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UNITED STATES
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 June 30, 1996
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 0-19829
CALUMET BANCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3785272
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
1350 EAST SIBLEY BOULEVARD, DOLTON, ILLINOIS 60419
(Address of principal executive offices) (Zip Code)
(708) 841-9010
(Registrant's telephone number, including area code)
Indicate by check mark whether 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
--- ---
As of August 9, 1996, the Company has 2,376,278 shares of $0.01 par value
common stock issued and outstanding.
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS PAGE NO.
-------------------- --------
Consolidated Statements of Financial Condition
as of June 30, 1996 and December 31, 1995 3
Consolidated Statements of Income
for the three months ended June 30, 1996 and 1995,
and for the six months ended June 30, 1996 and 1995 4
Consolidated Statements of Cash Flows
for the six months ended June 30, 1996 and 1995 5
Consolidated Statements of Stockholders' Equity
for the six months ended June 30, 1996 and 1995 7
Notes to Consolidated Financial Statements 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS 14
ITEM 2 - CHANGES IN SECURITIES 14
ITEM 3 - DEFAULT UPON SENIOR SECURITIES 14
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 14
ITEM 5 - OTHER INFORMATION 15
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURE PAGE 16
2
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CALUMET BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Assets:
Cash $ 2,224 $ 2,616
Interest-bearing deposits 5,021 6,041
-------- --------
CASH AND CASH EQUIVALENTS 7,245 8,657
Investment securities available-for-sale 71,163 68,153
Investment securities held-to-maturity 29,202 32,620
Loans receivable, net 367,018 375,467
Investment in limited partnerships 17,849 16,226
Real estate held for sale,
acquired through foreclosure 1,854 2,483
Office properties and equipment, net 4,222 4,267
Other assets 2,261 1,655
-------- --------
TOTAL ASSETS $500,814 $509,528
======== ========
Liabilities:
Deposits $369,612 $362,922
Federal Home Loan Bank advances 43,840 55,140
Advance payments by borrowers for
taxes and insurance 2,358 3,058
Income taxes 643 529
Miscellaneous liabilities 3,854 3,769
-------- --------
TOTAL LIABILITIES 420,307 425,418
Stockholders' Equity:
Preferred stock, $.01 par value,
2,000,000 shares authorized 0 0
Common stock, $.01 par value,
4,200,000 shares authorized
3,599,972 and 3,599,372 shares issued and outstanding 36 36
Additional paid-in-capital 34,706 34,665
Retained earnings - substantially restricted 71,921 68,418
Net unrealized gains (losses) on securities available-for-
sale, net of income tax (expense) benefit of $75 and
$(217) (72) 423
Less: Unearned ESOP shares (1,131) (1,414)
Stock held for management recognition plan (205) (273)
Treasury stock (1,177,294 and 926,494 shares) (24,748) (17,745)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 80,507 84,110
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $500,814 $509,528
======== ========
</TABLE>
3
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CALUMET BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Interest Income:
Loans $8,171 $7,944 $16,476 $15,981
Investment securities 1,546 1,670 3,158 3,387
------ ------ ------ ------
Total interest income 9,717 9,614 19,634 19,368
Interest Expense:
Deposits 4,566 4,182 9,143 7,852
Federal Home Loan Bank advances 652 792 1,334 1,698
------ ------ ------ ------
Total interest expense 5,218 4,974 10,477 9,550
------ ------ ------ ------
Net interest income 4,499 4,640 9,157 9,818
Provision for losses on loans 200 200 400 400
------ ------ ------ ------
Net interest income after
provision for losses on loans 4,299 4,440 8,757 9,418
Other Income:
Fees on loans sold 52 81 105 239
Gain (loss) on sale of real estate 12 (26) 58 (156)
Gain (loss) on sale of securities 0 33 20 (79)
Income from limited partnerships 534 (29) 1,054 38
Insurance commissions 79 93 110 130
Other 139 182 303 365
------ ------ ------ ------
Total other income 816 334 1,650 537
Other Expenses:
Compensation 1,195 1,218 2,886 2,834
Occupancy 323 292 647 644
Federal insurance premiums 210 202 423 405
Other general and administrative 623 810 1,249 1,453
------ ------ ------ ------
Total other expenses 2,351 2,522 5,205 5,336
------ ------ ------ ------
Income before income taxes 2,764 2,252 5,202 4,619
Income taxes 850 840 1,699 1,729
------ ------ ------ ------
Net income $1,914 $1,412 $3,503 $2,890
====== ====== ====== ======
Earnings per share $0.71 $0.48 $1.27 $0.99
====== ====== ====== ======
</TABLE>
4
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CALUMET BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
1996 1995
--------- ---------
<S> <C> <C>
Operating Activities:
Net income $ 3,503 $ 2,890
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for losses on loans 400 400
