NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations:
IBT Bancorp, Inc.
(the Bancorp), is a bank holding company whose principal activity is the ownership and
management of its wholly owned subsidiary, Irwin Bank (the Bank). The Bank is a full
service state chartered commercial banking institution and provides a variety of
financial services to individuals and corporate customers through its six branch
offices, a loan center, a trust division, three supermarket branches and main office
located in Southwestern Pennsylvania. The Bank’s primary deposit products are
non-interest and interest-bearing checking accounts, savings accounts and certificates
of deposit. Its primary lending products are single-family and multi-family residential
loans, installment loans and commercial loans.
Principles of Consolidation:
The
consolidated financial statements include the accounts of the Bancorp and the Bank. All
significant intercompany accounts have been eliminated in the consolidation.
Use of Estimates:
The preparation of
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 and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
Material estimates that are particularly susceptible to significant
change relate to the determination of the allowance for loan losses and the valuation
of real estate acquired in connection with foreclosures or in satisfaction of loans. In
connection with the determination of the allowances for loan losses and foreclosed real
estate, management obtains independent appraisals for significant
properties.
Investment Securities:
All investments in
debt and equity securities are to be classified into one of three categories.
Securities which management has the positive intent and ability to hold until maturity
are classified as held to maturity. Securities held to maturity are stated at cost,
adjusted for amortization of premium and accretion of discount computed on a level
yield basis. Securities that are bought and held principally for the purpose of selling
them in the near term are classified as trading securities. All other securities are
classified as available for sale securities. Unrealized holding gains and losses for
trading securities are included in earnings. Unrealized holding gains and losses for
available for sale securities are excluded from earnings and reported net of income
taxes as a separate component of stockholders’ equity until realized. At this
time, management has no intention of establishing a trading securities
classification.
Interest and dividends on securities are reported as interest income.
Gains and losses realized on sales of securities represent the differences between net
proceeds and carrying values determined by the specific identification
method.
Investments are reviewed for declines in fair value on a quarterly
basis. Declines in the fair value of held to maturity and available for sale securities
below their cost that are deemed to be other than temporary are reflected in earnings
as realized losses. In estimating other-than-temporary impairment losses, management
considers (1) the length of time and the extent to which the fair value has been less
than cost, (2) the financial condition and near-term prospects of the issuer, and (3)
the intent and ability of the Bancorp to retain its investment in the issuer for a
period of time sufficient to allow for any anticipated recovery in fair
value.
Advertising Costs:
Advertising costs are
expensed as incurred. Advertising expense totaled $531,596 for 2007, $431,995 for 2006
and $387,344 for 2005.
Loans and Allowance for Loan Losses:
Loans
are stated at unpaid principal balances, less the allowance for loan losses and net
deferred loan fees.
53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT
BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Loan
origination and commitment fees, as well as certain direct origination costs, are
deferred and amortized as a yield adjustment over the lives of the related loans using
the interest method. Amortization of deferred loan fees is discontinued when a loan is
placed on nonaccrual status.
The
allowance for loan losses is maintained at a level which, in management’s
judgment, is adequate to absorb potential losses inherent in the loan portfolio. The
amount of the allowance is based on management’s evaluation of the collectability
of the loan portfolio, including the nature of the portfolio, credit concentrations,
trends in historical loss experience, specific impaired loans, and economic conditions.
Large groups of smaller balance homogeneous loans are valued collectively for
impairment. The amount of loss reserve is calculated using historical loss rates, net
of recoveries, adjusted for environmental, and other qualitative factors such as
industry, geographic, economic and political factors that can affect loss rates or loss
measurements.
Allowances for losses on specifically identified loans that are
determined to be impaired are calculated based upon collateral value, market value, if
determinable, or the present value of the estimated future cash flows. The allowance is
increased by a provision for loan losses, which is charged to expense, and reduced by
charge-offs, net of recoveries. Loans are placed on nonaccrual status when they are
more than 90 days past due.
Premises and Equipment:
Premises and
equipment are stated at cost less accumulated depreciation computed on both the
straight-line and accelerated methods over the estimated useful lives of the assets.
Costs for maintenance and repairs are expensed currently. Costs of major additions or
improvements are capitalized.
Foreclosed Real Estate:
Real estate
properties acquired through or in lieu of loan foreclosure are initially recorded at
fair value less estimated selling cost at the date of foreclosure. Any write-downs
based on the asset’s fair value at the date of acquisition are charged to the
allowance for loan losses. After foreclosure, these assets are carried at the lower of
their new cost basis or fair value less cost to sell. Costs of significant property
improvements are capitalized, whereas costs relating to holding property are expensed.
Valuations are periodically performed by management, and any subsequent write-downs are
recorded as a charge to operations, if necessary, to reduce the carrying value of a
property to the lower of its cost or fair value less cost to sell.
Income Taxes:
The Bancorp uses an asset and
liability approach to financial accounting and reporting for income taxes. Deferred tax
assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Valuation
allowances are established, when necessary to reduce deferred tax assets to the amount
expected to be realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities. The Bancorp files consolidated Federal income tax returns with its
subsidiary.
Earnings per Share:
Basic earnings per
share are calculated on the basis of the weighted average number of shares outstanding.
The weighted average shares outstanding was 5,868,669, 5,895,919 and 5,910,910 for the
years ended December 31, 2007, 2006 and 2005, respectively.
Diluted earnings per share are calculated on the basis of the weighted
average number of shares outstanding, given retroactive effect of the stock dividend
described in Note 21. Weighted-average number of shares outstanding assuming dilution
of exercisable stock options using the treasury stock method was 5,909,083, 5,937,894,
and 5,964,900 for the years ended December 31, 2007, 2006, and 2005,
respectively.
Off-Balance Sheet Related Financial Instruments:
In the ordinary course of business, the Bancorp has entered into
commitments to extend credit, including commitments under commercial lines of credit,
and standby letters of credit. Such financial instruments are recorded when they are
funded.
54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT
BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Bank-Owned Life Insurance:
The
Bancorp’s banking subsidiary maintains life insurance policies for selected
senior officers. The Bank is the owner of single premium life insurance policies on
participants in the nonqualified retirement plans. Investment in bank-owned life
insurance policies provides tax-exempt return to the Bank.
Transfers of Financial Assets:
Transfers of
financial assets are accounted for as sales when control over the assets has been
surrendered. Control over transferred assets is deemed to be transferred when (1) the
assets have been isolated from the Bancorp, (2) the transferee obtains the right (free
of conditions that constrain it from taking advantage of that right) to pledge or
exchange the transferred assets, and (3) the Bancorp does not maintain effective
control over the transferred assets through an agreement to repurchase them before
their maturity.
Comprehensive Income:
Accounting principles
generally require that recognized revenue, expenses, gains, and losses be included in
net income. Changes in certain assets and liabilities, such as unrealized gains
(losses) on securities available for sale and the minimum pension liability, are
reported as a separate component of the stockholders’ equity section of the
balance sheet. Such items, along with net income, are components of comprehensive
income.
Segment Reporting:
The Bank acts as an
independent community financial services provider, which offers traditional banking and
related financial services to individual, business, and governmental customers. Through
its branch and automated teller machine networks, the Bank offers a full array of
commercial and retail financial services, including the taking of time, savings, and
demand deposits; the making of commercial, consumer, and mortgage loans; and the
providing of other financial services. Management does not separately allocate
expenses, including the cost of funding loan demand, between the commercial, retail and
mortgage banking operations of the Bank. As such, discrete financial information is not
available and segment reporting would not be meaningful.
Cash Equivalents:
For purposes of the
Statements of Cash Flows, the Bancorp considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash equivalents. The Bancorp
considers all cash and amounts due from depository institutions, interest-bearing
deposits in other banks, except certificates of deposit with maturities of more than
three months, and federal funds sold to be cash equivalents for purposes of the
statements of cash flows.
