<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 2000.
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 1-13676
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KANKAKEE BANCORP, INC.
-----------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-3846489
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(State or Other Jurisdiction of Incorporation (I.R.S. Employer
or Organization) Identification Number)
310 South Schuyler Avenue, Kankakee, Illinois 60901
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(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 _______
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As of November 8, 2000, there were 1,259,858 issued and outstanding shares of
the Issuer's common stock (exclusive of 490,142 shares of the Issuer's common
stock held as treasury stock).
<PAGE>
KANKAKEE BANCORP, INC.
INDEX
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<TABLE>
<CAPTION>
Page
Number
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial
Statements (Unaudited)
Statements of Financial Condition,
September 30, 2000 and December 31, 1999 1 - 2
Statements of Income and Comprehensive Income,
Three Months Ended September 30, 2000 and 1999 3
Statements of Income and Comprehensive Income,
Nine Months Ended September 30, 2000 and 1999 4
Statements of Cash Flows, Nine Months
Ended September 30, 2000 and 1999 5 - 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 8-17
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 9-10
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Assets
Cash and due from banks $ 15,296,293 $ 19,118,528
Federal funds sold 1,402,904 6,321,834
Money market funds 4,882,760 4,653,221
------------ ------------
Cash and cash equivalents 21,581,957 30,093,583
------------ ------------
Certificates of deposit 50,000 50,000
------------ ------------
Securities:
Investment securities:
Available-for-sale, at fair value 60,653,153 65,131,965
Held-to-maturity, at cost (fair value: September 30, 2000 -
$384,225; December 31, 1999 - $284,038) 402,425 306,241
------------ ------------
Total investment securities 61,055,578 65,438,206
------------ ------------
Mortgage-backed securities:
Available-for-sale, at fair value 17,022,427 17,490,841
Held-to-maturity, at cost (fair value: September 30, 2000 -
$84,716; December 31, 1999 - $109,819) 83,725 108,724
------------ ------------
Total mortgage-backed securities 17,106,152 17,599,565
------------ ------------
Non-marketable equity securities 501,100 501,100
------------ ------------
Loans, net of allowance for losses on loans ($2,139,612 at
September 30, 2000; $2,171,040 at December 31, 1999) 326,271,452 270,360,059
Loans held for sale - -
Real estate held for sale 525,780 575,164
Federal Home Loan Bank stock, at cost 1,876,100 1,811,400
Office properties and equipment 8,355,726 8,850,579
Accrued interest receivable 3,001,118 2,889,498
Prepaid expenses and other assets 1,240,758 1,352,138
Intangible assets 4,912,784 5,196,634
------------ ------------
Total assets $446,478,505 $404,717,926
============ ============
</TABLE>
(Continued)
1
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (continued)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------ ------------
<S> <C> <C>
Liabilities and stockholders' equity
Liabilities:
Deposits
Noninterest bearing $ 21,786,912 $ 21,455,669
Interest bearing 357,851,919 333,521,782
Short term borrowings 12,000,000 -
Other borrowings 15,000,000 11,200,000
Advance payments by borrowers for taxes and insurance 810,284 1,548,998
Other liabilities 1,178,473 743,750
------------ ------------
Total liabilities 408,627,588 368,470,199
------------ ------------
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, 2000 -
1,258,558; December 31, 1999 - 1,243,383 17,500 17,500
Additional paid-in capital 15,409,964 16,019,390
Retained income, substantially restricted 33,730,057 32,309,425
Less: Cost of treasury stock (491,442 shares at September
30, 2000; 506,617 shares at December 31, 1999) (10,556,492) (10,851,899)
Unrealized losses on securities available-for-
sale, net of related income taxes (674,507) (1,095,478)
------------ ------------
Total stockholders' equity before Employee Stock
Ownership Plan loan and Bank Incentive Plan and Trust 37,926,522 36,398,938
Employee Stock Ownership Plan loan (75,605) (151,211)
------------ ------------
Total stockholders' equity 37,850,917 36,247,727
------------ ------------
Total liabilities and stockholders' equity $446,478,505 $404,717,926
============ ============
</TABLE>
See notes to consolidated financial statements (unaudited)
2
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
2000 1999
---------- ----------
<S> <C> <C>
Interest income:
Loans $6,362,081 $5,213,446
Mortgage-backed securities 307,405 296,100
Investment securities 1,224,727 1,228,243
---------- ----------
Total interest income 7,894,213 6,737,789
---------- ----------
Interest expense:
Deposits 4,291,344 3,570,163
Borrowed funds 368,445 234,784
---------- ----------
Total interest expense 4,659,789 3,804,947
---------- ----------
Net interest income 3,234,424 2,932,842
Provision for losses on loans 20,000 -
---------- ----------
Net interest income after provision for losses on loans 3,214,424 2,932,842
Other income:
Net gain on sales of real estate held for sale 16,107 3,812
Net gain (loss) on sales of loans held for sale 765 (21,057)
Fee income 526,536 463,897
Insurance commissions 33,877 44,345
Other 85,420 114,047
