SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 2000
COMMISSION FILE NUMBER 000-24147
KILLBUCK BANCSHARES, INC.
(Exact name of registrant as specified in its Charter)
OHIO 34-1700284
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
165 N. MAIN STREET, KILLBUCK, OH 44637
-----------------------------------------------------
(Address of principal executive offices and zip code)
(330) 276-2771
----------------------------------------------------
(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 reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
----- -----
State the number of shares outstanding for each of the issuer's classes of
common equity as of the latest practicable date:
Class: Common Stock, no par value
Outstanding at July 18, 2000: 704,746
<PAGE>
KILLBUCK BANCSHARES, INC.
INDEX
Page Number
-----------
PART I. FINANCIAL INFORMATION
-----------------------------
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheet as of
June 30, 2000 and December 31, 1999 3
Consolidated Statements of Income for the
six months ended June 30, 2000 and 1999 4
Consolidated Statements of Income for the
three months ended June 30, 2000 and 1999 5
Consolidated Statements of Changes In Shareholders'
Equity for the six months ended June 30, 2000 6
Consolidated Statements of Cash Flows for the
six months ended June 30, 2000 and 1999 7
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition And Results of Operations 9-15
PART II. OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Default Upon Senior Securities 16
Item 4. Submissions of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
----------
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<PAGE>
KILLBUCK BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and amounts due from depository institutions $ 7,249,160 $ 8,123,806
Federal funds sold 11,100,000 8,700,000
------------- -------------
Total cash and cash equivalents 18,349,160 16,823,806
------------- -------------
Investment securities:
Securities available for sale 42,134,776 42,311,490
Securities held to maturity (market value of $34,169,579
and $33,578,899) 34,921,754 34,424,679
------------- -------------
Total investment securities 77,056,530 76,736,169
------------- -------------
Loans (net of allowance for loan losses of
$2,021,159 and $1,887,773) 144,881,484 141,521,075
Loans held for sale - 356,000
Premises and equipment, net 4,040,797 3,851,975
Accrued interest 1,753,517 1,622,480
Other assets 2,476,438 2,238,375
------------- -------------
Total assets $ 248,557,926 $ 243,149,880
============= =============
LIABILITIES
Deposits:
Noninterest bearing demand $ 28,721,907 $ 28,935,106
Interest bearing demand 26,033,360 29,579,519
Money market 11,112,992 8,746,151
Savings 27,768,719 28,173,933
Time 113,683,692 106,303,749
------------- -------------
Total deposits 207,320,670 201,738,458
Federal Home Loan Bank advances 6,568,046 7,112,753
Short term borrowings 4,295,000 4,900,000
Accrued interest and other liabilities 462,135 481,951
------------- -------------
Total liabilities 218,645,851 214,233,162
------------- -------------
SHAREHOLDERS' EQUITY
Common stock no par value: 1,000,000 shares authorized,
718,431 issued 8,846,670 8,846,670
Retained earnings 22,535,078 21,352,156
Accumulated other comprehensive loss (783,771) (648,620)
Treasury stock, at cost (13,685 and 13,100 shares) (685,902) (633,488)
------------- -------------
Total shareholders' equity 29,912,075 28,916,718
------------- -------------
Total liabilities and shareholders' equity $ 248,557,926 $ 243,149,880
============= =============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
-3-
<PAGE>
KILLBUCK BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
------------- -------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 6,840,630 $ 6,297,877
Federal funds sold 248,444 281,904
Investment securities:
Taxable 1,376,735 1,108,322
Exempt from federal income tax 795,321 681,891
------------- -------------
Total interest income 9,261,130 8,369,994
------------- -------------
INTEREST EXPENSE
Deposits 4,054,097 3,775,159
Federal Home Loan Bank advances 231,471 279,760
Short term borrowings 78,610 35,401
------------- -------------
Total interest expense 4,364,178 4,090,320
------------- -------------
NET INTEREST INCOME 4,896,952 4,279,674
Provision for loan losses 120,000 120,000
------------- -------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES 4,776,952 4,159,674
------------- -------------
OTHER INCOME
Service charges on deposit accounts 240,683 233,797
Gain on sale of loans, net 4,822 30,938
Other income 69,606 58,827
------------- -------------
Total other income 315,111 323,562
------------- -------------
