TABLE OF CONTENTS
President's Letter to Stockholders..................................... 2
The Business of Community Investors Bancorp, Inc. and Subsidiary....... 3
Market for Common Stock................................................ 3
Selected Consolidated Financial Data................................... 5
Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................ 7
Discussion of Financial Condition Changes from June 30, 1999 to
June 30, 2000........................................................ 8
Comparison of Results of Operations for Fiscal Years Ended
June 30, 2000 and 1999............................................... 9
Comparison of Results of Operations for Fiscal Years Ended
June 30, 1999 and 1998............................................... 10
Average Yield Analysis................................................. 13
Rate/Volume Table...................................................... 14
Asset and Liability Management......................................... 15
Liquidity and Capital Resources........................................ 17
Recent Accounting Pronouncements....................................... 18
Report of Independent Certified Public Accountants..................... 19
Consolidated Financial Statements...................................... 20
Directors and Officers................................................. 50
Stockholder Services................................................... 51
-1-
<PAGE>
Dear Stockholder:
We are pleased to present our Annual Report to Stockholders covering the fiscal
year ending June 30, 2000.
Fiscal 2000 represented another year of solid results for your Corporation. The
strength of our earnings performance was masked by a $240,000 after-tax charge
related to the sale of our mobile home loan portfolio. However, we believe the
long-term improvement in our asset quality more than justifies the short-term
cost of the sale.
We continue to be the leader in financing of single-family dwellings in our
area. We also have been most fortunate to be able to continue to originate a
significant percentage of adjustable rate mortgages. As interest rates increase,
we are starting to see the improved results of having a high percentage of home
loans with adjustable rates.
Moreover, we continue to look for additional products or changes to current
products to increase our fee income. The Crawford County Ohio market area is
probably the strongest it has been in over 100 years. Employment is high; there
seem to be improving employment levels everywhere we turn. The old saying that
"It doesn't get much better than this" seems to be very valid.
The prices of financial institutions stock have been a large disappointment to
your management and Board of Directors. The great majority of financial services
stocks have had dramatic decreases in this past year. We feel financial stocks
will start to improve over the next year and that profits will be the main
driver. We feel we are better positioned today for considerably better financial
results in 2001.
We have once again increased your cash dividend on common stock to $.26, an 8.3%
increase over the $.24 cash dividend of last year.
In conclusion, we remain committed to enhancing the long-term value of your
investment in CIBI, and thank you very much for your support over the past year.
Very truly yours,
COMMUNITY INVESTORS BANCORP, INC.
/s/John W. Kennedy
John W. Kennedy
President
2
<PAGE>
BUSINESS OF COMMUNITY INVESTORS BANCORP, INC. AND SUBSIDIARY
General
Community Investors Bancorp, Inc. (the "Corporation") was organized in fiscal
1995 at the direction of the Board of Directors of First Federal Savings and
Loan Association of Bucyrus ("First Federal" or the "Association") for the
purpose of acquiring all of the common stock to be issued by the Association
upon its conversion from a federally-chartered mutual savings and loan to a
federally-chartered stock association (the "Conversion"). Since completion of
the Conversion on February 6, 1995, the Corporation has conducted business as a
unitary savings and loan holding company. At June 30, 2000, the Corporation had
$119.0 million of total assets, $108.3 million of total liabilities, including
$79.1 million of deposits, and $10.8 million of stockholders' equity.
The Association is a traditional savings and loan association primarily engaged
in attracting deposits from the general public through its offices and using
those and other available sources of funds to originate loans secured by
single-family residences primarily located in Crawford County, Ohio. To a lesser
extent, the Association originates other real estate loans secured by
non-residential real estate and construction loans and non-real estate loans,
primarily consisting of consumer loans. The Association also invests in U.S.
Government and agency obligations and mortgage-backed securities which are
issued or guaranteed by federal agencies.
As a savings and loan holding company, the Corporation is subject to regulation,
supervision and examination by the Office of Thrift Supervision of the United
States Department of the Treasury (the "OTS"). As a savings association
chartered under the laws of the United States, the Association is subject to
regulation, supervision and examination by the OTS and the Federal Deposit
Insurance Corporation (the "FDIC"). The Association is also a member of the
Federal Home Loan Bank (the "FHLB") of Cincinnati.
MARKET FOR COMMON STOCK
Shares of common stock of Community Investors Bancorp, Inc. are traded
nationally under the symbol "CIBI" on the Nasdaq SmallCap Market System
("Nasdaq"). At September 7, 2000, the Corporation had 1,185,388 shares of common
stock outstanding and 436 stockholders of record.
The following tables set forth the reported high and low sale prices of a share
of the Corporation's common stock as reported by Nasdaq and cash dividends paid
per share of common stock during the periods indicated.
3
<PAGE>
MARKET FOR COMMON STOCK (CONTINUED)
<TABLE>
<CAPTION>
Fiscal Year Ended June 30, 2000
Quarter Ended High Low Dividend
<S> <C> <C> <C>
September 30, 1999 $10.00 $ 9.13 $.065
December 31, 1999 9.44 7.28 .065
March 31, 2000 9.44 8.13 .065
June 30, 2000 8.50 8.06 .065
Fiscal Year Ended June 30, 1999
Quarter Ended High Low Dividend
September 30, 1998 $15.00 $12.00 $.06
December 31, 1998 13.50 11.50 .06
March 31, 1999 12.75 9.00 .06
June 30, 1999 10.75 8.63 .06
</TABLE>
In addition to certain federal income tax considerations, OTS regulations impose
limitations on the payment of dividends and other capital distributions by
savings associations. Under OTS regulations applicable to converted savings
associations, the Association is not permitted to pay a cash dividend on its
common shares if the Association's regulatory capital would, as a result of the
payment of such dividend, be reduced below the amount required for the
liquidation account (which was established for the purpose of granting a limited
priority claim on the assets of the Association, in the event of a complete
liquidation, to those members of the Association before the Conversion who
maintain a savings account at the Association after the Conversion) or
applicable regulatory capital requirements prescribed by the OTS.
The Association is subject to regulations imposed by the Office of Thrift
Supervision ("OTS") regarding the amount of capital distributions payable by the
Association to the Corporation. Generally, the Association's payment of
dividends is limited, without prior OTS approval, to net income for the current
calendar year plus the two preceding calendar years, less capital distributions
paid over the comparable time period. Insured institutions are required to file
an application with the OTS for capital distributions in excess of this
limitation. At June 30, 2000, the Association was required to obtain OTS
approval with respect to future dividend distributions to the Corporation.
The Association currently meets all of its regulatory capital requirements and,
unless the OTS determines that the Association is an institution requiring more
than normal supervision, the Association may pay dividends in accordance with
the foregoing provisions of the OTS regulations.
4
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth certain selected consolidated financial and other
data of the Corporation at the dates and for the periods indicated. For
additional financial information about the Corporation, reference is made to
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements of the Corporation and
related notes included elsewhere herein.
<TABLE>
<CAPTION>
At June 30,
Selected Consolidated Financial
Condition Data: 2000 1999 1998 1997 1996
(In thousands)
<S> <C> <C> <C> <C> <C>
Total assets $119,034 $116,224 $102,535 $92,304 $91,787
Cash and cash equivalents 2,313 3,497 2,793 2,410 1,909
Securities:
Available-for-sale 14,876 15,517 5,485 1,498 6,201
Held-to-maturity 4,382 4,577 8,554 9,990 15,674
Loans receivable - net 94,366 89,922 83,574 76,446 66,255
Deposits 79,138 79,954 75,955 72,911 69,911
Federal Home Loan Bank advances 28,611 25,291 15,558 7,810 9,884
Stockholders' equity, restricted 10,763 10,417 10,343 11,113 11,486
</TABLE>
<TABLE>
<CAPTION>
Year ended June 30,
Selected Consolidated Operating Data: 2000 1999 1998 1997 1996
(In thousands, except share data)
<S> <C> <C> <C> <C> <C>
Total interest income $8,471 $8,189 $7,511 $7,288 $6,770
Total interest expense 5,078 4,822 4,153 4,069 3,626
----- ----- ----- ----- -----
Net interest income 3,393 3,367 3,358 3,219 3,144
Provision for losses on loans 121 94 156 142 159
----- ----- ----- ----- -----
Net interest income after provision for
losses on loans 3,272 3,273 3,202 3,077 2,985
Other income 291 261 197 140 164
Loss on disposition of mobile home
loan portfolio 364 - - - -
SAIF recapitalization assessment - - - 458 -
General, administrative and other expense 2,198 2,147 2,076 1,862 1,805
----- ----- ----- ----- -----
Earnings before income taxes 1,001 1,387 1,323 897 1,344
Federal income taxes 333 465 444 308 458
----- ----- ----- ----- -----
Net earnings $ 668 $ 922 $ 879 $ 589 $ 886
===== ===== ===== ===== =====
Earnings per share (1)
Basic $.59 $.81 $.70 $.44 $.59
=== === === === ===
Diluted $.58 $.78 $.68 $.44 $.59
=== === === === ===
</TABLE>
(1) Earnings per share for the years ended June 30, 1997 and 1996 have been
restated to give effect to the 3-for-2 stock splits effected during fiscal
1998 and 1997.
5
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
At or for the year ended June 30,
Selected financial ratios and
other data: (1) 2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Return on average assets (4) .56% .81% .90% .62% 1.05%
Return on average equity (4) 6.23 9.03 8.05 5.21 7.44
Average equity to average assets 9.00 9.02 11.20 11.97 14.06
Interest rate spread (2) 2.64 2.63 3.07 3.06 3.02
Net interest margin (2) 2.94 3.02 3.54 3.53 3.73
Non-performing assets and troubled debt
restructuring to total assets at end of period (3) .39 .87 .64 .63 .78
Non-performing loans and troubled debt
restructuring to total loans at end of period (3) .49 1.07 .70 .65 .94
Average interest-earning assets to average
interest-bearing liabilities 106.93 109.01 110.58 110.40 116.57
Net interest income after provision for loan
losses and other income to total general,
administrative and other expense (4) 158.79 164.59 163.73 138.66 174.46
General, administrative and other expense to
average total assets (4) 1.85 1.90 2.13 2.46 2.13
Dividend payout ratio (5) 44.07 29.63 30.48 40.40 6.03
Book value per share (5) $9.02 $8.55 $8.17 $7.97 $7.66
</TABLE>
(1) With the exception of end of period ratios, all ratios are based on average
monthly balances during the periods.
(2) Interest rate spread represents the difference between the weighted-average
yield on interest-earning assets and the weighted-average rate on
interest-bearing liabilities. Net interest margin represents net interest
income as a percentage of average interest-earning assets.
(3) Non-performing loans consist of non-accrual loans and accruing loans that
are contractually past due 90 days or more, and non-performing assets
consist of non-performing loans and real estate, mobile homes and other
assets acquired by foreclosure or deed-in-lieu thereof.