---------- ----------
Total other income 662,705 605,044
---------- ----------
Other expenses:
Compensation and benefits 1,575,153 1,508,671
Occupancy 280,469 292,346
Furniture and equipment 173,322 172,801
Federal insurance premiums 18,140 41,606
Advertising 89,322 111,377
Provision for losses on foreclosed assets 89,079 3,750
Data processing services 88,399 94,919
Telephone and postage 91,490 107,062
Amortization of intangible assets 94,617 94,617
Other general and administrative 468,699 536,868
---------- ----------
Total other expenses 2,968,690 2,964,017
---------- ----------
Income before income taxes 908,439 573,869
Income taxes 300,625 188,600
---------- ----------
Net income $ 607,814 $ 385,269
========== ==========
Net income $ 607,814 $ 385,269
Other comprehensive income:
Unrealized gains (losses) on available-for-sale
securities, net of related income taxes 519,479 (218,682)
---------- ----------
Comprehensive income $1,127,293 $ 166,587
========== ==========
Basic earnings per share $ 0.48 $ 0.29
========== ==========
Diluted earnings per share $ 0.47 $ 0.28
========== ==========
</TABLE>
See notes to consolidated financial statements (unaudited)
3
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
2000 1999
---------- -----------
<S> <C> <C>
Interest income:
Loans $17,441,229 $15,209,557
Mortgage-backed securities 931,348 825,651
Investment securities 3,719,861 4,093,464
----------- -----------
Total interest income 22,092,438 20,128,672
----------- -----------
Interest expense:
Deposits 11,804,839 10,691,558
Borrowed funds 708,133 835,548
----------- -----------
Total interest expense 12,512,972 11,527,106
----------- -----------
Net interest income 9,579,466 8,601,566
Provision for losses on loans 20,000 -
----------- -----------
Net interest income after provision for
losses on loans 9,559,466 8,601,566
Other income:
Net gain on sale of securities
available-for-sale - 1,094
Net gain on sales of real estate held
for sale 28,068 25,390
Net gain on sales of loans held for sale 4,059 2,854
Net gain on sales of office related
property 11,552 -
Fee income 1,404,640 1,458,429
Insurance commissions 142,710 75,822
Other 266,159 458,425
----------- -----------
Total other income 1,857,188 2,022,014
----------- -----------
Other expenses:
Compensation and benefits 4,654,203 4,545,122
Occupancy 806,793 819,214
Furniture and equipment 524,419 527,248
Federal insurance premiums 54,480 126,635
Advertising 233,642 289,320
Provision for losses on foreclosed
assets 120,805 33,000
Data processing services 258,375 299,763
Telephone and postage 268,584 271,700
Amortization of intangible assets 283,851 296,426
Other general and administrative 1,386,976 1,528,864
----------- -----------
Total other expenses 8,592,128 8,737,292
----------- -----------
Income before income taxes 2,824,526 1,886,288
Income taxes 948,050 620,350
----------- -----------
Net income $ 1,876,476 $ 1,265,938
=========== ===========
Net income $ 1,876,476 $ 1,265,938
Other comprehensive income:
Unrealized gains (losses) on
available-for-sale
securities, net of related income taxes 420,971 (967,350)
----------- -----------
Comprehensive income $ 2,297,447 $ 298,588
=========== ===========
Basic earnings per share $ 1.49 $ 0.95
=========== ===========
Diluted earnings per share $ 1.45 $ 0.90
=========== ===========
</TABLE>
See notes to consolidated financial statements (unaudited)
4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,876,476 $ 1,265,938
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for losses on loans 20,000 -
Provision for losses on real estate held for sale 120,805 (33,000)
Depreciation and amortization 967,942 960,697
Amortization of investment premiums and discounts, net 2,658 224,001
Accretion of loan fees and discounts 10,902 26,118
Deferred income tax provision (benefit) (41,838) 100,107
Originations of loans held for sale (251,382) (8,359,875)
Proceeds from sales of loans 255,441 10,202,925
Increase in interest receivable (111,620) (143,154)
Increase (decrease) in interest payable on deposits (8,859) 64,744
Net gain on sales of loans (4,059) (2,854)
Net gain on sales of securities available-for-sale - (1,094)
Net gain on sales of real estate held for sale (28,068) (25,390)
Net income on sales of office related property (11,552) -
Other, net 441,424 274,870
------------- ------------
Net cash from operating activities 3,238,270 4,554,033
------------- ------------
Cash flows from investing activities:
Investment securities:
Available-for-sale:
Purchases (6,492,404) (11,983,543)
Proceeds from sales - 2,001,094
Proceeds from calls and maturities 11,500,000 19,000,000
Held to maturity:
Purchases (100,000) -
Proceeds from maturities 2,976 2,797
Mortgage-backed securities:
Available-for-sale:
Purchases (1,962,724) (6,798,597)
Proceeds from maturities and paydowns 2,538,308 6,244,383
Held-to-maturity:
Proceeds from maturities and paydowns 24,999 51,488
Proceeds from sales of real estate 130,263 2,589,556
Deferred loan fees and costs, net 76,359 (63,198)
Loans originated (137,475,649) (98,540,131)
Loans purchased - (1,366,276)
Principal collected on loans 81,357,379 76,123,402
Purchases of office properties and equipment, net (232,949) (1,132,277)
Payments of improvements on real estate - (347,623)
------------- ------------
Net cash from investing activities (50,633,442) (14,218,925)
------------- ------------
</TABLE>
See notes to consolidated financial statements (unaudited).
