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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996 Commission File Number 1-14274
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CITIZENS FIRST FINANCIAL CORP.
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(Exact name of small business issuer as specified in its charter)
Delaware 37-1351861
- - -------------------------- -----------------------------------
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
301 Broadway, Normal, Illinois 61761
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(Address of principal executive offices)
(309) 452-1102
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(Issuer's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
(1) YES X NO
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(2) YES X NO
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
At July 31, 1995, the Registrant had 2,817,500 shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format
YES NO X
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
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Item 1 - Financial Statements
Consolidated Balance Sheets as of June 30, 1996 and
December 31, 1995.................................... 1
Consolidated Income Statements for the Six Months
Ended June 30, 1996 and 1995......................... 2
Consolidated Income Statements for the Three Months
Ended June 30, 1996 and 1995......................... 3
Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 1996 and 1995.................. 4
Consolidated Statement of Changes in Stockholders'
Equity............................................... 5
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 8
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings.................................... 14
Item 2 - Changes in Securities................................ 14
Item 3 - Defaults Upon Senior Securities...................... 14
Item 4 - Submission of Matters to a Vote of Security Holders.. 14
Item 5 - Other Information.................................... 14
Item 6 - Exhibits and Reports on Form 8-K..................... 15
SIGNATURES.......................................................... 16
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<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
CITIZENS FIRST FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1996 AND DECEMBER 31, 1995
JUNE 30, DECEMBER 31,
1996 1995
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(UNAUDITED AND IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and due from banks................... $3,730 $3,197
Interest-bearing deposits................. 8,515 3,405
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Total cash and cash equivalents....... 12,245 6,602
Investment securities:
Available for sale...................... 21,094 18,887
Held to maturity........................ 2,500 5,992
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Total investment securities........... 23,594 24,879
Loans..................................... 202,858 188,773
Allowance for loan losses............... (495) (412)
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Net loans............................. 202,363 188,361
Foreclosed real estate.................... 109 --
Premises and equipment.................... 4,955 4,914
Federal Home Loan Bank of Chicago
stock................................... 1,662 1,674
Other assets.............................. 2,954 2,208
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Total assets.......................... $247,882 $228,638
======== ========
LIABILITIES AND EQUITY CAPITAL
Liabilities:
Deposits.................................. $204,507 $209,864
Advances by borrowers for taxes and
insurance............................... 712 710
Other liabilities......................... 1,994 2,545
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Total liabilities..................... 207,213 213,119
Equity Capital:
Preferred stock, $.01 par value; 1,000,000
shares authorized and unissued.......... -- --
Common stock, $.01 par value; 8,000,000
shares authorized, 2,815,500 shares
issued, less 225,400 of unearned ESOP
shares.................................. 28 --
Paid-in capital........................... 26,984 --
Retained earnings......................... 16,369 15,685
Unrealized loss on securities available
for sale, net of taxes................ (458) (167)
Unearned Employee Stock Option Plan
shares................................. (2,254) --
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Total equity capital.................. 40,669 15,518
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Total liabilities and equity capital.. $247,882 $228,637
======== ========
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
CITIZENS FIRST FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS
FOR THE SIX MONTHS ENDED
---------------------------------
JUNE 30, JUNE 30,
1996 1995
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(UNAUDITED AND IN THOUSANDS)
<S> <C> <C>
Interest income:
Interest on loans......................... $7,845 $6,962
Interest on investments................... 988 1,248
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Total interest income................... 8,833 8,210
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Interest expense:
Interest on savings deposits.............. 5,150 4,802
Interest on borrowings.................... 29 78
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Total interest expense.................. 5,179 4,880
