SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
----------------------------------------
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 2-47541
RIVER VALLEY BANCORP
(Exact Name of Registrant as Specified in Its Charter)
Indiana 35-1984567
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
303 Clifty Drive
Madison, Indiana 47250
(Address of Principal (Zip Code)
Executive Office)
Issuer's Telephone Number, Including Area Code: (812) 273-4949
Check whether the issuer (1) has 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.
Yes [X] No [ ]
As of November 10, 2000, there were 875,874 shares of the Registrant's common
stock, without par value, issued and outstanding.
<PAGE>
River Valley Bancorp
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Financial Condition 3
Consolidated Condensed Statements of Income 4
Consolidated Condensed Statements of Comprehensive Income 5
Consolidated Condensed Statements of Cash Flows 6
Notes to Consolidated Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
<PAGE>
<TABLE>
<CAPTION>
River Valley Bancorp
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(In thousands, except share data)
September 30, December 31,
2000 1999
------------- -----------
ASSETS
<S> <C> <C>
Cash and due from banks $ 3,350 $ 3,648
Federal funds sold 0 1,550
Interest-earning deposits in
other financial institutions 4,692 2,854
------- -------
Cash and cash equivalents 8,042 8,052
Investment securities available for sale 5,658 6,301
Investment securities held to maturity 0 3,138
Loans receivable - net 135,431 115,131
Office premises and equipment 2,376 1,928
Federal Home Loan Bank stock 943 943
Accrued interest receivable 1,425 1,043
Other Assets 2,333 2,159
------- -------
Total assets $156,208 $138,695
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $128,044 $114,251
Borrowings 9,450 6,500
Accrued interest payable 516 330
Other liabilities 1,045 748
------- -------
Total liabilities 139,055 121,829
------- -------
Stockholders' equity
Preferred stock - 2,000,000 shares without par value
authorized; no shares issued - -
Common stock - 5,000,000 shares without par value authorized;
1,190,250 and 1,190,250 shares issued and outstanding at
September 30, 2000 and December 31, 1999 - -
Additional paid in capital 11,314 11,314
Retained earnings - substantially restricted 10,516 9,551
Shares acquired by stock benefit plans (847) (967)
Less 283,278 and 219,753 treasury shares - at cost (3,791) (2,976)
Accumulated other comprehensive loss (39) (56)
------- -------
Total stockholders' equity 17,153 16,866
------- -------
Total liabilities and stockholders' equity $156,208 $138,695
======== ========
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
River Valley Bancorp
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
2000 1999 2000 1999
------ ------ ------ ------
Interest income
<S> <C> <C> <C> <C>
Loans $7,498 $6,467 $2,716 $2,134
Investment securities 316 454 106 166
Interest-earning deposits and other 246 315 58 83
------ ------ ------ ------
Total interest income 8,060 7,236 2,880 2,383
------ ------ ------ ------
Interest expense
Deposits 3,690 3,382 1,317 1,072
Borrowings 305 73 148 43
------ ------ ------ ------
Total interest expense 3,995 3,455 1,465 1,115
------ ------ ------ ------
Net interest income 4,065 3,781 1,415 1,268
Provision for losses on loans 132 110 75 10
------ ------ ------ ------
Net interest income after
provision for losses on loans 3,933 3,671 1,340 1,258
------ ------ ------ ------
Other income
Loss on investment securities (4) 0 0 0
Service fees and charges 711 552 281 199
Other income 114 64 14 6
------ ------ ------ ------
Total other income 821 616 295 205
------ ------ ------ ------
Other expense
Employee compensation and benefits 1,542 1,768 547 757
Occupancy and equipment 427 389 140 123
Other operating expense 879 1,001 312 336
------ ------ ------ ------
Total other expense 2,848 3,158 999 1,216
------ ------ ------ ------
Income before income taxes 1,906 1,129 636 247
Income tax expense 707 464 224 122
------ ------ ------ ------
NET INCOME $1,199 $ 665 $ 412 $ 125
====== ====== ====== ======
EARNINGS PER SHARE
Basic $1.39 $.65 $.48 $.13
====== ====== ====== ======
Diluted $1.39 $.65 $.48 $.13
====== ====== ====== ======
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
River Valley Bancorp
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the nine months For the three months
ended September 30, ended September 30,
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net income $1,199 $665 $412 $125
Other comprehensive income(loss), net of tax:
Unrealized gains (losses) on securities
available for sale
Unrealized holding gains(losses) arising
