UNITED STATES
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 the quarterly period ended March 31, 2004
--------------
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. 1-31655
IBT Bancorp, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Pennsylvania 25-1532164
- --------------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
309 Main Street, Irwin, Pennsylvania 15642
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(724) 863-3100
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NA
- --------------------------------------------------------------------------------
(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. [X] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). [X] Yes [ ] No
Number of shares of Common Stock outstanding as of May 07, 2004: 2,977,655
IBT BANCORP, INC.
Contents
Pages
-----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.............................................................................1
Consolidated balance sheets at March 31, 2004
(unaudited) and December 31, 2003.............................................................. 1
Consolidated statements of income (unaudited) for the three months
ended March 31, 2004 and 2003 .................................................................. 2
Consolidated statements of cash flows (unaudited) for the three months
ended March 31, 2004 and 2003................................................................... 3
Notes to consolidated financial statements...................................................... 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................................................... 6
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................................... 12
Item 4. Controls and Procedures........................................................................ 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.............................................................................. 14
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities............... 14
Item 3. Defaults upon Senior Securities................................................................ 14
Item 4. Submission of Matters to a Vote of Security-Holders............................................ 14
Item 5. Other Information.............................................................................. 14
Item 6. Exhibits and Reports on Form 8-K............................................................... 14
Signatures..................................................................................................... 15
CONSOLIDATED BALANCE SHEETS
IBT BANCORP, INC. AND SUBSIDIARY
March 31, 2004 December 31, 2003
-------------- -----------------
(unaudited) (unaudited)
-------------- -----------------
ASSETS
Cash and due from banks $ 14,352,877 $ 15,391,714
Interest-bearing deposits in banks 1,400,333 436,981
Certificates of deposit 100,000 100,000
Securities available for sale 179,492,635 167,907,113
Federal Home Loan Bank stock, at cost 5,190,400 4,540,500
Loans, net 419,817,554 416,286,455
Premises and equipment, net 6,274,426 6,468,749
Other assets 17,834,367 18,398,092
------------- -------------
Total Assets $ 644,462,592 $ 629,529,604
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest bearing $ 77,810,135 $ 81,053,392
Interest-bearing 412,235,171 411,104,137
------------- -------------
Total deposits 490,045,306 492,157,529
Federal funds purchased 10,200,000 7,900,000
Repurchase agreements 16,886,869 12,610,877
Accrued interest and other liabilities 4,911,196 3,947,390
FHLB advances 61,115,887 53,307,767
------------- -------------
Total liabilities 583,159,258 569,923,563
Stockholders' Equity
Capital stock, par value $1.25 per share,
50,000,000 shares authorized, 3,023,799
shares issued, 2,977,655 shares
outstanding at March 31, 2004 and
December 31, 2003 3,779,749 3,779,749
Surplus 1,393,763 1,684,258
Retained earnings 55,613,197 54,451,662
Accumulated other comprehensive income 1,859,891 1,033,638
------------- -------------
62,646,600 60,949,307
Less: Treasury stock, at cost (1,343,266) (1,343,266)
------------- -------------
Total stockholders' equity 61,303,334 59,606,041
------------- -------------
Total Liabilities and Stockholders' Equity $ 644,462,592 $ 629,529,604
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
1
CONSOLIDATED STATEMENTS OF INCOME
IBT BANCORP, INC. AND SUBSIDIARY
Three Months Ended March 31,
----------------------------
2004 2003
---------- ----------
(unaudited)
----------------------------
Interest Income
Loans, including fees $6,590,525 $6,437,445
Investment securities 1,719,582 2,046,119
Federal funds sold 457 9,992
---------- ----------
Total interest income 8,310,564 8,493,556
Interest Expense
Deposits 2,111,083 2,356,906
FHLB advances 693,020 573,969
Repurchase agreements 20,551 36,388
Federal funds purchased 27,690 6,528
---------- ----------
Total interest expense 2,852,344 2,973,791
---------- ----------
Net Interest Income 5,458,220 5,519,765
Provision for Loan Losses 125,000 150,000
---------- ----------
Net Interest Income after Provision
for Loan Losses 5,333,220 5,369,765
Other Income
Service fees 550,802 570,236
