensed consolidated financial statements
6
<PAGE>
IROQUOIS BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Unaudited Consolidated Financial Statements
1) Financial Statements
--------------------
The interim financial statements contained herein are unaudited, but in the
opinion of management of the Company, include all adjustments (consisting
only of normal recurring adjustments) necessary for a fair presentation of
the results of operations for these periods. The results of operations for
the interim periods are not necessarily indicative of the results of
operations for the full year.
The data in the consolidated balance sheet for December 31, 1998 was
derived from the Company's 1998 Annual Report to Shareholders. That data,
along with the other interim financial information presented in the
consolidated balance sheets, statements of income, shareholders' equity and
comprehensive income and statements of cash flows should be read in
conjunction with the consolidated financial statements, including the notes
thereto, contained in the 1998 Annual Report to Shareholders.
2) Earnings Per Share
------------------
Basic earnings per share is calculated by dividing net income available to
common shareholders by the weighted average number of shares outstanding
during the period. Diluted earnings per share includes the maximum
dilutive effect of stock issuable upon conversion of stock options.
7
<PAGE>
Basic and diluted earnings per share were computed as follows:
<TABLE>
<CAPTION>
(In thousands, except per share data)
Three months ended
March 31
- -------------------------------------------------------------------------------------
1999 1998
---- ----
<S> <C> <C>
Basic earnings per share:
Earnings available for common shares:
Net income $1,110 1,218
Provision for cash dividends on
preferred stock -- 111
- ---------------------------------------------------------------------------------
Net earnings available for common
shareholders $1,110 1,107
- ---------------------------------------------------------------------------------
Weighted average common shares
outstanding 2,389 2,371
- ---------------------------------------------------------------------------------
Basic earnings per share $ .46 .47
- ---------------------------------------------------------------------------------
Diluted earnings per share:
Net earnings available for common
shares and common stock
equivalent shares deemed to have a
dilutive effect $1,110 1,107
- ---------------------------------------------------------------------------------
Weighted average common shares
outstanding 2,389 2,371
Additional potentially dilutive
securities (equivalent in common
stock):
Stock options 31 65
- ---------------------------------------------------------------------------------
Total 2,420 2,436
- ---------------------------------------------------------------------------------
Diluted earnings per share $ .46 .45
- ---------------------------------------------------------------------------------
</TABLE>
The additional potentially dilutive securities calculation for 1999 excludes an
average of 40,500 options because the exercise price of the options was greater
than the average market price.
8
<PAGE>
IROQUOIS BANCORP, INC.
AND CONSOLIDATED SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
- -------
Iroquois Bancorp Inc. ("Iroquois" or the "Company") is a bank holding company
with two financial institutions: Cayuga Bank of Auburn, New York, a New York
state-chartered commercial bank and trust company, and The Homestead Savings
(FA) of Utica, New York, a federally-chartered savings association.
RESULTS OF OPERATIONS
- ---------------------
Three months ended March 31, 1999 compared to March 31, 1998
- ------------------------------------------------------------
Net income for the three months ended March 31, 1999 was $1,110,000, or $.46
basic earnings per share, compared to net income of $1,218,000, or $.47 basic
earnings per share, for the three months ended March 31, 1998. Diluted earnings
per share were $.46 and $.45 for the three months ended March 31, 1999 and 1998,
respectively.
Net interest income was $5,030,000 for the first quarter of 1999 compared to
$5,056,000 for the first quarter of 1998. Net interest margin for the first
quarter of 1999 was 3.78%, compared to 4.20% in 1998. Growth in residential
mortgages and securities as a percentage of total assets combined with a flatter
yield curve compared to the prior year were the primary reasons for to the
decline in net interest margin. Asset yields fell to 7.48% for the current
quarter compared to 8.01% the year earlier. Interest-bearing liability costs
were 4.04% for the current quarter compared to 4.22% the year earlier.
Interest income increased 1.9%, to $9,826,000, for the three months ended March
31, 1999, compared to $9,647,000 for the same period the year earlier. Average
earning assets increased 9.1%, to $528.7 million in 1999 from $484.6 million in
1998. Average residential mortgage loans increased $39.0 million, or 17.8%,
while the yield on mortgages decreased from 7.90% in the first quarter of 1998
to 7.46% in the current quarter. Average commercial mortgage loans and
commercial loans declined $1.3 million and $5.4 million, respectively, in the
same period. Residential mortgage loans represented 48.8% of average earning
assets for the three months ended March 31, 1999, compared to 45.2% for the same
three months in 1998.
