UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
---------------------------------
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to _______________
Commission File Number: 33-84132
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COMMUNITY INVESTORS BANCORP, INC.
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(Exact name of small business issuer as specified in its charter)
Ohio 34-1779309
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
119 South Sandusky Avenue, Bucyrus, Ohio 44820
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(Address of principal executive offices)
(419) 562-7055
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(Issuer's telephone number)
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(Former name, former address and former fiscal year, if changed since last
report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: May 12, 2000 - 1,195,988 common
shares
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
Page 1 of 17 pages
<PAGE>
INDEX
Page
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition 3
Consolidated Statements of Operations 4
Consolidated Statements of Comprehensive Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
PART II - OTHER INFORMATION 16
SIGNATURES 17
2
<PAGE>
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
March 31, June 30,
ASSETS 2000 1999
<S> <C> <C>
Cash and due from banks $ 2,516 $ 2,142
Federal funds sold 355 724
Interest-bearing deposits in other financial institutions 22 631
------- -------
Cash and cash equivalents 2,893 3,497
Investment securities available for sale - at market 5,765 3,847
Investment securities held to maturity - at amortized cost, approximate market
value of $3,493 and $3,647 as of March 31, 2000 and June 30, 1999 3,579 3,664
Mortgage-backed securities available for sale - at market 9,775 11,670
Mortgage-backed securities held to maturity - at amortized cost, approximate market
value of $826 and $872 as of March 31, 2000 and June 30, 1999 809 913
Loans receivable - net 93,638 89,922
Property acquired in settlement of loans 68 50
Office premises and equipment - at depreciated cost 705 720
Federal Home Loan Bank stock - at cost 1,480 1,363
Accrued interest receivable on loans 131 65
Accrued interest receivable on mortgage-backed securities 57 69
Accrued interest receivable on investments and interest-bearing deposits 180 86
Prepaid expenses and other assets 123 127
Prepaid federal income taxes 194 23
Deferred federal income taxes 257 208
------- -------
Total assets $119,654 $116,224
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 81,377 $ 79,954
Advances from the Federal Home Loan Bank 27,004 25,291
Advances by borrowers for taxes and insurance 1 1
Accrued interest payable 371 369
Other liabilities 120 192
------- -------
Total liabilities 108,873 105,807
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; 1,660,850 shares issued 17 17
Additional paid-in capital 7,191 7,084
Retained earnings, restricted 8,579 8,370
Shares acquired by stock benefit plans (461) (610)
Less 461,562 and 442,166 shares of treasury stock - at cost (4,354) (4,189)
Accumulated other comprehensive (losses) - unrealized losses on securities
designated as available for sale, net of related tax effects (191) (255)
------- -------
Total stockholders' equity 10,781 10,417
------- -------
Total liabilities and stockholders' equity $119,654 $116,224
======= =======
</TABLE>
3
<PAGE>
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
Nine months ended Three months ended
March 31, March 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Interest income
Loans $5,301 $5,143 $1,778 $1,707
Mortgage-backed securities 490 421 160 193
Investment securities 486 421 175 112
Interest-bearing deposits and other 33 128 9 21
----- ----- ----- -----
Total interest income 6,310 6,113 2,122 2,033
Interest expense
Deposits 2,618 2,683 860 864
Borrowings 1,161 926 422 331
----- ----- ----- -----
Total interest expense 3,779 3,609 1,282 1,195
----- ----- ----- -----
Net interest income 2,531 2,504 840 838
Provision for losses on loans 68 73 29 21
----- ----- ----- -----
Net interest income after provision
for losses on loans 2,463 2,431 811 817
Other income (expense)
Gain on sale of investment securities - 6 - -
Loss on disposition of mobile home loan portfolio (374) - (374)
Gain (loss) on sale of other repossessed assets 8 (2) (6) -
Other operating 215 183 67 58
----- ----- ----- -----
Total other income (expense) (151) 187 (313) 58
General, administrative and other expense
Employee compensation and benefits 852 852 289 282
Occupancy and equipment 105 102 38 38
Federal deposit insurance premiums 28 35 4 12
Franchise taxes 93 113 28 34
Expenses of property acquired in settlement of loans 39 22 13 8
