<PAGE>
<PAGE>
UNITED STATES
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, 1997
[ ] 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: No. 0-22287
CUMBERLAND MOUNTAIN BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Tennessee 31-1499488
(State of Incorporation) (I.R.S. Employer
Identification Number)
1431 Cumberland Avenue, Middlesboro, Kentucky 40965
(Address of principal executive office)
(606) 248-4584
(Telephone number)
Check mark whether the issuer (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
As of October 31, 1997, there were 678,800 shares of common
stock outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [X]
<PAGE>
<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
FORM 10-QSB - September 30, 1997
INDEX
Page
Part I - Financial Information
Item 1. Financial Statements
Statement of Financial Condition
September 30, 1997 and June 30, 1997 2
Statements of Income
Three Months Ended September 30, 1997 and 1996 3
Statements of Stockholders' Equity
Three Months Ended September 30, 1997 4
Statements of Cash Flows
Three Months Ended September 30, 1997 and 1996 5-6
Notes to the Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-12
Part II - Other Information 13
-----------------
Signatures 14
<PAGE>
<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro, Kentucky
STATEMENTS OF FINANCIAL CONDITION
(Amounts in thousands)
September 30, 1997 and June 30, 1997
ASSETS
------
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
------------ -------
<S> <C> <C>
Cash and cash equivalents $ 1,078 $ 699
Investment securities, held-to-maturity 10 10
Investment securities available-for-sale, at
market value 4,187 4,174
Other investments, at market value 103 103
Mortgage-backed securities available-for-sale,
at market value 6,133 6,353
Loans, net of allowance for loan losses of
$433,000 at September 30, 1997 and
$306,000 at June 30, 1997 111,156 99,623
Accrued interest receivable 819 738
Real estate held for investment 301 -
Repossessed real estate 13 13
Federal Home Loan Bank (FHLB) stock, at cost 1,317 724
Premises and equipment, net 2,056 2,024
Prepaid expenses and other assets 1,665 194
-------- --------
TOTAL ASSETS $128,838 $114,655
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits $ 90,945 $ 91,596
Escrows 69 -
Advances from FHLB 26,000 13,000
Notes payable 735 715
Accrued interest payable 831 241
Other liabilities 1,421 589
-------- --------
Total liabilities 120,001 106,141
-------- --------
Common stock, $0.01 per value, 8,000,000 shares
authorized, 678,800 shares issued and
outstanding 7 7
Additional paid-in capital 5,542 5,542
Retained earnings 4,384 4,093
Unearned ESOP shares (986) (986)
Net unrealized loss on investment securities
available-for-sale, net of deferred tax (110) (142)
-------- --------
Total stockholders' equity 8,837 8,514
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $128,838 $114,655
======== ========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
Page 2<PAGE>
<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro , Kentucky
STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months
Ended September 30,
----------------------
1997 1996
------- ------
<S> <C> <C>
INTEREST INCOME
Investment securities $ 57 $ 57
Mortgage-backed securities 94 121
Mortgage loans 1,653 1,075
Commercial and consumer loans 619 253
------ -------
Total interest income 2,423 1,506
INTEREST EXPENSE
Deposits 1,154 863
FHLB advances 271 50
Other borrowed money 17 -
------ -------
1,442 913
------ -------
NET INTEREST INCOME 981 593
PROVISION FOR LOAN LOSSES 149 15
------ -------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 832 578
------ -------
NON-INTEREST INCOME
Loan fees and service charges 300 135
Gains (losses) on sales of investment
securities - -
Gains (losses) on sales of repossessed assets 20 -
------ -------
Total non-interest income 320 135
------ -------
NET INTEREST AND NON-INTEREST INCOME 1,152 713
------ -------
NON-INTEREST EXPENSE
Salaries and employee benefits 318 369
Occupancy and equipment expense 68 35
Marketing and other professional services 61 46
Other 244 567
------ -------
Total non-interest expense 691 1,017
------ -------
INCOME BEFORE INCOME TAX EXPENSE 461 (304)
INCOME TAX EXPENSE 170 (92)
------ -------
NET INCOME $ 291 $ (212)
====== =======
PER SHARE OF COMMON STOCK:
Earnings $0.429 $(0.416)
====== =======
Dividends $0.000 $ 0.000
====== =======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
Page 3
<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro, Kentucky