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Net interest income........................ 3,654 3,330
Provision for loan losses................. 75 49
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Net interest income after provision
for loan.............................. 3,579 3,281
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Other income:
Net loan sale gains....................... 137 70
Loan fees................................. 354 238
NOW fees.................................. 219 183
Branch fees............................... 41 42
Late charges.............................. 31 31
Other operating income.................... 44 14
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Total other income...................... 826 578
Other expense:
Salaries and benefits..................... 1,852 1,840
Loan related expenses..................... 141 62
Occupancy................................. 384 333
Deposit insurance/OTS assessment.......... 271 273
Data processing & ATM expense............. 191 241
Advertising............................... 79 69
Other operating expense................... 369 353
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3,287 3,171
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Pre-tax income............................ 1,118 688
Taxes..................................... 434 267
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Net income................................ $ 684 $ 421
====== ======
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
CITIZENS FIRST FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED
---------------------------------
JUNE 30, JUNE 30,
1996 1995
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(UNAUDITED AND IN THOUSANDS)
<S> <C> <C>
Interest income:
Interest on loans......................... $4,007 $3,563
Interest on investments................... 530 620
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Total interest income................... 4,537 4,183
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Interest expense:
Interest on savings deposits.............. 2,535 2,497
Interest on borrowings.................... 29 31
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Total interest expense.................. 2,564 2,528
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Net interest income........................ 1,973 1,655
Provision for loan losses................. 37 35
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Net interest income....................... 1,936 1,620
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Other income:
Net loan sale gains....................... 31 11
Loan fees................................. 186 130
NOW fees.................................. 119 90
Branch fees............................... 21 22
Late charges.............................. 15 16
Other operating income.................... 6 7
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378 276
--- ---
Other expense:
Salaries and benefits..................... 983 1,088
Loan related expenses..................... 81 36
Occupancy................................. 196 172
Deposit insurance/OTS assessment.......... 136 137
Data processing & ATM expense............. 93 124
Advertising............................... 38 40
Other operating expense................... 204 185
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1,731 1,782
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Pre-tax income............................. 583 114
Taxes...................................... 226 50
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Net income................................ $ 357 $ 64
====== ======
See notes to financial consolidated statements.
</TABLE>
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<TABLE>
<CAPTION>
CITIZENS FIRST FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Six Months Ended June 30,
-------------------------
1996 1995
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(Unaudited and in thousands)
<S> <C> <C>
Operating Activities
Net income.................................... $ 684 $ 421
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses..................... 75 49
Investment securities (gains) losses.......... 33 3
Investment securities amortization
(accretion), net............................ 43 19
Net gain on sales of real estate owned........ - (21)
Net (gain) loss on sales of loans............. (137) (70)
Net gain on sales of property and equipment... (23) -
Depreciation.................................. 201 164
Loans originated for sale..................... (9,401) (1,972)
Proceeds from sale of loans................... 9,538 2,042
Change in:
Other liabilities........................... (551) 372
Prepaid expenses and other assets........... (746) (492)
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Net cash (used) provided by operating
activities................................ (284) 515
Investing Activities:
Purchase of securities available for sale..... (6,204) -
Proceeds from maturities and principal
paydowns on securities available for sale... 1,420 6,249
Proceeds from sales of securities available
for sale.................................... 2,031 3,020
Purchase of securities held-to-maturity....... -- (2,487)
Proceeds from maturities and principal
paydowns on securities held-to-maturity..... 3,485 2,805
Redemption (purchase) of FHLB stock........... 12 (1,000)
Other net changes in loans.................... (14,000) (6,067)
Proceeds from sales of foreclosed property.... - 60
