<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 June 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.
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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
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(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 August 8, 2000, there were 1,276,858 issued and outstanding shares of the
Issuer's common stock (exclusive of 473,142 shares of the Issuer's common stock
held as treasury stock).
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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,
June 30, 2000 and December 31, 1999 1 - 2
Statements of Income and Comprehensive Income,
Three Months Ended June 30, 2000 and 1999 3
Statements of Income and Comprehensive Income,
Six Months Ended June 30, 2000 and 1999 4
Statements of Cash Flows, Six Months
Ended June 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 - 18
Item 3. Quantitative and Qualitative Disclosure
About Market Risk 9
Part II. OTHER INFORMATION 19
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
</TABLE>
1
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Assets
Cash and due from banks $ 15,023,879 $ 19,118,528
Federal funds sold 4,056,277 6,321,834
Money market funds 5,085,183 4,653,221
------------- ------------
Cash and cash equivalents 24,165,339 30,093,583
------------- ------------
Certificates of deposit 50,000 50,000
------------- ------------
Securities:
Investment securities:
Available-for-sale, at fair value 60,037,871 65,131,965
Held-to-maturity, at cost (fair value: June 30, 2000 -
$383,184; December 31, 1999 - $284,038) 402,705 306,241
------------- ------------
Total investment securities 60,440,576 65,438,206
------------- ------------
Mortgage-backed securities:
Available-for-sale, at fair value 17,585,873 17,490,841
Held-to-maturity, at cost (fair value: June 30, 2000 -
$92,494; December 31, 1999 - $109,819) 91,890 108,724
------------- ------------
Total mortgage-backed securities 17,677,763 17,599,565
------------- ------------
Non-marketable equity securities 501,100 501,100
------------- ------------
Loans, net of allowance for losses on loans ($2,146,769
at June 30, 2000; $2,171,040 at December 31, 1999) 307,337,848 270,360,059
Loans held for sale - -
Real estate held for sale 498,560 575,164
Federal Home Loan Bank stock, at cost 1,842,900 1,811,400
Office properties and equipment 8,457,535 8,850,579
Accrued interest receivable 2,988,057 2,889,498
Prepaid expenses and other assets 1,583,626 1,352,138
Intangible assets 5,007,401 5,196,634
------------- ------------
Total assets $ 430,550,705 $404,717,926
============= ============
</TABLE>
(Continued)
1
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (continued)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
June 30, December 31,
<S> <C> <C>
2000 1999
------------ ------------
Liabilities and stockholders' equity
Liabilities:
Deposits
Noninterest bearing $ 22,361,974 $ 21,455,669
Interest bearing 344,011,821 333,521,782
Short term borrowings 19,000,000 -
Other borrowings 5,000,000 11,200,000
Advance payments by borrowers for taxes and insurance 1,879,821 1,548,998
Other liabilities 1,041,116 743,750
------------ ------------
Total liabilities 393,294,732 368,470,199
------------ ------------
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: June 30, 2000 -
1,275,458; December 31, 1999 - 1,243,383 17,500 17,500
Additional paid-in capital 15,422,463 16,019,390
Retained income, substantially restricted 33,275,466 32,309,425
Less: Cost of treasury stock (474,542 shares at June 30,
2000; 506,617 shares at December 31, 1999) (10,189,865) (10,851,899)
Unrealized losses on securities available-for-
sale, net of related income taxes (1,193,986) (1,095,478)
------------ ------------
Total stockholders' equity before Employee Stock
Ownership Plan loan and Bank Incentive Plan and Trust 37,331,578 36,398,938
Employee Stock Ownership Plan loan (75,605) (151,211)
------------ ------------
Total stockholders' equity 37,255,973 36,247,727
------------ ------------
Total liabilities and stockholders' equity $430,550,705 $404,717,926
======='==== ============
</TABLE>
See notes to consolidated financial statements (unaudited)
2
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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Three Months Ended June 30,
----------------------------
2000 1999
---------- ----------
<S> <C> <C>
Interest income:
Loans $5,806,430 $5,091,316