Investment security gains 184,233 224,798
Debit card fees 128,803 154,046
Other income 484,217 491,460
---------- ----------
Total other income 1,348,055 1,440,540
Other Expenses
Salaries 1,329,624 1,215,430
Pension and other employee benefits 468,851 389,521
Occupancy expense 442,438 377,144
Data processing expense 220,187 194,410
Pennsylvania shares tax 125,430 105,804
Advertising expense 78,565 127,679
Other expenses 984,742 836,506
---------- ----------
Total other expenses 3,649,837 3,246,494
---------- ----------
Income Before Income Taxes 3,031,438 3,563,811
Provision for Income Taxes 678,843 934,406
---------- ----------
Net Income $2,352,595 $2,629,405
========== ==========
Basic Earnings per Share $ 0.79 $ 0.88
========== ==========
Diluted Earnings per Share $ 0.78 $ 0.88
========== ==========
Dividends per Share $ 0.40 $ 0.35
========== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF CASH FLOWS
IBT BANCORP, INC. AND SUBSIDIARY
Three Months Ended March 31,
-------------------------------
2004 2003
------------ ------------
(unaudited)
-------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,352,595 $ 2,629,405
Adjustments to reconcile net cash
from operating activities:
Depreciation 252,429 199,970
Increase in cash surrender value of insurance (112,918)
(129,179)
Net amortization/accretion of
premiums and discounts 271,736 253,790
Investment security gains (184,233) (224,798)
Provision for loan losses 125,000 150,000
Increase (decrease) in cash due
to changes in assets and liabilities:
Other assets 350,551 (968,028)
Accrued interest and other liabilities 651,080 724,389
------------ ------------
Net Cash From Operating Activities 3,706,240 2,635,549
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities
available for sale 23,150,373 7,338,568
Proceeds from maturities of securities
available for sale 9,579,468 17,143,080
Purchase of securities available for sale (43,150,969) (25,077,494)
Net loans made to customers (3,442,925) (11,896,808)
Purchases of premises and equipment (58,106) (519,192)
Proceeds from sales of Federal Home Loan Bank stock 1,141,900 -
Purchase of Federal Home Loan Bank stock (1,791,800) (1,301,100)
------------ ------------
Net Cash Used By Investing Activities (14,572,059) (14,312,946)
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in deposits (2,112,223) (125,342)
Net increase (decrease) in securities sold
under repurchase agreements 4,275,994 (685)
Dividends paid (1,191,062) (1,042,179)
Proceeds from FHLB advances 8,000,000 14,000,000
Repayment of FHLB advances (191,880) (124,549)
Federal funds purchased 2,300,000 -
Exercised stock options (290,495) -
------------ ------------
Net Cash From Financing Activities 10,790,334 12,707,245
------------ ------------
Net Change in Cash and Cash Equivalents (75,485) 1,029,848
Cash and Cash Equivalents at Beginning of Period 15,828,695 15,066,278
------------ ------------
Cash and Cash Equivalents at End of Period $ 15,753,210 $ 16,096,126
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
IBT BANCORP, INC. AND SUBSIDIARY
Period Ended March 31, 2004
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments consisting of normal recurring
accruals considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 2004 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2004 or any future interim period. The interim financial statements should be
read in conjunction with the financial statements and footnotes thereto included
in IBT Bancorp, Inc. and subsidiary Annual Report on Form 10-K for the year
ended December 31, 2003.
NOTE B - EARNINGS PER SHARE
Earnings per share are calculated on the basis of the weighted average number of
shares outstanding. The weighted average shares outstanding was 2,977,655 for
the three months ended March 31, 2004 and 2003.
NOTE C - COMPREHENSIVE INCOME
Total comprehensive income for the three months ended March 31, 2004 and 2003
was $3,178,848 and $2,278,645, respectively.
NOTE D - INVESTMENT SECURITIES
Investment securities available for sale consist of the following:
March 31, 2004
--------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------- ------------- ------------- -------------
Obligations of
U.S. Government Agencies $ 71,549,221 $ 1,103,399 $ (33,140) $ 72,619,480
Obligations of State and
political sub-divisions 37,503,955 2,404,965 (86,196) 39,822,724
Mortgage-backed securities 56,617,697 1,024,948 (36,956) 57,605,689
Other securities 710,970 23,962 - 734,932
Equity securities 10,292,778 169,274 (1,752,242) 8,709,810
------------- ------------- ------------- -------------
$ 176,674,621 $ 4,726,548 $ (1,908,534) $ 179,492,635
============= ============= ============= =============
5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 contains safe
harbor provisions regarding forward-looking statements. When used in this
discussion, the words "believes", "anticipate", "contemplates", "expects", and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected. Those risks and
uncertainties include changes in interest rates, risks associated with the
effect of opening a new branch, the ability to control costs and expenses, and
general economic conditions.