during period, net of tax expense(benefit)
of $9,$(8),$5 and $9 14 (12) 8 14
Less: Reclassification adjustment for
losses included in net income,
net of tax benefit of $(1) (3) 0 0 0
------ ------ ----- ------
17 (12) 8 14
------ ------ ----- -----
Comprehensive income $1,216 $653 $420 $139
====== ====== ====== ======
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
River Valley Bancorp
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the nine months ended September 30,
2000 1999
-------- --------
Cash flows from operating activities:
<S> <C> <C>
Net income for the period $ 1,199 $ 665
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Amortization(accretion) of premiums and discounts on investments (26) 14
Investment securities losses 4 -
Loans originated for sale in the secondary market (1,752) (9,596)
Proceeds from sale of loans in the secondary market 1,769 13,246
(Gain) loss on sale of loans (17) 51
Amortization of deferred loan origination costs 63 67
Provision for losses on loans 132 110
Depreciation and amortization 177 178
Amortization of goodwill 5 38
Amortization of stock benefit plans 120 120
Gain on sale of office premises and equipment (42) -
Increase (decrease) in cash due to changes in:
Accrued interest receivable (382) (188)
Accrued interest payable 186 (160)
Other adjustments 304 288
------- -------
Net cash provided by operating activities 1,740 4,833
------- -------
Cash flows used by investing activities:
Proceeds from maturity of securities available for sale 6,002 14,208
Proceeds from sale of investment securities available for sale 569 -
Proceeds from maturity of securities held to maturity 1,204 780
Purchase of investment securities available for sale (3,947) (17,579)
Net change in loans (20,495) (2,411)
Purchase of office equipment (639) (167)
Proceeds from sale of office premises and equipment 56 -
Premiums paid on life insurance (216) -
------- -------
Net cash used by investing activities (17,466) (5,169)
------- -------
Cash flows provided(used) by financing activities:
Net change in deposit accounts 13,793 (4,313)
Proceeds from Federal Home Loan Bank advances 10,000 -
Repayment of Federal Home Loan Bank advances (7,000) -
Net change in other borrowings (50) 2,385
Advances by borrowers for taxes and insurance 23 15
Dividends on common stock (235) (210)
Purchase of shares (815) (2,041)
------- -------
Net cash provided (used) in financing activities 15,716 (4,164)
------- -------
Net increase (decrease) in cash and cash equivalents (10) (4,500)
Cash and cash equivalents at beginning of period 8,052 12,307
------- -------
Cash and cash equivalents at end of period $ 8,042 $ 7,807
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes $ 666 $ 465
Interest on deposits and borrowings 3,809 3,615
Investment securities held to maturity
transferred to available for sale 1,934
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
River Valley Bancorp
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
For the nine month periods ended September 30, 2000 and 1999
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.
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-K for the year ended December 31, 1999. 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 nine and three month periods ended
September 30, 2000 are not necessarily indicative of the results which may be
expected for the entire year.
2. Principles of Consolidation
The consolidated condensed 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.
3. Effect of Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which requires entities to
recognize all derivatives in their financial statements as either assets or
liabilities measured at fair value. SFAS No. 133 also specifies new methods of
accounting for hedging transactions, prescribes the items and transactions that
may be hedged and specifies detailed criteria to be met to qualify for hedge
accounting.
<PAGE>
River Valley Bancorp
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
For the nine month periods ended September 30, 2000 and 1999
3. Effect of Recent Accounting Pronouncements (continued)
The definition of a derivative financial instrument is complex, but in general,
it is an instrument with one or more underlyings, such as an interest rate or
foreign exchange rate, that is applied to a notional amount, such as an amount
of currency, to determine the settlement amount(s). It generally requires no
significant initial investment and can be settled net or by delivery of an asset
that is readily convertible to cash. SFAS No. 133 applies to derivatives
embedded in other contracts, unless the underlying of the embedded derivative is
clearly and closely related to the host contract.
SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
beginning after June 15, 2000 with early adoption permissible. The Corporation
elected to adopt SFAS No. 133 on April 1, 2000. As permitted by SFAS No. 133,
all securities classified as held to maturity were transferred to available for
sale. The adoption of this statement did not have a significant impact on the
Corporation's financial statements.
4. Earnings Per Share
Earnings per share have been computed based upon weighted average common shares
outstanding. Unallocated and not committed to be released Employee Stock
Ownership Plan shares have been excluded from the computation of average common
shares outstanding. For the nine and three months ended September 30, 2000,
weighted average shares outstanding for basic and diluted earnings per share
were 862,016 and 854,139, respectively. For the nine and three months ended
September 30, 1999, weighted average shares outstanding for basic and diluted
earnings per share were 1,029,313 and 961,776, respectively.
5. Reclassifications
Certain reclassifications have been made to the 1999 consolidated condensed
financial statements to conform to the September 30, 2000 presentation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For the nine and three month periods ended September 30, 2000 and 1999
Forward-Looking Statements
In addition to historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties.
Economic circumstances, the Corporation's operations and the Corporation's
actual results could differ significantly from those discussed in the
forward-looking statements. Some of the factors that could cause or contribute
to such differences are discussed herein but also include changes in the economy
and interest rates in the nation and the Corporation's market area generally.
<PAGE>
River Valley Bancorp
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
For the nine and three month periods ended September 30, 2000 and 1999
Forward-Looking Statements (Continued)
Some of the forward-looking statements included herein are the statements
regarding management's determination of the amount and adequacy of the allowance
for losses on loans, the effect of the year 2000 on information technology
systems and the effect of certain recent accounting pronouncements.
Discussion of Financial Condition Changes from December 31, 1999 to September
30, 2000
At September 30, 2000, the Corporation's consolidated assets totaled $156.2
million, an increase of $17.5 million, or 12.6%, from the December 31, 1999
total. The increase in assets resulted primarily from an increase in loans
receivable of $20.3 million which was funded by an increase in deposits of $13.8
and an increase in borrowed funds of approximately $3.0 million.
Liquid assets (i.e., cash, federal funds sold and interest-earning deposits)
decreased by $10,000 from December 31, 1999 levels to a total of $8.0 million at
September 30, 2000. Investment securities decreased by $3.8 million, or 40.1%,
to a total of $5.7 million at September 30,2000, due primarily to repayments and
maturities on mortgage-backed and related securities.
Loans receivable totaled $135.4 million at September 30, 2000, an increase of
$20.3 million, or 17.6%, from the $115.1 million total at December 31, 1999. The
increase resulted primarily from loan originations during the period of $50.4
million, which were offset by sales of $1.8 and by loan principal repayments
during the period of $27.1 million.
The Corporation's consolidated allowance for loan losses totaled $1.5 million
and $1.6 million on September 30, 2000 and December 31, 1999, respectively,
which represented 1.2% and 1.3%, respectively, of total loans at each of those
respective dates. Nonperforming loans (defined as loans delinquent greater than
90 days and loans on nonaccrual status) totaled $544,000 and $859,000 at
September 30, 2000 and December 31, 1999, respectively. Although management
believes that its allowance for loan losses at September 30, 2000 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.
<PAGE>
River Valley Bancorp
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the nine and three month periods ended September 30, 2000 and 1999
Discussion of Financial Condition Changes from December 31, 1999 to September
30, 2000 (continued)
Deposits totaled $128.0 million at September 30, 2000, an increase of $13.7
million, or 11.9%, compared to the $114.3 million total at December 31, 1999.
During the nine month period ended September 30, 2000, growth in deposits was
attributable to the Bank's participation in the State of Indiana's "Treasurers
Agricultural Loan Program," providing for $4.9 million in one year certificates
of deposit, which were used to fund a corresponding agricultural loan at a
spread to the Bank of 2.50%. The remaining $8.8 million of deposit growth
resulted from management's continuing efforts to increase deposits through
marketing and interest-rate strategies.