Provision for depreciation 159 165
Amortization of deferred loan and commitment fees (572) (495)
Amortization and accretion of premiums and discounts 126 70
Amortization and allocation of stock based benefits 351 351
Loss (gain) on sales of securities (20) 79
Equity loss (income) from limited partnerships (1,054) 215
Loss (gain) on sales of real estate (58) 156
Change in operating assets and liabilities:
Decrease (increase) in interest receivable (12) (100)
Decrease (increase) in other assets 88 3,481
(Decrease) increase in interest payable 59 756
(Decrease) increase in income taxes payable 406 (509)
(Decrease) increase in miscellaneous liabilities 764 1,701
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 4,140 9,160
Investing Activities:
Investment securities available-for-sale:
Purchases (23,396) (20,977)
Proceeds from sales 18,514 8,137
Maturities 0 13,700
Repayments 1,099 1,460
Investment securities held-to-maturity:
Purchases 0 (55)
Proceeds from sales 0 0
Maturities 0 0
Repayments 3,297 1,502
Principal and fees collected on loans 50,279 28,241
Loans originated (37,816) (31,076)
Loans purchased (3,312) (720)
Originations of loans held for sale (4,977) (6,181)
Cost of loans sold 4,977 6,181
Investments in limited partnerships (3,387) 0
Return of investment in limited partnerships 1,491 1,907
Proceeds from sales of real estate 212 590
Purchases of office property and equipment (114) (148)
-------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 6,867 2,561
</TABLE>
5
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CALUMET BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
1996 1995
-------- --------
<S> <C> <C>
Financing Activities:
Net increase (decrease) in demand and passbook accounts 5,496 (3,963)
Net increase (decrease) in certificates of deposit 1,082 16,153
Proceeds from Federal Home Loan Bank advances 19,900 21,000
Repayments of Federal Home Loan Bank advances (31,200) (41,850)
Net increase (decrease) in advance payments by
borrowers for taxes and insurance (700) (645)
Purchase of treasury stock (7,003) 0
Net proceeds from exercise of stock options 6 20
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (12,419) (9,285)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,412) 2,436
Cash and cash equivalents at beginning of period 8,657 9,350
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,245 $ 11,786
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest on deposits $ 9,031 $ 7,096
Interest on Federal Home Loan Bank advances 1,386 1,772
-------- --------
Total interest paid $ 10,417 $ 8,868
======== ========
Income taxes $ 912 $ 2,238
======== ========
Non-cash transactions:
Loans transferred to real estate owned $ 107 $ 1,020
Loans and non-cash transfers to facilitate
sales of real estate owned 552 359
</TABLE>
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CALUMET BANCORP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
1996 1995
---------- --------
<S> <C> <C>
Common stock:
Beginning of period $ 36 $ 36
Proceeds of option stock issued 0 0
-------- -------
End of period 36 36
-------- -------
Additional paid-in-capital:
Beginning of period 34,665 34,494
Tax benefit of MRP deduction 35 0
Proceeds of option stock issued 6 20
-------- -------
End of period 34,706 34,514
-------- -------
Unrealized gains and (losses) on securities
available for sale:
Beginning of period, net of income tax
(expense) benefit of ($217) and $1,269 423 (1,953)
Change in unrealized gains and (losses), net of
income tax (expense) benefit of $292 and ($1,221) (495) 1,925
-------- -------
End of period, net of income tax
(expense) benefit of ($75) and $48 (72) (28)
-------- -------
Retained earnings:
Beginning of period 68,418 62,453
Net income 3,503 2,890
-------- -------
End of period 71,921 65,343
-------- -------
Less unearned ESOP shares:
Beginning of period (1,414) (1,980)
Shares released 283 283
-------- -------
End of period (1,131) (1,697)
-------- -------
Less stock held for MRP:
Beginning of period (273) (410)
Amortization 68 68
-------- -------
End of period (205) (342)
-------- -------
Less Treasury stock:
Beginning of period (17,745) (14,354)
Purchases (7,003) 0
-------- -------
End of period (24,748) (14,354)
-------- -------
Total stockholders' equity $ 80,507 $83,472
======== =======
</TABLE>
7
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
for interim financial information and with the instructions to Form 10-Q and
Regulation S-X. Accordingly, they do not include all of the information
required by GAAP for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for fair presentation have been included. The results of operations
for the three months and the six months ended June 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996. Certain 1995 amounts have been reclassified to conform to 1996
presentation. For further information, refer to the consolidated financial
statements and notes thereto included in the Calumet Bancorp, Inc. (the
"Company") Annual Report on Form 10-K for the year ended December 31, 1995.