Purchase of premises and equipment............ (270) (664)
Proceeds from sales of office properties...... 51 -
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Net cash (used) provided by investing
activities................................ (13,475) 1,916
Financing Activities:
Net change in deposits........................ (5,357) (290)
Repayment of FHLB advances.................. - (3,000)
Issuance of common stock, net of
stock issuance expenses of $1,163,000..... 27,011 -
Purchase of ESOP stock...................... (2,254) -
Net change in advances by borrowers for taxes
and insurance.............................. 2 147
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Net cash (used) provided by financing
activities................................. 19,402 (3,143)
Net change in cash and cash equivalents......... 5,643 (712)
Cash and cash equivalents, beginning of period.. 6,602 4,964
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Cash and cash equivalents, end of period........ $12,245 $4,252
======= ======
Additional cashflows and supplementary
information:
Interest paid................................. $ 5,093 $3,131
Income tax paid............................... $ 345 $ 280
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
CITIZENS FIRST FINANCIAL CORP. AND SUBSIDIARY
STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
Common Stock
--------------------
Deferred Net Unrealized Gain
Capital Retained Compensation Related (Loss) on Securities
Shares Amount Surplus Earnings to ESOP Available for Sale Total
--------- --------- ---------- --------- ---------------- ------------------- ---------
(Unaudited and in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 N/A N/A N/A $15,685 N/A $(167) $15,518
Common stock issued in
stock conversion........ 2,818 $28 $26,984 27,012
Purchase of stock by ESOP $(2,254) (2,254)
Net income for the six
months ended June 30,
1996.................... 684 684
Net change in unrealized
gain (loss) on securities
available for sale net
of taxes of $186........ (291) (291)
----- --- ------- ------- ------- ----- -------
BALANCE, JUNE 30, 1996 2,818 $28 $26,984 $16,369 $(2,254) $(458) $40,669
===== === ======= ======= ======= ===== =======
See notes to consolidated financial statements.
</TABLE>
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CITIZENS FIRST FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BACKGROUND INFORMATION
Citizens First Financial Corp. (the "Company") was incorporated in
January, 1996 and on May 1, 1996 acquired all of the outstanding shares of
common stock of Citizens Savings Bank, F.S.B. (the "Bank") upon the Bank's
conversion from a federally chartered mutual savings bank to a federally
chartered stock savings bank. The Company purchased 100% of the outstanding
capital stock of the Bank using 50% of the net proceeds from the Company's
initial stock offering which was completed on May 1, 1996. Accordingly, the data
relating to period prior to May 1, 1996 represents the consolidated data of the
Bank and its subsidiaries. The data subsequent to May 1, 1996 represents the
consolidated data of the Company and the Bank.
The Company sold 2,187,500 shares of common stock in the initial offering
at $10.00 per share, including 225,400 shares purchased by the Bank's Employee
Stock Option Plan (the "ESOP"). The ESOP shares were acquired by the Bank with
proceeds from a Company loan totalling $2,254,000. The net proceeds of the
offering totalled $27,612,000; $28,175,000 less $1,163,000 in underwriting
commissions and other expenses. The Company's stock is traded on the American
Stock Exchange under the symbol "CBK."
The acquisition of the Bank by the Company is being accounted for as a
"pooling-of-interests" under generally accepted accounting principles. The
application of the pooling-of-interests method records the assets and
liabilities of the merged companies on a historical cost basis with no goodwill
or other intangible assets being recorded.
On May 31, 1995, the Bank consummated a business combination with Fairbury
Federal Savings and Loan Association ("Fairbury Federal"). The
pooling-of-interests method of accounting was used to account for the
transaction. Accordingly, the statements of income and cash flows for the six
months ended June 30, 1995 and the consolidated statement of income for the
three months ended June 30, 1995, have been combined as if the combination had
been in effect for each of the periods presented.
2. STATEMENT OF INFORMATION FURNISHED
The accompanying consolidated financial statements have been prepared in
accordance with Form 10-QSB instructions and Item 310(b) of Regulation S-B, and
in the opinion of management contains all adjustments necessary to present
fairly the financial position as of June 30, 1996 and December 31, 1995, the
results of operations for the six months ended June 30, 1996 and 1995 and the
cash flows for the six months ended June 30, 1996 and 1995. All adjustments to
the financial statements were normal and recurring in nature. These results have
been determined on the basis of generally accepted accounting principles. The
results of
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operations for the six months ended June 30, 1996 are not necessarily indicative
of the results to be expected for the entire fiscal year.
The consolidated financial statements are those of the Company and the
Bank. These consolidated financial statements should be read in conjunction with
the audited financial statements and notes thereto included in the Company's
Prospectus dated March 12, 1996.