OTHER EXPENSE
Salaries and employee benefits 1,419,861 1,176,059
Occupancy expense 93,044 84,081
Equipment expense 307,685 283,891
Professional fees 155,833 158,235
Franchise tax 165,770 176,760
Other expenses 715,911 651,278
------------- -------------
Total other expense 2,858,104 2,530,304
------------- -------------
INCOME BEFORE INCOME TAXES 2,233,959 1,952,932
Income taxes 557,681 472,527
------------- -------------
NET INCOME $ 1,676,278 $ 1,480,405
============= =============
Earning per common share $ 2.38 $ 2.10
============= =============
Average shares outstanding 705,166 705,331
============= =============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
-4-
<PAGE>
KILLBUCK BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
2000 1999
------------- -------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 3,500,837 $ 3,163,073
Federal funds sold 168,785 166,911
Investment securities:
Taxable 679,558 528,523
Exempt from federal income tax 400,436 356,362
------------- -------------
Total interest income 4,749,616 4,214,869
------------- -------------
INTEREST EXPENSE
Deposits 2,096,809 1,900,248
Federal Home Loan Bank advances 114,625 137,082
Short term borrowings 41,695 17,219
------------- -------------
Total interest expense 2,253,129 2,054,549
------------- -------------
NET INTEREST INCOME 2,496,487 2,160,320
Provision for loan losses 60,000 60,000
------------- -------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES 2,436,487 2,100,320
------------- -------------
OTHER INCOME
Service charges on deposit accounts 125,078 121,031
Gain on sale of loans, net 2,745 16,130
Other income 30,155 32,287
------------- -------------
Total other income 157,978 169,448
------------- -------------
OTHER EXPENSE
Salaries and employee benefits 745,100 591,912
Occupancy expense 37,418 35,094
Equipment expense 147,516 144,321
Professional fees 65,202 84,257
Franchise tax 88,082 90,272
Other expenses 380,337 329,751
------------- -------------
Total other expense 1,463,655 1,275,607
------------- -------------
INCOME BEFORE INCOME TAXES 1,130,810 994,161
Income taxes 288,320 243,469
------------- -------------
NET INCOME $ 842,490 $ 750,692
============= =============
Earning per common share $ 1.19 $ 1.06
============= =============
Average shares outstanding 705,037 705,331
============= =============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
-5-
<PAGE>
KILLBUCK BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
Accumulated
Other Total
Common Retained Comprehensive Treasury Shareholders' Comprehensive
Stock Earnings Income (Loss) Stock Equity Income
---------- ----------- --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 $8,846,670 $21,352,156 $(648,620) $(633,488) $28,916,718
Net income 1,676,278 1,676,278 $1,676,278
Other comprehensive income:
Net unrealized loss
on securities (135,151) (135,151) (135,151)
----------
Comprehensive income $1,541,127
==========
Purchase of Treasury stock (52,414) (52,414)
Dividends paid (493,356) (493,356)
---------- ----------- --------- --------- -----------
Balance, June 30, 2000 $8,846,670 $22,535,078 $(783,771) $(685,902) $29,912,075
========== =========== ========= ========= ===========
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
-6-
<PAGE>
KILLBUCK BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
------------- -------------
<S> <C> <C>
Operating Activities
Net income $ 1,676,278 $ 1,480,405
Adjustments to reconcile net income to net cash provided by
Operating activities:
Provision for loan losses 120,000 120,000
Gain on sale of loans (4,822) (30,938)
Provision for depreciation and amortization 200,030 193,196
Origination of loans held for sale (1,354,120) (2,899,650)
Proceeds from the sale of loans 1,714,942 3,164,338
Federal Home Loan Bank stock dividend (31,700) (29,400)
Increase in accrued interest and other assets (299,477) (84,399)
Decrease in accrued expenses and other liabilities (19,816) (165,327)
------------- -------------
Net cash provided by operating activities 2,001,315 1,748,225
------------- -------------
INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from maturities and repayments 3,100,000 10,499,688
Purchases (3,091,600) (9,988,175)
Investment securities held to maturity:
Proceeds from maturities and repayments 100,000 442,974
Purchases (634,666) (5,206,311)
Net increase in loans (3,480,409) (2,647,019)
Purchase of premises and equipment (356,021) (272,947)
------------- -------------
Net cash used in investing activities (4,362,696) (7,171,790)
------------- -------------
FINANCING ACTIVITIES
Net decrease in demand, money market and savings deposits (1,797,731) (2,900,797)