Advances from the Federal Home Loan Bank totaled $9.0 million at September 30,
2000. Continued growth in loan demand necessitated the use of more advance
monies. Future deposit growth will continue to be a priority.
Stockholders' equity totaled $17.2 million at September 30, 2000, an increase of
$287,000, or 1.7%, from the $16.9 million total at December 31, 1999. The
increase resulted primarily from the Corporation's net income and amortization
of expense related to stock benefit plans, offset by cash dividends and stock
repurchases.
The Bank is required to maintain minimum regulatory capital pursuant to federal
regulations. At September 30, 2000, the Bank's regulatory capital exceeded all
applicable regulatory capital requirements.
Comparison of Results of Operations for the Nine Month Periods Ended September
30, 2000 and 1999
General
The Corporation's net earnings for the nine months ended September 30, 2000
totaled $1,199,000, an increase of $534,000, or 80.3%, from the $665,000 of net
earnings reported in the comparable 1999 period. The increase in income in the
2000 period was primarily attributable to an increase in net interest income of
$284,000 and an increase in other income of $205,000.
Net Interest Income
Total interest income for the nine months ended September 30, 2000 amounted to
$8.0 million, an increase of $824,000, or 11.4%, from the comparable period in
1999, reflecting the effects of an increase in average interest-earning assets
outstanding, coupled with an increase in the yield year-to-year. Interest income
on loans totaled $7.5 million for the nine months ended September 30, 2000, an
increase of $1.0 million, or 15.9%, from the comparable 1999 period. The
increase resulted primarily from an increase in the volume of average interest
earning assets outstanding year-to-year.
<PAGE>
River Valley Bancorp
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the nine and three month periods ended September 30, 2000 and 1999
Comparison of Results of Operations for the Nine Month Periods Ended September
30, 2000 and 1999 (continued)
Net Interest Income (continued)
Interest expense on deposits increased by $308,000, or 9.1%, to a total of $3.7
million for the nine month period ended September 30, 2000, due primarily to a
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 $305,000 for the nine months ended September 30, 2000, an increase of
$232,000, from the comparable period in 1999. The increase resulted primarily
from a 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 $284,000, or 7.5%, for the nine months ended
September 30, 2000, as compared to the comparable period in 1999. 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. The interest rate
spread amounted to approximately 3.58% for the 2000 period, compared to 3.63% in
1999, while the net interest margin was approximately 3.90% in the 2000 period,
compared to 3.94% in 1999.
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 $132,000 provision for losses
on loans for the nine months ended September 30, 2000, compared to the $110,000
amount recorded in the 1999 period. The 2000 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 September 30, 2000, 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 increased by $205,000, or 33.3%, for the nine months ended
September 30, 2000, as compared to the same period in 1999, due primarily to an
increase of $130,000, or 25.1%, in service charges and a $21,000, or 37.5%,
increase in commissions. In addition, a gain of $42,000 was recorded during 2000
on the sale of office premises.
Other Expense
Other expense decreased by $310,000, or 9.8%, during the nine months ended
September 30, 2000, as compared to the same period in 1999. A one time pre-tax
charge for $184,000 occurred in the 1999 period. This charge related to the
severance benefits recorded following the resignation of the Bank's executive
vice-president. The remaining decrease in other expense resulted primarily from
cost containment efforts to control such expenses.
<PAGE>
River Valley Bancorp
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the nine and three month periods ended September 30, 2000 and 1999
Comparison of Results of Operations for the Nine Month Periods Ended September
30, 2000 and 1999 (continued)
Other Considerations
The Corporation has entered into a contract for major renovation and expansion
of the 430 Clifty Drive branch office for the purpose of establishing that
branch as the main office for the Corporation and the Bank. This will also allow
for the closing and sale of the 303 Clifty Drive branch office. Management
believes that this anticipated move will result in both a favorable decrease in
expenses and provide the Corporation with the opportunity for increased growth.
