<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
_____________________
FORM 10-Q
(MARK ONE)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the Quarterly Period Ended September 30, 1996.
or
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the Transition Period From __________ to __________.
Commission File Number 0-20804
KANKAKEE BANCORP, INC.
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(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 36-3846489
- --------------------------------------------- ---------------------------------------
(State or Other Jurisdiction of Incorporation (I.R.S. Employer Identification Number)
or Organization)
310 SOUTH SCHUYLER AVENUE, KANKAKEE, ILLINOIS 60901
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
(815) 937-4440
- ------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 November 7, 1996, there were 1,414,918 issued and outstanding shares of
the Issuer's Common Stock (exclusive of 335,082 shares of the Issuer's Common
Stock held as treasury stock).
<PAGE>
KANKAKEE BANCORP, INC.
INDEX
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Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial
Statements (Unaudited)
Statements of Financial Condition,
September 30, 1996 and December 31, 1995 1
Statements of Income, Three Months
Ended September 30, 1996 and 1995 2
Statements of Income, Nine Months
Ended September 30, 1996 and 1995 3
Statements of Cash Flows, Nine Months
Ended September 30, 1996 and 1995 4 - 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7 - 18
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<S> <C> <C>
September 30, December 31,
1996 1995
------------- ------------
Assets
Cash and amounts due from banks $ 10,445,507 $ 8,849,933
Federal funds sold 2,300,000 13,090,000
Money market funds 4,864,104 3,754,576
------------- -------------
Cash and cash equivalents 17,609,611 25,694,509
Certificates of deposit 50,000 287,500
Investment securities
available-for-sale - at market 54,927,324 47,710,703
Investment securities (fair value:
September 30, 1996 - $72,223;
December 31, 1995 - $74,545) 72,223 74,545
Mortgage-backed securities
available-for-sale - at market 30,716,465 36,118,544
Mortgage-backed securities (fair value:
September 30, 1996 - $254,890;
December 31, 1995 - $378,182) 254,652 362,843
Nonmarketable equity securities 501,100 551,100
Loans 236,711,152 232,274,230
Less: Allowance for losses on loans 2,357,001 2,387,856
------------- -------------
Net loans 234,354,151 229,886,374
Loans held for sale 1,046,937 581,054
Real estate held for sale 199,815 834,136
Federal Home Loan Bank stock, at cost 1,956,000 1,546,500
Office properties and equipment 4,735,318 5,099,536
Accrued interest receivable 2,478,670 2,483,548
Prepaid expenses and other assets 1,571,973 1,269,868
Intangible assets 2,451,343 2,602,237
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Total assets $352,925,582 $355,102,997
------------- -------------
------------- -------------
Liabilities and stockholders' equity
Liabilities
Deposits $283,898,572 $286,079,750
Short term borrowings 23,090,000 20,370,000
Other borrowings 7,925,000 9,275,000
Advance payments by borrowers for
taxes and insurance 474,471 1,630,066
Other liabilities 2,181,273 1,297,494
------------ -------------
Total liabilities 317,569,316 318,652,310
------------ -------------
Stockholders' equity
Preferred stock, $.01 par value;
authorized, 500,000 shares; none
outstanding - -
Common stock, $.01 par value;
authorized, 3,500,000 shares;
issued and outstanding: September 30,
1996 - 1,414,918; December 31,
1995 - 1,453,418 17,500 17,500
Additional paid-in capital 16,181,726 16,186,914
Retained income, substantially
restricted 26,558,510 26,015,559
Unrealized gains (losses) on available-
for-sale securities, net of related
income taxes (799,690) 188,849
Employee Stock Ownership Plan loan (680,449) (756,055)
Bank Incentive Plan and Trusts (44,822) (75,434)
------------ -------------
41,232,775 41,577,333
Less cost of treasury stock 5,876,509 5,126,646
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Total stockholders' equity 35,356,266 36,450,687
------------ -------------
Total liabilities and stockholders'
equity $352,925,582 $355,102,997
------------ -------------
------------ -------------
</TABLE>
See notes to consolidated financial statements (unaudited)
1
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
<S> <C> <C>
1996 1995
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Interest income:
Loans $4,844,505 $4,581,406
Mortgage-backed securities 487,471 321,341
Investment securities 1,139,502 935,741
---------- -----------
Total interest income 6,471,478 5,838,488
---------- -----------
Interest expense:
Deposits 3,412,619 3,074,890
Borrowed funds 392,100 215,024
---------- -----------
Total interest expense 3,804,719 3,289,914
---------- -----------
Net interest income 2,666,759 2,548,574
Provision for losses on loans 23,300 22,835
---------- -----------
Net interest income after provision
for losses on loans 2,643,459 2,525,739
Other income:
Net gain on sales of securities 41,376 -
Net gain on sales of real estate
held for sale 6,137 504
Net gain on sales of loans 14,859 5,618
Fee income 210,158 151,745
Insurance commissions 35,877 13,446
Other 819,535 92,711
---------- ----------
Total other income 1,127,942 264,024
---------- ----------
Other expenses:
Compensation and benefits 1,075,314 1,186,659
Occupancy 173,479 172,498
Furniture and equipment 105,889 72,309
Federal insurance premiums 1,867,470 152,970
Advertising 31,095 43,117
Provisions for losses on real estate
held for sale - -
Data processing services 70,884 66,106
Telephone and postage 74,952 74,926
Other general and administrative 412,833 382,598
---------- ----------
Total other expenses 3,811,916 2,151,183
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Income before income taxes (40,515) 638,580
Income taxes (benefit) (13,760) 217,100
---------- ----------
Net income (loss) $ (26,755) $ 421,480
---------- ----------
---------- ----------
Earnings (loss) per share ($0.02) $0.27
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------- -----
</TABLE>
See notes to consolidated financial statements (unaudited)
2
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------
<S> <C> <C>
1996 1995
------ ------
Interest income:
Loans $14,315,785 $13,023,889
Mortgage-backed securities 1,603,315 544,956
Investment securities 3,434,050 3,072,272
----------- ------------
Total interest income 19,353,150 16,641,117
----------- ------------
Interest expense:
Deposits 10,229,822 8,707,657
Borrowed funds 1,234,834 225,070
----------- ------------
