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 SEPTEMBER 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
Commission file number: 000-23543
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 September 30, 2000 was 2,375,450.
<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 4
Consolidated Condensed Statement of Income 5
Consolidated Condensed Statement of
Shareholders' Equity 6
Consolidated Condensed Statement of Cash Flows 7
Notes to Unaudited Consolidated Condensed
Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
<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
-----------------------------
<TABLE>
<CAPTION>
UNION COMMUNITY BANCORP AND SUBSIDIARY
Consolidated Condensed Balance Sheet
(Unaudited)
September 30, December 31,
2000 1999
--------------------------------------
Assets
<S> <C> <C>
Cash $ 203,125 $ 286,812
Interest-bearing demand deposits 3,859,061 2,830,213
-----------------------------------
Cash and cash equivalents 4,062,186 3,117,024
Investment securities
Available for sale 238,760 315,463
Held to maturity 7,643,628 7,521,923
-----------------------------------
Total investment securities 7,882,388 7,837,386
Loans, net of allowance for loan losses
of $464,554 and $422,258 108,172,632 106,173,782
Premises and equipment 366,427 367,427
Federal Home Loan Bank stock 1,043,700 1,043,700
Investment in limited partnership 931,609 1,011,609
Interest receivable 851,389 823,768
Other assets 94,471 278,942
-----------------------------------
Total assets $123,404,802 $120,653,639
===================================
Liabilities
Deposits
Noninterest bearing $ 1,800,379 $ 1,151,075
Interest bearing 70,795,207 67,839,367
-----------------------------------
Total deposits 72,595,586 68,990,442
Federal Home Loan Bank advances 12,534,893 11,658,526
Note payable 654,542 837,442
Interest payable 211,472 122,565
Dividends payable 332,851 315,591
Other liabilities 626,473 449,158
-----------------------------------
Total liabilities 86,955,817 82,373,724
-----------------------------------
Commitments and Contingent Liabilities
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 - 2,375,450
and 2,600,700 shares 23,199,316 25,389,422
Retained earnings 16,021,306 15,912,206
Accumulated other comprehensive income 17,372 15,385
Unearned employee stock ownership plan
("ESOP") shares (1,546,955) (1,624,444)
Unearned recognition and retention plan
("RRP") shares (1,242,054) (1,412,654)
-----------------------------------
Total shareholders' equity 36,448,985 38,279,915
-----------------------------------
Total liabilities and shareholders'
equity $123,404,802 $120,653,639
===================================
</TABLE>
See notes to unaudited consolidated condensed financial statements.
<TABLE>
<CAPTION>
UNION COMMUNITY BANCORP AND SUBSIDIARY
Consolidated Condensed Statement of Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
----------------------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------------------
Interest and Dividend Income
<S> <C> <C> <C> <C>
Loans $ 2,117,128 $ 1,963,021 $ 6,331,818 $ 5,683,315
Investment securities 154,266 144,256 419,532 427,806
Dividends on Federal Home Loan Bank stock 22,300 17,475 63,820 49,043
Deposits with financial institutions 17,989 27,929 54,944 100,986
----------------------------------------------------------------
Total interest and dividend income 2,311,683 2,152,681 6,870,114 6,261,150
----------------------------------------------------------------
Interest Expense
Deposits 985,976 872,768 2,816,628 2,597,486
Federal Home Loan Bank advances 203,062 109,825 547,856 167,865
----------------------------------------------------------------
Total interest expense 1,189,038 982,593 3,364,484 2,765,351
----------------------------------------------------------------
Net Interest Income 1,122,645 1,170,088 3,505,630 3,495,799
Provision for loan losses 15,000 15,000 45,000 45,000
----------------------------------------------------------------
Net Interest Income After Provision for Loan Losses 1,107,645 1,155,088 3,460,630 3,450,799
----------------------------------------------------------------
Other Income (Loss)
Equity in losses of limited partnerships (25,000) (25,000) (80,000) (77,500)
Gain on sales of securities available for sale 73,150 8,331 73,150
Other income 31,440 25,354 93,303 77,567
----------------------------------------------------------------
Total other income 6,440 73,504 21,634 73,217
----------------------------------------------------------------
Other Expenses
Salaries and employee benefits 277,294 252,499 810,248 767,744
Net occupancy and equipment expenses 17,794 15,999 44,300 52,545
Deposit insurance expense 3,866 16,260 11,526 38,255
Data processing expense 19,934 19,510 58,974 105,385
Legal and professional fees 19,865 18,747 91,191 101,409
Other expenses 79,192 65,066 230,794 225,745
----------------------------------------------------------------
Total other expenses 417,945 388,081 1,247,033 1,291,083
----------------------------------------------------------------
Income Before Income Tax 696,140 840,511 2,235,231 2,232,933
