-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ow7DiWPiXoDUjVbUPt/++D2EL2LLbkFxUQmbAHq7+zom+XspYWIOCfPVTuz+SWyy AnQrTJMjzgt/90iL5jXZTA== 0000946275-99-000616.txt : 19991117 0000946275-99-000616.hdr.sgml : 19991117 ACCESSION NUMBER: 0000946275-99-000616 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IBT BANCORP INC CENTRAL INDEX KEY: 0000801122 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 251532164 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-25903 FILM NUMBER: 99752432 BUSINESS ADDRESS: STREET 1: 309 MAIN ST CITY: IRWIN STATE: PA ZIP: 15642 BUSINESS PHONE: 4128633100 MAIL ADDRESS: STREET 1: IBT BANCORP INC STREET 2: 309 MAIN ST CITY: IRWIN STATE: PA ZIP: 15642 10-Q 1 FORM 10-Q 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 September 30, 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 No. 0-25903 IBT Bancorp, Inc. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Pennsylvania 25-1532164 - ----------------------------- --------------------------------------- (State of incorporation) (I.R.S. employer identification no.) 309 Main Street, Irwin, Pennsylvania 15642 - ------------------------------------------- ------------------------------- (Address of principal executive offices) (zip code) (724) 863-3100 - -------------------------------------------------------------------------------- Issuer's telephone number, including area code Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Number of shares of Common Stock outstanding as of November 9, 1999: 3,023,799 --------- IBT BANCORP, INC. Contents --------
Pages ----- PART I - FINANCIAL INFORMATION Item 1. Financial Statements.............................................................................. Consolidated balance sheets at September 30, 1999 (unaudited) and December 31, 1998................................................................ 1 Consolidated statements of operations (unaudited) for the three and nine months ended September 30, 1999 and 1998................................................................ 2 Consolidated statements of cash flows (unaudited) for the nine months ended September 30, 1999 and 1998................................................................ 3 Notes to condensed consolidated financial statements (Unaudited)................................. 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................................................................... 5 Item 3. Quantitative and Qualitative Disclosures About Market Risk....................................... 13 PART II - OTHER INFORMATION Item 1. Legal Proceedings................................................................................ 14 Item 2. Changes in Securities and Use of Records......................................................... 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
PART I CONSOLIDATED BALANCE SHEETS IBT BANCORP, INC. AND SUBSIDIARY
September 30, 1999 December 31, ------------------ ------------ (unaudited) 1998 ------------------ ------------ ASSETS Cash and due from banks $ 11,749,527 $ 10,767,316 Interest-bearing deposits in banks 10,276,212 7,196,998 Federal funds sold 5,064,000 25,432,000 Securities available for sale 149,923,424 117,469,947 Securities held to maturity (Market value of -- 2,569,215 $0 and $2,554,545 respectively) Federal Home Loan Bank stock, at cost 1,964,300 1,308,100 Loans, net 256,219,245 238,304,491 Premises and equipment, net 4,698,012 4,879,133 Other assets 6,437,417 4,438,743 ------------- ------------- Total Assets $ 446,332,137 $ 412,365,943 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Deposits Non-interest bearing $ 56,485,459 $ 58,208,466 Interest-bearing 318,462,481 298,174,672 ------------- ------------- Total deposits 374,947,940 356,383,138 Securities sold under repurchase agreements 7,495,613 -- Accrued interest and other liabilities 3,870,975 3,781,876 Long-term debt 22,000,000 14,000,000 ------------- ------------- Total liabilities 408,314,528 374,165,014 Stockholders' Equity Capital stock, par value $1.25, 5,000,000 shares authorized, 3,023,799 shares issued and outstanding 3,779,749 3,779,749 Surplus 2,073,102 2,073,102 Retained earnings 34,348,400 31,401,922 Accumulated other comprehensive income (2,183,642) 946,156 ------------- ------------- Total stockholders' equity 38,017,609 38,200,929 ------------- ------------- Total Liabilities and Stockholders' Equity $ 446,332,137 $ 412,365,943 ============= =============
1 CONSOLIDATED STATEMENTS OF INCOME IBT BANCORP, INC. AND SUBSIDIARY