Total interest expense 11,464,656 8,932,727
----------- ------------
Net interest income 7,888,494 7,708,390
Provision for losses on loans 61,397 157,225
----------- -----------
Net interest income after provision
for losses on loans 7,827,097 7,551,165
Other income:
Net gain on sales of securities 12,567 21,655
Net gain (loss) on sales of real
estate held for sale 44,565 (3,788)
Net gain (loss) on sales of loans (5,209) 8,192
Loan and late charge fees 126,368 95,652
Fee income 448,437 366,849
Insurance commissions 76,022 45,863
Other 1,029,793 271,827
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Total other income 1,732,543 806,250
----------- ------------
Other expenses:
Compensation and benefits 3,355,997 3,336,961
Occupancy 524,347 536,887
Furniture and equipment 272,975 217,588
Federal insurance premiums 2,186,996 445,731
Advertising 96,774 146,525
Provision for losses on real
estate held for sale - 50,000
Data processing services 245,998 183,468
Telephone and postage 219,921 189,679
Other general and administrative 1,384,155 1,229,897
----------- ------------
Total other expenses 8,287,163 6,336,736
----------- ------------
Income before income taxes 1,272,477 2,020,679
Income taxes 298,761 687,050
----------- ------------
Net income $ 973,716 $1,333,629
----------- ------------
----------- ------------
Earnings per share $0.64 $0.84
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----- -----
</TABLE>
See notes to consolidated financial statements (unaudited)
3
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------
<S> <C> <C>
1996 1995
------ ------
Cash flows from operating activities
Net income $973,716 $1,333,629
Adjustments to reconcile net income to
net cash provided (used) by operating
activities:
Provision for losses on loans 61,397 157,225
Provision for losses on real estate
held for sale - 50,000
Depreciation and amortization 511,222 374,624
Amortization of investment premiums
and discounts-net 289,809 24,946
Accretion of loan fees and discounts (90,426) (98,614)
Deferred income tax provision (benefit) (13,710) 244,981
Origination of loans held for sale (4,776,690) (2,345,361)
Proceeds from sales of loans 4,305,598 1,088,984
Increase in interest receivable (13,522) (79,317)
Increase (decrease) in interest
payable on deposits (44,644) 25,999
Proceeds from sales of trading
securities 21,412,500 -
Purchase of trading securities (21,644,844) -
Net (gain) loss on sales of loans 5,209 (8,192)
Net gain on sales of securities (12,567) (21,655)
Net (gain) loss on sales of real
estate held for sale (44,565) 3,788
Net gain on sale of branch (707,675) -
Other, net 1,084,919 (397,817)
----------- ----------
Net cash provided (used) by
operating activities 1,295,727 353,220
----------- ----------
Cash flows from investing activities
Investment securities:
Available-for-sale:
Purchases (26,961,940) (3,059,513)
Proceeds from sales 4,290,751 12,975,469
Proceeds from maturities 14,500,000 -
Held-to-maturity:
Purchases - (2,000,000)
Proceeds from maturities 2,322 5,002,182
Mortgage-backed securities:
Available-for-sale
Purchases (2,967,588) (17,340,957)
Proceeds from maturities 7,831,689 1,562,917
Held-to-maturity:
Proceeds from maturities 108,192 562,022
Purchases of certificates of deposit (826,640) (675,000)
Proceeds from maturities of
certificates of deposit 1,064,140 1,935,326
Proceeds from sales of real
estate 939,361 21,018
Net loan fees deferred 144,349 71,190
Loans originated (57,384,896) (52,612,494)
Loans purchased (1,000,000) (378,136)
Principal collected on loans 49,824,039 39,442,287
Purchases of office properties
and equipment-net (369,523) (336,009)
Cash transferred to buyer on sale
of branch (3,852,993) -
Payment of acquisition costs (22,868) -
----------- ------------
Net cash used by investing activities (14,681,605) (14,829,698)
----------- ------------
</TABLE>
See notes to consolidated financial statements (unaudited)
4
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (continued)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------
<S> <C> <C>
1996 1995
------ ------
Cash flows from financing activities
Net (decrease) increase in non-certificate
of deposit accounts 1,451,110 (18,850,423)
Net increase in certificates of deposit 5,036,049 19,522,224
Decrease in advance payments by
borrowers for taxes and insurance (1,370,363) (1,169,465)
Proceeds from short-term borrowing 34,460,000 17,625,000
Repayments of short-term borrowed funds (31,740,000) (8,715,000)
Proceeds from other borrowing 650,000 6,075,000
Repayments of other borrowings (2,000,000) -
Proceeds from exercise of stock options 6,912 5,431
Dividends paid (430,765) (455,486)
Purchase of treasury stock (761,963) (470,638)
---------- -----------
Net cash provided by financing activities 5,300,980 13,566,643
---------- -----------
Decrease in cash and cash equivalents (8,084,898) (909,835)
Cash and cash equivalents:
Beginning of period 25,694,509 14,047,105
----------- -----------
End of period $17,609,611 $13,137,270
----------- -----------
----------- -----------
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest on deposits $10,274,500 $8,681,700
----------- -----------
----------- -----------
Interest on borrowed funds $1,285,800 $100,100
---------- ---------
---------- ---------
Income taxes $689,436 $460,000
-------- ---------
-------- ---------
Supplemental disclosures of non-cash investing activities:
Real estate acquired through foreclosure $224,830 $79,345
-------- --------
-------- --------
Sale of Branch:
Cash paid $3,774,524
----------
Assets disposed:
Cash ($78,469)
Loans (3,845,182)
Accrued interest receivable (18,400)
Premises and equipment (238,181)
Other assets (15,468)
Liabilities assumed by buyer:
Non-certificates of deposit 3,684,830
Certificates of deposit 4,922,897
Accrued interest payable 15,966
Escrows on loans 51,664
Other liabilities 2,542
Gain on sale of branch (707,675)
-----------
$3,774,524
-----------
-----------
</TABLE>
See notes to consolidated financial statements (unaudited)
5
<PAGE>
KANKAKEE BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1996
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-Q. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The statement of condition
at December 31, 1995 has been derived from the audited financial statements at
that date, but does not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
Operating results for the three-month and nine-month periods ended September 30,
1996 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included in the annual
report for Kankakee Bancorp, Inc. (the "Company") on Form 10-K for the year
ended December 31, 1995.