5
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (continued)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
2000 1999
------------- ---------------
<S> <C> <C>
Cash flows from financing activities
Net increase in non-certificate of deposit accounts ($1,353,407) ($2,195,753)
Net increase in certificate of deposit accounts 26,023,646 3,323,769
Net increase in advance payments by
borrowers for taxes and insurance (816,830) (1,096,328)
Proceeds from short-term borrowings 31,000,000 -
Repayments of short-term borrowings (19,000,000) -
Proceeds from other borrowings 10,000,000 -
Repayments of other borrowings (6,200,000) (7,200,000)
Proceeds from exercise of stock options 623,853 181,607
Dividends paid (455,844) (483,371)
Purchase of treasury stock (937,872) (3,274,809)
------------ ------------
Net cash from financing activities 38,883,546 (10,744,885)
------------ ------------
Decrease in cash and cash equivalents (8,511,626) (20,409,777)
Cash and cash equivalents:
Beginning of period 30,093,583 46,990,638
------------ ------------
End of year $ 21,581,957 $ 26,580,861
============ ============
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest on deposits $ 11,796,000 $ 10,756,300
============ ============
Interest on borrowed funds $ 640,000 $ 869,100
============ ============
Income taxes $ 776,824 $ 417,072
============ ============
Supplemental disclosures of non-cash investing activities:
Real estate acquired through foreclosure $ 99,616 $ 122,713
============ ============
(Increase) decrease in unrealized gains (losses) on
securities available-for-sale $ 637,835 ($1,443,806)
============ ============
Increase (decrease) in deferred taxes attributable to the
unrealized gains (losses) on securities available-for-sale ($216,864) $ 476,456
============ ============
Reduction of Employee Stock Ownership plan loan $ 75,606 $ 75,606
============ ============
</TABLE>
See notes to consolidated financial statements (unaudited).
6
<PAGE>
KANKAKEE BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2000
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, 1999 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,
2000 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2000. 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, 1999.
Note 2 - Earnings Per Share
Basic earnings per share of common stock have been determined by dividing
net income for the period by the average number of shares of common stock
outstanding. Diluted earnings per share of common stock have been determined by
dividing net income for the period by the 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 has an incentive stock option plan for the benefit of
directors, officers and employees. Diluted 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, 2000, stockholders' equity included a negative $675,000,
which 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 $351,000. A decrease in market
interest rates during the nine months ended September 30, 2000 resulted in a
$421,000 increase in the market value, net of income tax effect, of the
available-for-sale securities and the available-for-sale mortgage-backed
securities. At the end of 1999, the book value of the available-for-sale
securities portfolio exceeded the market value by $1.1 million, net of income
tax benefit.
7
<PAGE>
KANKAKEE BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company was formed in 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 Company 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 fourteen branch offices located in the communities of
Ashkum, Bourbonnais, Bradley, Braidwood, Champaign, Coal City (2), Diamond,
Dwight, Herscher, Hoopeston, Manteno, Momence and Urbana, Illinois. The
Company'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 market areas. The Company also invests in investment
securities, mortgage-backed securities and various types of short term liquid
assets.
FINANCIAL CONDITION
During the first nine months of 2000, knowing that there was available
capacity in the branch network, the Company emphasized growth in interest-
earning assets. Additionally, the Company continued to shift the composition of
its balance sheet toward loans rather than lower yielding investment securities.
Emphasis was also placed on deposit growth within the branch network, since both
item processing and data processing, as well as the branches, had the capacity
to handle a larger deposit base. Growth strategies for both loans and deposits
have included the continuing implementation of a sales culture, a heightened
awareness of customer service and more aggressive pricing policies.
The increase in loans has included the retention of long-term fixed-rate
mortgages, which previously had been designated for sale in the secondary
market, and growth of the commercial loan portfolio. The mix and maturities of
earning assets on the Company's balance sheet at December 31, 1999 allowed for
the retention of some long-term fixed-rate mortgage loans during the first nine
months of the year without a material increase in risk. The increase in loan
volume was funded by increases in deposits and borrowed money, and by decreases
in cash, cash equivalents and investment securities. While the Company's
strategy will continue to emphasize growth, a slower rate of growth is expected
during the last quarter of 2000 and into the first part of 2001, although it is
anticipated that earnings should continue to benefit from the growth during the
first nine months of the year.
Total assets of the Company increased by $41.8 million, or 10.3%, to $446.5
million at September 30, 2000 from $404.7 million at December 31, 1999.
Cash and cash equivalents decreased by $8.5 million, or 28.3%, from $30.1
million at December 31, 1999 to $21.6 million at September 30, 2000. The
decrease was primarily attributable to the use of cash equivalent assets in the
funding of loans during the period.
8
<PAGE>
During the nine-month period ended September 30, 2000, net loans receivable
increased by $55.9 million, or 20.7%, from $270.4 million to $326.3 million.
This was primarily the result of the origination of $93.6 million of real estate
loans and the origination of $43.9 million of consumer and commercial business
loans, offset by loan repayments which totaled $81.4 million.
There were no loans held for sale at either September 30, 2000, or at
December 31, 1999. During the nine months ended September 30, 2000, no mortgage
loans were originated for sale.
Securities available-for-sale decreased by $4.5 million, or 6.9%, to $60.6
million at September 30, 2000 from $65.1 million at December 31, 1999 as the
result of the maturity of $11.5 million of securities, which was partially
offset by the purchase of $6.5 million of securities and by the net change in
market value adjustment.