Reclassification of Prior Year’s Statements:
Certain previously reported items have been reclassified to conform to
the current year’s classifications. The reclassifications have no effect on total
assets, total liabilities and stockholders’ equity, or net income.
NOTE 2 -- INVESTMENT SECURITIES
Investment securities available for sale consist of the
following:
|
|
December 31, 2007
|
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Gains
|
|
Fair
Value
|
|
Obligations of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Agencies
|
|
$
|
102,306,133
|
|
$
|
1,868,929
|
|
$
|
(40,177
|
)
|
$
|
104,134,885
|
|
Obligations of State and
political sub-divisions
|
|
|
65,998,208
|
|
|
1,169,441
|
|
|
(182,817
|
)
|
|
66,984,832
|
|
Mortgage-backed securities
|
|
|
80,275,722
|
|
|
462,689
|
|
|
(550,505
|
)
|
|
80,187,906
|
|
Other securities
|
|
|
47,228
|
|
|
—
|
|
|
(2
|
)
|
|
47,226
|
|
Equity securities
|
|
|
250,220
|
|
|
175
|
|
|
(66,378
|
)
|
|
184,017
|
|
|
|
$
|
248,877,511
|
|
$
|
3,501,234
|
|
$
|
(839,879
|
)
|
$
|
251,538,866
|
|
55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 2 -- INVESTMENT SECURITIES (CONTINUED)
|
|
December 31, 2006
|
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Gains
|
|
Fair
Value
|
|
Obligations of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Agencies
|
|
$
|
95,578,239
|
|
$
|
426,951
|
|
$
|
(680,000
|
)
|
$
|
95,325,190
|
|
Obligations of State and
political sub-divisions
|
|
|
63,316,546
|
|
|
1,348,184
|
|
|
(67,095
|
)
|
|
64,597,635
|
|
Mortgage-backed securities
|
|
|
62,174,784
|
|
|
70,967
|
|
|
(1,199,447
|
)
|
|
61,046,304
|
|
Other securities
|
|
|
46,545
|
|
|
--
|
|
|
(3
|
)
|
|
46,542
|
|
Equity securities
|
|
|
250,220
|
|
|
1,167
|
|
|
(17,689
|
)
|
|
233,698
|
|
|
|
$
|
221,366,334
|
|
$
|
1,847,269
|
|
$
|
(1,964,234
|
)
|
$
|
221,249,369
|
|
The
Bancorp realized gross gains of $5,132 during 2007, $900,922 during 2006, and $274,267
during 2005 and gross losses of $42,052 during 2007, $120,301 during 2006 and $138,078
during 2005 on calls and sales of securities available for sale.
The
amortized cost and estimated fair value of the investment securities available for sale
at December 31, 2007, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because issuers have the right to call or
prepay obligations with or without call or prepayment penalties.
|
Amortized
Cost
|
|
Fair
Value
|
|
|
|
|
|
|
|
|
Due in one year or less
|
$
|
350,000
|
|
$
|
350,358
|
|
Due after one year through five years
|
|
16,994,386
|
|
|
17,023,043
|
|
Due after five years through ten years
|
|
98,596,103
|
|
|
100,716,219
|
|
Due after ten years, included equity
securities
|
|
132,937,022
|
|
|
133,449,246
|
|
|
$
|
248,877,511
|
|
$
|
251,538,866
|
|
As a
member of the Federal Home Loan Bank of Pittsburgh (FHLB), the Bank is required to
maintain a minimum amount of FHLB stock. The minimum amount is calculated based on
level of assets, residential real estate loans, and outstanding FHLB advances. The Bank
held $4,422,600 and $5,196,800 of FHLB stock at December 31, 2007 and 2006,
respectively, which is carried at cost.
At
December 31, 2007, 2 U.S. Government Agency securities have unrealized losses and 1 of
the securities has been in a continuous loss position for 12 months or more. These
unrealized losses relate principally to changes in interest rates subsequent to the
acquisition of specific securities. None of the securities in this category had an
unrealized loss that exceed 1% of amortized cost.
At
December 31, 2007, 42 state and political sub-division securities and 1 other security
have unrealized losses and 14 of the securities have been in a continuous loss position
for 12 months or more. In analyzing the issuer’s financial condition, management
considers industry analysts’ reports, financial performance and projected target
prices of investment analysts within a one-year time frame. None of the securities in
this category had an unrealized loss that exceeds 4% of amortized cost and a majority
had unrealized losses totaling less than 2% of amortized cost.
At
December 31, 2007, 5 equity securities have unrealized losses and 1 of the securities
has been in a continuous loss position for 12 months or more. None of the securities in
this category had an unrealized loss that are individually considered
material.
56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT
BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 2 -- INVESTMENT SECURITIES (CONTINUED)
Temporarily impaired investments consist of the following:
|
|
December 31, 2007
|
|
|
|
Less Than 12 Months
|
|
12 Months or Longer
|
|
|
Total
|
|
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Obligations of U.S.
Government Agencies
|
|
$
|
10,455,725
|
|
$
|
(36,427
|
)
|
|
$
|
2,996,250
|
|
$
|
(3,750
|
)
|
|
$
|
13,451,975
|
|
$
|
(40,177
|
)
|
Mortgage-backed securities
|
|
|
—
|
|
|
—
|
|
|
|
36,160,404
|
|
|
(550,505
|
)
|
|
|
36,160,404
|
|
|
(550,505
|
)
|
Obligations of state and)
political sub-divisions
|
|
|
12,320,200
|
|
|
(134,693
|
)
|
|
|
6,369,718
|
|
|
(48,124
|
)
|
|
|
18,689,918
|
|
|
(182,817
|
)
|
Other investments
|
|
|
49,990
|
|
|
(6,499
|
)
|
|
|
93,176
|
|
|
(59,881
|
)
|
|
|
143,166
|
|
|
(66,380
|
)
|
Total temporarily
impaired securities
|
|
$
|
22,825,915
|
|
$
|
(177,619
|
)
|
|
$
|
45,619,548
|
|
$
|
(662,260
|
)
|
|
$
|
68,445,463
|
|
$
|
(839,879
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006
|
|
|
|
Less Than 12 Months
|
|
|
12 Months or Longer
|
|
|
Total
|
|
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Obligations of U.S.
Government Agencies
|
|
$
|
10,578,040
|
|
$
|
(23,375
|
)
|
|
$
|
60,393,240
|
|
$
|
(656,625
|
)
|
|
$
|
70,971,280
|
|
$
|
(680,000
|
)
|
Mortgage-backed securities
|
|
|
11,864,259
|
|
|
(63,493
|
)
|
|
|
40,001,238
|
|
|
(1,135,954
|
)
|
|
|
51,865,497
|
|
|
(1,199,447
|
)
|
Obligations of state and
political sub-divisions
|
|
|
3,568,589
|
|
|
(35,791
|
)
|
|
|
4,253,633
|
|
|
(31,304
|
)
|
|
|
7,822,222
|
|
|
(67,095
|
)
|
Other investments
|
|
|
41,130
|
|
|
(676
|
)
|
|
|
136,040
|
|
|
(17,016
|
)
|
|
|
177,170
|
|
|
(17,692
|
)
|
Total temporarily
impaired securities
|
|
$
|
26,052,018
|
|
$
|
(123,335
|
)
|
|
$
|
104,784,151
|
|
$
|
(1,840,899
|
)
|
|
$
|
130,836,169
|
|
$
|
(1,964,234
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments are reviewed for declines in value on a quarterly basis. At
December 31, 2007 and 2006, no investments were recognized as having an
other-than-temporary impairment. The unrealized loss on debt securities is attributable
to changes in interest rates. The unrealized loss on the equity securities are
attributed to temporary declines in fair value.
