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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-25180
CKF BANCORP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 61-1267810
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
340 WEST MAIN STREET, DANVILLE, KENTUCKY 40422
- ---------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (606) 236-4181
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
Yes X No
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As of November 5, 1997, 950,000 shares of the registrant's common stock were
issued and outstanding.
Page 1 of 15 Pages Exhibit Index at Page N/A
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CONTENTS
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1997
(unaudited) and December 31, 1996......................................................... 3
Consolidated Statements of Income for the Three-Month
Periods Ended September 30, 1997 and 1996 (unaudited) and the
Nine-Month Periods Ended September 30, 1997 and 1996 (unaudited).......................... 4
Consolidated Statements of Cash Flows for the Nine-Month Periods Ended
September 30, 1997 and 1996 (unaudited)................................................... 5
Notes to Consolidated Financial Statements................................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................................. 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................................................ 14
Item 2. Changes in Securities........................................................................ 14
Item 3. Defaults Upon Senior Securities.............................................................. 14
Item 4. Submission of Matters to a Vote of Security Holders.......................................... 14
Item 5. Other Information............................................................................ 14
Item 6. Exhibits and Reports on Form 8-K............................................................. 14
SIGNATURES
</TABLE>
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CKF BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF AS OF
SEPTEMBER 30, DECEMBER 31,
ASSETS 1997 1996
------------- ------------
(unaudited)
<S> <C> <C>
Cash and due from banks $ 307,611 $ 564,003
Interest bearing deposits 709,018 1,655,589
Investment securities:
Securities available-for-sale 473,484 728,475
Securities held-to-maturity 2,175,696 2,714,723
Loans receivable, net 55,148,502 53,181,509
Real estate owned 227,340
Accrued interest receivable 459,613 378,405
Office property and equipment, net 558,845 540,638
Other assets 34,776 11,778
----------- -----------
Total assets $59,867,545 $60,002,460
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $42,681,403 $42,832,354
Advance from Federal Home Loan Bank 2,223,629 1,252,179
Federal income tax payable 453,988 641,014
Advance payment by borrowers for taxes and insurance 123,284 18,944
Other liabilities 214,169 159,040
----------- -----------
Total liabilities 45,696,473 44,903,531
----------- -----------
Stockholders' equity:
Common stock, $0.01 par value, 4,000,000 shares authorized;
1,000,000 shares issued 10,000 10,000
Additional paid-in capital 9,630,478 9,612,331
Retained earnings, substantially restricted 6,789,875 7,147,931
Net unrealized appreciation on securities available-for-sale 303,968 463,732
Treasury stock, 50,000 shares, at cost (986,388) (986,388)
Stock Option Trust, 46,825 shares, at cost (923,519) (455,344)
Unallocated employee stock ownership plan (ESOP) shares (653,342) (693,333)
----------- -----------
Total stockholders' equity 14,171,072 15,098,929
----------- -----------
Total liabilities and stockholders' equity $59,867,545 $60,002,460
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
3
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CKF BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE-MONTH PERIODS FOR THE NINE-MONTH PERIODS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------------- --------------------------
1997 1996 1997 1996
---------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Interest income:
Interest on loans...................... $1,101,459 $1,031,581 $3,256,388 $3,016,521
Interest and dividends on investments.. 38,062 44,604 119,932 120,480
Other interest income.................. 19,511 15,325 50,522 69,257
---------- ---------- ---------- ----------
Total interest income............... 1,159,032 1,091,510 3,426,842 3,206,258
---------- ---------- ---------- ----------
Interest expense:.......................