GENERAL
IBT Bancorp, Inc. is a bank holding company headquartered in Irwin,
Pennsylvania, which provides a full range of commercial and retail banking
services through its wholly owned banking subsidiary, Irwin Bank & Trust Co.
(collectively, the "Company").
On February 25, 2004, the Company announced plans to open a new office
on Pennsylvania Avenue, Greensburg, Pennsylvania. The new office will be
integrated into the Company's existing Trust Division office and will provide a
full range of commercial and retail banking services.
FINANCIAL CONDITION
At March 31, 2004 total assets had increased $15.0 million, or 2.4%, to
$644.5 million from $629.5 million at December 31, 2003. Asset growth was
primarily due to increases of $11.5 million in securities available for sale and
$3.5 million in net loans. Other growth in assets included a $700,000 increase
in Federal Home Loan Bank stock.
At March 31, 2004, securities available for sale reached $179.4 million
from $167.9 million at December 31, 2003. The increase in available for sale
securities was primarily attributable to increases of $19.9 million in mortgage
backed securities and $1.9 million in obligations of state and political
sub-divisions offset by a decrease of $10.3 million in obligations of U.S.
government agencies. The monthly principal reductions associated with mortgage
backed securities provide the Company with a constant source of cash flow that
can be reinvested in instruments yielding current interest rates.
Net loans reached $419.8 million at March 31, 2004 from $416.3 million
at December 31, 2003. The increase in net loans is primarily attributed to a net
increase of $3.8 million in tax-free loans made to local municipalities.
At March 31, 2004, total liabilities increased $13.3 million, or 2.3%,
to $583.2 million from $569.9 million at December 31, 2003. This increase was
primarily the result of fixed-rate long-term and amortizing borrowings from the
Federal Home Loan Bank, which had a net increase of $7.8 million reaching $61.1
million at March 31, 2004 from $53.3 million at December 31, 2003. These
low-rate advances were used to fund the growth in available
6
for sale securities. Overnight Federal funds purchased increased $2.3 million to
$10.2 million at March 31, 2004 from $7.9 million at December 31, 2003. The
Company used these low-cost funds to meet the short-term liquidity needs of the
Company.
Repurchase agreements increased to $16.9 million at March 31, 2004, an
increase of $4.3 million from December 31, 2003. The Company offers its
corporate customers sweep accounts where unused deposit balances are swept into
an overnight repurchase agreement yielding market rates.
Interest-bearing deposits increased to $412.2 million at March 31,
2004, from $411.1 million at December 31, 2003. The increase of $1.1 million was
primarily due to increases of $3.8 million in interest-bearing checking accounts
and $2.7 million in savings accounts. Such increases were offset by decreases of
$2.2 million and $3.0 million in money market and certificate of deposit
accounts, respectively.
Non-interest bearing deposit accounts decreased to $77.8 million at
March 31, 2004, from $81.1 million at December 31, 2003. The decrease of $3.3
million is attributed to existing deposit customers maintaining a smaller
balance on March 31, 2004. Balance fluctuations within this account from quarter
to quarter are expected.
At March 31, 2004, total stockholders' equity increased $1.7 million to
$61.3 million from $59.6 million at December 31, 2003. The increase was due to
net income of $2.4 million and accumulated other comprehensive income (net of
income taxes) of $800,000 offset by dividends paid of $1.2 million. Accumulated
other comprehensive income increased as a result of changes in the net
unrealized gain on securities available for sale. Because of interest rate
volatility, the Company's accumulated other comprehensive income could
materially fluctuate for each interim period and year-end. See Note D to the
consolidated financial statements.
RESULTS OF OPERATIONS
Net income. Net income for the three months ended March 31, 2004
decreased $276,000, or 10.5%, to $2.4 million, or $.78 per diluted earnings per
share from $2.6 million, or $.88 per diluted earnings per share, for the
comparable three month period in 2003. The decrease for the three months ended
March 31, 2004 was the result of increases in other expenses and a decrease in
net interest income and other income.