(4) Before consideration of the SAIF recapitalization assessment the ratios set
forth below for the fiscal year ended June 30, 1997, would have been as
follows:
Return on average assets .95%
Return on average equity 7.90
Net interest income after provision for
loan losses and other income to total
general, administrative and other expense 165.25
General, administrative and other expense
to average total assets 1.97
(5) Adjusted to give effect to the 3-for-2 stock splits effected during fiscal
1998 and 1997.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The principal asset of the Corporation is its ownership of First Federal.
Accordingly, the Corporation's results of operations are primarily dependent
upon the results of operations of the Association. The Association conducts a
general banking business that consists of attracting deposits from the general
public and using those funds to originate loans for primarily residential and
consumer purposes.
The Association's profitability depends primarily on its net interest income,
which is the difference between interest income generated from interest-earning
assets (i.e., loans, investments and mortgage-backed securities) less the
interest expense incurred on interest-bearing liabilities (i.e., deposits and
borrowed funds). Net interest income is affected by the relative amounts of
interest-earning assets and interest-bearing liabilities, and the interest rates
paid on these balances.
Additionally, and to a lesser extent, the Association's profitability is
affected by such factors as the level of other income and general and
administrative expenses, the provision for losses on loans, and the effective
tax rate. Other income consists primarily of service charges and other fees.
General, administrative and other expenses consist of compensation and benefits,
occupancy-related expenses, FDIC deposit insurance premiums and other operating
expenses.
Management's discussion and analysis of earnings and related financial data are
presented herein to assist investors in understanding the consolidated financial
condition and results of operations of the Corporation for the fiscal years
ended June 30, 2000 and 1999. This discussion should be read in conjunction with
the consolidated financial statements and related footnotes presented elsewhere
in this report.
Forward-Looking Statements
In the following pages, management presents an analysis of the Corporation's
financial condition as of June 30, 2000, and the results of operations for the
year ended June 30, 2000 as compared to prior periods. In addition to this
historical information, the following discussion contains forward-looking
statements that involve risks and uncertanties. 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 in the Corporation's general market area.
Without limiting the foregoing, some of the forward-looking statements include
the following:
Management's establishment of an allowance for loan losses and its
statements regarding the adequacy of such allowance for loan losses.
Management's opinion as to the financial statement effect of certain
recent accounting pronouncements.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Discussion of Financial Condition Changes from June 30, 1999 to June 30, 2000
The Corporation's total assets amounted to $119.0 million as of June 30, 2000,
an increase of $2.8 million, or 2.4%, over the $116.2 million total at June 30,
1999. The increase in assets was funded primarily through an increase in
advances from the Federal Home Loan Bank of $3.3 million, which was partially
offset by an $816,000 decrease in deposits outstanding.
Cash and cash equivalents and investment securities totaled $21.6 million at
June 30, 2000, a decrease of $2.0 million, or 8.6%, from 1999 levels. The
decrease resulted primarily from maturities of investment and mortgage-backed
securities of $135,000 and $2.7 million, respectively, which were offset by
purchases of investment securities totaling $2.1 million. Purchases during
fiscal 2000 included government agency securities bearing a weighted-average
interest rate of 8.32%, which were financed via fixed-rate advances from the
Federal Home Loan Bank bearing a weighted-average cost of 6.52%, coupled with
proceeds from maturities of investment securities.
Loans receivable totaled $94.4 million at June 30, 2000, an increase of $4.4
million, or 4.9%, over June 30, 1999 levels. Loan disbursements during fiscal
2000 totaled $24.0 million, which were partially offset by principal repayments
of $18.0 million. The volume of loan disbursements during fiscal 2000
represented a $13.7 million, or 36.4%, decline compared to the record volume in
fiscal 1999. The decrease in loan origination volume was due primarily to a
decline in loan demand following an overall increase in interest rates in the
economy year to year.
At June 30, 2000, the Corporation's allowance for loan losses totaled $484,000,
which represented .51% of total loans and 107.8% of nonperforming loans. The
allowance totaled $591,000 at June 30, 1999, which represented .66% of total
loans and 64.8% of nonperforming loans at that date. Nonperforming loans totaled
$449,000 and $912,000 at June 30, 2000 and 1999, respectively, which represented
.48% and 1.01% of total loans at those respective dates. Although management
believes that its allowance for loan losses at June 30, 2000 was adequate based
on 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.
Deposits totaled $79.1 million at June 30, 2000, a decrease of $816,000, or
1.0%, from the $79.9 million total reported at June 30, 1999. While management
has generally pursued a strategy of moderate growth in the deposit portfolio, it
has historically not engaged in sporadic increases or decreases in interest
rates, nor has it offered the highest rates available in its deposit market.
Advances from the Federal Home Loan Bank totaled $28.6 million at June 30, 2000,
an increase of $3.3 million, or 13.1%, over June 30, 1999 levels. Proceeds from
such advances were used primarily to fund the purchase of investment securities
and to fund the growth in the loan portfolio.
Stockholders' equity totaled $10.8 million at June 30, 2000, an increase of
$346,000, or 3.3%, over June 30, 1999 levels. The increase resulted primarily
from net earnings of $668,000, which was partially offset by repurchases of
25,896 shares of treasury stock at an aggregate price of $219,000, coupled with
dividend payments on common stock totaling $310,000.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Results of Operations for the Fiscal Years Ended June 30, 2000
and 1999
General
The Corporation's net earnings totaled $668,000 for the fiscal year ended June
30, 2000, a decrease of $254,000, or 27.5%, from the $922,000 of net earnings
reported for fiscal 1999. The decrease in earnings resulted primarily from a
$364,000 loss on the disposition of the mobile home loan portfolio recorded
during the fiscal year. Exclusive of this loss, the Corporation would have
realized net earnings for the current period of $908,000, or $.80 per basic
share.
Net Interest Income
Total interest income for the fiscal year ended June 30, 2000, amounted to $8.5
million, an increase of $282,000, or 3.4%, over fiscal 1999. This increase was
due primarily to a $3.9 million, or 3.5%, increase in the weighted-average
balance of interest-earning assets outstanding. Interest income on loans
increased by $244,000, or 3.6%, due primarily to a $5.1 million, or 5.8%,
increase in the average balance of loans outstanding year-to-year, partially
offset by a sixteen basis point decline in the average yield. Interest income on
investment and mortgage-backed securities and interest-bearing deposits
increased by $38,000, or 2.9%, due primarily to a 46 basis point increase in the
average yield year to year, which was partially offset by a $1.2 million, or
4.9%, decline in the average portfolio balance outstanding.
Interest expense on deposits decreased by $68,000, or 1.9%, primarily due to a
twenty-two basis point decrease in cost of deposits, which was partially offset
by a $2.3 million, or 3.0%, increase in the weighted-average balance of deposits
outstanding. Interest expense on borrowings increased by $324,000, or 25.7%,
during the current period, due primarily to a $3.4 million increase in the
weighted-average balance of advances from the Federal Home Loan Bank
outstanding, coupled with a fifty-four basis point increase in the average cost
of borrowings, to 5.84% in fiscal 2000.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $26,000, or .8%, to a total of $3.4 million for
the fiscal year ended June 30, 2000. The interest rate spread amounted to 2.64%
in fiscal 2000, compared to 2.63% in fiscal 1999, while the net interest margin
totaled approximately 2.94% in fiscal 2000, as compared to 3.02% in fiscal 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 $121,000 provision for losses on loans during the fiscal year ended June 30,
2000, an increase of $27,000, or 28.7%, over the provision recorded in fiscal
1999. The current period provision was predicated upon the overall growth in the
loan portfolio, offset by a decrease in the level of nonperforming loans.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Results of Operations for the Fiscal Years Ended June 30, 2000 and
1999 (continued)
Other Income
Other income decreased by $334,000 for the fiscal year ended June 30, 2000,
compared to fiscal 1999, due primarily to a $364,000 loss recorded 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 $30,000, or
11.5%, primarily due to increased service fees on deposit accounts and
transactions.
General, Administrative and Other Expense
General, administrative and other expense totaled $2.2 million for the fiscal
year ended June 30, 2000, an increase of $51,000, or 2.4%, compared to fiscal
1999. This increase was due primarily to a $57,000, or 5.0%, increase in
employee compensation and benefits and a $28,000, or 13.1%, increase in data
processing, which were partially offset by a $24,000, or 16.2%, decrease in
franchise taxes. The increase in employee compensation and benefits resulted
primarily from increased management staffing levels year to year, coupled with
normal merit increases. The increase in data processing generally reflects the
effects of the Corporation's overall growth year to year. The decrease in
franchise taxes was due to a reduction in the effective tax rate.
Federal Income Taxes
The provision for federal income taxes decreased by $132,000, or 28.4%, for the
fiscal year ended June 30, 2000, as compared to fiscal 1999. This decrease
resulted primarily from the decrease in net earnings before taxes of $386,000,
or 27.8%. The effective tax rates were 33.3% and 33.5% for the fiscal years
ended June 30, 2000 and 1999, respectively.
Comparison of Results of Operations for the Fiscal Years Ended June 30, 1999 and
1998
General
The Corporation's net earnings totaled $922,000 for the fiscal year ended June
30, 1999, an increase of $43,000, or 4.9%, over the $879,000 of net earnings
reported for fiscal 1998. The increase in earnings resulted from a $62,000
decrease in provision for losses on loans, a $64,000 increase in other income
and a $9,000 increase in net interest income, which were partially offset by a
$71,000 increase in general, administrative and other expense and a $21,000
increase in the provision for federal income taxes.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Results of Operations for the Fiscal Years Ended June 30, 1999 and
1998 (continued)
Net Interest Income
Total interest income for the fiscal year ended June 30, 1999, amounted to $8.2
million, an increase of $678,000, or 9.0%, over fiscal 1998. This increase was
due primarily to a $16.5 million, or 17.4%, increase in the weighted-average
balance of interest-earning assets outstanding, which was partially offset by a
fifty-six basis point decline in the average yield year to year, to 7.35% in
fiscal 1999. Interest income on loans increased by $240,000, or 3.6%, due
primarily to a $6.6 million, or 8.1%, increase in the average balance of loans
outstanding year to year, partially offset by a thirty-four basis point decline
in the average yield. Interest income on investment and mortgage-backed
securities and interest-bearing deposits increased by $438,000, or 49.8%, due
primarily to a $9.9 million, or 74.2%, increase in the average portfolio balance
outstanding.
Interest expense on deposits increased by $10,000, or .3%, as the $3.4 million,
or 4.5%, increase in the weighted-average balance of deposits outstanding was
mitigated by a nineteen basis point decrease in the cost of deposits year to
year, to 4.54% in fiscal 1999. Interest expense on borrowings increased by
$659,000, or 109.8%, during fiscal 1999, compared to fiscal 1998, due primarily
to a $13.0 million increase in the weighted-average balance of advances from the
Federal Home Loan Bank outstanding, partially offset by a thirty-one basis point
decline in the average cost of borrowings, to 5.30% in fiscal 1999.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $9,000, or .3%, to a total of $3.4 million for
the fiscal year ended June 30, 1999. The interest rate spread amounted to 2.63%
in fiscal 1999 and 3.07% in fiscal 1998, while the net interest margin totaled
approximately 3.02% in fiscal 1999, as compared to 3.54% in fiscal 1998.