Interest on deposits................... 546,804 548,635 1,626,471 1,586,437
Other interest expense................. 45,825 4,528 109,983 14,043
---------- ---------- ---------- ----------
Total interest expense.............. 592,629 553,163 1,736,454 1,600,480
---------- ---------- ---------- ----------
Net interest income..................... 566,403 538,347 1,690,388 1,605,778
Provision for loan losses............... 6,000 6,000 12,000 18,000
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses........... 560,403 532,347 1,678,388 1,587,778
---------- ---------- ---------- ----------
Non-interest income:
Loan and other service fees............ 16,255 13,235 44,197 35,881
Gain on sale of investment............. 281,616 420,575 281,616
Other, net............................. 810 645 2,137 2,053
---------- ---------- ---------- ----------
Total non-interest income........... 17,065 295,496 466,909 319,550
---------- ---------- ---------- ----------
Non-interest expense:
Compensation and benefits.............. 144,591 135,120 426,028 400,727
Federal insurance premium.............. 4,669 298,897 22,369 347,866
State franchise tax.................... 12,274 12,274 36,821 36,821
Occupancy expenses, net................ 10,653 11,500 33,598 31,025
Data processing expenses............... 12,401 12,135 36,400 32,306
Legal fees............................. 1,108 2,344 14,327 19,348
Loss on real estate owned.............. 41,813
Other operating expenses............... 51,266 45,694 166,340 175,441
---------- ---------- ---------- ----------
Total non-interest expense.......... 236,962 517,964 777,696 1,043,534
---------- ---------- ---------- ----------
Income before income tax expense........ 340,506 309,879 1,367,601 863,794
Provision for income taxes.............. 115,772 105,151 464,984 299,738
---------- ---------- ---------- ----------
Net income.............................. $ 224,734 $ 204,728 $ 902,617 $ 564,056
========== ========== ========== ==========
Earnings per share...................... $.26 $.23 $1.02 $.61
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
4
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CKF BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE-MONTH PERIODS
ENDED SEPTEMBER 30
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 902,617 $ 564,056
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 12,000 18,000
Amortization of loan fees (7,586) (6,098)
ESOP benefit expense 76,298 78,214
Provision for depreciation 19,537 18,075
FHLB stock dividend (26,000) (23,900)
Amortization of investment premium 2,249 8,040
Realized gain on sale of investments (420,575) (281,616)
Change in:
Interest receivable (81,208) 25,912
Other liabilities and federal income taxes payable (63,244) 318,835
Prepaid expense (22,998) (39,445)
Interest payable 13,609 5,919
----------- -----------
Net cash provided by operating activities 404,699 685,992
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan originations and principal payment on loans, net (1,744,067) (3,032,206)
Purchase of office equipment (37,744) (7,127)
Purchase of loans (164,000)
Proceeds from available-for-sale securities 433,500 294,165
Purchase of securities, held-to-maturity (1,017,806)
Matured securities, held-to-maturity 500,000 250,415
Proceeds from certificates of deposit 1,000,000
Principle repayment on mortgage-backed securities 62,818 37,403
----------- -----------
Net cash (used) by investing activities (785,493) (2,639,156)
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements
5
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CKF BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE-MONTH PERIODS
ENDED SEPTEMBER 30
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in demand deposits, NOW accounts
and savings accounts (91,849) 884,920
Net increase (decrease) in certificates of deposit (59,100) 3,245,609
Payments on FHLB advances (1,028,550) (26,665)
Proceeds from FHLB advances 2,000,000
Net increase in custodial accounts 104,340
Proceeds from exercise of stock options 42,000
Dividends paid (1,260,675) (379,542)
Purchase of common stock (528,335) (1,181,207)
----------- -----------
Net cash provided (used) by financing activities (822,169) 2,543,115
----------- -----------
Increase (decrease) in cash and cash equivalents (1,202,963) 589,951
Cash and cash equivalents, beginning of period 2,219,592 2,103,757
----------- -----------
Cash and cash equivalents, end of period $ 1,016,629 $ 2,693,708
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ 569,708 $ 248,353
=========== ===========
Cash paid for interest $ 1,726,976 $ 1,594,561
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
6
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
CKF Bancorp, Inc. (the "Company") was formed in August 1994 at the
direction of Central Kentucky Federal Savings Bank (the "Bank") to become
the holding company of the Bank upon the conversion of the Bank from mutual
to stock form (the "Conversion"). Since the Conversion, the Company's
primary assets have been the outstanding capital stock of the Bank, 50% of
the net proceeds of the Conversion, and a note receivable from the
Company's Employee Stock Ownership Plan ("ESOP"), and its sole business is
that of the Bank. Accordingly, the consolidated financial statements and
discussions herein include both the Company and the Bank. On December 29,
1994, the Bank converted from mutual to stock form as a wholly owned
subsidiary of the Company. In conjunction with the Conversion, the Company
issued 1,000,000 shares of its common stock to the public.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
("GAAP") for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by GAAP for complete
financial statements. In the opinion of management, all adjustments
(consisting of only normal recurring accruals) necessary for fair
presentation have been included. The results of operations and other data
for the three and nine month periods ended September 30, 1997 are not
necessarily indicative of results that may be expected for the entire
fiscal year ending December 31, 1997.
