10QSB 1 rv_10q.txt FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (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, 2001 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: 0-21765 RIVER VALLEY BANCORP (Exact name of small business issuer as specified in its charter) Indiana 35-1984567 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 430 Clifty Drive Madison, Indiana 47250 (Address of principal executive offices) (812) 273-4949 (Issuer's telephone number) APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the issuer filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS As of May 2, 2001, there were 853,100 shares of the Registrant's common stock issued and outstanding. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ] RIVER VALLEY BANCORP FORM 10-QSB INDEX Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Balance Sheet 3 Consolidated Condensed Statement of Income 4 Consolidated Condensed Statement of Comprehensive Income 5 Consolidated Condensed Statement of Cash Flows 6 Notes to Unaudited Consolidated Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Resultsof Operations. 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings 10 Item 2. Changes in Securities 10 Item 3. Defaults Upon Senior Securities 10 Item 4. Submission of Matters to a Vote of Security Holders 10 Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10 SIGNATURES 11 PART I. FINANCIAL INFORMATION Item 1. Financial Statements RIVER VALLEY BANCORP Consolidated Condensed Balance Sheet (Unaudited)
March 31, December 31, 2001 2000 --------------------- -------------------- (In Thousands, Except Share Amounts) Assets Cash and due from banks $ 3,375 $ 3,361 Interest-bearing demand deposits 4,041 3,021 --------------------- -------------------- Cash and cash equivalents 7,416 6,382 Investment securities available for sale 9,235 7,247 Loans 148,907 142,672 Allowance for loan losses 1,774 1,702 --------------------- -------------------- Net Loans 147,133 140,970 Premises and equipment 3,377 2,817 Federal Home Loan Bank stock 943 943 Interest receivable 1,309 1,468 Other assets 2,127 2,303 --------------------- -------------------- Total assets $ 171,540 $ 162,130 ===================== ==================== Liabilities Deposits Noninterest-bearing $ 9,160 $ 9,170 Interest-bearing 130,109 121,055 --------------------- -------------------- Total deposits 139,269 130,225 Borrowings 13,450 13,450 Interest payable 566 598 Other liabilities 893 673 --------------------- -------------------- Total liabilities 154,178 144,946 --------------------- -------------------- Commitments and Contingencies Shareholders' Equity Preferred stock, without par value Authorized and unissued - 2,000,000 shares Common stock, without par value Authorized - 5,000,000 shares Issued - 1,190,250 shares Additional paid-in capital 11,365 11,349 Retained earnings 11,190 10,882 Shares acquired by stock benefit plans (702) (734) Less 334,576 and 321,376 treasury shares, at cost (4,566) (4,343) Accumulated other comprehensive income 75 30 --------------------- -------------------- Total shareholders' equity 17,362 17,184 --------------------- -------------------- Total liabilities and shareholders' equity $ 171,540 $ 162,130 ===================== ====================
See notes to consolidated condensed financial statements. RIVER VALLEY BANCORP Consolidated Condensed Statement of Income (Unaudited)
Three Months Ended March 31 ------------------ ------------------- 2001 2000 ------------------ ------------------- (In Thousands, Except Share Amounts) Interest Income Loans receivable $ 2,964 $ 2,316 Investment securities 128 125 Interest-earning deposits and other 81 99 ------------------ ------------------- Total interest income 3,173 2,540 ------------------ ------------------- Interest Expense Deposits 1,501 1,159 Borrowings 203 83 ------------------ ------------------- Total interest expense 1,704 1,242 ------------------ ------------------- Net Interest Income 1,469 1,298 Provision for loan losses 90 13 ------------------ ------------------- Net Interest Income After Provision for Loan Losses 1,379 1,285 ------------------ ------------------- Other Income Service fees and charges 206 198 Net gains on loan sales 56 12 Other income 10 67 ------------------ ------------------- Total other income 272 277 ------------------ ------------------- Other Expenses Salaries and employee benefits 533 514 Net occupancy and equipment expenses 141 134 Data processing fees 43 26 Advertising 39 43 Legal and professional fees 47 28 Other expenses 206 188 ------------------ ------------------- Total other expenses 1,009 933 ------------------ ------------------- Income Before Income Tax 642 629 Income tax expense 247 248 ------------------ ------------------- Net Income $ 395 $ 381 ================== =================== Basic earnings per share $ .48 $.44 Diluted earnings per share .48 .44
See notes to consolidated condensed financial statements. RIVER VALLEY BANCORP Consolidated Condensed Statement of Comprehensive Income (Unaudited)
Three Months Ended March 31, ------------------ ------------------ 2001 2000 ------------------ ------------------ (In Thousands) Net income $ 395 $ 381 Other comprehensive income, net of tax Unrealized gains on securities available for sale Unrealized holding gains arising during the period, net of tax expense of $30 and $4. 45 8 ------------------ ------------------ Comprehensive income $ 440 $ 389 ================== ==================