Provision for Losses on Loans
Based upon an analysis of 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, management recorded a $94,000 provision for
losses on loans during the fiscal year ended June 30, 1999, a decrease of
$62,000, or 39.7%, from the provision recorded in fiscal 1998. The fiscal 1999
provision was predicated upon the overall growth in the loan portfolio, coupled
with an increase in the level of nonperforming loans.
Other Income
Other income increased by $64,000, or 32.5%, for the fiscal year ended June 30,
1999, compared to fiscal 1998, due primarily to an increase in service fees on
loan and deposit accounts and transactions.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Results of Operations for the Fiscal Years Ended June 30, 1999 and
1998 (continued)
General, Administrative and Other Expense
General, administrative and other expense totaled $2.1 million for the fiscal
year ended June 30, 1999, an increase of $71,000, or 3.4%, compared to fiscal
1998. This increase was due primarily to a $43,000, or 4.0%, increase in
employee compensation and benefits and a $36,000, or 20.3%, increase in data
processing. The increase in employee compensation and benefits resulted
primarily from increased management staffing levels year to year, coupled with
increased costs attendant to stock benefit plans and normal merit increases. The
increase in data processing generally reflects the effects of the Corporation's
overall growth year to year.
Federal Income Taxes
The provision for federal income taxes increased by $21,000, or 4.7%, for the
fiscal year ended June 30, 1999, as compared to fiscal 1998. This increase
resulted primarily from the increase in net earnings before taxes of $64,000, or
4.8%. The effective tax rates were 33.5% and 33.6% for the fiscal years ended
June 30, 1999 and 1998, respectively.
12
<PAGE>
AVERAGE YIELD ANALYSIS
The following average balance sheet table sets forth for the periods indicated,
information on the Corporation regarding: (i) the total dollar amounts of
interest income on interest-earning assets and the resulting average yields;
(ii) the total dollar amounts of interest expense on interest-bearing
liabilities and the resulting average costs; (iii) net interest income; (iv)
interest rate spread; (v) net interest-earning assets; (vi) the net interest
margin; and (viii) the ratio of total interest-earning assets to total
interest-bearing liabilities. Additional interest income that would have been
recognized had non-accruing loans performed in accordance with original terms
has not been included in the table. Interest income from non-accruing loans is a
component of interest income in the period received. The loan is returned to
accruing status upon payment of all delinquent interest. Information is based on
average monthly balances during the period presented.
<TABLE>
<CAPTION>
Year ended June 30,
2000 1999 1998
Average Interest Average Interest Average Interest
outstanding earned/ Yield/ outstanding earned/ Yield/ outstanding earned/ Yield/
balance paid rate balance paid rate balance paid rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable $ 93,277 $7,115 7.63% $ 88,179 $6,871 7.79% $81,586 $6,631 8.13%
Investment securities 21,391 1,313 6.14 20,448 1,168 5.71 12,668 837 6.61
Other interest-earning
assets (1) 758 43 5.67 2,851 150 5.26 705 43 6.10
------- ----- ---- ------- ----- ---- ------ ----- ----
Total interest-earning
assets 115,426 8,471 7.34 111,478 8,189 7.35 94,959 7,511 7.91
Non-interest-earning assets 3,706 1,671 2,572
------- ------- ------
Total assets $119,132 $113,149 $97,531
======= ======= ======
Interest-bearing liabilities:
Deposits $ 80,862 3,495 4.32 $ 78,528 3,563 4.54 $75,177 3,553 4.73
FHLB advances 27,086 1,583 5.84 23,735 1,259 5.30 10,695 600 5.61
------- ----- ---- ------- ----- ---- ------ ----- ----
Total interest-bearing
liabilities 107,948 5,078 4.70 102,263 4,822 4.72 85,872 4,153 4.84
----- ---- ----- ---- ----- ----
Non-interest-bearing
liabilities 468 675 736
------- ------- ------
Total liabilities 108,416 102,938 86,608
Stockholders' equity 10,716 10,211 10,923
------- ------- ------
Total liabilities and
stockholders' equity $119,132 $113,149 $97,531
======= ======= ======
Net interest income/interest
rate spread $3,393 2.64% $3,367 2.63% $3,358 3.07%
===== ==== ===== ==== ===== ====
Net interest margin (2) 2.94% 3.02% 3.54%
==== ==== ====
Ratio of interest-earning assets
to interest-bearing liabilities 106.93% 109.01% 110.58%
====== ====== ======
</TABLE>
(1) Comprised principally of interest-bearing deposits.
(2) Net interest income divided by average interest-earning assets.
13
<PAGE>
RATE/VOLUME TABLE
The following table describes the extent to which changes in interest rates and
changes in volume of interest-earning assets and liabilities have affected the
Corporation's interest income and expense during the periods indicated. For each
category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in volume (change
in volume multiplied by prior year rate), (ii) changes in rate (change in rate
multiplied by prior year volume), (iii) changes in rate/volume (changes in rate
multiplied by changes in volume) and (iv) total changes in rate and volume.
<TABLE>
<CAPTION>
Year ended June 30,
2000 vs. 1999 1999 vs. 1998
Increase Increase
(decrease) Total (decrease) Total
due to increase/ due to increase/
Rate Volume (decrease) Rate Volume (decrease)
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $(144) $388 $244 $(283) $ 523 $240
Investment securities 89 56 145 (127) 458 331
Interest-earning deposits and other 12 (119) (107) (7) 114 107
---- --- --- ---- ----- ---
Total interest-earning assets $ (43) $325 282 $(417) $1,095 678
==== === ==== =====
Interest-bearing liabilities:
Deposits $(174) $106 (68) $(146) $ 156 10
Advances from Federal Home Loan Bank 136 188 324 (35) 694 659
---- --- --- ---- ----- ---
Total interest-bearing liabilities $ (38) $294 256 $(181) $ 850 669
==== === --- ==== ===== ---
Increase in net interest income $ 26 $ 9
=== ===
</TABLE>
14
<PAGE>
ASSET AND LIABILITY MANAGEMENT
The lending activities of savings institutions have historically emphasized
long-term loans secured by single-family residences, and the primary source of
funds of such institutions has been deposits. The deposit accounts of savings
institutions generally bear interest rates that reflect market rates and largely
mature or are subject to repricing within a short period of time. This factor,
in combination with substantial investments in long-term, fixed-rate loans, has
historically caused the income earned by savings institutions on their loan
portfolios to adjust more slowly to changes in interest rates than their cost of
funds.
In order to minimize the potential for adverse effects of material and prolonged
increases in interest rates on the Corporation's results of operations, the
Corporation's management has implemented and continues to monitor asset and
liability management policies to better match the maturities and repricing terms
of the Corporation's interest-earning assets and interest-bearing liabilities.
Such policies have consisted primarily of: (i) emphasizing investment in
Adjustable Rate Mortgages (ARMs); (ii) emphasizing the retention of
lower-costing savings accounts and other core deposits and lengthening the term
of liabilities by participating in the mortgage matched advances program offered
by the Federal Home Loan Bank (FHLB) of Cincinnati; and (iii) maintaining a
significant level of liquid assets that can be readily invested in higher
yielding investments should interest rates rise.
Although the Corporation emphasizes the origination of single-family residential
ARMs, originations of such loans have been difficult due to the preference of
the Corporation's customers for fixed-rate residential mortgage loans in the low
interest rate environment that has prevailed for the past five years. Despite
this preference for fixed-rate originations, as a consequence of management's
continuing efforts, $47.1 million, or 62.4%, of the Corporation's portfolio of
one-to-four family residential mortgage loans consisted of ARMs at June 30,
2000. In addition, at June 30, 2000, another $8.6 million, or 45.0%, of the
Corporation's total loan portfolio consisted of other types of loans with
adjustable interest rates.
The Corporation prices deposit accounts based upon the availability of prudent
investment opportunities. Pursuant to this policy, the Corporation has generally
neither engaged in sporadic increases or decreases in interest rates paid nor
offered the highest rates available in its deposit market. In addition, the
Corporation does not pursue an aggressive growth strategy which has assisted it
in controlling the cost of funds.
The Corporation generally maintains a high level of liquidity to respond to
investment opportunities as interest rates and lending activities permit and to
fund deposit withdrawals. Management believes that this flexibility will allow
the Corporation to maintain its profitability over a wide range of interest rate
environments.
The interest rate spread is the principal determinant of First Federal's income.
The interest rate spread, and therefore net interest income, can vary
considerably over time because asset and liability repricing do not coincide.
Moreover, the long-term and cumulative effect of interest rate changes can be
substantial. Interest rate risk is defined as the sensitivity of an
institution's earnings and net asset values to changes in interest rates. The
management and Board of Directors attempt to manage First Federal's exposure to
interest rate risk in a manner to maintain the projected four-quarter percentage
change in net interest income and the projected change in the market value of
portfolio equity within limits established by the Board of Directors, assuming a
permanent and instantaneous parallel shift in interest rates.
15
<PAGE>
ASSET AND LIABILITY MANAGEMENT (CONTINUED)
First Federal, like other financial institutions, is subject to interest rate
risk to the extent that its interest-earning assets reprice differently than its
interest-bearing liabilities. As a part of its effort to monitor its interest
rate risk, First Federal reviews the reports of the OTS which set forth the
application of the "net portfolio value" ("NPV") methodology adopted by the OTS
as part of its final rules related to revisions in the risk-based capital
regulations. Although First Federal is not currently subject to the NPV
regulation, the application of the NPV methodology may illustrate First
Federal's interest rate risk.
Generally, NPV is the discounted present value of the difference between
incoming cash flows on interest-earning and other assets and outgoing cash flows
on interest-bearing liabilities. The application of the methodology attempts to
quantify interest rate risk as the change in the NPV which would result from a
theoretical 200 basis point (1 basis point equals .01%) change in market
interest rates. Both a 200 basis point increase in market interest rates and a
200 basis point decrease in market interest rates are considered. If the NPV
would decrease more than 2% of the present value of the institution's assets
with either an increase or a decrease in market rates, the institution must
deduct 50% of the amount of the decrease in excess of such 2% in the calculation
of the institution's risk-based capital.
At June 30, 2000, 2% of the present value of First Federal's assets was
approximately $2.4 million. Because the interest rate risk of a 200 basis point
increase in market interest rates (which was greater than the interest rate risk
of a 200 basis point decrease) exceeded $2.4 million at June 30, 2000, First
Federal would have been required to reduce its capital by approximately $630,000
(50% of the $1.3 million difference) in determining whether First Federal met
its risk-based capital requirement. Regardless of such reduction, however, First
Federal's risk-based capital would still have exceeded the regulatory
requirement by approximately $4.4 million.
The tables below show the increase and decrease of NPV under different interest
rate scenarios at June 30, 2000 and 1999.