NOTE
3 -- LOANS
Major classifications of loans are as follows:
|
December 31,
|
|
2007
|
|
2006
|
Mortgage:
|
|
|
|
|
|
Residential
|
$
|
75,015,714
|
|
$
|
70,097,665
|
Commercial
|
|
186,502,379
|
|
|
184,739,864
|
Construction
|
|
19,900,125
|
|
|
12,742,284
|
Home Equity
|
|
15,280,817
|
|
|
16,597,644
|
Installment
|
|
100,683,904
|
|
|
99,044,497
|
Commercial
|
|
72,443,821
|
|
|
74,167,612
|
Student
|
|
7,235,754
|
|
|
6,471,077
|
Municipal
|
|
5,371,024
|
|
|
8,374,801
|
Credit cards
|
|
104,023
|
|
|
99,789
|
Other
|
|
314,136
|
|
|
406,672
|
|
|
482,851,697
|
|
|
472,741,905
|
Less:
|
|
|
|
|
|
Allowance for loan losses
|
|
5,382,402
|
|
|
4,769,260
|
Deferred loan fees
|
|
149,953
|
|
|
252,137
|
|
$
|
477,319,342
|
|
$
|
467,720,508
|
57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 3 -- LOANS (CONTINUED)
The
aggregate amount of demand deposit accounts with overdrawn balances that were
reclassified as loan balances at December 31, 2007 and 2006 amounted to $314,136 and
$406,672, respectively and are included in other loans.
The
total recorded investment in impaired loans amounted to $3,734,836 at December 31, 2007
and $1,058,657 at December 31, 2006. Impaired loans had an average balance of
$2,396,747 in 2007 and $1,271,337 in 2006. The allowance for loan losses related to
impaired loans amounted to $1,165,380 and $367,294 at December 31, 2007 and 2006,
respectively. The Bank had no loans greater than 90 days delinquent but still accruing
interest at December 31, 2007 and $2,767,000 at December 31, 2006.
Changes in the allowance for loan losses were as follows:
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of year
|
|
$
|
4,769,260
|
|
$
|
3,563,501
|
|
$
|
2,593,642
|
|
Provision charged to operations
|
|
|
900,000
|
|
|
1,500,000
|
|
|
1,200,000
|
|
Loans charged off
|
|
|
(352,050
|
)
|
|
(347,467
|
)
|
|
(271,238
|
)
|
Recoveries
|
|
|
65,192
|
|
|
53,226
|
|
|
41,097
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of year
|
|
$
|
5,382,402
|
|
$
|
4,769,260
|
|
$
|
3,563,501
|
|
NOTE 4 -- PREMISES AND EQUIPMENT
Premises and equipment which are stated at cost are as
follows:
|
December 31,
|
|
2007
|
|
2006
|
|
|
|
|
|
|
Land
|
$
|
921,559
|
|
$
|
921,559
|
Buildings and improvements
|
|
5,987,385
|
|
|
5,992,449
|
Furniture and equipment
|
|
8,725,459
|
|
|
8,088,429
|
|
|
15,634,403
|
|
|
15,002,437
|
Less: Accumulated depreciation
|
|
10,395,491
|
|
|
9,721,052
|
|
|
|
|
|
|
|
$
|
5,238,912
|
|
$
|
5,281,385
|
Depreciation expense was $677,933 in 2007 $768,651 in 2006 and $994,839
in 2005.
Eight of the Bank’s commercial branch office buildings and/or
land, the Bank’s trust division office and an operations facility are leased by
the Bank. These leases have initial terms of 1 to 20 years, and all contain renewal
options for additional years.
In
2007, fully depreciated assets and the remaining depreciation on assets no longer in
use, as a result of the closure of a loan center, were written off.
58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT
BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 4 -- PREMISES AND EQUIPMENT (CONTINUED)
The
following is a summary of the future minimum lease payments under these operating
leases:
For
the years ended December 31,
2008
|
$
|
150,608
|
2009
|
|
143,925
|
2010
|
|
92,540
|
2011
|
|
62,687
|
2012
|
|
58,323
|
2013 and thereafter
|
|
57,793
|
|
$
|
565,876
|
Rental expense under these operating leases was $230,166, $238,915 and
$247,327 for the years ended December 31, 2007, 2006 and 2005, respectively.
NOTE 5 -- JOINT VENTURE
The
Bancorp has an 85% limited partnership interest in T.A. of Irwin, L.P. This partnership
provides title insurance to the general public. The Bancorp uses the equity method to
account for its investment in the partnership. As of December 31, 2007 and 2006, the
investment in the partnership is reflected in the other assets section of the balance
sheet at $29,280 and $26,713, respectively.
NOTE 6 -- BANK OWNED LIFE INSURANCE
In
2001, the Bank purchased single premium life insurance policies on officers of the Bank
at a cost of $10,000,000. At December 31, 2007 and 2006, the cash surrender value of
these policies was $12,867,199 and $12,381,754, respectively, and is included in the
other assets section of the balance sheet. The increase in cash surrender value of
these policies is recorded as other income.
NOTE 7 -- DEPOSITS
Time
deposits maturing in years ending December 31, as of December 31, 2007 are summarized
as follows:
2008
|
$
|
304,318,981
|
2009
|
|
16,103,550
|
2010
|
|
3,979,358
|
2011
|
|
2,516,352
|
2012
|
|
6,773,872
|
2013 and thereafter
|
|
7,469,524
|
|
$
|
341,161,637
|
The
Bank held related party deposits of approximately $3,281,000 and $3,817,000 at December
31, 2007 and 2006, respectively.
The
Bank held time deposits of $100,000 or more of $100,318,582 and $93,876,778 at December
31, 2007 and 2006, respectively.
59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 8 -- REPURCHASE AGREEMENTS
The
Bank offers 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. The amount of repurchase
agreements was $44,944,240 and $27,416,559 at December 31, 2007 and 2006,
respectively.
NOTE 9 -- PLEDGED ASSETS
At
December 31, 2007 and 2006, U.S. Government Agency obligations and obligations of state
and political sub-divisions carried at approximately $49,282,000 and $62,695,000
respectively, were pledged to qualify for fiduciary powers, to secure public monies and
for other purposes required or permitted by law. At December 31, 2007 and 2006, the
carrying amount of securities pledged to secure repurchase agreements was approximately
$63,313,000 and $52,920,000 respectively.
NOTE 10 -- FHLB ADVANCES
At
December 31, 2007 and 2006, the Bank had the following advances from the Federal Home
Loan Bank (FHLB).
2007
|
|
2006
|
|
|
Interest Rate
|
|
|
Maturity Date
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$ 2,000,000
|
|
|
5.20% Fixed
|
|
|
March 7, 2007
|
|
—
|
|
|
2,000,000
|
|
|
5.20% Fixed
|
|
|
June 7, 2007
|
|
—
|
|
|
4,920,000
|
|
|
5.43% Variable LOC
|
|
|
July 27, 2007
|
|
—
|
|
|
575,070
|
|
|
2.99% Amortizing—Fixed
|
|
|
August 20, 2007
|
|
—
|
|
|
2,000,000
|
|
|
3.67% Fixed
|
|
|
September 5, 2007
|
|
—
|
|
|
4,000,000
|
|
|
5.215% Fixed
|
|
|
September 7, 2007
|
|
71,336
|
|
|
914,573
|
|
|
2.79% Amortizing—Fixed
|
|
|
January 28, 2008
|
|
5,000,000
|
|
|
5,000,000
|
|
|
5.63% Fixed to Float
|
|
|
July 21, 2008
|
|
8,000,000
|
|
|
8,000,000
|
|
|
3.48% Fixed w/Strike Rate
|
|
|
January 20, 2009
|
|
10,000,000
|
|
|
10,000,000
|
|
|
4.06% Fixed w/Strike Rate
|
|
|
July 22, 2009
|
|
4,000,000
|
|
|
4,000,000
|
|
|
5.18% Fixed w/Strike Rate
|
|
|
February 23, 2011
|
|
4,000,000
|
|
|
4,000,000
|
|
|
4.98% Fixed to Float
|
|
|
March 23, 2011
|
|
5,000,000
|
|
|
5,000,000
|
|
|
4.947% Fixed w/Strike Rate
|
|
|
August 29, 2011
|
|
5,000,000
|
|
|
5,000,000
|
|
|
4.6% Fixed w/Strike Rate
|
|
|
January 30, 2012
|
|
1,560,000
|
|
|
—
|
|
|
4.32% Variable LOC
|
|
|
July 27, 2012
|
|
5,000,000
|
|
|
5,000,000
|
|
|
3.51% Fixed w/Strike Rate
|
|
|
January 28, 2013
|
|
5,000,000
|
|
|
5,000,000
|
|
|
3.47% Fixed w/Strike Rate
|
|
|
March 18, 2013
|
|
5,000,000
|
|
|
5,000,000
|
|
|
4.05% Fixed to Float
|
|
|
August 20, 2014
|
|
|
|
|
|
|
|
|
|
|
|
$
|
57,631,336
|
|
|
$72,409,643
|
|
|
|
|
|
|
Interest only is payable until maturity on all FHLB advances except for
the FHLB advance with a maturity date of January 28, 2008, which requires monthly
payments of interest and principal. Collateral for all advances includes all qualifying
mortgages.
