SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
| (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, 2003, 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: 0-26128 |
| Indiana | 35-1927981 | |
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| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
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| 9204 Columbia Avenue Munster, Indiana |
46321 | |
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| (Address of principal executive office) | (ZIP code) |
Registrant’s telephone number, including area code: (219) 836-4400
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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act ). Yes [ ] No [X]
There were 2,742,149 shares of the registrant’s Common Stock, without par value, outstanding at March 31, 2003.
NorthWest Indiana Bancorp
Index
| Page | ||||||||||||
| Number | ||||||||||||
| PART I. Financial Information | ||||||||||||
| Item 1. | Consolidated Financial Statements of NorthWest Indiana Bancorp
Consolidated Balance Sheets, March 31, 2003 and December 31, 2002 |
1 | ||||||||||
Consolidated Statements of Income, Three Months Ended
March 31, 2003 and 2002 |
2 | |||||||||||
Consolidated Statements of Changes in Stockholders’ Equity, Three Months
Ended March 31, 2003 and 2002 |
3 | |||||||||||
Consolidated Statements of Cash Flows, Three Months Ended March 31, 2003
and 2002 |
4 | |||||||||||
Notes to Consolidated Financial Statements |
5-6 | |||||||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and
Results of Operations |
7-14 | ||||||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market |
15-16 | ||||||||||
| Item 4. | Controls and Procedures |
17 | ||||||||||
| PART II. Other Information | 18 | |||||||||||
| SIGNATURES | 19 | |||||||||||
| CERTIFICATIONS | 20-21 | |||||||||||
| EXHIBITS | 22-24 | |||||||||||
NorthWest Indiana Bancorp
Consolidated Balance Sheets
| March 31, | |||||||||||
| 2003 | December 31, | ||||||||||
| (Dollars in thousands) | (unaudited) | 2002 | |||||||||
ASSETS |
|||||||||||
Cash and non-interest bearing balances in financial institutions |
$ | 15,639 | $ | 18,026 | |||||||
Interest bearing balances in financial institutions |
8,790 | 15,625 | |||||||||
Federal funds sold |
235 | 1,549 | |||||||||
Total cash and cash equivalents |
24,664 | 35,200 | |||||||||
Securities available-for-sale |
57,047 | 56,002 | |||||||||
Securities held-to-maturity; fair value: March 31, 2003 - $592, |
|||||||||||
December 31, 2002 - $594 |
567 | 569 | |||||||||
Loans held for sale |
644 | 601 | |||||||||
Loans receivable |
387,130 | 380,428 | |||||||||
Less: allowance for loan losses |
(3,744 | ) | (3,635 | ) | |||||||
Net loans receivable |
383,386 | 376,793 | |||||||||
Federal Home Loan Bank stock |
2,672 | 2,672 | |||||||||
Accrued interest receivable |
2,356 | 2,363 | |||||||||
Premises and equipment |
10,442 | 9,460 | |||||||||
Foreclosed real estate |
— | 127 | |||||||||
Other assets |
2,823 | 4,215 | |||||||||
Total assets |
$ | 484,601 | $ | 488,002 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||||||
Deposits: |
|||||||||||
Non-interest bearing |
$ | 37,322 | $ | 36,308 | |||||||
Interest bearing |
366,013 | 370,365 | |||||||||
Total |
403,335 | 406,673 | |||||||||
Borrowed funds |
36,857 | 36,065 | |||||||||
Accrued expenses and other liabilities |
4,771 | 6,116 | |||||||||
Total liabilities |
444,963 | 448,854 | |||||||||
Commitments and contingencies |
— | — | |||||||||
Stockholders’ Equity: |
|||||||||||
Preferred stock, no par or stated value;
10,000,000 shares authorized, none outstanding |
— | — | |||||||||
Common
stock, no par or stated value; 10,000,000 shares authorized; shares issued: March 31, 2003 - 2,810,313, |
351 | 351 | |||||||||
December 31, 2002 - 2,807,293 |
|||||||||||
shares outstanding: March 31, 2003 - 2,742,149, |
|||||||||||
December 31, 2002 - 2,739,129 |
|||||||||||
Additional paid in capital |
3,410 | 3,392 | |||||||||
Accumulated other comprehensive income |
801 | 950 | |||||||||
Retained earnings |
36,516 | 35,895 | |||||||||
Treasury stock, common shares at cost: March 31, 2003 - 68,164, |
|||||||||||
December 31, 2002 - 68,16 |
(1,440 | ) | (1,440 | ) | |||||||
Total stockholders’ equity |
