<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (Date of earliest event reported) January 27, 1999
CALUMET BANCORP, INC.
(Exact name of registrant as specified in its charter)
----------------------------
<TABLE>
<S> <C> <C>
Delaware 0-19829 36-3785272
(State or other jurisdiction (Commission (I.R.S. Employee
of incorporation) File Number) Identification No.)
1350 E. Sibley Boulevard 60419
Dolton, Illinois (Zip Code)
</TABLE>
Registrant's telephone number, including area code (708) 841-9010
Not Applicable
(Former name or former address, if changes since last year)
<PAGE> 2
Item 5 Other Events
On January 27, 1999, the Registrant issued a press release announcing
fourth quarter 1998 earnings of the Registrant. A copy of the press release as
such is filed by exhibit hereto and the text of same is hereby incorporated by
reference.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CALUMET BANCORP, INC.
(Registrant)
Date: February 24, 1999
/s/ John Garlanger
----------------------
John Garlanger
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EXHIBIT TABLE
DESCRIPTION EXHIBIT NO.
- ----------- -----------
Press Release Issued January 27, 1999 1
<PAGE> 1
EXHIBIT 1
For further information, call
John Garlanger, Senior Vice President
(708) 841-9010
FOR IMMEDIATE RELEASE
CALUMET BANCORP ANNOUNCES FOURTH QUARTER EARNINGS
DOLTON, IL (January 27, 1999) -- Calumet Bancorp, Inc.
(NASDAQ/NMS:CBCI), today reported net income of $1.2 million for the fourth
quarter of 1998, compared to $2.5 million for the fourth quarter of 1997.
Diluted earnings per share decreased to $0.36 for the fourth quarter of 1998,
compared to $0.72 for the fourth quarter of 1997. The primary reason for the
decrease in earnings was a $2.2 million decrease in income from limited
partnerships. During the fourth quarter of 1998 the Company recorded a $648,000
loss from its investment, through a limited partnership, in mortgage loan
servicing resulting primarily from impairment allowances for purchased mortgage
servicing rights, following a sharp drop in mortgage interest rates and
increased loan prepayments. The loss on loan servicing reduced diluted earnings
per share, net of income taxes, by approximately $0.13 per share for the
quarter. During the fourth quarter of 1997 the Company recorded a non-recurring,
$1.2 million gain on sale of a limited partnership investment property which
increased diluted earnings per share, net of income taxes, by approximately
$0.23.
Net income for the year ended December 31, 1998, decreased $2.1
million, to $5.9 million, compared to $8.0 million for the year ended December
31, 1997. Diluted earnings per share for 1998 was $1.73, compared to $2.29 for
1997. The primary reason for the decrease was a $4.1 million decrease in income
from limited partnerships. The decrease included a $5.8 million loss from the
Company's limited partnership investments in mortgage loan servicing, primarily
due to impairment allowances for purchased mortgage servicing rights, offset in
part by a $3.6 million gain on the sale of a limited partnership investment
property during the first quarter of 1998. The $5.8 million loss reduced diluted
earnings per share, net of income taxes, by approximately $1.12, while the $3.6
million gain increased diluted earnings per share, net of income taxes, by
approximately $0.71 for the year ended December 31, 1998.
Net interest income decreased $241,000, to $4.3 million for the
fourth quarter of 1998, compared to $4.5 million for the fourth quarter of 1997.
The average yield on interest earning assets decreased to 7.88% during the
fourth quarter of 1998, from 8.65% during the fourth quarter of 1997, while the
average cost of funds decreased to 4.91%, from 5.28% for these same periods,
resulting in a decrease in the rate spread to 2.97% in 1998, from 3.37% in 1997.
The net interest margin, based on average interest earning assets, decreased to
3.78% for the fourth quarter of 1998, compared to 4.03% for the fourth quarter
of 1997.
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CALUMET BANCORP ANNOUNCES FOURTH QUARTER EARNINGS, Page 2
Net interest income decreased $211,000, to $17.8 million for the
year ended December 31, 1998, compared to $18.0 million for the year ended
December 31, 1997. The average yield on interest earning assets decreased to
8.19% during 1998, from 8.51% during 1997, while the average cost of funds
decreased to 5.05%, from 5.22% for these same periods, resulting in a decrease
in the rate spread to 3.14% in 1998, from 3.29% in 1997. The net interest margin
decreased to 3.91% for 1998, compared to 3.92% for 1997.