2. EARNINGS PER SHARE
Earnings per share for the three and nine month periods ended September 30,
1997 amounted to $0.26 and $1.02 per share, respectively, based on weighted
average common stock shares outstanding. Earnings per share for the three
and nine month periods ended September 30, 1996 amounted to $0.23 and $0.61
per share, respectively, based on weighted average common stock shares
outstanding. The weighted average number of common shares issued and
outstanding for the three and nine month periods ended September 30, 1997
was 877,096 and 881,903 shares, respectively. The weighted average number
of common shares issued and outstanding for the three and nine month
periods ended September 30, 1996 was 904,321 and 927,361 shares,
respectively.
7
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3. REGULATORY CAPITAL
At September 30, 1997, the Bank's regulatory capital levels exceeded each
of the three regulatory capital requirements. The following table
reconciles the Bank's stockholder equity at September 30, 1997 to its
regulatory capital requirements.
<TABLE>
<CAPTION>
REGULATORY CAPITAL
------------------------------------
TANGIBLE CORE RISK-BASED
CAPITAL CAPITAL CAPITAL
--------- --------- ----------
(In thousands)
<S> <C> <C> <C>
Stockholder equity $ 12,308 $ 12,308 $ 12,308
Net unrealized appreciation on investment
securities available-for-sale (304) (304) (304)
General allowance for loan losses - - 119
--------- --------- ---------
Regulatory capital 12,004 12,004 12,123
Minimum capital requirement 893 1,787 2,806
--------- --------- ---------
Excess regulatory capital $11,111 $10,217 $9,317
========= ========= =========
Minimum capital requirement as a
percentage of assets 1.5% 3.0% 8.0%
Regulatory capital in excess of minimum capital
requirements as a percentage of assets 18.6% 17.1% 26.6%
- ----------
</TABLE>
/1/Based on risk weighted assets.
4. DIVIDENDS
For the nine months ended September 30, 1997, the Company paid the regular
semi-annual dividends to stockholders of record on January 28 and July 28,
totaling $0.22 and $0.25 per share, respectively. In addition, the Company
paid a special dividend of $1.00 per share to stockholders of record on
January 29, 1997. The total dividends paid by the Company for the nine months
ended September 30, 1997 amounted to $1,260,675.
5. COMMON STOCK
On July 17, 1997 options to acquire 3,200 shares at $13.125 per share were
exercised with the Company receiving total proceeds of $42,000. In addition,
the Company purchased 25,300 shares of common stock at a cost of $492,225 for
the stock option trust during the three months ended September 30, 1997.
Total shares of common stock purchased for the stock option trust for the
nine months ended September 30, 1997 amounts to 27,500 shares at a total cost
of $528,335.
8
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION
Total assets decreased approximately $135,000 from $60.0 million at December 31,
1996 to $59.9 million at September 30, 1997. Loans increased $2.0 million or
3.8%, which was offset in part by a decrease in the investment portfolio of
$800,000 plus a decrease in cash and interest bearing deposits of $1.2 million.
The Company's aggregate investment securities portfolio decreased $800,000, or
23.1% to $2.6 million at September 30, 1997 compared to $3.4 million at December
31, 1996. Securities classified as available-for-sale and recorded at market
value per SFAS No. 115 decreased $255,000, which consisted of a $360,000
decrease due to the sale of 13,200 shares of Federal Home Loan Mortgage
Corporation stock offset by an increase of $105,000 in the market value of the
remaining securities. Securities classified as held-to-maturity decreased
$539,000 due primarily to the maturity of a FHLB Bond in the amount of $500,000.
Under SFAS No. 115, unrealized gains or losses on securities available-for-sale
are recorded net of deferred income tax as a separate component of stockholders'
equity. At September 30, 1997, the Company included net unrealized gains of
approximately $304,000 in stockholders' equity. At December 31, 1996, the
Company included net unrealized gains of approximately $464,000 in stockholders'
equity. Per SFAS No. 115, such gains or losses will not be reflected as a
charge or credit to earnings until the underlying securities are sold, and then
only to the extent of the amount of gain or loss, if any, actually realized at
the time of sale.
