<PAGE> 1
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 SEPTEMBER 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 November 1, 2000: 702,915
<PAGE> 2
KILLBUCK BANCSHARES, INC.
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheet (unaudited) as of
September 30, 2000 and December 31, 1999 3
Consolidated Statement of Income (unaudited)
For the nine months ended September 30, 2000 and 1999 4
Consolidated Statement of Income (unaudited)
For the three months ended September 30, 2000 and 1999 5
Consolidated Statement of Changes in Shareholders' Equity (unaudited)
For the nine months ended September 30, 2000 6
Consolidated Statement of Cash Flows (unaudited)
For the nine months ended September 30, 2000 and 1999 7
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis 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 16
SIGNATURES 17
</TABLE>
-2-
<PAGE> 3
KILLBUCK BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and amounts due from depository institutions $ 10,571,936 $ 8,123,806
Federal funds sold 9,800,000 8,700,000
------------- -------------
Total cash and cash equivalents 20,371,936 16,823,806
------------- -------------
Investment securities:
Securities available for sale 46,268,196 42,311,490
Securities held to maturity (market value of $35,569,212
and $33,578,899) 35,798,015 34,424,679
------------- -------------
Total investment securities 82,066,211 76,736,169
------------- -------------
Loans (net of allowance for loan losses of
$2,029,652 and $1,887,773) 147,049,399 141,521,075
Loans held for sale -- 356,000
Premises and equipment, net 4,004,233 3,851,975
Accrued interest 2,302,717 1,622,480
Other assets 2,121,527 2,238,375
------------- -------------
Total assets $ 257,916,023 $ 243,149,880
============= =============
LIABILITIES
Deposits:
Noninterest bearing demand $ 29,902,639 $ 28,935,106
Interest bearing demand 25,817,986 29,579,519
Money market 11,364,438 8,746,151
Savings 28,469,192 28,173,933
Time 119,000,997 106,303,749
------------- -------------
Total deposits 214,555,252 201,738,458
Federal Home Loan Bank advances 6,442,155 7,112,753
Short term borrowings 5,195,001 4,900,000
Accrued interest and other liabilities 522,655 481,951
------------- -------------
Total liabilities 226,715,063 214,233,162
------------- -------------
SHAREHOLDERS' EQUITY
Common stock - no par value: 1,000,000 shares authorized,
718,431 issued 8,846,670 8,846,670
Retained earnings 23,493,798 21,352,156
Accumulated other comprehensive loss (420,281) (648,620)
Treasury stock, at cost (14,051 and 13,100 shares) (719,227) (633,488)
------------- -------------
Total shareholders' equity 31,200,960 28,916,718
------------- -------------
Total liabilities and shareholders' equity $ 257,916,023 $ 243,149,880
============= =============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
-3-
<PAGE> 4
KILLBUCK BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
----------- -----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $10,507,967 $ 9,458,423
Federal funds sold 443,815 409,967
Investment securities:
Taxable 2,118,794 1,703,850
Tax exempt 1,198,033 1,055,058
----------- -----------
Total interest income 14,268,609 12,627,298
----------- -----------
INTEREST EXPENSE
Deposits 6,375,254 5,646,256
Federal Home Loan Bank advances 340,766 409,555
Short term borrowings 128,342 54,576
----------- -----------
Total interest expense 6,844,362 6,110,387
----------- -----------
NET INTEREST INCOME 7,424,247 6,516,911
Provision for loan losses 180,000 180,000
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES 7,244,247 6,336,911
----------- -----------
OTHER INCOME
Service charges on deposit accounts 371,064 355,352
Gain on sale of loans 4,534 36,870
Other income 101,833 87,105
----------- -----------
Total other income 477,431 479,327
----------- -----------
OTHER EXPENSE
Salaries and employee benefits 2,064,780 1,899,644
Occupancy expense 156,236 131,744
Equipment expense 457,861 421,725
Professional fees 196,700 213,357
Franchise tax 256,031 268,874
Other expenses 1,068,602 968,503
----------- -----------
Total other expense 4,200,210 3,903,847
----------- -----------
INCOME BEFORE INCOME TAXES 3,521,468 2,912,391
Income taxes 886,470 693,459
----------- -----------
NET INCOME $ 2,634,998 $ 2,218,932
=========== ===========
EARNINGS PER SHARE $ 3.74 $ 3.15
=========== ===========
AVERAGE SHARES OUTSTANDING 705,014 705,331
=========== ===========
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
-4-
<PAGE> 5
KILLBUCK BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
---------- ----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $3,667,050 $3,160,547
Federal funds sold 195,371 128,063
Investment securities:
Taxable 742,059 595,528
Tax exempt 402,713 373,166
---------- ----------
Total interest income 5,007,193 4,257,304