Mortgage-backed securities available-for-sale decreased by $468,000, or
2.7%, to $17.0 million at September 30, 2000 from $17.5 million at December 31,
1999. The decrease resulted from the maturity of $2.5 million of securities,
which was partially offset by the purchase of $2.0 million of securities. The
change in market value adjustment was minimal.
Deposits increased by $24.6 million, or 6.9%, from $355.0 million at
December 31, 1999 to $379.6 million at September 30, 2000. During the nine month
period, there was a $26.0 million increase in certificate of deposit accounts,
which was partially offset by a $1.4 million decrease in passbook, checking and
money market accounts.
Total borrowings increased by $15.8 million, or 141.1%, from $11.2 million
at December 31, 1999 to $27.0 million at September 30, 2000. The increase was
the result of $41.0 million in new borrowings required for loan origination and
cash management, which were partially offset by repayments of $19.0 million and
the call on a $6.2 million advance which was subject to a quarterly call at the
option of the lender. Borrowings consisted entirely of advances from the Federal
Home Loan Bank of Chicago.
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. Adjustable rate mortgage loans, and loans with typically shorter
terms, such as commercial real estate loans, commercial business loans and
consumer loans, have historically been, and continue to be, retained.
Historically, most fixed-rate mortgage loans, particularly those with terms of
20-years or longer, have been sold in the secondary market (with servicing
usually retained). Since the beginning of 2000, the Company has retained
virtually all the fixed-rate mortgage loans it has originated. Those with terms
of 20-years or longer totaled approximately $40.4 million during the nine month
period. While the Company continues to promote the origination of adjustable
rate mortgages, commercial real estate loans, commercial business loans and
consumer loans, management determined that the Company's asset/liability
position was such that retention of additional longer term fixed-rate mortgage
loans was appropriate. Management reviews the Company's asset/liability
position on a regular basis.
The Company has not entered into derivative financial instruments including
futures, forwards,
9
<PAGE>
interest rate risk swaps, option contracts, or other financial instruments with
similar characteristics. However, the Company is a party to financial
instruments with off-balance sheet risk in the normal course of business to meet
the financing needs of its customers such as commitments to extend credit and
letters of credit.
NON-PERFORMING ASSETS AND ALLOWANCE FOR LOSSES ON LOANS
The Company's non-performing assets decreased to $1.8 million, or 0.41%, of
total assets at September 30, 2000 from $2.8 million, or 0.69% of total assets
at December 31, 1999. During the nine month period ended September 30, 2000,
non-performing consumer loans and non-performing commercial real estate loans
decreased by $221,000 and $861,000, respectively. These decreases were partially
offset by increases in non-performing one-to-four family loans and non-
performing commercial business loans of $114,000 and $100,000, respectively. In
addition, foreclosed assets decreased by $50,000 and restructured troubled debts
decreased by $19,000. The ratio of the allowance for losses on loans to non-
performing loans increased to 243.2% as of September 30, 2000 as compared to
124.2% as of December 31, 1999. The increase in this ratio, which excludes
foreclosed assets and restructured troubled debt, was primarily the result of
the decrease of $868,000 in non-performing loans.
The Company classified $3.9 million of its assets as Special Mention, $2.2
million as Substandard and $111,000 as Loss as of September 30, 2000. No assets
were classified as Doubtful at September 30, 2000. This represents an increase
of $1.6 million in the Special Mention category and a net decrease of $240,000
in the other categories from the December 31, 1999 totals for classified assets.
The increase in the Special Mention category was primarily the result of short-
term cash flow problems experienced by a borrower in the construction business.
The loan is well collateralized and management does not currently anticipate a
loss. The ratio of classified assets to total assets (including items
classified as Special Mention) was 1.39% at September 30, 2000 as compared to
1.20% at December 31, 1999. The ratio of the allowance for losses on loans to
classified assets decreased to 34.4% as of September 30, 2000 as compared to
44.8% as of December 31, 1999.
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,
level of classified loans and other factors that warrant recognition in
providing for an adequate allowance for losses on 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.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
Net income for the quarter ended September 30, 2000 was $608,000 compared
to $385,000 for the same period in 1999. This represented a $223,000, or 57.8%,
increase. The increase in net
10
<PAGE>
income resulted from an increase of $302,000 in net interest income and a
$58,000 increase in other income, which were partially offset by an increase of
$20,000 in provisions for losses on loans and an increase of $112,000 in income
tax expense.
Basic earnings per share were $.48 for the quarter ended September 30, 2000
compared to $.29 for the 1999 period. Diluted earnings per share were $.47 for
the quarter ended September 30, 2000 compared to $.28 for the comparable 1999
period.
Net interest income increased $302,000, or 10.3%, during the quarter ended
September 30, 2000, compared to the quarter ended September 30, 1999.
The table presented on page 18 ("Table I"), sets forth an analysis of the
Company's net interest income for the three-month periods ended September 30,
2000 and 1999.
