U. S. 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 March 31, 2000.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______________ to_______________.
Commission file number 0-22471
Luxemburg Bancshares, Inc.
(Exact name of small business issuer as specified in its charter)
Wisconsin 39-1457904
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
630 Main Street, Luxemburg, Wisconsin 54217
(Address of principal executive offices)
(920) 845-2345
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year, if
changed since last report)
Check whether the issuer (1) 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 [ ]
State the number of shares outstanding of each issuer's
classes of common equity, as of April 21, 2000:
270,264 shares were outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
LUXEMBURG BANCSHARES, INC.
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Independent Accountant's Report 3
Consolidated Balance Sheets - March 31, 2000 and
December 31, 1999 4
Consolidated Statements of Income - Three Months
Ended March 31, 2000 and 1999 5
Consolidated Condensed Statements of Changes
in Stockholders' Equity - Three Months Ended
March 31, 2000 and 1999 6
Consolidated Statements of Cash Flow - Three Months
Ended March 31, 2000 and 1999 7
Notes to Consolidated Financial Statements 8 - 9
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 14
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 15
SIGNATURES 15
<PAGE>
PART I - FINANCIAL INFORMATION
Wipfli Ullrich
Bertelson LLP
Independent Accountant's Report
Board of Directors and Stockholders
Luxemburg Bancshares, Inc.
Luxemburg, Wisconsin
We have reviewed the accompanying unaudited consolidated
balance sheet of Luxemburg Bancshares, Inc. and Subsidiaries
as of March 31, 2000, and the related unaudited consolidated
statements of income, changes in stockholders' equity, and
cash flows for the three-month period then ended. These
financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying
consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
/s/ Wipfli Ullrich Bertelson LLP
Wipfli Ullrich Bertelson LLP
May 3, 2000
Green Bay, Wisconsin
<PAGE>
LUXEMBURG BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (UNAUDITED)
March 31, 2000 and December 31, 1999
ASSETS
2000 1999
Cash and due from banks $ 3,150,532 $ 4,275,838
Interest-bearing deposits 538,624 240,293
Federal funds sold 7,787,000 0
------------ ------------
Cash and cash equivalents 11,476,156 4,516,131
Investment securities available for sale-
Stated at fair value 17,712,343 18,276,824
Total loans 87,845,212 82,366,209
Allowance for credit losses (988,475) (895,952)
------------ ------------
Net loans 86,856,737 81,470,257
Premises and equipment 2,680,663 2,731,432
Other investments at cost 318,550 318,550
Other assets 2,627,634 2,735,318
------------ ------------
TOTAL ASSETS $121,672,083 $110,048,512
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
2000 1999
LIABILITIES:
Non-interest-bearing deposits $ 12,240,375 $ 12,198,310
Interest-bearing deposits 95,365,981 84,761,332
------------ ------------
Total deposits 107,606,356 96,959,642
Short-term borrowings 1,373,649 2,154,809
Borrowed funds 21,022 27,683
Other liabilities 810,452 947,691
------------ ------------
Total liabilities 110,592,639 99,308,665
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock- $1.00 par value:
Authorized - 2,400,000 shares,
Issued - 297,248 shares in 2000 and
295,000 shares in 1999 297,248 295,500
Capital surplus 4,350,450 4,281,977
Retained earnings 7,162,382 6,891,080
Accumulated other comprehensive deficit (386,477) (384,551)
Less - 26,984 shares of treasury
common stock, at cost (344,159) (344,159)
------------ ------------
Total stockholders' equity 11,079,444 10,739,847
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $121,672,083 $110,048,512
------------ ------------
See accompanying notes to consolidated financial statements.