<TABLE>
<CAPTION>
June 30, 2000
Estimated
Change in NPV as a
Interest Rates Estimated Percentage Amount
(basis points) NPV of Assets of Change Percent
(Dollars in thousands)
<S> <C> <C> <C> <C>
+300 $ 4,849 4.33% $(5,759) (54)%
+200 6,966 6.08 (3,642) (34)
+100 8,937 7.63 (1,671) (16)
- 10,608 8.89 - -
-100 11,708 9.68 1,100 10
-200 12,286 10.06 1,678 16
-300 13,211 10.69 2,603 25
</TABLE>
16
<PAGE>
ASSET AND LIABILITY MANAGEMENT (CONTINUED)
<TABLE>
<CAPTION>
June 30, 1999
Estimated
Change in NPV as a
Interest Rates Estimated Percentage Amount
(basis points) NPV of Assets of Change Percent
(Dollars in thousands)
<S> <C> <C> <C> <C>
+300 $ 6,069 5.36% $(3,376) (36)%
+200 7,753 6.72 (1,692) (18)
+100 8,780 7.52 (665) (7)
- 9,445 8.01 - -
-100 10,195 8.56 750 8
-200 11,098 9.21 1,653 18
-300 12,215 10.00 2,770 29
</TABLE>
In the event that interest rates should rise from current levels, First
Federal's net interest income could be expected to be negatively affected.
Moreover, rising interest rates could negatively affect First Federal's earnings
due to diminished loan demand.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's primary sources of funds are deposits, repayments, prepayments
and maturities of outstanding loans and mortgage-backed securities and funds
provided by operations. While scheduled loan and investment securities
repayments are relatively predictable sources of funds, deposit flows and loan
prepayments are greatly influenced by the movement of interest rates in general,
economic conditions and competition. The Corporation manages the pricing of its
deposits to maintain a deposit balance deemed appropriate and desirable. In
addition, the Corporation invests excess funds in FHLB overnight deposits and
other short-term interest-earning assets which provide liquidity to meet lending
requirements. The Corporation has been able to generate enough cash through the
retail deposit market, its traditional funding source, to offset the cash
utilized in investing activities. As an additional source of funds, the
Association may borrow from the FHLB of Cincinnati and has access to the Federal
Reserve Bank discount window. The Association has borrowed from the FHLB of
Cincinnati as part of its asset/liability management strategy to match payments
on the advances to the stream of income from its recently originated fixed rate
one-to-four family residential loan portfolio and its investment in U.S.
government agency bonds. As of June 30, 2000, the Association had $28.6 million
of advances outstanding.
Liquidity management is both a daily and long-term function. Excess liquidity is
generally invested in short-term investments such as FHLB of Cincinnati
overnight deposits. On a longer term basis, the Corporation maintains a strategy
of investing in various investment securities and lending products. At June 30,
2000, the total approved mortgage-loan commitments outstanding amounted to
$519,000. At the same date, the Corporation had maximum exposure for loan
commitments under unfunded loans and unused lines of credit totaling $3.0
million.
17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
During fiscal 2000, the Corporation had positive cash flows from operating
activities and financing activities and negative cash flows from investing
activities which resulted in a net decrease in cash and cash equivalents for the
year totaling $1.2 million.
During fiscal 1999, the Corporation had positive cash flows from operating
activities and financing activities and negative cash flows from investing
activities which resulted in a net increase in cash and cash equivalents for the
year totaling $704,000.
Operating activities provided cash as net interest income exceeded general and
administrative expenses. Investing activities used cash primarily as a result of
loan originations and purchases of investment securities exceeding principal
repayments. Cash flows from financing activities increased during fiscal 2000
and 1999 primarily due to proceeds from Federal Home Loan Bank advances.
The Association is required by the Office of Thrift Supervision ("OTS") to
maintain average daily balances of liquid assets and short-term liquid assets
(as defined) in amounts equal to 4% and 1%, respectively, of net withdrawable
deposits and borrowings payable in one year or less to assure its ability to
meet demand for withdrawals and repayment of short-term borrowings. The
liquidity requirements may vary from time to time at the direction of the OTS
depending upon economic conditions and deposit flows. The Association's average
monthly liquidity ratio and short-term liquid assets ratio at June 30, 2000 was
11.7%.
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. Management adopted SFAS No. 133 effective July 1, 2000,
as required, without material impact on the Corporation's financial condition
and results of operations.
18
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors
Community Investors Bancorp, Inc.
We have audited the accompanying consolidated statements of financial condition
of Community Investors Bancorp, Inc. as of June 30, 2000 and 1999, and the
related consolidated statements of earnings, comprehensive income, stockholders'
equity and cash flows for each of the years ended June 30, 2000, 1999 and 1998.
These consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Community
Investors Bancorp, Inc. as of June 30, 2000 and 1999, and the consolidated
results of its operations and its cash flows for each of the years ended June
30, 2000, 1999 and 1998, in conformity with generally accepted accounting
principles.
/s/GRANT THORNTON LLP
Cincinnati, Ohio
August 16, 2000
19
<PAGE>
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30,
(In thousands, except share data)
ASSETS 2000 1999
<S> <C> <C>
Cash and due from banks $ 1,701 $ 2,142
Federal funds sold 310 724
Interest-bearing deposits in other financial institutions 302 631
------- -------
Cash and cash equivalents 2,313 3,497
Investment securities available for sale - at market 5,773 3,847
Investment securities held to maturity - at amortized cost, approximate market
value of $3,556 and $3,647 as of June 30, 2000 and 1999 3,616 3,664
Mortgage-backed securities available for sale - at market 9,103 11,670
Mortgage-backed securities held to maturity - at amortized cost, approximate market
value of $742 and $872 as of June 30, 2000 and 1999 766 913
Loans receivable - net 94,366 89,922
Property acquired in settlement of loans - net 69 50
Office premises and equipment - at depreciated cost 692 720
Federal Home Loan Bank stock - at cost 1,507 1,363
Accrued interest receivable on loans 86 65
Accrued interest receivable on mortgage-backed securities 52 69
Accrued interest receivable on investments and interest-bearing deposits 118 86
Prepaid expenses and other assets 170 127
Prepaid federal income taxes 235 23
Deferred federal income tax asset 168 208
------- -------
Total assets $119,034 $116,224
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 79,138 $ 79,954
Advances from the Federal Home Loan Bank 28,611 25,291
Advances by borrowers for taxes and insurance 5 1
Accrued interest payable 329 369
Other liabilities 188 192
------- -------
Total liabilities 108,271 105,807
Commitments - -
Stockholders' equity
Preferred stock, 1,000,000 shares of no par value authorized,
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 8,728 8,370
Shares acquired by stock benefit plans (461) (610)
Less 468,062 and 442,166 shares of treasury stock at June 30, 2000
and 1999, respectively - at cost (4,408) (4,189)
Accumulated other comprehensive loss - unrealized losses on securities
designated as available for sale, net of related tax benefits (304) (255)
------- -------
Total stockholders' equity 10,763 10,417
------- -------
Total liabilities and stockholders' equity $119,034 $116,224
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
20
<PAGE>
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
For the year ended June 30,
(In thousands, except share data)
2000 1999 1998
<S> <C> <C> <C>
Interest income
Loans $7,115 $6,871 $6,631
Mortgage-backed securities 641 600 98
Investment securities 672 568 739
Interest-bearing deposits and other 43 150 43
----- ----- -----
Total interest income 8,471 8,189 7,511
Interest expense
Deposits 3,495 3,563 3,553
Borrowings 1,583 1,259 600
----- ----- ------
Total interest expense 5,078 4,822 4,153
----- ----- -----
Net interest income 3,393 3,367 3,358
Provision for losses on loans 121 94 156
----- ----- -----
Net interest income after provision
for losses on loans 3,272 3,273 3,202
Other income (loss)
Gain on sale of investment securities - 6 -
Loss on disposition of mobile home loan portfolio (364) - -
Gain (loss) on sale of property acquired in settlement of loans 8 - (1)
Other operating 283 255 198
----- ----- -----
Total other income (loss) (73) 261 197
General, administrative and other expense
Employee compensation and benefits 1,187 1,130 1,087
Occupancy and equipment 141 133 133
Federal deposit insurance premiums 32 47 46
Franchise taxes 124 148 152
Expenses of property acquired in settlement of loans 39 33 35
Data processing 241 213 177
Other operating 434 443 446
----- ----- -----
Total general, administrative and other expense 2,198 2,147 2,076
----- ----- -----
Earnings before income taxes 1,001 1,387 1,323
Federal income taxes
Current 267 407 469
Deferred 66 58 (25)
----- ----- -----
Total federal income taxes 333 465 444
----- ----- -----
NET EARNINGS $ 668 $ 922 $ 879
===== ===== =====
EARNINGS PER SHARE
Basic $.59 $.81 $.70
=== === ===
Diluted $.58 $.78 $.68
=== === ===
</TABLE>
The accompanying notes are an integral part of these statements.
21
<PAGE>
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the year ended June 30,
(In thousands)
2000 1999 1998
<S> <C> <C> <C>
Net earnings $ 668 $ 922 $879
Other comprehensive income (loss), net of tax:
Unrealized holding losses on securities during the period,
net of tax of $(25), $(122) and $(4) during the respective periods (49) (237) (8)
Reclassification adjustment for realized gains
included in earnings, net of tax of $2 in 1999 - (4) -
---- ---- ---
Comprehensive income $ 619 $ 681 $871
==== ==== ===
Accumulated comprehensive loss $(304) $(255) $(14)
==== ==== ===
</TABLE>
The accompanying notes are an integral part of these statements.
22
<PAGE>
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended June 30, 2000, 1999 and 1998
(In thousands, except share data)
Unrealized
losses on
Shares securities
Additional acquired designated
Common paid-in Retained by stock Treasury as available
stock capital earnings benefit plans shares for sale Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1997 $11 $6,827 $7,142 $(890) $(1,971) $ (6) $11,113
Purchase of treasury shares, at cost - - - - (1,580) - (1,580)
Amortization of stock benefit plan expense - 81 - 131 - - 212
Net earnings for the year ended June 30, 1998 - - 879 - - - 879
Cash dividends of $.21 per share - - (271) - - - (271)
Effect of 3-for-2 stock split, including cash
in lieu of fractional shares 6 - (8) - - - (2)
Unrealized losses on securities designated as
available for sale, net of related tax benefits - - - - - (8) (8)
-- ----- ----- ---- ------ ---- ------
Balance at June 30, 1998 17 6,908 7,742 (759) (3,551) (14) 10,343
Purchase of treasury shares, at cost - - - - (638) - (638)
Amortization of stock benefit plan expense - 176 - 149 - - 325
Net earnings for the year ended June 30, 1999 - - 922 - - - 922
Cash dividends of $.24 per share - - (294) - - - (294)
Unrealized losses on securities designated as
available for sale, net of related tax benefits - - - - - (241) (241)
-- ----- ----- ---- ------ ---- ------
Balance at June 30, 1999 17 7,084 8,370 (610) (4,189) (255) 10,417
Purchase of treasury shares, at cost - - - - (219) - (219)
Amortization of stock benefit plan expense - 107 - 149 - - 256
Net earnings for the year ended June 30, 2000 - - 668 - - - 668
Cash dividends of $.26 per share - - (310) - - - (310)
Unrealized losses on securities designated as
available for sale, net of related tax benefits - - - - - (49) (49)
-- ----- ----- ---- ------ ---- ------
Balance at June 30, 2000 $17 $7,191 $8,728 $(461) $(4,408) $(304) $10,763
== ===== ===== ==== ====== ==== ======
</TABLE>
The accompanying notes are an integral part of these statements.