Data processing 183 159 63 59
Other operating 344 338 108 104
----- ----- ----- -----
Total general, administrative and other expense 1,644 1,621 543 537
----- ----- ----- -----
Earnings (loss) before income taxes (credits) 668 997 (45) 338
Federal income taxes (credits)
Current 157 363 (27) 107
Deferred 70 (29) 16 8
----- ----- ----- -----
Total federal income taxes (credits) 227 334 (11) 115
----- ----- ----- -----
NET EARNINGS (LOSS) $ 441 $ 663 $ (34) $ 223
===== ===== ===== =====
EARNINGS (LOSS) PER SHARE
Basic $.39 $.58 $(.03) $.20
=== === === ===
Diluted $.38 $.57 $(.03) $.19
=== === === ===
</TABLE>
4
<PAGE>
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Nine months ended Three months ended
March 31, March 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net earnings $ 441 $663 $ (34) $223
Other comprehensive income, net of tax:
Unrealized holding gains (losses) on securities during the period,
net of tax $33, $(28), $(12) and $21 for the respective periods. 64 (54) (24) 41
Reclassification adjustment for realized gains
included in earnings, net of tax of $(2) - (4) - -
---- --- ---- ---
Comprehensive income $ 505 $605 $(191) $264
==== === ==== ===
Accumulated comprehensive losses $(191) $(72) $(191) $(72)
==== === ==== ===
</TABLE>
5
<PAGE>
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended March 31,
(In thousands)
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 441 $ 663
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 12 26
Amortization of deferred loan origination fees (49) (69)
Depreciation and amortization 44 35
Provision for losses on loans 68 73
Amortization expense of stock benefit plans 385 329
Loss on disposition of the mobile home loan portfolio 374 -
Proceeds from disposition of mobile home portfolio 835 -
Loss on sale of other repossessed assets 34 2
Federal Home Loan Bank stock dividends (75) (63)
Increase (decrease) in cash due to changes in:
Accrued interest receivable on loans (66) 16
Accrued interest receivable on mortgage-backed securities 12 (63)
Accrued interest receivable on investments and
interest-bearing deposits (94) 124
Prepaid expenses and other assets 4 (5)
Accrued interest payable 2 46
Other liabilities (72) (126)
Federal income taxes
Current (220) (125)
Deferred 70 (29)
------ ------
Net cash provided by operating activities 1,679 834
Cash flows provided by (used in) investing activities:
Proceeds from maturity of investment securities 5 5,583
Proceeds from sale of securities designated as available for sale - 4,996
Purchase of investment securities designated as available for sale (2,000) (2,949)
Purchase of investment securities designated as held to maturity - (930)
Purchase of mortgage-backed securities designated as available for sale - (16,252)
Principal repayments on mortgage-backed securities 2,116 3,308
Loan principal repayments 13,611 22,975
Loan disbursements (18,953) (27,364)
Purchase of office premises and equipment (29) (166)
Proceeds from sale of other repossessed assets 270 154
Purchase of Federal Home Loan Bank stock (42) (452)
------ ------
Net cash used in investing activities (5,022) (11,097)
------ ------
Net cash used in operating and investing
activities (subtotal carried forward) (3,343) (10,263)
------ ------
</TABLE>
6
<PAGE>
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the nine months ended March 31,
(In thousands)
2000 1999
<S> <C> <C>
Net cash used in operating and investing
activities (subtotal brought forward) $(3,343) $(10,263)
Cash flows provided by (used in) financing activities:
Net increase in deposit accounts 1,423 2,914
Proceeds from Federal Home Loan Bank advances 42,128 12,000
Repayment of Federal Home Loan Bank advances (40,415) (2,183)
Advances by borrowers for taxes and insurance - 4
Purchase of treasury stock (165) (643)
Dividends on common stock (232) (221)
------ -------
Net cash provided by financing activities 2,739 11,871
------ -------
Net increase (decrease) in cash and cash equivalents (604) 1,608
Cash and cash equivalents at beginning of period 3,497 2,793
------ -------
Cash and cash equivalents at end of period $ 2,893 $ 4,401
====== =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ 479 $ 487
====== =======
Interest on deposits and borrowings $ 3,777 $ 3,563
====== =======
Supplemental disclosure of noncash investing activities:
Transfers from loans to other repossessed assets $ 339 $ 154
====== =======
Unrealized gains (losses) on securities designated as available
for sale, net of related tax effects $ 64 $ (58)
====== =======
</TABLE>
7
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the nine and three months ended March 31, 2000 and 1999
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 Community Investors Bancorp, Inc.