Income tax expense 224,559 300,671 734,032 787,557
----------------------------------------------------------------
Net Income $ 471,581 $ 539,840 $ 1,501,199 $ 1,445,376
================================================================
Basic Earnings per Share $ .22 $ .22 $ .67 $ .58
================================================================
Diluted Earnings per Share $ .22 $ .22 $ .67 $ .58
================================================================
</TABLE>
See notes to unaudited consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
UNION COMMUNITY BANCORP AND SUBSIDIARY
Consolidated Condensed Statement of Shareholders' Equity
(Unaudited)
Common Stock Accumulated
--------------------------- Other Unearned
Shares Comprehensive Retained Comprehensive ESOP Unearned
Outstanding Amount Income Earnings Income (Loss) Shares Compensation Total
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, January 1, 2000 2,600,700 $25,389,422 $15,912,206 $15,385 $(1,624,444) $(1,412,654) $38,279,915
Comprehensive income
Net income for the period $1,501,199 1,501,199 1,501,199
Other comprehensive
income, net of tax
Unrealized gains on
securities, net of
reclassification
adjustment 1,987 1,987 1,987
----------
Comprehensive income $1,503,186
==========
Cash dividends
($.435 per share) (1,006,657) (1,006,657)
Purchase of common stock (225,250) (2,199,405) (385,442) (2,584,847)
Amortization of unearned
compensation expense 170,600 170,600
ESOP shares earned 9,299 77,489 86,788
------------------------ -----------------------------------------------------------------
Balances, September 30, 2000 2,375,450 $23,199,316 $16,021,306 $17,372 $(1,546,955) $(1,242,054) $36,448,985
======================= =================================================================
</TABLE>
See notes to unaudited consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
UNION COMMUNITY BANCORP AND SUBSIDIARY
Consolidated Condensed Statement of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
-----------------------------
2000 1999
-----------------------------
Operating Activities
<S> <C> <C>
Net income $ 1,501,199 $ 1,445,376
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for loan losses 45,000 45,000
Depreciation and amortization 20,820 24,981
Investment securities accretion, net (33,671) (8,844)
Gain on sales of securities available for sale (8,331) (73,150)
Gain on sale of foreclosed assets (284)
Equity in losses of limited partnerships 80,000 77,500
Amortization of unearned compensation expense 170,600 170,599
ESOP shares earned 86,788 90,308
Net change in:
Interest receivable (27,621) (71,287)
Interest payable 88,907 33,722
Other assets 95,472 15,637
Other liabilities 50,691 84,835
-----------------------------
Net cash provided by operating activities 2,069,854 1,834,393
-----------------------------
Investing Activities
Investment securities
Purchase of securities available for sale (778,529)
Purchase of securities held to maturity (300,000) (1,415,000)
Proceeds from sales of securities available for sale 87,997 595,655
Proceeds from maturities of securities held to
maturity and paydowns of mortgage-backed securities 211,966 1,124,293
Net changes in loans (1,955,826) (14,066,286)
Purchase of FHLB of Indianapolis stock (299,200)
Purchases of property and equipment (19,820) (32,924)
Proceeds from sale of foreclosed assets 100,357
Other investing activities (2,726)
-----------------------------
Net cash used by investing activities (1,975,683) (14,774,360)
-----------------------------
Financing Activities
Net change in
Interest-bearing demand and savings deposits 544,943 4,976,478
Certificates of deposit 3,060,201 (2,071,624)
Stock subscription escrow accounts
Proceeds from borrowings 14,000,000 11,000,000
Repayment of borrowings (13,306,533) (296,900)
Cash dividends (989,397) (826,265)
Repurchase of common stock (2,584,847) (3,423,757)
Net change in advances by borrowers for taxes and insurance 126,624 112,513
-----------------------------
Net cash provided by financing activities 850,991 9,470,445
-----------------------------
Net Change in Cash and Cash Equivalents 945,162 (3,469,522)
Cash and Cash Equivalents, Beginning of Period 3,117,024 6,191,080
-----------------------------
Cash and Cash Equivalents, End of Period $ 4,062,186 $ 2,721,558
=============================
Additional Cash Flows Information
Interest paid $ 3,275,577 $ 2,731,629
Income tax paid 724,025 791,301
</TABLE>
See notes to unaudited consolidated condensed financial statements.
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, 1999 Annual Report
to Shareholders. All significant intercompany accounts and transactions have
been eliminated in consolidation.
The interim consolidated condensed 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 condensed financial statements at September 30, 2000,
and for the nine and three months ended September 30, 2000 and 1999, 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 ESOP shares have been excluded from the computation
of average common shares outstanding.