Note 2 - Earnings Per Share
Earnings per share of common stock have been determined by dividing net
income (loss) for the period by the weighted average number of shares of common
stock and common stock equivalents outstanding. Common stock equivalents assume
exercise of stock options and the calculation assumes purchase of treasury stock
with the option proceeds at the average market price for the period (when
dilutive). The Company adopted an incentive stock option plan for the benefit of
directors, officers and employees and on December 30, 1992 awarded stock options
subject to stockholder approval. The stockholders approved the plan at their
annual meeting on April 23, 1993. Earnings per share have been determined
considering the stock options granted, net of stock options which have been
exercised.
Note 3 - Accounting for Certain Investments in Debt and Equity Securities
At September 30, 1996, in accordance with the requirements of Statement of
Financial Accounting Standards No. 115 ("SFAS 115"), "Accounting for Certain
Investments in Debt and Equity Securities", stockholders' equity has been
reduced by $799,690. This represents the amount by which the book value of the
available-for-sale securities and the available-for-sale mortgage-backed
securities exceeded the market value, net of an income tax benefit of $411,912.
An increase in market interest rates during the nine months ended September 30,
1996 resulted in a $988,539 decrease in the market value, net of income tax
effect, of the available-for-sale securities and the available-for-sale
mortgage-backed securities during the nine months. At the end of 1995, the
market value of the available-for-sale securities portfolio exceeded the book
value by $188,849, net of income tax benefit.
6
<PAGE>
KANKAKEE BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company was formed in late 1992 under the laws of the State of Delaware
for the purpose of becoming the savings and loan holding company of Kankakee
Federal Savings Bank (the "Bank"), the Company's principal subsidiary.
The Bank was originally chartered in 1885 as an Illinois savings and loan
association and was converted to a federally chartered thrift institution in
1937. The Bank serves the financial needs of families and local businesses in
its primary market areas through its main office at 310 South Schuyler Avenue,
Kankakee, Illinois and eight branch offices located in the communities of
Ashkum, Bourbonnais, Champaign, Dwight, Herscher, Hoopeston, Manteno and
Momence, Illinois. The Bank's business involves attracting deposits from the
general public and using such deposits to originate residential mortgage loans
and, to a lesser extent, commercial real estate, consumer, commercial business,
multi-family and construction loans in its primary market areas. The Bank also
invests in investment securities, mortgage-backed securities and various types
of short term liquid assets.
SIGNIFICANT THIRD QUARTER EVENTS
There were two events during the third quarter of 1996 that significantly
impacted net income for both the quarter and the nine months ended September 30,
1996, and contributed to a slight decrease in total assets. The combined impact
of these two events on net income was a loss of $655,000, or $.44 per share.
The first event was a one-time assessment of 65.7 basis points (.657%) of
the Company's federally-insured deposit base as of March 31, 1995. The
assessment, which became law on September 30, 1996, was levied on deposits
insured by the Savings Institutions Insurance Fund ("SAIF") of the Federal
Deposit Insurance Corporation. The purpose of this assessment was to
increase the balance of SAIF to the level required by law. The Company
recorded an expense of $1.7 million during the quarter to meet its obligation
for this assessment. Net of tax benefit of $578,000, this transaction
reduced net income for both the quarter and the nine months ended September
30, 1996 by $1.1 million, or $.75 per share. The special assessment should
also have the effect of substantially reducing annual deposit insurance costs
beginning in 1997. The reduction in annual deposit insurance costs should
allow full recovery of the special assessment in less than four years. See,
"Recent Regulatory Developments".
The second event was the September 13, 1996 sale by the Bank of its branch
office in Carlyle, Illinois. The sale of the branch's $8.6 million in deposits
and $3.8 million in loans, along with the fixed assets, resulted in a gain of
$708,000. After provision for income taxes of $241,000, net income for both the
quarter and the nine months ended September 30, 1996 was increased by $467,000,
or $.31 per share.
7
<PAGE>
FINANCIAL CONDITION
Total assets of the Company decreased by $2.2 million, or 0.6%, to $352.9
million at September 30, 1996 from $355.1 million at December 31, 1995.
Cash and cash equivalents decreased by $8.1 million, or 31.5%, from $25.7
million at December 31, 1995 to $17.6 million at September 30, 1996. The
decrease was primarily attributable to increases in investment securities
available-for-sale and loans receivable, and a decrease in deposits, which were
partially offset by an increase in borrowings and a decrease in mortgage-backed
securities available-for-sale.
During the nine-month period ended September 30, 1996, net loans receivable
increased by $4.5 million (1.9%) from $229.9 million to $234.4 million. This was
primarily the result of the origination (or purchase) of $29.8 million of real
estate loans and the origination (or purchase) of $28.6 million of consumer and
commercial business loans, offset by loan repayments which totaled $49.8 million
and by the sale of $3.8 million of loans in connection with the Carlyle branch
office sale.
Securities available-for-sale increased by $7.2 million to $54.9 million at
September 30, 1996 from $47.7 million at December 31, 1995 as the result of the
purchase of $27.0 million of such securities, partially offset by the sale of
$4.2 million and the maturity of $14.5 million of such securities, and by the
net change in market value adjustment.
During 1995, the Board of Directors of the Bank authorized the purchase of
approximately $30.0 million of mortgage-backed securities using borrowed money
as the means of funding the purchases. The mortgage-backed securities purchased
with borrowed money are categorized as available-for-sale and subject to market
value adjustments under SFAS 115. Mortgage-backed securities available-for-sale
decreased by $5.4 million, or 15.0%, to $30.7 million at September 30, 1996 from
$36.1 million at December 31, 1995. The decrease resulted from maturities of
$7.8 million of such securities, and by the change in market value adjustment,
which were partially offset by the purchase of $3.0 million of such securities.
