<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 33-84132
COMMUNITY INVESTORS BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Ohio 34-1779309
- --------------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
119 South Sandusky Avenue
Bucyrus, Ohio 44820
- ----------------------------- ----------
(Address of principal (Zip Code)
executive office)
Issuers' telephone number, including area code: (419) 562-7055
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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 February 7, 1997, the latest practicable date, 632,946 shares of the
registrant's common stock, $.01 par value, were issued and outstanding.
Page 1 of 16 pages
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INDEX
<TABLE>
<CAPTION>
Page
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<S> <C> <C> <C>
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition 3
Consolidated Statements of Earnings 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
PART II - OTHER INFORMATION 15
SIGNATURES 16
</TABLE>
2
<PAGE> 3
COMMUNITY INVESTORS BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
ASSETS 1996 1996
<S> <C> <C>
Cash and due from banks $ 1,491 $ 1,094
Federal funds sold 270 21
Interest-bearing deposits in other financial institutions 74 794
------ ------
Cash and cash equivalents 1,835 1,909
Investment securities available for sale - at market 7,230 6,201
Investment securities - at amortized cost, approximate market value of
$10,540 and $12,728 as of December 31, 1996 and June 30, 1996 10,838 12,891
Mortgage-backed securities - at amortized cost, approximate market value
of $1,856 and $2,794 as of December 31, 1996 and June 30, 1996 1,889 2,783
Loans receivable - net 72,183 66,255
Property acquired in settlement of loans 82 81
Office premises and equipment - at depreciated cost 563 525
Federal Home Loan Bank stock - at cost 741 575
Accrued interest receivable on loans 84 66
Accrued interest receivable on mortgage-backed securities 17 19
Accrued interest receivable on investments and interest-bearing deposits 186 251
Prepaid expenses and other assets 40 109
Deferred federal income taxes 99 122
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Total assets $95,787 $91,787
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LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $70,352 $69,911
Advances from the Federal Home Loan Bank 13,991 9,884
Advances by borrowers for taxes and insurance 18 6
Accrued interest payable 312 290
Other liabilities 182 156
Accrued federal income taxes 19 54
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Total liabilities 84,874 80,301
Stockholders' equity
Preferred stock, 1,000,000 shares authorized, no par value; no shares issued - -
Common stock, 4,000,000 shares authorized, $.01 par value; 738,146 shares issued 7 7
Additional paid-in capital 6,800 6,800
Retained earnings, restricted 6,781 6,796
Shares acquired by stock benefit plans (961) (995)
Less 105,200 and 71,900 shares of treasury stock - at cost (1,710) (1,117)
Unrealized losses on securities designated as available for sale, net of related
tax effects (4) (5)
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Total stockholders' equity 10,913 11,486
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Total liabilities and stockholders' equity $95,787 $91,787
====== ======
</TABLE>
3
<PAGE> 4
COMMUNITY INVESTORS BANCORP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share data)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income
Loans $2,909 $2,628 $1,480 $1,353
Mortgage-backed securities 77 95 38 38
Investment securities 606 564 307 281
Interest-bearing deposits and other 16 41 7 30
----- ----- ----- -----
Total interest income 3,608 3,328 1,832 1,702
Interest expense
Deposits 1,634 1,804 823 907
Borrowings 356 49 193 24
----- ----- ----- -----
Total interest expense 1,990 1,853 1,016 931
----- ----- ----- -----
Net interest income 1,618 1,475 816 771
Provision for losses on loans 96 93 50 42
----- ----- ----- -----
Net interest income after provision
for losses on loans 1,522 1,382 766 729
Other income
Gain on sale of investment securities designated
as available for sale - 59 - 59
Gain on sale of other repossessed assets 1 - - 3
Other operating 66 73 41 43
----- ----- ----- -----
Total other income 67 132 41 105
General, administrative and other expense
Employee compensation and benefits 388 345 227 182
Occupancy and equipment 61 52 31 27
Federal deposit insurance premiums 532 80 30 40
Franchise taxes 75 39 42 20
Expenses of property acquired in settlement of loans 41 29 22 20
Data processing 76 69 34 35
Other operating 245 272 122 161
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Total general, administrative and other expense 1,418 886 508 485
----- ----- ----- -----
Earnings before income taxes 171 628 299 349
Federal income taxes
Current 34 207 50 116
Deferred 23 - 32 (4)
----- ----- ----- -----
Total federal income taxes 57 207 82 112
----- ----- ----- -----
NET EARNINGS $ 114 $ 421 $ 217 $ 237
===== ===== ===== =====
EARNINGS PER SHARE $.19 $.62 $.36 $.35
=== === === ===
</TABLE>
4
<PAGE> 5
COMMUNITY INVESTORS BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended December 31,