NOTE B - EARNINGS PER SHARE
Earnings per share of Common Stock outstanding for the three months and
the six months ended June 30, 1996 and 1995, respectively, have been determined
by dividing net income for the period by the weighted average number of shares
of common stock and common stock equivalents outstanding. Common stock
equivalents assume the exercise of stock options and use of proceeds to purchase
Treasury Stock at the average market price for the period. The weighted average
number of shares of common stock and common stock equivalents outstanding used
for this calculation were 2,700,192 and 2,928,002 for the three months ended
June 30, 1996 and 1995, and 2,755,793 and 2,924,223 for the six months ended
June 30, 1996 and 1995, respectively. The average number of uncommitted
(unearned) shares held for the Company's Employee Stock Ownership Plan ("ESOP")
and included in the weighted average shares outstanding for these same periods
were 120,233, 180,349, 127,305 and 187,421, respectively. Shares committed to
be released to the ESOP are expensed during the period based on original cost.
NOTE C - COMMITMENTS AND CONTINGENCIES
At June 30, 1996, the Company had approved loan commitments totalling
$12.4 million to originate loans, $9.5 million to sell loans, $12.1 million in
undisbursed loans-in-process, $23.0 million in unused lines of credit, and $7.0
million in credit enhancement arrangements. Commitments to fund loans and those
under credit enhancement arrangements have credit risk essentially the same as
that involved in extending loans to customers and are subject to the Company's
normal credit policies.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Calumet Bancorp, Inc. (the "Company") completed its initial public
offering of Common Stock on February 20, 1992. It owns all of the outstanding
Common Stock of Calumet Federal Savings and Loan Association of Chicago (the
"Association"), a federally chartered stock savings and loan association which
operates five financial services offices in the Chicago area -- in Dolton,
Lansing, Sauk Village, and two in southeastern Chicago. The Association owns
two first tier subsidiaries, Calumet Savings Service Corporation and Calumet
Residential Corporation, both wholly owned. Calumet Residential Corporation
owns 51% of a second tier subsidiary, Calumet United Limited Liability Company.
Calumet Savings Service Corporation owns two second tier subsidiaries, Calumet
Mortgage Corporation of Idaho and Calumet Mortgage Corporation of New Mexico,
both wholly owned.
The Company's business activities currently consist of investment in
equity securities, participation as a limited partner in real estate investment
and loan servicing partnerships, and operation of the Association. The
Association's principal business consists of attracting deposits from the
public and investing these deposits, together with funds generated from
operations and borrowings, primarily in residential mortgage loans. The
Association's deposit accounts are insured to the maximum allowable by the
FDIC.
The Association's results of operations are dependent primarily on net
interest income, which is the difference between the interest income earned on
its loan and investment securities portfolios and its cost of funds, consisting
of interest paid on its deposits and borrowings. The Association's operating
results are also affected by the sale of insurance, annuities and real estate
through its second tier subsidiaries, and to a lesser extent, loan commitment
fees, customer service charges and other income. Operating expenses of the
Association are primarily employee compensation and benefits, equipment and
occupancy costs, federal insurance of accounts premiums and other
administrative expenses. The Association's results of operations are further
affected by economic and competitive conditions, particularly changes in market
interest rates, government policies and actions of regulatory authorities.