Deposits decreased by $2.2 million, or 0.8% to $283.9 million at September
30, 1996 from $286.1 million at December 31, 1995. The sale of the Carlyle
branch office resulted in a $4.9 million decrease in certificates of deposit and
a $3.7 million decrease in passbook, NOW and money market accounts. Excluding
the sale of the Carlyle branch office, certificates of deposit increased by $5.0
million and passbook, NOW and money market accounts increased by $1.5 million.
Borrowed money, which increased by $1.4 million, or 4.6%, to $31.0
million at September 30, 1996 from $29.6 million at December 31, 1995,
consisted of $14.9 million in advances from the Federal Home Loan Bank of
Chicago ("FHLB") and $16.1 million in funds borrowed using mortgage-backed
securities available-for-sale as collateral. Advances from the FHLB included
$5.0 million in funds borrowed for cash management purposes.
8
<PAGE>
ASSET/LIABILITY MANAGEMENT
Management attempts to control fluctuations in net interest income which
result from an imbalance in the amounts of assets and liabilities that reprice
during a period of time. The Company attempts to mitigate its interest rate
exposure, to the extent consistent with the maintenance of an adequate interest
rate spread, by retaining adjustable rate loans and selling, in the secondary
market (with servicing retained), the majority of 30-year fixed-rate mortgage
loans which it originates. In addition, the Company has continued to build its
portfolio of adjustable rate commercial real estate loans. The Company has also
increased its origination of installment and home equity consumer loans having
adjustable or floating interest rates and/or relatively short terms to maturity
in an effort to control interest rate risk.
NON-PERFORMING ASSETS AND ALLOWANCE FOR LOSSES ON LOANS
The Company's non-performing assets increased to $3.2 million at September
30, 1996 as compared to $2.3 million at December 31, 1995. Non-performing
assets represented 0.90% and 0.64% of total assets at September 30, 1996 and
December 31, 1995, respectively. During the nine-month period ending September
30, 1996, non-performing construction and development loans, consumer loans,
commercial real estate loans and commercial business loans increased by $1.1
million, $3,000, $431,000 and $19,000, respectively. These increases were
partially offset by decreases of $634,000 and $90,000 in foreclosed assets and
non-performing one-to-four family loans, respectively. The ratio of the
allowance for losses on loans to non-performing loans was 79.3% as of September
30, 1996 as compared to 163.5% as of December 31, 1995. The decrease in this
ratio, which excludes foreclosed assets, is primarily the result of the increase
of $1.5 million in non-performing loans.
The Company classified $2.4 million of its assets as Special Mention, $4.0
million as Substandard and $218,000 as Loss as of September 30, 1996. No assets
were classified as Doubtful at September 30, 1996. This represents a decrease
of $169,000 in the Special Mention category and a net decrease of $781,000 in
the other categories from the December 31, 1995 totals for classified assets.
The ratio of classified assets to total assets (including items classified as
Special Mention) was 1.89% as of September 30, 1996 as compared to 2.15% as of
December 31, 1995. The ratio of the allowance for losses on loans to classified
assets increased to 35.3% as of September 30, 1996 as compared to 31.3% as of
December 31, 1995.
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 the
loan portfolio and changes in the nature and volume of its loan activity. Such
evaluation, which includes a review of all loans with respect to which full
collectibility may not be reasonably assured, considers the fair value of the
underlying collateral, economic conditions, historical loan loss experience and
other factors that warrant recognition in providing for an adequate allowance
for losses on loans. The Bank also requires additional reserves for delinquent
and classified loans.
While management believes that it uses the best information available to
determine the allowance for losses on loans, unforeseen market conditions could
result in adjustments to the allowance for losses on loans and net earnings
could be significantly affected if circumstances differ substantially from the
assumptions used in establishing the allowance for losses on loans.
9
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
During the three-month period ended September 30, 1996, the Company
recorded a net loss of $27,000, or $.02 per share, compared to net income of
$421,000, or $.27 per share, for the same period in 1995. The difference of
$448,000 represents a 106.3% decrease in net income for the 1996 period. The
decrease in net income resulted from a $1.7 million increase in general and
administrative expenses, which was partially offset by an increase of $118,000
in net interest income, a $864,000 increase in other income and a $231,000
decrease in federal income tax expense. Prior to the effects of the SAIF
special assessment and the sale of the Carlyle branch office, net income for the
three-month period ending September 30, 1996 would have been $628,000, or $.42
per share.
Net interest income increased $118,000, or 4.6%, during the three-month
period ended September 30, 1996 compared to the three-month period ended
September 30, 1995.
The table presented on page 17 ("Table I"), sets forth an analysis of the
Company's net interest income for the three-month periods ended September 30,
1996 and 1995.
As Table I indicates, interest income increased $633,000, or 10.8%, to
$6.5 million for the three-month period ended September 30, 1996 from $5.8
million for the same period in 1995. The increase in interest income was the
result of an increase in the average balance of interest-earning assets to
$341.0 million during the 1996 period from $305.9 million during the 1995
period, which was partially offset by a decrease in the yield earned on
interest-earning assets to 7.55% during the 1996 period from 7.57% during the
1995 period. The decrease in yield was primarily due to lower short-term
interest rates on other interest-earning assets and lower returns on
mortgage-backed securities resulting from larger than expected prepayments.
Interest expense increased $515,000, or 15.6%, to $3.8 million for the
three-month period ended September 30, 1996 from $3.2 million for the same
period in 1995. The increase in interest expense was the result of an increase
in the average yield on interest-bearing liabilities and an increase in the
average outstanding balance of interest-bearing liabilities to 4.75% and $318.7
million, respectively, during the 1996 period from 4.67% and $279.5 million,
respectively, during the 1995 period. The increase in the average yield on
interest-bearing liabilities was attributable to a change in the composition of
average interest-bearing liabilities during the 1996 period as compared to the
1995 period. Higher yielding interest-bearing liabilities, consisting of
certificates of deposit and borrowings, represented 66.4% of interest-bearing
liabilities during the 1996 period as compared to 63.1% during the 1995 period.