<PAGE>
LUXEMBURG BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended March 31,
2000 1999
INTEREST INCOME:
Interest and fees on loans $ 1,810,520 $ 1,388,410
Interest on investment securities:
Taxable 164,813 203,863
Tax-Exempt 94,135 65,189
Other interest and dividend income 24,034 86,759
----------- -----------
Total interest income 2,093,502 1,744,221
----------- -----------
INTEREST EXPENSE:
Deposits 1,058,544 888,110
Short-term borrowings 28,833 1,543
Borrowed funds 604 1,975
----------- -----------
Total interest expense 1,087,981 891,628
----------- -----------
Net interest income 1,005,521 852,593
Provision for credit losses 39,000 30,000
----------- -----------
Net interest income after
provision for credit losses 966,521 822,593
----------- -----------
OTHER INCOME:
Service charges on deposit accounts 48,942 50,393
Mortgage underwriting fees -
Secondary market 26,677 12,354
Loan servicing fee income 11,002 29,422
Other operating income 190,498 164,024
----------- -----------
Total other income 277,119 256,193
----------- -----------
OPERATING EXPENSES:
Salaries and related benefits 500,969 395,165
Net occupancy expense 63,501 51,302
Equipment rentals, depreciation,
and maintenance 90,448 79,114
Data processing 41,107 32,637
Other operating expenses 189,075 147,953
----------- -----------
Total operating expenses 885,100 706,171
----------- -----------
Income before provision for
income taxes 358,540 372,615
Provision for income taxes 87,238 97,841
----------- -----------
Net income $ 271,302 $ 274,774
----------- -----------
Basic earnings per common share $1.01 $1.13
----------- -----------
See accompanying notes to consolidated financial statements.
<PAGE>
LUXEMBURG BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF
CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
Three Months Ended March 31, 2000 and 1999
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
Shares Equity Total Shares Equity Total
Balance - Beginning of period 268,516 $10,739,847 243,501 $ 9,456,433
------- ----------- ------- -----------
Issuance of common stock 1,748 $ 70,221
Comprehensive income:
Net Income $ 271,302 $ 274,774
Other comprehensive deficit
- Change in net unrealized
loss on securities
available for sale -1,926 -76,254
Total comprehensive income 269,376 198,520
------- ----------- ------- -----------
Balance - End of period 270,264 $11,079,444 243,501 $ 9,654,953
------- ----------- ------- -----------
<PAGE>
LUXEMBURG BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
Three Months Ended March 31, 2000 and 1999
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 271,302 $ 274,774
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 89,484 78,428
Accretion of discounts on securities ( 4,211) ( 5,659)
Amortization of premiums on securities 2,137 6,482
Provision for credit losses 39,000 30,000
Change in other operating assets 119,840 (123,000)
Change in other operating liabilities (129,665) 153,253
------------ ------------
Total adjustments 116,585 139,504
------------ ------------
Net cash provided by operating activities 387,887 414,278
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities
available for sale 563,832 1,902,860
Purchase of securities available for sale (4,760,652) (3,597,422)
Net (increase) decrease in loans (5,425,480) 89,751
Purchase of additional life insurance (12,156) (12,922)
Proceeds from sale of other real estate 31,652
Capital expenditures (38,715) (848,111)
------------ ------------
Net cash provided by (used in) investing
activities (4,912,519) (3,597,422)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in deposits 10,646,713 (667,490)
Net increase (decrease) in short-term
borrowings 781,160 17,787
Principal payments on borrowed funds (13,437) (14,329)
Director and Employee Stock Purchase Plans 70,221 0
------------ ------------
Net cash provided by (used in) financing
activities 11,484,657 (664,032)
------------ ------------
Net increase (decrease) in cash and cash
equivalents 6,960,025 (3,847,176)
Cash and cash equivalents at beginning 4,516,131 12,320,851
------------ ------------
Cash and cash equivalents at end $11,476,156 $ 8,473,675
------------ ------------
Supplemental information:
Cash paid during the period for:
Interest $ 1,008,638 $ 878,352
Income taxes $ 152,645 $ 16,491
See accompanying notes to consolidated financial statements
<PAGE>
LUXEMBURG BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The consolidated financial statements for interim periods are
unaudited; however, in the opinion of the management of
Luxemburg Bancshares, Inc. ("Company"), all adjustments
(consisting of only normal recurring adjustments) necessary
for a fair presentation have been included. Refer to the
Notes to Consolidated Financial Statements which appear in
the Company's Form 10-KSB for the Fiscal Year ended December
31, 1999 for the Company's accounting policies which are
pertinent to these financial statements.
NOTE 1: BASIS OF PRESENTATION
The consolidated financial statements of Company, a bank
holding company, include the accounts of Company and
Subsidiaries - Bank of Luxemburg, Luxemburg Investment
Corporation, and Area Development Corporation. All
significant intercompany balances and transactions have been
eliminated in consolidation. Goodwill acquired in a business
acquisition is being amortized on a straight-line basis over
five years.
The accompanying financial statements have been prepared in
accordance with the instructions for Form 10-QSB and,
therefore, do not include all information and footnotes
required by generally accepted accounting principles in
annual consolidated financial statements.