Mortgage-backed securities 315,259 291,181
Investment securities 1,180,595 1,370,208
---------- ----------
Total interest income 7,302,284 6,752,705
---------- ----------
Interest expense:
Deposits 3,828,002 3,536,707
Borrowed funds 199,438 300,849
---------- ----------
Total interest expense 4,027,440 3,837,556
---------- ----------
Net interest income 3,274,844 2,915,149
Provision for losses on loans - -
---------- ----------
Net interest income after provision for losses on loans 3,274,844 2,915,149
Other income:
Net gain on sale of securities available-for-sale - 1,094
Net gain on sales of real estate held for sale 5,216 1,599
Net gain on sales of loans held for sale 1,702 12,560
Fee income 466,929 449,771
Insurance commissions 22,823 17,695
Other 96,511 148,566
---------- ----------
Total other income 593,181 631,285
---------- ----------
Other expenses:
Compensation and benefits 1,504,499 1,537,410
Occupancy 259,511 262,033
Furniture and equipment 174,811 178,760
Federal insurance premiums 18,192 42,044
Advertising 66,309 102,748
Provision for losses on foreclosed assets 13,304 11,500
Data processing services 82,021 87,258
Telephone and postage 75,084 78,937
Amortization of intangible assets 94,617 95,288
Other general and administrative 415,371 507,551
---------- ----------
Total other expenses 2,703,719 2,903,529
---------- ----------
Income before income taxes 1,164,306 642,905
Income taxes 395,925 204,108
---------- ----------
Net income $ 768,381 $ 438,797
========== ==========
Net income $ 768,381 $ 438,797
Other comprehensive income:
Unrealized gains (losses) on available-for-sale
securities, net of related income taxes 142,659 (512,625)
---------- ----------
Comprehensive income (loss) $ 911,040 ($73,828)
========== ==========
Basic earnings per share $ 0.61 $ 0.33
========== ==========
Diluted earnings per share $ 0.59 $ 0.31
========== ==========
</TABLE>
See notes to consolidated financial statements (unaudited)
3
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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
Six Months Ended June 30,
-------------------------
2000 1999
----------- -----------
Interest income:
Loans $11,079,148 $ 9,996,111
Mortgage-backed securities 623,943 529,551
Investment securities 2,495,134 2,865,221
----------- -----------
Total interest income 14,198,225 13,390,883
----------- -----------
Interest expense:
Deposits 7,513,495 7,121,395
Borrowed funds 339,688 600,764
----------- -----------
Total interest expense 7,853,183 7,722,159
----------- -----------
Net interest income 6,345,042 5,668,724
Provision for losses on loans - -
----------- -----------
Net interest income after provision for
losses on loans 6,345,042 5,668,724
Other income:
Net loss on sale of securities
available-for-sale - 1,094
Net gain on sales of real estate held for sale 11,961 21,578
Net gain on sales of loans held for sale 3,294 23,911
Net gain on sales of property held for
expansion 11,552 -
Fee income 878,104 994,532
Insurance commissions 108,833 31,477
Other 180,739 344,378
----------- -----------
Total other income 1,194,483 1,416,970
----------- -----------
Other expenses:
Compensation and benefits 3,079,050 3,036,451
Occupancy 526,324 526,868
Furniture and equipment 351,097 354,447
Federal insurance premiums 36,340 85,029
Advertising 144,320 177,943
Provision for losses on foreclosed
assets 31,726 29,250
Data processing services 169,976 204,844
Telephone and postage 177,094 164,638
Amortization of intangible assets 189,234 201,809
Other general and administrative 918,277 991,996
----------- -----------
Total other expenses 5,623,438 5,773,275
----------- -----------
Income before income taxes 1,916,087 1,312,419
Income taxes 647,425 431,750
----------- -----------
Net income $ 1,268,662 $ 880,669
=========== ===========
Net income $ 1,268,662 $ 880,669
Other comprehensive income:
Unrealized losses on available-for-sale
securities, net of related income taxes (98,508) (748,668)
----------- -----------
Comprehensive income $ 1,170,154 $ 132,001
=========== ===========
Basic earnings per share $1.01 $0.66
=========== ===========
Diluted earnings per share $0.98 $0.62
=========== ===========
See notes to consolidated financial statements (unaudited)
4
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,268,662 $ 880,669
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for losses on loans - -
Provision for losses on real estate held for sale 31,726 (29,250)
Depreciation and amortization 644,514 643,192
Amortization of investment premiums and discounts, net 4,652 176,747
