SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
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: 333-35799
UNION COMMUNITY BANCORP
(Exact name of registrant specified in its charter)
Indiana 35-2025237
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
221 East Main Street
Crawfordsville, Indiana 47933
(Address of principal executive offices,
including Zip Code)
(765) 362-2400
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares of the Registrant's common stock, without par value,
outstanding as of March 31,1999 was 2,779,663.
<PAGE>
Union Community Bancorp
Form 10-Q
Index
Page No.
FORWARD LOOKING STATEMENT
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance
Sheet as of March 31, 1999 and December 31, 1998
(Unaudited) 4
Consolidated Condensed Statement of Income for
the three months ended March 31, 1999 and 1998
(Unaudited) 5
Consolidated Condensed Statement of Shareholders'
Equity for the three months ended March 31, 1999
(Unaudited) 6
Consolidated Condensed Statement of
Cash Flows for the three
months ended March 31, 1999 and 1998
(Unaudited) 7
Notes to Unaudited Consolidated Condensed
Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
<PAGE>
FORWARD LOOKING STATEMENT
This Quarterly Report on Form 10-Q ("Form 10-Q") contains statements which
constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this Form 10-Q and include statements regarding the intent, belief,
outlook, estimate or expectations of the Company (as defined in the notes to the
consolidated condensed financial statements), its directors or its officers
primarily with respect to future events and the future financial performance of
the Company. Readers of this Form 10-Q are cautioned that any such forward
looking statements are not guarantees of future events or performance and
involve risks and uncertainties, and that actual results may differ materially
from those in the forward looking statements as a result of various factors. The
accompanying information contained in this Form 10-Q identifies important
factors that could cause such differences. These factors include changes in
interest rates; loss of deposits and loan demand to other financial
institutions; substantial changes in financial markets; changes in real estate
values and the real estate market; or regulatory changes.
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
UNION COMMUNITY BANCORP AND SUBSIDIARY
Consolidated Condensed Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------------------ -------------------------
<S> <C> <C>
Assets
Cash $ 91,504 $ 32,153
Interest-bearing demand deposits 3,059,277 6,158,927
------------------------ -------------------------
Cash and cash equivalents 3,150,781 6,191,080
Investment securities
Available for sale 779,211
Held to maturity 8,285,939 8,026,162
------------------------ -------------------------
Total investment securities 9,065,150 8,026,162
Loans, net of allowance for loan losses of $377,258 and $362,258 96,436,381 90,900,269
Premises and equipment 367,242 355,194
Federal Home Loan Bank stock 744,500 744,500
Investment in limited partnership 1,030,109 1,055,109
Interest receivable 737,676 714,691
Other assets 225,312 174,687
------------------------ -------------------------
Total assets $ 111,757,151 $ 108,161,692
======================== =========================
Liabilities
Deposits
Noninterest-bearing $ 1,276,392 $ 656,796
Interest-bearing 66,184,757 64,188,836
------------------------ -------------------------
Total deposits 67,461,149 64,845,632
Federal Home Loan Bank advances 2,658,526 772,226
Note payable 837,442 1,020,642
Interest payable 90,354 109,337
Dividends payable 273,692 270,567
Other liabilities 964,859 612,427
------------------------ -------------------------
Total liabilities 72,286,022 67,630,831
------------------------ -------------------------
Commitments and Contingent Liabilities
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Shareholders' Equity
Preferred stock, no-par value
Authorized and unissued - 2,000,000 shares
Common stock, no-par value
Authorized - 5,000,000 shares
Issued and outstanding - 2,779,663 and 2,889,663 shares 27,124,905 28,193,644
Retained earnings 15,633,229 15,708,073
Accumulated other comprehensive income 412
Unearned employee stock ownership plan ("ESOP") shares (1,074,163) (1,730,736)
Unearned recognition and retention plan ("RRP") shares (1,583,254) (1,640,120)
------------------------ -------------------------
Total shareholders' equity 39,471,129 40,530,861
------------------------ -------------------------
Total liabilities and shareholders' equity $ 111,757,151 $ 108,161,692
======================== =========================
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
UNION COMMUNITY BANCORP AND SUBSIDIARY
Consolidated Condensed Statement of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------- -------------------
1999 1998
------------------- -------------------
<S> <C> <C>
Interest and Dividend Income
Loans $ 1,816,349 $ 1,631,366
Investment securities 141,532 106,840
Dividends on Federal Home Loan Bank stock 14,686 13,960
Deposits with financial institutions 49,045 261,553
------------------- -------------------
Total interest and dividend income 2,021,612 2,013,719
------------------- -------------------
Interest Expense
Deposits 859,225 804,523
Federal Home Loan Bank advances 11,414 16,764
------------------- -------------------
Total interest expense 870,639 821,287
------------------- -------------------