Current banking legislation in Congress deals with, among other things,
the recapitalization of the Savings Association Insurance Fund ("SAIF"), and
the disparity in deposit insurance premiums between savings institutions
insured by SAIF and banks insured by the Bank Insurance Fund ("BIF"). Although
a number of solutions to these problems have been proposed, it appears likely
that any final Congressional legislation will include among its provisions, a
one-time special assessment on all SAIF-insured institutions, including the
Association, of 0.85% of total deposits. For the Association, this would
result in a one-time after-tax charge of approximately $2.0 million, assuming
the assessment is fully tax deductible. While this charge would have a
negative impact
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on the Company's earnings and book value for the period of assessment, it is
expected that any legislation providing for such an assessment would also
mandate a significant reduction in SAIF-insured institutions' deposit insurance
premium assessments. This action would have a positive effect on the
Association's earnings in future periods.
FINANCIAL CONDITION
Total assets decreased $8.7 million, or 1.7%, to $500.8 million at June
30, 1996, from $509.5 million at December 31, 1995. Net loans receivable
decreased $8.4 million, or 2.3%, to $367.0 million at June 30, 1996, from
$375.5 million at December 31, 1995, with originations and purchases of $41.1
million during the first six months of 1996.
The Company's lending activities have been concentrated primarily in
residential real estate secured by first liens. At June 30, 1996,
approximately 57.8% of the Company's mortgage loans were secured by one-to-four
family residential properties, 15.6% by multifamily income producing
properties, and 26.6% by commercial properties and land. At December 31, 1995,
these concentrations were 57.6%, 16.3%, and 26.1%, respectively. At June 30,
1996, the Company's mortgage loan portfolio was geographically distributed
primarily in Illinois (35.4%), Colorado (27.5%), Idaho (17.3%), and New Mexico
(13.4%). At December 31, 1995, these distributions were 37.2%, 28.0%, 16.7%,
and 11.5%, respectively.
Deposits increased $6.7 million, or 1.8%, to $369.6 million at June 30,
1996, from $362.9 million at December 31, 1995. These funds, together with
funds generated from operations and asset reductions, were used to pay down
Federal Home Loan Bank advances as they became due, reducing advances by $11.3
million, or 20.5%, to $43.8 million at June 30, 1996, from $55.1 million at
December 31, 1995.
Stockholders' equity decreased $3.6 million, or 4.3%, to $80.5 million
at June 30, 1996, from $84.1 million at December 31, 1995. The decrease came
primarily from treasury stock purchases of $7.0 million, offset by earnings of
$3.5 million, $351,000 in credits from employee benefit plans, and reduced by
$495,000 in net unrealized losses on securities. On June 25, 1996, the Board
of Directors of Calumet Federal Savings declared a $9.0 million dividend
payable to Calumet Bancorp, Inc. on June 26, 1996. During the first six months
of 1996 the Company repurchased 250,800 shares of its stock at an average price
of $27.92 per share. The Company has 2,422,678 shares of common stock
(including 120,233 unearned ESOP shares) outstanding on June 30, 1996, with a
book value of $33.23 per share.
ASSET QUALITY
Non-performing loans decreased to $5.3 million, or 1.45% of total loans
at June 30, 1996, from $5.8 million, or 1.53% of total loans at December 31,
1995. Non-performing assets decreased to $7.2 million, or 1.44% of total assets
at June 30, 1996, from $8.2 million, or 1.62% of total assets at December 31,
1995. The allowance
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for losses on loans increased to $5.3 million, or 99.59% of non-performing
loans at June 30, 1996, from $4.9 million, or 84.58% of non-performing loans at
December 31, 1995. The allowance for losses on loans increased to 1.45% of
total loans at June 30, 1996, from 1.30% of total loans at December 31, 1995.
RESULTS OF OPERATIONS
Net income for the second quarter of 1996 was $1.9 million, compared to
$1.4 million for the second quarter of 1995. Earnings per share of common
stock for the second quarter of 1996 was $0.71, compared to $0.48 for the
second quarter of 1995. Net income for the six months ended June 30, 1996 was
$3.5 million, compared to $2.9 million for the six months ended June 30, 1995,
while earnings per share increased to $1.27 for the first six months of 1996,
from $0.99 for the first six months of 1995.