Average outstanding borrowings during the 1996 period were 8.6% of interest-
bearing liabilities as compared to 4.9% during the 1995 period.
The provision for losses on loans was $23,000 for the three-month period
ended September 30, 1996, the same as the previous year's comparable period.
Other income for the three-month period ended September 30, 1996 increased
$864,000, or 327.2%, to $1.1 million compared to $264,000 for the same period in
1995. The increase was primarily attributable to the $708,000 net gain on the
sale of the Carlyle branch office.
10
<PAGE>
Additionally, the increase was attributable to increases of $41,000 in net
gain on sale of investment and mortgage-backed securities, $58,000 in fee
income, $22,000 in insurance commissions and $35,000 in other categories.
The increase in fee income was due to the Company reevaluating and improving
the methods used to assess fees.
Other expenses for the three-month period ended September 30, 1996 increased
by $1.6 million, or 77.2%, to $3.8 million from $2.2 million during the 1995
period. The increase was attributable to the special one-time SAIF assessment
of $1.7 million, increases in furniture and equipment expense and other general
and administrative expenses of $33,000 and $30,000, respectively, which were
partially offset by decreases in compensation and benefits and advertising of
$111,000 and $12,000, respectively. The decrease in compensation and benefits
expense was primarily the result of recommendations derived from an operational
review and restructuring of certain departments, which resulted in a decrease
in the total staff level.
Federal income taxes decreased $231,000, or 106.3%, to a benefit of $14,000
for the three-month period ended September 30, 1996, compared to an expense of
$217,000 for the same period in 1995.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Net income for the nine-month period ended September 30, 1996 was $974,000,
or $.64 per share, compared to $1.3 million, or $.84 per share, for the same
period in 1995. The difference in net income of $360,000 represents a 27.0%
decrease in net income for the 1996 period. The decrease in net income resulted
from a $2.0 million increase in general and administrative expenses (including
the one-time SAIF assessment), which was partially offset by a $180,000 increase
in net interest income, a $926,000 increase in other income and a $388,000
decrease in federal income tax expense. Prior to the effects of the SAIF
special assessment and the sale of the Carlyle branch office, net income for the
nine-month period ending September 30, 1996 would have been $1.6 million, or
$1.08 per share.
Net interest income increased by $180,000, or 2.3%, during the nine-month
period ended September 30, 1996 compared to the nine-month period ended
September 30, 1995.
The table presented on page 18 ("Table II"), sets forth an analysis of the
Company's net interest income for the nine months ended September 30, 1996 and
1995.
As Table II indicates, interest income increased $2.7 million, or 16.3% ,
to $19.3 million for the nine-month period ended September 30, 1996 from
$16.6 million for the same period in 1995. The increase in interest income
was the result of an increase in the yield earned on interest-earning assets
and an increase in the average balance of interest-earning assets to 7.54%
and $342.7 million, respectively, during the 1996 period from 7.47% and
$297.7 million, respectively, during the 1995 period. The increase in yield
was due to adjustments on adjustable-rate mortgage loans repricing at higher
levels during the period, which was partially offset by lower short-term
interest rates on other interest-earning assets.
11
<PAGE>
Interest expense increased $2.5 million, or 28.3%, to $11.4 million for
the nine-month period ended September 30, 1996 from $8.9 million for the same
period in 1995. The increase in interest expense was the result of an
increase in the average yield on interest-bearing liabilities and an increase
in the average outstanding balance of interest-bearing liabilities to 4.79%
and $319.5 million, respectively, during the 1996 period from 4.40% and
$271.1 million, respectively, during the 1995 period.
Other income for the nine-month period ended September 30, 1996 increased
$926,000, or 114.9%, to $1.7 million from $806,000 for the same period in 1995.
The increase was primarily attributable to the $708,000 net gain on the sale of
the Carlyle branch office. Additionally, there were increases of $48,000 in net
gain on the sale of real estate, $112,000 in fee income, $30,000 in insurance
commissions, and $50,000 in other income, which were partially offset by
decreases of $9,000 and $13,000 in net gains on the sale of securities and
loans, respectively.
Other expenses for the nine-month period ended September 30, 1996
increased $2.0 million, or 30.8%, from the same period in 1995. The increase
was primarily attributable to the special one-time SAIF assessment of $1.7
million. Compensation and benefits increased $19,000, or 0.6% to almost $3.4
million during the 1996 period, from just over $3.3 million during the 1995
period. The 1995 figure reflected a one-time expense reduction of $275,000
which resulted from the decision to discontinue funding a portion of the cost
of post-retirement health benefits for retired employees. During the
nine-month period ended September 30, 1996, furniture and equipment expense
increased by $55,000, or 25.5%, to $273,000, data processing expense
increased by $63,000, or 34.1%, to $246,000, telephone and postage expense
increased by $30,000, or 15.9%, to $220,000 and other general and
administrative expenses increased $154,000, or 12.5%, to $1.4 million. The
increase in furniture and equipment expense was due to depreciation on teller
and network equipment installed during the last quarter of 1995 and the first
six months of 1996. The increase in data processing expense was due to costs
associated with temporary data center management during the first quarter of
1996 and the amortization of software licensing and prepaid maintenance
associated with an upgrade of the computer system. The increase in telephone
and postage expense was due to increased use of direct mail and personal
phone contact in the marketing of products and services. The increase in
other general and administrative expenses was primarily due to the
amortization of intangible assets related to the Momence branch acquisition
in December 1995 and an increase in fees paid for outsourced services. These
increases were partially offset by a reduction of $50,000, or 34.0%, in
advertising expense during the period to $97,000.
Federal income taxes decreased by $388,000, or 56.5%, to $299,000 for the
nine-month period ended September 30, 1996, compared to $687,000 for the same
period in 1995. The decrease is attributable to the decrease in pre-tax income
and a reduction in the effective federal income tax rate for 1996 because of a
prior overaccrual of income taxes which was considered immaterial.