Three Months Ended September 30, Nine Months Ended September 30, ------------------------------------------- ---------------------------------------- 1999 1998 1999 1998 -------------------- -------------------- ------------------- ------------------ (unaudited) (unaudited) ------------------------------------------- ---------------------------------------- Interest Income Loans $ 4,989,828 $ 4,728,515 $ 14,615,146 $ 14,159,110 Investment securities 2,376,310 1,976,842 6,609,582 5,697,395 Federal funds sold 172,135 200,592 423,961 578,838 -------------------- -------------------- ------------------- -------------------- Total interest income 7,538,273 6,905,949 21,648,689 20,435,343 Interest Expense Deposits 3,196,223 3,031,244 9,206,211 9,045,806 Long-term debt 284,222 118,145 648,969 242,145 Repurchase agreements 66,892 - 110,330 - -------------------- -------------------- ------------------- -------------------- Total interest expense 3,547,337 3,149,389 9,965,510 9,287,951 -------------------- -------------------- ------------------- -------------------- Net Interest Income 3,990,936 3,756,560 11,683,179 11,147,392 Provision for Loan Losses 105,000 75,000 195,000 285,000 -------------------- -------------------- ------------------- -------------------- Net Interest Income after Provision 3,885,936 3,681,560 11,488,179 10,862,392 for Loan Losses Other Income Service fees 465,503 371,997 1,258,502 1,016,654 Net investment security gains 19,268 9,708 24,057 34,707 Other income 322,051 228,123 925,877 628,979 -------------------- -------------------- ------------------- -------------------- Total other income 806,822 609,828 2,208,436 1,680,340 Other Expenses Salaries and employee benefits 1,136,728 1,184,272 3,297,234 3,256,397 Other expense 1,193,113 965,195 3,389,896 2,930,711 -------------------- -------------------- ------------------- -------------------- Total other expenses 2,329,841 2,149,467 6,687,130 6,187,108 -------------------- -------------------- ------------------- -------------------- Income Before Income Taxes 2,362,917 2,141,921 7,009,485 6,355,624 Provision for Income Taxes 760,121 694,622 2,248,727 2,030,399 -------------------- -------------------- ------------------- -------------------- Net income $ 1,602,796 $ 1,447,299 $ 4,760,758 $ 4,325,225 ==================== ==================== =================== ==================== Net Income per Share of Capital Stock $ 0.53 $ 0.48 $ 1.57 $ 1.43 ==================== ==================== =================== ==================== Dividends per Share of Capital Stock $ 0.20 $ 0.16 $ 0.60 $ 0.48 ==================== ==================== =================== ====================
2
CONSOLIDATED STATEMENTS OF CASH FLOWS IBT BANCORP, INC. AND SUBSIDIARY Nine Months ended September 30, --------------------------------------------- 1999 1998 -------------------- -------------------- (unaudited) --------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 4,760,758 $ 4,325,225 Adjustments to reconcile net cash from operating activities: Depreciation 400,500 362,000 Net amortization/accretion of premiums and discounts 17,235 (4,416) Net investment security gains (24,057) (34,707) Provision for loan losses 195,000 285,000 Increase (Decrease) in cash due to changes in assets and liabilities: Other assets (386,354) (856,044) Accrued interest and other liabilities 89,099 (180,432) -------------------- -------------------- Net Cash From Operating Activities 5,052,181 3,896,626 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales of securities available for sale 6,502,031 2,166,459 Proceeds from maturities of securities held to maturity 2,569,215 3,162,659 Proceeds from maturities of securities available for sale 41,406,716 28,606,733 Purchase of securities available for sale (85,097,520) (44,443,881) Net loans made to customers (18,109,754) (11,720,339) Purchases of premises and equipment (219,379) (268,394) Purchase of Federal Home Loan Bank stock (656,200) (137,400) -------------------- -------------------- Net Cash Used By Investing Activities (53,604,891) (22,634,163) CASH FLOWS FROM FINANCING ACTIVITIES Net increase in deposits 18,564,802 7,924,972 Net increase in securities sold under repurchase agreements 7,495,613 - Dividends (1,814,280) (1,454,572) Payments on long-term debt (2,000,000) - Proceeds from long-term debt 10,000,000 5,000,000 -------------------- -------------------- Net Cash From Financing Activities 32,246,135 11,470,400 -------------------- -------------------- Net Change in Cash and Cash Equivalents (16,306,575) (7,267,137) Cash and Cash Equivalents at Beginning of Period 43,396,314 27,700,319 -------------------- -------------------- Cash and Cash Equivalents at End of Period $ 27,089,739 $ 20,433,182 ==================== ====================