60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 10 -- FHLB ADVANCES (CONTINUED)
A
summary of the FHLB maturities at December 31, 2007 is as follows:
2008
|
$
|
5,071,336
|
2009
|
|
18,000,000
|
2010
|
|
-
|
2011
|
|
13,000,000
|
2012
|
|
6,500,000
|
2013 and thereafter
|
|
15,000,000
|
|
|
|
|
$
|
57,631,336
|
The
Bank has a line of credit with the FHLB in the amount of $30,000,000. The interest rate
is variable and was 4.32% at December 31, 2007. The line of credit has an expiration
date of July 27, 2012. The outstanding balance on the line of credit as of December 31,
2007 is $1,560,000 and is included in FHLB advances on the consolidated balance
sheet.
The
Bank had maximum borrowing capacity with FHLB, including the line of credit, of
approximately $327,431,000 and $313,018,000 at December 31, 2007 and 2006,
respectively.
NOTE 11 -- INCOME TAXES
The
provision for income taxes consists of:
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
Currently payable
|
|
$
|
2,550,018
|
|
$
|
2,397,251
|
|
$
|
3,086,159
|
|
Deferred benefit
|
|
|
(236,841
|
)
|
|
(361,814
|
)
|
|
(327,826
|
)
|
Total
|
|
$
|
2,313,177
|
|
$
|
2,035,437
|
|
$
|
2,758,333
|
|
A
reconciliation of the federal statutory tax rate to the effective tax rate applicable
to income before income taxes is as follows:
|
Years Ended December 31,
|
|
|
% of Pretax Income
|
|
|
2007
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
|
Provision at statutory rate
|
34.0
|
%
|
34.0
|
%
|
34.0
|
%
|
Tax-exempt interest income
|
(9.5
|
)
|
(8.9
|
)
|
(7.7
|
)
|
Earnings on investment in life insurance
|
(1.6
|
)
|
(1.4
|
)
|
(1.3
|
)
|
Other
|
(0.2
|
)
|
(4.3
|
)
|
(0.7
|
)
|
|
|
|
|
|
|
|
Effective tax rate
|
22.7
|
%
|
19.4
|
%
|
24.3
|
%
|
61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 11 -- INCOME TAXES (CONTINUED)
The
deferred tax assets and deferred tax liabilities recorded on the balance sheet as of
December 31, 2007 and 2006 are as follows:
|
|
|
|
2007
|
|
|
|
|
2006
|
|
|
|
|
|
Deferred Tax
|
|
|
|
|
Deferred Tax
|
|
|
|
|
|
Assets
|
|
|
|
|
Liabilities
|
|
|
|
|
Assets
|
|
|
|
|
Liabilities
|
|
|
Provision for loan losses
|
|
|
$
|
1,830,017
|
|
|
|
$
|
—
|
|
|
|
$
|
1,621,548
|
|
|
|
$
|
—
|
|
|
Depreciation
|
|
|
|
—
|
|
|
|
|
121,806
|
|
|
|
|
—
|
|
|
|
|
124,000
|
|
|
Pension expense
|
|
|
|
—
|
|
|
|
|
402,388
|
|
|
|
|
—
|
|
|
|
|
374,624
|
|
|
Other
|
|
|
|
455,194
|
|
|
|
|
61,359
|
|
|
|
|
371,405
|
|
|
|
|
61,359
|
|
|
Available for sale securities
|
|
|
|
—
|
|
|
|
|
927,370
|
|
|
|
|
34,151
|
|
|
|
|
—
|
|
|
Unfunded pension cost
|
|
|
|
402,379
|
|
|
|
|
—
|
|
|
|
|
423,407
|
|
|
|
|
—
|
|
|
|
|
|
$
|
2,687,590
|
|
|
|
$
|
1,512,923
|
|
|
|
$
|
2,450,511
|
|
|
|
$
|
559,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Company has no unrecognized tax benefits included in these financial statements. All
tax positions have been taken in previously filed tax returns or will be taken in
returns yet to be filed. Differences in amounts reported in these financial statements
and amounts taken in tax returns are primarily temporary differences common to the
operation of commercial banks. Differences regarding tax and book depreciation, losses
on loans and pension costs are detailed in this footnote. The Company has determined
that the tax positions taken are more likely than not to be sustained upon examination.
No provision has been taken in the financial statements for interest and penalties
related to unrecognized tax benefits. Tax years which remain open for examination are
2006, 2005, and 2004.
NOTE 12 -- SHAREHOLDER RIGHTS PLAN
On
November 18, 2003, the Board of Directors of the Bancorp adopted a Shareholder Rights
Plan. The Board declared a dividend distribution of one Right for each outstanding
share of common stock to stockholders of record at the close of business on December 1,
2003. Each Right initially entitled the registered holder to purchase from the Bancorp
common stock worth $410 on the date of exercise, for a purchase price of $205, subject
to adjustment.
Initially, the Rights will be attached to all common stock certificates
representing shares then outstanding, and no separate Rights certificates will be
distributed. The Rights will separate from the common stock and a distribution date
will occur upon the earlier of (i) 10 business days following a public announcement
that a person or group of affiliated or associated persons (an “Acquiring
Person”), has acquired, or obtained the Right to acquire, beneficial ownership of
10% or more of the outstanding shares of common stock (“stock acquisition
date”) or (ii) 10 business days following the commencement of a tender offer or
exchange offer that would result in a person or group beneficially owning 10% or more
of such outstanding shares of common stock.
The
Rights are not exercisable until the distribution date and will expire at the close of
business on December 1, 2013, unless earlier redeemed or exchanged by the
Bancorp.
In
the event that at any time following the Rights dividend declaration date, a person
becomes the beneficial owner of 10% or more of the then-outstanding shares of common
stock, each holder of a Right (other than Rights held by the party triggering the
Rights and certain transferees which are voided) will thereafter have the right to
receive, upon exercise, common stock (or, in certain circumstances, cash, property, or
other securities of the Bancorp subject to certain limitations) having a value equal to
two times the exercise price of the Right. However, Rights are not exercisable
following the occurrence of the event set forth above until such time as the Rights are
no longer redeemable by the Bancorp.
62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 12 -- SHAREHOLDER RIGHTS PLAN (CONTINUED)
On
December 16, 2007, the Bancorp amended its Shareholder Rights Plan to provide that
neither S&T Bancorp, Inc. (“S&T”) nor any of its Subsidiaries,
Affiliates or Associates, shall be or become an Acquiring Person as a result of the
approval, execution, delivery or performance, or public announcement thereof, of the
Agreement and Plan of Merger between S&T and the Company, dated as of December 16,
2007 (the “Merger Agreement”), any or all of the Voting Agreements (as
defined in the Merger Agreement), or the consummation of any of the transactions
contemplated thereby.