Interest income. Interest income for the three months ended March 31,
2004 decreased $183,000 to $8.3 million from $8.5 million for the comparable
three month period in 2003. While the average balances of interest earning
assets increased $36.6 million for the three months ended March 31, 2004, to
$600.9 million from $564.3 million for the comparable period in 2003, the yield
on these assets decreased 49 basis points to 5.53%, for the three months ended
March 31, 2004 from 6.02% for the comparable period in 2003. The on-going low
interest rate environment continues to put negative pressure on interest earning
assets. See "Average Balance Sheet and Rate/Volume Analysis."
7
Interest expense. Interest expense for the three months ended March 31,
2004 decreased $122,000 to $2.9 million from $3.0 million for the comparable
period in 2003. The decrease in interest expense was primarily attributed to a
28 basis point decrease in the average cost of funds to 2.31% for the three
months ended March 31, 2004 from 2.59% for the comparable period in 2003, offset
by a $33.7 million increase in the average balance of interest bearing
liabilities. The reduction of average cost of funds for the three month period
ended March 31, 2004 is reflective of the continued historically low interest
rates paid on deposits and borrowings over the past year. See "Average Balance
Sheet and Rate/Volume Analysis"
Average Balance Sheet
The following table sets forth certain information relating to the company for
the periods indicated. The average yields and costs are derived by dividing
income or expense on an annualized basis by the average balance of assets or
liabilities, respectively, for the periods presented. Average balances are
derived from average daily balances.
- ------------------------------------------------------------------------------------------------------------
Three Months Ended March 31, Three Months Ended March 31,
- ------------------------------------------------------------------------------------------------------------
2004 2003
---- ----
- ------------------------------------------------------------------------------------------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
- ------------------------------------------------------------------------------------------------------------
(Dollars In Thousands) (Dollars In Thousands)
- ------------------------------------------------------------------------------------------------------------
Interest-earning assets:
- ------------------------------------------------------------------------------------------------------------
Loans receivable (1) $421,939 $ 6,590 6.25% $369,759 $ 6,437 6.96%
- ------------------------------------------------------------------------------------------------------------
Investment securities available
for sale (2) 179,003 1,720 3.84% 190,972 2,046 4.29%
- ------------------------------------------------------------------------------------------------------------
Other interest-earning assets (3) 32 0 5.74% 3,545 10 1.13%
- ------------------------------------------------------------------------------------------------------------
Total interest earning assets $600,974 $ 8,310 5.53% $564,276 $ 8,493 6.02%
- -------------------------------------------------------=====================-------------===================
- ------------------------------------------------------------------------------------------------------------
Non-interest earning assets 32,688 29,065
-------- --------
- ------------------------------------------------------------------------------------------------------------
Total assets $633,662 $593,341
- ---------------------------------------------========-------------------------========----------------------
- ------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
- ------------------------------------------------------------------------------------------------------------
Money market accounts $ 56,499 $ 118 0.84% $ 60,474 $ 216 1.43%
- ------------------------------------------------------------------------------------------------------------
Certificates of Deposit 239,120 1,857 3.11% 224,060 1,893 3.38%
- ------------------------------------------------------------------------------------------------------------
Other liabilities 197,411 877 1.78% 174,767 864 1.98%
-------- -------- -------- -------
- ------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities $493,030 $ 2,852 2.31% $459,301 $ 2,973 2.59%
- --------------------------------------------- ====================--------------===================
- ------------------------------------------------------------------------------------------------------------
Non-interest-bearing liabilities 80,675 77,373
-------- -------
- ------------------------------------------------------------------------------------------------------------
Total liabilities $ 573,705 $536,674
- --------------------------------------------=========---------------------------==================----------
Stockholders' equity (4) 59,957 56,667
--------- --------
- ------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 633,662 $593,341
- -----------------------------------------------======-------------------------========----------------------
Net interest income $ 5,458 $ 5,520
- -------------------------------------------------------========--------------------------=======------------
Interest rate spread (5) 3.22% 3.43%
- ---------------------------------------------------------------------======------------------------=========
Net yield on interest-earning assets (6) 3.63% 3.91%
- ---------------------------------------------------------------------======------------------------=========
Ratio of average interest-earning
assets to average interest-
bearing liabilities 121.89% 122.86%
- ---------------------------------------------------------------------======------------------------=========
8
(1) Average balances include non-accrual loans, and are net of deferred loan
fees.
(2) Includes interest-bearing deposits in other financial institutions.
(3) Consists of federal funds sold.
(4) Includes capital stock, surplus and accumulated other comprehensive income,
less treasury stock.