Interest expense on deposits and borrowings increased 4.5%, to $4,796,000, for
the three months ended March 31, 1999, compared to $4,591,000 for the three
months ended March 31, 1998. The increase was due primarily to the growth in
average deposits and borrowings. Average deposit balances increased 6.6%, from
$418.9 million to $446.3 million while the average cost of
9
<PAGE>
interest-bearing deposits decreased from 3.76% in 1998 to 3.54% in 1999. Average
borrowings increased 35.3% from $48.2 million in 1998 to $65.3 million in 1999.
The average cost of borrowings decreased from 5.98% for the three months ended
March 31, 1998 to 5.59% for the three months ended March 31, 1999.
The provision for loan losses decreased slightly from $360,000 for the quarter
ended March 31, 1998, to $358,000 for the same period in 1999.
Total noninterest income was $787,000 for the quarter ended March 31, 1999,
compared to $815,000 for the quarter ended March 31, 1998, a decrease of 3.4%.
Net gains on sales of securities and loans contributed $10,000 to noninterest
income for the three months ended March 31, 1999. The decrease was attributable
primarily to a lower volume of commercial service fees.
Total noninterest expense was $3,751,000 for the quarter ended March 31, 1999,
compared to $3,596,000 for the quarter ended March 31, 1998, an increase of
4.3%. Occupancy and equipment expense increased 12.9%, to $445,000, for the
first quarter of 1999, compared to $394,000 for the first quarter of 1998. The
increase was attributable to higher property taxes, utilities, and rental
expense in 1999 compared to 1998. Other noninterest expense increased 16.6%
from $712,000 in 1998 to $830,000 in 1999 due primarily to increased expense
relating to Other Real Estate.
The provision for income taxes for the three months ended March 31, 1999 was
$598,000, for an effective tax rate of 35.0%, compared to $697,000, or an
effective tax rate of 36.4%, for the three months ended March 31, 1998.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
- ----------------------------------------------------
Consolidated assets were $567.8 million at March 31, 1999, compared to $547.4
million at December 31, 1998, an increase of $20.4 million, or 3.7%.
Loans increased $8.3 million, or 2.1%, to $412.4 million at March 31, 1999,
compared to $404.1 million at year end 1998. Residential mortgage loans
increased $9.2 million, from $254.8 million at year end 1998, to $264.0 million
at March 31, 1999. Commercial mortgage loans increased $1.2 million, to $40.7
million at March 31, 1999. Commercial loans decreased $449,000 from December
31, 1998 to March 31, 1999, ending the period at $37.0 million. The decline in
commercial loans continues to reflect lower loan demand and increased
competition in the small business market.
The allowance for loan losses decreased from $3.8 million at December 31, 1998,
to $3.6 million at March 31, 1999 as net charge-offs for the quarter exceeded
the loan loss provision. Nonperforming assets increased $25,000 to $6,728,000
at March 31, 1999, reflecting the transfer of certain properties to Other Real
Estate. Nonperforming loans decreased from $6.0 million at year end 1998 to
$5.5 million at March 31, 1999. The percentage of non-performing loans to total
loans decreased from 1.49% at December 31, 1998, to 1.34% at March 31, 1999.
10
<PAGE>
Residential and commercial mortgage loans each represented approximately 40.5%
of total nonperforming loans at March 31, 1999, while consumer and commercial
loans represented the remaining 19.0%.
Total securities increased 5.8%, from $111.0 million at year end 1998 to $117.4
million at March 31, 1999. Securities available for sale increased to $70.6
million at March 31, 1999, from $63.9 million at December 31, 1998, while in the
same period securities held to maturity declined slightly from $47.0 million to
$46.7 million. Holdings of U.S. Government Agency securities and mortgage-
backed securities increased while holdings of U.S. Government securities and
state and municipal obligations declined slightly compared to year end 1998.
Other assets increased $5.5 million, or 24.2%, from $22.7 million at December
31, 1998 to $28.2 at March 31, 1999. The increase is primarily attributable to
the Company's first quarter purchase of $5 million in Corporate Owned Life
Insurance.