---------- ----------
INTEREST EXPENSE
Deposits 2,321,157 1,871,096
Federal Home Loan Bank advances 109,295 129,795
Short term borrowings 49,732 19,176
---------- ----------
Total interest expense 2,480,184 2,020,067
---------- ----------
NET INTEREST INCOME 2,527,009 2,237,237
Provision for loan losses 60,000 60,000
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES 2,467,009 2,177,237
---------- ----------
OTHER INCOME
Service charges on deposit accounts 130,381 121,556
Gain on sale of loans -- 5,933
Other income 32,227 28,276
---------- ----------
Total other income 162,608 155,765
---------- ----------
OTHER EXPENSE
Salaries and employee benefits 644,919 723,584
Occupancy expense 63,192 47,663
Equipment expense 150,177 137,833
Professional fees 40,867 55,122
Franchise tax 90,260 92,114
Other expenses 352,693 317,227
---------- ----------
Total other expense 1,342,108 1,373,543
---------- ----------
INCOME BEFORE INCOME TAXES 1,287,509 959,459
Income taxes 328,789 220,932
---------- ----------
NET INCOME $ 958,720 $ 738,527
========== ==========
EARNINGS PER SHARE $ 1.36 $ 1.05
========== ==========
AVERAGE SHARES OUTSTANDING 704,715 705,331
========== ==========
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
-5-
<PAGE> 6
KILLBUCK BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Accumulated
Other
Common Retained Comprehensive
Stock Earnings Income (Loss)
------------ ------------ ------------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1999 $ 8,846,670 $ 21,352,156 $ (648,620)
Net income 2,634,998
Other comprehensive income:
Net unrealized income
on securities net of tax of $117,629 228,339
Comprehensive income
Purchase of Treasury stock
Dividends paid (493,356)
------------ ------------ ------------
BALANCE, SEPTEMBER 30, 2000 $ 8,846,670 $ 23,493,798 $ (420,281)
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Total
Treasury Shareholders' Comprehensive
Stock Equity Income
------------ ------------ ------------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1999 $ (633,488) $ 28,916,718
Net income 2,634,998 $ 2,634,998
Other comprehensive income:
Net unrealized income
on securities net of tax of $117,629 228,339 228,339
------------
Comprehensive income $ 2,863,337
============
Purchase of Treasury stock (85,739) (85,739)
Dividends paid (493,356)
------------ ------------
BALANCE, SEPTEMBER 30, 2000 $ (719,227) $ 31,200,960
============ ============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
-6-
<PAGE> 7
KILLBUCK BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,634,998 $ 2,218,932
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 180,000 180,000
Depreciation, amortization and accretion, net 312,883 287,594
Gain on sale of loans (4,534) (36,870)
Origination of loans held for sale (2,082,920) (3,422,150)
Proceeds from the sale of loans 2,443,454 3,692,771
Loss on sale of real estate -- 9,104
Federal Home Loan Bank stock dividend (48,700) (44,400)
Increase in accrued interest and other assets (681,018) (329,047)
Increase (decrease) in accrued expenses and other liabilities 40,704 (157,129)
------------ ------------
Net cash provided by operating activities 2,794,867 2,398,805
------------ ------------
INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from maturities and repayments 3,500,000 12,272,655
Purchases (7,055,168) (13,593,307)
Investment securities held to maturity:
Proceeds from maturities and repayments 250,000 555,450
Purchases (1,680,091) (6,742,769)
Net increase in loans (5,708,324) (1,254,258)
Purchase of premises and equipment (415,256) (450,597)
Decrease in other real estate owned -- 73,334
------------ ------------
Net cash used in investing activities (11,108,839) (9,139,492)
------------ ------------
FINANCING ACTIVITIES
Net increase in demand, money market
and savings deposits 119,546 1,950,533
Increase in time deposits 12,697,248 2,237,430
Repayment of Federal Home Loan Bank advances (670,598) (1,011,715)
Net increase in short term borrowings 295,001 185,001
Purchase of Treasury stock (85,739) --
Dividends paid (493,356) (423,199)
------------ ------------
Net cash provided by financing activities 11,862,102 2,938,050
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,548,130 (3,802,637)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 16,823,806 22,172,224
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 20,371,936 $ 18,369,587
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the period for:
Interest on deposits and borrowings $ 6,811,226 $ 6,114,723
============ ============
Income taxes $ 859,236 $ 710,417
============ ============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
-7-
<PAGE> 8
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 unaudited 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> 9
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.