STATEMENTS OF STOCKHOLDERS' EQUITY
(Amounts in thousands)
<TABLE>
<CAPTION>
Unrealized
Loss on
Investment
Additional Securities Unearned
Common Paid-In Retained Available ESOP
Stock Capital Earnings for-Sale Shares Total
------- --------- -------- ----------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1997 $ 7 $5,542 $4,093 $(142) $(986) $8,514
Net income for the three month
period ended September 30, 1997 - - 291 - - 291
Common stock issued - - - - - -
Common stock exchanged - - - - - -
ESOP shares purchased - - - - - -
Decrease in unrealized loss on
investment securities available-
for-sale for the period ended
September 30, 1997, net of
deferred tax - - - 32 - 32
---- ------ ------ ----- ----- ------
Balance at September 30, 1997 $ 7 $5,542 $4,384 $(110) $(986) $8,837
==== ====== ====== ===== ===== ======
</TABLE>
The accompanying notes are an integral part of these financial
statements
Page 4
<PAGE>
<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro, Kentucky
STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Three Months Ended September 30,
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 291 $ (212)
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Depreciation 33 21
Amortization and accretion 4 3
FHLB stock dividend (17) (8)
Provision for loan losses 149 15
(Gains) losses on sales of investment securities - -
(Gains) losses on sales of other real estate (20) -
Changes in assets and liabilities:
Accrued interest receivable (81) (51)
Prepaid expenses and other assets (1,471) (297)
Accrued interest payable 590 415
Other liabilities 832 946
-------- -------
Net cash provided by (used in) operating
activities 310 832
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of FHLB stock (576) -
Purchases of investment securities available-
for-sale - -
Proceeds on maturities of investment securities - 386
Principal collected on mortgage-backed securities 246 182
Proceeds on sales of mortgage-backed securities
available-for-sale - -
Purchase of mortgage-backed securities available-
for-sale - -
Purchase of real estate held for investment (301) -
Net (increase) decrease in purchased loans 32 (129)
Net (increase) decrease in loans exclusive
of loans purchased (11,613) (9,327)
Purchases of premises and equipment (68) (143)
-------- -------
Net cash provided by (used in) investing
activities (12,280) (9,031)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits (651) 2,930
Net increase in advances from FHLB 13,000 5,000
-------- -------
Net cash provided by (used in)
financing activities 12,349 7,930
-------- -------
</TABLE>
The accompanying notes are an integral part of these financial
statements.
Page 5
<PAGE>
<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro, Kentucky
STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Three Months Ended September 30,
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 379 (269)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 699 874
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,078 $ 605
======= =======
SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest $ 255 $ 246
======= =======
Income taxes $ 139 $ -
======= =======
Loans transferred to other real estate during
the period $ - $ -
======= =======
Total increase (decrease) in unrealized gain
(loss) on securities available for sale $ (32) $ (18)
======= =======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
Page 6
<PAGE>
<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro, Kentucky
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1997
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
---------------------
The accompanying unaudited consolidated financial
statements were prepared in accordance with instructions for
Form 10-QSB and, therefore, do not include all information and
notes necessary for a complete presentation of financial
position, results of operations, changes in stockholders'
equity, and cash flows in conformity with generally accepted
accounting principles. However, all adjustments (consisting
only of normal recurring accruals) which, in the opinion of
management, are necessary for a fair presentation of the
unaudited consolidated financial statements have been included
in the results of operations for the three months ended
September 30, 1997 and 1996.
Operating results for the three month period ended
September 30, 1997 are not necessarily indicative of the results
that may be expected for the year ending June 30, 1998.