39,638 | 39,148 | |||||||||
Total liabilities and stockholders’ equity |
$ | 484,601 | $ | 488,002 | |||||||
See accompanying notes to consolidated financial statements
1
NorthWest Indiana Bancorp
Consolidated Statements of Income
(unaudited)
| Three Months Ended | |||||||||||
| (Dollars in thousands, except per share data) | March 31, | ||||||||||
| 2003 | 2002 | ||||||||||
Interest income: |
|||||||||||
Loans receivable |
|||||||||||
Real estate loans |
$ | 5,418 | $ | 5,329 | |||||||
Commercial loans |
499 | 545 | |||||||||
Consumer loans |
103 | 163 | |||||||||
Total loan interest |
6,020 | 6,037 | |||||||||
Securities |
598 | 810 | |||||||||
Other interest earning assets |
19 | 5 | |||||||||
Total interest income |
6,637 | 6,852 | |||||||||
Interest expense: |
|||||||||||
Deposits |
1,717 | 2,281 | |||||||||
Borrowed funds |
317 | 377 | |||||||||
Total interest expense |
2,034 | 2,658 | |||||||||
Net interest income |
4,603 | 4,194 | |||||||||
Provision for loan losses |
120 | 130 | |||||||||
Net interest income after provision for loan losses |
4,483 | 4,064 | |||||||||
Noninterest income: |
|||||||||||
Fees and service charges |
435 | 395 | |||||||||
Gain on sale of loans, net |
142 | 36 | |||||||||
Trust operations |
122 | 103 | |||||||||
Gain on sale of securities, net |
45 | 89 | |||||||||
Gain/(loss) on sale of foreclosed real estate |
(4 | ) | 9 | ||||||||
Other |
4 | 4 | |||||||||
Total noninterest income |
744 | 636 | |||||||||
Noninterest expense: |
|||||||||||
Compensation and benefits |
1,574 | 1,452 | |||||||||
Occupancy and equipment |
508 | 418 | |||||||||
Data processing |
170 | 133 | |||||||||
Marketing |
53 | 43 | |||||||||
Other |
618 | 556 | |||||||||
Total noninterest expense |
2,923 | 2,602 | |||||||||
Income before income tax expenses |
2,304 | 2,098 | |||||||||
Income tax expenses |
861 | 792 | |||||||||
Net income |
$ | 1,443 | $ | 1,306 | |||||||
Earnings per common share: |
|||||||||||
Basic |
$ | 0.53 | $ | 0.48 | |||||||
Diluted |
$ | 0.52 | $ | 0.48 | |||||||
Dividends declared per common share |
$ | 0.30 | $ | 0.28 | |||||||
See accompanying notes to consolidated financial statements
2
NorthWest Indiana Bancorp
Consolidated Statements of Changes in Stockholders’ Equity
(unaudited)
| Three Months Ended | ||||||||||
| (Dollars in thousands) | March 31, | |||||||||
| 2003 | 2002 | |||||||||
Balance at beginning of period |
$ | 39,148 | $ | 35,882 | ||||||
Comprehensive income: |
||||||||||
Net income |
1,443 | 1,306 | ||||||||
Net unrealized gain/(loss) on securities
available-for-sale, net of reclassifications and tax effects |
(149 | ) | (264 | ) | ||||||
Comprehensive income |
1,294 | 1,042 | ||||||||
Issuance of shares of common stock |
18 | 72 | ||||||||
Cash dividends |
(822 | ) | (765 | ) | ||||||
Balance at end of period |
$ | 39,638 | $ | 36,231 | ||||||
See accompanying notes to consolidated financial statements
3
NorthWest Indiana Bancorp
Consolidated Statements of Cash Flows
(unaudited)
| Three Months Ended | ||||||||||||
| (Dollars in thousands) | March 31, | |||||||||||
| 2003 | 2002 | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||
Net income |
$ | 1,443 | $ | 1,306 | ||||||||
Adjustments to reconcile net income to
net cash provided by operating activities: |
||||||||||||
Origination of loans for sale |
(4,864 | ) | (1,853 | ) | ||||||||
Sale of loans originated for sale |
4,904 | 2,673 | ||||||||||
Depreciation and amortization, net of accretion |
440 | 302 | ||||||||||
Amortization of mortgage servicing rights |
26 | 13 | ||||||||||
Amortization of investment in real estate limited partnerships |
12 | 12 | ||||||||||
Equity in loss of investment in limited partnership,
net of interest received |
9 | (4 | ) | |||||||||
Equity in gain of investment in limited liability corporation |
(7 | ) | — | |||||||||
Net gains on sale of securities |
(45 | ) | (89 | ) | ||||||||
Net gains on sale of loans |
(142 | ) | (36 | ) | ||||||||
Net (gain)/loss on sale of foreclosed real estate |
4 | (9 | ) | |||||||||
Provision for loan losses |
120 | 130 | ||||||||||
Net change in: |
||||||||||||
Interest receivable |
7 | (4 | ) | |||||||||
Other assets |
(855 | ) | 141 | |||||||||
Accrued expenses and other liabilities |
959 | (83 | ) | |||||||||