NOTE 13 -- COMMITMENTS AND CONTINGENCIES
In
the normal course of business, there are various outstanding commitments and certain
contingent liabilities which are not reflected in the accompanying financial
statements. These commitments and contingent liabilities represent financial
instruments with off-balance-sheet risk. The contract or notional amounts of those
instruments were comprised of commitments to extend credit approximating $122,976,000
and $85,356,000 as of December 31, 2007 and 2006, respectively, and approximate fair
value.
The
instruments involve, to varying degrees, elements of credit and interest rate risk in
excess of the amount recognized in the balance sheet. The same credit policies are used
in making commitments and conditional obligations as for on-balance-sheet instruments.
The amount of collateral obtained, if deemed necessary upon extension of credit, is
based on management’s credit evaluation of the counterparty. The terms are
typically for a one year period, with an annual renewal option subject to prior
approval by management.
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the loan agreement. These
commitments are comprised primarily of available commercial and personal lines of
credit.
Commitments to extend credit, including commitments to grant loans and
unfunded commitments under lines of credit, are agreements to lend to a customer as
long as there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may require
payment of a fee. Since some of the commitments are expected to expire without being
drawn upon, the total commitment amounts do not necessarily represent future cash
requirements. The Bancorp evaluates each customer’s creditworthiness on a
case-by-case basis. The amount of collateral obtained, if deemed necessary by the
Bancorp upon extensions of credit, is based on management’s credit evaluation of
the customer. Collateral held varies but may include accounts receivable, inventory,
property and equipment, and income producing commercial properties. On loans secures by
real estate, the Bancorp generally requires loan to value ratios of no greater than
80%.
Standby letters of credit are conditional commitments issued by the
Bancorp to guarantee the performance of a customer to a third party. Those guarantees
are primarily issued to support public and private borrowing arrangements and similar
transactions. The terms of the letters of credit vary and may have renewal features.
The credit risk involved in using letters of credit is essentially the same as that
involved in extending loans to customers. The Bancorp holds collateral supporting those
commitments for which collateral is deemed necessary. Management believes that the
proceeds obtained through a liquidation of such collateral would be sufficient to cover
the maximum potential amount of future payments required under the corresponding
guarantees. The current amount of the liability as of December 31, 2007 and 2006, for
guarantees under standby letters of credit issued is not material.
63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 13 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
The
exposure to loss under these commitments is limited by subjecting them to credit
approval and monitoring procedures. Substantially all of the commitments to extend
credit are contingent upon customers maintaining specific credit standards at the time
of the loan funding. Since many of the commitments are expected to expire without being
drawn upon, the total contractual amounts do not necessarily represent future funding
requirements.
The
Bancorp and Bank are involved in various legal actions from normal business activities.
Management believes that the liability, if any, arising from such actions will not have
a material adverse effect on the financial position of the Bancorp and Bank.
NOTE 14 -- CONCENTRATION OF CREDIT
The
Bank primarily grants loans to customers in Western Pennsylvania, and maintains a
diversified loan portfolio and the ability of its debtors to honor their contracts is
not substantially dependent on any particular economic business sector. A substantial
portion of the Bank’s investments in municipal securities are obligations of
state or political subdivisions located within Pennsylvania. As a whole, the
Bank’s loan and investment portfolios could be affected by the general economic
conditions of Pennsylvania. In addition, at December 31, 2007 and 2006, a significant
portion of the Bank’s “due from banks” and “federal funds
sold” is maintained with two large financial institutions located in Southwestern
Pennsylvania. The Bank maintains a cash balance and federal funds sold at financial
institutions that exceed the $100,000 amount that is insured by the FDIC. Amounts in
excess of insured limits, per the institutions’ records, were approximately
$4,832,000 and $4,680,000 at December 31, 2007 and 2006, respectively.
NOTE 15 -- EMPLOYEE BENEFIT PLANS
The
Bank maintained one non-contributory defined benefit pension plan for its employees
prior to 1995 (Plan #1). In 1995, various plan assumptions were changed which resulted
in a reduction in benefits for older and long-standing employees. To compensate for
this, a supplemental non-qualified plan was installed for those employees so affected
(Plan #2). The Bank’s funding policy is to contribute annually, an amount not to
exceed that which can be deducted for federal income tax purposes for Plan #1.
Contributions are intended to provide not only for benefits attributed to service to
date but also for those expected to be earned in the future. Assets for the plans are
primarily invested in U.S. Government obligations, corporate obligations, equity
securities, and mutual funds whose valuations are subject to fluctuations of the
securities’ market.
In
September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for
Defined Benefit Pension and Other Postretirement Plans” (SFAS 158). The Bank
adopted SFAS 158 prospectively on December 31, 2006. SFAS 158 requires that we
recognize all obligations related to defined benefit pensions. This statement requires
that the Bank quantify the plans’ funding status as an asset or a liability on
our consolidated balance sheets.
SFAS
158 requires that the Bank measure the plans’ assets and obligations that
determine its funded status as of the end of the fiscal year. The Bank is also required
to recognize as a component of other comprehensive income (OCI) the changes in funded
status that occurred during the year that are not recognized as part of net periodic
benefit cost as explained in SFAS No. 87, “Employers’ Accounting for
Pensions.”
Based on the funded status of its defined benefit pension plans as of
December 31, 2007, the Bank reported an increase to our OCI of $40,818, a decrease of
$317,430 to accrued pension obligations, and a decrease of $21,028 to the deferred tax
asset account.
64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 15 -- EMPLOYEE BENEFIT PLANS (CONTINUED)
Defined Benefit Plans (continued)
The
actuarial measurement period of October 15, through October 14, was used to determine
the components of the net periodic pension cost and the financial disclosures for both
plans. The actuarial measurement date of October 15 was used in determining the
plans’ liabilities and asset information. The following is a combined summary of
the plans’ components as of December 31, 2007, 2006 and 2005, even though the
information has been compiled on the basis of the actuarial measurement
period.
Change in Projected Benefit Obligation:
|
|
|
|
2007
|
|
|
|
|
2006
|
|
|
|
|
Benefit obligation at beginning of year
|
$
|
4,768,711
|
|
|
|
$
|
4,455,987
|
|
|
|
|
Service cost
|
|
356,489
|
|
|
|
|
356,068
|
|
|
|
|
Interest cost
|
|
285,737
|
|
|
|
|
266,965
|
|
|
|
|
Benefits paid
|
|
(754,589
|
)
|
|
|
|
(123,622
|
)
|
|
|
|
Other – net
|
|
120,726
|
|
|
|
|
(186,687
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
$
|
4,777,074
|
|
|
|
$
|
4,768,711
|
|
|
Change in Fair Value of Plan Assets:
|
|
|
|
2007
|
|
|
|
|
2006
|
|
|
|
|
Plan assets at estimated
|
|
|
|
|
|
|
|
|
|
|
|
fair value at beginning of year
|
$
|
4,245,466
|
|
|
|
$
|
3,348,241
|
|
|
|
|
Actual return on plan assets, net of expenses
|
|
467,678
|
|
|
|
|
342,549
|
|
|
|
|
Benefits paid
|
|
(754,589
|
)
|
|
|
|
(123,622
|
)
|
|
|
|
Employer contributions
|
|
612,704
|
|
|
|
|
678,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
$
|
4,571,259
|
|
|
|
$
|
4,245,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status at end of year
|
$
|
(205,815
|
)
|
|
|
$
|
(523,245
|
)
|
|
|
|
Unrecognized net loss from actuarial
experience
|
|
1,304,324
|
|
|
|
|
1,388,289
|
|
|
|
|
Unrecognized prior service cost
|
|
(110,652
|
)
|
|
|
|
(128,914
|
)
|
|
|
|
Unrecognized transition asset
|
|
(10,203
|
)
|
|
|
|
(14,060
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid pension cost
|
$
|
977,654
|
|
|
|
$
|
722,070
|
|
|
Amounts recognized in the consolidated balance sheets consist
of:
|
|
|
|
December 31,
|
|
|
|
|
|
|
2007
|
|
|
|
|
2006
|
|
|
|
|
Prepaid benefit cost
|
$
|
327,707
|
|
|
|
$
|
485,057
|
|
|
|
|
Accrued benefit liability
|
|
(202,815
|
)
|
|
|
|
(523,245
|
)
|
|
|
|
Accumulated OCI, net of taxes
|
|
(781,090
|
)
|
|
|
|
(821,908
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(656,198
|
)
|
|
|
$
|
(860,096
|
)
|
|
In
the months of December 2007, 2006 and 2005, the Bank contributed $413,947, $612,708 and
$678,298 respectively, to the plans subsequent to the actuarial measurement dates of
October 15, 2007, 2006 and 2005. Because these employer contributions were paid after
the actuarial measurement period ended, the Bank’s prepaid pension cost at
December 31, 2007, 2006 and 2005 was $327,707, $485,057 and $1,043,094,
respectively.