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
September 30, 2000 September 30, 1999
------------------ ------------------
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 $ 471,581 2,184,351 $ .22 $539,840 2,403,355 $ .22
====== ======
Effect of dilutive RRP awards
and stock options
--------------------- ----------------------
Diluted earnings per share
Income available to common
shareholders and assumed
conversions $ 471,581 2,184,351 $ .22 $539,840 2,403,355 $ .22
===================================== =====================================
<PAGE>
Nine Months Ended Nine Months Ended
September 30, 2000 September 30, 1999
------------------ ------------------
Weighted Weighted
Average Per Share Average Per Share
Income Shares Amount Income Shares Amount
------ ------ ------ ------ ------ ------
Basic earnings per share
Income available to common
shareholders $1,501,199 2,256,188 $ .67 $1,445,376 2,482,219 $ .58
====== ======
Effect of dilutive RRP awards
and stock options
--------------------- ----------------------
Diluted earnings per share
Income available to common
shareholders and assumed
conversions $ 1,501,199 2,256,188 $ .67 $ 1,445,376 2,482,219 $ .58
===================================== =====================================
</TABLE>
Note 3: Other Comprehensive Income
----------------------------------
<TABLE>
<CAPTION>
Before-Tax Tax Net-of-Tax
Nine months ended September 30, 2000 Amount Expense Amount
------ ------- ------
Unrealized gains on securities
<S> <C> <C> <C>
Unrealized holding gains arising during the period $11,294 $ (3,720) $7,574
Less: reclassification adjustment for gains realized
in net income 8,331 (2,744) 5,587
-------------------------------------------
Net unrealized gains $ 2,963 $ (976) $1,987
===========================================
</TABLE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
--------------------------------------------------------------------------------
General
The company was organized in September, 1997. On December 29, 1997, it acquired
all of the outstanding common stock of 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, Office of
Thrift Supervision ("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 approximately $2.7 million, or 2.2% to $123.4 million at
September 30, 2000, from $120.7 million at December 31, 1999. The increase was
primarily due to loan growth of $2.0 million. Net loans increased by 1.9% to
$108.2 million due to an increase in customer demand and an increased focus by
the Company in the areas of commercial and consumer lending.
Deposits increased by $3.6 million to $72.6 million during the nine months ended
September 30, 2000. Demand and savings deposits increased $545,000, or 2.4%,
from December 31, 1999 to September 30, 2000. Certificates of deposit increased
$3.1 million, or 6.6%, during this period.
Borrowed funds increased by $694,000 from December 31, 1999 to September 30,
2000. The increases in borrowings were primarily to used to fund loan growth.
Shareholders' equity decreased $1.8 million to $36.4 million at September 30,
2000. The decrease was primarily due to stock repurchases of $2.6 million and
cash dividends of $1.0 million. These decreases were offset by net income for
nine months ended September 30, 2000 of $1.5 million, Employee Stock Ownership
Plan shares earned of $87,000 and unearned compensation amortization of
$171,000.
Comparison of Operating Results for the Three Months Ended September 30, 2000
and 1999
Net income decreased approximately $68,000 from $540,000 for the three months
ended September 30, 1999 to $472,000 for the three months ended September 30,
2000. The return on average assets was 1.54% and 1.85% for the three months
ended September 30, 2000 and 1999, respectively.
Interest income was $2,312,000 for the three months ended September 30, 2000 as
compared to $2,153,000 for the comparable period in 1999. Interest expense
increased approximately $206,000 or 21.0% from $983,000 for the three months
ended September 30, 1999 to $1,189,000 for the same period in 2000. As a result,
net interest income for the three months ended September 30, 2000 amounted to
$1,123,000, approximately a $47,000 decrease from the third quarter of 1999.
The provision for loan losses made for both three month periods ended September
30, 2000 and 1999 was $15,000. The 2000 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.
Total other income was $7,000 for the three months ended September 30, 2000
compared to $74,000 for the same period in 1999. This decrease in total other
income was primarily due to $73,000 of gains on sales of securities available
for sale during the third quarter of 1999. Other income also includes 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 September 30, 2000 and 1999.
Total other expenses increased approximately $30,000 for three months ended
September 30, 2000 compared to the same period in 1999. The increase in total
other expense was primarily due to nominal increases in a variety of expense
categories.
Income tax expense decreased $76,000, or 19.6%, for the three months ended
September 30, 2000 compared to the same period in 1999. The decrease was
directly related to the decrease in taxable income for the period.
Comparison of Operating Results for the Nine Months Ended September 30, 2000 and
1999
Net income increased $56,000, or 3.9%, from $1,445,000 for the nine months ended
September 30, 1999 to $1,501,000 for the nine months ended September 30, 2000.