23
<PAGE>
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended June 30,
(In thousands)
2000 1999 1998
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings for the year $ 668 $ 922 $ 879
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Amortization (accretion) of discounts and premiums on
investments and mortgage-backed securities - net 9 47 (53)
Gain on sale of investment securities - 6 -
Amortization of deferred loan origination fees (59) (95) (90)
Depreciation and amortization 52 49 53
Provision for losses on loans 121 94 156
Amortization of stock benefit plan expense 256 325 212
Loss on disposition of mobile home loan portfolio 364 - -
Proceeds from disposition of mobile home loan portfolio 835 - -
(Gain) loss on sale of property acquired in settlement of loans (8) - 1
Federal Home Loan Bank stock dividends (102) (86) (57)
Increase (decrease) in cash due to changes in:
Accrued interest receivable on loans (21) 49 (25)
Accrued interest receivable on mortgage-backed securities 17 (62) 5
Accrued interest receivable on investments and
interest-bearing deposits (32) 147 (91)
Prepaid expenses and other assets (43) 23 (9)
Accrued interest payable (40) 27 52
Other liabilities (4) (34) 77
Federal income taxes
Current (212) (129) 82
Deferred 66 58 (25)
------ ------ ------
Net cash provided by operating activities 1,867 1,341 1,167
Cash flows provided by (used in) investing activities:
Proceeds from maturity of investment securities 135 5,583 5,646
Proceeds from sale of investment securities designated as available-for-sale - 5,002 -
Purchase of investment securities designated as available for sale (2,000) (3,950) (4,992)
Purchase of investment securities designated as held to maturity (55) (1,430) (3,621)
Purchase of mortgage-backed securities designated as available for sale - (16,249) -
Principal repayments on mortgage-backed securities 2,663 4,584 463
Purchase of loans - - (60)
Loan principal repayments 18,013 31,200 20,421
Loan disbursements (23,983) (37,730) (27,732)
Purchase of office premises and equipment (34) (170) (35)
Proceeds from sale of property acquired in settlement of loans 273 179 189
Purchase of Federal Home Loan Bank stock (42) (452) -
------ ------ ------
Net cash used in investing activities (5,030) (13,433) (9,721)
------ ------ ------
Net cash used in operating and investing activities
(subtotal carried forward) (3,163) (12,092) (8,554)
------ ------ ------
</TABLE>
24
<PAGE>
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the year ended June 30,
(In thousands)
2000 1999 1998
<S> <C> <C> <C>
Net cash used in operating and investing activities
(subtotal brought forward) $(3,163) $(12,092) $(8,554)
Cash flows provided by (used in) financing activities:
Net increase (decrease) in deposit accounts (816) 3,999 3,044
Proceeds from Federal Home Loan Bank advances 59,250 12,000 25,950
Repayment of Federal Home Loan Bank advances (55,930) (2,267) (18,202)
Advances by borrowers for taxes and insurance 4 (4) (2)
Purchase of treasury stock (219) (638) (1,580)
Dividends on common stock (310) (294) (273)
------ ------- ------
Net cash provided by financing activities 1,979 12,796 8,937
------ ------- ------
Net increase (decrease) in cash and cash equivalents (1,184) 704 383
Cash and cash equivalents at beginning of year 3,497 2,793 2,410
------ ------- ------
Cash and cash equivalents at end of year $ 2,313 $ 3,497 $ 2,793
====== ======= ======
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Federal income taxes $ 479 $ 537 $ 404
====== ======= ======
Interest on deposits and borrowings $ 5,118 $ 4,795 $ 4,101
====== ======= ======
Supplemental disclosure of noncash investing activities:
Transfers from loans to property acquired in settlement of loans $ 345 $ 179 $ 177
====== ======= ======
Unrealized losses on securities designated as available
for sale, net of related tax benefits $ (49) $ (241) $ (8)
====== ======= ======
</TABLE>
The accompanying notes are an integral part of these statements.
25
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Community Investors Bancorp, Inc. (the "Corporation") is a savings and loan
holding company whose activities are primarily limited to holding the stock
of First Federal Savings and Loan Association of Bucyrus (the
"Association"). The Association conducts a general banking business in
northern Ohio which consists of attracting deposits from the general public
and applying those funds to the origination of loans for residential,
consumer and nonresidential purposes. The Association's profitability is
significantly dependent on net interest income, which is the difference
between interest income generated from interest-earning assets (i.e. loans
and investments) and the interest expense paid on interest-bearing
liabilities (i.e. customer deposits and borrowed funds). Net interest income
is affected by the relative amount of interest-earning assets and
interest-bearing liabilities and the interest received or paid on these
balances. The level of interest rates paid or received by the Association
can be significantly influenced by a number of environmental factors, such
as governmental monetary policy, that are outside of management's control.
The consolidated financial information presented herein has been prepared in
accordance with generally accepted accounting principles ("GAAP") and
general accounting practices within the financial services industry. In
preparing consolidated financial statements in accordance with GAAP,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues
and expenses during the reporting period. Actual results could differ from
such estimates.
The following is a summary of the Corporation's significant accounting
policies which have been consistently applied in the preparation of the
accompanying consolidated financial statements.
1. Principles of Consolidation
The consolidated financial statements include the accounts of the
Corporation and its subsidiary, the Association. All significant
intercompany balances and transactions have been eliminated.
2. Investment Securities and Mortgage-Backed Securities
The Corporation accounts for investment and mortgage-backed securities in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 115
"Accounting for Certain Investments in Debt and Equity Securities." SFAS No.
115 requires that investments be categorized as held-to-maturity, trading,
or available for sale. Securities classified as held-to-maturity are carried
at cost only if the Corporation has the positive intent and ability to hold
these securities to maturity. Trading securities and securities available
for sale are carried at fair value with resulting unrealized gains or losses
recorded to operations or stockholders' equity, respectively.
At June 30, 2000 and 1999, the Corporation's stockholders' equity reflected
net unrealized losses on securities designated as available for sale of
$304,000 and $255,000, respectively.
26
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2. Investment Securities and Mortgage-Backed Securities (continued)
Realized gains or losses on sales of securities are recognized using the
specific identification method.
3. Loans Receivable
Loans receivable are stated at the principal amount outstanding, adjusted
for deferred loan origination fees and the allowance for loan losses.
Interest is accrued as earned unless the collectibility of the loan is in
doubt. Interest on loans that are contractually past due is charged off, or
an allowance is established based on management's periodic evaluation. The
allowance is established by a charge to interest income equal to all
interest previously accrued, and income is subsequently recognized only to
the extent that cash payments are received until, in management's judgment,
the borrower's ability to make periodic interest and principal payments has
returned to normal, in which case the loan is returned to accrual status. If
the ultimate collectibility of the loan is in doubt, in whole or in part,
all payments received on nonaccrual loans are applied to reduce principal
until such doubt is eliminated.
4. Loan Origination Fees
The Association accounts for loan origination fees in accordance with SFAS
No. 91 "Accounting for Nonrefundable Fees and Costs Associated with
Originating or Acquiring Loans and Initial Direct Cost of Leases". Pursuant
to the provisions of SFAS No. 91, origination fees received from loans, net
of direct origination costs, are deferred and amortized to interest income
using the level-yield method, giving effect to actual loan prepayments.
Additionally, SFAS No. 91 generally limits the definition of loan
origination costs to the direct costs attributable to originating a loan,
i.e., principally actual personnel costs. Fees received for loan commitments
that are expected to be drawn upon, based on the Association's experience
with similar commitments, are deferred and amortized over the life of the
loan using the level-yield method. Fees for other loan commitments are
deferred and amortized over the loan commitment period on a straight-line
basis.
5. Allowance for Losses on Loans
It is the Association's policy to provide valuation allowances for estimated
losses on loans based on past loss experience, trends in the level of
delinquent and specific problem loans, adverse situations that may affect
the borrower's ability to repay, the estimated value of any underlying
collateral and current and anticipated economic conditions in its primary
lending areas. When the collection of a loan becomes doubtful, or otherwise
troubled, the Association records a loan valuation allowance equal to the
difference between the fair value of the property securing the loan and the
loan's carrying value. Major loans and major lending areas are reviewed
periodically to determine potential problems at an early date. The allowance
for loan losses is increased by charges to earnings and decreased by
charge-offs (net of recoveries).
27
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
5. Allowance for Losses on Loans (continued)
The Association accounts for impaired loans in accordance with SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan" which requires that
impaired loans be measured based upon the present value of expected future
cash flows discounted at the loan's effective interest rate or, as an
alternative, at the loan's observable market price or fair value of the
collateral. The Association's current procedures for evaluating impaired
loans result in carrying such loans at the lower of cost or fair value.
A loan is defined as impaired under SFAS No. 114 when, based on current
information and events, it is probable that a creditor will be unable to
collect all amounts due according to the contractual terms of the loan
agreement. In applying the provisions of SFAS No. 114, the Association
considers its investment in one-to-four family residential loans and
consumer installment loans to be homogeneous and therefore excluded from
separate identification for evaluation of impairment. With respect to the
Association's investment in multi-family and nonresidential loans, and its
evaluation of impairment thereof, such loans are collateral dependent and as
a result are carried as a practical expedient at the lower of cost or fair
value.
It is the Association's policy to charge off unsecured credits that are more
than ninety days delinquent. Similarly, collateral dependent loans which are
more than ninety days delinquent are considered to constitute more than a
minimum delay in repayment and are evaluated for impairment under SFAS No.
114 at that time.
At June 30, 2000 and 1999, the Association had no loans that would be
defined as impaired under SFAS No. 114.
6. Office Premises and Equipment
Office premises and equipment are carried at cost and include expenditures
which extend the useful lives of existing assets. Maintenance, repairs and
minor renewals are expensed as incurred. For financial reporting,
depreciation and amortization are provided on the straight-line method over
the useful lives of the assets, estimated to be up to fifty years for
buildings, five to fifty years for building improvements, and five to twenty
years for furniture and equipment. An accelerated method is used for tax
reporting purposes.
7. Property Acquired in Settlement of Loans
Property acquired in settlement of loans is carried at the lower of the
loan's unpaid principal balance (cost) or the fair value of collateral less
estimated selling expenses at the date of acquisition. Loss provisions are
recorded if the property's fair value subsequently declines below the amount
determined at the recording date. In determining the lower of cost or fair
value at acquisition, costs relating to development and improvement of
property are capitalized. Costs relating to holding property acquired
through foreclosure, net of rental income, are charged against earnings as
incurred.