The Company's provision for losses on loans was reduced to
$460,000 for the year ended December 31, 1998, from $700,000 for the year ended
December 31, 1997, primarily due to reductions in non-performing loans and loans
receivable. Net chargeoffs to the allowance for losses on loans were $501,000
during 1998, compared to $260,000 during 1997. The allowance for losses on loans
increased to 1.62% of loans receivable at December 31, 1998, compared to 1.54%
of loans receivable at December 31, 1997. Nonperforming loans to loans
receivable decreased to 0.91% at December 31, 1998, from 1.39% at December 31,
1997, primarily due to foreclosed loans transferred to real estate acquired
through foreclosure. Nonperforming assets to total assets decreased to 1.15% at
December 31, 1998, from 1.64% at December 31, 1997, primarily due to the
subsequent sale of property acquired through the foreclosures. The allowance for
losses on loans amounted to 178% of nonperforming loans at December 31, 1998,
increased from 111% at December 31, 1997.
Other income decreased $1.9 million, to a loss of $194,000 for the
fourth quarter of 1998, compared to income of $1.7 million for the fourth
quarter of 1997, primarily due to the $2.2 million decrease in income from
limited partnerships, which included the $648,000 loss from mortgage loan
servicing limited partnerships in 1998, and the non-recurring, $1.2 million gain
on sale of a limited partnership investment property in 1997.
Other income decreased $3.4 million, to $861,000 during the year
ended December 31, 1998, from $4.2 million during 1997, primarily due to the
$4.1 million decrease in income from limited partnerships, which included the
$5.8 million loss in mortgage loan servicing limited partnerships described
above, which was partially offset by increased sales of single family homes by
Illinois real estate development limited partnerships and the $3.6 million gain
on sale of a limited partnership residential investment property located in
Florida. At December 31, 1998, the Company had a remaining investment of $8.9
million in mortgage loan servicing, $2.6 million in residential development, and
$1.4 million in other real estate limited partnerships.
Operating expenses decreased $106,000, to $2.3 million for the
fourth quarter of 1998, compared to $2.4 million for the fourth quarter of 1997,
primarily due to a $109,000 decrease in compensation expense. Operating expenses
as a percent of average assets decreased to 1.88% in the fourth quarter of 1998,
from 1.93% in the fourth quarter of 1997. Return on average assets for the
fourth quarter of 1998 decreased to 1.01%, compared to 2.03% for the fourth
quarter last year. Return on average stockholders' equity for the fourth quarter
of 1998 decreased to 5.62%, compared to 12.48% for the fourth quarter last year.
<PAGE> 3
CALUMET BANCORP ANNOUNCES FOURTH QUARTER EARNINGS, Page 3
Operating expenses remained at approximately $9.5 million for
years 1998 and 1997. Compensation expense decreased $311,000, to $5.2 million in
1998, from $5.5 million in 1997, offsetting in part an increase of $94,000 in
professional fees. Data processing and occupancy (including equipment) expenses
increased $82,000 in 1998, primarily as the result of Year 2000 preparations.
Operating expenses as a percent of average assets increased to 1.96% in 1998,
from 1.93% in 1997. Return on average assets for 1998 was 1.21%, compared to
1.61% for 1997. Return on average stockholders' equity for 1998 was 6.92%,
compared to 10.20% for 1997.
The Company's effective income tax rate for 1998 was 31.95%,
compared to 33.30% for 1997. The effective tax rate for both years was reduced
from statutory rates by the dividends received deduction and by low income
housing tax credits.
The Company has 3,145,861 shares of common stock outstanding on
December 31, 1998, with a book value of $27.92 per share. Calumet Bancorp, Inc.
is the holding company of Calumet Federal Savings and Loan Association of
Chicago, which operates five financial services offices -- Dolton, Lansing, Sauk
Village and two in southeastern Chicago.