As Table I indicates, interest income increased $1.2 million, or 17.2%, to
$7.9 million for the three-month period ended September 30, 2000 from $6.7
million for the same period in 1999. The increase in interest income was the
result of an increase in the yield earned on interest-earning assets to 7.64%
during the 2000 period from 7.20% during the 1999 period, and an increase in the
average balance of interest-earning assets to $409.8 million during the 2000
period from $371.5 million during the 1999 period. The increase in the average
balance of interest-earning assets was due to an increase in balances of loans,
which was partially offset by decreases in balances of mortgage-backed
securities, investment securities and other interest-earning assets during the
quarter. The increase in the yield earned on interest-earning assets was the
result of increasing market interest rates during 2000, which resulted in higher
yields on short term assets and a higher yield on both the reinvestment of
principal repayments on loans and newly originated loans. The increase in
average loans was primarily the result of an aggressive lending program during
the first nine months of 2000.
Interest expense increased $855,000, or 22.5%, to $4.7 million during the
third quarter from $3.8 million in the same period in 1999. The increase in
interest expense was the result of an increase in the average outstanding
balance of interest-bearing liabilities to $399.7 million during the 2000 period
from $363.2 million during the 1999 period, and, by an increase in the average
yield on interest-bearing liabilities to 4.63% during the 2000 period from 4.16%
during the 1999 period. The increase in average interest-bearing liabilities
resulted primarily from a more aggressive pricing policy and the continuing
movement to a sales oriented operation. The increase in the average yield on
interest-bearing liabilities resulted from increasing market rates during 2000
and a more aggressive pricing policy.
Based on management's review of the adequacy of the allowance for losses on
loans, a provision for losses on loans of $20,000 was recorded during the third
quarter of 2000. There was no provision for losses on loans recorded during the
third quarter of 1999.
Other income for the three-month period ended September 30, 2000 increased
$58,000, or 9.5%, to $663,000 compared to $605,000 for the same period in 1999.
The increase was attributable to increases of $63,000 in fee income, $22,000 in
gain on the sale of loans held for sale and $12,000 in gain on sale of real
estate held for sale. These increases were partially offset by decreases of
$10,000 in insurance commissions and $29,000 in other income. The $63,000
increase in fee income resulted primarily from higher volumes of service charges
on checking accounts resulting from an increase in such accounts during the 2000
period, compared to the 1999 period.
11
<PAGE>
Other expenses for the third quarter of 2000 increased $5,000 or 0.2%, and
totaled approximately $3.0 million, as did other expenses for the third quarter
of 1999. There was an increase of $66,000 (4.4%) in compensation and benefits.
In addition, due to unforeseen and extensive repairs related primarily to one
foreclosed property, the provision for losses on repossessed assets totaled
$89,000 for the quarter, compared to $4,000 for the 1999 quarter. These
increases were substantially offset by decreases of $12,000 (4.1%) in occupancy
costs, $22,000 (19.8%) in advertising, $68,000 (12.7%) in other expenses,
$23,000 (56.4%) in federal insurance premiums, $7,000 (6.9%) in data processing
expenses and $16,000 (14.5%) in telephone and postage. General and
administrative expenses remained at approximately the same level as the result
of the need to provide for loss reserves on repossessed assets, which offset
ongoing cost control efforts during the third quarter.
Federal income taxes increased $112,000 to $301,000 for the three-month
period ended September 30, 2000, compared to $189,000 for the same period in
1999. The primary reason for this increase was the increase in pre-tax income.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2000 and 1999
Net income for the nine-months ended September 30, 2000 was $1.9 million
compared to $1.3 million for the same period in 1999. This represented a
$611,000, or 48.2%, increase. The increase in net income resulted from an
increase of $978,000 in net interest income, and a decrease of $145,000 in
general and administrative expense, which were partially offset by a decrease of
$165,000 in other income, an increase of $20,000 in the provision for losses on
loans and an increase of $328,000 in income tax expense.
Basic earnings per share were $1.49 for the nine months ended September 30,
2000 compared to $.95 for the 1999 period. Diluted earnings per share were
$1.45 for the nine months ended September 30, 2000 compared to $.90 for the
comparable 1999 period.
Net interest income increased $978,000, or 11.4%, during the nine months
ended September 30, 2000, compared to the nine months ended September 30, 1999.
The table presented on page 19 ("Table II"), sets forth an analysis of the
Company's net interest income for the nine-month periods ended September 30,
2000 and 1999.
As Table II indicates, interest income increased $2.0 million, or 9.8%, to
$22.1 million for the nine-month period ended September 30, 2000 from $20.1
million for the same period in 1999. The increase in interest income was the
result of an increase in the yield earned on interest-earning assets to 7.57%
during the 2000 period from 7.15% during the 1999 period, and an increase in the
average balance of interest-earning assets to $389.9 million during the 2000
period from $376.6 million during the 1999 period. The increase in the average
balance of interest-earning assets was primarily due to increases in balances of
loans, which was partially offset by decreases in balances of mortgage-backed
securities, investment securities and other interest-earning assets during the
period. The increase in the yield earned on interest-earning assets was the
result of increasing market interest rates during 2000, which resulted in higher
yields on short term assets and a higher yield on both the reinvestment of
principal repayments on loans and newly originated loans.
Interest expense increased $986,000, or 8.6%, to $12.5 million during the
first nine months of
12
<PAGE>
2000 from $11.5 million in the same period in 1999. The increase in interest
expense was the result of an increase in the average outstanding balance of
interest-bearing liabilities to $380.2 million during the 2000 period from
$367.0 million during the 1999 period, and by an increase in the average yield
on interest-bearing liabilities to 4.40% during the 2000 period from 4.20%
during the 1999 period. The increase in average interest-bearing liabilities
resulted primarily from a more aggressive pricing policy and the continuing
movement to a sales oriented operation. The increase in the average yield on
interest-bearing liabilities resulted from increasing market rates during 2000
and a more aggressive pricing policy.