Net Interest Income 1,150,973 1,192,432
Provision for loan losses 15,000
------------------- -------------------
Net Interest Income After Provision for Loan Losses 1,135,973 1,192,432
------------------- -------------------
Other Income (Losses)
Equity in losses of limited partnerships (25,000) (25,000)
Other income 13,779 14,516
------------------- -------------------
Total other losses (11,221) (10,484)
------------------- -------------------
Other Expenses
Salaries and employee benefits 266,869 218,184
Net occupancy expenses 7,167 4,901
Equipment expenses 7,883 7,462
Deposit insurance expense 11,221 9,711
Legal and professional fees 34,549 19,890
Other expenses 131,202 79,494
------------------- -------------------
Total other expenses 458,891 339,642
------------------- -------------------
Income Before Income Tax 665,861 842,306
Income tax expense 230,736 305,382
------------------- -------------------
Net Income $ 435,125 $ 536,924
=================== ===================
Basic Earnings per Share $ .17 $ .19
=================== ===================
Diluted Earnings per Share $ .17 $ .19
=================== ===================
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
UNION COMMUNITY BANCORP AND SUBSIDIARY
Consolidated Condensed Statement of Shareholders' Equity
For the Three Months Ended March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Common Stock Other Unearned
-----------------------
Shares Comprehensive Retained Comprehensive ESOP Unearned
Outstanding Amount Income Earnings Income Shares Compensation Total
-------------- --------- ------------- ----------- --------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1999 2,889,663 $28,193,644 15,708,073 (1,730,736) (1,640,120) $40,530,861
Comprehensive income
Net income for the $ 435,125 435,125 435,125
period
Other comprehensive
income, net of tax
Unrealized gains on
securities 412 $ 412 412
=============
Comprehensive income $ 435,537
=============
Cash dividends
(.105 per share) (273,692) (273,692)
Purchase of common stock (110,000) (1,073,416) (236,277) (1,309,693)
Amortization of unearned
compensation expense 56,866 56,866
ESOP shares earned 4,677 4,677 31,250
26,573
----------- ----------- ----------- --------------- ----------- ------------ -----------
Balances, March 31, 1999 2,779,663 $27,124,905 $15,633,229 $ 412 $(1,704,163)$(1,583,254) $39,471,129
=========== =========== =========== =============== =========== ============ ============
</TABLE>
<PAGE>
UNION COMMUNITY BANCORP AND SUBSIDIARY
Consolidated Condensed Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------- ---------------
1999 1998
---------------- ---------------
Operating Activities
<S> <C> <C>
Net income $ 435,125 $ 536,924
Adjustments to reconcile net income to net
cash provided (used) by operating activities
Provision for loan losses 15,000
Depreciation and amortization 7,798 7,170
Investment securities accretion, net (3,405) (3,524)
Equity in losses of limited partnerships 25,000 25,000
Amortization of unearned compensation expense 56,866
ESOP shares earned 31,250 40,155
Net change in:
Interest receivable (22,985) 86,454
Interest payable (18,983) (35,614)
Other assets 47,301 (5,811)
Other liabilities 231,737 202,136
---------------- ---------------
Net cash provided by operating activities 804,704 852,890
---------------- ---------------
Investing Activities
Investment securities
Purchase of securities available for sale (778,529)
Purchase of securities held to maturity (815,000) (3,394,375)
Proceeds from maturities of securities held
to maturity and paydowns of
mortgage- backed securities 558,628 1,138,336
Net changes in loans (5,648,458) (4,472,333)
Purchases of property and equipment (19,846) (1,946)
Other investing activities (850)
---------------- ---------------
Net cash used by investing activities (6,704,055) (6,730,318)
---------------- ---------------
Financing Activities
Net change in
Interest-bearing demand and savings deposits 3,134,450 (648,366)
Certificates of deposit (518,933) 280,662
Stock subscription escrow accounts (22,687,104)
Proceeds from borrowings 2,000,000
Repayment of borrowings (296,900) (1,780,225)
Cash dividends (270,567)
Repurchase of common stock (1,309,693)
Net change in advances by borrowers for taxes and insurance 120,695 130,565
---------------- ---------------
Net cash provided (used) by financing activities 2,859,052 (24,704,468)
---------------- ---------------
Net Change in Cash and Cash Equivalents (3,040,299) (30,581,896)
Cash and Cash Equivalents, Beginning of Period 6,191,080 44,780,827
---------------- ---------------
Cash and Cash Equivalents, End of Period $ 3,150,781 $
14,198,931
================ ===============
Additional Cash Flows Information
Interest paid $889,622 $861,429
Income tax paid 38,610 25,400
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
UNION COMMUNITY BANCORP AND SUBSIDIARY
Notes to Unaudited Consolidated Condensed Financial Statements
Note 1: Basis of Presentation
The consolidated financial statements include the accounts of Union Community
Bancorp (the "Company") and its wholly owned subsidiary, Union Federal Savings
and Loan Association, a federally chartered savings and loan association ("Union
Federal"). A summary of significant accounting policies is set forth in Note 1
of Notes to Financial Statements included in the December 31, 1998 Annual Report
to Shareholders. All significant intercompany accounts and transactions have
been eliminated in consolidation.