Net increase in time deposits 7,379,943 2,350,762
Repayment of Federal Home Loan Bank advances (544,707) (798,718)
Net decrease in short term borrowings (605,000) (215,000)
Purchase of Treasury stock (52,414) -
Dividends paid (493,356) (423,199)
------------- -------------
Net cash provided by (used in) financing activities 3,886,735 (1,986,952)
------------- -------------
Net increase (decrease) in cash and cash equivalents 1,525,354 (7,410,517)
Cash and cash equivalents at beginning of period 16,823,806 22,172,224
------------- -------------
Cash and cash equivalents at end of period $ 18,349,160 $ 14,761,707
============= =============
Supplemental Disclosures of Cash Flows Information
Cash Paid During the Period For:
Interest on deposits and borrowings $ 4,332,598 $ 4,076,413
============= =============
Income taxes $ 500,000 $ 440,000
============= =============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
-7-
<PAGE>
KILLBUCK BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Killbuck
Bancshares, Inc. (the "Company") and its wholly-owned subsidiary Killbuck
Savings Bank Company (the "Bank"). All significant intercompany balances and
transactions have been eliminated in the consolidation.
The accompanying reviewed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do
not necessarily include all information that would be included in audited
financial statements. The information furnished reflects all adjustments
which are, in the opinion of management, necessary for a fair statement of
the results of operations. All such adjustments are of a normal recurring
nature. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the full year.
These statements should be read in conjunction with the consolidated statements
of and for the year ended December 31, 1999 and related notes which are
included on the Form 10-K (file no. 000-24147)
NOTE 2 EARNINGS PER SHARE
The Company currently maintains a simple capital structure; therefore, there
are no dilutive effects on earnings per share. As such, earnings per share are
calculated using the weighted number of shares for the period.
-8-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking statements. When used in this
discussion, the words "believes", "anticipates", "contemplates", "expects",
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties, which could
cause actual results to differ materially from those projected. Those risks
and uncertainties include changes in interest rates, risks associated with the
ability to control costs and expenses, and general economic conditions.
Killbuck Bancshares, Inc. undertakes no obligation to publicly release the
results of any revisions to those forward-looking statements which may be made
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
The Company conducts no significant business or operations of its own other
than holding all of the outstanding stock of the Killbuck Savings Bank
Company. As a result, references to the Company generally refer to the Bank
unless the context indicates otherwise.
FINANCIAL CONDITION
Total assets at June 30, 2000 were $248,558,000 compared to $243,150,000 at
December 31, 1999, an increase of $5,408,000 or 2.2%.
Cash and cash equivalents increased by $1,525,000 or 9.1% from December 31,
1999 to June 30, 2000, with federal funds sold increasing $2,400,000. This
increase improved the Bank's liquidity position for loan demand and investment
security purchases at June 30, 2000.
Total investments increased by $320,000 or 0.4% from December 31, 1999 to June
30, 2000. Available for sale U.S. Treasury securities maturing were replaced
with available for sale U.S. Government Agencies securities while securities
held to maturity increased by $497,000. The Bank had limited purchases of
investment securities during the first six months of 2000 due to the
uncertainty of interest rates.
Net loans increased by $3,360,000 or 2.4% from December 31, 1999 to June 30,
2000. An increase of $1,804,000 occurred in the consumer loan category while
mortgage and home equity loan balances increased by $1,182,000 and commercial
loans increased by $274,000. Loans at the new Sugarcreek branch totaled
$1,052,000 at June 30, 2000.
Total deposits at June 30, 2000 were $207,321,000 compared to $201,738,000 at
December 31, 1999, an increase of $5,583,000 or 2.8%. Time deposits increased
$7,380,000, demand accounts decreased $3,759,000 and money market and savings
accounts increased $1,962,000. Management attributes these changes to normal
transfers of funds within the deposit accounts and a promotional time
certificate being offered starting February 5, 2000. Deposits at the new
Sugarcreek branch totaled $898,000 at June 30, 2000.