Accretion of loan fees, costs and discounts, net 19,279 12,069
Deferred income tax provision (benefit) (41,838) 100,107
Originations of loans held for sale (174,873) (7,354,799)
Proceeds from sales of loans 178,167 7,721,832
(Increase) decrease in interest receivable (98,559) 20,191
Increase (decrease) in interest payable on deposits (23,152) 10,669
Proceeds from sales of trading securities - -
Purchase of trading securities - -
Net gain on sales of loans (3,294) (23,911)
Net gain on sales of securities available-for-sale - (1,094)
Net gain on sales of real estate held for sale (11,961) (21,578)
Income on sales of property held for expansion (11,553) -
Other, net 184,128 195,673
------------ ------------
Net cash from operating activities 1,965,898 (1,939,171)
------------ ------------
Cash flows from investing activities:
Investment securities:
Available-for-sale:
Purchases (6,486,521) (10,976,715)
Proceeds from sales - 2,001,094
Proceeds from calls and maturities 11,500,000 16,000,000
Held to maturity:
Purchases (100,000) -
Proceeds from maturities 2,976 2,797
Mortgage-backed securities:
Available-for-sale:
Purchases (1,962,724) (5,650,382)
Proceeds from maturities and paydowns 1,794,958 4,622,630
Held-to-maturity:
Proceeds from maturities and paydowns 16,834 29,965
Proceeds from sales of real estate 130,263 420,201
Deferred loan fees and costs, net 70,318 (46,130)
Loans originated (96,081,673) (68,140,655)
Loans purchased - (1,366,276)
Principal collected on loans 59,014,287 50,719,190
Purchases of office properties and equipment, net (105,947) (651,852)
Payments of improvements on real estate - (347,623)
------------ ------------
Net cash from investing activities (32,207,229) (13,383,556)
</TABLE>
See notes to consolidated financial statements (unaudited).
5
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (continued)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
2000 1999
----------- ------------
<S> <C> <C>
Cash flows from financing activities
Net increase in non-certificate of deposit accounts $ 1,992,121 $ 433,847
Net increase (decrease) in certificate of deposit accounts 9,427,375 (5,191,673)
Net increase in advance payments by
borrowers for taxes and insurance 331,105 285,345
Proceeds from short-term borrowings 19,000,000
Repayments of short-term borrowings - -
Proceeds from other borrowings - -
Repayments of other borrowings (6,200,000) -
Proceeds from exercise of stock options 600,577 127,144
Dividends paid (302,621) (323,961)
Purchase of treasury stock (535,470) (1,003,804)
----------- ------------
Net cash from financing activities 24,313,087 (5,673,102)
----------- ------------
Decrease in cash and cash equivalents (5,928,244) (17,117,487)
Cash and cash equivalents:
Beginning of year 30,093,583 46,990,638
----------- ------------
End of period $24,165,339 $ 29,873,151
=========== ============
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest on deposits $ 7,490,300 $ 7,132,100
=========== ============
Interest on borrowed funds $ 298,400 $ 605,500
=========== ============
Income taxes $ 358,144 $ 137,072
=========== ============
Supplemental disclosures of non-cash investing activities:
Real estate acquired through foreclosure - $ 122,713
=========== ============
(Increase) decrease in unrealized gains (losses) on
securities available-for-sale ($149,255) ($1,134,345)
=========== ============
Increase (decrease) in deferred taxes attributable to the
unrealized gains (losses) on securities available-for-sale $ 50,747 $ 385,677
=========== ============
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)
June 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 six-month periods ended June 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 June 30, 2000, stockholders' equity includes a negative $1.2 million, 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 $615,000. An increase in market
interest rates during the six months ended June 30, 2000 resulted in a $99,000
decrease 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 on 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 half 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 half
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 second half of 2000, although it is anticipated that earnings should
continue to benefit from the growth during the first half of the year.
Total assets of the Company increased by $25.8 million, or 6.4%, to $430.6
million at June 30, 2000 from $404.7 million at December 31, 1999.