3 IBT BANCORP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed 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 and nine months ended September 30, 1999 are not necessarily indicative of the results that may be expected for the year ended December 31, 1999 or any future interim period. These statements should be read in conjunction with the registration statement on Form 10 (File No. 0-25903). 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, giving retroactive effect, in 1998, of the three-for-one stock split, declared December 28, 1998 and distributed January 19, 1999, was 3,023,799 for the nine months ended September 30, 1999 and 1998. NOTE C - COMPREHENSIVE INCOME Total comprehensive income for the nine months ended September 30, 1999 and 1998 was $1,630,960 and $4,815,379, respectively and comprehensive income for the three months ended September 30, 1999 and 1998 was $1,003,237 and $1,985,303, respectively. 4 IBT BANCORP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Cont. NOTE D - INVESTMENT SECURITIES Investment securities available for sale consist of the following:
September 30, 1999 ---------------------------------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Market Cost Gains Losses Value ---------------------------------------------------------------------------- Obligations of U.S. Government Agencies $ 93,683,276 $ 71,343 $ (1,541,909) $ 92,212,710 Obligations of State and political sub-divisions 8,208,946 82,796 (272,095) 8,019,647 Mortgage-backed securities 50,538,214 50,235 (1,778,580) 48,809,869 Other securities 647,128 6,038 - 653,166 Equity securities 154,410 73,622 - 228,032 ---------------------------------------------------------------------------- $ 153,231,974 $ 284,034 $ (3,592,584) $ 149,923,424 ============================================================================
NOTE E - REPURCHASE AGREEMENTS During 1999, the Bank began offering its corporate customers an investment product fashioned in the form of a repurchase agreement. Under the terms of the agreement, deposits in designated demand accounts of the customer are put into an investment vehicle which is used daily to purchase an interest in designated U.S. Government or Agencies' securities owned by the Bank. The Bank in turn agrees to repurchase these investments on a daily basis and pay the customer the daily interest earned on them. At September 30, 1999, the amount of repurchase agreements was $7,495,613. 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. IBT Bancorp, Inc. undertakes no obligation to publicly release the results of any revisions to those forward looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. 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"). FINANCIAL CONDITION At September 30, 1999, total assets increased $33.9 million to $446.3 million from $412.4 million at December 31, 1998. Of this increase, securities available for sale increased $32.4 million, net loans receivable increased $17.9 million, cash and due from bank's increased $1.0 million and interest bearing deposits in bank's increased $3.0 million. Such increases were offset by a $20.3 million decrease in federal funds sold. Federal funds sold and $8.0 million of loan term debt (which consisted of Federal Home Loan Bank advances) were used to take advantage of the lower interest rate environment by funding purchases of securities available for sale. 6 The growth in interest bearing deposits of $20.4 million was used primarily to fund the growth in the loan portfolio. The increase in the loan portfolio was primarily due to the growth of the fixed rate one- to four- family mortgage loan and installment loan portfolios of $6.7 million and $8.7 million, respectively. The Company's loan portfolio continues to grow due to the Company's offering of competitive market interest rates. Interest bearing deposits in bank's increased primarily due the Company's investment in short term certificates of deposits. Interest-bearing deposits increased $20.4 million to $318.5 at September 30, 1999 from $298.1 million at December 31, 1998. The Company's competitive market rates offered to the public was primarily the reason for the growth. Non-interest bearing deposits decreased $1.7 million to $56.5 million at September 30, 1999 from $58.2 million at December 31, 1998. The decrease in the non-interest bearing accounts is primarily attributed to repurchase agreements. During 1999, the Company began to offer its corporate customers an investment product fashioned in the form of a repurchase agreement. Under the terms of the agreement, deposits in designated demand accounts of the customer are put into an investment vehicle which is used daily to purchase an interest in designated U.S. Government or Agencies= securities. The Company in turn agrees to repurchase these investments on a daily basis and pay the customer the daily interest earned on them. At September 30, 1999, the amount of repurchase agreements was $7.5 million. See Note E to the condensed consolidated financial statements. At September 30, 1999, total stockholders' equity decreased $200,000 to $38.0 million from $38.2 million at December 31, 1998. The decrease was due to a $3.1 million loss in accumulated other