65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 15 -- EMPLOYEE BENEFIT PLANS (CONTINUED)
Defined Benefit Plans (continued)
Amounts recognized in accumulated other comprehensive income consist
of:
|
|
|
December 31,
|
|
|
|
|
|
2007
|
|
|
|
2006
|
|
|
|
Transition asset
|
$
|
(10,203
|
)
|
|
$
|
(14,060
|
)
|
|
|
Prior service cost
|
|
(110,652
|
)
|
|
|
(128,914
|
)
|
|
|
Net loss
|
|
1,304,324
|
|
|
|
1,388,289
|
|
|
|
|
$
|
1,183,469
|
|
|
$
|
1,245,315
|
|
|
The
pension liability adjustment to Accumulated Other Comprehensive Income (Loss) is a
result of an increase, net of deferred income tax, in the transition asset and prior
service cost of $2,546, $12,053, respectively, off-set by a decrease in net loss, net
of deferred benefit, of $55,417.
The
accumulated benefit obligation totaled $3,525,101 and $3,622,820 at December 31, 2007
and 2006, respectively.
Net
periodic pension cost included the following components:
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
2007
|
|
|
|
2006
|
|
|
|
|
2005
|
|
|
Service cost
|
|
$
|
356,489
|
|
|
$
|
356,068
|
|
|
|
$
|
289,282
|
|
|
Interest cost
|
|
|
285,737
|
|
|
|
266,965
|
|
|
|
|
227,751
|
|
|
Expected return on plan assets
|
|
|
(313,604
|
)
|
|
|
(270,003
|
)
|
|
|
|
(219,638
|
)
|
|
Amortization of prior service cost
|
|
|
(18,262
|
)
|
|
|
(18,262
|
)
|
|
|
|
(18,262
|
)
|
|
Amortization of transition asset
|
|
|
(3,857
|
)
|
|
|
(3,857
|
)
|
|
|
|
(3,857
|
)
|
|
Recognized net actuarial loss
|
|
|
50,617
|
|
|
|
75,335
|
|
|
|
|
57,296
|
|
|
Net periodic pension cost
|
|
$
|
357,120
|
|
|
$
|
406,246
|
|
|
|
$
|
332,572
|
|
The
following is a summary of the estimated portion of the net periodic pension cost
included in accumulated other comprehensive income that is expected to be recognized
during the year ended December 31, 2008:
|
Amortization of prior service cost
|
|
$
|
(18,262
|
)
|
|
|
Amortization of transition asset
|
|
|
(3,857
|
)
|
|
|
Recognized net actuarial loss
|
|
|
52,628
|
|
|
|
Net periodic pension cost to be recognized
|
|
$
|
30,509
|
|
|
Weighted-average assumptions used to determine both the benefit
obligations and net periodic pension costs were as follows:
|
Years Ended December 31,
|
|
2007
|
|
2006
|
|
2005
|
|
Plan #1
|
|
|
|
|
|
|
|
Discount rate
|
|
6.00%
|
|
6.00%
|
|
6.00%
|
|
Expected long-term return on plan assets
|
|
7.00%
|
|
7.00%
|
|
7.00%
|
|
Rate of compensation increase
|
|
3.50%-5.50%
|
|
3.50%-5.50%
|
|
3.50%-5.50%
|
|
Plan #2
|
|
|
|
|
|
|
|
Discount rate
|
|
7.00%
|
|
7.00%
|
|
7.00%
|
|
Expected long-term return on plan assets
|
|
5.00%
|
|
6.00%
|
|
6.00%
|
|
Rate of compensation increase
|
|
3.50%
|
|
3.50%
|
|
3.50%
|
66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 15 -- EMPLOYEE BENEFIT PLANS (CONTINUED)
Defined Benefit Plans (continued)
The
interest rate assumption utilized for the plan valuation methods is 7%. The interest
rate assumption is reasonable considering historical rates of return and the asset
allocation mix of the plans.
Pension plan weighted-average asset allocations by investment category
are as follows:
|
|
|
December
31,
|
|
|
|
|
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
12
|
%
|
|
16
|
%
|
|
|
|
|
Stocks
|
|
13
|
%
|
|
15
|
%
|
|
|
|
|
Bonds
|
|
7
|
%
|
|
5
|
%
|
|
|
|
|
Mutual funds
|
|
39
|
%
|
|
33
|
%
|
|
|
|
|
Government securities
|
|
29
|
%
|
|
31
|
%
|
|
|
|
|
|
|
100
|
%
|
|
100
|
%
|
|
|
|
The
Bank’s pension plan funds are managed and held in trust by the Bank’s Trust
Division. The investment objective and strategy for investing plan assets calls for a
“Moderate Growth Income Objective”. This objective provides for a
preservation of the principal’s purchasing power and moderate growth and income.
The range of equity exposure is from 40 to 80 percent and fixed income maturities to 30
years. The investment policies of the plan trustees prohibit the use of derivatives. In
addition, the plan assets are diversified appropriately across different business
sections for individual securities and the plan trustees have further diversified plan
assets by maintaining an investment in mutual funds.
Other Employee Benefit Plans
The
Bank also maintains non-qualified deferred compensation plans for certain directors,
which are generally funded by life insurance. Prior to 2002, premiums on those policies
were paid for by the Bank. In 2002, the Bank elected to pay those premiums with
dividends accruing on the insurance policies. The present value of these benefits to be
paid under the programs is being accrued over the estimated remaining service period of
the participants. The liability for these future obligations was $633,276 and $616,930
at December 31, 2007 and 2006, respectively.
In
addition, the Bank maintains a qualified 401(k) - deferred compensation plan for
eligible employees. The plan is designed to provide a predetermined matching
contribution by the Bank based on compensation deferrals by participants in the plan.
The Bank contributions, including administrative fees, for 2007, 2006 and 2005 amounted
to $86,846, $88,196 and $80,561, respectively.
NOTE 16 -- RELATED-PARTY TRANSACTIONS
At
December 31, 2007 and 2006, certain officers and directors of the Bancorp and the Bank,
and companies in which they have beneficial ownership, were indebted to the Bank in the
aggregate amount of approximately $13,870,000 and $9,063,000, respectively. During
2007, new loans to such related parties were approximately $8,518,000 and repayments
approximated $3,711,000.
67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 17 -- DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL
INSTRUMENTS
The
following methods and assumptions were used to estimate the fair value of each class of
financial instruments for which it is practicable to estimate that value.
Cash
and cash equivalents: The carrying amount is a reasonable estimate of fair
value.
Certificates of deposit: The carrying amounts of these short term
investments approximate their fair value.
Investment securities: The fair value of securities is equal to the
available quoted market price. If no quoted market price is available, fair value is
estimated using the quoted market price for similar securities.
Federal Home Loan Bank stock: The carrying value of the FHLB stock is a
reasonable estimate of fair value due to restrictions on the securities.
Loans receivable: For certain homogeneous categories of loans, fair
value is estimated using the quoted market prices for securities backed by similar
loans adjusted for differences in loan characteristics. The fair value of other types
of loans is estimated by discounting the future cash flows using the current rates at
which similar loans would be made to borrowers for the same remaining
maturities.
Accrued interest receivable: The carrying amount is a reasonable
estimate of fair value.