(the "Corporation") included in the Annual Report on Form 10-KSB for the
year ended June 30, 1999. 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 nine and three month periods
ended March 31, 2000 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
the Corporation and its wholly owned subsidiary, First Federal Savings and
Loan Association of Bucyrus (the "Association"). All significant
intercompany items have been eliminated.
3. Earnings Per Share
Basic earnings per share is computed based upon the weighted-average common
shares outstanding during the period less shares in the ESOP that are
unallocated and not committed to be released. Weighted-average common shares
deemed outstanding, which gives effect to 65,836 unallocated ESOP shares,
totaled 1,139,371 and 1,139,320 for the nine and three month periods ended
March 31, 2000. Weighted-average common shares deemed outstanding, which
gives effect to 79,292 unallocated ESOP shares, totaled 1,146,414 and
1,138,872 for the nine and three month periods ended March 31, 1999.
Diluted earnings per share is computed taking into consideration common
shares outstanding and dilutive potential common shares to be issued under
the Corporation's stock option plan. Weighted-average common shares deemed
outstanding for purposes of computing diluted earnings per share totaled
1,159,457 and 1,156,026 for the nine and three month periods ended March 31,
2000. Weighted-average common shares deemed outstanding for purposes of
computing diluted earnings per share totaled 1,163,715 and 1,156,173 for the
nine and three month periods ended March 31, 1999. Incremental shares
related to the assumed exercise of stock options included in the calculation
of diluted earnings per share totaled 20,086 and 16,706 for the nine and
three month periods ended March 31, 2000, and 17,301 for both the nine and
three month periods ended March 31, 1999. Options to purchase 19,521 shares
of common stock with a weighted-average exercise price of $10.72 were
outstanding at March 31, 2000, but were excluded from the computation of
diluted earnings per share for the three and nine months ended March 31,
2000 because their exercise prices were greater than the average market
price of the common shares.
8
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the nine and three months ended March 31, 2000 and 1999
4. Effects of Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," which requires entities
to recognize all derivatives in their financial statements as either assets
or liabilities measured at fair value. SFAS No. 133 also specifies new
methods of accounting for hedging transactions, prescribes the items and
transactions that may be hedged, and specifies detailed criteria to be met
to qualify for hedge accounting.
The definition of a derivative financial instrument is complex, but in
general, it is an instrument with one or more underlyings, such as an
interest rate or foreign exchange rate, that is applied to a notional
amount, such as an amount of currency, to determine the settlement
amount(s). It generally requires no significant initial investment and can
be settled net or by delivery of an asset that is readily convertible to
cash. SFAS No. 133 applies to derivatives embedded in other contracts,
unless the underlying of the embedded derivative is clearly and closely
related to the host contract.
SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
beginning after June 15, 2000. On adoption, entities are permitted to
transfer held-to-maturity debt securities to the available-for-sale or
trading category without calling into question their intent to hold other
debt securities to maturity in the future. SFAS No. 133 is not expected to
have a material impact on the Corporation's financial statements.
9
<PAGE>
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 and adequacy of the allowance
for loan losses and the effect of certain recent accounting pronouncements.
Discussion of Financial Condition Changes from June 30, 1999 to March 31, 2000
At March 31, 2000, the Corporation's assets totaled $119.7 million, an increase
of $3.4 million, or 3.0%, over the level reported at June 30, 1999. The increase
in assets was funded primarily through an increase in advances from the Federal
Home Loan Bank of $1.7 million, combined with growth in the deposit portfolio.