Based on management's review of the adequacy of the allowance for losses on
loans, a provision for losses on loans of $20,000 was recorded during the nine
months ending September 30, 2000. There was no provision for losses on loans
during the 1999 period.
Other income for the nine-month period ended September 30, 2000 decreased
$165,000, or 8.2%, to $1.9 million compared to $2.0 million for the same period
in 1999. The decrease was attributable to decreases of $54,000 in fee income,
$192,000 in other income and $1,000 in gain on the sale of securities available-
for-sale. These decreases were partially offset by increases of $67,000 in
insurance commissions, $3,000 in gain on sale of real estate held for sale and
$12,000 in gain on sale of office-related property. The decrease in fee income
was the result of a positive adjustment in the carrying value of originated
mortgage servicing rights during the 1999 period, which did not recur in the
2000 period. The $192,000 decrease in other income resulted primarily from the
absence of rental income on real estate owned during the 2000 period, compared
to the 1999 period. The property on which rents were received was sold in 1999.
Other expenses for the first half of 2000 decreased $145,000, or 1.7%, to
$8.6 million from $8.7 million during the 1999 period. There were decreases of
$72,000 (57.0%) in federal insurance premiums, $56,000 (19.2%) in advertising,
$41,000 (13.8%) in data processing expense, $142,000 (9.3%) in other expenses,
$12,000 (1.5%) in occupancy costs, and $13,000 (4.2%) in amortization of
intangible assets. These decreases were partially offset by increases of
$109,000 (2.4%) in compensation and benefits and $88,000 (266.1%) in provision
for losses on foreclosed assets.
The Year 2000 posed a unique set of challenges to those industries reliant
on information technology. Financial institutions are particularly dependent on
electronic data processing systems. The Company's cumulative costs of the Year
2000 project through the end of 1999 were approximately $100,000. Additional
costs related to Year 2000 have been limited during 2000 to payment of invoices
received after the end of 1999. No additional expenditures or payments are
expected at this time. The Company and its subsidiaries experienced an
uneventful transition from 1999 to 2000. There was no disruption of services to
customers or with internal operations. The Company will continue to remain aware
of dates during 2000 which are considered critical and will address issues,
should they arise.
Federal income taxes increased $328,000 to $948,000 for the nine-month
period ended September 30, 2000, compared to $620,000 for the same period in
1999. The primary reason for this increase was the increase in pre-tax income.
LIQUIDITY AND CAPITAL RESOURCES
The Company 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 (the
13
<PAGE>
"OTS") regulations currently require each savings association to maintain, for
each calendar quarter, an average daily balance of liquid assets (including cash
and cash equivalent investments) equal to at least 4% of its liquidity base as
of the end of the preceding calendar quarter or the average daily balance of its
liquidity base during the preceding calendar quarter. The liquidity base
consists of net withdrawable accounts plus borrowings repayable in 12 months or
less. At September 30, 2000, the Company's liquidity ratio was 14.6%, which was
well in excess of the minimum regulatory requirement.
The Company'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 by federal
law and OTS regulations to maintain minimum levels of regulatory capital. The
OTS has established the following minimum capital requirements: a risk-based
capital ratio, a core capital ratio and a tangible capital ratio. In addition to
these minimum regulatory capital requirements, another provision of federal law
grants the OTS broad power to take prompt corrective action to resolve the
problems of undercapitalized institutions. The OTS regulations implementing this
statutory authority (the "prompt corrective action regulations") establish other
capital thresholds which determine whether an institution will be deemed to be
"well capitalized", "adequately capitalized", "undercapitalized", "significantly
undercapitalized" or "critically undercapitalized". The capital category to
which an institution is assigned in turn determines the actions the OTS may take
to address the institution's undercapitalization. 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). Under the prompt corrective
action regulations, however, an institution with a ratio of tangible capital to
total assets below 2.0% is deemed to be "critically undercapitalized" and, as
such, will be subject to a variety of sanctions under the prompt corrective
action regulations, including, without limitation, limits on asset growth,
restrictions on activities and, ultimately, the appointment of a receiver.
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 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). Under the prompt
corrective action regulations, however, an institution with a ratio of core
capital to adjusted total assets of 3.0% will be deemed to be "adequately
capitalized" only if the institution also has a composite rating of "1" under
the Uniform Financial Institutions Rating System ("UFIRS"). All other
institutions must maintain a minimum ratio of core capital to adjusted total
assets of 4.0% in order to be deemed to be "adequately capitalized", and an
institution, regardless of its UFIRS rating, will be deemed to be "well
capitalized" only if it maintains a ratio of core capital to adjusted total
assets of at least 5.0%. If an institution fails to remain at least "adequately
capitalized", the OTS may impose one or more of a variety of sanctions on the
institution to address its undercapitalized condition, including, without
limitation, requiring the submission of a capital plan, restricting growth and
restricting the payment of capital distributions (such as dividends). Core
capital generally consists of tangible capital plus specified amounts of certain
intangible assets.