Cash and cash equivalents decreased by $5.9 million, or 19.7%, from $30.1
million at December 31, 1999 to $24.2 million at June 30, 2000. The decrease
was primarily attributable to the use of cash equivalent assets in the funding
of loans and, to a lesser extent, the purchase of mortgage-backed securities
during the period.
During the six-month period ended June 30, 2000, net loans receivable
increased by $36.9
8
<PAGE>
million, or 13.7%, from $270.4 million to $307.3 million. This was primarily the
result of the origination (or purchase) of $66.9 million of real estate loans
and the origination (or purchase) of $29.2 million of consumer and commercial
business loans, offset by loan repayments which totaled $59.0 million.
There were no loans held for sale at either June 30, 2000, or at December 31,
1999. During the six months ended June 30, 2000, no mortgage loans were
originated for sale.
Securities available-for-sale decreased by $5.1 million, or 7.8%, to $60.0
million at June 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 increased by $95,000, or 0.5%,
to $17.6 million at June 30, 2000 from $17.5 million at December 31, 1999. The
increase resulted from purchases of $2.0 million of securities, which was
partially offset by the maturity of $1.8 million of securities and the change in
market value adjustment.
Deposits increased by $11.4 million, or 3.2%, from $355.0 million at December
31, 1999 to $366.4 million at June 30, 2000. During the six month period there
was a $2.0 million increase in passbook, NOW and money market accounts and a
$9.4 million increase in certificate of deposit accounts.
Total borrowings increased by $12.8 million from $11.2 million at December 31,
1999 to $24.0 million at June 30, 2000. The increase was the result of $19.0
million in new borrowings required for loan origination and cash management,
which were partially offset by 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. This amounted to
approximately $28.1 million during the six 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, 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.
9
<PAGE>
NON-PERFORMING ASSETS AND ALLOWANCE FOR LOSSES ON LOANS
The Company's non-performing assets decreased to $1.7 million, or 0.39%, of
total assets at June 30, 2000 from $2.8 million, or 0.69% of total assets at
December 31, 1999. During the six month period ended June 30, 2000, non-
performing one-to-four family loans, non-performing consumer loans and non-
performing commercial real estate loans decreased by $12,000, $133,000 and
$861,000, respectively. These decreases were partially offset by an increase of
$10,000 in non-performing commercial business loans. In addition, foreclosed
assets decreased by $77,000 and restructured troubled debts decreased by
$10,000. The ratio of the allowance for losses on loans to non-performing loans
increased to 285.5% as of June 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 $996,000
in non-performing loans.
The Company classified $3.9 million of its assets as Special Mention, $2.2
million as Substandard and $34,000 as Loss as of June 30, 2000. No assets were
classified as Doubtful at June 30, 2000. This represents an increase of $1.6
million in the Special Mention category and a net decrease of $290,000 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 1.42% at June 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 35.1% as of June 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 JUNE 30, 2000 AND 1999
Net income for the quarter ended June 30, 2000 was $768,000 compared to
$439,000 for the same period in 1999. This represented a $329,000, or 75.1%,
increase. The increase in net income resulted from an increase of $360,000 in
net interest income and a $200,000 decrease in general and administrative
expense, which were partially offset by a decrease of $38,000 in other income,
and an increase of $192,000 in income tax expense.
Basic earnings per share were $.61 for the quarter ended June 30, 2000
compared to $.33 for the 1999 period. Diluted earnings per share were $.59 for
the quarter ended June 30, 2000 compared to $.31 for the comparable 1999 period.
The second quarter per share earnings were the highest quarterly earnings in the
Company's history.
10
<PAGE>
Net interest income increased $360,000, or 12.3%, during the quarter ended
June 30, 2000, compared to the three-month period ended June 30, 1999.
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 June 30, 2000
and 1999.
As Table I indicates, interest income increased $549,000, or 8.1%, to $7.3
million for the three-month period ended June 30, 2000 from $6.8 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 7.60% during the 2000
period from 7.13% during the 1999 period, and an increase in the average balance
of interest-earning assets to $385.6 million during the 2000 period from $379.8
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 the reinvestment of principal repayments
on loans. The increase in average loans was the result of an aggressive lending
program during the first six months of 2000.