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2000
AND DECEMBER 31, 1999
Total assets at September 30, 2000 were approximately $257,917,000 compared to
$243,150,000 at December 31, 1999.
Cash and cash equivalents increased by $3,548,000 or 21.1% from December 31,
1999, to September 30, 2000, with liquid funds held in the form of federal funds
sold increasing $1,100,000 and cash and amounts due from depository institutions
increasing $2,448,000.
Investment securities available for sale increased by $3,957,000 or 9.4% from
December 31, 1999. Investments held to maturity increased $1,373,000 or 4.0%.
The Company increased purchases of investment securities due to a rise in
investment interest rates.
The net loan portfolio increased by $5,528,000 or 3.9% from December 31, 1999,
to September 30, 2000. An increase of $973,000 occurred in the commercial loan
category while real estate and consumer loan balances increased $1,981,000 and
$1,652,000 respectively. Management attributes the increase in commercial, real
estate, and consumer loan balances to the local economic conditions. The
increase in real estate loans is also attributable to a decrease in the Company
selling their real estate loans in the secondary market due to higher interest
rates.
Total deposits at September 30, 2000 were $214,555,000 compared to $201,738,000
at December 31, 1999, an increase of $12,817,000 or 6.4%. Money market accounts
increased $2,618,000 and time deposits increased $12,697,000. Interest bearing
demand decreased $3,762,000. Management attributes the changes to normal
transfers of funds within the deposit accounts, a promotional time certificate
being offered starting in February, 2000 and competitive time deposit rates.
Deposits at the Sugarcreek branch which opened in February 2000 totaled
$1,929,000 at September 30, 2000.
-9-
<PAGE> 10
Shareholders' Equity increased by $2,284,000 or 7.9% for the first nine months
of 2000, due to net earnings of $2,635,000 and an increase in net unrealized
income on securities of $228,000, offset by the payment of $493,000 in the
dividends and the purchase of treasury stock of $86,000. Management monitors
risk-based capital and leveraged capital ratios in order to assess compliance
with the regulatory guidelines. At September 30, 2000, the total capital ratio
was 20.31%; the Tier I capital ratio was 19.06%, and the leverage ratio was
11.87%, 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 Bank has received regulatory approval for a new branch in Apple Valley,
Ohio. The Bank estimates construction to begin in November 2000 with completion
anticipated in the summer of 2001.
-10-
<PAGE> 11
RESULTS OF OPERATIONS
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
Total interest income of $14,269,000 for the nine month period ended September
30, 2000, compares to $12,627,000 for the same period in 1999, an increase of
$1,642,000 or 13.0%. The majority of the overall increase in total interest
income is attributed to an increase in interest and fees on loans of $1,050,000
or 63.9% of the overall increase. The increase in interest and fees on loans is
due to increased volume in the loan portfolio and a rise in loan yields. Average
loan balances were $146,659,000 for the first nine months of 2000 compared to
$139,747,000 for the first nine months of 1999. The annualized yield on loans
was 9.54% for the nine month period ended September 30, 2000 and 9.02% for the
comparable 1999 period. The increase in interest on investment securities of
$558,000 is due mainly to an increase in average balances of $9,449,000
outstanding for 2000 compared to 1999.
