SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
0-26248 31-1800830
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(Commission File No.) (IRS Employer I.D. No.)
INDUSTRIAL BANCORP, INC.
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(Exact name of registrant as specified in its charter)
OHIO
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(State of jurisdiction or incorporation)
211 North Sandusky Street, Bellevue, Ohio 44811
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(Address of principal executive office) (Zip Code)
(419) 483-3375
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(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 and
Exchange Act of 1934 during the preceding twelve 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.
Outstanding as of April 25, 1997:
Common stock, no par value 5,286,775 common shares
INDUSTRIAL BANCORP, INC.
Form 10-Q
For the Quarter ended March 31, 1997
Part I--Financial Information
Item 1: Financial Statements
- -------
Interim financial information required by Rule 10-01 of Regulation S-X
is included in this Form 10-Q as referenced below:
Consolidated Balance Sheets.......................................... 3
Consolidated Statements of Income.................................... 4
Consolidated Statements of Shareholders' Equity...................... 5
Condensed Consolidated Statements of Cash Flow....................... 6
Notes to Consolidated Financial Statements........................... 7
Item 2: Management's Discussion and Analysis of Financial Condition
- ------- and Results of Operations...................................... 8
Part II--Other Information................................................. 10
Signatures................................................................. 11
INDUSTRIAL BANCORP, INC.
Consolidated Balance Sheets
(Unaudited, $ in thousands except per share data)
<TABLE>
<CAPTION>
3/31/97 12/31/96
-------- --------
<S> <C> <C>
ASSETS
Cash and noninterest-bearing deposits $ 658 $ 1,312
Interest-bearing demand deposits 3,156 2,101
Overnight deposits 5,000 4,000
--------------------
Cash and cash equivalents 8,814 7,413
Investment securities available for sale, at fair value 23,005 23,236
Investment securities held to maturity
(fair value: 1997--$568; 1996--$608) 529 561
Federal Home Loan Bank stock 2,691 2,645
Loans receivable, net 291,637 285,803
Office properties and equipment, net 4,979 5,029
Accrued interest receivable 1,810 1,784
Other assets 381 142
--------------------
Total assets $333,846 $326,613
====================
LIABILITIES
Deposits $261,003 $259,074
Federal Home Loan Bank advances 8,000 2,000
Accrued interest payable and other liabilities 3,114 3,435
--------------------
Total liabilities 272,117 264,509
--------------------
SHAREHOLDERS' EQUITY
Common stock, no par value, 10,000,000 shares
authorized; 5,554,500 shares issued 34,669 34,669
Additional paid-in capital 1,701 1,669
Retained earnings 32,515 31,803
Treasury stock, at cost: 144,500 shares at 3/31/97,
50,000 shares at 12/31/96 (1,836) (634)
Unearned employee stock ownership plan shares (3,863) (3,974)
Unearned compensation (2,148) (2,279)
Unrealized gain on securities available for sale 691 850
--------------------
Total shareholders' equity 61,729 62,104
--------------------
Total liabilities and shareholders' equity $333,846 $326,613
====================
Book value per share $ 11.41 $ 11.28
</TABLE>
INDUSTRIAL BANCORP, INC.
Consolidated Statements of Income
(Unaudited, $ in thousands except per share data)
<TABLE>
<CAPTION>
Three months ended
3/31/97 3/31/96
------- -------
<S> <C> <C>
Interest income
Interest and fees on loans $6,122 $5,584
Interest and dividends on investment securities 386 452
Interest on deposits 73 308
-----------------
Total interest income 6,581 6,344
Interest expense
Interest on deposits 3,093 2,832
Interest on FHLB advances 94 -
-----------------
Total interest expense 3,187 2,832
-----------------
Net interest income 3,394 3,512
Provision for loan losses 49 45
-----------------
Net interest income after provision for loan losses 3,345 3,467
Noninterest income
Service fees and other charges 101 85
Other 10 11
-----------------
Total noninterest income 111 96
Noninterest expense
Salaries and employee benefits 782 761
State franchise tax 214 206
Federal deposit insurance premiums 20 131
Occupancy and equipment 81 81
Data processing 98 90
Depreciation 65 60
Other 305 335
-----------------
Total noninterest expense 1,565 1,664
-----------------
Income before income tax 1,891 1,899
Provision for income tax 671 645
-----------------
Net income $1,220 $1,254
=================
Earnings per share $ 0.24 $ 0.25
</TABLE>
INDUSTRIAL BANCORP, INC.