MERGER UPDATE
On September 9, 1998, the Company announced that a definitive
agreement had been signed pursuant to which FBOP Corporation would acquire, for
cash, all of the outstanding stock of the Company in a transaction valued at
approximately $111.6 million, or $32.00 per fully diluted share, after deducting
the Company's merger-related expenses. The transaction was expected to be
completed during the first quarter of 1999, subject to the approvals of
regulatory agencies and the Company's shareholders. On November 20, 1998, the
Company received a letter from FBOP stating that FBOP was prepared to terminate
the Merger Agreement unless the Company agreed to a price reduction of $4.0
million. FBOP asserted that, since the date of the Merger Agreement, actual and
potential losses associated with the Company's investment in mortgage loan
servicing limited partnerships constituted a "Material Adverse Change" under the
Merger Agreement, which would allow FBOP to terminate the Merger Agreement at
its option.
The Company convened a special meeting of its Board of Directors
on November 22, 1998, to consider FBOP's letter, and the Board rejected the
various assertions made in the FBOP letter, including, specifically, the
assertion that a "Material Adverse Change" had occurred. Nonetheless, in order
to avoid additional costs and time associated with litigation and without any
prejudice to the Company's'rights under the Merger Agreement, the Company
offered to accept a reduction in the aggregate merger consideration of $1.5
million provided that the Merger Agreement was amended (i) to exclude the
purchased mortgage servicing rights investments and changes in the value of
interest rate sensitive assets currently in the Company's portfolio from the
"Material Adverse Change" representation and condition under the Merger
Agreement and (ii) to provide for upward adjustment to the purchase price if the
Company recovers losses relating to the purchased mortgage servicing rights
prior to the closing of the merger.
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CALUMET BANCORP ANNOUNCES FOURTH QUARTER EARNINGS, Page 4
FBOP subsequently proposed that the Company accept a $2.0 million
reduction in the aggregate merger consideration and share in any recovery in the
value of the purchased mortgage servicing rights investments. FBOP was advised
that a reduction of that magnitude had been considered by the Board at its
special meeting and had been rejected. In response to the counter proposal of
FBOP it was the position of the Company's Board that in view of the substantial
reduction in purchase price embodied in the original $111.6 million merger
consideration, any reduction in excess of $1.5 million would be unfair to
Calumet's shareholders. As of 5:00 P.M., Monday, November 23, 1998, the
Company's offer had not been accepted and, therefore, terminated at that time in
accordance with its terms.
On December 8, 1998, the Company advised FBOP in writing that
unless it received, by 5:00 P.M. on December 15, 1998, unequivocal written
assurances that FBOP will fully perform its obligations under the Merger
Agreement, the Company will treat the Merger Agreement as terminated by FBOP's
anticipatory repudiation of the contract, its failure to provide reasonable
assurances of performances thereunder, and its continuing failure to perform its
obligations under the Merger Agreement.
On December 11, 1998, the Company received a letter from FBOP
stating in part that "FBOP has and will fully perform its obligations under the
Agreement and Plan of Merger and reserves all of its rights under that
Agreement." In that letter FBOP also requested a meeting with management of the
Company to discuss the Merger Agreement. The Company met with representatives of
FBOP on December 21, 1998. At that meeting FBOP would not give the Company any
assurance that FBOP would proceed with the Merger Agreement and informed the
Company that they would make no decisions on the Merger Agreement at that time
but would continue to reserve their rights under the Merger Agreement.
#####
Financial Highlights and Consolidated Statements of
Financial Condition, Income, and Stockholders' Equity and
Comprehensive Income attached.