For purposes of reporting cash flows, the Company considers
cash on hand, interest-bearing and non-interest bearing
deposits in banks and federal funds sold as cash and cash
equivalents.
Earnings per common share are based upon the weighted average
number of common shares outstanding. The weighted average
number of shares outstanding was 270,033 in March 2000 and
243,501 in March 1999. The basic and diluted earnings per
share are the same for 2000 and 1999.
On March 17, 2000 the Board of Directors approved a two (2)
for one (1) stock for shareholders of record of April 2, 2000
and to be issued on May 15, 2000.
NOTE 2: FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Bank of Luxemburg's ("Bank's") financial statements do
not reflect various commitments and contingent liabilities
which arise in the normal course of business and which
involve elements of credit risk, interest rate risk, and
liquidity risk. These commitments and contingent liabilities
are commitments to extend credit and standby letters of
credit. A summary of the Bank's commitments and contingent
liabilities at each balance sheet date is as follows:
Notional Amount
March 31, 2000 December 31, 1999
Commitments to extend credit $ 7,412,000 $ 7,928,000
Credit card arrangements 1,451,000 1,451,000
Standby letters of credit 510,000 848,000
Commitments to extend credit and credit card arrangements are
agreements to lend to a customer as long as there is no
violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. A
portion of the commitments are expected to be drawn upon,
thus representing future cash requirements. The Bank
evaluates each customer's creditworthiness on a case-by-case
basis. The amount of collateral obtained upon extension of
credit is based on management's credit evaluation of the
counterparty. Collateral held varies but may include
accounts receivable; inventory; property, plant, and
equipment; real estate; and stocks and bonds. Management does
not anticipate any material losses as a result of these
commitments.
Standby letters of credit are conditional commitments issued
by the Bank to guarantee the performance of a customer to a
third party. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending
loan facilities to customers. The Bank holds collateral
supporting those commitments for which collateral is deemed
necessary. Because these instruments have fixed maturity
dates and because many of them expire without being drawn
upon, they do not generally present any significant liquidity
risk to the Bank. Management does not anticipate any material
losses as a result of these letters of credit.
<PAGE>
LUXEMBURG BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3: ACCOUNTING CHANGES
Future Accounting Changes - In June 1998, the Financial
Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting
for Derivative Instruments and Hedging Activities." This
statement establishes accounting and reporting standards for
derivative instruments and for hedging activities. This
statement requires an entity to recognize all derivatives as
either assets or liabilities in the balance sheet and measure
those instruments at fair value. The accounting for changes
in the fair value of a derivative depends on the intended use
of the derivative and the resulting designation. As amended
by SFAS No. 137, the statement is effective for fiscal years
beginning after June 15, 2000. Management, at this time,
cannot determine the effect adoption of this statement may
have on the consolidated financial statements of the Company
as the accounting for derivatives is dependent on the amount
and nature of derivatives in place at the time of adoption.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LUXEMBURG BANCSHARES, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA
Three Months Ended March 31,
2000 1999
Net Earnings $ 271,302 $ 274,774
Average Consolidated Balance Sheet Items:
Loans 83,104,368 61,314,210
Taxable Investment Securities 10,664,134 13,048,984
Fed Funds Sold 991,121 6,765,478
Municipal Loans & Investments 9,407,588 8,562,339
Other Earning Assets 605,715 1,245,899
----------- ------------
Total Earning Assets 104,772,926 90,936,910
Total Assets 112,069,631 97,431,547
Deposits 98,236,967 86,441,725
Shareholders' Equity 10,926,908 9,601,636
Key Ratios:
Average Equity to Average Total Assets 9.75% 9.85%
Return on Average Total Assets .97% 1.13%
Return on Average Equity 9.94% 11.45%
Net Interest Margin 3.85% 3.83%
NET INTEREST INCOME
Net interest income, the principle source of earnings, is the
amount by which interest generated by earning assets exceeds
the interest costs of liabilities obtained to fund them. As
shown below, net interest income has increased $152,928 or
17.94% to $1,005,521 for the three months ended March 31,
2000 from $852,593 for the three months ended March 31, 1999.
The increase in net interest income is due to bank growth. As
noted above, average assets for the three months ended March
31, 2000 were $112,069,631 compared to average assets for the
three months ended March 31, 2000 of $97,431,547.