28
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
8. Federal Income Taxes
The Corporation accounts for federal income taxes in accordance with the
provisions of SFAS No. 109, "Accounting for Income Taxes". Pursuant to the
provisions of SFAS No. 109, a deferred tax liability or deferred tax asset
is computed by applying the current statutory tax rates to net taxable or
deductible differences between the tax basis of an asset or liability and
its reported amount in the consolidated financial statements that will
result in taxable or deductible amounts in future periods. Deferred tax
assets are recorded only to the extent that the amount of net deductible
temporary differences or carryforward attributes may be utilized against
current period earnings, carried back against prior years earnings, offset
against taxable temporary differences reversing in future periods, or
utilized to the extent of management's estimate of future taxable income. A
valuation allowance is provided for deferred tax assets to the extent that
the value of net deductible temporary differences and carryforward
attributes exceeds management's estimates of taxes payable on future taxable
income. Deferred tax liabilities are provided on the total amount of net
temporary differences taxable in the future.
The Corporation's principal temporary differences between pretax financial
income and taxable income result from different methods of accounting for
deferred loan origination fees and costs, Federal Home Loan Bank stock
dividends, the general loan loss allowance and percentage of earnings bad
debt deductions. Additional temporary differences result from depreciation
computed using accelerated methods for tax purposes.
9. Benefit Plans
The Corporation has an Employee Stock Ownership Plan ("ESOP") which provides
retirement benefits for substantially all full-time employees who have
completed one year of service and have attained the age of 21. The
Corporation accounts for the ESOP in accordance with Statement of Position
("SOP") 93-6, "Employers Accounting for Employee Stock Ownership Plans." SOP
93-6 requires that compensation expense recorded by employers equal the fair
value of ESOP shares allocated to participants during a given fiscal year.
Expense recognized related to the ESOP totaled approximately $117,000,
$153,000 and $150,000 for the fiscal years ended June 30, 2000, 1999 and
1998, respectively.
The Corporation also has a Management Recognition Plan ("MRP"). During
fiscal 1996, the MRP purchased 66,430 shares of the Corporation's common
stock in the open market. As of June 30, 2000, the Corporation had awarded
64,550 shares under the MRP, leaving 1,880 shares available for allocation
at June 30, 2000. Common stock awarded under the MRP vests ratably over a
five year period, commencing with the date of award. A provision of
$114,000, $150,000 and $143,000 related to the MRP was charged to expense
for the fiscal years ended June 30, 2000, 1999 and 1998, respectively.
29
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
10. Earnings Per Share
Basic earnings per share is computed based upon the weighted-average 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 a reduction for 72,591, 85,991 and 99,427
weighted-average unallocated shares held by the ESOP, totaled 1,136,989,
1,144,573 and 1,248,309 for the fiscal years ended June 30, 2000, 1999 and
1998, respectively.
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
1,155,484, 1,184,187 and 1,287,095 for the fiscal years ended June 30, 2000,
1999 and 1998, respectively. Incremental shares related to the assumed
exercise of stock options included in the computation of diluted earnings
per share totaled 18,495, 39,614 and 38,786 for the fiscal years ended June
30, 2000, 1999 and 1998, respectively. Options to purchase 19,521 and 20,871
shares of common stock with a weighted average exercise price of $10.72 and
$10.74 were outstanding at June 30, 2000 and 1999, respectively, but were
excluded from the computation of diluted earnings per share because their
exercise prices were greater than the average market price of the common
shares.
11. Fair Value of Financial Instruments
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments",
requires disclosure of the fair value of financial instruments, both assets
and liabilities whether or not recognized in the consolidated statement of
financial condition, for which it is practicable to estimate that value. For
financial instruments where quoted market prices are not available, fair
values are based on estimates using present value and other valuation
methods.
The methods used are greatly affected by the assumptions applied, including
the discount rate and estimates of future cash flows. Therefore, the fair
values presented may not represent amounts that could be realized in an
exchange for certain financial instruments.
The following methods and assumptions were used by the Corporation in
estimating its fair value disclosures for financial instruments at June 30,
2000 and 1999:
Cash and cash equivalents: The carrying amounts presented in
the consolidated statements of financial condition for cash
and cash equivalents are deemed to approximate fair value.
Investment and mortgage-backed securities: For investment and
mortgage-backed securities, fair value is deemed to equal the
quoted market price.
30
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
11. Fair Value of Financial Instruments (continued)
Loans receivable: The loan portfolio has been segregated into
categories with similar characteristics, such as one-to-four
family residential, multi-family residential and
nonresidential real estate. These loan categories were further
delineated into fixed-rate and adjustable-rate loans. The fair
values for the resultant loan categories were computed via
discounted cash flow analysis, using current interest rates
offered for loans with similar terms to borrowers of similar
credit quality. For loans on deposit accounts and consumer and
other loans, fair values were deemed to equal the historic
carrying values. The historical carrying amount of accrued
interest on loans is deemed to approximate fair value.
Federal Home Loan Bank stock: The carrying amount presented in
the consolidated statements of financial condition is deemed
to approximate fair value.
Deposits: The fair value of NOW accounts, passbook accounts
and advances by borrowers are deemed to approximate the
amounts payable on demand. Fair values for fixed-rate
certificates of deposit have been estimated using a discounted
cash flow calculation using the interest rates currently
offered for deposits of similar remaining maturities.
Advances from Federal Home Loan Bank: The fair value of
advances is estimated using the rates currently offered for
similar advances of similar remaining maturities or, when
available, quoted market prices.
Commitments to extend credit: For fixed-rate and
adjustable-rate loan commitments, the fair value estimate
considers the difference between current levels of interest
rates and committed rates. The difference between the fair
value and notional amount of outstanding loan commitments at
June 30, 2000 and 1999 was not material.
31
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
11. Fair Value of Financial Instruments (continued)
Based on the foregoing methods and assumptions, the carrying value and fair
value of the Corporation's financial instruments at June 30 are as follows:
<TABLE>
<CAPTION>
2000 1999
Carrying Fair Carrying Fair
value value value value
(In thousands)
<S> <C> <C> <C> <C>
Financial assets
Cash and cash equivalents $ 2,313 $ 2,313 $ 3,497 $ 3,497
Investment securities 9,389 9,329 7,511 7,494
Mortgage-backed securities 9,869 9,845 12,583 12,542
Loans receivable 94,366 85,853 89,922 90,720
Federal Home Loan Bank stock 1,507 1,507 1,363 1,363
------- ------- ------- -------
$117,444 $108,847 $114,876 $115,616
======= ======= ======= =======
Financial liabilities
Deposits $ 79,138 $ 79,268 $ 79,954 $ 80,197
Advances from the Federal Home Loan Bank 28,611 28,381 25,291 24,998
Advances by borrowers for taxes and insurance 5 5 1 1
------- ------- ------- -------
$107,754 $107,654 $105,246 $105,196
======= ======= ======= =======
</TABLE>
12. Advertising
Advertising costs are expensed when incurred. Advertising expense totaled
$63,000, $65,000 and $65,000 for the fiscal years ended June 30, 2000, 1999
and 1998, respectively.
13. Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash
and due from banks, federal funds sold and interest-bearing deposits due
from other financial institutions with original maturities of less than
ninety days.
14. Reclassifications
Certain prior year amounts have been reclassified to conform to the 2000
consolidated financial statement presentation.
32
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES
Carrying values and estimated fair values of investment securities held to
maturity at June 30 are summarized as follows:
<TABLE>
<CAPTION>
2000 1999
Estimated Estimated
Carrying fair Carrying fair
value value value value
(In thousands)
<S> <C> <C> <C> <C>
U. S. Government and
agency obligations $2,718 $2,681 $2,690 $2,687
Corporate debt obligations 513 490 515 501
Municipal obligations 385 385 459 459
----- ----- ----- -----
$3,616 $3,556 $3,664 $3,647
===== ===== ===== =====
</TABLE>
At June 30, 2000, the cost carrying value of the Corporation's investment
securities exceeded the fair value by $60,000, comprised of $9,000 in gross
unrealized gains and $69,000 in gross unrealized losses. At June 30, 1999,
the cost carrying value of the Corporation's investment securities exceeded
the fair value by $17,000, comprised of $28,000 in gross unrealized gains
and $45,000 in gross unrealized losses.
The amortized cost, gross unrealized gains, gross unrealized losses, and
estimated fair values of investment securities designated as available for
sale at June 30 are summarized as follows:
<TABLE>
<CAPTION>
2000
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
(In thousands)
<S> <C> <C> <C> <C>
U.S. Government agency obligations $5,463 $ 2 $156 $5,309
Mutual funds 488 - 24 464
----- --- --- -----
$5,951 $ 2 $180 $5,773
===== === === =====
1999
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
(In thousands)
U.S. Government agency obligations $3,474 $ - $ 96 $3,378
Mutual funds 488 - 19 469
----- --- --- -----
$3,962 $ - $115 $3,847
===== === === =====
</TABLE>
33
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES (continued)
The amortized cost and estimated fair value of investment securities
designated as held to maturity, by contractual term to maturity, at June 30
are shown below:
<TABLE>
<CAPTION>
2000 1999
Estimated Estimated
Amortized fair Amortized fair
cost value cost value
(In thousands)
<S> <C> <C> <C> <C>
Due in three years or less $2,645 $2,614 $1,928 $1,949
Due after three years through
five years 500 486 815 791
Due after five years 471 456 921 907
----- ----- ----- -----
$3,616 $3,556 $3,664 $3,647
===== ===== ===== =====
</TABLE>
The amortized cost and estimated fair value of U.S. Government agency
securities designated as available for sale at June 30, by contractual terms
to maturity, are shown below:
<TABLE>
<CAPTION>
2000 1999
Estimated Estimated
Amortized fair Amortized fair
cost value cost value
(In thousands)
<S> <C> <C> <C> <C>
Due after three years through
five years $2,449 $2,351 $2,449 $2,387
Due after five years 3,014 3,058 1,025 991
----- ----- ----- -----
$5,463 $5,309 $3,474 $3,378
===== ===== ===== =====
</TABLE>
Gross realized gains on sales of available-for-sale investment securities
were approximately $6,000 during the year ended June 30, 1999.
At June 30, 2000 and 1999, investment securities with an aggregate book
value of $2.8 million and $1.8 million, respectively, were pledged as
collateral for public deposits.