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CALUMET BANCORP, INC.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (UNAUDITED) (AUDITED)
(Dollars in thousands, except per share data) DECEMBER 31, DECEMBER 31,
1998 1997
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<S> <C> <C>
Statement of Financial Condition:
Total assets $ 479,115 $ 486,626
Securities available-for-sale 50,672 46,967
Securities held-to-maturity 14,348 18,768
Loans receivable, net 356,544 376,988
Real estate held for sale, acquired through foreclosure 2,109 2,491
Investment in limited partnerships 12,905 24,645
Deposits $ 348,284 $ 348,461
Borrowings 32,310 45,060
Stockholders' equity 87,826 81,614
Common shares outstanding* 3,145,861 3,141,497
Stockholders' equity per share* $ 27.92 $ 25.98
Selected Asset Quality Ratios:
Loans receivable $ 373,117 $ 392,890
Non-performing loans 3,391 5,472
Allowance for losses on loans 6,029 6,070
Non-performing loans to loans receivable 0.91% 1.39%
Non-performing assets to total assets 1.15% 1.64%
Allowance for losses on loans to loans receivable 1.62% 1.54%
Allowance for losses on loans to non-performing loans 177.79% 110.93%
<CAPTION>
(UNAUDITED) (UNAUDITED) (AUDITED)
THREE MONTHS ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
-------------------------------------------------------------
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Results of Operations:
Net interest income $ 4,283 $ 4,524 $ 17,762 $ 17,973
Provision for losses on loans 118 100 460 700
Other income (194) 1,707 861 4,238
Other expenses 2,250 2,356 9,521 9,536
Income taxes (benefit) 512 1,300 2,761 3,988
-------------------------------------------------------------
Net income (loss) $ 1,209 $ 2,475 $ 5,881 $ 7,987
=============================================================
Basic earnings per share* $ 0.38 $ 0.78 $ 1.87 $ 2.46
Diluted earnings per share* $ 0.36 $ 0.72 $ 1.73 $ 2.29
Operating Ratios (Annualized):
Interest rate spread 2.97% 3.37% 3.14% 3.29%
Net interest margin 3.78% 4.03% 3.91% 3.92%
Return on average assets 1.01% 2.03% 1.21% 1.61%
Return on average equity 5.62% 12.48% 6.92% 10.20%
Non-interest expense to average assets 1.88% 1.93% 1.96% 1.93%
Stock price this period:
High* $ 30.44 $ 34.63 $ 39.00 $ 34.63
Low* 26.63 31.00 26.00 21.67
Close* 27.13 33.25 27.13 33.25
Weighted average common shares outstanding* 3,145,861 3,159,164 3,143,816 3,244,500
Weighted average diluted shares outstanding* 3,390,989 3,415,855 3,396,336 3,488,061
Average unearned ESOP shares included above* - 35,363 10,609 84,870
Average assets $ 479,585 $ 487,122 $ 486,749 $ 495,345
Average interest earning assets 453,502 449,275 454,547 458,048
Average stockholders' equity 85,980 79,307 85,046 78,283
</TABLE>
*Adjusted for 3-for-2 stock split distributed November 17, 1997.
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CALUMET BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
DECEMBER 31, DECEMBER 31,
1998 1997
-----------------------------------
<S> <C> <C>
ASSETS:
Cash $ 3,678 $ 2,932
Interest bearing deposits 30,130 5,351
-----------------------------------
CASH AND CASH EQUIVALENTS 33,808 8,283
Securities available-for-sale 50,672 46,967
Securities held-to-maturity
(fair value: $14,222 (1998); $18,606 (1997)) 14,348 18,768
Loans receivable, net 356,544 376,988
Investment in limited partnerships 12,905 24,645
Real estate held for sale acquired
through foreclosure 2,109 2,491
Office properties and equipment, net 5,113 4,468
Accrued interest receivable and other assets 3,616 4,016
-----------------------------------
TOTAL ASSETS $ 479,115 $ 486,626
===================================
LIABILITIES:
Deposits $ 348,284 $ 348,461
Federal Home Loan Bank advances 32,310 45,060
Advance payments by borrowers for
taxes and insurance 3,014 3,237
Income taxes 506 1,229
Accrued interest payable and other liabilities 7,175 7,025
-----------------------------------
TOTAL LIABILITIES 391,289 405,012
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 2,000,000 shares authorized -- --
Common stock, $.01 par value, 8,400,000 shares authorized,
3,620,454 shares issued 36 36
Additional paid-in capital 35,262 35,217
Retained earnings - substantially restricted 62,667 56,786
Accumulated other comprehensive income, net of tax 1,306 1,303
Unearned ESOP shares -- (283)
Treasury stock (474,593 shares) (11,445) (11,445)
-----------------------------------
TOTAL STOCKHOLDERS' EQUITY 87,826 81,614
-----------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 479,115 $ 486,626
====================================
</TABLE>