The interim consolidated financial statements have been prepared in accordance
with instructions to Form 10-Q, and therefore do not include all information and
footnotes necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles.
The interim consolidated financial statements at March 31, 1999, and for the
three months ended March 31, 1999 and 1998, have not been audited by independent
accountants, but reflect, in the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows for such periods.
Note 2: Earnings Per Share
Earnings per share have been computed based upon the weighted average common
shares outstanding. Unearned Employee Stock Ownership Plan shares have been
excluded from the computation of average common shares outstanding.
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1999 March 31, 1998
-------------- --------
Weighted Weighted
Average Per Share Average Per Share
Income Shares Amount Income Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share
Income available to common
shareholders $ 435,125 2,595,026 $ .17 $ 536,924 2,859,116 $ .19
=========== =============
Effect of dilutive RRP awards
and stock options
-------------- --------------- ------------- -------------
Diluted earnings per share
Income available to common
shareholders and assumed
conversions $ 435,125 2,595,026 $ .17 $ 536,924 2,859,116 $ .19
============== =============== =========== ============= ============= =============
</TABLE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
Union Community Bancorp, an Indiana corporation (the "Company"), was organized
in September, 1997. On December 29, 1997, it acquired the common stock of Union
Federal Savings and Loan Association ("Union Federal") upon the conversion of
Union Federal from a federal mutual savings and loan association to a federal
stock savings and loan association.
Union Federal was organized as a state-chartered savings and loan association in
1913. Since then, Union Federal has conducted its business from its full-service
office located in Crawfordsville, Indiana. Union Federal's principal business
consists of attracting deposits from the general public and originating
fixed-rate and adjustable-rate loans secured primarily by first mortgage liens
on one- to four-family residential real estate. Union Federal's deposit accounts
are insured up to applicable limits by the Savings Association Insurance Fund
("SAIF") of the Federal Deposit Insurance Corporation ("FDIC"). Union Federal
offers a number of financial services, including: (i) residential real estate
loans; (ii) multi-family loans; (iii) commercial real estate loans; (iv)
construction loans; (v) home improvement loans; (vi) money market demand
accounts ("MMDAs"); (vii) passbook savings accounts; and (viii) certificates of
deposit.
Union Federal currently owns one subsidiary, UFS Service Corp. ("UFS"), whose
sole asset is its investment in Pedcor Investments 1993-XVI, L.P. ("Pedcor"),
which is an Indiana limited partnership that was established to organize, build,
own, operate and lease a 48-unit apartment complex in Crawfordsville, Indiana
known as Shady Knoll II Apartments (the "Project"). Union Federal owns the
limited partner interest in Pedcor. The general partner is Pedcor Investments
LLC. The Project, operated as a multi-family, low- and moderate-income housing
project, is completed and is performing as planned. Because UFS engages
exclusively in activities that are permissible for a national bank, OTS
regulations permit Union Federal to include its investment in UFS in its
calculation of regulatory capital.
Union Federal's results of operations depend primarily upon the level of net
interest income, which is the difference between the interest income earned on
interest-earning assets, such as loans and investments, and costs incurred with
respect to interest-bearing liabilities, primarily deposits and borrowings.
Results of operations also depend upon the level of Union Federal's non-interest
income, including fee income and service charges, and the level of its
non-interest expenses, including general and administrative expenses.