Prior to March 31, 1997, Cumberland Mountain Bancshares,
Inc. (the "Company") did not have any material assets or
liabilities and did not engage in any material business
operations. On March 31, 1997, the Company acquired all of the
outstanding stock of Middlesboro Federal Bank, Federal Savings
Bank (the "the Bank") pursuant to the Plan of Conversion of
Cumberland Mountain Bancshares, M.H.C., the Bank's former mutual
holding company, and the Agreement and Plan of Reorganization
between the Company and the Bank. In connection with the
Conversion and Reorganization, the Company sold 439,731 shares
of Common Stock in an initial public offering and issued 1.333
shares of Common Stock in exchange for each share of the Bank's
common stock then outstanding. The Company's financial
statements for the periods prior to March 31, 1997 consist of
the financial statements of the Bank.
NOTE 2 - ALLOWANCE FOR LOAN LOSSES
-------------------------
Activity in the allowance for loan losses is summarized as
follows (amounts in thousands):
September 30,
1997
------------
Balance, beginning of year $ 306
Provision for loan losses 149
Charge-offs, net of recoveries (22)
-------
Balance, September 30, 1997 $ 433
=======
Page 7
<PAGE>
<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro, Kentucky
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1997
(UNAUDITED)
NOTE 3 - NONACCRUAL LOANS
----------------
Nonaccrual loans are as follows (amounts in thousands):
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
------------ --------
<S> <C> <C>
Permanent Mortgage Loans, Secured by:
1-4 Dwelling Units $ 705 $ 601
5 or More Dwelling Units 148 -
Nonresidential Property (Except Land) 259 -
Land - -
Nonmortgage Loans and Leases, Open End:
Credit Cards and Related Plans - 11
------- -------
$ 1,112 $ 612
======= =======
</TABLE>
Page 8
<PAGE>
<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro, Kentucky
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION
Total assets of the Company have increased 12.37% from
$114,655,000 at June 30, 1997 to $128,838,000 at September 30,
1997. This has resulted largely from the increase in loans of
11.58% to $111,156,000 at September 30, 1997 from $99,623,000 at
June 30, 1997. Over the past few years, the size of the Savings
Bank's loan portfolio has grown as a result of increased loan
demand in the Savings Bank's primary market area. Management
has attempted to grow the loan portfolio while at the same time
limiting the credit risk and improving the rate sensitivity of
the Savings Bank's interest-earning assets. While the Savings
Bank's primary emphasis continues to be the origination of one
to four family adjustable rate mortgage loans secured by
properties in its primary market area, the Savings Bank has also
invested excess funds in investment securities and
mortgage-backed securities with adjustable rates or terms to
maturity of seven years or less.
The Company's asset growth during the three months ended
September 30, 1997 was financed almost entirely by an increase
in advances from the Federal Home Loan Bank ("FHLB"). FHLB
advances rose by $13,000,000 from $13,000,000 at June 30, 1997
to $26,000,000 at September 30, 1997. Subsequent to September
30, 1997, the Savings Bank entered into an agreement to purchase
the Harlan, Kentucky branch of National City Bank of Kentucky.
Pursuant to this agreement, the Savings Bank expects to assume
approximately $20.0 million in deposits. The Savings Bank
anticipates that such deposit purchase will enable it to reduce
its FHLB borrowings. Total stockholders' equity rose by
$323,000, or 3.80%, principally due to net income earned during
the quarter.
RESULTS OF OPERATIONS
Net Income. The Company realized net income of $291,000
for the three-month period ended September 30, 1997, an increase
of $503,000 as compared to the three-month period ended
September 30, 1996. This increase was the result of an improved
net interest margin and higher non-interest income resulting
primarily from loan fee income from the continued high loan
demand the Savings Bank has been experiencing. During the
three-month period ended September 30, 1996, the Bank recognized
an expense related to a special assessment of $388,300 on
SAIF-assessable deposits to capitalize the Savings Association
Insurance Fund mandated by the Deposit Insurance Funds Act of
1996. In addition, the Bank expensed $152,000 to record the
funding of a retirement plan for the directors of the Savings
Bank during the quarter ended September 30, 1996. Excluding the
one-time expenses for the SAIF assessment and directors
retirement plan, net income for the three-month period ended
September 30, 1996, would have been $144,000. The Savings Bank,
therefore, realized an increase of $147,000, or 102.09%, in net
income for the three-month period ended September 30, 1997
compared to adjusted net income for the three-month period ended
September 30, 1996.