3. EARNINGS PER SHARE
Net earnings per share will be computed based upon the weighted average
common and common equivalent shares outstanding for periods subsequent to the
Bank's conversion to a stock savings bank on May 1, 1996. Net income per share
for the six months and three month periods ended June 30, 1996, is not
meaningful.
7
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Item 1. Consolidated Financial Statements
Citizens First Financial Corp. acquired all of the common stock of
Citizens Savings Bank, F.S.B. (the "Bank") concurrent with the Bank's conversion
from mutual to stock form of organization on May 1, 1996. Accordingly, prior to
such time, Citizens First Financial Corp. was a noncapitalized shell corporation
with no business activities and no significant assets. On May 1, 1996, the
conversion of the Bank was consummated and at such time, Citizens Savings Bank,
F.S.B. became the wholly-owned subsidiary of Citizens First Financial Corp.
Item 2. Management Discussion and Analyses of Financial Condition and Results
of Operation
Citizens First Financial Corp. (the "Company") is the holding company for
Citizens Savings Bank, F.S.B. (the "Bank"). The Bank has two inactive
subsidiaries, CSL Service Corporation and Fairbury Service Corp. Prior to the
Company's acquisition of the Bank on May 1, 1996, the Company had no material
assets or operations. Accordingly, the following information reflects
management's discussion and analysis of the financial condition and results of
operations for the Bank for the period prior to May 1, 1996 and for the Company
and Bank subsequent to the period beginning on May 1, 1996.
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1996 AND DECEMBER 31, 1995
Total assets at June 30, 1996 were $247.9 million as compared to $228.6
million at December 31, 1995. The $19.3 million or 8.4% increase was due to the
cash generated by the Company's stock offering: $28,175,000 total stock offering
less $1,163,000 in underwriting commissions and other expenses of the offering,
less $2,254,000 related to shares purchased by the Employee Stock Ownership Plan
(the "ESOP"), and less approximately $4,141,000 in proceeds from stock sales
which came from existing customer deposits.
Cash and cash equivalents increased from $6,602,000 at December 31, 1995
to $12,245,000 at June 30, 1996, an increase of $5,643,000 or 85.5%. This
increase was the result of the cash proceeds from the stock offering.
Loans increased to $202,858 at June 30, 1996 from $188,773 at December 31,
1995, an increase of $14,085,000 or 7.5%. The growth in loans was funded
primarily from the investment of the proceeds from the stock offering. The
growth was primarily in one- to four-family residential mortgage loans which
rose by $13.0 million.
The decrease in deposits of $5,357,000 or 2.6% was attributable to the
$4,141,000 of stock purchases that came from customer deposit accounts. Overall
certificates of deposit declined by $6,157,000.
Other liabilities decreased by $551,000 or 21.7% because of lower accrued
payables.
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The total equity capital increased by $25,151,000 or 162.1%, from
$15,518,000 at December 31, 1995 to $40,669,000 at June 30, 1996. The increase
is summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
Equity, December 31, 1995 $15,518,000
Gross proceeds of stock offering 28,175,000
Underwriting commissions and other
expenses of conversion (1,163,000)
Net income 684,000
Increase in unrealized loss on securities available
for sale, net of income tax effect (291,000)
Total shares purchased by ESOP (2,254,000)
-----------
Equity capital, June 30, 1996 $40,669,000
===========
</TABLE>
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COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND JUNE
30, 1995
GENERAL
Net income for the six months ended June 30, 1996 increased by $263,000 or
62.5%, from $421,000 for the six months ended June 30, 1995 to $684,000 for the
six months ended June 30, 1996. The increase was due to the recognition of a
funding liability for benefits under the Bank's Director Emeritus retirement
plan in 1995 and higher interest income from the investment of the proceeds from
the stock offering in 1996.