Financial Condition
Total assets increased $3.6 million, or 3.3%, to $111.8 million at March 31,
1999, from $108.2 million at December 31, 1998. The increase was primarily due
to loan growth of $5.5 million offset by a decrease in cash and cash equivalents
of $3.0 million. Net loans increased by 6.1% to $96.4 million due to an increase
in customer demand and an increased focus by the Company in the areas of
commercial and consumer lending. Investment securities available for sale and
held to maturity also increased by $1.0 million, or 12.9% during the first
quarter of 1999.
Deposits increased by $2.6 million to $67.5 million during the first quarter of
1999. Demand and savings deposits increased $3.1 million, or 19.5%, from
December 31, 1998 to March 31, 1999 primarily due to an increase in money market
savings of $2.5 million. Certificates of deposit decreased $519,000, or 1.1%,
during this period.
Borrowed funds increase by $1.7 million, or 95.0%, from December 31, 1998 to
March 31, 1999. The increase in total borrowed funds resulted from an increase
in FHLB advances of $1.9 million and a decrease in the note payable to a limited
partnership of $184,000. The increases in borrowings were primarily used to fund
loan growth.
Stockholder's equity decreased $1.1 million to $39.5 million at March 31, 1999.
The decrease was primarily due to stock repurchases of $1.3 million and cash
dividends of $274,000. These decreases were offset by net income for three
months ended March 31, 1999 of $435,000, Employee Stock Ownership Plan shares
earned of $31,000 and unearned compensation amortization of $57,000.
Comparison of Operating Results for the Three Months Ended March 31, 1999 and
1998
Net income decreased $102,000, or 19.0%, from $537,000 for the three months
ended March 31, 1998 to $435,000 for the three months ended March 31, 1999. The
decreases were primarily attributable to a decline in the Company's net interest
income and increases in non-interest expenses. The return on average assets was
1.60% and 1.99 % for the three months ended March 31, 1999 and 1998,
respectively.
Interest income remained relatively constant at approximately $2.0 million for
the three months ended March 31, 1999 and 1998. Interest expense increased
$50,000, or 6.1%, from $821,000 for the three months ended March 31, 1998 to
$871,000 for the same period in 1999. As a result, net interest income for the
three months ended March 31, 1999 amounted to $1,151,000, a 3.4% decrease from
the first quarter of 1998. The Company's net interest margin decreased from 4.5%
for the first quarter of 1998 to 4.3% for the comparable period in 1999.
The provision for loan losses made for the three months ended March 31, 1999 was
$15,000 as compared to no provision for the same period in 1998. The 1999
provision and the allowance for loan losses were considered adequate, based on
size, condition and components of the loan portfolio. While management estimates
loan losses using the best available information, no assurance can be given that
future addition to the allowance will not be necessary based on changes in
economic and real estate market conditions, further information obtained
regarding problem loans, identification of additional problem loans and other
factors, both within and outside of management's control.
Other losses were $11,000 for the three months ended March 31, 1999 compared to
$10,000 for the same period in 1998. Other losses included the equity in losses
of the Company's investment in a limited partnership, Pedcor. In addition to
recording the equity in the losses of Pedcor, a benefit of low income housing
income tax credits in the amount of $45,000 was recorded for the three months
ended March 31, 1999 and 1998.
Salaries and employee benefits were $267,000 for the three months ended March
31, 1999 compared to $218,000 for the 1998 period, and increase of $49,000, or
22.5%. This increase was primarily due to compensation expense related to the
management recognition and retention plan that began effective on June 30, 1998.
Other expenses, consisting primarily of expenses related to service center fees,
advertising, directors' fees, supervisory examination fees, supplies, and
postage increased approximately $51,000 for three months ended March 31, 1999
compared to the same period in 1998. The increase in other expenses was
primarily due to $35,000 of non-recurring expenses related to the Company's data
processing conversion during the first quarter of 1999.
Income tax expense decreased $75,000, or 24.4%, for the three months ended March
31, 1999 compared to the same period in 1998. The decrease was directly related
to the decrease in taxable income for the period.
Asset Quality
Union Federal currently classifies loans as special mention, substandard,
doubtful and loss to assist management in addressing collection risks and
pursuant to regulatory requirements which are not necessarily consistent with
generally accepted accounting principles. Special mention loans represent
credits that have potential weaknesses that deserve management's close
attention. If left uncorrected, these potential weaknesses may result in
deterioration of the repayment prospects or Union Federal's credit position at
some future date. Substandard loans represent credits characterized by the
distinct possibility that some loss will be sustained if deficiencies are not
corrected. Doubtful loans possess the characteristics of substandard loans, but
collection or liquidation in full is doubtful based upon existing facts,
conditions and values. A loan classified as a loss is considered uncollectible.