See notes to consolidated condensed financial statements. RIVER VALLEY BANCORP Consolidated Condensed Statement of Cash Flows (Unaudited)
Three Months Ended March 31, -------------------- ------------------- 2001 2000 -------------------- ------------------- Operating Activities (In Thousands) Net income $ 395 $ 381 Adjustments to reconcile net income to net cash provided (used) by operating activities Provision for loan losses 90 13 Depreciation and amortization 86 59 Amortization of goodwill 2 2 Investment securities accretion, net (2) (26) Loans originated for sale in the secondary market (3,247) (728) Proceeds from sale of loans in the secondary market 3,269 733 Gain on sale of loans (22) (5) Amortization of deferred loan origination cost 35 26 Amortization of expense related to stock benefit plans 48 Gain on sale of premises and equipment (42) Capitalized interest on construction (14) Net change in: Interest receivable 159 (7) Interest payable (32) 2 Other adjustments 347 154 -------------------- ------------------- Net cash provided by operating activities 1,114 562 -------------------- ------------------- Investing Activities Purchases of securities available for sale (4,002) (1,900) Proceeds from maturities of securities available for sale 91 4,089 Proceed from sales of securities available for sale 2,000 Proceeds from maturities of securities held to maturity 1,204 Net change in loans (6,288) (7,315) Purchases of premises and equipment (632) (23) Premiums on life insurance (95) Proceeds from sale of premises and equipment 56 -------------------- ------------------- Net cash used by investing activities (8,926) (3,889) -------------------- ------------------- Financing Activities Net change in Noninterest-bearing, interest-bearing demand and savings deposits (352) 1,840 Certificates of deposit 9,396 6,114 Proceeds from borrowings 14,000 350 Repayment of borrowings (14,000) (3,000) Cash dividends (82) Purchase of stock (223) (606) Advances by borrowers for taxes and insurance 25 20 -------------------- ------------------- Net cash provided by financing activities 8,846 4,636 -------------------- ------------------- Net Change in Cash and Cash Equivalents 1,034 1,309 Cash and Cash Equivalents, Beginning of Period 6,382 8,052 -------------------- ------------------- Cash and Cash Equivalents, End of Period $ 7,416 $ 9,361 ==================== =================== Additional Cash Flows and Supplementary Information Interest paid $ 1,736 $ 1,240 Income tax paid 0 136
See notes to consolidated condensed financial statements. RIVER VALLEY BANCORP Notes to Unaudited Consolidated Condensed Financial Statements River Valley Bancorp (the "Corporation") is a unitary savings and loan holding company whose activities are primarily limited to holding the stock of River Valley Financial Bank ("River Valley" or the "Bank"). The Bank conducts a general banking business in southeastern Indiana which consists of attracting deposits from the general public and applying those funds to the origination of loans for consumer, residential and commercial purposes. River Valley's profitability is significantly dependent on net interest income, which is the difference between interest income generated from interest-earning assets (i.e. loans and investments) and the interest expense paid on interest-bearing liabilities (i.e. customer deposits and borrowed funds). Net interest income is affected by the relative amount of interest-earning assets and interest-bearing liabilities and the interest received or paid on these balances. The level of interest rates paid or received by the Bank can be significantly influenced by a number of competitive factors, such as governmental monetary policy, that are outside of management's control. Note 1: Basis of Presentation The accompanying unaudited consolidated condensed financial statements were prepared in accordance with instructions for Form 10-QSB and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. Accordingly, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto of the Corporation included in the Annual Report on Form 10-KSB for the year ended December 31, 2000. However, in the opinion of management, all adjustments (consisting of only normal recurring accruals) which are necessary for a fair presentation of the financial statements have been included. The results of operations for the three-month period ended March 31, 2001, are not necessarily indicative of the results which may be expected for the entire year. Note 2: Principles of Consolidation The consolidated financial statements include the accounts of the Corporation and its subsidiary, the Bank and the Bank's subsidiary, Madison First Service Corporation ("First Service"). All significant intercompany balances and transactions have been eliminated in the accompanying consolidated financial statements. Note 3: Earnings Per Share Earnings per share have been computed based upon the weighted-average common shares outstanding. Unearned Employee Stock Ownership Plan shares have been excluded from the computation of average common shares outstanding.