Federal Home Loan Bank advances and short term borrowings decreased $545,000
and $605,000 respectively at June 30, 2000 from December 31, 1999.
-9-
<PAGE>
Shareholders' Equity increased by $995,000 or 3.4%, which was mainly due to
earnings of $1,676,000 for the first six months of 2000 offset by a $135,000
increase in the unrealized loss on securities included in other comprehensive
income, the purchase of Treasury stock for $52,000 and dividends paid totaling
$493,000. Management monitors risk-based capital and leveraged capital ratios
in order to assess compliance of the regulatory guidelines. At June 30, 2000,
the total capital ratio was 20.27%; the Tier I capital ratio was 19.02%, and
the leverage ratio was 11.84%, compared to regulatory capital requirements of
8.0%, 4.0% and 4.0% respectively. These ratios are well in excess of
regulatory capital requirements.
The Company opened and began operating its new branch in Sugarcreek, Ohio in
February, 2000.
-10-
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
---------------------------------------------------------
Total interest income of $9,261,000 for the six month period ended June 30,
2000, compares to $8,370,000 for the same period in 1999, an increase of
$891,000 or 10.6%. The majority of the overall increase in total interest
income is attributed to an increase in interest and fees on loans of
approximately $543,000 or 60.9% of the overall increase. The increase in
interest and fees on loans is due to increased volume in the loan portfolio
and an increase in the yield on loans. Average loan balances were
$145,950,000 for the first six months of 2000 compared to $139,846,000 for the
first six months of 1999 and the yield on loans increased to 9.40% for the
first six months of 2000 compared to 9.03% for the first six months of 1999.
Investment income increased $382,000 or 21.3% for the six month period ended
June 30, 2000 compared to the same period for 1999. The increase in
investment income is also due to an increase in volume and an increase in the
yield on investments. Average investment balances were $76,812,000 compared
to $66,958,000 and the yields were 5.67% compared to 5.36% for the first six
months of 2000 and 1999 respectively.
Total interest expense of $4,364,000 for the six month period ending June 30,
2000, represents an increase of $274,000 from the $4,090,000 reported for the
same six month period in 1999. The increase in interest expense on deposits
of $279,000 is due mainly to the increases in the volume of deposit accounts.
Average interest bearing deposits were $177,317,000 for the first six months
of 2000 compared to $166,769,000 for the first six months of 1999. The cost
on interest bearing deposits was 4.59%, compared to 4.54% for the six month
periods of 2000 and 1999 respectively.
Net interest income of $4,897,000 for the six months ended June 30, 2000,
compares to $4,280,000 for the same six month period in 1999, an increase of
$617,000 or 14.4%.
Total other income for the six month period ended June 30, 2000, of $315,000
compares to $324,000 for the same six month period in 1999, a decrease of
$9,000 or 2.8%. The increase of $6,900 in service charges on deposit accounts
was attributable to normal activity within the deposit accounts due to an
increase in accounts. Gains on sale of loans decreased $26,000 due to
decreased activity caused by rising fixed loan rates. Other income increased
$11,000 due to an increase of $9,000 in alternative investment income. The
increase in alternative investment income is attributable to increased
activity in this area.
Total other expense of $2,858,000 for the six months ended June 30, 2000,
compares to $2,530,000 for the same six month period in 1999. This represents
an increase of $328,000 or 13.0%. Salary and employee benefits increased
approximately $244,000 due to additional staff being hired as a result of
opening the branch in Sugarcreek, Ohio and normal increases in salaries, staff
additions and employee benefits. The increases in the remaining expense
accounts were attributable to the opening of the branch in Sugarcreek, Ohio
and increases in items that are normal and recurring in nature.
Net income for the six month period ended June 30, 2000, was $1,676,000, an
increase of $196,000 or 13.2% from the $1,480,000 reported at June 30, 1999.