(In thousands)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 114 $ 421
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Amortization of discounts and premiums on loans,
investments and mortgage-backed securities - net (11) 3
Amortization of deferred loan origination fees (48) (57)
Depreciation and amortization 18 20
Provision for losses on loans 96 93
Amortization expense of stock benefit plans 34 14
Gain on sale of investment securities - (59)
Gain on sale of other repossessed assets (1) -
Federal Home Loan Bank stock dividends (22) (22)
Increase (decrease) in cash due to changes in:
Accrued interest receivable on loans (18) 3
Accrued interest receivable on mortgage-backed securities 2 7
Accrued interest receivable on investments and
interest-bearing deposits 65 97
Prepaid expenses and other assets 67 64
Accrued interest payable 22 20
Other liabilities 26 (73)
Federal income taxes
Current (35) -
Deferred 23 -
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Net cash provided by operating activities 332 531
Cash flows provided by (used in) investing activities:
Proceeds from maturity of investment securities 2,564 4,876
Proceeds from sale of securities designated as available for sale - 1,677
Purchase of investment securities designated as available for sale (1,030) -
Purchase of investment securities designated as held to maturity (500) (3,575)
Principal repayments on mortgage-backed securities 896 1,313
Loan principal repayments 8,939 6,078
Loan disbursements (15,080) (9,732)
Purchase of office premises and equipment (56) -
Proceeds from sale of other repossessed assets 167 95
Purchase of Federal Home Loan Bank stock (144) -
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Net cash provided by (used in) investing activities (4,244) 732
------- -----
Net cash provided by (used in) operating and investing
activities (subtotal carried forward) (3,912) 1,263
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</TABLE>
5
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COMMUNITY INVESTORS BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the six months ended December 31,
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Net cash provided by (used in) operating and investing
activities (subtotal brought forward) $(3,912) $ 1,263
Cash flows provided by financing activities:
Net increase in deposit accounts 441 160
Proceeds from Federal Home Loan Bank advances 5,250 -
Repayment of Federal Home Loan Bank advances (1,143) (39)
Advances by borrowers for taxes and insurance 12 12
Purchase of treasury stock (593) -
Dividends on common stock (129) (58)
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Net cash provided by financing activities 3,838 75
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Net increase (decrease) in cash and cash equivalents (74) 1,338
Cash and cash equivalents at beginning of period 1,909 1,077
------ ------
Cash and cash equivalents at end of period $ 1,835 $ 2,415
====== ======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ 100 $ 207
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Interest on deposits and borrowings $ 1,968 $ 1,834
====== ======
Supplemental disclosure of noncash investing activities:
Transfers from loans to other repossessed assets $ 176 $ 120
====== ======
Unrealized gains on securities designated as available
for sale, net of related tax effects $ 1 $ 33
====== ======
</TABLE>
6
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COMMUNITY INVESTORS BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six and three months ended December 31, 1996 and 1995
1. Basis of Presentation
The accompanying unaudited consolidated financial statements were prepared
in accordance with instructions for Form 10-QSB and, therefore, do not
include information or footnotes necessary for a complete presentation of
consolidated financial position, results of operations and cash flows in
conformity with generally accepted accounting principles. Accordingly,
these financial statements should be read in conjunction with the
consolidated financial statements and notes thereto of the Corporation
included in the Annual Report on Form 10-KSB for the year ended June 30,
1996. However, in the opinion of management, all adjustments (consisting of
only normal recurring accruals) which are necessary for a fair presentation
of the financial statements have been included. The results of operations
for the six and three month periods ended December 31, 1996 and 1995 are not
necessarily indicative of the results which may be expected for an entire
fiscal year.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Community Investors Bancorp, Inc. (the Corporation) and First Federal
Savings and Loan Association of Bucyrus (the Association). All significant
intercompany items have been eliminated.
3. Earnings Per Share
Earnings per share is computed based upon the weighted-average shares
outstanding during the period plus those stock options that are dilutive,
less shares in the ESOP that are unallocated and not committed to be
released. Weighted-average common shares deemed outstanding, which gives
effect to 47,242 unallocated ESOP shares, totaled 608,333 and 597,662 for
the six and three month periods ended December 31, 1996, respectively.