Union Federal had no loans classified as special mention as of March 31, 1999
while there were 1.2 million of special mention loans at December 31, 1998. In
addition, Union Federal had $983,000 and $840,000 of loans classified as
substandard at March 31, 1999 and December 31, 1998, respectively. At March 31,
1999 and December 31, 1998, no loans were classified as doubtful or loss. At
March 31, 1999, and December 31, 1998, respectively, $494,000 and $349,000 of
the substandard loans were non-accrual loans. The allowance for loan losses was
$377,000 or .4% of loans at March 31, 1999 as compared to $362,000 or .4% of
loans at December 31, 1998.
Liquidity and Capital Resources
The standard measure of liquidity for savings associations is the ratio of cash
and eligible investments to a certain percentage of net withdrawable savings
accounts and borrowings due within one year. The minimum required ratio is
currently set by the Office of Thrift Supervision regulation at 4%. As of March
31, 1999, Union Federal had liquid assets of $5.0 million and a liquidity ratio
of 7.2%.
Other
The Securities and Exchange Commission maintains a Web site that contains
reports, proxy information statements, and other information regarding
registrants that file electronically with the Commission, including the Company.
The address is (http://www.sec.gov).
Year 2000 Compliance
The Company's lending and deposit activities, like those of most financial
institutions, depend significantly upon computer systems. The Company is
addressing the potential problems associated with the possibility that the
computers that it uses to control its operating systems, facilities and
infrastructure may not be programmed to read four-digit date codes. This could
cause some computer applications to be unable to recognize the change from the
year 1999 to the year 2000, which could cause computer systems to generate
erroneous data or to fail.
The Company is actively monitoring its compliance with making its computer
equipment and other information systems Year 2000 compliant. During the first
week of March 1999, the Company switched its electronic data service provider
from On-Line Financial Services, Inc. in Oak Brook, Illinois to Intrieve
Incorporated ("Intrieve"), located in Cincinnati, Ohio. The Company changed data
service providers in order to improve the quality of its computer and networking
technology. Testing conducted during the second week of March 1999 indicates
that the data that the Company maintains on Intrieve's system is Year 2000
compliant. The Company incurred expenses of approximately $35,000 in converting
its data processing to Intrieve's system. It is not expected that data
processing expense incurred by the Company in the future will differ materially
from prior periods. Bankers' Systems, which maintains the Company's loan
documentation system, conducted tests during December 1998 that indicated that
its systems are Year 2000 compliant. The Company will continue to conduct tests
during the remainder of 1999 to ensure that its data processing and information
systems are Year 2000 compliant.
The Company has also contacted the approximately 49 companies that supply or
service its material operations requesting that they certify by December 31,
1998 that they have plans to make their respective systems Year 20000 compliant.
The Company received responses from 29 of these companies confirming that their
systems are Year 2000 compliant. Follow up letters have been delivered to the
parties that did not respond to this initial inquiry and, in some cases, the
Company has contacted them by telephone requesting confirmation that their
systems are Year 2000 compliant. A deadline of May 1, 1999 has been established
for vendors to respond to this second inquiry. Notwithstanding these efforts
that the Company has made, no assurances can be given that the systems of its
service providers will be timely renovated to address the Year 2000 issue.
The Company's Board of Directors reviews on a monthly basis its progress in
addressing Year 2000 issues and has appointed three executive officers to
address all aspects of Year 2000 compliance. The Company believes that its
expenses related to upgrading its systems and software for Year 2000 compliance
will not exceed $10,000. At March 31, 1999, the Company had spent approximately
$5,000 in connection with Year 2000 compliance. Although the Company believes it
is taking the necessary steps to address the Year 2000 compliance issue, no
assurances can be given that some problems will not occur or that it will not
incur significant additional expenses in future periods. In the event that the
Company is ultimately required to purchase replacement computer systems,
programs and equipment, or to incur substantial expenses to make its current
systems, programs and equipment Year 2000 compliant, its net income and
financial condition could be adversely affected.