-11-
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
-----------------------------------------------------------
Total interest income of $4,750,000 for the three month period ended June 30,
2000, compares to $4,215,000 for the same period in 1999, an increase of
$535,000 or 12.7%. The majority of the overall increase in total interest
income is attributed to an increase in interest and fees on loans of
approximately $338,000 or 63.2% of the overall increase. The increase in
interest and fees on loans is due to increased volume in the loan portfolio
and an increase in the yield on loans. Average loan balances were
$147,107,000 compared to $141,471,000 and the yield was 9.55% compared to
8.97% for this three month period of 2000 and 1999 respectively. The increase
in interest on investment securities of $195,000 was due to an increase in the
average balances outstanding of $76,113,000 for 2000 compared to $66,402,000
for 1999 and the yield was 5.69% compared to 5.35% for this three month period
of 2000 and 1999 respectively.
Total interest expense of $2,253,000 for the three month period ending June
30, 2000, represents an increase of $198,000 from the $2,055,000 reported for
the same three month period in 1999. The increase in interest expense on
deposits of $197,000 is due mainly to increases in volume. Average interest
bearing deposits were $179,691,000 for this three month period of 2000
compared to $168,007,000 for the same three months of 1999. The cost of
interest bearing deposits was 4.68% compared to 4.54% for this three month
period of 2000 and 1999 respectively.
Net interest income of $2,496,000 for the three months ended June 30, 2000,
compares to $2,160,000 for the same three month period in 1999, an increase of
$336,000 or 15.6%.
Total other income for the three month period ended June 30, 2000, of $158,000
compares to $169,000 for the same three month period in 1999, a decrease of
$11,000 or 6.5%. The service fee income on deposits increased $4,000 due to
an increase in the accounts being serviced. Gains on sale of loans decreased
$13,000 due to the Bank's decreased activity caused by rising fixed loan
rates.
Total other expense of $1,464,000 for the three months ended June 30, 2000,
compares to $1,276,000 for the same three month period in 1999. This
represents an increase of $188,000 or 14.7%. Salary and employee benefits
increased $153,000 in part to new employees due to the opening of the branch
in Sugarcreek, Ohio and normal recurring employee cost increases for salary,
staff additions and employee benefits. The increase in other expenses of
$51,000 was due in part to the opening of the branch in Sugarcreek, Ohio and
increases in other expenses that are generally thought to be normal and
recurring in nature.
Net income for the three month period ended June 30, 2000, was $842,000, an
increase of $91,000 or 12.1% from the $751,000 reported at June 30, 1999.
-12-
<PAGE>
LIQUIDITY
---------
Management monitors projected liquidity needs and determines the level
desirable based in part on the Company's commitments to make loans and
management's assessment of the Company's ability to generate funds.
The primary sources of funds are deposits, repayment of loans, maturities of
investments, funds provided from operations and advances from the FHLB of
Cincinnati. While scheduled repayments of loans and maturities of investment
securities are predictable sources of funds, deposit flows and loan repayments
are greatly influenced by the general level of interest rates, economic
conditions and competition. The Company uses its sources of funds to fund
existing and future loan commitments, to fund maturing time deposits and
demand deposit withdrawals, to invest in other interest-earning assets, to
maintain liquidity, and to meet operating expenses.
Cash and amounts due from depository institutions and federal funds sold
totaled $18,349,000 at June 30, 2000. These assets provide the primary source
of liquidity for the Company. In addition, management has designated a
substantial portion of the investment portfolio, $42,135,000 as available for
sale and has an available unused line of credit of $8,000,000 with the Federal
Home Loan Bank of Cincinnati to provide additional sources of liquidity at
June 30, 2000. As of June 30, 2000, the Company had commitments to fund loans
of approximately $1,000,000.
Cash was provided during the six month period ended June 30, 2000, mainly from
operating activities of $2.0 million, a net increase in deposits of $5.6
million and the maturities and repayments of investment securities of $3.2
million. Cash was used during the six month period ended June 30, 2000,
mainly to fund a net increase in loans of $3.5 million, and the purchase of
investment securities of $3.7 million and the purchase of fixed assets of
$356,000. In addition, $1.1 million was used to reduce Federal Home Loan Bank
advances and short term borrowings and $493,000 was used to pay dividends
during the first six months of 2000. Cash and cash equivalents totaled $18.3
million at June 30, 2000, an increase of $1.5 million from $16.8 million at
December 31, 1999.