34
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES (continued)
The amortized cost, gross unrealized gains, gross unrealized losses and
estimated fair values of mortgage-backed securities at June 30, 2000 and
1999 are summarized as follows:
<TABLE>
<CAPTION>
2000
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
Available for sale: (In thousands)
<S> <C> <C> <C> <C>
Government National
Mortgage Association
participation certificates $ 4,602 $ - $ 68 $4,534
Federal National
Mortgage Association
participation certificates 4,783 - 214 4,569
------ --- --- -----
Total mortgage-backed
securities available for sale 9,385 - 282 9,103
Held to maturity:
Federal Home Loan
Mortgage Corporation
participation certificates 93 1 - 94
Government National
Mortgage Association
participation certificates 223 1 - 224
Federal National
Mortgage Association
participation certificates 450 - 26 424
------ --- --- -----
Total mortgage-backed
securities held to maturity 766 2 26 742
------ --- --- -----
Total mortgage-backed securities $10,151 $ 2 $308 $9,845
====== === === =====
</TABLE>
35
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES (continued)
<TABLE>
<CAPTION>
1999
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
Available for sale: (In thousands)
<S> <C> <C> <C> <C>
Government National
Mortgage Association
participation certificates $ 6,348 $ - $100 $ 6,248
Federal National
Mortgage Association
participation certificates 5,593 - 171 5,422
------ --- --- ------
Total mortgage-backed
securities available for sale 11,941 - 271 11,670
Held to maturity:
Federal Home Loan
Mortgage Corporation
participation certificates 118 2 - 120
Government National
Mortgage Association
participation certificates 276 2 - 278
Federal National
Mortgage Association
participation certificates 519 - 45 474
------ --- --- ------
Total mortgage-backed
securities held to maturity 913 4 45 872
------ --- --- ------
Total mortgage-backed securities $12,854 $ 4 $316 $12,542
====== === === ======
</TABLE>
The amortized cost of mortgage-backed securities designated as available for
sale by contractual terms to maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may generally
prepay obligations without prepayment penalties.
<TABLE>
<CAPTION>
June 30,
2000 1999
(In thousands)
<S> <C> <C>
Due in five to ten years $3,775 $ 4,576
Due after twenty years 5,610 7,365
----- ------
$9,385 $11,941
===== ======
</TABLE>
36
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES (continued)
The amortized cost of mortgage-backed securities designated as held to
maturity, by contractual terms to maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may
generally prepay obligations without prepayment penalties.
<TABLE>
<CAPTION>
June 30,
2000 1999
(In thousands)
<S> <C> <C>
Due within three years $ 2 $ 16
Due in three to five years - 1
Due in five to ten years 66 77
Due in ten to twenty years 42 32
Due after twenty years 656 787
--- ---
$766 $913
=== ===
</TABLE>
NOTE C - LOANS RECEIVABLE
The composition of the loan portfolio at June 30 is as follows:
<TABLE>
<CAPTION>
2000 1999
(In thousands)
Residential real estate
<S> <C> <C>
One-to-four family $75,358 $75,600
Multi-family 1,202 399
Construction 801 1,374
Nonresidential real estate and land 7,990 3,733
Mobile home loans 64 1,484
Consumer and other 10,548 9,520
------ ------
95,963 92,110
Less:
Undisbursed portion of loans in process 801 1,289
Deferred loan origination fees 312 308
Allowance for loan losses 484 591
------ ------
$94,366 $89,922
====== ======
</TABLE>
The Association's lending efforts have historically focused on one-to-four
family and multi-family residential real estate loans, which comprise
approximately $76.6 million, or 81%, of the total loan portfolio at June 30,
2000 and $76.0 million, or 85%, of the total loan portfolio at June 30,
1999. Generally, such loans have been underwritten on the basis of no more
than an 80% loan-to-value ratio, which has historically provided the
Association with adequate collateral coverage in the event of default.
Nevertheless, the Association, as with any lending institution, is subject
to the risk that real estate values could deteriorate in its primary lending
area of northern Ohio, thereby impairing collateral values. However,
management is of the belief that residential real estate values in the
Association's primary lending area are presently stable.
37
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE C - LOANS RECEIVABLE (continued)
In the normal course of business, the Association has made loans to some of
its directors, officers and employees. In the opinion of management, such
loans are consistent with sound lending practices and are within applicable
regulatory lending limitations. Loans to directors and officers totaled
approximately $1.3 million and $1.2 million at June 30, 2000 and 1999,
respectively. During the year ended June 30, 2000, there were $470,000 in
loans disbursed to directors and officers, while principal repayments of
$305,000 were received.
NOTE D - ALLOWANCE FOR LOAN LOSSES
The activity in the allowance for loan losses is summarized as follows for
the years ended June 30:
<TABLE>
<CAPTION>
2000 1999 1998
(In thousands)
<S> <C> <C> <C>
Balance at beginning of year $591 $563 $478
Provision for loan losses 121 94 156
Charge-offs of loans (229) (74) (87)
Recoveries 1 8 16
--- --- ---
Balance at end of year $484 $591 $563
=== === ===
</TABLE>
As of June 30, 2000, the Association's allowance for loan losses was
comprised of a general loss allowance of $412,000, which is includible as a
component of regulatory risk-based capital, and a specific loss allowance of
$72,000.
Nonperforming and nonaccrual loans totaled approximately $449,000, $912,000
and $600,000 at June 30, 2000, 1999 and 1998, respectively.
During the years ended June 30, 2000, 1999 and 1998, interest income of
approximately $41,000, $65,000 and $44,000, respectively, would have been
recognized had nonperforming loans been performing in accordance with their
contractual terms.
NOTE E - OFFICE PREMISES AND EQUIPMENT
Office premises and equipment at June 30 are comprised of the following:
<TABLE>
<CAPTION>
2000 1999
(In thousands)
<S> <C> <C>
Land and improvements $ 93 $ 93
Office buildings and improvements 646 639
Furniture, fixtures and equipment 331 311
----- -----
1,070 1,043
Less accumulated depreciation and amortization 378 323
----- -----
$ 692 $ 720
===== =====
</TABLE>
38
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE F - DEPOSITS
Deposits consist of the following major classifications at June 30:
<TABLE>
<CAPTION>
Deposit type and weighted-
average interest rate 2000 1999
(In thousands)
<S> <C> <C>
NOW accounts
2000 - 1.92% $10,315
1999 - 2.03% $10,058
Passbook
2000 - 2.97% 16,070
1999 - 2.98% 16,263
------ ------
Total demand, transaction and
passbook deposits 26,385 26,321
Certificates of deposit
Original maturities of:
Less than 12 months
2000 - 4.48% 6,271
1999 - 4.61% 7,600
12 months to 24 months
2000 - 4.03% 26,442
1999 - 5.15% 24,432
30 months to 36 months
2000 - 5.47% 4,303
1999 - 5.69% 4,781
More than 36 months
2000 - 5.74% 3,225
1999 - 5.95% 3,920
Individual retirement accounts
2000 - 5.50% 12,512
1999 - 5.65% 12,900
------ ------
Total certificates of deposit 52,753 53,633
------ ------
Total deposit accounts $79,138 $79,954
====== ======
</TABLE>
At June 30, 2000 and 1999, the Association had certificate of deposit accounts
with balances in excess of $100,000 totaling $4.5 million and $4.8 million,
respectively.
39
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE F - DEPOSITS (continued)
Interest expense on deposits for the year ended June 30 is summarized as
follows:
<TABLE>
<CAPTION>
2000 1999 1998
(In thousands)
<S> <C> <C> <C>
Passbook $ 427 $ 445 $ 503
NOW accounts 273 272 226
Certificates of deposit 2,795 2,846 2,824
----- ----- -----
$3,495 $3,563 $3,553
===== ===== =====
</TABLE>
Maturities of outstanding certificates of deposit at June 30 are summarized
as follows:
<TABLE>
<CAPTION>
2000 1999
(In thousands)
<S> <C> <C>
Less than one year $37,050 $40,592
One to three years 13,357 11,563
Over three years 2,346 1,478
------ ------
$52,753 $53,633
====== ======
</TABLE>
NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK
Advances from the Federal Home Loan Bank, collateralized at June 30, 2000 by
pledges of certain residential mortgage loans totaling $42.9 million, and
the Association's investment in Federal Home Loan Bank stock, are summarized
as follows:
<TABLE>
<CAPTION>
Maturing year
Interest rate ending June 30, 2000 1999
(Dollars in thousands)
<S> <C> <C> <C>
5.00 - 5.78% 2000 $ - $24,500
5.92 - 6.78% 2001 14,050 -
6.52 - 6.60% 2002 14,000 -
6.20 - 7.05% 2008 561 791
------ ------
$28,611 $25,291
====== ======
Weighted-average interest rate 6.33% 5.28%
==== ====
</TABLE>
40
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE H - FEDERAL INCOME TAXES
Federal income taxes differ from the amounts computed at the statutory
corporate tax rate as follows for the years ended June 30:
<TABLE>
<CAPTION>
2000 1999 1998
(In thousands)
<S> <C> <C> <C>
Federal income taxes computed at
statutory rate $340 $472 $450
Decrease in taxes resulting from:
Other (primarily tax-exempt interest) (7) (7) (6)
--- --- ---
Federal income tax provision per consolidated
statements of earnings $333 $465 $444
=== === ===
</TABLE>
The composition of the Corporation's net deferred tax asset at June 30 is as
follows:
<TABLE>
<CAPTION>
2000 1999
(In thousands)
<S> <C> <C>
Taxes (payable) refundable on temporary
differences at estimated corporate tax rate:
Deferred tax assets:
General loan loss allowance $140 $161
Deferred loan origination fees 106 105
Unrealized losses on securities designated as
available for sale 156 131
Stock benefit plan 21 27
Other 6 -
--- ---
Total deferred tax assets 429 424
Deferred tax liabilities:
Percentage of earnings bad debt deduction (6) (7)
Federal Home Loan Bank stock dividends (196) (161)
Book/tax depreciation (59) (48)
--- ---
Total deferred tax liabilities (261) (216)
--- ---
Net deferred tax asset $168 $208
=== ===
</TABLE>
41
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE H - FEDERAL INCOME TAXES (continued)
The Association was allowed a special bad debt deduction, generally limited
to 8% of otherwise taxable income, subject to certain limitations based on
aggregate loans and deposit account balances at the end of the year. If the
amounts that qualified as deductions for federal income taxes are later used
for purposes other than bad debt losses, including distributions in
liquidation, such distributions will be subject to federal income taxes at
the then current corporate income tax rate. Retained earnings at June 30,
2000, includes approximately $1.2 million for which federal income taxes
have not been provided. The amount of unrecognized deferred tax liability
relating to the cumulative bad debt deduction at June 30, 2000 is
approximately $400,000. The Association is required to recapture as taxable
income approximately $26,000 of its tax bad debt reserve, which represents
the post-1987 additions to the reserve, and will be 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
began to amortize the recapture of the bad debt reserve into taxable income
over a six year period in fiscal 1998.
NOTE I - LOAN COMMITMENTS
The Association is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers, including commitments to extend credit. Such commitments involve,
to varying degrees, elements of credit and interest-rate risk in excess of
the amount recognized in the consolidated statement of financial condition.
The contract or notional amounts of the commitments reflect the extent of
the Association's involvement in such financial instruments.
The Association's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend credit
is represented by the contractual notional amount of those instruments. The
Association uses the same credit policies in making commitments and
conditional obligations as those utilized for on-balance-sheet instruments.