Return on average assets increased to 1.53% for the second quarter of
1996, from 1.14% for the same quarter last year. Return on average
stockholders' equity for the second quarter of 1996 was 9.23%, compared to
6.84% for the same quarter last year. Return on average assets increased to
1.40% for the first half of 1996, from 1.16% in the first half of 1995.
Return on average stockholders' equity for the first half of 1996 was 8.35%,
compared to 7.12% in 1995.
NET INTEREST INCOME
Net interest income decreased by $141,000, to $4.5 million during the
second quarter of 1996, compared to $4.6 million during the second quarter of
1995, primarily due to a $384,000 increase in the cost of deposits, offset by a
$140,000 decrease in the cost of borrowings and a $103,000 increase in interest
income. The average yield on interest earning assets increased to 8.23% during
the second quarter of 1996, from 8.19% in 1995, while the average cost of funds
increased to 5.17%, from 4.97% for these same periods, resulting in a decrease
in the rate spread to 3.06% in 1996, from 3.22% in 1995.
Net interest income decreased by $661,000, to $9.2 million during the
first six months of 1996, compared to $9.8 million during the first six months
of 1995, primarily due to a $1.3 million increase in the cost of deposits,
offset by a $364,000 decrease in the cost of borrowings and a $266,000 increase
in interest income. The average yield on interest earning assets increased to
8.31% during the first half of 1996, compared to 8.27% for the first half of
1995, while the average cost of funds increased to 5.20% in 1996, from 4.76% in
1995, resulting in a decrease in the rate spread to 3.11%, compared to 3.51%
last year. However, during the first six months of 1995 the Company recovered
$330,000 in nonaccrued interest as the result of collection in full of interest
on two seriously delinquent loans. This had the effect of increasing the
average yield on interest earning assets, the rate spread, and the net interest
margin by 0.14% during the first half of 1995.
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PROVISION FOR LOAN LOSSES
The allowance for losses on loans is established through a provision for
losses on loans based on management's evaluation of the risk inherent in its
loan portfolio and general economic conditions. Management's evaluation
includes a review of all loans on which full collectibility may not be
reasonably assured, the estimated fair value of the underlying collateral,
economic conditions, historical loan loss experience and the Company's internal
credit review process. The provision for losses on loans has been maintained at
$200,000 per quarter for 1996, the same as for 1995. Net recoveries credited
to the allowance for losses on loans amounted to $45,000 during the first half
of 1996. Net charges to the allowance for losses on loans amounted to
$108,000 during the first half of 1995.
OTHER INCOME
Other income increased to $816,000 during the second quarter of 1996,
from $334,000 in the second quarter of 1995, primarily due to the $563,000
increase in income from limited partnerships. Other income increased to $1.7
million during the first half of 1996, from $537,000 during the first half of
1995, primarily due to the $1.0 million increase in income from limited
partnerships, but also due to a $214,000 swing from losses to gains on sales of
real estate acquired through foreclosure, and a $99,000 swing from losses to
gains on sales of securities. The significant improvement in income from
limited partnerships comes primarily from the Company's investments in single
family development projects located in Illinois, although there has also been an
improvement in the performance of its Colorado real estate investments. Fees on
loans sold decreased $134,000, to $105,000 in the first six months of 1996, from
$239,000 in the first six months of 1995, primarily due to a decrease in loans
sold in the secondary market by the Company's Idaho subsidiary.
OPERATING EXPENSES
Operating expenses decreased during the second quarter of 1996 to $2.4
million, from $2.5 million during the second quarter of 1995. Operating
expenses as a percent of average assets decreased to 1.87% in the second quarter
of 1996, from 2.03% in 1995, primarily as the result of a $177,000 decrease in
legal expenses. During the second quarter of 1995 the Company incurred
significant legal expenses related to litigation involving Florida loans,
foreclosures and limited partnership investments which has not been repeated in
1996. Net non-interest expense as a percent of average assets improved to 1.22%
for the second quarter of 1996, from 1.76% for the second quarter of 1995. The
Company's efficiency ratio was 46.0% for the second quarter of 1996, compared to
52.8% in 1995.