LIQUIDITY AND CAPITAL RESOURCES
The Bank maintains a certain level of cash and other liquid assets to fund
normal volumes of loan commitments, deposit withdrawals and other obligations.
The Office of Thrift Supervision
12
<PAGE>
("OTS") requires thrifts to maintain a minimum liquidity ratio (cash and cash
equivalent investments to net withdrawable deposits and borrowings due within
one year) of 5%. At September 30, 1996, the Bank's liquidity ratio was 14.4%,
which was in excess of the minimum regulatory requirement.
The Bank's primary sources of funds are deposits and proceeds from
payments of principal and interest on loans and the sale or maturity of
investment securities and mortgage-backed securities. Management considers
current liquidity and additional sources of funds adequate to meet
outstanding liquidity needs.
Federally insured savings banks, such as the Bank, are required to maintain
a minimum level of regulatory capital. The OTS has established the following
capital requirements: a risk-based capital ratio, a core capital ratio and a
tangible capital ratio. The capital regulations of the OTS exclude the effect
of SFAS 115 for the purpose of calculating regulatory capital.
The capital regulations currently require tangible capital of at least
1.5% of adjusted total assets (as defined by regulation). Tangible capital
generally includes common stockholders' equity and retained income and
certain non-cumulative perpetual preferred stock and related income less
intangible assets (other than specified amounts of purchased mortgage
servicing rights) and certain non-includable investments in subsidiaries. The
capital regulations also currently require core capital equal to at least
3.0% of adjusted total assets (as defined by regulation). Core capital
generally consists of tangible capital plus specified amounts of certain
intangible assets. The OTS risk-based requirement currently requires
associations to have total capital of at least 8.0% of risk-weighted assets.
Total capital consists of core capital plus supplementary capital, which
consists of, among other things, maturing capital instruments, such as
subordinated debt and mandatorily redeemable preferred stock, and a portion
of the Bank's general allowance for losses on loans. As of September 30,
1996, the Bank exceeded all current minimum regulatory capital standards.
At September 30, 1996, the Bank's tangible capital was $28.1 million, or
8.1%, of adjusted total assets, which exceeded the 1.5% requirement by $22.9
million. In addition, at September 30, 1996, the Bank had core capital of
$28.1 million, or 8.1%, of adjusted total assets, which exceeded the 3.0%
requirement by $17.7 million. The Bank had risk-based capital of $30.2
million at September 30, 1996, or 15.1%, of risk-adjusted assets, which
exceeded the minimum risk-based capital requirement by $14.2 million.
STOCK REPURCHASE
On January 30, 1996, the Company announced that its Board of Directors
had authorized the repurchase of up to 150,000 shares of its common stock.
The Company repurchased 18,800 shares of its common stock during the third
quarter of 1996 at a total cost of $359,000, and since the current program
was announced, 39,200 shares of common stock have been repurchased at a total
cost of $762,000. Through September 30, 1996, a total of 354,357 shares of
common stock of the Company had been purchased under the current and
previously completed repurchase programs at a total cost of $6.2 million. As
of September 30, 1996, the Company held 335,082 shares of its common stock as
treasury stock.
13
<PAGE>
EXERCISE OF STOCK OPTIONS
There were no stock options exercised during the third quarter of 1996.
During the first nine months of 1996, stock options for 700 shares of common
stock were exercised. Between September 30, 1996 and November 7, 1996, no
notice was received from holders of options of their intent to exercise
options.
DIVIDENDS
During January, 1995, the Company began a regular quarterly dividend
program and declared the first cash dividend since becoming a public company.
Cash dividends of $.10 per share have been paid during each quarter since the
Company announced the dividend program. On October 15, 1996, a cash dividend
of $.10 per share was declared payable on December 2, 1996 to stockholders of
record as of November 15, 1996. Future dividends will depend primarily upon
earnings, financial condition and need for funds, as well as restrictions
imposed by regulatory authorities regarding dividend payments and capital
requirements.
RECENT REGULATORY DEVELOPMENTS
On September 30, 1996, President Clinton signed into law the "Economic
Growth and Regulatory Paperwork Reduction Act of 1996" (the "Regulatory
Reduction Act"). Subtitle G of the Regulatory Reduction Act consists of the
"Deposit Insurance Funds Act of 1996" (the "DIFA"). The DIFA provides for a
one-time special assessment on each depository institution holding deposits
subject to assessment by the FDIC for SAIF in an amount which, in the
aggregate, will increase the designated reserve ratio of the SAIF (I.E., the
ratio of the insurance reserves of the SAIF to total SAIF-insured deposits)
to 1.25% on October 1, 1996. Subject to certain exceptions, the special
assessment is payable in full on November 27, 1996. As a SAIF member, the
Bank is subject to the special assessment.
Under the DIFA, the amount of the special assessment payable by an
institution is to be determined on the basis of the amount of SAIF-assessable
deposits held by the institution on March 31, 1995, or acquired by the
institution after March 31, 1995 from another institution which held the
deposits as of that date but is no longer in existence on November 27, 1996.
The DIFA provides for a 20% discount in calculating the SAIF-assessable
deposits of certain "Oakar" banks (I.E., Bank Insurance Fund ("BIF") member
banks that hold deposits acquired from a SAIF member that are deemed to
remain SAIF insured) and certain "Sasser" banks (I.E., banks that converted
from thrift to bank charters but remain SAIF members). The DIFA also exempts
certain institutions from payment of the special assessment (including
institutions that are undercapitalized or that would become undercapitalized
as a result of payment of the special assessment), and allows an institution
to pay the special assessment in two installments if there is a significant
risk that by paying the special assessment in a lump sum, the institution or
its holding company would be in default under or in violation of terms or
conditions of debt obligations or preferred stock issued by the institution
or its holding company and outstanding on September 13, 1995.
14
<PAGE>
On October 8, 1996, the FDIC adopted a final regulation implementing the
SAIF special assessment. In that regulation, the FDIC set the special
assessment rate at 0.657% of SAIF-assessable deposits held on March 31, 1995.