comprehensive income and dividends paid of $1.8 million. Such decrease was offset by net income of $4.7 million for the period. Accumulated other comprehensive income decreased as a result of changes in the net unrealized (loss) on the available for sale securities due to fluctuations in interest rates. Pursuant to generally accepted accounting principles, securities available for sale are recorded at current market value and net unrealized gains or losses on such securities are excluded from current earnings and reported net of income taxes, as part of comprehensive income, until realized. Because of interest rate 7 volatility, the Company's accumulated other comprehensive income could materially fluctuate for each interim period and year-end. The majority of the accumulated unrealized loss resulted from the Company's investment in U.S. government agencies and mortgage backed securities. See Note D to the condensed consolidated financial statements. COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998: Net income. Net income for the three months ended September 30, 1999 increased $200,000 to $1.6 million from $1.4 million for the comparable three months 1998 period. Net income for the nine months ended September 30, 1999 increased $500,000 to $4.8 million from $4.3 million for the comparable nine months 1998 period. Such increases for the three and nine months ended 1999 were the result of the growth in the loan portfolio and the purchase of available for sale securities. Interest income. Interest income for the three months ended September 30, 1999 increased $600,000 to $7.5 million from $6.9 million for the comparable three months 1998 period. Interest income for the nine months ended September 30, 1999 increased $1.2 million to $21.6 million from $20.4 million for the comparable nine months 1998 period. The increases for the three and nine months ended 1999 was primarily due the growth in the loan portfolio and the increase in available for sale securities. Interest expense. Interest expense for the three months ended September 30, 1999 increased $400,000 to $3.5 million from $3.1 million for the comparable three months 1998 period. Interest expense for the nine months ended September 30, 1999 increased $700,000 to $10.0 million from $9.3 million for the comparable nine months 1998 period. The increase was primarily due to the increase in interest earning deposits, FHLB advances and corporate repurchase agreement deposits. Provision for loan losses. For the three and nine months ended September 30, 1999 provision for loan losses were $105,000 and $195,000, respectively. The evaluation for determining the provision includes evaluations of concentrations of credit, past loss experience, current economic conditions, amount and composition of the loan portfolio (including loans being specifically monitored by management), estimated 8 fair value of underlying collateral, loan commitments outstanding, delinquencies, and other information available at such times. The Company will continue to monitor its allowance for loan losses and make future adjustments to the allowance through the provision for loan losses as economic conditions dictate. Management continues to offer a wider variety of loan products coupled with the continued success of changing the mix of the products offered in the loan portfolio from lower yielding loans (i.e., one- to four-family loans) to higher yielding loans (i.e., equity loans, multi-family (five or more units) buildings, and commercial (nonresidential) mortgages). Although the Company maintains its allowance for loan losses at a level that it considers to be adequate to provide for the inherent risk of loss in its loan portfolio, there can be no assurance that future losses will not exceed estimated amounts or that additional provisions for loan losses will not be required in future periods due to the higher degree of credit risk which might result from the change in the mix of the loan portfolio. Other income. Other income for the three months ended September 30, 1999 increased $197,000 to $807,000 from $610,000 for the comparable three months 1998 period . Other income for the nine months ended September 30, 1999 increased $500,000 to $2.2 million from $1.7 million for the comparable nine months 1998 period. The total increases for the three and nine months 1999 results were due to the increase in service fees and other income. The increase in service fees was the result of overdraft fees primarily due to the increase in the number of demand deposit accounts. Other income increased as a result of the Company's assessment of ATM surcharges on transactions performed by non-customers beginning in January 1999. Other expense. Other expense for the three months ended September 30, 1999 increased $200,000 to $2.3 million from $2.1 million for the comparable three months 