The return on average assets was 1.65% and 1.71% for the nine months ended
September 30, 2000 and 1999, respectively.
Interest income was $6,870,000 for the nine months ended September 30, 2000 as
compared to $6,261,000 for the nine months ended September 30, 1999. Interest
expense increased $599,000, or 21.7%, from $2,765,000 for the nine months ended
September 30, 1999 to $3,364,000 for the same period in 2000. As a result, net
interest income for both the nine month periods ended September 30, 2000 and
1999 amounted to approximately $3.5 million. The Company's net interest margin
decreased from 4.2% for the nine months ended September 30, 1999 to 3.9% for the
comparable period in 2000.
The provisions for loan losses made for the nine months ended September 30, 2000
and 1999 were $45,000. The 2000 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.
Total other income was $22,000 for the nine months ended September 30, 2000
compared to $73,000 for the same period in 1999. This increase in total other
income was primarily due to 73,000 of gains on sales of securities available for
sale for the nine months ended September 30, 1999 as compared to gains of $8,000
for the same period in 2000. Other income also includes 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 $135,000 was recorded for the nine months
ended September 30, 2000 and 1999.
Other expenses were $1,247,000 for the nine months ended September 30, 2000
compared to $1,291,000 for the 1999 period, a decrease of $44,000, or 3.4%. This
decrease was primarily due to a decrease in data processing expense. Data
processing expense decreased from 105,000 for the nine months ended September
30, 1999 to $59,000 for the comparable period in 2000, a decrease of $46,000.
This decrease was primarily due to approximately $45,000 of non-recurring
expenses related to the Company's data processing conversion during the first
quarter of 1999.
Income tax expense decreased $54,000, or 6.9%, for the nine months ended
September 30, 2000 compared to the same period in 1999. The decrease in tax
expense was the result of a recent revision to the Indiana Code that permits
financial institutions incorporated in Indiana to apportion income in the same
manner as financial institutions incorporated in other states. This revision to
the statute was made retroactive to January 1, 1999 and recognized as a single
adjustment in the second quarter of 2000.
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 loans of $464,000 classified as special mention as of
September 30, 2000 while there were no special mention loans at December 31,
1999. In addition, Union Federal had $1.1 million and $650,000 of loans
classified as substandard at September 30, 2000 and December 31, 1999,
respectively. At September 30, 2000 and December 31, 1999, no loans were
classified as doubtful or loss. At September 30, 2000, and December 31, 1999
respectively, $180,000 and $166,000 of the substandard loans were non-accrual
loans. The allowance for loan losses was $465,000, or .43%, of loans at
September 30, 2000 as compared to $422,000, or .40%, of loans at December 31,
1999.
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
September 30, 2000, Union Federal had liquid assets of $11.8 million and a
liquidity ratio of 12.9%
Other
The Securities and Exchange Commission ("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).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
------------------------------------------------------------------
Presented below, as of September 30, 2000 and 1999, 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.
September 30, 2000
Net Portfolio Value NPV as % of PV of Assets
Changes
In Rates $ Amount $ Change % Change NPV Ratio Change
-------- -------- --------- -------- --------- ------
+300 bp $26,087 -8,728 -25 23.03% -518 bp
+200 bp 28,968 -5,847 -17 24.84% -337 bp
+100 bp 31,896 -2,919 -8 26.58% -163 bp
0 bp 34,815 28.21%
-100 bp 37,363 2,548 7 29.55% +134 bp
-200 bp 39,185 4,370 13 30.44% +223 bp
-300 bp 40,948 6,133 18 31.27% +306 bp
September 30, 1999
Net Portfolio Value NPV as % of PV of Assets
Changes
In Rates $ Amount $ Change % Change NPV Ratio Change
-------- -------- -------- -------- --------- ------
+300 bp $23,950 -9,230 -28% 21.91% -576 bp
+200 bp 27,076 -6,084 -18% 23.99% -368 bp
+100 bp 30,235 -2,925 -9% 25.96% -171 bp
0 bp 33,160 27.67%
-100 bp 35,578 2,418 7% 28.99% +132 bp
-200 bp 37,562 4,402 13% 30.01% +234 bp
-300 bp 39,592 6,432 19% 31.00% +333 bp
<PAGE>
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 September 30, 2000.
<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: November 14, 2000 By: /s/ Joseph E. Timmons
----------------- -------------------------------------
Joseph E. Timmons
President and
Chief Executive Officer
Date: November 14, 2000 By: /s/ Denise E. Swearingen
----------------- ----------------------------
Denise E. Swearingen
Treasurer