As a result of the special assessment, the Bank has taken a charge against
earnings for the quarter ended September 30, 1996, in the amount of $1.7
million. As discussed below, however, the recapitalization of the SAIF
resulting from the special assessment should significantly reduce the Bank's
ongoing deposit insurance expense.
In light of the recapitalization of the SAIF pursuant to the special
assessment authorized by the DIFA, the FDIC, on October 8, 1996, issued a
proposed rule that would reduce regular semi-annual SAIF assessments from the
current range of 0.23% - 0.31% of deposits to a range of 0% - 0.27% of
deposits. Under the proposal, the new rates would be effective October 1,
1996 for Oakar and Sasser banks, but would not take effect for other
SAIF-assessable institutions until January 1, 1997. From October 1, 1996
through December 31, 1996, SAIF-assessable institutions other than Oakar and
Sasser banks would, under the proposal, be assessed at rates ranging from
0.18% to 0.27% of deposits, which represents the amount the FDIC calculates
as necessary to cover the interest due for that period on outstanding
obligations of the Financing Corporation (the "FICO"), discussed below.
Because SAIF-assessable institutions have already been assessed at current
rates (I.E., 0.23% - 0.31% of deposits) for the semi-annual period ending
December 31, 1996, the proposal contemplates that the FDIC will refund the
amount collected from such institutions for the period from October 1, 1996
through December 31, 1996 which exceeds the amount due for that period under
the reduced assessment schedule. Assuming the proposal is adopted as
proposed, and assuming the Bank retains its current risk classification under
the FDIC's risk-based assessment system, the deposit insurance assessments
payable by the Bank will be reduced significantly effective January 1, 1997,
to the same level currently paid by the Bank's BIF-member competitors.
Prior to the enactment of the DIFA, a substantial amount of the SAIF
assessment revenue was used to pay the interest due on bonds issued by the FICO,
the entity created in 1987 to finance the recapitalization of the Federal
Savings and Loan Insurance Corporation, the SAIF's predecessor insurance fund.
Pursuant to the DIFA, the interest due on outstanding FICO bonds will be covered
by assessments against both SAIF and BIF member institutions beginning January
1, 1997. Between January 1, 1997 and December 31, 1999, FICO assessments
against BIF-member institutions cannot exceed 20% of the FICO assessments
charged SAIF-member institutions. From January 1, 2000 until the FICO bonds
mature in 2019, FICO assessments will be shared by all FDIC-insured institutions
on a PRO RATA basis. The FDIC estimates that the FICO assessments for the
period January 1, 1997 through December 31, 1999 will be approximately 0.013% of
deposits for BIF members versus approximately 0.064% of deposits for SAIF
members, and will be less than 0.025% of deposits thereafter.
The DIFA also provides for a merger of the BIF and the SAIF on January 1,
1999, provided there are no state or federally chartered, FDIC-insured savings
associations existing on that date. To facilitate the merger of the BIF and the
SAIF, the DIFA directs the Treasury Department to conduct a study on the
development of a common charter and to submit a report, along with appropriate
legislative recommendations, to the Congress by March 31, 1997.
In addition to the DIFA, the Regulatory Reduction Act includes a number of
statutory changes designed to eliminate duplicative, redundant or unnecessary
regulatory requirements. Further, the
15
<PAGE>
Regulatory Reduction Act removes the percentage of assets limitations on the
aggregate amount of credit card and education loans that may be made by a
savings association, such as the Bank; increases from 10% to 20% of total
assets the aggregate amount of commercial loans that a savings association may
make, provided that any amount in excess of 10% of total assets represents small
business loans; allows education, small business and credit card loans to be
counted in full in determining a savings association's compliance with the
qualified thrift lender ("QTL") test; and provides that a savings association
may be deemed to meet the QTL test if it qualifies as a domestic building and
loan association under the Internal Revenue Code. The Regulatory Reduction Act
also clarifies the liability of a financial institution, when acting as a lender
or in a fiduciary capacity, under the federal environmental clean-up laws.
Although the full impact of the Regulatory Reduction Act on the operations of
the Company and the Bank cannot be determined at this time, management believes
that the legislation will reduce compliance costs to some extent and allow the
Company and the Bank somewhat greater operating flexibility.
On August 10, 1996, President Clinton signed into law the Small Business
Job Protection Act of 1996 (the "Job Protection Act"). Among other things, the
Job Protection Act eliminates the percent-of-taxable-income ("PTI") method for
computing additions to a savings association's tax bad debt reserves for tax
years beginning after December 31, 1995, and requires all savings associations
who have used the PTI method to recapture, over a six-year period, all or a
portion of their tax bad debt reserves added since the last taxable year
beginning before January 1, 1988. The Job Protection Act allows a savings
association to postpone the recapture of bad debt reserves for up to two years
if the institution meets a minimum level of mortgage lending activity during
those years. The Bank believes that it will engage in sufficient mortgage
lending activity during 1996 and 1997 to be able to postpone any recapture of
its bad debt reserves until 1998. As a result of these provisions of the Job
Protection Act, the Bank will determine additions to its tax bad debt reserves
using the same method as a commercial bank of comparable size and, if the Bank
were to decide to convert to a commercial bank charter, the changes in the tax
bad debt recapture rules enacted in the Job Protection Act should make such
conversion less costly.