Total deposits increased $5.5 million, or 1.2%, to $448.7 million at March 31,
1999, compared to $443.2 million at December 31, 1998. Personal and public
deposits increased $2.8 million and $6.9 million, respectively, while business
deposits decreased $4.2 million. The growth in deposits occurred primarily in
time deposits and money market accounts.
Borrowings at March 31, 1999 were $76.9 million compared to $61.6 million at
December 31, 1998. Term advances from the Federal Home Loan Bank ("FHLB") and
advances against overnight lines of credit with the FHLB increased $6.0 million
and $9.3 million, respectively. Borrowings represented 13.5% of total assets at
March 31, 1999 compared to 11.3% at year end 1998.
At March 31, 1999, Iroquois had total shareholders' equity of $39.2 million,
compared to $38.3 million at December 31, 1998. The Company's regulatory Tier 1
capital to average assets ratio increased from 6.70% at December 31, 1998 to
6.73% at March 31, 1999, and the ratio of Tier 1 Capital to risk weighted assets
decreased slightly from 10.55% to 10.42%. As of March 31, 1999, the capital
ratios of Iroquois and both of its banking subsidiaries continued to exceed the
capital requirements for classification as "well capitalized" under applicable
regulatory provisions.
At March 31, 1999, the Company held securities maturing in one year or less
(excluding estimated payments from amortizing securities) of $24.3 million,
compared to $21.8 million at December 31, 1998. The Company considers its
current level of liquidity along with other available sources of funds as both
sufficient and within acceptable ranges.
YEAR 2000
- ---------
The Company's Year 2000 (or "Y2K") activities continue on schedule under the
framework of the FFIEC's Five Step program. Senior management and the Company's
Board of Directors are actively involved in managing efforts in support of these
activities, monitoring the Company's progress, and evaluating risks of the
process to the Company's strategic plan.
11
<PAGE>
Step 1 Awareness Phase
- ----------------------
The Company continues to follow a comprehensive reporting and communication
plan. All employees have participated in Y2K awareness training. Customer
awareness is being promoted through various mailings, in-branch signage and
community education seminars.
Step 2 Assessment Phase
- -----------------------
The assessment phase has been completed. All software, hardware and other
systems applications have been identified and evaluated for Year 2000
compliance.
All business customers with loan relationships in excess of $150,000 have been
identified and contacted relative to their Y2K readiness.
Step 3 Renovation Phase
- -----------------------
The Company estimates that as of March 31, 1999 that it has completed
approximately 90% of the renovation phase. Close monitoring of the progress of
third party vendors continues. Fiserv Inc., the Company's data services and
item processing provider, remains on schedule and anticipates its systems will
be completely upgraded to Year 2000 compliance, tested and implemented no later
than June 30, 1999.
Step 4 Validation Phase
- -----------------------
The validation phase, which entails testing of critical applications, was
approximately 90% complete as of March 31, 1999. Additional testing including
direct testing with Fiserv Inc. is scheduled and should be completed in the
second quarter.
Step 5 Implementation Phase
- ---------------------------
The implementation phase continues to focus on monitoring the progress of
service providers and vendors as they install fully renovated and tested Y2K
compliant systems into the normal daily operating environment. All upgrades of
Y2K compliant software received to date have been tested, installed, and placed
into daily production.
Business resumption contingency plans have been completed for all of the
Company's critical business processes. Work is presently underway on an Event
Management Plan detailing responsibilities and activities relative to the
century rollover--before, during and after the actual event. In addition, a Y2K
Liquidity Plan is being formulated to prepare for increased demands on the
Company's cash and/or liquidity. The Company anticipates that all contingency
plans will be completed and tested in the second quarter of 1999.
12
<PAGE>
Forward-looking Statements
- --------------------------
The information set forth above relating to the Company's Year 2000 activities
contains forward-looking statements. Specifically, such statements are
contained in sentences including the words "expect" or "anticipate" or "could"
or "should." Such forward-looking statements are subject to inherent risks and
uncertainties that may cause actual results to differ materially from those
contemplated by such forward-looking statements. The factors that may cause
actual results to differ materially include the failure of third parties to
remediate Year 2000 issues adequately or the inability of the Company to
complete the project phases on the time schedules currently expected.
13
<PAGE>
Item 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss from adverse changes in market prices
and rates. The Company's market risk arises primarily from interest rate
risk inherent in its lending and deposit activities. Other types of
market risk, such as foreign currency exchange rate risk and commodity
price risk, do not arise in the normal course of the Company's business
activities.