INTEREST INCOME
Interest on loans increased by $883,000 or 12.7%, from $6,962,000 for the
six months ended June 30, 1995 to $7,845,000 for the six months ended June 30,
1996. The increase was due to a higher average balance of loans due to the
investment of the proceeds from the stock offering and the transfer of funds
from investment securities to loans. The new loans were invested primarily in
one- to four-family mortgage loans. Interest on investments decreased from
$1,248,000 for the six months ended June 30, 1995 to $988,000 for the six months
ended June 30, 1996, a decrease of $260,000 or 20.8%. The decrease reflected
the lower average balance of securities during the six months ended June 30,
1996.
INTEREST EXPENSE
Interest on savings deposits increased by $348,000 or 7.3%, from
$4,802,000 for the six months ended June 30, 1995 to $5,150,000 for the six
months ended June 30, 1996. The increase was attributable to higher average
balance in savings deposits during the six months ended June 30, 1996. The
interest on borrowings decreased by $49,000 or 62.8% because of a lower average
balance in borrowings in 1996.
OTHER INCOME
Total other income increased by $248,000 or 42.9%, from $578,000 for the
six months ended June 30, 1995 to $826,000 for the six months ended June 30,
1996. The increase was primarily due to an increase in loan fees which increased
$116,000, or 48.74%, from $238,000 for the six months ended June 30, 1995 to
$354,000 for the six months ended June 30, 1996. This increase reflected the
increase of loan originations from $33.6 million for the six months ended June
30, 1995 to $61.5 million for the six months ended June 30, 1996. Net loan sale
gains increased by $67,000 or 95.7% because of the effects of Statement of
Financial Accounting Statement 122, "Accounting for Mortgage Servicing Rights",
which was not adopted for 1995 until the fourth quarter and was not reflected in
the results for the six months ended June 30, 1995. NOW fees increased by
$36,000 or 19.7% because of the higher fees being charged on certain checking
accounts.
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OTHER EXPENSE
Total other expenses increased by $116,000 or 3.7%, from $3,171,000 for the
six months ended June 30, 1995 to $3,287,000 for the six months ended June 30,
1996. Salaries and benefits increased by $12,000 or 0.7%, due to higher salaries
and directors fees and the effect of implementing the ESOP which resulted in an
expense of $80,000 reflecting the contribution for the two months ended June 30,
1996. This offset the $355,000 of salary and benefit expenses in the six months
ended June 30, 1995 which related to the funding of retirement benefits under
the Bank's Director Emeritus retirement plan resulting from the merger of the
Bank with Fairbury Federal Savings and Loan Association ("Fairbury Federal") in
May 1995. Loan related expenses increased by $79,000 or 127.4% for the six
months ended June 30, 1996 because of the increase in loan originations in 1996.
Occupancy expenses increased by $51,000 or 15.3% for the six months ended June
30, 1996 primarily because of the opening of a new branch facility in October
1995. Data processing and ATM expense expenses decreased by $50,000 for the six
months ended June 30, 1996 because of the efficiencies achieved by the
integration of the Bank's and Fairbury Federal's computer system in the second
half of fiscal 1995 following the merger of the Bank and Fairbury Federal in
June 1995.
PROVISION FOR LOAN LOSSES
The provision for loan losses increased to $75,000 for the six months
ended June 30, 1996 from $49,000 for the six months ended June 30, 1995, an
increase of $26,000 or 53.1%. The increase was made because of the continued
growth of the loan portfolio and management's evaluation of the loan portfolio.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND
JUNE 30, 1995.
GENERAL
Net income for the three months ended June 30, 1995 increased by $293,000
or 457.8% from $64,000 for the three months ended June 30, 1995 to $357,000 for
the three months ended June 30, 1996. The increase was primarily attributable to
the recognition in 1995 of a funding liability for directors emeritus retirement
benefits and increased interest income in 1996 resulting from the investment of
stock proceeds.
INTEREST INCOME
Interest income increased to $4,537,000 for the three months ended June 30,
1996 from $4,183,000 for the three months ended June 30, 1995, an increase of
$354,000 or 8.5%. This increase was primarily attributable to a $444,000 or
12.5% increase in interest on loans for the three months ended June 30, 1996.