Total interest expense of $6,844,000 for the nine month period ending September
30, 2000, represents an increase of $734,000 from the $6,110,000 reported for
the same nine month period in 1999. The increase in interest expense on deposits
of $729,000 is due to increases in volume and deposit rates. Average interest
bearing deposit balances were $179,826,000 for the first nine months of 2000
compared to $167,575,000 for the first nine months of 1999. The annualized cost
of deposits was 4.71% and 4.49% for the nine month periods ended September 30,
2000 and 1999 respectively. A decrease of $69,000 for interest expense incurred
on Federal Home Loan Bank advances, due to the average outstanding balance of
Federal Home Loan Bank advances decreasing $1,268,000 for the nine months ended
September 30, 2000 compared to 1999.
Net interest income of $7,424,000 for the nine months ended September 30, 2000,
compares to $6,517,000 for the same nine month period in 1999, an increase of
$907,000 or 13.9%.
Total other income for the nine month period ended September 30, 2000, of
$477,000 compares to $479,000 for the same nine month period in 1999, a decrease
of $2,000 or 0.4%. The service charge income on deposits increased $16,000 due
to an increase in the number of accounts being serviced. Gains on sale of loans
decreased $27,000 due to the Company's decreased involvement in offering fixed
rate loans for sale in the secondary market caused by rising fixed loan rates.
The increase in other income of $15,000 is mostly attributable to an increase of
$14,000 in alternative investment income due to increased activity in this area.
-11-
<PAGE> 12
RESULTS OF OPERATIONS (CONTINUED)
Total other expense of $4,200,000 for the nine months ended September 30, 2000,
compares to $3,904,000 for the same nine month period in 1999. This represents
an increase of $296,000 or 7.6%. Salary and employee benefits increased $165,000
or 8.7%. The increase in salary and employee benefits is attributable to an
increase in staff due to the addition of the branch in Sugarcreek, Ohio and
normal wage and benefit increases. The increase in other expenses of $100,000
was due in part to the costs associated with operating an additional branch.
Expenses such as stationary, supplies, printing, and advertising showed
significant increases. Increases in other expenses were brought about by those
items that are generally thought to be normal and recurring in nature.
Net income for the nine month period ended September 30, 2000, was $2,635,000,
an increase of $416,000 or 18.7% from the $2,219,000 reported at September 30,
1999.
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
Total interest income of $5,007,000 for the three month period ended September
30, 2000, compares to $4,257,000 for the same period in 1999, an increase of
$750,000 or 17.6%. The majority of the overall increase in total interest income
is attributed to an increase in interest and fees on loans of $507,000 or 67.6%
of the overall increase. The increase in interest and fees on loans is due to
increased volume in the loan portfolio and a rise in loan yields. Average loan
balances were $148,077,000 for this three months of 2000 compared to
$139,547,000 for the same three months of 1999. The annualized yield on loans
was 9.83% and 8.99% for the three month periods ended September 30, 2000 and
1999 respectively. The increase in interest on investment securities of $176,000
is due mainly to an increase in average balances outstanding for 2000 compared
to 1999 of $8,639,000.
Total interest expense of $2,480,000 for this three month period ending
September 30, 2000, represents an increase of $460,000 from the $2,020,000
reported for the same three month period in 1999. The increase in interest
expense on deposits of $450,000 is due to increases in volume and deposit rates.
Average interest bearing deposit balances were $184,843,000 for this three month
period of 2000 compared to $169,186,000 for the same three months of 1999. The
annualized cost on deposits was 4.96% and 4.42% for the three month periods
ended September 30, 2000 and 1999 respectively. This increase was offset by a
decrease in interest expense of $21,000 for Federal Home Loan Bank advances. The
average outstanding balance of Federal Home Loan Bank advances decreased
$1,161,000 for the third quarter for 2000 compared to 1999.
Net interest income of $2,527,000 for the three months ended September 30, 2000,
compares to $2,237,000 for the same three month period in 1999, an increase of
$290,000 or 13.0%.