Deposit liabilities: The fair value of demand deposits, savings accounts
and money market deposits is the amount payable on demand at the reporting date. The
fair value of fixed-maturity certificates of deposit is estimated by discounting the
future cash flows using the rates currently offered for deposits of similar remaining
maturities.
Accrued interest payable: The carrying amount is a reasonable estimate
of fair value.
Short-term borrowings: The carrying amounts of borrowings under
repurchase agreements are short-term borrowings and approximate their fair
values.
FHLB
advances: The fair value of FHLB advances was determined using a discounted cash flow
analysis based on current FHLB advance rates for advances with similar
maturities.
Off-balance sheet financial instruments: Off-balance sheet financial
instruments of The Bancorp consist of letters of credit, loan commitments and unfunded
lines of credit. Fair value is estimated using fees currently charged for similar
agreements, taking into account the remaining terms of the agreements and the
counterparties credit standings. Any fees charged are immaterial.
The
estimated fair value of the Bancorp’s financial instruments as of December 31,
2007 and 2006 are as follows:
|
|
|
2007
|
|
|
|
|
2006
|
|
|
|
|
Carrying
|
|
|
|
|
Fair
|
|
|
|
|
Carrying
|
|
|
|
|
Fair
|
|
|
|
|
Amount
|
|
|
|
|
Value
|
|
|
|
|
Amount
|
|
|
|
|
Value
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
25,209,978
|
|
|
|
$
|
25,209,978
|
|
|
|
$
|
19,954,648
|
|
|
|
$
|
19,954,648
|
|
|
|
Certificate of deposit
|
$
|
100,000
|
|
|
|
$
|
100,000
|
|
|
|
$
|
100,000
|
|
|
|
$
|
100,000
|
|
|
|
Investment securities
|
$
|
251,538,866
|
|
|
|
$
|
251,538,866
|
|
|
|
$
|
221,249,369
|
|
|
|
$
|
221,249,369
|
|
|
|
Federal Home Loan Bank stock
|
$
|
4,422,600
|
|
|
|
$
|
4,422,600
|
|
|
|
$
|
5,196,800
|
|
|
|
$
|
5,196,800
|
|
|
|
Loans receivable
|
$
|
477,319,342
|
|
|
|
$
|
482,903,705
|
|
|
|
$
|
467,720,508
|
|
|
|
$
|
471,887,819
|
|
|
|
Accrued interest receivable
|
$
|
4,691,875
|
|
|
|
$
|
4,691,875
|
|
|
|
$
|
4,472,894
|
|
|
|
$
|
4,472,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
$
|
610,756,935
|
|
|
|
$
|
610,794,957
|
|
|
|
$
|
572,472,214
|
|
|
|
$
|
581,250,829
|
|
|
|
Short—term borrowings
|
$
|
44,944,240
|
|
|
|
$
|
44,944,240
|
|
|
|
$
|
27,416,559
|
|
|
|
$
|
27,416,559
|
|
|
|
FHLB advances
|
$
|
57,631,336
|
|
|
|
$
|
57,233,719
|
|
|
|
$
|
72,409,643
|
|
|
|
$
|
74,028,364
|
|
|
|
Accrued interest payable
|
$
|
5,134,729
|
|
|
|
$
|
5,134,729
|
|
|
|
$
|
4,405,172
|
|
|
|
$
|
4,405,172
|
|
|
|
Off—balance sheet financial instruments
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 18 -- REGULATORY MATTERS
The
Bank is subject to legal limitations on the amount of dividends that can be paid to the
Bancorp. The Pennsylvania Banking Code restricts the payment of dividends, generally to
the extent of its retained earnings.
The
Bank and the Bancorp are subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional discretionary
actions by regulators that, if undertaken, could have a direct material effect on the
Bancorp’s financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank and Bancorp must meet
specific capital guidelines that involve quantitative measures of the Bank’s
assets, liabilities and certain off-balance sheet items as calculated under regulatory
accounting practices. The Bank’s and Bancorp’s capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum amounts and ratios, as set forth below,
of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets,
and of Tier 1 capital to average assets. Management believes, as of December 31, 2007
and 2006, that the Bank meets all capital adequacy requirements to which it is
subjected. The Bancorp’s ratios are not materially different than the
Bank’s.
The
Bank’s actual capital ratios as of December 31, 2007 and 2006, the minimum ratios
required for capital adequacy purposes, and the ratios required to be considered well
capitalized under the Federal Deposit Insurance Corporation Improvement Act of 1991
provisions are as follows:
|
|
|
|
|
|
Minimum
|
|
|
|
Well
|
|
|
|
|
December 31,
|
|
|
|
Capital
|
|
|
|
Capitalized
|
|
|
|
|
2007
|
|
|
|
2006
|
|
|
|
Requirements
|
|
|
|
Requirements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-based capital ratio
|
|
14.7
|
%
|
|
|
14.6
|
%
|
|
|
8.0
|
%
|
|
|
10.00
|
%
|
|
Leverage capital ratio
|
|
8.3
|
%
|
|
|
8.5
|
%
|
|
|
3.0% to 4.0
|
%
|
|
|
5.00
|
%
|
|
Tier 1 risk-based capital ratio
|
|
13.6
|
%
|
|
|
13.8
|
%
|
|
|
4.0
|
%
|
|
|
6.00
|
%
|
|
Included in cash and due from banks are required federal reserves of
$8,274,000 and $7,945,000 at December 31, 2007 and 2006, respectively, for facilitating
the implementation of monetary policy by the Federal Reserve System. The required
reserves are computed by applying prescribed ratios to the classes of average deposit
balances. These reserves are held in the form of due from banks.
NOTE 19 -- STOCK OPTION PLAN
The
Bancorp’s Stock Option Plan authorizes the granting of stock options to directors
and employees for up to 600,000 shares of common stock, given retroactive effect of the
stock dividend described in Note 21. The stock option plan provides for a term of ten
years, after which no awards can be made. Under the plan, the exercise price of each
option equals the closing market price of the Bancorp’s stock on the grant date,
and an option’s maximum term is ten years. Options constitute both incentive and
non-incentive stock options. Options granted to directors are vested immediately and
are exercisable six months from the grant date and options granted to employees
generally vest over three years.
69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 19 -- STOCK OPTION PLAN (CONTINUED)
As
of December 31, 2007, a total of 599,500 stock options have been granted, of which,
250,375 are vested and exercisable, 192,667 have not vested, 128,556 have been
exercised and 27,903 have been forfeited.
A
summary of the status of the Bank’s stock option plan is presented
below:
|
December 31,
|
|
|
|
2007
|
|
|
|
2006
|
|
|
|
2005
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Exercise
|
|
|
|
|
|
|
|
Exercise
|
|
|
|
|
|
|
|
Exercise
|
|
|
Shares
|
|
|
|
Price
|
|
|
|
Shares
|
|
|
|
Price
|
|
|
|
Shares
|
|
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at beginning of year
|
230,874
|
|
|
|
$
|
17.30
|
|
|
|
174,542
|
|
|
|
$
|
15.43
|
|
|
|
204,178
|
|
|
|
$
|
15.57
|
|
Granted
|
219,000
|
|
|
|
$
|
18.75
|
|
|
|
80,500
|
|
|
|
$
|
19.99
|
|
|
|
—
|
|
|
|
$
|
—
|
|
Forfeitures
|
(2,832
|
)
|
|
|
$
|
22.67
|
|
|
|
(6,668
|
)
|
|
|
$
|
24.41
|
|
|
|
—
|
|
|
|
$
|
—
|
|
Exercised
|
(4,000
|
)
|
|
|
$
|
13.11
|
|
|
|
(17,500
|
)
|
|
|
$
|
13.37
|
|
|
|
(29,636
|
)
|
|
|
$
|
13.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31,
|
443,042
|
|
|
|
$
|
18.01
|
|
|
|
230,874
|
|
|
|
$
|
17.30
|
|
|
|
174,542
|
|
|
|
$
|
15.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31,
|
250,375
|
|
|
|
$
|
17.25
|
|
|
|
169,873
|
|
|
|
$
|
16.33
|
|
|
|
165,004
|
|
|
|
$
|
15.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
options outstanding at December 31, 2007, 2006 and 2005 had a weighted-average
contractual maturity of 7.53 years, 5.68 years, and 5.74 years,
respectively.