Three Months Ended Three Months Ended March 31, 2001 March 31, 2000 -------------- -------------- Weighted Per Weighted Per Average Share Average Share Income Shares Amount Income Shares Amount ------ ------ ------ ------ ------ ------ Basic earnings per share Income available to common shareholders $ 395 818,937 $ .48 $ 381 870,903 $ .44 ========== ========== Effect of dilutive RRP --- awards and stock options 11,854 ---------------------- ------------------------ Diluted earnings per share Income available to common shareholders and assumed conversions $ 395 830,791 $ .48 $ 381 870,903 $ .44 ===================================== ========================================
Note 4: Reclassifications Certain reclassifications have been made to the 2000 consolidated financial statements to conform to the March 31, 2001 presentation. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Forward Looking Statements This Quarterly Report on Form 10-QSB ("Form 10-QSB") contains statements which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this Form 10-QSB and include statements regarding the intent, belief, outlook, estimate or expectations of the Corporation (as defined in the notes to the consolidated condensed financial statements), its directors or its officers primarily with respect to future events and the future financial performance of the Corporation. Readers of this Form 10-QSB are cautioned that any such forward looking statements are not guarantees of future events or performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward looking statements as a result of various factors. The accompanying information contained in this Form 10-QSB identifies important factors that could cause such differences. These factors include changes in interest rates; loss of deposits and loan demand to other financial institutions; substantial changes in financial markets; changes in real estate values and the real estate market; or regulatory changes. Financial Condition At March 31, 2001, the Corporation's consolidated assets totaled $171.5 million, an increase of $9.4 million, or 5.8%, from December 31, 2000. The increase in assets resulted primarily from an increase in net loans receivable of $6.2 million and an increase of approximately $2.0 million in investments, which was funded by an increase in deposits of $9.0 million. Liquid assets (i.e., cash and interest-earning deposits) increased by $1.0 million from December 31, 2000 levels, to a total of $7.4 million at March 31, 2001. Investment securities increased by $2.0 million, or 27.4%, to a total of $9.2 million at March 31, 2001 due to the increase in deposits. Net loans receivable were $147.1 million at March 31, 2001, an increase of $6.2 million, or 4.4%, from $140.9 million at December 31, 2000. The Corporation's consolidated allowance for loan losses totaled $1.7 million and $1.8 million on December 31, 2000 and March 31, 2001, respectively, which represented 1.2% of total loans at both dates. Nonperforming loans (defined as loans delinquent greater than 90 days and loans on nonaccrual status) totaled $621,000 and $998,000 at December 31, 2000 and March 31, 2001, respectively. Although management believes that its allowance for loan losses at March 31, 2001, was adequate based upon the available facts and circumstances, there can be no assurance that additions to such allowance will not be necessary in future periods, which could negatively affect the Corporation's results of operations. Deposits totaled $139.3 million at March 31, 2001, an increase of $9.0 million, or 6.9%, compared to total deposits at December 31, 2000. The growth for the three-month period resulted from the marketing and interest rate strategies. Advances from the Federal Home Loan Bank totaled $13.0 million at both March 31, 2001 and December 31, 2000. These advances had a positive effect on the bottom line during the first quarter of 2001 due to a decline in their interest rates. More than half of the advances outstanding at December 31, 2000 matured during the first quarter of 2001 and were renewed at rates below 5.0%. Stockholders' equity totaled $17.4 million at March 31, 2001, an increase of $178,000, or 1.0%, from $17.2 million at December 31, 2000. The increase resulted primarily from the Corporation's net income, offset by cash dividends and stock repurchases. The Bank is required to maintain minimum regulatory capital pursuant to federal regulations. At March 31, 2001, the Bank's regulatory capital exceeded all applicable