14
<PAGE>
The OTS risk-based requirement currently requires associations to have
total capital of at least 8.0% of risk-weighted assets. In order to be
considered "well capitalized" under the prompt corrective action regulations,
however, an institution must maintain a ratio of total capital to total risk-
weighted assets of at least 10.0% and a ratio of core capital to total risk-
weighted assets of at least 6.0%. 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, 2000, the Bank exceeded all current minimum regulatory
capital standards and was deemed to be "well capitalized" for purposes of the
OTS's prompt corrective action regulations. At September 30, 2000, the Bank's
tangible capital was $30.8 million, or 7.0%, of adjusted total assets, which
exceeded the 1.5% requirement by $24.2 million and exceeded the 2.0% "critically
undercapitalized" threshold by $22.0 million. In addition, at September 30,
2000, the Bank had core capital of $30.8 million, or 7.0%, of adjusted total
assets, which exceeded the 4.0% requirement by $13.2 million and exceeded the
5.0% "well capitalized" threshold by $8.8 million. The Bank had risk-based
capital of $32.9 million at September 30, 2000, or 11.9%, of risk-adjusted
assets, which exceeded the minimum risk-based capital requirement by $10.8
million and exceeded the 10.0% "well capitalized" threshold by $5.3 million.
Additionally, the Bank's $30.8 million of core capital equaled 11.2% of total
risk-weighted assets, which exceeded the 6.0% "well capitalized" threshold by
$14.3 million.
RECENT REGULATORY DEVELOPMENTS
The Gramm-Leach-Bliley Act (the "Act"), which was enacted in November,
1999, allows eligible bank holding companies to engage in a wider range of
nonbanking activities, including greater authority to engage in securities and
insurance activities. Under the Act, an eligible bank holding company that
elects to become a financial holding company may engage in any activity that the
Board of Governors of the Federal Reserve System (the "Federal Reserve"), in
consultation with the Secretary of the Treasury, determines by regulation or
order is financial in nature, incidental to any such financial activity, or
complementary to any such financial activity and does not pose a substantial
risk to the safety or soundness of depository institutions or the financial
system generally. National banks are also authorized by the Act to engage,
through "financial subsidiaries", in certain activity that is permissible for
financial holding companies (as described above) and certain activity that the
Secretary of the Treasury, in consultation with the Federal Reserve, determines
is financial in nature or incidental to any such financial activity.
The Act limits the nonbanking activities of unitary savings and loan
holding companies by generally prohibiting any savings and loan holding company
from engaging in any activity other than activities that are currently permitted
for multiple savings and loan holding companies or are permissible for financial
holding companies (as described above) (collectively "permissible activities").
The Act also generally prohibits any company from acquiring control of a savings
association or savings and loan holding company unless the acquiring company
engages solely in permissible activities. The Act creates an exemption from the
general prohibitions for unitary savings and loan holding companies in
existence, or formed pursuant to an application pending before the Office of
Thrift Supervision, on or before May 4, 1999.
Although various bank regulatory agencies have issued regulations as
mandated by the Act, except for the jointly issued privacy regulations, the Act
and its implementing regulations have had little impact on the daily operations
of the Company and the Bank and, at this time, it is not possible
15
<PAGE>
to predict the impact the Act and its implementing regulations may have on the
Company or the Bank.
In December 1999, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 101 ("SAB No. 101"), "Revenue Recognition
in Financial Statements". SAB No. 101 summarizes some of the staff's
interpretations of the application of generally accepted accounting principles
to revenue recognition. The Company will adopt SAB No. 101 when required in the
fourth quarter of 2000. Management believes the adoption of SAB No. 101 will not
have a significant effect on the Company's financial statements.
STOCK REPURCHASE
On January 11, 2000, the Company's Board of Directors authorized the
repurchase through January 31, 2001, of up to 90,000 shares of its common stock.
During the quarter ended September 30, 2000, a total of 18,300 shares of common
stock were repurchased at a cost of $402,000. During the nine months ended
September 30, 2000, a total of 42,300 shares of common stock were repurchased at
a cost of $938,000. Through September 30, 2000, a total of 601,307 shares of
common stock of the Company had been purchased under the current and previous
repurchase programs at a total cost of $12.7 million. As of September 30, 2000,
the Company held 491,442 shares of its common stock as treasury stock. During
the period from September 30, 2000 through November 8, 2000, no additional
shares of common stock were repurchased.
STOCK OPTIONS
During the third quarter of 2000, options on 1,400 shares of common stock
were exercised. Between September 30, 2000 and November 8, 2000, options on
1,300 shares of common stock were exercised. No other notice was received from
holders of options of their intent to exercise options during that period.
DIVIDENDS
On October 10, 2000, a cash dividend of $.12 per share was declared,
payable on December 1, 2000 to stockholders of record as of November 15, 2000.
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.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such forward-
looking statements to be covered by the safe harbor provisions for forward-
looking statements contained in the Private Securities Reform Act of 1995, and
is including this statement for purposes of these safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe
future plans, strategies and expectations of the Company, are generally
identifiable by use of the words "believe," "expect," "intend," "anticipate,"
"estimate," "project" or similar expressions. The Company's ability to predict
16
<PAGE>
results or the actual effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse effect on the operations
and future prospects of the Company and its subsidiaries include, but are not
limited to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U. S.