The increase was due to an increased investment in loans. The average balance of
loans increased from $179.1 million for the three months ended June 30, 1995 to
$197.2 million for the three months ended June 30, 1996. This investment in
loans was primarily funded by proceeds from the stock offering.
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INTEREST EXPENSE
Interest expense for the three months ended June 30, 1996 increased by
$36,000 or 1.4%, from $2,528,000 for the three months ended June 30, 1995 to
$2,564,000 for the three months ended June 30, 1996. The increase was primarily
caused by a higher overall cost of savings which offset a decrease in average
balance of savings deposits from $208.8 million for the three months ended June
30, 1995 to $209.3 million for the three months ended June 30, 1996.
OTHER INCOME
Total other income increased from $276,000 for the three months ended June
30, 1995 to $378,000 for the three months ended June 30, 1996, an increase of
$102,000 or 37.0%. The increase was due to higher loan fees, NOW fees and net
loan sale gains. Loan fees increased to $186,000 for the three months ended June
30, 1996 from $130,000 for the three months ended June 30, 1995, an increase of
$56,000 or 43.1%. The higher loan fees were caused by an increase in loan
originations in the period from $22.1 million in 1995 to $32.7 million in
1996. NOW fees increased in 1996 by $29,000 or 32.2%, primarily because of
higher fees being charged on certain checking accounts. Net loan sale gains
increased by $20,000 or 181.8% for the three months ended June 30, 1996 compared
to the three months ended June 30, 1995 because, as of June 30, 1995, the Bank
had not yet adopted Statement of Financial Accounting Standard No. 122,
"Accounting for Mortgage Servicing Rights."
OTHER EXPENSE
Total other expense decreased by $51,000 or 2.9%, from $1,782,000 for the
three months ended June 30, 1995 as compared to $1,731,000 for the three months
ended June 30, 1996. Salaries and benefits were $105,000 or 9.7% lower in 1996,
because the 1995 result included a $355,000 expense for the funding of
retirement benefits under the Bank's Director Emeritus retirement plan in
connection with the Bank's merger with Fairbury Federal in 1995. This expense
was offset in 1996 by higher directors fees and salaries and the effect of
implementing the ESOP which resulted in an expense of $80,000 reflecting the
contribution for the two months ended June 30, 1996. Loan related expenses
increased to $81,000 for the three months ended June 30, 1996 from $36,000 for
the three months ended June 30, 1995, an increase of $45,000 or 125.0% because
of increased loan originations during the period in 1996. Data processing and
ATM expense decreased by $31,000 or 25.0%, from $124,000 for the three months
ended June 30, 1995 to $93,000 for the three months ended June 30, 1996 because
of cost savings from the merging of data processing systems of Fairbury Federal
and the Bank subsequent to their May 1995 merger. Occupancy expense increased by
$24,000 or 14.0% for the three months ended June 30, 1996 as compared to the
three months ended June 30, 1995 because of the effect of the opening of a new
banking facility in October 1995.
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INCOME TAX
Total income tax expenses was $226,000 for the three months ended June 30,
1996 as compared to $50,000 for the three months ended June 30, 1995, a decrease
of $176,000 or 352.0%. The decrease was caused by lower pre-tax income in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Bank's primary sources of funds are deposits, principal and interest
payments on loans and securities, sales of loans and securities and FHLB
advances. While maturities and scheduled amortization of loans are predictable
sources of funds, deposit outflows and mortgage prepayments are greatly
influenced by general interest rates, economic conditions and competition. The
Bank's liquidity requirement, which may be varied at the direction of the OTS
depending on economic conditions, and deposit flows is based upon a percentage
of the Bank's deposits and short-term borrowings. The Bank is currently required
by the OTS to maintain a ratio of liquid assets of 5.0%. At June 30, 1996 and
1995, the Bank's liquidity ratio was 6.9% and 6.1%, respectively. Management
maintains the Bank's liquid assets in accordance with regulatory requirements.