Loans receivable increased by $2.0 million, or 3.8%, from $53.2 million at
December 31, 1996 to $55.1 million at September 30, 1997. The increase in loans
during this nine-month period reflects management's success in loan
solicitation, which included the introduction of consumer auto loans in the
first quarter of 1997.
Deposits decreased by $151,000, or .4%, from $42.8 million at December 31, 1996
to $42.7 million at September 30, 1997, which reflects the continued strong
competition within the Bank's market area. Net advances from the Federal Home
Loan Bank increased $971,000.
The net equity of the Company decreased $.9 million due primarily to the payment
of dividends of $1.3 million and the repurchase of the company stock totaling
$.5 million offset in part by net income of $.9 million.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
NET INCOME
Net income for the three months ended September 30, 1997 was $225,000 compared
to $205,000 for the corresponding period in 1996, an increase of $20,000, or
9.8%. Net interest income increased $28,000, non-interest income decreased
278,000, non-interest expense decreased $280,000, and the provision for income
taxes increased $10,000.
INTEREST INCOME
Interest income totaled $1.2 million and $1.1 million for the three months ended
September 30, 1997 and 1996, respectively. The increase in interest income of
$67,000, or 6.1%, for the three months ended September 30, 1997
9
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as compared to the same period for 1996 was due to an increase in the average
rate earned on assets from 7.5% to 7.8% and an increase of $1.4 million in the
balance of average earning assets.
INTEREST EXPENSE
Interest expense totaled $593,000 and $553,000 for the three months ended
September 30, 1997 and 1996, respectively. The increase in interest expense of
$40,000 or 7.2%, for the three months ended September 30, 1997 as compared to
the same period for 1996 was due to an increase of $3.1 million in average
interest bearing liabilities during the three months ended June 30, 1997
compared to the same period in 1996.
PROVISION FOR LOAN LOSSES
The Bank established a provision for loan losses of $6,000 for the three month
period ended September 30, 1997 and 1996. Management considers many factors in
determining the necessary level of the allowance for loan losses, including an
analysis of specific loans in the portfolio, estimated value of the underlying
collateral, assessment of general trends in the real estate market, delinquency
trends, prospective economic and regulatory conditions, inherent loss in the
loan portfolio, and the relationship of the allowance for loan losses to
outstanding loans. At September 30, 1997 the allowance for loan losses
represented .21% of total loans compared to .22% at September 30, 1996.
There can be no assurance that management will not decide to increase the
allowance for loan losses or that regulators, when reviewing the Bank's loan
portfolios in the future, will not request the Bank to increase such allowance,
either of which could adversely affect bank earnings. Further, there can be no
assurance that the Bank's actual loan losses will not exceed its allowance for
loan losses.
NON-INTEREST INCOME
Non-interest income amounted to $17,000 and $295,000 for the three months ended
September 30, 1997 and 1996, respectively. The decrease was due primarily to a
$282,000 gain in the quarter ended September 30, 1996, resulting from the sale
of investments classified as available-for-sale.
NON-INTEREST EXPENSE
Non-interest expense totaled $237,000 and $518,000 for the three months ended
September 30, 1997 and 1996, respectively. Non-interest expense was 1.7% of
average assets for the 1997 period as compared to 3.5% for the 1996 period. The
decrease of $281,000 was primarily due to a decrease of $294,000 in the Federal
insurance premium expense in the 1997 period compared to the 1996 period. In
addition to a higher rate paid for insuring deposits, the 1996 period included a
one-time special assessment of $274,000 for the purpose of recapitalizing the
Savings Association Insurance Fund (SAIF). This decrease of $294,000 was offset
by normal increases in other non-interest expense categories in the 1997 period.
INCOME TAXES
The provision for income taxes for the three months ended September 30, 1997 and
1996 was $116,000 and $105,000, respectively, which, as a percentage of income
before income taxes was 34% for the 1997 and 1996 periods.
10
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RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
NET INCOME
Net income for the nine months ended September 30, 1997 was $902,000 compared to
$564,000 for the same period in 1996. The increase of $338,000 or 60% was due to
an increase in net interest income of $85,000, an increase in non-interest
income of $147,000, a decrease in non-interest expense of $265,000, and a
decrease in the provision for loan losses of $6,000 offset by an increase in the
provision for income taxes of $165,000.