Managing interest rate risk is of primary importance to Iroquois. The
Company's asset and liability management program includes a process for
identifying and measuring potential risks to earnings and to the market
value of equity due to changes in interest rates. Interest rate risk is
measured and managed for each bank and monitored from a holding company
perspective. The goal of interest rate risk analysis is to minimize the
potential loss in net interest income and net portfolio value that could
arise from changes in interest rates. Iroquois' asset/liability
management strategies emphasize balancing the mix and repricing
characteristics of its loans, securities, deposits and borrowings to
ensure that exposure to interest rate risk is limited within acceptable
levels. Iroquois determines sensitivity of earnings and capital to
changes in interest rates by utilizing various tools.
A simulation model is the primary tool used to assess the impact of
changes in interest rates on net interest income. The Company also uses
a net portfolio value ("NPV") analysis as another means of measuring and
monitoring its interest rate risk, and in addition also uses a
cumulative gap analysis to measure interest rate sensitivity. The
Company establishes guidelines to monitor the results to ensure interest
rate risk is limited within acceptable levels. At March 31, 1999, the
Company's interest rate risk as measured by the above mentioned analyses
was within established guidelines.
The following table sets forth at March 31, 1999 the analysis of the
Company's interest rate risk as measured by the estimated changes in NPV
resulting from instantaneous and sustained parallel shifts in the
interest rate yield curve. The NPV represents the difference between the
present value of the Company's liabilities and the present value of the
expected cash flows from its assets. For purposes of the NPV table,
assumptions similar to those used in the 1998 Annual Report, adjusted to
reflect current market conditions, were used.
NET PORTFOLIO VALUE ANALYSIS at March 31, 1999
($ in thousands)
<TABLE>
<CAPTION>
Changes in interest Estimated Change in NPV
rate (basis points) NPV Amount %
----------------------- --------------- -------------------------------
<S> <C> <C> <C>
+200 $53,252 (10,218) (16.1)
+100 58,988 (4,482) (7.1)
0 63,470 --
-100 68,193 4,724 7.4
-200 73,165 9,696 14.2
</TABLE>
14
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K - None
15
<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.
Iroquois Bancorp, Inc.
Registrant
Date: May 12, 1999 /s/Richard D. Callahan
-------------------------
Richard D. Callahan
President & CEO
Date: May 12, 1999 /s/Marianne R. O'Connor
-----------------------
Marianne R. O'Connor
Treasurer & CFO
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM *MARCH 31,
1999 10-Q REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998
<CASH> 9360 11385
<INT-BEARING-DEPOSITS> 0 505
<FED-FUNDS-SOLD> 4100 1900
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 70623 55432
<INVESTMENTS-CARRYING> 46745 49344
<INVESTMENTS-MARKET> 47198 49832
<LOANS> 412410 379782
<ALLOWANCE> (3623) (3343)
<TOTAL-ASSETS> 567787 518182
<DEPOSITS> 448660 427009
<SHORT-TERM> 43343 29158
<LIABILITIES-OTHER> 3014 3455
<LONG-TERM> 33544 18602
0 0
0 48
<COMMON> 2427 2393
<OTHER-SE> 36799 37517
<TOTAL-LIABILITIES-AND-EQUITY> 567787 518182
<INTEREST-LOAN> 8041 7927
<INTEREST-INVEST> 1657 1617
<INTEREST-OTHER> 128 103
<INTEREST-TOTAL> 9826 9647
<INTEREST-DEPOSIT> 3896 3879
<INTEREST-EXPENSE> 4796 4591
<INTEREST-INCOME-NET> 5030 5056
<LOAN-LOSSES> 358 360
<SECURITIES-GAINS> 8 0
<EXPENSE-OTHER> 3751 3596
<INCOME-PRETAX> 1708 1915
<INCOME-PRE-EXTRAORDINARY> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1110 1218
<EPS-PRIMARY> .46 .47
<EPS-DILUTED> .46 .45
<YIELD-ACTUAL> 3.78 4.20
<LOANS-NON> 5080 5620
<LOANS-PAST> 466 608
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 3815 3285
<CHARGE-OFFS> 587 325
<RECOVERIES> 37 23
<ALLOWANCE-CLOSE> 3623 3343
<ALLOWANCE-DOMESTIC> 3623 3343
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
</TABLE>