1998 period . Other income for the nine months ended September 30, 1999 increased $500,000 to $6.7 million from $6.1 million for the comparable nine months 1998 period. Other expenses increased due to the of the opening of two additional supermarket branches. Year 2000 Issues Senior management views the year 2000 initiative as one of the highest priorities of the Company. With oversight from the Board of 9 Directors, the Company has pursued appropriate solutions and assurances with regard to compliance of all applications affected by the year 2000. In 1997, the Company formed a year 2000 team consisting of senior management, officers, and members of various departments of the Company, to assess the impact year 2000 issues could have on the Company's daily business operations. A five-phase plan was developed which was comprised of the following phases: awareness, assessment, renovation, validation, and implementation . The awareness phase included gathering information on year 2000 issues and sharing it with all levels of employees and the Board of Directors. This process of gathering and sharing information continues and includes the bank's customer base. Workshops have been provided for commercial customers. Newsletters, local newspaper announcements and brochures are available at each branch location to keep customers, shareholders and employees abreast of the year 2000 issue. The Board of Directors is updated on a monthly basis. The assessment phase includes the inventorying of all hardware and software and identification of all systems, which could be affected by the date change. The hardware, software and systems were prioritized based upon their importance in providing uninterrupted services to customers. Those items determined to be of the highest priority were ranked "mission critical." The core processing system was determined to be "mission critical." The core processing system is outsourced to two outside vendors. The first vendor provides the software for in-house processing of all documents including checks, deposit tickets, loan payments, and miscellaneous items from the Federal Reserve, correspondent banks, and over the counter transactions. The second vendor, at an off-site location, performs the process of editing, posting, and report generation of all activity on customer accounts. All non-information technology systems were also identified during the assessment phase and testing was performed. This included testing of loan calculators, fax machines, VCR=s, surveillance cameras, etc. Vendors were contacted and provided with makes, models, and serial numbers on systems that could not be tested in-house, such as, elevators, vault security systems, phone systems, and heat/air conditioning systems. The vendors provided written assurance that their systems are year 2000 compliant. 10 During the assessment phase it was determined that the cost associated with addressing the year 2000 issue should not exceed $300,000, which includes capital expenditures. At September 30, 1999, approximately $200,000 had been expended. These costs or any additional costs associated with the year 2000 issue are not expected to have a major impact on the Company's financial statements. The renovation phase included hardware replacement, software upgrades and vendor assurance. At September 30, 1999, the renovation phase for all "mission critical" and other systems were completed. The validation phase includes extensive testing of all hardware, software and systems provided by third party vendors. As of September 30, 1999, the final stages of testing of our "mission critical" core applications and all remaining products were completed. The testing process of our "mission critical" core applications was monitored by an independent consulting group. The risks exist that some of the bank's commercial borrowers may not be prepared for year 2000 issues and may suffer financial harm as a result. This, in tern, represents risk to the bank regarding the repayment of loans from those commercial customers. Because of this, year 2000 compliance is considered part of our loan underwriting procedures. A risk analysis was performed in September of 1998 on all existing commercial loans with an aggregate balance exceeding $100,000 and commercial mortgage loans with an aggregate balance exceeding $250,000. The risk analysis was performed using FDIC guidelines. Commercial loan customers were evaluated based upon their year 2000 vulnerability, their ability to obtain the resources to identify and correct any deficiencies, and their year 2000 plan. Their overall year 2000 credit risk was then classified as low, medium, or high. Those classified as high risk are re-evaluated on a quarterly basis. However, repayment sources for the majority of loans in the bank's commercial loan portfolio are in multi-family real estate