16
<PAGE>
<TABLE>
<CAPTION>
TABLE I
NET INTEREST INCOME ANALYSIS (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
THREE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------------------------------------------
1996 1995
------------------------------------------- ----------------------------------------------------
Average Average
Outstanding Interest Yield/ Outstanding Interest Yield/
Balance Earned/Paid Rate Balance Earned/Paid Rate
------------------------------------------- ----------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (1) $235,365 $4,845 8.19% $226,518 $4,582 8.03%
Mortgage-backed securities 31,703 487 6.11% 19,677 321 6.47%
Investment securities (2) 59,009 991 6.68% 47,458 774 6.47%
Other interest-earning assets 12,987 116 3.55% 10,668 136 5.06%
FHLB stock 1,956 33 6.71% 1,546 26 6.67%
-------- ------ -------- ------
Total interest-earning assets 341,020 6,472 7.55% 305,867 5,839 7.57%
-------- ------ -------- ------
Other assets 15,274 12,911
-------- --------
Total assets $356,294 $318,778
-------- --------
-------- --------
Interest-bearing liabilities:
Time deposits $183,933 2,655 5.74% $162,457 2,342 5.72%
Savings deposits 54,600 369 2.69% 53,921 350 2.58%
Demand and NOW deposits 52,624 389 2.94% 49,296 383 3.08%
Borrowings 27,505 392 5.67% 13,811 215 6.18%
-------- ------ -------- ------
Total interest-bearing liabilities 318,662 3,805 4.75% 279,485 3,290 4.67%
-------- ------ -------- ------
Other liabilities 2,175 2,746
-------- --------
Total liabilities 320,837 282,231
-------- --------
Stockholders' equity 35,457 36,547
-------- --------
Total liabilities and
stockholders' equity $356,294 $318,778
-------- --------
-------- --------
Net interest income $2,667 $2,549
------ ------
------ ------
Net interest rate spread 2.80% 2.90%
------ ------
------ ------
Net earning assets $22,358 $26,382
-------- --------
-------- --------
Net yield on average interest-
earning assets (net interest
margin) 3.11% 3.31%
------ ------
------ ------
Average interest-earning assets to
average interest-bearing liabilities 107.02% 109.44%
------- -------
------- -------
</TABLE>
(1) Calculated including loans held for sale, and net of deferred loan fees,
loan discounts, loans in process and loan loss reserves.
(2) Calculated including investment securities available-for-sale.
17
<PAGE>
<TABLE>
<CAPTION>
TABLE II
NET INTEREST INCOME ANALYSIS (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------------------------
1995 1996
------------------------------------------- ---------------------------------------------------
Average Average
Outstanding Interest Yield/ Outstanding Interest Yield/
Balance Earned/Paid Rate Balance Earned/Paid Rate
------------------------------------------- ---------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (1) $232,967 $14,316 8.21% $221,779 $13,024 7.85%
Mortgage-backed securities 33,739 1,603 6.35% 11,560 545 6.30%
Investment securities (2) 56,331 2,751 6.52% 50,876 2,502 6.58%
Other interest-earning assets 17,865 591 4.42% 12,031 498 5.53%
FHLB stock 1,833 92 6.70% 1,488 72 6.47%
-------- ------ -------- ------
Total interest-earning assets 342,735 19,353 7.54% 297,734 16,641 7.47%
-------- ------ -------- ------
Other assets 15,525 13,233
-------- --------
Total assets $358,260 $310,967
-------- --------
-------- --------
Interest-bearing liabilities:
Time deposits $184,188 7,962 5.77% $157,134 6,441 5.48%
Savings deposits 54,515 1,096 2.69% 56,158 1,068 2.54%
Demand and NOW deposits 52,364 1,172 2.99% 52,247 1,199 3.07%
Borrowings 28,401 1,235 5.81% 5,525 225 5.44%
-------- ------ -------- ------
Total interest-bearing liabilities 319,468 11,465 4.79% 271,064 8,933 4.40%
-------- ------ -------- ------
Other liabilities 3,077 3,638
-------- --------
Total liabilities 322,545 274,702
-------- --------
Stockholders' equity 35,715 36,265
-------- --------
Total liabilities and
stockholders' equity $358,260 $310,967
-------- --------
-------- --------
Net interest income $7,888 $7,708
------ ------
------ ------
Net interest rate spread 2.75% 3.07%
----- -----
----- -----
Net earning assets $23,267 $26,670
-------- --------
-------- --------
Net yield on average interest-
earning assets (net interest
margin) 3.07% 3.46%
----- -----
----- -----
Average interest-earning assets to
average interest-bearing liabilities 107.28% 109.84%
------- -------
------- -------
</TABLE>
(1) Calculated including loans held for sale, and net of deferred loan fees,
loan discounts, loans in process and loan loss reserves.
(2) Calculated including investment securities available-for-sale.
18
<PAGE>
KANKAKEE BANCORP, INC.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - None
Item 2. CHANGES IN SECURITIES - None
Item 3. DEFAULTS UPON SENIOR SECURITIES - None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None
Item 5. OTHER INFORMATION - None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits - Exhibit 27 - Financial Data Schedule
Reports on Form 8-K - None
<PAGE>
KANKAKEE BANCORP, INC.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KANKAKEE BANCORP, INC.
Registrant
Date: November 7, 1996 /S/ JAMES G. SCHNEIDER
----------------------------- ----------------------------------------
Chairman, President and Chief Executive
Officer (Principal Executive
and Operating Officer)
Date: November 7, 1996 /S/ RONALD J. WALTERS
----------------------------- ----------------------------------------
Vice President and Treasurer
(Principal Financial
and Accounting Officer)
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 10,446
<INT-BEARING-DEPOSITS> 4,914
<FED-FUNDS-SOLD> 2,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 85,644
<INVESTMENTS-CARRYING> 327
<INVESTMENTS-MARKET> 327
<LOANS> 236,711
<ALLOWANCE> 2,357
<TOTAL-ASSETS> 352,926
<DEPOSITS> 283,899
<SHORT-TERM> 23,090
<LIABILITIES-OTHER> 2,656
<LONG-TERM> 7,925
0
0
<COMMON> 16,199
<OTHER-SE> 19,157
<TOTAL-LIABILITIES-AND-EQUITY> 352,926
<INTEREST-LOAN> 4,845
<INTEREST-INVEST> 1,140
<INTEREST-OTHER> 487
<INTEREST-TOTAL> 6,472
<INTEREST-DEPOSIT> 3,413
<INTEREST-EXPENSE> 3,805
<INTEREST-INCOME-NET> 2,667
<LOAN-LOSSES> 23
<SECURITIES-GAINS> 41
<EXPENSE-OTHER> 3,812
<INCOME-PRETAX> (41)
<INCOME-PRE-EXTRAORDINARY> (41)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (27)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