Interest expense increased $190,000, or 4.9%, to $4.0 million during the
second 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 $374.5 million during the 2000 period
from $368.4 million during the 1999 period, and, by an increase in the average
yield on interest-bearing liabilities to 4.31% during the 2000 period from 4.18%
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.
No provision for losses on loans was deemed necessary during either the second
quarter of 2000, or the second quarter of 1999, based on management's review of
the adequacy of the allowance for losses on loans.
Other income for the three-month period ended June 30, 2000 decreased $38,000,
or 6.0%, to $593,000 compared to $631,000 for the same period in 1999. The
decrease was attributable to decreases of $52,000 in other income, $11,000 in
gain on the sale of loans held for sale and $1,000 in gain on sale of securities
available-for-sale. These decreases were partially offset by increases of
$5,000 in insurance commissions, $17,000 in fee income and $4,000 in gain on
sales of real estate held for sale. The $52,000 decrease in other income
resulted primarily from a decline in appraisal fee income and 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 second quarter ended June 30, 2000 decreased $200,000
or 6.9%, to $2.7 million from $2.9 million for the second quarter of 1999.
There were decreases in all areas of expense except the provision for losses on
foreclosed assets which increased by $2,000 (15.7%) to $13,000 for the second
quarter of 2000. There were decreases of $33,000 (2.1%) in compensation and
benefits, $36,000 (35.5%) in advertising, $92,000 (18.2%) in other expenses,
$24,000 (56.7%) in federal insurance premiums and $5,000 (6.0%) in data
processing expenses. The decrease in general and administrative expenses was
primarily the result of cost control efforts.
11
<PAGE>
Federal income taxes increased $192,000 to $396,000 for the three-month period
ended June 30, 2000, compared to $204,000 for the same period in 1999. The
primary reason for this increase was the increase in pre-tax income.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000 and 1999
Net income for the six-months ended June 30, 2000 was $1.3 million compared to
$881,000 for the same period in 1999. This represented a $388,000, or 44.1%,
increase. The increase in net income resulted from an increase of $676,000 in
net interest income, and a decrease of $150,000 in general and administrative
expense, which were partially offset by a decrease of $222,000 in other income,
and an increase of $216,000 in income tax expense.
Basic earnings per share were $1.01 for the six months ended June 30, 2000
compared to $.66 for the 1999 period. Diluted earnings per share were $.98 for
the six months ended June 30, 2000 compared to $.62 for the comparable 1999
period.
Net interest income increased $676,000, or 11.9%, during the six months ended
June 30, 2000, compared to the six months ended June 30, 1999.
The table presented on page 18 ("Table II"), sets forth an analysis of the
Company's net interest income for the six-month periods ended June 30, 2000 and
1999.
As Table II indicates, interest income increased $807,000, or 6.0%, to $14.2
million for the six-month period ended June 30, 2000 from $13.3 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 7.51% during the 2000
period from 7.12% during the 1999 period, and an increase in the average balance
of interest-earning assets to $380.0 million during the 2000 period from $379.3
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 the reinvestment of principal
repayments on loans.
Interest expense increased $131,000, or 1.7%, to $7.9 million during the first
six months of 2000 from $7.7 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 $370.4 million during the 2000 period
from $368.9 million during the 1999 period, and, to a lesser extent, by an
increase in the average yield on interest-bearing liabilities to 4.26% during
the 2000 period from 4.22% 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.
No provision for losses on loans was deemed necessary during either the first
six months of 2000, or the first six months of 1999, based on management's
review of the adequacy of the allowance for losses on loans.
12
<PAGE>
Other income for the six-month period ended June 30, 2000 decreased $222,000,
or 15.7%, to $1.2 million compared to $1.4 million for the same period in 1999.