projects that tend to be less computer-dependent than, for example, a manufacturing business. Nevertheless, a year 2000 disclosure is included in new commercial and commercial mortgage loans requiring the borrower to maintain year 2000 compliant systems. A Contingency and Business Resumption Plan was approved by the Board in May 1999. This plan addresses perceived risks associated with the year 2000 problem. These activities include remediation contingency 11 planning intended to mitigate any risks associated with unforeseen system glitches, system failure, increased demands for cash, or processes outside the Bank's control. The remainder of 1999 will be used to further validate the plan. While this plan was designed to significantly address the Year 2000 problems of the Company, the occurrence of the following could negatively impact the Company: (a) utility service companies may be unable to provide the necessary service to drive the Company's data systems or provide sufficient sanitary conditions for the Company's offices; (b) the Company's primary software provider could have a major malfunction in its system or their service could be disrupted due to its utility providers, or some combination of the two; or (c) the Company may have to transact its business manually The Company will attempt to monitor these uncertainties by continuing to request an update on all critical and important vendors through the remainder of 1999. If the Company identifies any concern related to any critical or important vendor, the contingency plan will be implemented immediately to assure continued service to the bank's customers. The implementation phase includes incorporating all necessary changes and becoming completely year 2000 compliant. At September 30, 1999 the implementation phase is complete. The Company continues to focus on the awareness phase with its efforts on providing customers, the Company's shareholders and employees with up-to-date information on the Company's state of preparedness for the year 2000. This will include employee awareness at monthly manager and operation meetings and informational seminars at various local civic groups. For the remainder of 1999, the Company will focus on employee training to insure continued, uninterrupted customer service in the new year. Successful and timely completion of the year 2000 project is based on management=s best estimates derived from various assumptions of future events, which are inherently uncertain, including the progress and results 12 of the Company's testing plans, and all vendors, suppliers and customer readiness. Despite the best efforts of management to address this issue, the vast number of external entities that have direct and indirect business relationships with the Company, such as customers, vendors, payment systems providers, utility companies, and other financial institutions, makes it impossible to assure that a failure to achieve compliance by one or more of these entities would not have a material impact on the financial statements of the Company. Additionally, year 2000 issues could affect the Company's liquidity if customer withdrawals in anticipation of the year 2000 are greater than expected or if lenders are unable to provide the Company with funds when needed. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There were no significant changes for the nine months ended September 30, 1999 from the information presented in the Form 10 registration statement, under the caption Market Risk, for the year ended December 31, 1998. 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings The registrant is not engaged in any legal proceedings at the present time. From time to time, the Bank is a party to 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 and Use of Proceeds None. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders None. 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) Bylaws of IBT Bancorp, Inc.* 27 Financial Data Schedule (electronic filing only) --------------- * Incorporated by reference to the registration statement on Form 10, filed on April 29, 1999 and subsequently amended on June 28, 1999. (b) Reports on Form 8-K -- None. 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: November 12 , 1999 By: /s/Charles G. Urtin ---- ----------------------------------------------------- Charles G. Urtin Executive Vice President and Chief Financial Officer (Chief Accounting Officer) (Duly authorized officer)
15 EX-27 2 FDS
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION. 1000 9-MOS DEC-31-1999 SEP-30-1999 11,750 10,276 5,064 0 149,923 0 0 258,514 2,295 446,332 374,948 0 3,871 22,000 0 0 3,780 34,238 446,332 14,615 6,610 424 21,649 9,206 759 11,683 195 24 6,687 7,009 7,009 0 0 4,761 1.57 1.57 0 35 1,770 0 0 2,228 137 9 2,295 2,295 0 0
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