(5) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(6) Net yield on interest-earning assets represents annualized net interest
income as a percentage of average interest earning assets.
Rate / Volume Analysis
The following table shows the effect of changes in volumes and rates on
interest income and interest expense. The changes in interest income and
interest expense attributable to changes in both volume and rate have been
allocated to the changes due to rate. Tax-exempt income was not recalculated on
a tax equivalent basis due to the immateriality of the change to the table
resulting from a recalculation.
- ---------------------------------------------------------------------------------------------------------
Three Month Period ended March 31, 2004
- ---------------------------------------------------------------------------------------------------------
2004 vs. 2003
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease)
Due to
- ---------------------------------------------------------------------------------------------------------
Volume Rate Net
- -----------------------------------------------------------------------------------------------------
(In Thousands)
- -----------------------------------------------------------------------------------------------------
Interest income:
- -----------------------------------------------------------------------------------------------------
Loans receivable $ 908 $(755) $153
- -----------------------------------------------------------------------------------------------------
Investment securities available for sale (128) (198) (326)
- -----------------------------------------------------------------------------------------------------
Other interest earning assets (10) 0 (10)
- -----------------------------------------------------------------------------------------------------
Total interest-earning assets $770 $(953) $(183)
- -----------------------------------------------------================================================
- -----------------------------------------------------------------------------------------------------
Interest expense:
- -----------------------------------------------------------------------------------------------------
Money market accounts $(14) $ (84) $ (98)
- -----------------------------------------------------------------------------------------------------
Certificates of deposit 128 (164) (36)
- -----------------------------------------------------------------------------------------------------
Other liabilities 112 (99) 13
- -----------------------------------------------------------------------------------------------------
Total interest-bearing liabilities $226 $(347) $(121)
- -----------------------------------------------------================================================
- -----------------------------------------------------------------------------------------------------
Net change in net interest income $544 $(606) $ (62)
- -----------------------------------------------------================================================
Provision for loan losses. For the three months ended March 31, 2004
the provision for loan losses was $125,000 compared to $150,000 for the
comparable 2003 period.
The provision for loan losses is charged to operations to bring the
total allowance for loan losses to a level that represents management's best
estimate of the losses inherent in the portfolio, based on a monthly review by
management of the following factors:
9
o Historical experience
o Volume
o Type of lending conducted by the Bank
o Industry standards
o The level and status of past due and non-performing loans
o The general economic conditions in the Bank's lending area; and
o Other factors affecting the collectability of the loans in the
portfolio
Large groups of homogeneous loans, such as residential real estate,
small commercial real estate loans and home equity and consumer loans are
evaluated in the aggregate using historical loss factors and other data. The
amount of loss reserve is calculated using historical loss rates, net of
recoveries on a five year rolling weighted average, adjusted for environmental,
and other qualitative factors such as industry, geographical, economic and
political factors that can effect loss rates or loss measurements.
Large balance and/or more complex loans such as multi-family and
commercial real estate loans may be evaluated on an individual basis and are
also evaluated in the aggregate to determine adequate reserves. As specific
loans are determined to be impaired, specific reserves are assigned based upon
collateral value, market value, if determinable, or the present value of the
estimated future cash flows of the loan.
The allowance is increased by a provision for loan loss which is
charged to expense, and reduced by charge-offs, net of recoveries. Loans are
placed on non-accrual status when they are 90 days past due, unless they are
adequately collateralized and in the process of collection.
The allowance for loan losses is maintained at a level that represents
management's best estimate of losses in the portfolio at the balance sheet date.
However, there can be no assurance that the allowance for losses will be
adequate to cover losses which may be realized in the future and that additional
provisions for losses will not be required.
Other income. Total other income for the three months ended March 31,
2004 decreased $93,000 to $1.3 million from $1.4 million for the comparable
three month period in 2003. The decrease in other income for the three months
ended March 31, 2004 was primarily due to a reduction in gains recognized from
the sale of available for sale securities of $41,000, to $184,000, compared to
gains of $225,000 reported for the same 2003 period. The Company sold select
securities in 2004, that were expected to be called, taking advantage of the
steep yield curve and reducing maturity concentrations. Additional decreases in
other income were mainly due to a decrease of $25,000 in debit card fees. This
decrease was primarily the result of the agreement made between Master Card and
Wal-Mart, which reduced processing charges on debit card transactions.