Weighted-average common shares deemed outstanding, which gives effect to
56,101 unallocated ESOP shares, totaled 682,045 for each of the six and
three month periods ended December 31, 1995. There is no dilutive effect
associated with the Corporation's stock option plan.
4. Effects of Recent Accounting Pronouncements
In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation", establishing financial accounting and reporting
standards for stock-based employee compensation plans. SFAS No. 123
encourages all entities to adopt a new method of accounting to measure
compensation cost of all employee stock compensation plans based on the
estimated fair value of the award at the date it is granted. Companies are,
however, allowed to continue to measure compensation cost for those plans
using the intrinsic value based method of accounting, which generally does
not result in compensation expense recognition for most plans. Companies
that elect to remain with the existing accounting are required to disclose
in a footnote to the financial statements pro forma net earnings and, if
presented, earnings per share, as if SFAS No. 123 had been adopted. The
accounting
7
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COMMUNITY INVESTORS BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six and three months ended December 31, 1996 and 1995
4. Effects of Recent Accounting Pronouncements (continued)
requirements of SFAS No. 123 are effective for transactions entered into
during fiscal years that begin after December 15, 1995; however, companies
are required to disclose information for awards granted in their first
fiscal year beginning after December 15, 1994. Management has determined
that the Corporation will continue to account for stock-based compensation
pursuant to Accounting Principles Board Opinion No. 25, and therefore the
disclosure provisions of SFAS No. 123 will have no effect on its
consolidated financial condition or results of operations.
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers of
Financial Assets, Servicing Rights, and Extinguishment of Liabilities", that
provides accounting guidance on transfers of financial assets, servicing of
financial assets, and extinguishment of liabilities. SFAS No. 125
introduces an approach to accounting for transfers of financial assets that
provides a means of dealing with more complex transactions in which the
seller disposes of only a partial interest in the assets, retains rights or
obligations, makes use of special purpose entities in the transaction, or
otherwise has continuing involvement with the transferred assets. The new
accounting method, the financial components approach, provides that the
carrying amount of the financial assets transferred be allocated to
components of the transaction based on their relative fair values. SFAS No.
125 provides criteria for determining whether control of assets has been
relinquished and whether a sale has occurred. If the transfer does not
qualify as a sale, it is accounted for as a secured borrowing. Transactions
subject to the provisions of SFAS No. 125 include, among others, transfers
involving repurchase agreements, securitizations of financial assets, loan
participations, factoring arrangements, and transfers of receivables with
recourse.
An entity that undertakes an obligation to service financial assets
recognizes either a servicing asset or liability for the servicing contract
(unless related to a securitization of assets, and all the securitized
assets are retained and classified as held-to-maturity). A servicing asset
or liability that is purchased or assumed is initially recognized at its
fair value. Servicing assets and liabilities are amortized in proportion to
and over the period of estimated net servicing income or net servicing loss
and are subject to subsequent assessments for impairment based on fair
value.
SFAS No. 125 provides that a liability is removed from the balance sheet
only if the debtor either pays the creditor and is relieved of its
obligation for the liability or is legally released from being the primary
obligor.
SFAS No. 125 is effective for transfers and servicing of financial assets
and extinguishment of liabilities occurring after December 31, 1997, and is
to be applied prospectively. Earlier or retroactive application is not
permitted. Management does not believe that adoption of SFAS No. 125 will
have a material adverse effect on the Corporation's consolidated financial
position or results of operations.
8
<PAGE> 9
COMMUNITY INVESTORS BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward-Looking Statements
In addition to historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. Economic circumstances, the Corporation's operations and the
Corporation's actual results could differ significantly from those discussed in
the forward-looking statements. Some of the factors that could cause or
contribute to such differences are discussed herein but also include changes in
the economy and interest rates in the nation and the Corporation's market area
generally.
Some of the forward-looking statements included herein are the statements
regarding management's determination of the amount of allowance for losses on
loans, legislative changes with respect to the federal thrift charter and the
effect of certain accounting pronouncements.
Discussion of Financial Condition Changes from June 30, 1996 to December 31,
1996
At December 31, 1996, the Corporation's assets totaled $95.8 million, an
increase of $4.0 million, or 4.4%, over the $91.8 million of total assets at
June 30, 1996. The increase in assets was funded through growth in the deposit
portfolio of $441,000 coupled with an increase in advances from the Federal
Home Loan Bank of $4.1 million.