Operating expenses decreased during the first half of 1996 to $5.2
million, from $5.3 million in the first half of 1995. Operating expenses as a
percent of average assets
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decreased to 2.08% in the first half of 1996, from 2.15% in the first half of
1995, primarily as the result of a $172,000 decrease in legal costs. Net
non-interest expense as a percent of average assets improved to 1.42% for the
first half of 1996, from 1.93% in the first half of 1995. The Company's
efficiency ratio was 50.0% for the first half of 1996, compared to 53.6% in
1995.
INCOME TAXES
During the second quarter of 1996 the Company accrued income tax credits
related to low income housing in the amount of $124,000, which had the effect
of reducing the Company's effective income tax rate to 30.75% for the quarter
and 32.66 % for the first half of 1996, compared to 37.30% and 37.43% for the
comparable 1995 periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds include deposits and Federal Home
Loan Bank advances, principal and interest payments on loans and securities,
maturing investment securities, and sales of securities from the
available-for-sale portfolio. While maturities and scheduled amortization of
loans and mortgage-backed securities are a predictable source of funds, deposit
flows and mortgage prepayments are greatly influenced by interest rates,
general economic conditions, and competition.
The primary investing activity of the Company is the origination and
purchase of mortgage loans and the purchase of securities. During the first
half of 1996 the Company originated and purchased mortgage loans in the amount
of $41.1 million, compared to $31.8 million during the first half of 1995.
During the first half of 1996 the Company purchased securities in the amount of
$23.4 million, compared to $21.0 million during the first half of 1995.
During the first half of 1996 and 1995, the Company increased its
deposit base by $6.7 million and $12.9 million, respectively, through a
combination of more aggressive rates and new products. These funds, together
with funds from operations, loan repayments, and securities, were used to repay
maturing Federal Home Loan Bank advances a net $11.3 million in 1996 and $21.9
million in 1995.
Federal regulations require a savings institution to maintain an average
daily balance of liquid assets equal to at least 5% of the average daily
balance of its net withdrawable deposits and short term borrowings. In
addition, short term liquid assets must constitute 1% of net withdrawable
deposits and short term borrowings. Management has consistently maintained
levels in excess of the regulatory requirement. The Association's average
liquidity ratios for the first six months of 1996 and 1995 were 8.1% and 8.3%,
respectively. The Association's average short term liquidity ratios for these
same periods were 2.1% and 2.8%, respectively.
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The Association is also required to maintain specific amounts of capital
pursuant to federal regulations. As of June 30, 1996, the Association was in
compliance with all regulatory capital requirements, with tangible and core
capital of 10.2%, and risk-based capital of 17.3%, well above the requirements
of 1.5%, 3.0%, and 8.0%, respectively.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Holding Company and the Association are not engaged in any legal
proceedings of a material nature at the present time.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its annual meeting of shareholders on April 24,
1996.
(b) The names of each director elected at the annual meeting are as
follows:
Carole J. Lewis Tytus R. Bulicz
Louise Czarobski
The names of each director whose term of office continued after
the annual meeting are as follows:
William A McCann Sylvester Lulinski
Thaddeus Walczak Dr. Henry J Urban
(c) The following matters were voted upon at the annual meeting and the
number of votes cast with respect to the matter follows:
(i) Ratification of the appointment of Ernst & Young LLP as
the Company's independent auditors for the fiscal year
ending December 31, 1996:
For Against Abstain
--- ------- -------
2,135,245 600 2,952
14
<PAGE> 15
(d) None.
ITEM 5. OTHER INFORMATION
On June 20, 1996, Sylvester Lulinski, for health reasons aggravated by
his age, resigned as a director of the Registrant and the Association. On
June 25, 1996, the Board of Directors of both the Registrant and the Association
elected Darryl Erlandson a director to serve until the next annual meeting of
shareholders of the Registrant and the Association. Mr. Erlandson is the
son-in-law of Ms. Carole J. Lewis, the President and a director of both the
Registrant and the Association. Mr. Erlandson is also President of CSSC.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
15
<PAGE> 16
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
DATE: AUGUST 9, 1996 CALUMET BANCORP, INC.
/S/THADDEUS WALCZAK
-------------------
THADDEUS WALCZAK,
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
DATE: AUGUST 9, 1996 /S/JOHN GARLANGER
-----------------
JOHN GARLANGER,
CHIEF FINANCIAL OFFICER
16
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