Income Taxes
The provision for income taxes totaled $707,000 for the nine months ended
September 30, 2000, an increase of $243,000, or 52.4%, as compared to the same
period in 1999. This increase resulted primarily from an increase in net income
before taxes of $777,000, or 68.8%. The effective tax rates amounted to 37.1%
and 41.1% for the nine months ended September 30, 2000 and 1999, respectively.
Comparison of Results of Operations for the Three Month Periods Ended September
30, 2000 and 1999
General
The Corporation's net income for the three months ended September 30, 2000,
totaled $412,000, an increase of $287,000, from the $125,000 of net income
reported in the comparable 1999 period. The increase in earnings in the 2000
period was primarily attributable to a increase in net interest income of
$147,000, an increase in other income of $90,000 and a decrease in other
expenses of $217,000, which were partially offset by an increase in the
provision for losses on loans of $65,000 and an increase in the provision for
income taxes of $102,000.
Net Interest Income
Total interest income for the three months ended September 30, 2000 amounted to
$2.9 million, an increase of $497,000, or 20.9%, from the comparable quarter in
1999, reflecting the effects of an increase in average interest-earning assets
outstanding, coupled with an increase in the yield year-to-year. Interest income
on loans totaled $2.7 million for the three months ended September 30, 2000, an
increase of $582,000, or 27.3%, from the comparable 1999 quarter.
<PAGE>
River Valley Bancorp
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the nine and three month periods ended September 30, 2000 and 1999
Comparison of Results of Operations for the Three Month Periods Ended September
30, 2000 and 1999 (continued)
Net Interest Income (continued)
Interest expense on deposits increased by $245,000, or 22.9%, to a total of $1.3
million for the quarter ended September 30, 2000, due primarily to an increase
in the average cost of deposits and an increase in the average balance of
deposits outstanding. Interest expense on borrowings totaled $148,000 for the
three months ended September 30, 2000, an increase of $105,000, from the
comparable quarter in 1999. The increase resulted primarily from a 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 $147,000, or 11.6%, for the three months ended
September 30, 2000, as compared to the comparable quarter in 1999.
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 $75,000 provision for losses on
loans for the three months ended September 30, 2000, compared to the $10,000
amount recorded in the 1999 period. While management believes that the allowance
for losses on loans is adequate at September 30, 2000, based upon the available
facts and circumstances, there can be no assurance that the loan loss allowance
will be adequate to cover losses on non-performing assets in the future.
Other Income
Other income increased by $90,000, or 43.9%, for the three months ended
September 30, 2000, as compared to the same period in 1999, due primarily to a
increase of $82,000 in service fees and charges.
Other Expense
Other expense decreased by $217,000, or 17.8%,during the three months ended
September 30, 2000, compared to the same period in 1999. This decrease was due
primarily to a one time charge for severance benefits, as previously discussed
and monitoring of all expenditures. Management's goal is to be cost effective in
all expenditures.
<PAGE>
River Valley Bancorp
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the nine and three month periods ended September 30, 2000 and 1999
Comparison of Results of Operations for the Three Month Periods Ended September
30, 2000 and 1999 (continued)
Income Taxes
The provision for income taxes totaled $224,000 for the three months ended
September 30, 2000, an increase of $102,000, as compared to the same period in
1999. This increase resulted primarily from an increase in net income before
taxes of $389,000. The effective tax rates amounted to 35.2% and 49.4% for the
three months ended September 30, 2000 and 1999, respectively.
<PAGE>
River Valley Bancorp
PART II
ITEM 1. Legal Proceedings
None.
ITEM 2. Changes in Securities and Use of Proceeds
None.
ITEM 3. Defaults Upon Senior Securities
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
Exhibit 27: Financial Data Schedule for the nine month period ended
September 30, 2000
Report on Form 8-K: The Corporation filed no reports on Form 8-K
during the quarter ended September 30, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 14, 2000 By: /s/Matthew P. Forrester
-------------------------- --------------------------------
Matthew P. Forrester
Chief Executive Officer
and President
Date: November 14, 2000 By: /s/Larry C. Fouse
-------------------------- --------------------------------
Larry C. Fouse
Chief Financial Officer