Interest Income. Total interest income for the three-month
period ended September 30, 1997 amounted to $2,423,000, an
increase of 60.89% from the Savings Bank's total interest income
of $1,506,000 for the three-month period ended September 30,
1996. During the three-month period ended September 30, 1997 as
compared to the three-month period ended September 30, 1996, the
Savings Bank's interest income on its loan portfolio increased
71.09% from $1,328,000 to $2,272,000; its interest income from
its mortgage-backed securities portfolio decreased 22.32% from
$121,000 to $94,000; and the Savings Bank's interest income from
its investment securities portfolio remained the same at
$57,000.
The Savings Bank's changes in interest income for the
periods discussed above were due to several factors. The
Savings Bank has been decreasing its investment securities and
mortgage-backed securities, thereby reducing the Savings Bank's
interest income from those investments. Further, the Savings
Bank's average yield on its mortgage loan portfolio has remained
relatively stable. The Savings Bank is increasing their overall
interest income by originating additional mortgage loans and
consumer loans while also decreasing their investment in
investment securities and mortgage-backed securities.
Page 9
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<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro, Kentucky
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS (CONTINUED)
Interest Expense. The Savings Bank's interest expense is
the interest paid on its deposits and borrowings. As the
Savings Bank has been attracting more deposit funds, interest
expense has been increased. The high demand for mortgage and
consumer lending has also caused the Savings Bank to secure
advances from the Federal Home Loan Bank to fund these loans.
Such expense increased from $913,000 for the three-month period
ended September 30, 1996, to $1,442,000 for the three-month
period ended September 30, 1997.
Net Interest Income. During the quarter ended September
30, 1997, net interest income increased 65.43% to $981,000 from
$593,000 for the quarter ended September 30, 1996. This increase
was due primarily to the continued high loan demand experienced
by the Savings Bank which has resulted in overall increase in
the loan portfolio.
Provision for Loan Losses. Provision for loan losses are
charged to earnings to bring the total allowance to a level
considered adequate by management to provide for loan losses
based on the prior loss experience, volume and type of lending
conducted by Middlesboro Federal, industry standards and past
due loans in the Savings Bank's portfolio. Management also
considers general economic conditions and other factors related
to the collectibility of the Savings Bank's portfolio.
For the three-month period ended September 30, 1997, the
Savings Bank provided $149,000 for loan losses compared to
$15,000 during the quarter ended September 30, 1996. The
increase in provision for loan losses for these periods
represented management's effort to maintain an adequate reserve
against losses given the rapid growth of the overall loan
portfolio. At September 30, 1997, the Savings Bank's allowance
for loan losses represented 30.76% of total non-performing loans
and .39% of quarter-end loans.
Non-Interest Income. Non-interest income for the
three-month period ended September 30, 1997 consisted primarily
of loan fees and service charges. The Savings Bank's loan fees
and service charges fluctuate as loan demand in the market area
changes. The Savings Bank's loan fees and service charges for
the three-month period ended September 30, 1997 were $300,000,
an increase of 122.23% from such fees and charges of $135,000
for the three-month period ended September 30, 1996. Such fees
primarily reflect the demand for loans in the Savings Bank's
market area.
Non-Interest Expense. For the three-month period ended
September 30, 1997, as compared to the three-month period ended
September 30, 1996, total non-interest expense decreased
$326,000 from $1,017,000 to $691,000 or 32.06%.
Total salaries and employee benefits were $318,000 for the
three-month period ended September 30, 1997, down $51,000 over
the three-month period ended March 31, 1996 level of $369,000.
The decrease in salaries and employee benefits expense for the
three-month period ended September 30, 1997, as compared to the
three-month period ended September 30, 1996, primarily reflects
a one time charge of $152,000 to record the funding of a
retirement plan for the directors of the Savings Bank during the
three-month period ended September 30, 1996.