Liquid assets (i.e. cash, interest-bearing deposits and investment securities)
decreased by $1.1 million over the six month period, to a total of $19.9
million at December 31, 1996, as investment securities purchases of $1.5
million were offset by maturities totaling $2.6 million. Regulatory liquidity
amounted to 22.9% at December 31, 1996.
Loans receivable increased by $5.9 million, or 8.9%, during the six month
period, to a total of $72.2 million at December 31, 1996. Loan disbursements
amounted to $15.1 million and were partially offset by principal repayments of
$8.9 million. Loan disbursements increased by $5.3 million, or 55.0%, during
the six months ended December 31, 1996, as compared to the same period in 1995.
The allowance for loan losses totaled $457,000 at December 31, 1996, as
compared to $459,000 at June 30, 1996. Nonperforming loans totaled $583,000 at
December 31, 1996, as compared to $636,000 at June 30, 1996. The allowance for
loan losses represented 78.4% of nonperforming loans as of December 31, 1996
and 72.2% at June 30, 1996. Although management believes that its allowance
for loan losses at December 31, 1996 is adequate based upon facts and
circumstances available to it, there can be no assurances that additions to
such allowance will not be necessary in future periods, which could adversely
affect the Corporation's results of operations.
Deposits totaled $70.4 million at December 31, 1996, an increase of $441,000,
or .6%, over June 30, 1996 levels. Management continued its conservative
pricing strategy with respect to deposit accounts during the current interest
rate environment.
9
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COMMUNITY INVESTORS BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Discussion of Financial Condition Changes from June 30, 1996 to December 31,
1996 (continued)
The Association is required to meet each of three minimum capital standards
promulgated by the Office of Thrift Supervision (OTS), hereinafter described as
the tangible capital requirement, the core capital requirement and the
risk-based capital requirement. The tangible capital requirement mandates
maintenance of stockholders' equity less all intangible assets equal to 1.5% of
adjusted total assets. The core capital requirement provides for the
maintenance of tangible capital plus certain forms of supervisory goodwill
equal to 3% of adjusted total assets, while the risk-based capital requirement
mandates maintenance of core capital plus general loan loss allowances equal to
8% of risk-weighted assets as defined by OTS regulations.
At December 31, 1996, the Association's tangible and core capital totaled $9.8
million, or 10.4%, of adjusted total assets, which exceeded the minimum
requirements of $1.4 million and $2.9 million by $8.4 million and $7.0 million,
respectively. The Association's risk-based capital of $10.3 million, or 23.2%
of risk-weighted assets, exceeded the current 8% requirement by $6.7 million.
Comparison of Operating Results for the Six Month Periods Ended December 31,
1996 and 1995
General
The Corporation's net earnings totaled $114,000 for the six months ended
December 31, 1996, a decrease of $307,000, or 72.9%, from the $421,000 of net
earnings reported for the same period in 1995. The decline in earnings
resulted primarily from a $458,000 charge recorded in the current period
reflecting the assessment to recapitalize the Savings Association Insurance
Fund (SAIF), coupled with a $74,000 increase in general, administrative and
other expense (other than federal deposit insurance premiums), a $65,000
decrease in other income and a $150,000 decrease in the provision for federal
income taxes, which were partially offset by a $143,000 increase in net
interest income.
Net Interest Income
Net interest income increased by $143,000, or 9.7%, for the six months ended
December 31, 1996, compared to the 1995 period. Interest income on loans and
mortgage-backed securities increased by $263,000, or 9.7%, due primarily to a
$7.7 million increase in the average balance of loans and mortgage-backed
securities outstanding year-to-year. Interest income on investment securities
and interest-bearing deposits increased by $17,000, or 2.8%, due primarily to a
$900,000 increase in the average portfolio balance outstanding.
Interest expense on deposits decreased by $170,000, or 9.4%, due primarily to a
decline in the cost of deposits year-to-year. Interest expense on borrowings
increased by $307,000 during the current period, due primarily to a $10.6
million increase in the weighted-average balance of advances from the Federal
Home Loan Bank outstanding.
10
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COMMUNITY INVESTORS BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Six Month Periods Ended December 31,
1996 and 1995 (continued)
Net Interest Income (continued)
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $143,000, or 9.7%, to a total of $1.6 million
for the six months ended December 31, 1996. The interest rate spread increased
to approximately 3.05% from 2.90% during the respective 1996 and 1995 periods,
while the net interest margin totaled approximately 3.54% in 1996, as compared
to 3.56% in 1995.