Three Months Ended March 31,
2000 1999
Interest Income $ 2,093,502 $ 1,744,221
Interest Expense 1,087,981 891,628
----------- -----------
Net Interest Income $ 1,005,521 $ 852,593
----------- -----------
Net Interest Margin 3.85% 3.83%
RATE/VOLUME ANALYSIS
The impact of changes in volume and interest rates on net
interest income for the three months ended March 31, 2000 is
illustrated in the following table:
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999.
Increase (Decrease) in Net Interest Income
Net Change Due To Rate Due To Volume
Interest Income $ 349,281 $ (24,946) $ 374,227
Interest Expense 196,353 20,301 176,052
--------- ---------- ---------
Net Interest Income $ 152,928 $ (45,247) $ 198,175
--------- ---------- ---------
Interest rates on the Bank's earning assets and interest
bearing liabilities were generally lower for the three months
ended March 31, 2000 compared to the three months ended March
31, 1999. However, earning assets increased to $104,772,926
for the three months ended March 31, 2000 from $90,936,910
for the three months ended March 31, 1999. Interest bearing
liabilities increased $11,659,548 or 15.12% to $88,765,906
for the three months ended March 31, 2000 compared to
$77,106,358 for the three months ended March 31, 1999.
<PAGE>
OPERATING RESULTS
Net income for the three months ended March 31, 2000, was
$271,302 compared to $274,774 for the three months ended
March 31, 1999. The decrease of $3,472 reflects an increase
in operating expense of $85,597 for the Casco office, which
began operation in the second quarter of 1999. The increase
in net interest income of $152,928 for the three months ended
March 31, 2000, compared to the three months ended March 31,
1999 is discussed in "Net Interest Income" and "Rate/Volume
Analysis" elsewhere in this report. Loan fees, including
mortgage underwriting fees - Secondary market, increased
$14,323 to $26,677 for the three months ended March 31, 2000,
compared to $12,354 for the three months ended March 31,
1999. This increase is primarily due to the Company
originating $566,689 of Small Business Administration
guaranteed loans of the $1,706,689 sold to the secondary
market.
Total operating expenses increased a $178,929 or 25.3% from
$706,171 for the three months ended March 31, 1999 to
$885,100 for the three months ended March 31, 2000.
Salaries and related benefits increased 105,804 or 26.8% to
$500,969 for the three months ended March 31, 2000 compared
to $395,165 for the three months ended March 31, 1999.
Additional staffing in the Financial Resource Center plus
increases in insurance and training costs along with the
employment expenses at the Casco office account for the
increase. Net occupancy expense increased $12,199 to $63,501
for the three months ended March 31, 2000 compared to $51,302
for the three months ended March 31, 1999. Equipment
rentals, depreciation, and maintenance for the three months
ended March 31, 2000 increased $11,334 or 14.4% to $90,448
compared to $79,114 for the three months ended March 31,
1999. Finally, other operating expenses for the three months
ended March 31, 2000 increased $41,122 or 27.8% to $189,075
from $147,953 for the three months ended March 31, 1999
because of increases in accounting fees, telecommunication
expenses and the FDIC assessments.
Year 2000 Risks. The Company was exposed to future
uncertainty, potential future reduction in earnings, and
future losses, including litigation, due to business
interruption or errors, if its computer systems were not
modified to ensure that dates after December 31, 1999 were
not misrepresented by those systems. This eventuality was
commonly referred to as the Year 2000 problem. The Bank uses
computer-related technologies and software throughout its
business that may have been affected by the date change in
the year 2000. The Bank's directors, senior management and
staff were aware of these Year 2000 issues and appointed a
technology committee to study and direct the project to bring
all of the computer-related systems into Year 2000 compliance
during 1999. The technology committee reviewed both
Information Technology systems and non-Information Technology
Systems including the Bank's telephone systems, HVAC systems
and security equipment.
The Company did not experience any disruptions with any
of its systems or with the services provided by contracted
outside vendors. The Company did not receive any complaints
from customers, regulators or other individuals that may have
lead to potential litigation. The company did not experience
any disruptions with any of its systems or with service
provided contracted outside vendors with year 2000 being a
leap year.
Loan and deposit customers were identified as
having potential Year 2000 risks. No serious loan or
deposit related problems were experienced by the Company or
its bank subsidiary as a result of the Year 2000 issues.
The Bank identified approximately $50,000 of direct
investment during 1998 and 1999 for Year 2000 renovation and
testing. The Company expects that there will be only minor
expenses, if any, related to future Year 2000 issues.