Government, including policies of the U. S. Treasury and the Federal Reserve
Board, the quality of composition of the loan or investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
the Company's market area, our implementation of new technologies, our ability
to develop and maintain secure and reliable electronic systems, and account
principles, policies and guidelines. These risks and uncertainties should be
considered in evaluating forward-looking statements and undue reliance should
not be placed on such statements. Further information concerning the Company and
its business, including additional factors that could materially affect the
Company's financial results, is included in the Company's filings with the
Securities and Exchange Commission.
17
<PAGE>
TABLE I
NET INTEREST INCOME ANALYSIS (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------------------------------------------
2000 1999
-------------------------------- ---------------------------------
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) $316,328 $ 6,362 7.98% $267,110 $ 5,214 7.74%
Mortgage-backed securities (2) 17,385 307 7.01% 19,409 296 6.05%
Investments securities (3) 60,767 953 6.22% 67,466 989 5.82%
Other interest-earning assets 13,500 236 6.94% 15,733 209 5.27%
FHLB stock 1,868 36 7.65% 1,811 30 6.57%
-------- ------- -------- -------
Total interest-earning assets 409,848 7,894 7.64% 371,529 6,738 7.20%
-------- ------- -------- -------
Other assets 29,916 31,566
-------- --------
Total assets $439,764 $403,095
======== ========
Interest-bearing liabilities:
Certificate accounts $239,083 3,445 5.72% $209,560 2,757 5.22%
Savings deposits 60,264 379 2.50% 61,949 381 2.44%
Demand and NOW deposits 76,632 467 2.42% 74,148 432 2.31%
Borrowings 23,750 369 6.16% 17,500 235 5.33%
-------- ------- -------- -------
Total interest-bearing liabilities 399,729 4,660 4.63% 363,157 3,805 4.16%
-------- ------- -------- -------
Other liabilities 2,466 2,052
-------- --------
Total liabilities 402,195 365,209
-------- --------
Stockholders' equity 37,569 37,886
-------- --------
Total liabilities and
stockholders' equity $439,764 $403,095
======== ========
Net interest income $ 3,234 $ 2,933
======= =======
Net interest rate spread 3.01% 3.04%
==== ====
Net earning assets $ 10,119 $ 8,372
======== ========
Net yield on average interest-
earning assets (net interest
margin) 3.13% 3.13%
==== ====
Average interest-earning assets to
average interest-bearing liabilities 102.53% 102.31%
======= =======
</TABLE>
(1) Calculated including loans held for sale, and net of deferred loan fees,
loan discounts, loans in process and the allowance for losses on loans.
(2) Calculated including mortgage-backed securities available-for-sale.
(3) Calculated including investment securities available-for-sale and
certificates of deposit.
18
<PAGE>
TABLE II
NET INTEREST INCOME ANALYSIS (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------------------------------------------------
2000 1999
------------------------------------ ---------------------------------
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) $294,217 $17,441 7.92% $259,792 $15,210 7.83%
Mortgage-backed securities (2) 17,815 931 6.98% 19,385 826 5.70%
Investments securities (3) 61,451 2,870 6.24% 71,256 3,130 5.87%
Other interest-earning assets 14,527 749 6.89% 24,384 876 4.80%
FHLB stock 1,840 101 7.33% 1,807 87 6.44%
-------- ------- -------- -------
Total interest-earning assets 389,850 22,092 7.57% 376,624 20,129 7.15%
-------- ------- -------- -------
Other assets 29,998 31,848
-------- --------
Total assets $419,848 $408,472
======== ========
Interest-bearing liabilities:
Certificate accounts $226,888 9,341 5.50% $209,483 8,298 5.30%
Savings deposits 60,598 1,141 2.52% 61,857 1,130 2.44%
Demand and NOW deposits 76,314 1,323 2.32% 74,900 1,263 2.25%
Borrowings 16,360 708 5.78% 20,740 836 5.39%
-------- ------- -------- -------
Total interest-bearing liabilities 380,160 12,513 4.40% 366,980 11,527 4.20%
-------- ------- -------- -------
Other liabilities 2,960 2,818
-------- --------
Total liabilities 383,120 369,798
-------- --------
Stockholders' equity 36,728 38,674
-------- --------
Total liabilities and
stockholders' equity $419,848 $408,472
======== ========
Net interest income $ 9,579 $ 8,602
======= =======
Net interest rate spread 3.17% 2.95%
==== ====
Net earning assets $ 9,690 $ 9,644
======== ========
Net yield on average interest-
earning assets (net interest
margin) 3.28% 3.05%
==== ====
Average interest-earning assets to
average interest-bearing liabilities 102.55% 102.63%
======= =======
</TABLE>
(1) Calculated including loans held for sale, and net of deferred loan fees,
loan discounts, loans in process and the allowance for losses on loans.
(2) Calculated including mortgage-backed securities available-for-sale.
(3) Calculated including investment securities available-for-sale and
certificates of deposit.
19
<PAGE>
KANKAKEE BANCORP, INC.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings - There are no material pending legal proceedings
-----------------
to which the Company or the Bank is a party other than ordinary
routine litigation incidental to their respective businesses.
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
20
<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 8, 2000 /s/ MICHAEL A. STANFA
------------------- --------------------------------------
Executive Vice President
Date: November 8, 2000 /s/ RONALD J. WALTERS
------------------- --------------------------------------
Vice President and Treasurer
(Principal Financial
and Accounting Officer)
21