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CALUMET BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED) (AUDITED)
THREE MONTHS ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------
1998 1997 1998 1997
---------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME:
Loans $ 7,746 $ 8,592 $ 32,543 $ 34,013
Securities and deposits 1,187 1,119 4,691 4,987
---------------------------------------------------------------
Total interest and dividend income 8,933 9,711 37,234 39,000
INTEREST EXPENSE:
Deposits 4,104 4,416 16,812 17,641
Federal Home Loan Bank advances 546 771 2,660 3,386
---------------------------------------------------------------
Total interest expense 4,650 5,187 19,472 21,027
---------------------------------------------------------------
NET INTEREST INCOME 4,283 4,524 17,762 17,973
Provision for losses on loans 118 100 460 700
---------------------------------------------------------------
Net interest income after provision for losses 4,165 4,424 17,302 17,273
OTHER INCOME:
Gain on loans sold 67 41 193 167
Gain (loss) on sales of real estate (8) 16 137 70
Gain (loss) on sales of securities -- (271) 12 (230)
Income (loss) from limited partnerships (539) 1,637 (712) 3,385
Insurance and brokerage commissions 26 80 273 233
Other 260 204 958 613
---------------------------------------------------------------
Total other income (194) 1,707 861 4,238
OTHER EXPENSES:
Compensation and benefits 1,142 1,251 5,194 5,505
Office occupancy and equipment 389 350 1,402 1,295
Federal insurance premiums 51 57 215 231
Advertising and promotion 95 108 335 343
Data processing 156 139 607 525
Other 417 451 1,768 1,637
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Total other expenses 2,250 2,356 9,521 9,536
---------------------------------------------------------------
Income before income taxes 1,721 3,775 8,642 11,975
Income taxes 512 1,300 2,761 3,988
---------------------------------------------------------------
NET INCOME $ 1,209 $ 2,475 $ 5,881 $ 7,987
===============================================================
BASIC EARNINGS PER SHARE $ 0.38 $ 0.78 $ 1.87 $ 2.46
===============================================================
DILUTED EARNINGS PER SHARE $ 0.36 $ 0.72 $ 1.73 $ 2.29
===============================================================
</TABLE>
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CALUMET BANCORP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
(Dollars in thousands) (UNAUDITED)
COMPREHENSIVE INCOME STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------------
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Common stock:
Beginning and end of period $ 36 $ 36
--------------------------------------
Additional paid-in capital:
Beginning of period 35,217 35,090
Proceeds of option stock exercised 31 37
Tax benefits of MRP and option deductions 14 90
--------------------------------------
End of period 35,262 35,217
--------------------------------------
Retained earnings:
Beginning of period 56,786 73,817
Common stock split from treasury stock - (25,018)
NET INCOME $ 5,881 $ 7,987 5,881 7,987
--------------------------------------
End of period 62,667 56,786
--------------------------------------
Accumulated other comprehensive income:
Beginning of period unrealized gains on securities,
net of income taxes 1,303 239
Unrealized holding gains (losses) on securities arising
during period, net of income taxes (54) 968
Reclassification adjustment for (gains) losses on securities
included in net income, net of income taxes (8) 153
Effect of tax rate adjustment on unrealized gains 65 (57)
-------------------------------
Other comprehensive income 3 1,064 3 1,064
---------------------------------------------------------------------
End of period accumulated other comprehensive income 1,306 1,303
--------------------------------------
COMPREHENSIVE INCOME $ 5,884 $ 9,051
===============================
Less unearned ESOP shares:
Beginning of period (283) (849)
Shares to be released 283 566
--------------------------------------
End of period - (283)
--------------------------------------
Less stock held for MRP:
Beginning of period - (137)
Amortization - 137
--------------------------------------
End of period - -
--------------------------------------
Less treasury stock:
Beginning of period (11,445) (26,432)
Common stock split from treasury stock - 25,014
Purchases - (10,027)
--------------------------------------
End of period (11,445) (11,445)
--------------------------------------
Total stockholders' equity $ 87,826 $ 81,614
======================================
</TABLE>
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