INTEREST INCOME
Interest income totaled $3.4 million and $3.2 million for the nine months ended
September 30, 1997 and 1996, respectively. The increase in interest income of
$221,000, or 6.9%, for the nine months ended September 30, 1997 as compared to
the same period for 1996 was due to an increase in the average rate earned on
interest earning assets from 7.4% to 7.7% and an increase of $1.9 million in the
average balance of interest earning assets.
INTEREST EXPENSE
Interest expense totaled $1.7 million and $1.6 million for the nine months ended
September 30, 1997 and 1996, respectively. The increase in interest expense of
$136,000, or 8.5%, for the nine months ended September 30, 1997 as compared to
the same period in 1996 was due to an increase of .20% in the average interest
rate paid on interest bearing liabilities, plus an increase of $2.3 million in
interest bearing liabilities during the nine months ended September 30, 1997
compared to the same period in 1996.
PROVISION FOR LOAN LOSSES
The Bank established a provision for loan losses of $12,000 and $18,000 for the
nine month period ended September 30, 1997 and 1996, respectively. Management
considers many factors in determining the necessary level of the allowance for
loan losses, including an analysis of specific loans in the portfolio, estimated
value of the underlying collateral, assessment of general trends in the real
estate market, delinquency trends, prospective economic and regulatory
conditions, inherent loss in the loan portfolio, and the relationship of the
allowance for loan losses to outstanding loans.
NON-INTEREST INCOME
Non-interest income amounted to $467,000 and $320,000 for the nine months ended
September 30, 1997 and 1996, respectively. The increase was due primarily to an
increase of $139,000 in the gain resulting from the sale of investments
classified as available-for-sale, plus an $8,000 increase in service fee income
in the 1997 period compared to the 1996 period.
NON-INTEREST EXPENSE
Non-interest expense totaled $778,000 and $1,043,000 for the nine months ended
September 30, 1997 and 1996, respectively. Non-interest expense was 1.7% and
2.4% of average assets for the 1997 and 1996 periods, respectively. The decrease
in non-interest expense of $265,000 or 25.4% was due to a decrease in Federal
insurance premiums of $325,000 offset in part by increases of $42,000 in losses
on real estate and $25,000 in compensation and benefits for the nine months
ended September 30, 1997 as compared to the same period in 1996. The decrease in
Federal insurance premiums was due to the one-time special assessment of
$274,000 in 1996 to recapitalize the Savings Association Insurance Funds, plus a
decrease in the insurance rate paid on deposits in 1997 as compared to 1996. The
loss on real estate of $42,000 resulted from the sale of a commercial piece of
property acquired
11
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through foreclosure. The increase in compensation and benefits
was due to normal increases in salaries and related benefits.
INCOME TAXES
The provision for income taxes for the nine months ended September 30, 1997 and
1996 was $465,000 and $300,000, respectively, and, as a percentage of income
before income taxes was 34% and 35% for the 1997 and 1996 periods, respectively.
NON-PERFORMING ASSETS
The following table sets forth information with respect to the Bank's non-
performing assets at the dates indicated. No loans were recorded as restructured
loans within the meaning of SFAS No. 15 at the dates indicated.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 DECEMBER 31 1996
------------------- -----------------
(amounts in thousands)
<S> <C> <C>
Loans accounted for on a non-accrual basis:(1)
Real Estate:
Residential.................................... $139 $ 87
Commercial.....................................
Consumer.......................................... 7
---- ----
Total...................................... $146 $ 87
==== ====
Accruing loans which are contractually past due
90 days or more:
Real Estate:
Residential.................................... 298 359
Commercial.....................................
Consumer.......................................... ---- ----
Total...................................... 298 359
==== ====
Total of loans accounted for as non-accrual or as
accruing past due 90 days or more................. $444 $446
==== ====
Percentage of total loans.......................... .89% .82%
==== ====
Other non-performing assets (2).................... $ $227
==== ====
Restructured loans................................. $272 $271
==== ====
</TABLE>
(1) Non-accrual status denotes any mortgage loan past due 90 days and whose loan
balance, plus accrued interest exceeds 90% of the estimated loan collateral
value, and any consumer or commercial loan more than 90 days past due.
Payments received on a non-accrual loan are either applied to the
outstanding principal balance or recorded as interest income, or both,
depending on assessment of the collectibility of the loan.