Page 10
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<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro, Kentucky
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS (CONTINUED)
Occupancy and equipment expense was $68,000 for the
three-month period ended September 30, 1997, up $33,000 from the
three-month period ended September 30, 1996. This represented a
94.29% increase. The increases were primarily due to increased
depreciation, repairs and maintenance costs associated with the
expansion of the existing main office building and the opening
of a new branch office.
Other expenses of $244,000 were down $323,000, or 56.97%,
over the three-month period ended September 30, 1996 amount of
$567,000. This decrease was primarily attributable to the one
time special assessment to capitalize the Savings Association
Insurance Fund of $388,300 expensed in the period ended
September 30, 1996.
Income Taxes. Income tax expense for the three-month
period ended September 30, 1997 and 1996 was $170,000 and
($92,000), respectively. The changes in income tax expense are
a result of changes in net taxable income during the periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company currently has no business other than that of
the Savings Bank and does not currently have any material
funding commitments. The Company's principal sources of
liquidity are cash on hand, payments received on its loan to the
Company's Employee Stock Ownership Plan and dividends received
from the Savings Bank. The Savings Bank is subject to various
regulatory restrictions on the payment of dividends.
The Savings Bank is required by OTS regulations to maintain
minimum levels of specified liquid assets which are currently
equal to 5% of deposits and short-term borrowings. Middlesboro
Federal's liquidity ratio for the month ended September 30, 1997
was 5.60% and its liquidity ratio was 6.95% at September 30,
1996.
The Savings Bank's principal sources of funds for
investments and operations are net income, deposits from its
primary market area, principal and interest payments on loans
and mortgage-backed securities and proceeds from maturing
investment securities. Its principal funding commitments are
for the origination or purchase of loans and the payment of
maturing deposits. Deposits are considered a primary source of
funds supporting the Savings Bank's lending and investment
activities. Deposits were $90,945,000 and $91,596,000 at
September 30, 1997 and June 30, 1997, respectively.
The Savings Bank's most liquid assets are cash and cash
equivalents, which are cash on hand, amounts due from financial
institutions, federal funds sold, certificates of deposit with
other financial institutions that have an original maturity of
three months or less and money market mutual funds. The levels
of such assets are dependent on the Savings Bank's operating,
financing and investment activities at any given time. The
Savings Bank's cash and cash equivalents totaled $1,078,000 at
September 30, 1997 and $699,000 at June 30, 1997. The
variations in levels of cash and cash equivalents are influenced
by deposit flows and anticipated future deposit flows.
At September 30, 1997, Middlesboro Federal had $918,000 in
commitments to originate loans. At September 30, 1997, the
Savings Bank had $54,455,000 in certificates of deposit which
were scheduled to mature in one year or less. It is anticipated
that the majority of these certificates will be renewed in the
normal course of operations.
Page 11
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<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro, Kentucky
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Savings Bank opened a new branch office in late
February in a local grocery store in the nearby town of
Pineville. Capital expenditures for this new branch office did
not materially increase the non-earning assets of the Savings
Bank. Management expects to raise additional funds through
deposit products to help fund the loan demand the Savings Bank
is currently experiencing due to the recent acquisition of the
only Savings Bank located in this community.
The Savings Bank is not aware of any trends or
uncertainties that will have or are reasonably expected to have
a material effect on the Savings Bank's liquidity or capital
resources. The Savings Bank has no current plans for material
capital improvements or other capital expenditures that would
require more funds than are currently on hand.
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and related data presented herein
have been prepared in accordance with generally accepted
accounting principles which require the measurement of financial
position and operating results in terms of historical dollars,
without considering changes in the relative purchasing power of
money over time due to inflation.
Unlike most companies, the assets and liabilities of a
financial institution are primarily monetary in nature. As a
result, interest rates have a more significant impact on a
financial institution's performance than the effects of general
levels of inflation. Interest rates do not necessarily move in
the same direction or in the same magnitude as the price of
goods and services, since such prices are affected by inflation.