At June 30, 1996, the Bank exceeded all of its regulatory capital
requirement with a tangible capital level of $27.5 million, or 11.4% of
adjusted assets, which is above the required level of $3.6 million or 1.50%;
core capital of $27.5 million, or 11.4% of adjusted assets, which above the
required level of $7.2 million or 3.0%; and risk-based capital of $28.0
million, or 20.7% of adjusted assets, which is above the required level of
$10.8 million, or 8.0%.
The Company's most liquid assets are cash and interest-bearing demand
accounts. The level of these accounts are dependent on the Company's operating,
financing, lending and investing activities during any given period. At June 30,
1996, cash and interest-bearing demand accounts totalled $12.2 million, or 4.94%
of assets.
The Company has other sources of liquidity if a need for additional funds
arises, including Federal Home Loan Bank ("FHLB") advances. At June 30, 1996,
the Bank had no outstanding advances with the FHLB and a borrowing capacity of
$33.2 million. Depending upon market conditions and the pricing of deposit
products and FHLB borrowings, the Bank may utilize FHLB advances to fund loan
originations.
At June 30, 1996, the Bank had commitments to originate loans and unused
lines of credit totalling $14.1 million. Certificate accounts, which are
scheduled to mature in one year or less from June 30, 1996 totalled $102.2
million. The Bank anticipates that it will have sufficient funds to meet its
current loan commitments and maturing deposits.
13
<PAGE> 16
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The Company is not involved in any legal proceedings of a material nature
at this time other than those occurring in the ordinary course of business which
in the aggregate involves amounts which are believed by management to be
immaterial to the financial condition of the Company.
Item 2 - Changes in Securities
None
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
On August 2, 1996, Citizens Savings Bank announced the signing of an
agreement with Commerce Bank to purchase the building at 2101 N.
Veterans Parkway, Bloomington, Illinois. The Bank will open a full
servicing banking facility and move its administrative offices to
this location. The 20,000 square foot building will also contain
rental office space.
14
<PAGE> 17
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Certificate of Incorporation of Citizens First Financial Corp*
3.2 Bylaws of Citizens First Financial Corp.*
27. Financial Data Schedule
(b) Reports on Form 8-K
None
*Incorporated by reference to Registration Statement on Form SB-2, as
amended, filed on January 24, 1996.
15
<PAGE> 18
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CITIZENS FIRST FINANCIAL CORP.
(Registrant)
Date: August 13, 1996 /s/ C. William Landefeld
--------------------------- -------------------------------------
C. William Landefeld
President
Date: August 13, 1996 /s/ Dallas G. Smiley
--------------------------- -------------------------------------
Dallas G. Smiley
Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary information extracted from the Form 10-QSB and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001006265
<NAME> CITIZENS FIRST FINANCIAL CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,923
<INT-BEARING-DEPOSITS> 8,515
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 21,094
<INVESTMENTS-CARRYING> 2,500
<INVESTMENTS-MARKET> 2,493
<LOANS> 202,858
<ALLOWANCE> 495
<TOTAL-ASSETS> 247,882
<DEPOSITS> 204,507
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,706
<LONG-TERM> 0
0
0
<COMMON> 27,011
<OTHER-SE> 13,658
<TOTAL-LIABILITIES-AND-EQUITY> 247,882
<INTEREST-LOAN> 8,673
<INTEREST-INVEST> 514
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 9,187
<INTEREST-DEPOSIT> 5,150
<INTEREST-EXPENSE> 5,179
<INTEREST-INCOME-NET> 3,654
<LOAN-LOSSES> 75
<SECURITIES-GAINS> (33)
<EXPENSE-OTHER> 3,287
<INCOME-PRETAX> 1,118
<INCOME-PRE-EXTRAORDINARY> 684
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 684
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 3.05
<LOANS-NON> 73
<LOANS-PAST> 848
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 412
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 495
<ALLOWANCE-DOMESTIC> 495
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 475
</TABLE>