Total adjustments |
568 | 1,193 | ||||||||||
Net cash from operating activities |
2,011 | 2,499 | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||
Proceeds from maturities of securities available-for-sale |
4,470 | 500 | ||||||||||
Proceeds from sales of securities available-for-sale |
2,051 | 6,021 | ||||||||||
Purchase of securities available-for-sale |
(11,542 | ) | (500 | ) | ||||||||
Proceeds from maturities and pay downs of securities held-to-maturity |
3,599 | 1,567 | ||||||||||
Purchase of Federal Home Loan Bank Stock |
— | (150 | ) | |||||||||
Loan participations purchased |
(220 | ) | (5,211 | ) | ||||||||
Net change in loans receivable |
(6,400 | ) | (14,031 | ) | ||||||||
Purchase of premises and equipment, net |
(1,247 | ) | (482 | ) | ||||||||
Proceeds from sale of foreclosed real estate |
37 | — | ||||||||||
Net cash from investing activities |
(9,252 | ) | (12,286 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||
Change in deposits |
(3,338 | ) | 15,746 | |||||||||
Proceeds from FHLB advances |
— | 3,000 | ||||||||||
Change in other borrowed funds |
792 | (9,511 | ) | |||||||||
Proceeds from issuance of common stock |
18 | 72 | ||||||||||
Dividends paid |
(767 | ) | (708 | ) | ||||||||
Net cash from financing activities |
(3,295 | ) | 8,599 | |||||||||
Net change in cash and cash equivalents |
(10,536 | ) | (1,188 | ) | ||||||||
Cash and cash equivalents at beginning of period |
35,200 | 16,936 | ||||||||||
Cash and cash equivalents at end of period |
$ | 24,664 | $ | 15,748 | ||||||||
SUPPLEMENTAL CASH FLOW INFORMATION: |
||||||||||||
Cash paid during the period for: |
||||||||||||
Interest |
$ | 2,044 | $ | 2,650 | ||||||||
Income taxes |
$ | — | $ | 335 | ||||||||
SUPPLEMENTAL NONCASH INFORMATION: |
||||||||||||
Transfers from loans to foreclosed real estate |
$ | — | $ | 185 | ||||||||
See accompanying notes to consolidated financial statements
NorthWest Indiana Bancorp
Notes to Consolidated Financial Statements
Note 1 — Basis of Presentation
The consolidated financial statements include the accounts of NorthWest Indiana Bancorp (the Bancorp), its wholly-owned subsidiary, Peoples Bank SB (the Bank), and the Bank’s wholly-owned subsidiary, Peoples Service Corporation. The Bancorp has no other business activity other than being a holding company for the Bank. The Bancorp’s earnings are dependent upon the earnings of the Bank. The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all disclosures required by accounting principles generally accepted in the United States of America for complete presentation of financial statements. In the opinion of management, the consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the balance sheets of the Bancorp as of March 31, 2003 and December 31, 2002, and the statements of income and changes in stockholders’ equity for the three months ended March 31, 2003 and 2002, and cash flows for the three months ended March 31, 2003 and 2002. The income reported for the three month period ended March 31, 2003 is not necessarily indicative of the results to be expected for the full year.
Note 2 — Use of Estimates
Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilites at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period, as well as the disclosures provided. Actual results could differ from those estimates. Estimates associated with the allowance for loan losses, fair values of financial instruments and status of contingencies are particularly susceptible to material change in the near term.
Note 3 — Concentrations of Credit Risk
The Bancorp grants residential, commercial real estate, commercial business and installment loans to customers in its primary market area of Lake County, in northwest Indiana. Substantially all loans are secured by specific items of collateral including residences, business assets and consumer assets.
Note 4 — Reclassifications
Certain amounts reported in the December 31, 2002 consolidated financial statements and the March 31, 2002 Form 10-Q have been reclassified to conform to the March 31, 2003 presentation.
Note 5 — Commitments and Contingencies
The Bancorp is a party to financial instruments in the normal course of business to meet financing needs of its customers and to reduce its own exp