In the current interest rate environment, liquidity and the
maturity structure of the Savings Bank's assets and liabilities
are critical to the maintenance of acceptable performance
levels.
NEW ACCOUNTING PRONOUNCEMENTS
Disclosures About Fair Value of Financial Instruments. In
December 1991, the FASB issued Statement of Financial Accounting
Standards No. 107 (SFAS No. 107) "Disclosure About Fair Value of
Financial Instruments." SFAS No. 107 requires all entities to
disclose the fair value of financial instruments (both assets
and liabilities recognized and not recognized in the financial
statements) for which it is practicable to estimate fair value,
except those financial instruments specifically excluded. The
disclosure shall be either in the body of the financial
statements or in the accompanying notes and shall also include
the methods and significant assumptions used to estimate the
fair value of financial instruments. Additional information is
required to be disclosed if it is not practicable for an entity
to estimate the fair value of a financial instrument or a class
of financial instruments as well as the reasons why it is not
practicable to estimate fair value. SFAS No. 107 is effective
for entities with less than $150 million in total assets in the
current statement of financial condition for financial
statements issued for the fiscal year beginning July 1, 1995.
Accounting By Creditors For Impairment of a Loan. During
May 1993, the FASB issued SFAS No. 114 "Accounting by Creditors
for Impairment of a Loan" that requires impaired loans be
measured based upon the present value of expected future cash
flows discounted at the loan's effective interest rate or at the
loan's market price or fair value of collateral, if the loan is
collateral dependent. Adoption of SFAS No. 114, as amended by
SFAS No. 118, occurred on June 30, 1996, and did not have a
material impact on the financial statements.
Page 12
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<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro, Kentucky
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
---------------------------------------------------
On October 15, 1997, the Company held its Annual Meeting of
Stockholders at which the following matters were voted on:
Proposal I -- Election of Directors
NOMINEE FOR WITHHELD
------- --- --------
J. Roy Shoffner 574,964 0
Robert R. Long 574,964 0
There were no abstentions or broker non-votes.
The terms of office of Directors James J. Shoffner, Reecie
Stagnolia, Jr. and Raymond C. Walker continued after the annual
meeting.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit 27 - Financial Data Schedule (EDGAR only)
(b) Reports on Form 8-K. During the quarter ended
September 30, 1997, the registrant did not file any reports on
Form 8-K.
Page 13
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<PAGE>
CUMBERLAND MOUNTAIN BANCSHARES, INC.
Middlesboro, Kentucky
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.
Cumberland Mountain Bancshares, Inc.
By: /s/ James J. Shoffner
----------------------------
James J. Shoffner
President
Page 14
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 1,078
<INT-BEARING-DEPOSITS> 20
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 10,320
<INVESTMENTS-CARRYING> 10
<INVESTMENTS-MARKET> 10
<LOANS> 111,589
<ALLOWANCE> 433
<TOTAL-ASSETS> 128,838
<DEPOSITS> 90,945
<SHORT-TERM> 23,000
<LIABILITIES-OTHER> 2,321
<LONG-TERM> 3,735
<COMMON> 7
0
0
<OTHER-SE> 8,830
<TOTAL-LIABILITIES-AND-EQUITY> 128,838
<INTEREST-LOAN> 2,272
<INTEREST-INVEST> 151
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,423
<INTEREST-DEPOSIT> 1,154
<INTEREST-EXPENSE> 1,442
<INTEREST-INCOME-NET> 981
<LOAN-LOSSES> 149
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 691
<INCOME-PRETAX> 461
<INCOME-PRE-EXTRAORDINARY> 461
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 291
<EPS-PRIMARY> 0.429
<EPS-DILUTED> 0.429
<YIELD-ACTUAL> 3.16
<LOANS-NON> 1,112
<LOANS-PAST> 296
<LOANS-TROUBLED> 13
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 306
<CHARGE-OFFS> 42
<RECOVERIES> 20
<ALLOWANCE-CLOSE> 433
<ALLOWANCE-DOMESTIC> 433
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