The
fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions:
|
December 31,
|
|
2007
|
|
2006
|
|
2005
|
Dividend yield
|
6.00%
|
|
5.50%
|
|
None granted
|
Expected life
|
7 years
|
|
7 years
|
|
|
Expected volatility
|
18.99%
|
|
19.24%
|
|
|
Risk-free interest rate
|
4.50%
|
|
4.90%
|
|
|
Weighted-average fair value
|
$ 1.95
|
|
$ 2.45
|
|
|
The
Bancorp follows the fair value recognition provisions of Statement of Financial
Accounting Standards (SFAS) 123, Accounting for Stock-Based Compensation. Awards under
the plan vest over periods ranging from six months to three years.
NOTE 20 -- TREASURY STOCK
In
2007 and 2006 the Bancorp repurchased 29,716 shares of its stock for $565,973 and
16,385 shares of its stock for $667,100, respectively, and is being held as treasury
stock.
70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 21 -- CAPITAL STOCK
On
October 17, 2006, the Bancorp declared a two-for-one stock split on the Bancorp’s
capital stock, which was effected in the form of a 100 percent stock dividend. One
additional share was issued for each share of capital stock held by shareholders of
record as of the close of business on October 27, 2006. New shares were distributed on
November 16, 2006. Par value will remain unchanged as $1.25. The number of shares
issued on November 16, 2006, after giving effect to the split, was
5,965,119.
NOTE 22 -- MERGER ANNOUNCEMENT
On
December 17, 2007, S&T Bancorp Inc. (NASDAQ:STBA) and IBT Bancorp, Inc. (AMEX:IRW)
jointly announced the signing of a definitive merger agreement pursuant to which
S&T Bancorp, Inc. will acquire IBT Bancorp, Inc. in a stock and cash transaction
subject to shareholder and regulatory approvals.
NOTE 23 -- RECENT ACCOUNTING PRONOUNCEMENTS
In
May 2007, the FASB issued FASB Staff Position (“FSP”) FIN 48-1
“Definition of Settlement in FASB Interpretation No. 48” (FSP FIN 48-1).
FSP FIN 48-1 provides guidance on how to determine whether a tax position is
effectively settled for the purpose of recognizing previously unrecognized tax
benefits. FSP FIN 48-1 is effective retroactively to January 1, 2007. The
implementation of this standard did not have a material impact on our consolidated
financial position or results of operations.
In
November 2007, the SEC issued Staff Accounting Bulletin No. 109 (SAB 109),
“Written Loan Commitments Recorded at Fair Value Through Earnings” which
expresses the views of the staff regarding written loan commitments that are accounted
for at fair value through earnings under generally accepted accounting principles. To
make the staff’s views consistent with current authoritative accounting guidance,
the SAB revises and rescinds portions of SAB No. 105, “Application of Accounting
Principles to Loan Commitments.” Specifically, the SAB revises the SEC
staff’s views on incorporating expected net future cash flows related to loan
servicing activities in the fair value measurement of a written
loan
commitment. The SAB retains the staff’s views on incorporating expected net
future cash flows related to internally-developed intangible assets in the fair value
measurement of a written loan commitment. The staff expects registrants to apply the
views in Question 1 of SAB 109 on a prospective basis to derivative loan commitments
issued or modified in fiscal quarters beginning after December 15, 2007. The Bancorp
does not expect SAB 109 to have a material impact on its consolidated financial
statements.
71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 23 -- RECENT ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
In
September 2006, the FASB issued Statement No. 157, Fair Value Measurements (“SFAS
157”), which defines fair value, establishes a framework for measuring fair value
under GAAP, and expands disclosures about fair value measurements. The new guidance is
effective for financial years beginning after November 15, 2007, and for interim
periods within those fiscal years. The Bancorp is currently evaluating the potential
impact, if any, of the adoption of SFAS 157 on the Bancorp’s consolidated
financial statements
In
December 2007, the FASB issued proposed FASB Staff Position (FSP) 157-b,
“Effective Date of FASB Statement No. 157,” that would permit a one-year
deferral in applying the measurement provisions of Statement No. 157 to non-financial
assets and non-financial liabilities (non-financial items) that are not recognized or
disclosed at fair value in an entity’s financial statements on a recurring basis
(at least annually). Therefore, if the change in fair value of a non-financial item is
not required to be recognized or disclosed in the financial statements on an annual
basis or more frequently, the effective date of application of Statement 157 to that
item is deferred until fiscal years beginning after November 15, 2008 and interim
periods within those fiscal years. This deferral does not apply, however, to an entity
that applies Statement 157 in interim or annual financial statements before proposed
FSP 157-b is finalized. The Bancorp is currently evaluating the impact, if any, that
the adoption of FSP 157-b will have on the Bancorp’s operating income or net
earnings.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities-Including an amendment of FASB Statement No.
115.” SFAS No. 159 permits entities to choose to measure many financial
instruments and certain other items at fair value. Unrealized gains and losses on items
for which the fair value option has been elected will be recognized in earnings at each
subsequent reporting date. SFAS No. 159 is effective on January 1, 2008. The Company is
evaluating the impact that the adoption of SFAS No. 159 will on the Bancorp’s
consolidated financial statements.
72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IBT BANCORP, INC. AND SUBSIDIARY
Years Ended December 31, 2007, 2006 and 2005
NOTE 24 -- PARENT COMPANY FINANCIAL INFORMATION
The
condensed financial information for IBT Bancorp, Inc. as of December 31, 2007 and 2006
and for the years ended December 31, 2007, 2006 and 2005 is as follows:
BALANCE SHEETS
|
|
|
|
|
|
|
|
2007
|
|
|
|
2006
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash in bank
|
|
|
|
|
|
|
|
$
|
141,147
|
|
|
|
$
|
1,016,721
|
|
Investment in subsidiary
|
|
|
|
|
|
|
|
|
65,466,162
|
|
|
|
|
61,110,750
|
|
Securities available for sale
|
|
|
|
|
|
|
|
|
156,245
|
|
|
|
|
205,243
|
|
Other assets
|
|
|
|
|
|
|
|
|
250,915
|
|
|
|
|
248,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
|
|
|
$
|
66,014,469
|
|
|
|
$
|
62,581,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
66,014,469
|
|
|
|
|
62,581,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’
Equity
|
|
|
|
|
|
|
|
$
|
66,014,469
|
|
|
|
$
|
62,581,060
|
|
STATEMENTS OF INCOME
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
|
|
2006
|
|
|
|
2005
|
|
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends from subsidiary
|
|
$
|
6,000,000
|
|
|
|
$
|
7,100,000
|
|
|
|
$
|
5,650,000
|
|
Other dividends
|
|
|
8,050
|
|
|
|
|
10,882
|
|
|
|
|
11,280
|
|
Investment security gains
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
120,744
|
|
Income from joint ventures
|
|
|
31,315
|
|
|
|
|
19,026
|
|
|
|
|
34,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees
|
|
|
226,944
|
|
|
|
|
118,074
|
|
|
|
|
105,943
|
|
Miscellaneous
|
|
|
250,915
|
|
|
|
|
111,857
|
|
|
|
|
63,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Equity in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undistributed Earnings of Subsidiary
|
|
|
5,561,506
|
|
|
|
|
6,899,977
|
|
|
|
|
5,647,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Undistributed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings of Subsidiary
|
|
|
2,294,852
|
|
|
|
|
1,555,715
|
|
|
|
|
2,931,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
7,856,358
|
|
|
|
$
|
8,455,692
|
|
|
|
$
|
8,579,351
|
|
73