Other expense. Total other expense for the three month period ended
March 31, 2004 increased $404,000 to $3.6 million from $3.2 million for the
comparable three month period in 2003. Salaries and benefits increased $194,000
at March 31, 2004 from the comparable period in 2003 due to annual salary
increases, increased staff primarily for the new Greensburg branch, and
increases in employee health care costs. Occupancy expense for the three months
ended March 31, 2004 increased $65,000 to $442,000 from $377,000 for the
comparable three month period in 2003. Such increases at March 31, 2004 were
predominantly due to depreciation expense related to the opening of the
Greensburg branch in November 2003 and equipment purchases for technological
improvements. Other expenses increased $148,000 to $985,000, from $837,000 for
the
10
comparable 2003 period. Costs related to maintenance agreements on various
software and equipment increased $40,000 from the comparable period in 2003. The
balance of the increase is due to normal increases in the cost of doing
business.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no significant changes for the three months ended March 31,
2004 from the information presented in the 10K statement, under the caption
Market Risk, for the year ended December 31, 2003.
11
Item 4. CONTROLS AND PROCEDURES
The Company's management evaluated, with the participation of the
Company's Chief Executive Officer and Chief Financial Officer, the effectiveness
of the Company's disclosure controls and procedures, as of the end of the period
covered by this report. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms.
There were no changes in the Company's internal control over financial
reporting that occurred during the Company's last fiscal quarter that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Registrant is not party to any material legal proceedings at the
present time. From time to time, the Bank is a party to routine legal
proceedings within the normal course of business wherein it enforces
its security interest in loans made by it, and other matters of a like
kind.
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
On April 20, 2004, the Registrant held its annual meeting of
stockholders at which the following matters were voted on:
PROPOSAL I - ELECTION OF DIRECTORS
Nominee For Withheld
------- --- --------
John N. Brenzia 2,534,184 67,015
Robert Rebich, Jr. 2,562,201 39,998
Grant J. Shevchik 2,548,444 52,756
Charles G. Urtin 2,530,184 71,016
PROPOSAL II - RATIFICATION OF AUDITORS
For Against Abstain
--- ------- -------
2,558,148 40,311 -0-
There were no broker non-votes on any of the foregoing.
13
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
3(i) Articles of Incorporation of IBT Bancorp, Inc.*
3(ii) Amended Bylaws of IBT Bancorp, Inc.**
4 Rights Agreement, dated as of November 18, 2003,
by and between IBT Bancorp, Inc. and Registrar
and Transfer Company, as Rights Agent.***
10 Change In Control Severance Agreement with
Charles G. Urtin ****
10.1 Deferred Compensation Plan For Bank Directors****
10.2 Retirement Agreement Between Irwin Bank & Trust Co. And
J. Curt Gardner****
10.3 Death Benefit Only Deferred Compensation Plan For Bank
Directors effective as of January 1, 1990****
10.4 Retirement and Death Benefit Deferred Compensation Plan
For Bank Directors effective as of January 1, 1990****
10.5 2000 Stock Option Plan*****
31.1 Rule 13a-14(a) Certification of Chief Executive Officer
31.2 Rule 13a-14(a) Certification of Chief Financial Officer
32 Section 1350 Certification
-------------------------
* Incorporated by reference to the identically numbered
exhibits of the Registrant's Form 10 (File No. 0-25903)
filed April 29, 1999.
** Incorporated by reference to the identically numbered
exhibit of the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 2002.
*** Incorporated by reference to Exhibit 4 to Amendment No. 1
to Form 8-A (File No. 1-31655) filed November 20, 2003.
**** Incorporated by reference to the identically numbered
exhibits of the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999.
***** Incorporated by reference to Exhibit 4.1 the Registrant's
Registration Statement on Form S-8 (File No. 333-40398)
filed June 29, 2000.
(b) Reports on Form 8-K
-------------------
(i) On February 18, 2004, the registrant filed a Current Report
on Form 8-K to report its announcement of earnings for the
quarter and year ended December 31, 2003 under Item 12. No
financial statements were filed as part of this report.
14
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.
IBT BANCORP, INC.
Date: May 10, 2004 By: /s/Charles G. Urtin
---------------------------------------
Charles G. Urtin
President, Chief Executive Officer
(Duly authorized officer)
Date: May 10, 2004 By: /s/Raymond G. Suchta
---------------------------------------
Raymond G. Suchta
Vice President, Chief Financial Officer
(Principal Financial Officer)
15