The decrease was attributable to decreases of $116,000 in fee income, $163,000
in other income, $21,000 in gain on the sale of loans held for sale and $10,000
in gain on the sale of real estate held for sale. These decreases were
partially offset by an increase of $77,000 in insurance commissions. 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 $164,000 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 $150,000, or 2.6%, to $5.6
million from $5.8 million during the 1999 period. There were decreases of
$49,000 (57.3%) in federal insurance premiums, $34,000 (18.9%) in advertising,
$35,000 (17.0%) in data processing expense, $73,000 (7.4%) in other expenses and
$13,000 (6.2%) in amortization of intangible assets. These decreases were
partially offset by increases of $43,000 (1.4%) in compensation and benefits,
$13,000 (7.6%) in telephone and postage and $2,000 (8.5%) 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, such as 10/10/2000,
and will address issues, should they arise.
Federal income taxes increased $215,000 to $647,000 for the six-month period
ended June 30, 2000, compared to $432,000 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 "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 June 30, 2000, the Company's
liquidity ratio was 16.4%, 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.
13
<PAGE>
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.
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 June 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 June 30, 2000, the Bank's tangible
capital was $30.4 million, or 7.2%, of adjusted total assets, which exceeded the
1.5% requirement by $23.0 million and exceeded the 2.0% "critically
undercapitalized" threshold by $22.0 million. In addition, at June 30, 2000, the
Bank had core
14
<PAGE>
capital of $30.4 million, or 7.2%, of adjusted total assets, which exceeded the
4.0% requirement by $13.4 million and exceeded the 5.0% "well capitalized"
threshold by $9.2 million. The Bank had risk-based capital of $32.5 million at
June 30, 2000, or 12.2%, of risk-adjusted assets, which exceeded the minimum
risk-based capital requirement by $11.2 million and exceeded the 10.0% "well
capitalized" threshold by $5.9 million. Additionally, the Bank's $30.4 million
of core capital equaled 11.5% of total risk-weighted assets, which exceeded the
6.0% "well capitalized" threshold by $14.5 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.
Various bank regulatory agencies have begun issuing regulations as mandated by
the Act. During June, 2000, all of the federal bank regulatory agencies jointly
issued regulations implementing the privacy provisions of the Act. In addition,
the Federal Reserve issued interim regulations listing the financial activities
permissible for financial holding companies and describing the extent to which
financial holding companies may engage in securities and merchant banking
activities. At this time, it is not possible to predict the impact the Act and
its implementing regulations may have on the Company.
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 June 30, 2000, a total of 6,000 shares of common stock
were repurchased at a cost of $124,000. During the six months ended June 30,
2000, a total of 24,000 shares of common stock were repurchased at a cost of
$535,000. Through June 30, 2000, a total of 583,007 shares of common stock of
the
15
<PAGE>
Company had been purchased under the current and previous repurchase programs at
a total cost of $12.3 million. As of June 30, 2000, the Company held 474,542
shares of its common stock as treasury stock. During the period from June 30,
2000 through August 8, 2000, no additional shares of common stock were
repurchased.
STOCK OPTIONS
During the second quarter of 2000, options on 51,075 shares of common stock
were exercised. Between June 30, 2000 and August 8, 2000, options on 1,400
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 July 11, 2000, a cash dividend of $.12 per share was declared, payable on
September 1, 2000 to stockholders of record as of August 11, 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
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.
16
<PAGE>
TABLE I
NET INTEREST INCOME ANALYSIS (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Three Months Ended June 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) $293,843 $ 5,806 7.93% $260,692 $ 5,092 7.83%
Mortgage-backed securities (2) 18,130 315 6.97% 20,628 291 5.66%
Investments securities (3) 60,840 949 6.26% 70,586 1,020 5.80%
Other interest-earning assets 10,957 199 7.28% 26,037 321 4.94%
FHLB stock 1,835 33 7.21% 1,809 29 6.43%
-------- ------- -------- -------
Total interest-earning assets 385,605 7,302 7.60% 379,752 6,753 7.13%
-------- ------- -------- -------
Other assets 29,068 30,982
-------- --------
Total assets $414,673 $410,734
======== ========
Interest-bearing liabilities:
Certificate accounts $221,558 3,006 5.44% $207,515 2,738 5.29%
Savings deposits 61,942 388 2.51% 62,798 384 2.45%
Demand and NOW deposits 76,279 434 2.28% 75,179 415 2.21%
Borrowings 14,750 199 5.41% 22,900 301 5.27%
-------- ------- -------- -------
Total interest-bearing liabilities 374,529 4,027 4.31% 368,392 3,838 4.18%
-------- ------- -------- -------
Other liabilities 3,657 3,582
-------- --------
Total liabilities 378,186 371,974
-------- --------
Stockholders' equity 36,487 38,760
-------- --------
Total liabilities and
stockholders' equity $414,673 $410,734
======== ========
Net interest income $ 3,275 $ 2,915
======= =======
Net interest rate spread 3.29% 2.95%
====
Net earning assets $ 11,076 $ 11,360
======== ========
Net yield on average interest-
earning assets (net interest
margin) 3.41% 3.08%
==== ====
Average interest-earning assets to
average interest-bearing liabilities 102.96% 103.08%
======= =======
</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.