Management is not aware of any conditions, including any regulatory
recommendations or requirements, which would adversely affect its liquidity or
ability to meet its funding needs in the normal course of business.
-13-
<PAGE>
RISK ELEMENTS
-------------
The table below presents information concerning nonperforming assets including
nonaccrual loans, renegotiated loans, loans 90 days or more past due, other
real estate loans and repossessed assets at June 30, 2000, and December 31,
1999. A loan is classified as nonaccrual when, in the opinion of management,
there are doubts about collectability of interest and principal. At the time
the accrual of interest is discontinued, future income is recognized only when
cash is received. Renegotiated loans are those loans which terms have been
renegotiated to provide a reduction or deferral of principal or interest as of
result of the deterioration of the borrower.
June 30, December 31,
2000 1999
------ ------
(dollars in thousands)
Loans on nonaccrual basis $ 44 $287
Loans past due 90 days or more 229 312
Renegotiated loans - -
---- ----
Total nonperforming loans 273 599
Other real estate - -
Repossessed assets - -
---- ----
Total nonperforming assets $273 $599
==== ====
Nonperforming loans as a percent of total loans 0.19% 0.42%
Nonperforming loans as a percent of total assets 0.11% 0.25%
Nonperforming assets as a percent of total assets 0.11% 0.25%
Management monitors impaired loans on a continual basis. As of June 2000,
impaired loans had no material effect on the Company's financial position or
results from operations.
The allowance for loan losses at June 30, 2000, totaled $2,021,000 or 1.4% of
total loans as compared to $1,888,000 or 1.3% at December 31, 1999.
Provisions for loan losses were $120,000 for the six months ended June 30,
2000 and $120,000 for the six months ended June 30, 1999.
The level of funding for the provision is a reflection of the overall loan
portfolio. Nonperforming loans consist of approximately $15,000 in one to
four family residential mortgages, $22,000 in commercial real estate, $135,000
in commercial loans and $101,000 in consumer loans. The collateral
requirements on such loans reduce the risk of potential losses to an
acceptable level in management's opinion.
-14-
<PAGE>
Management performs a quarterly evaluation of the allowance for loan losses.
The evaluation incorporates internal loan review, actual historical losses, as
well as any negative economic trends in the local market. The evaluation is
presented to and approved by the Board of Directors. Although the Company
maintains its allowance for loan losses at a level that it considers to be
adequate to provide for the inherent risk of loss in its portfolio, there can
be no assurance that future losses will not exceed estimated amounts or that
additional provisions for loan losses will not be required in future periods.
-15-
<PAGE>
PART II OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in the rights of the Company's security holders
None
Item 3 - Defaults by the Company on its senior securities
None
Item 4 - Results of votes of security holders
The following represents the results of matters submitted to a vote
of the shareholders at the annual meeting held on April 10, 2000:
Affixing the number of directors at ten for 2000:
For 555,951
Abstain 4,889
Absent 144,400
Election of Directors:
The following directors were elected with terms to expire April 2003:
For Abstain Absent
------- ------- -------
Robert D. Bell 555,951 4,889 144,400
Allan E. Mast 555,951 4,889 144,400
Luther E. Proper 555,951 4,889 144,400
Item 5 - Other Information
None
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<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
a) The following exhibits are included in this report or
incorporated herein by reference:
3(I) Articles of Incorporation of Killbuck Bancshares, Inc.*
3(ii) Code of Regulations of Killbuck Bancshares, Inc.*
10 Agreement and Plan of Reorganization with Commercial and
Savings Bank Co.*
21 Subsidiaries of Registrant*
27 Financial Data Schedule (in electronic filing only)
99 Independent Accountant's Report
b) No reports on Form 8-K were filed during the quarter of the
period covered by this report.
*Incorporated by reference to an identically numbered exhibit to
the Form 10 (file No. 0-24147) filed with SEC on April 30, 1998
and subsequently amended on July 8, 1998 and July 31, 1998.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Killbuck Bancshares, Inc.
Date: By:/s/Luther E. Proper
--------------------- -------------------
Luther E. Proper
President and
Chief Executive Officer
Date: By:/s/Diane Knowles
--------------------- ----------------
Diane Knowles
Chief Financial Officer
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