Provision for Losses on Loans
A provision for losses on loans is charged to earnings to bring the total
allowance for loan losses to a level considered appropriate by management based
on historical experience, the volume and type of lending conducted by the
Association, the status of past due principal and interest payments, general
economic conditions, particularly as such conditions relate to the
Association's market area, and other factors related to the collectibility of
the Association's loan portfolio. As a result of such analysis, management
recorded a $96,000 provision for losses on loans during the six month period
ended December 31, 1996. There can be no assurance that the loan loss
allowance of the Association will be adequate to cover losses on nonperforming
assets in the future.
Other Income
Other income decreased by $65,000, or 49.2%, for the six months ended December
31, 1996, compared to the same period in 1995, due primarily to the recognition
of a $59,000 gain on sale of investment securities in the 1995 period.
General, Administrative and Other Expense
General, administrative and other expense increased by $532,000, or 60.0%,
during the six months ended December 31, 1996, compared to the same period in
1995. This increase resulted primarily from the $458,000 charge recorded in
1996 attendant to the aforementioned SAIF recapitalization. The deposit
accounts of the Association and of other savings associations are insured by
the FDIC in the SAIF. The reserves of the SAIF were below the level required
by law, because a significant portion of the assessments paid into the fund are
used to pay the cost of prior thrift failures. The deposit accounts of
commercial banks are insured by the FDIC in the Bank Insurance Fund ("BIF"),
except to the extent such banks have acquired SAIF deposits. The reserves of
the BIF met the level required by law in May 1995. As a result of the
respective reserve levels of the funds, deposit insurance assessments paid by
healthy savings associations exceeded those paid by healthy commercial banks by
approximately $.19 per $100 in deposits in 1995. In 1996, no BIF assessments
were required for healthy commercial banks except for a $2,000 minimum fee.
11
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COMMUNITY INVESTORS BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Six Month Periods Ended December 31,
1996 and 1995 (continued)
General, Administrative and Other Expense (continued)
Congress enacted legislation to recapitalize the SAIF and eliminate the
significant premium disparity. The recapitalization plan provided for a
special assessment of $.657 per $100 of SAIF deposits held at March 31, 1995,
in order to increase SAIF reserves to the level required by law. In addition,
the cost of prior thrift failures will be shared by both the SAIF and the BIF.
This would likely increase BIF assessments by $.02 to $.025 per $100 in
deposits. SAIF assessments would initially be set at the same level as BIF
assessments and could never be reduced below the level for BIF assessments.
The Association had $70.2 million in deposits at March 31, 1995. The special
assessment level was finalized at $.657 per $100 in deposits, resulting in an
assessment totaling $458,000, or $304,000 after-tax, which was recorded on
September 30, 1996 and paid in November 1996.
A component of the recapitalization plan provides for the merger of the SAIF
and BIF on January 1, 1999, if no insured depository institution is a savings
association on that date. If the Association is required to convert to a bank
charter, its operations and those of the Corporation will become subject to the
applicable statutory and regulatory provisions of commercial banks and bank
holding companies, respectively. Unless special grandfathering provisions are
included in applicable legislation or regulations, the Corporation would become
subject to the more restrictive activities limitations imposed on bank holding
companies and the Association would become subject to general commercial
banking rules. Those latter rules generally provide for less restrictive
commercial and consumer lending authority but are more restrictive in such
areas as service corporations investments. Under separate but related
legislation, the Association is required to recapture, as taxable income,
approximately $26,000 of its percentage of earnings bad debt deduction, which
represents post-1987 additions, and is unable to utilize the percentage of
earnings method to compute its bad debt deduction in the future. The
Association has provided deferred taxes for this amount and is permitted to
amortize the recapture of its percentage of earnings bad debt deduction over
six years.
Additionally, the increase in general, administrative and other expense
resulted from a $43,000, or 12.5%, increase in employee compensation and
benefits and a $36,000, or 92.3%, increase in franchise taxes, which were
partially offset by a $27,000, or 9.9%, decrease in other operating expense.
The increase in employee compensation and benefits resulted primarily from
increased costs attendant to stock benefit plans, coupled with normal merit
increases, while the increase in franchise taxes reflects the growth in the
Corporation's equity year-to-year. The special one-time assessment to
recapitalize the SAIF is expected to cause federal deposit insurance premiums
to be significantly reduced in future quarters, beginning January 1, 1997.
Federal Income Taxes
The provision for federal income taxes declined by $150,000, or 72.5%, for the
six months ended December 31, 1996, as compared to the same period in 1995.