(2) Other non-performing assets represent property acquired by the Bank through
foreclosure or repossession. Such property is carried at the lower of its
fair market value or the principal balance of the related loan.
During the nine months ended September 30, 1997, additional interest income of
$7,884 would have been recorded on loans accounted for on a non-accrual basis if
the loans had been current throughout the year. Interest on such loans actually
included in income during the nine months ended September 30, 1997 totaled
$7,597.
12
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At September 30, 1997, there were no loans identified by management, which were
not reflected in the preceding table, but as to which known information about
possible credit problems of borrowers caused management to have serious doubts
as to the ability of the borrowers to comply with present loan repayment terms.
LIQUIDITY AND CAPITAL RESOURCES
The Bank's principal sources of funds for operations are deposits from its
primary market area, principal and interest payments on loans, and proceeds from
maturing investment securities. The principal uses of funds by the Bank include
the origination of mortgage and consumer loans and the purchase of investment
securities.
The Bank is required by current OTS regulations to maintain specified liquid
assets of at least 5% of its net withdrawable accounts plus short-term
borrowings. Short-term liquid assets (those maturing in one year or less) may
not be less than 1% of the Bank's liquidity base. At September 30, 1997, the
Bank's liquidity was 4.96%, which has subsequently been increased above the OTS
requirement of 5% of net withdrawals accounts plus short-term borrowings.
Management believes that the liquidity levels maintained are adequate to meet
potential deposit outflows, loan demand, and normal operations.
The Bank must satisfy three capital standards, as set by the OTS. These
standards include a ratio of core capital to adjusted total assets of 3.0%, a
tangible capital standard expressed as 1.5% of total adjusted assets, and a
combination of core and "supplementary" capital equal to 8.0% of risk-weighted
assets. At September 30, 1997, the Bank's capital was in excess of these
requirements (see Note 3).
At September 30, 1997, the Bank had outstanding commitments to originate loans
totaling $1,826,437, excluding $699,000 in approved but unused home equity lines
of credit. Management believes that the Bank's sources of funds are sufficient
to fund all of its outstanding commitments. Certificates of deposits which are
scheduled to mature in one year or less from September 30, 1997 totaled $21.8
million. Management believes that a significant percentage of such deposits
will remain with the Bank.
13
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PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS None
Item 2. CHANGES IN SECURITIES None
Item 3. DEFAULTS UPON SENIOR SECURITIES None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Item 5. OTHER INFORMATION None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following Exhibit is filed herewith:
Exhibit 27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1997.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CKF BANCORP, INC.
Date: November 5, 1997
------------------------------------------------------
John H. Stigall, President and Chief Executive Officer
(Duly Authorized Officer)
Date: November 5, 1997
------------------------------------------------------
Ann L. Hooks, Vice President and Treasurer
(Principal Financial and Accounting Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 307,611
<INT-BEARING-DEPOSITS> 709,018
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 473,484
<INVESTMENTS-CARRYING> 2,175,696
<INVESTMENTS-MARKET> 2,175,483
<LOANS> 55,267,502
<ALLOWANCE> 119,000
<TOTAL-ASSETS> 59,867,545
<DEPOSITS> 42,681,403
<SHORT-TERM> 0
<LIABILITIES-OTHER> 791,441
<LONG-TERM> 2,223,629
0
0
<COMMON> 10,000
<OTHER-SE> 14,161,072
<TOTAL-LIABILITIES-AND-EQUITY> 59,867,545
<INTEREST-LOAN> 3,256,388
<INTEREST-INVEST> 119,932
<INTEREST-OTHER> 50,522
<INTEREST-TOTAL> 3,426,842
<INTEREST-DEPOSIT> 1,626,471
<INTEREST-EXPENSE> 1,736,454
<INTEREST-INCOME-NET> 1,690,388
<LOAN-LOSSES> 12,000
<SECURITIES-GAINS> 420,575
<EXPENSE-OTHER> 777,696
<INCOME-PRETAX> 1,367,601
<INCOME-PRE-EXTRAORDINARY> 1,367,601
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 902,617
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.02
<YIELD-ACTUAL> 3.85
<LOANS-NON> 146,000
<LOANS-PAST> 298,000
<LOANS-TROUBLED> 272,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 107,000
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 119,000
<ALLOWANCE-DOMESTIC> 119,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 119,000
</TABLE>