Liquid assets (i.e. cash, interest-bearing deposits, investment securities, and
mortgage-backed securities available for sale) decreased by $666,000 during the
nine month period, to a total of $22.0 million at March 31, 2000, as maturities
of mortgage-backed securities of $2.1 million and a $604,000 decrease in cash
and cash equivalents were partially offset by purchases of investment securities
totaling $2.0 million. The purchases include government agency securities and
bear a weighted average interest rate of 8.31% and were financed using advances
from the Federal Home Loan Bank, coupled with previously mentioned maturities of
mortgage-backed securities. Regulatory liquidity amounted to 11.87% at March 31,
2000.
Loans receivable totaled $93.6 million at March 31, 2000, an increase of $3.7
million, or 4.1%, over June 30, 1999 levels. Loan disbursements amounted to
$19.0 million and were partially offset by principal repayments of $14.0
million. The volume of loan disbursements during the nine months ended March 31,
2000 decreased by $8.4 million, or 30.7%, from the same period in 1999 due to
rising interest rates and less refinancing activity. The allowance for loan
losses totaled $474,000 at March 31, 2000, as compared to $591,000 at June 30,
1999. Nonperforming loans totaled $591,000 at March 31, 2000, as compared to
$912,000 at June 30, 1999. The allowance for loan losses represented 80.2% of
nonperforming loans as of March 31, 2000 and 64.8% at June 30, 1999. Although
management believes that its allowance for loan losses at March 31, 2000, is
adequate based upon the available facts and circumstances, there can be no
assurance that additions to such allowance will not be necessary in future
periods, which could adversely affect the Corporation's results of operations.
10
<PAGE>
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, 1999 to March 31, 2000
(continued)
Deposits totaled $81.4 million at March 31, 2000, an increase of $1.4 million,
or 1.8%, over June 30, 1999 levels. Management continued its efforts to achieve
a moderate rate of growth through marketing and pricing strategies.
Advances from the Federal Home Loan Bank totaled $27.0 million at March 31,
2000, an increase of $1.7 million, or 6.8%, over June 30, 1999 levels. The
increase resulted primarily from variable-rate advances used to fund loan growth
and the purchase of investment securities, as previously discussed.
Stockholder's equity totaled $10.8 million at March 31, 2000, an increase of
$364,000, or 3.5% over June 30, 1999 levels. The increase resulted primarily
from net earnings of $441,000 coupled with amortization of stock benefit plans,
which were partially offset by repurchases of 19,396 shares of treasury stock at
an aggregate price of $165,000 coupled with dividend payments on common stock
totaling $232,000.
The Association is required to meet minimum capital standards promulgated by the
Office of Thrift Supervision (OTS). At March 31, 2000, the Association's capital
was well in excess of such minimum capital requirements.
Comparison of Operating Results for the Nine Month Periods Ended March 31, 2000
and 1999
General
The Corporation's net earnings totaled $441,000 for the nine months ended March
31, 2000, a decrease of $222,000, or 33.5%, from the $663,000 of net earnings
reported for the same period in 1999. The decrease in earnings resulted
primarily from a $374,000 loss on the disposition of the mobile home loan
portfolio recorded during the period ended March 31, 2000. Exclusive of this
loss, the Corporation would have realized net earnings for the current period of
$688,000, or $0.60 per basic share.
Net Interest Income
Net interest income increased by $27,000, or 1.1%, for the nine months ended
March 31, 2000, compared to the 1999 period. Interest income on loans increased
by $158,000, or 3.1%, due primarily to a $5.8 million increase in the average
net portfolio balance of loans outstanding year-to-year, partially offset by a
decline in the average yield. Interest income on investment and mortgage-backed
securities and interest-bearing deposits increased by $39,000, or 4.0%, due
primarily to an increase in the average portfolio balance outstanding.
Interest expense on deposits decreased by $65,000, or 2.4%, as the $2.7 million
increase in the average balance of deposits outstanding was offset by the
decline in the cost of deposits year-to-year. Interest expense on borrowings
increased by $235,000, or 25.4%, due primarily to a $3.9 million increase in the
weighted-average balance of Federal Home Loan Bank advances outstanding.