This decline resulted primarily from the decrease in net earnings before taxes
of $457,000, or 72.8%. The effective tax rates were 33.3% and 33.0% for the
six months ended December 31, 1996 and 1995, respectively.
12
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COMMUNITY INVESTORS BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three Month Periods Ended December 31,
1996 and 1995
General
The Corporation reported net earnings totaling $217,000 for the three months
ended December 31, 1996, a decrease of $20,000, or 8.4%, from the $237,000 of
net earnings reported for the same period in 1995. The decline in earnings
resulted primarily from a $64,000 decrease in other income and a $23,000
increase in general, administrative and other expense, which were partially
offset by a $45,000 increase in net interest income and a $30,000 decrease in
the provision for federal income taxes.
Net Interest Income
Net interest income increased by $45,000, or 5.8%, for the three months ended
December 31, 1996, compared to the 1995 period. Interest income on loans and
mortgage-backed securities increased by $127,000, or 9.1%, due primarily to an
increase of approximately $9.6 million in the average balance of loans
outstanding year-to-year. Interest income on investment securities and
interest-bearing deposits increased by $3,000, or 1.0%, due primarily to an
increase in the average portfolio balance outstanding.
Interest expense on deposits decreased by $84,000, or 9.3%, due primarily to a
decline in the cost of deposits year-to-year. Interest expense on borrowings
increased by $169,000 during the current period, due primarily to an increase
in advances from the Federal Home Loan Bank.
Provision for Losses on Loans
A provision for losses on loans is charged to earnings to bring the total
allowance for loan losses to a level considered appropriate by management based
on historical experience, the volume and type of lending conducted by the
Association, the status of past due principal and interest payments, general
economic conditions, particularly as such conditions relate to the
Association's market area, and other factors related to the collectibility of
the Association's loan portfolio. As a result of such analysis, management
recorded a $50,000 provision for losses on loans during the three month period
ended December 31, 1996. There can be no assurance that the loan loss
allowance of the Association will be adequate to cover losses on nonperforming
assets in the future.
Other Income
Other income decreased by $64,000, or 61.0%, for the three months ended
December 31, 1996, compared to the same period in 1995, due primarily to the
recognition of a $59,000 gain on sale of securities during the 1995 period.
13
<PAGE> 14
COMMUNITY INVESTORS BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three Month Periods Ended December 31,
1996 and 1995 (continued)
General, Administrative and Other Expense
General, administrative and other expense increased by $23,000, or 4.7%, during
the three months ended December 31, 1996, compared to the same period in 1995.
The increase resulted primarily from a $45,000, or 24.7%, increase in employee
compensation and benefits and a $22,000, or 110.0%, increase in franchise
taxes, which were partially offset by a $39,000, or 24.2%, decrease in other
operating expense. The increase in employee compensation and benefits resulted
primarily from an increase in costs attendant to stock benefit plans and normal
merit increases. The increase in franchise taxes resulted from the growth in
stockholders' equity year-to-year.
Federal Income Taxes
The provision for federal income taxes declined by $30,000, or 26.8%, for the
three months ended December 31, 1996, as compared to the same period in 1995.
This decline resulted primarily from the decrease in net earnings before taxes
of $50,000, or 14.3%. The effective tax rates were 27.4% and 32.1% for the
three months ended December 31, 1996 and 1995, respectively.
14
<PAGE> 15
COMMUNITY INVESTORS BANCORP, INC.
PART II
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
On October 21, 1996, the Annual Meeting of the Corporation's
Stockholders was held. Four directors nominated were elected
to terms expiring in 1998 by the following votes:
John W. Kennedy
For: 586,332 Abstain: 2,700
David Auck
For: 588,807 Abstain: 225
Richard Cory
For: 588,632 Abstain: 400
Philip Harris
For: 588,782 Abstain: 250
One other matter was submitted to the stockholders, for which
the following votes were cast:
Ratification of the appointment of Grant Thornton LLP as
independent auditors of the Corporation for the fiscal year
ended June 30, 1997.
For: 587,157 Against: 700 Abstain: 1,175
ITEM 5. Other Materially Important Events
None
ITEM 6. Exhibits and Reports on Form 8-K
None
15
<PAGE> 16
COMMUNITY INVESTORS BANCORP, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: By: /s/John W. Kennedy
-------------------------- ------------------------------
John W. Kennedy
President and Chief
Executive Officer
Date: By: /s/Robert W. Siegel
-------------------------- ------------------------------
Robert W. Siegel
Controller
16
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