Consolidated Statements of Shareholders' Equity
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
Total
shareholders'
equity
-------------
<S> <C>
Balance at January 1, 1996 $ 81,055
Net income 1,254
Capital distribution declared (19,441)
($3.50 per share)
Cash dividends declared (383)
($.075 per share)
Employee Stock Ownership Plan:
Shares released 132
Change in unrealized gain on securities available for sale (79)
--------
Balance at March 31, 1996 $ 62,538
========
Balance at January 1, 1997 $ 62,104
Net income 1,220
Purchase of treasury stock (1,202)
(94,500 shares)
Cash dividends declared (508)
($.12 per share)
Employee Stock Ownership Plan:
Shares released 143
Management Recognition Plan:
Compensation earned 131
Change in unrealized gain on securities available for sale (159)
--------
Balance at March 31, 1997 $ 61,729
========
</TABLE>
INDUSTRIAL BANCORP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
Three months ended
3/31/97 3/31/96
<S> <C> <C>
Cash flows from operating activities
Net income $ 1,220 $ 1,254
Adjustments to reconcile net income to net cash from
operating activities (281) (691)
-------------------
Net cash from operating activities 939 563
Cash flows from investing activities
Net change in interest-bearing time deposits - (10,000)
Purchases of investment securities available for sale (2,997) (3,910)
Proceeds from maturities of investment securities 3,000 3,000
Mortgage-backed securities principal repayments 32 63
Net increase in loans (5,737) (3,263)
Properties and equipment expenditures, net (15) (326)
-------------------
Net cash from investing activities (5,717) (14,436)
Cash flows from financing activities
Net increase in deposits 1,929 3,537
Proceeds from FHLB advances 6,000 -
Purchase of treasury stock (1,202) (384)
Cash dividends paid (548) -
-------------------
Net cash from financing activities 6,179 3,153
-------------------
Net change in cash and cash equivalents 1,401 (10,720)
Cash and cash equivalents at beginning of period 7,413 26,711
-------------------
Cash and cash equivalents at end of period $ 8,814 $ 15,991
===================
</TABLE>
INDUSTRIAL BANCORP, INC.
Notes to Consolidated Financial Statements
(Unaudited)
Summary of Significant Accounting Policies
These interim financial statements are presented in accordance with
the SEC's rules for quarterly financial information without audit and
reflect all adjustments which, in the opinion of management, are necessary
to present fairly the financial position of Industrial Bancorp, Inc. (the
"Company") and its wholly owned subsidiary, The Industrial Savings and Loan
Association (the "Association), at March 31, 1997 and the results of
operations and cash flows for the periods presented. All such adjustments
are normal and recurring in nature. All significant intercompany accounts
and transactions have been eliminated in consolidation. The accompanying
condensed financial statements do not purport to contain all the necessary
disclosures required by generally accepted accounting principles that might
otherwise be necessary in the circumstances and should be read in
conjunction with the financial statements included in the 1996 Annual Report
of Industrial Bancorp, Inc. The results of the three months presented are
not necessarily representative of the results of operations and cash flows
which may be expected for the entire year.
Earnings Per Share
Earnings per common share for 1997 have been computed based on
5,091,300 and 5,117,051 weighted average number of common shares outstanding
during the quarters ended March 31, 1997 and 1996, respectively. Employee
Stock Ownership Plan shares that have been released, or committed to be
released, to participants are considered outstanding for earnings per share
purposes.
Commitments and Contingencies
As of March 31, 1997, commitments to originate loans and loans in
process to be funded in six months or less totaled $15.6 million.
INDUSTRIAL BANCORP, INC.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Financial Condition
Total assets increased $7.2 million to $333.8 million at March 31,
1997 from $326.6 million at December 31, 1996. The increase in total assets
is primarily attributable to $5.8 million growth in net loans receivable
during the first three months of 1997. Cash and cash equivalents also
increased to $8.8 million at March 31, 1997 from $7.4 million at December
31, 1996. Liquidity, which amounted to 5.6% at March 31, 1997, exceeded the
regulatory requirement.
Asset growth was funded by deposit growth of $1.9 million and $6.0
million in advances from the Federal Home Loan Bank. Total deposits were
$261.0 million at March 31, 1997, compared to $259.1 million at December 31,
1996. The Company intends to continue to fund loan demand in excess of
deposit growth with advances from the Federal Home Loan Bank. At March 31,
1997, the undisbursed portion of construction loans totaled $7.0 million.
Despite net income of $1.2 million for the first quarter of 1997,
total shareholders' equity decreased slightly to $61.7 million at March 31,
1997 from $62.1 million at December 31, 1996, primarily as a result of
treasury share purchases. As part of the 5% repurchase program initiated
late in 1996, the Company repurchased 94,500 shares during the quarter ended
March 31, 1997 at an aggregate cost of $1.2 million.