11
<PAGE>
Community Investors Bancorp, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Nine Month Periods Ended March 31, 2000
and 1999 (continued)
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $27,000, or 1.1%, to a total of $2.5 million
for the nine months ended March 31, 2000. The interest rate spread amounted to
approximately 2.63% for both the fiscal 2000 and fiscal 1999 nine month periods,
while the net interest margin totaled approximately 2.93% in 2000, as compared
to 3.02% in 1999.
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 $68,000 provision for losses on loans during the nine month period ended March
31, 2000, a decrease of $5,000 from the comparable 1999 period. The current
period provision reflects the growth in the loan portfolio integrated with an
overall decrease in nonperforming loans, which consists substantially of one- to
four-family residential mortgage loans that management deems to have adequate
levels of collateralization. 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 $338,000 for the nine months ended March 31, 2000,
compared to the same period in 1999, due primarily to a $374,000 loss on the
disposition of the mobile home loan portfolio. The sale of the aforementioned
assets resulted as management elected to dispose of the lower yielding portfolio
and re-deploy these funds into higher quality, higher yielding assets. Exclusive
of this loss, the Corporation's other income would have increased by $36,000,
primarily due to increased service fees on deposit accounts and transactions.
General, Administrative and Other Expense
General, administrative and other expense increased by $23,000, or 1.4%, during
the nine months ended March 31, 2000, compared to the same period in 1999. This
increase resulted primarily from a $24,000, or 15.1%, increase in data
processing expense, which was partially offset by a $20,000, or 17.7%, decrease
in franchise tax expense. The increase in data processing expense resulted
primarily from an increase in item processing transaction levels, coupled with
increased costs attendant to computer system upgrades.
Federal Income Taxes
The provision for federal income taxes decreased by $107,000, or 32.0%, during
the nine months ended March 31, 2000, as compared to the same period in 1999.
Net earnings before income taxes decreased by $329,000, or 33.0%, compared to
the nine months ended March 31, 1999, primarily due to a $374,000 loss on the
disposition of the mobile home loan portfolio. The effective tax rates were
34.0% and 33.5% for the nine months ended March 31, 2000 and 1999, respectively.
12
<PAGE>
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 March 31, 2000
and 1999
General
The Corporation's net loss totaled $34,000 for the three months ended March 31,
2000, a decrease of $257,000, from the $223,000 of net earnings reported for the
same period in 1999. The decrease in earnings resulted primarily from a $374,000
loss on the disposition of the mobile home loan portfolio. Exclusive of this
loss, the Corporation would have realized net earnings of $213,000, or $0.19 per
basic share for the three months ended March 31, 2000.
Net Interest Income
Net interest income increased by $2,000, or 0.2%, for the three months ended
March 31, 2000, compared to the 1999 period. Interest income on loans increased
by $71,000, or 4.2%, due primarily to a $6.1 million increase in the average net
portfolio balance of loans outstanding year-to-year, partially offset by a
decline in the average yield. Interest income on investment and mortgage-backed
securities and interest-bearing deposits increased by $18,000, or 5.5%, as a
$709,000 decrease in the average portfolio balance outstanding was offset by a
increase in the average yield.
Interest expense on deposits decreased by $4,000, or 0.5%, due primarily to a
decline in the cost of deposits year-to-year, which was partially offset by a
$2.4 million increase in the average balance of deposits outstanding. Interest
expense on borrowings increased by $91,000, or 27.5%, due primarily to a $2.6
million increase in the weighted-average balance of advances from the Federal
Home Loan Bank outstanding.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $2,000, or 0.2%, to a total of $840,000 for the
three months ended March 31, 2000. The interest rate spread amounted to
approximately 2.54% in the 2000 three month period, as compared to 2.61% during
the 1999 period, while the net interest margin totaled approximately 2.88% in
2000, as compared to 2.98% in 1999.
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 $29,000 provision for losses on loans during the three month period ended
March 31, 2000, an increase of $8,000 from the comparable 1999 period. The
current period provision reflects the growth in the loan portfolio integrated
with an overall decrease in nonperforming loans, which consists substantially of
one- to four-family residential mortgage loans that management deems to have
adequate levels of collateralization. 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.