In addition to possible expenses related to the Company's own systems and those
of its service providers, the Company could incur losses if Year 2000 problems
affect any of its depositors or borrowers. Such problems could include delayed
loan payments due to Year 2000 problems affecting any of its significant
borrowers or impairing the payroll systems of large employers in its market
area. The Company has contacted the approximately 18 commercial borrowers with
outstanding loans in excess of $500,000 for confirmation that, by June 1, 1999,
their computer systems are, or soon will be, Year 2000 compliant. In addition,
the Company requires that borrowers under new commercial loans that it
originates certify that they are aware of the Year 2000 issue and will give all
necessary attention to insure that their information technology will be Year
2000 compliant. Because the Company's loan portfolio to individual borrowers is
diversified and its market area does not depend significantly upon one employer
or industry, the Company does not expect any such Year 2000 related difficulties
that may affect its depositors and borrowers to significantly affect its net
earnings or cash flow.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Presented below, as of March 31, 1999 and 1998, is an analysis performed by the
OTS of Union Federal's interest rate risk as measured by changes in Union
Federal's net portfolio value ("NPV") for instantaneous and sustained parallel
shifts in the yield curve, in 100 basis point increments, up and down 300 basis
points.
March 31, 1999
--------------
Net Portfolio Value NPV as % of PV of Assets
Changes
In Rates $ Amount $ Change % Change NPV Ratio Change
-------- -------- --------- -------- --------- ------
+300 bp 24,988 -8,461 -25% 24.05% -548 bp
+200 bp 28,053 -5,395 -16% 26.15% -338 bp
+100 bp 30,920 -2,528 -8% 28.00% -153 bp
0 bp 33,448 29.53%
- -100 bp 35,528 2,079 6% 30.72% +119 bp
- -200 bp 37,460 4,012 12% 31.78% +225 bp
- -300 bp 39,575 6,126 18% 32.90% +337 bp
March 31, 1998
--------------
Net Portfolio Value NPV as % of PV of Assets
Changes
In Rates $ Amount $ Change % Change NPV Ratio Change
-------- -------- --------- -------- --------- ------
+300 bp 27,251 -7,190 -21% 26.46% -460 bp
+200 bp 29,801 -4,640 -13% 28.07% -289 bp
+100 bp 32,253 -2,188 -6% 29.63% -133 bp
0 bp 34,441 30.96%
- -100 bp 35,991 1,550 5% 31.85% +89 bp
- -200 bp 36,727 2,287 7% 32.23% +127 bp
- -300 bp 37,501 3,060 9% 32.63% +167 bp
The analysis at March 31, 1999 indicates that there have been no material
changes in market interest rates or in the Company's interest rate sensitive
instruments which would cause a material change in the market risk exposures
which affect the quantitative and qualitative risk disclosures as presented in
Item 7A of the Company's Annual Report on Form 10-K for the period ended
December 31, 1998.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits 27. Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
ended March 31, 1999.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNION COMMUNITY BANCORP
Date: May 13, 1999 By: /s/ Joseph E. Timmons
------------ -------------------------
Joseph E. Timmons
President and
Chief Executive Officer
Date: May 13, 1999 By: /s/ Denise E. Swearingen
------------ ----------------------------
Denise E. Swearingen
Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's unaudited consolidated financial statements for the three months
ended March 31, 1999 and is qualified in its entirety by reference to such
statements.
</LEGEND>
<CIK> 0001046183
<NAME> Union Community Bancorp
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1.000
<CASH> 92
<INT-BEARING-DEPOSITS> 3,059
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 779
<INVESTMENTS-CARRYING> 8,286
<INVESTMENTS-MARKET> 8,390
<LOANS> 96,813
<ALLOWANCE> 377
<TOTAL-ASSETS> 111,757
<DEPOSITS> 67,461
<SHORT-TERM> 2,307
<LIABILITIES-OTHER> 1,329
<LONG-TERM> 1,189
<COMMON> 27,125
0
0
<OTHER-SE> 12,346
<TOTAL-LIABILITIES-AND-EQUITY> 111,757
<INTEREST-LOAN> 1,816
<INTEREST-INVEST> 142
<INTEREST-OTHER> 64
<INTEREST-TOTAL> 2,022
<INTEREST-DEPOSIT> 859
<INTEREST-EXPENSE> 871
<INTEREST-INCOME-NET> 1,151
<LOAN-LOSSES> 15
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 459
<INCOME-PRETAX> 666
<INCOME-PRE-EXTRAORDINARY> 435
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 435
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
<YIELD-ACTUAL> 4.30
<LOANS-NON> 494
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 489
<ALLOWANCE-OPEN> 362
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 377
<ALLOWANCE-DOMESTIC> 377
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