17
<PAGE>
TABLE II
NET INTEREST INCOME ANALYSIS
(UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Three Months Ended June 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) $283,456 $11,079 7.86% $256,418 $ 9,996 7.86%
Mortgage-backed securities (2) 18,041 624 6.96% 19,391 530 5.51%
Investments securities (3) 61,704 1,918 6.25% 72,989 2,141 5.92%
Other interest-earning assets 14,941 512 6.89% 28,711 667 4.68%
FHLB stock 1,825 65 7.16% 1,806 57 6.36%
-------- ------- -------- -------
Total interest-earning assets 379,967 14,198 7.51% 379,315 13,291 7.12%
-------- ------- -------- -------
Other assets 30,029 31,889
-------- --------
Total assets $409,996 $411,204
======== ========
Interest-bearing liabilities:
Certificate accounts $219,997 5,895 5.39% $208,863 5,541 5.35%
Savings deposits 61,256 762 2.50% 61,865 749 2.44%
Demand and NOW deposits 79,955 856 2.27% 75,246 831 2.23%
Borrowings 13,229 340 5.17% 22,900 601 5.29%
-------- ------- -------- -------
Total interest-bearing liabilities 370,437 7,853 4.26% 368,874 7,722 4.22%
-------- ------- -------- -------
Other liabilities 3,237 3,204
-------- --------
Total liabilities 373,674 372,078
-------- --------
Stockholders' equity 36,322 39,126
-------- --------
Total liabilities and
stockholders' equity $409,996 $411,204
======== ========
Net interest income $ 6,345 $ 5,669
======= =======
Net interest rate spread 3.25% 2.90%
==== ====
Net earning assets $ 9,530 $ 10,441
======== ========
Net yield on average interest-
earning assets (net interest
margin) 3.36% 3.01%
==== ====
Average interest-earning assets to
average interest-bearing liabilities 102.57% 102.83%
======= =======
</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 investment securities available-for-sale.
(3) Calculated including investment securities available-for-sale and
certificates of deposit.
18
<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 - The Annual
---------------------------------------------------
Meeting of Stockholders of the Company was held on April 21, 2000. At
the meeting, Charles C. Huber, Thomas M. Schneider and Wesley E. Walker
were elected to serve as directors with terms expiring in 2003.
Continuing with terms expiring in 2002 were William Cheffer and Michael
A. Stanfa. Continuing with terms expiring in 2001 were Brenda L. Baird
and Larry D. Huffman. The matters approved by stockholders at the
meeting and the number of votes cast for, against or withheld (as well
as the number of abstentions and broker non-votes) as to each matter
are set forth below:
Number of Votes
------------------
For Withheld
----- ---------
The election of the following
directors for a three-year term:
Charles C. Huber 1,012,554 123,406
Thomas M. Schneider 1,013,496 122,464
Wesley E. Walker 1,014,571 121,389
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
--- ------- ------- ---------
<S> <C> <C> <C> <C>
The ratification of McGladrey &
Pullen, LLP, as the auditors for the
year ending December 31, 2000: 1,120,360 11,596 4,004 -
</TABLE>
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
19
<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: August 8, 2000 /s/ MICHAEL A. STANFA
------------------- --------------------------------------
Executive Vice President
Date: August 8, 2000 /s/ RONALD J. WALTERS
------------------- ------------------------------------
Vice President and Treasurer
(Principal Financial
and Accounting Officer)
20