13
<PAGE>
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 March 31, 2000
and 1999 (continued)
Other Income
Other income decreased by $371,000 for the three months ended March 31, 2000,
compared to the same period in 1999, due primarily to a $374,000 loss on the
disposition of the mobile home loan portfolio. The sale of the aforementioned
assets resulted as management elected to dispose of the lower yielding portfolio
and re-deploy these funds into higher quality, higher yielding productive
assets. Exclusive of this loss, the Corporation's other income would have
increased by $3,000, primarily due to increased service fees on deposit accounts
and transactions.
General, Administrative and Other Expense
General, administrative and other expense increased by $6,000, or 1.1%, during
the three months ended March 31, 2000, compared to the same period in 1999. This
increase resulted primarily from a $4,000, or 6.8%, increase in data processing
expense, which was partially offset by a $6,000, or 17.6%, decrease in franchise
tax expense. The increase in data processing expense resulted primarily from an
increase in item processing transaction levels, coupled with increased costs
attendant computer system upgrades.
Federal Income Taxes
The provision for federal income taxes decreased by $126,000, during the three
months ended March 31, 2000, as compared to the same period in 1999. Net
earnings before income taxes decreased by $383,000, compared to the three months
ended March 31, 1999, primarily due to a $374,000 loss on the disposition of the
mobile home loan portfolio. The effective tax rates were 24.4% and 34.0% for the
three months ended March 31, 2000 and 1999, respectively.
Year 2000 Compliance Matters
As with all providers of financial services, the Association's operations are
heavily dependent on information technology systems. During the three year
period leading up to January 1, 2000, the Association addressed the potential
problems associated with the possibility that the computers that control or
operate the information technology system and infrastructure may not have been
programmed to read four-digit date codes and, upon arrival of the year 2000, may
have recognized the two-digit code "00" as the year 1900, causing systems to
fail to function or to generate erroneous data.
As part of the awareness and assessment phases of its action plan related to the
Year 2000 problem, the Association identified the operating systems that it
considers critical to the on-going operations of the Association.
14
<PAGE>
Community Investors Bancorp, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Year 2000 Compliance Matters (continued)
Of the systems that the Association identified as mission-critical, the most
significant is the on-line core account processing system that is performed by a
third party service provider, Intrieve, Inc. The service provider converted its
hardware to a new Year 2000 compliant system. The Association's conversion to
this new system was completed during the fourth calendar quarter of 1998.
The Association realized no technology-related problems upon arrival of January
1, 2000, and had no interruption of services to its customers. The Association
could incur losses if loan payments are delayed due to Year 2000 problems
affecting any major borrowers in the Association's primary market area. Because
the Association's loan portfolio is highly diversified with regard to individual
borrowers and types of businesses and the Association's primary market area is
not significantly dependent upon one employer or industry, the Association does
not expect, and to date has not realized, any significant or prolonged
difficulties that will affect net earnings or cash flow.
15
<PAGE>
Community Investors Bancorp, Inc.
PART II
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities and Use of Proceeds
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K: None.
Exhibits
15: Independent Accountants' Report
27: Financial Data Schedule for the nine
months ended March 31, 2000.
16
<PAGE>
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: May 12, 2000 By: /s/John W. Kennedy
------------------------- ------------------
John W. Kennedy
President and Chief
Executive Officer
Date: May 12, 2000 By: /s/Robert W. Siegel
------------------------- -------------------
Robert W. Siegel
Assistant Vice President
Controller and Treasurer
17
Independent Accountants' Report
Board of Directors
Community Investors Bancorp, Inc.
We have reviewed the accompanying consolidated statements of financial
condition, earnings, comprehensive income, and cash flows of Community Investors
Bancorp, Inc. as of March 31, 2000, and for the three and nine-month periods
then ended. The financial statements are the responsibility of the Corporation's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial condition as of June 30,
1999, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for the year then ended (not presented herein) and in our report
dated August 19, 1999, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated statement of financial condition as of June 30, 1999,
is fairly stated, in all material respects, in relation to the consolidated
statement of financial condition from which it has been derived.
/s/GRANT THORNTON LLP
Cincinnati, Ohio
May 10, 2000
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