<PAGE>
ALLOWANCE FOR LOAN LOSSES
The amount charged to the provision for loan losses by the
Bank is based on management's evaluation as to the amounts
required to maintain an allowance adequate to provide for
potential losses inherent in the loan portfolio. The level of
this allowance is dependent upon the total amount of past due
and non-performing loans, general economic conditions and
management's assessment of potential losses based upon
internal credit evaluations of the loan portfolio and
particular loans. The Bank management allocated the allowance
based on an assigned risk factor for each category of loans
and adjusting the allocation by potential losses of
individual loans. Loans are entirely to borrowers in
Northeast Wisconsin.
The Bank generally places loans on non-accrual status when
the loan is past due as to the payment of interest and/or
principal in excess of 90 days. The Bank also places loans on
a non-accrual status when it deems the collection of such
interest unlikely. Loans are returned to full accrual status
when the loan is brought current according to all terms of
the loan agreement, all past due principal and interest is
paid and the Bank deems its collateral position adequate to
warrant a return to accrual status.
At March 31, 2000 the Company had $118,000 in loans past due
90 days or more that were still accruing interest as compared
to $179,000 for March 31, 1999. The loans were adequately
secured to allow for the repayment of both the principal and
interest due. At March 31, 2000 and 1999 the Company did not
have any loans that meet the definition of "Troubled Debt
Restructuring". In addition, there were no loans considered
to be impaired. The Bank had $291,000 of nonaccrual loans at
March 31, 2000 and $316,000 of nonaccrual loans at March 31,
1999.
During the three months ended March 31, 2000, $39,000 was
charged to the provision for loan losses compared to $30,000
for the three months ended March 31, 1999. At March 31, 2000
the allowance was $988,000 or 1.12% of total loans. This
compares to an allowance of $794,000 or 1.23% of total loans
as of March 31, 1999. For the three months ended March 31,
2000 the Bank had net recoveries of $54,000 compared to net
charge-offs of $9,000 for the three months ended March 31,
1999.
The following table summarizes loan charge-offs and
recoveries by type of loan for the three months ended
March 31, 2000 and 1999:
Loan Type March 31, 2000 March 31, 1999
Charge-Off Recovery Charge-Off Recovery
Real Estate $ 0 $ 0 $ 0 $ 0
Commercial and Industrial 0 32,000 0 0
Agricultural 0 25,000 0 3,000
Consumer 10,000 7,000 13,000 1,000
------- ------- ------- -------
TOTALS $10,000 $64,000 $13,000 $ 4,000
------- ------- ------- -------
<PAGE>
The Bank has allocated its allowance for credit losses at the
end of each period presented as follows:
March 31, 2000 March 31, 1999
% of % of
loans to loans to
total total
Balance at End of Period Applicable to: Amount Loans Amount Loans
Commercial and agricultural $609,447 59% $456,738 59%
Real Estate-construction 72,748 4% 32,813 4%
Real Estate-mortgage 81,665 21% 65,650 21%
Consumer 156,121 16% 121,562 16%
-------- ---- -------- ----
Total Domestic 919,981 100% 676,763 100%
---- ----
Unallocated 68,494 117,213
-------- --------
TOTALS $988,475 100% $793,976 100%
-------- ---- -------- ----
LIQUIDITY AND INTEREST RATE SENSITIVITY
The Company must maintain an adequate liquidity position in
order to respond to the short-term demand for funds caused by
withdrawals from deposit accounts, extensions of credit and
for the payment of operating expenses. Maintaining this
position of adequate liquidity is accomplished through the
management of a combination of liquid assets; those which can
be converted into cash and access to additional sources of
funds. Primary liquid assets of the Company are cash and due
from banks, federal funds sold, investments held as
"available for sale" and maturing loans. Federal funds
purchased and loans from the Federal Home Loan Bank system
represent the Company's primary source of immediate liquidity
and were maintained at a level to meet immediate needs.
Federal Funds Sold averaged approximately $991,000 and
$6,756,000 for the three months ended March 31, 2000 and
1999, respectively. Maturities in the Company's loan and
investment portfolios are monitored regularly to avoid
matching short-term deposits with long-term loans and
investments. Other assets and liabilities are also monitored
to provide the proper balance between liquidity, safety, and
profitability. This monitoring process must be continuous
due to the constant flow of cash that is inherent in a
financial institution.