The Association is required by the Office of Thrift Supervision to
maintain certain minimum levels of tangible, core, and risk-based capital.
The following table presents the Association's regulatory capital position
at March 31, 1997:
<TABLE>
<CAPTION>
($ in thousands) Minimum Required For
Actual Capital Adequacy Purposes
- -------------------------- ----------------- -------------------------
<S> <C> <C> <C> <C>
Total capital
(to risk weighted assets) $55,849 31.43% $14,215 8.00%
- ------------------------------------------------------------------------
Core capital
(to adjusted total assets) $54,281 16.30% $ 9,990 3.00%
- ------------------------------------------------------------------------
Tangible capital
(to adjusted total assets) $54,281 16.30% $ 4,995 1.50%
- ------------------------------------------------------------------------
</TABLE>
Results of Operations
Net income for the three months ended March 31, 1997 was $1.22 million
compared to $1.25 million for the same period in 1996. Net interest income
was $118,000 less for the quarter ended March 31, 1997 than for the
comparable period in 1996.
Total interest income was $237,000 more for the quarter ended March
31, 1997 than for the same period in 1996. This increase was primarily the
result of an increased average balance in net loans receivable, which
resulted in a $538,000 increase in interest and fees on loans.
Total interest expense was $355,000 more for the quarter ended March
31, 1997 than for the same period in 1996, due to marginally higher deposit
rates paid on increased average interest-bearing deposit balances and due to
the cost of Federal Home Loan Bank advances which were absent during the
first quarter of 1996.
The provision for loan losses was $49,000 for the three months ended
March 31, 1997 compared to $45,000 for the comparable period in 1996, based
upon management's assessment of reasonably foreseeable losses inherent in
the portfolio for each period.
Noninterest income for the quarter ended March 31, 1997 was $111,000,
an increase of 16% over the $96,000 recorded for the same quarter in 1996,
due primarily to higher service fee income on an increased average balance
of deposits.
Noninterest expense was $99,000 less for the quarter ended March 31,
1997 than for the same period in 1996. The primary reason for the decline
is the reduced level of FDIC premiums being paid following, and as a result
of, a special assessment levied in 1996 for the recapitalization of the
Savings Association Insurance Fund. Salaries and employee benefits expense
was $782,000 for the first quarter of 1997 compared to $761,000 for the
first quarter of 1996, a result of a higher number of full-time equivalent
employees and normal pay increases.
INDUSTRIAL BANCORP, INC.
Form 10-Q
Other Information
Part II
Item 1. Legal Proceedings
-----------------
Not applicable.
Item 2. Changes in Securities
---------------------
Not applicable.
Item 3. Defaults upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
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Not applicable.
Item 5. Other Information
-----------------
On April, 3, 1997, the Company's Board of Directors declared a
quarterly dividend of $0.12 per common share, an increase of
$0.02 over the $0.10 per common share dividend declared in the
prior quarter.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibit 27 -- Financial Date Schedule
INDUSTRIAL BANCORP, INC.
Form 10-Q
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.
4/25/97 /s/ Lawrence R. Rhoades
Date: ____________ By: ________________________
Lawrence R. Rhoades
Chairman of the Board and
Chief Financial Officer
4/25/97 /s/ David M. Windau
Date: ____________ By: ________________________
David M. Windau
President and
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 658
<INT-BEARING-DEPOSITS> 8,156
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 23,005
<INVESTMENTS-CARRYING> 529
<INVESTMENTS-MARKET> 568
<LOANS> 293,243
<ALLOWANCE> 1,606
<TOTAL-ASSETS> 333,846
<DEPOSITS> 261,003
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,114
<LONG-TERM> 8,000
0
0
<COMMON> 34,669
<OTHER-SE> 27,060
<TOTAL-LIABILITIES-AND-EQUITY> 333,846
<INTEREST-LOAN> 6,122
<INTEREST-INVEST> 386
<INTEREST-OTHER> 73
<INTEREST-TOTAL> 6,581
<INTEREST-DEPOSIT> 3,093
<INTEREST-EXPENSE> 3,187
<INTEREST-INCOME-NET> 3,394
<LOAN-LOSSES> 49
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,565
<INCOME-PRETAX> 1,891
<INCOME-PRE-EXTRAORDINARY> 1,220
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,220
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.24
<YIELD-ACTUAL> 4.19
<LOANS-NON> 574
<LOANS-PAST> 798
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,557
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,606
<ALLOWANCE-DOMESTIC> 1,606
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