regulatory capital requirements. Comparison of Operating Results for the Three Months Ended March 31, 2001 and 2000 General The Corporation's net earnings for the three months ended March 31, 2001, totaled $395,000, an increase of $14,000 or 3.7% from the $381,000 reported for the quarter ended March 31, 2000. The increase in income in the 2001 period was primarily attributable to a increase in net interest income of $171,000, which was partially offset by an increase in the provision for loan losses of $77,000 and an increase in other expenses of $76,000. Net Interest Income Total interest income for the three months ended March 31, 2001 amounted to $3.2 million, an increase of $633,000, or 24.9%, over the comparable quarter in 2000, reflecting the effects of an increase in average interest-earning assets outstanding. Interest expense on deposits increased by $342,000, or 29.5%, to a total of $1.5 million for the quarter ended March 31, 2001, due primarily to an increase in the average cost of deposits, and by an increase in the average balance of deposits outstanding year-to-year. Interest expense on borrowings totaled $203,000 for the three months ended March 31, 2001, an increase of $120,000, from the comparable period in 2000. The increase resulted primarily from an increase in average borrowings outstanding year-to-year. As a result of the foregoing changes in interest income and interest expense, net interest income increased by $171,000 or 13.2%, for the three months ended March 31, 2001, as compared to the comparable period in 2000. This increase was due to the increase in volume of average interest earning assets offset in part by the increase in average interest bearing liabilities. Provision for Losses on Loans A provision for losses on loans is charged to income to bring the total allowance for loan losses to a level considered appropriate by management based upon historical experience, the volume and type of lending conducted by the Bank, the status of past due principal and interest payments, general economic conditions, particularly as such conditions relate to the Bank's market area, and other factors related to the collectibility of the Bank's loan portfolio. As a result of such analysis, management recorded a $90,000 provision for losses on loans for the three months ended March 31, 2001, compared to the $13,000 amount recorded in the 2000 period. The 2001 provision amount was predicated on the increase in the balance of the loan portfolio, coupled with the level of nonperforming loans year-to-year. While management believes that the allowance for losses on loans is adequate at March 31, 2001, based upon the available facts and circumstances, there can be no assurance that the loan loss allowance will be adequate to cover losses on nonperforming assets in the future. Other Income Other income decreased by $5,000, or 1.8%, for the three months ended March 31,2001, as compared to the same period in 2000, due primarily to the fact that the first quarter of 2000 included a gain of $42,000 on the sale of office premises. Other Expense Other expense increased by $76,000, or 8.1%, during the three months ended March 31, 2001, as compared to the same period in 2000. The increase was due primarily to the increase in loan volume/administrative expense, both balance sheet and off-balance sheet volume, and general expense increases due to growth. Income Taxes The provision for income taxes totaled $247,000 for the three months ended March 31, 2001, a decrease of $1,000, or .4%, as compared to the same period in 2000. The effective tax rates amounted to 38.5% and 39.4% for the three months ended March 31, 2001 and 2000, respectively. Other The Securities and Exchange Commission maintains a Web site that contains reports, proxy information statements, and other information regarding registrants that file electronically with the Commission, including the Corporation. The address is http://www.sec.gov. PART II. OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. (a) No reports on Form 8-K were filed during the quarter ended March 31, 2001. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Issuer has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RIVER VALLEY BANCORP Date: May 14, 2001 By: /s/ Matthew P. Forrester ------------ -------------------------------- Matthew P. Forrester President and Chief Executive Officer Date: May 14, 2001 By: /s/ Larry C. Fouse ------------ -------------------------------- Larry C. Fouse Vice President of Finance