The Company actively manages its interest rate sensitive
assets and liabilities to reduce the impact of interest rate
fluctuations. In addition, the Bank monitors the interest
rates paid on Certificates of Deposit as advertised by its
competitors and strives to pay competitive interest rates to
retain and attract Certificates of Deposit. Should
competitive pressures dictate, the Bank may have to increase
rates paid to retain the Certificates of the Deposit that
mature in the next year and any increase in interest rates
paid on Certificates of Deposit may reduce future Company
earnings. The Bank also monitors the assets and liabilities
that reprice each month to determine the impact on future
earnings from anticipated repricings. At March 31, 2000 the
Company's rate sensitive liabilities exceed rate sensitive
assets due within one year by $15,408,000.
As part of managing liquidity, the Company monitors its loan
to deposit ratio on a daily basis. At March 31, 2000 the
ratio was 84.6% which is within the Company's acceptable
range.
The Company experienced an increase in cash and cash
equivalents, its primary source of liquidity, of $6,960,025
for the three months ended March 31, 2000. The primary source
of cash flow for the three months ended March 31, 2000 was
cash provided by financing activities of $11,484,657 which
consisted of an increase in deposits of $10,646,713 and an
increase in short term borrowing of $781,160. Cash outflow
for the three months ended March 31, 2000 was primarily an
increase in loans of $5,425,480. The Company's management
believes its liquidity sources are adequate to meet its
operating needs and does not know of any trends, events or
uncertainties that may result in a significant adverse effect
on the Company's operations or liquidity position.
The following table illustrates the projected maturities and
the repricing mechanisms of the major asset/liability
categories of the Company as of March 31, 2000, based on
certain assumptions. No prepayment rate assumptions have been
made for the loan portfolio. Maturities and repricing dates
for investments have been projected by applying the
assumptions set forth below to contractual maturities and
repricing dates.
<PAGE>
1 Year 1 - 5 5 - 10 After
or Less Years Years 10 Years
Interest Earning Assets:
Fed Funds Sold $ 8,326,000
Investment Securities $ 2,150,000 $ 7,400,000 $ 6,115,000 $ 2,635,000
Loans
Variable Rate $11,970,000
Real Estate-Construction $ 6,602,000 $ 672,000
Real Estate-Other $ 7,784,000 $21,107,000 $ 794,000 $ 1,937,000
Commercial and Industrial $ 6,741,000 13,883,000 $ 295,000
Agricultural $ 2,452,000 $ 3,445,000 $ 773,000
Consumer $ 1,487,000 $ 6,074,000 $ 168,000
Other $ 544,000 $ 330,000 $ 787,000 -0-
----------- ----------- ----------- -----------
Total Interest Earning Assets $48,056,000 $52,911,000 $ 8,159,000 $ 5,345,000
Interest Bearing Liabilities:
Interest Bearing Demand $ 4,865,000
Savings Deposits $ 5,973,000 $13,936,000
Money Market Accounts $ 1,006,000 $ 2,345,000
Certificates of Deposit $39,561,000 $11,349,000
Jumbo CD's $ 9,892,000 $ 880,000
IRA's $ 4,856,000 $ 703,000
Other $ 2,176,000 -0- -0- -0-
----------- ----------- ----------- -----------
Total Interest Bearing
Liabilities $63,464,000 $12,932,000 -0- $21,146,000
----------- ----------- ----------- -----------
Interest Sensitivity Gap
per Period $(15,408,000) $39,979,000 $ 8,159,000 $(15,801,000)
------------- ----------- ----------- -------------
Cumulative Interest
Sensitivity Gap $(15,408,000) $24,571,000 $32,730,000 $16,929,000
------------- ----------- ----------- -----------
Interest Sensitivity Gap
as a Percentage of Earning
Assets (13.5%) 34.9% 7.2% (13.8%)
Cumulative Sensitivity Gap
as a Percentage of Earning
Assets (13.5%) 21.4% 28.6% 14.8%
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended March 31, 2000, the
registrant did not file any reports on Form 8-K.
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 hereunto duly
authorized.
LUXEMBURG BANCSHARES, INC.
--------------------------
(Registrant)
/s/ John A. Slatky /s/ John H. Kaye
- ------------------------------------ -----------------------------
John A. Slatky, John H. Kaye, C. P. A.
President and Chief Executive Officer Treasurer
(Principal Accounting Officer)
Date: May 15, 2000 Date: May 15, 2000
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