Total other income for the three month period ended September 30, 2000, of
$163,000 compares to $156,000 for the same three month period in 1999, an
increase of $7,000 or 4.5%. The service charge income on deposits increased
$9,000, caused by an increase in the number of accounts being serviced. Gains on
sale of loans decreased $6,000 due to the Company's decreased involvement in
offering fixed rate loans for sale in the secondary market caused by rising
fixed loan rates.
-12-
<PAGE> 13
RESULTS OF OPERATIONS (CONTINUED)
Total other expense of $1,342,000 for the three months ended September 30, 2000,
compares to $1,374,000 for the same three month period in 1999. This represents
a decrease of $32,000 or 2.3%. Salary and employee benefits expense decreased
$79,000 due to a three pay month in July, 1999, compared to a normal two pay
month in July, 2000 and a decrease in employee benefits, offset by increases in
wages due to an increase in staff due to the addition of the branch in
Sugarcreek, Ohio and normal wage and benefits increases. The increase in other
expenses of $35,000 was due in part to significant increases in credit card
processing and advertising of $12,000 and $10,000, respectively. Increases in
other expenses were brought about by those items that are generally thought to
be normal and recurring in nature and by costs associated with the new branch in
Sugarcreek, Ohio.
Net income for the three month period ended September 30, 2000, was $959,000, an
increase of $220,000 or 29.8% from the $739,000 reported for the three month
period ended September 30, 1999.
-13-
<PAGE> 14
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
$20,372,000 at September 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, $46,268,000 as available for sale and has
an available unused line of credit of $12,832,000 with the Federal Home Loan
Bank of Cincinnati to provide additional sources of liquidity at September 30,
2000.
Cash was provided during the nine month period ended September 30 2000, mainly
from proceeds from the maturity and repayment of investment securities of $3.8
million, an increase in deposits of $12.8 million and $2.8 million from
operating activities. Cash was used during the nine month period ended September
30, 2000, mainly for the purchase of investment securities of $8.7 million and
to fund a net increase in loans of $5.7 million. In addition, $1.6 million was
also used to reduce Federal Home Loan Bank advances, purchase of premises and
equipment and pay dividends during the first nine months of 2000. Cash and cash
equivalents totaled $20.4 million at September 30, 2000, an increase of $3.6
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.
-14-
<PAGE> 15
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 September 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 in which the terms have been
renegotiated to provide a reduction or deferral of principal or interest as a
result of the deterioration of the borrower.
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
---- ----
(dollars in thousands)
<S> <C> <C>
Loans on nonaccrual basis $100 $287
Loans past due 90 days or more 358 312
Renegotiated loans -- --
---- ----
Total nonperforming loans 458 599
Other real estate -- --
Repossessed assets -- --
---- ----
Total nonperforming assets $458 $599
==== ====
Nonperforming loans as a percent of total loans 0.31% 0.42%
Nonperforming loans as a percent of total assets 0.18% 0.25%
Nonperforming assets as a percent of total assets 0.18% 0.25%
</TABLE>
Management monitors impaired loans on a continual basis. As of September 30,
2000, impaired loans had no material effect on the company's financial position
or results from operations.
The allowance for loan losses at September 30, 2000, totaled $2,030,000 or 1.4%
of total loans as compared to $1,888,000 or 1.3% at December 31, 1999.
Provisions for loan losses were $180,000 and $180,000 for the nine months ended
September 30, 2000 and 1999 respectively.
The level of funding for the provision is a reflection of the overall increase
in loans and is not an indication of any decline in the quality of the loan
portfolio. Nonperforming loans consist of approximately $82,000 in one to four
family residential mortgages, $2,000 in commercial real estate, $111,000 in
commercial loans and $263,000 in consumer loans. The collateral requirements on
such loans reduce the risk of potential losses to an acceptable level in
management's opinion.
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 of the Company. Management, through
the use of the quarterly evaluation, believes that the allowance is maintained
at an adequate level.
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<PAGE> 16
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
None
Item 5 - Other Information
None
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> 17
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: November 13, 2000 By: /s/ Luther E. Proper
------------------ ------------------------------
Luther E. Proper
President and
Chief Executive Officer
Date: November 13, 2000 By: /s/ Diane Knowles
------------------ ------------------------------
Diane Knowles
Chief Financial Officer
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