At June 30, 2000, the Association had outstanding commitments of
approximately $519,000 to originate loans. Additionally, the Association was
obligated under unused lines of credit totaling $2.2 million. In the opinion
of management, all loan commitments equaled or exceeded prevalent market
interest rates as of June 30, 2000, and will be funded from normal cash flow
from operations.
42
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE J - REGULATORY CAPITAL
The Association is subject to the regulatory capital requirements of the
Office of Thrift Supervision (the "OTS"). Failure to meet minimum capital
requirements can initiate certain mandatory - and possibly additional
discretionary - actions by regulators that, if undertaken, could have a
direct material effect on the Association's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Association must meet specific capital guidelines
that involve quantitative measures of the Association's assets, liabilities,
and certain off-balance-sheet items as calculated under regulatory
accounting practices.
The Association's capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings,
and other factors. Such minimum capital standards generally require the
maintenance of regulatory capital sufficient to meet each of three tests,
hereinafter described as the tangible capital requirement, the core capital
requirement and the risk-based capital requirement. The tangible capital
requirement provides for minimum tangible capital (defined as stockholders'
equity less all intangible assets) equal to 1.5% of adjusted total assets.
The core capital requirement provides for minimum core capital (tangible
capital plus certain forms of supervisory goodwill and other qualifying
intangible assets) generally equal to 4.0% of adjusted total assets except
for those associations with the highest examination rating and acceptable
levels of risk. The risk-based capital requirement provides for the
maintenance of core capital plus general loss allowances equal to 8.0% of
risk-weighted assets. In computing risk-weighted assets, the Association
multiplies the value of each asset on its statement of financial condition
by a defined risk-weighting factor, e.g., one-to-four family residential
loans carry a risk-weighted factor of 50%.
During the 2000 fiscal year, the Association was notified from its regulator
that it was categorized as "well-capitalized" under the regulatory framework
for prompt corrective action. To be categorized as "well-capitalized" the
Association must maintain minimum capital ratios as set forth in the
following tables.
43
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE J - REGULATORY CAPITAL (continued)
As of June 30, 2000 and 1999, management believes that the Association met
all capital adequacy requirements to which it was subject.
<TABLE>
<CAPTION>
2000
To be "well-
capitalized" under
For capital prompt corrective
Actual adequacy purposes action provisions
Amount Ratio Amount Ratio Amount Ratio
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Risk-based capital $10,177 15.8% =>$5,148 =>8.0% =>$6,435 =>10.0%
Core capital $ 9,765 8.2% =>$4,766 =>4.0% =>$7,150 => 6.0%
Tangible capital $ 9,765 8.2% =>$1,787 =>1.5% =>$5,958 => 5.0%
</TABLE>
<TABLE>
<CAPTION>
1999
To be "well-
capitalized" under
For capital prompt corrective
Actual adequacy purposes action provisions
Amount Ratio Amount Ratio Amount Ratio
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Risk-based capital $8,339 13.8% =>$4,828 =>8.0% =>$6,035 =>10.0%
Core capital $7,866 6.8% =>$4,647 =>4.0% =>$6,970 => 6.0%
Tangible capital $7,866 6.8% =>$1,743 =>1.5% =>$5,808 => 5.0%
</TABLE>
The Corporation's management believes that, under the current regulatory
capital regulations, the Association will continue to meet its minimum
capital requirements in the foreseeable future. However, events beyond the
control of the management, such as increased interest rates or a downturn in
the economy in the Association's market area, could adversely affect future
earnings and, consequently, the ability to meet future minimum regulatory
capital requirements.
44
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE K - CONDENSED FINANCIAL STATEMENTS OF COMMUNITY INVESTORS BANCORP, INC.
The following condensed financial statements summarize the financial
position of Community Investors Bancorp, Inc. as of June 30, 2000 and 1999,
and the results of its operations and its cash flows for the years ended
June 30, 2000, 1999 and 1998.
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
STATEMENTS OF FINANCIAL CONDITION
June 30,
(In thousands)
ASSETS 2000 1999
<S> <C> <C>
Non interest-bearing deposits in First Federal Savings and
Loan Association of Bucyrus $ 834 $ 2,327
Interest-bearing deposits in other financial institutions - 21
Loan receivable from ESOP 347 403
Investment in First Federal Savings and Loan Association of Bucyrus 9,461 7,611
Prepaid expenses and other 204 151
------ ------
Total assets $10,846 $10,513
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and other liabilities $ 83 $ 96
Stockholders' equity
Common stock and additional paid-in capital 7,208 7,101
Retained earnings 8,728 8,370
Shares acquired by stock benefit plans (461) (610)
Treasury shares - at cost (4,408) (4,189)
Unrealized losses on securities designated as available for sale,
net of related tax benefits (304) (255)
------ ------
Total stockholders' equity 10,763 10,417
------ ------
Total liabilities and stockholders' equity $10,846 $10,513
====== ======
</TABLE>
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
STATEMENTS OF EARNINGS
Year ended June 30,
(In thousands)
2000 1999 1998
<S> <C> <C> <C>
Revenue
Interest income $ 28 $ 31 $ 56
Equity in earnings of First Federal Savings and Loan
Association of Bucyrus 770 1,046 976
--- ----- -----
Total revenue 798 1,077 1,032
General, administrative and other expenses 183 219 204
--- ----- -----
Earnings before income tax credits 615 858 828
Federal income tax credits (53) (64) (51)
--- ----- -----
NET EARNINGS $668 $ 922 $ 879
=== ===== =====
</TABLE>
45
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE K - CONDENSED FINANCIAL STATEMENTS OF COMMUNITY INVESTORS BANCORP, INC.
(continued)
Community Investors Bancorp, Inc.
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Year ended June 30,
(In thousands)
2000 1999 1998
<S> <C> <C> <C>
Cash flows provided by (used in) operating activities:
Net earnings for the year $ 668 $ 922 $ 879
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
(Undistributed earnings of) excess distributions from
consolidated subsidiary (1,770) (1,046) 3,913
Amortization of stock benefit plan expense 114 153 104
Increases (decreases) in cash due to changes in:
Prepaid expenses and other assets (53) (75) (51)
Other liabilities (13) (1) 64
Other 13 (1) (18)
----- ----- -----
Net cash provided by (used in) operating activities (1,041) (48) 4,891
Cash flows provided by investing activities:
Repayments on ESOP loan 56 51 18
Cash flows used in financing activities:
Dividends on common stock (310) (294) (271)
Purchase of treasury stock (219) (638) (1,580)
----- ----- -----
Net cash used in financing activities (529) (932) (1,851)
----- ----- -----
Net increase (decrease) in cash and cash equivalents (1,514) (929) 3,058
Cash and cash equivalents at beginning of year 2,348 3,277 219
----- ----- -----
Cash and cash equivalents at end of year $ 834 $2,348 $3,277
===== ===== =====
</TABLE>
46
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE K - CONDENSED FINANCIAL STATEMENTS OF COMMUNITY INVESTORS BANCORP, INC.
(continued)
The Association is subject to regulations imposed by the OTS regarding the
amount of capital distributions payable by the Association to the
Corporation. Generally, the Association's payment of dividends is limited,
without prior OTS approval, to net income for the current calendar year plus
the two preceding calendar years, less capital distributions paid over the
comparable time period. Insured institutions are required to file an
application with the OTS for capital distributions in excess of this
limitation. At June 30, 2000, the Association was required to obtain OTS
approval with respect to future dividend distributions to the Corporation.
NOTE L - STOCK OPTION PLAN
During fiscal 1996, the Board of Directors adopted a Stock Option Plan that
provided for the issuance of 166,084 shares of authorized, but unissued
shares of common stock at the fair value at the date of grant.
The Corporation accounts for the stock option plan in accordance with SFAS
No. 123, "Accounting for Stock-Based Compensation," which contains a fair
value-based method for valuing stock-based compensation at the grant date.
Compensation is then recognized over the service period, which is usually
the vesting period. Alternatively, SFAS No. 123 permits entities to continue
to account for stock options and similar equity instruments under Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees." Entities that continue to account for stock options using APB
Opinion No. 25 are required to make pro forma disclosures of net earnings
and earnings per share, as if the fair value-based method of accounting
defined in SFAS No. 123 had been applied.
The Corporation applies APB Opinion No. 25 and related Interpretations in
accounting for its stock option plan. Accordingly, no compensation cost has
been recognized for the plan. Had compensation cost for the Corporation's
stock option plan been determined based on the fair value at the grant dates
for awards under the plan consistent with the accounting method utilized in
SFAS No. 123, the Corporation's net earnings and earnings per share would
have been reduced to the pro forma amounts indicated below:
47
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE L - STOCK OPTION PLAN (continued)
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C> <C>
Net earnings (In thousands) As reported $668 $922 $879
=== === ===
Pro-forma $668 $922 $863
=== === ===
Earnings per share
Basic As reported $.59 $.81 $.70
=== === ===
Pro-forma $.59 $.81 $.69
=== === ===
Diluted As reported $.58 $.78 $.68
=== === ===
Pro-forma $.58 $.78 $.67
=== === ===
</TABLE>
The fair value of each option grant was estimated on the date of grant using
the modified Black-Scholes options-pricing model with the following
weighted-average assumptions used for grants in 1998; dividend yield of
7.0%, expected volatility of 20.0%, risk-free interest rate of 6.5% and
expected lives of ten years.
A summary of the status of the Corporation's stock option plan as of June
30, 2000, 1999 and 1998, and changes during the periods ending on those
dates is presented below:
<TABLE>
<CAPTION>
2000 1999 1998
Weighted- Weighted- Weighted-
average average average
exercise exercise exercise
Shares price Shares price Shares price
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 115,274 $7.67 117,074 $7.67 96,653 $ 7.00
Granted - - - - 21,321 10.73
Exercised - - (540) 6.61 (180) 9.92
Forfeited (450) - (1,260) - (720) -
------- ---- ------- ---- ------- -----
Outstanding at end of year 114,824 $7.67 115,274 $7.67 117,074 $ 7.67
======= ==== ======= ==== ======= =====
Options exercisable at year-end 81,892 $7.34 59,198 $6.95 36,322 $ 6.95
======= ==== ======= ==== ======= =====
Weighted-average fair value of
options granted during the year N/A N/A $ 1.20
=== === =====
</TABLE>
48
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2000, 1999 and 1998
NOTE L - STOCK OPTION PLAN (continued)
The following information applies to options outstanding at June 30, 2000:
<TABLE>
<CAPTION>
<S> <C>
Number outstanding 114,824
Range of exercise prices $6.61 - $10.83
Weighted-average exercise price $7.67
Weighted-average remaining contractual life 5.9 years
</TABLE>
49
<PAGE>
Board of Directors Executive Officers
John W. Kennedy John W. Kennedy
President and Chief Executive President and Chief Executive
Officer of First Federal Officer
Savings and Loan Association
Brian R. Buckley
Dale C. Hoyles Vice President
Chairman of the Board, Retired
Senior Vice President/Treasurer Phillip W. Gerber
of Centurion Financial Vice President
David M. Auck Robert W. Siegel
Vice Chairman of the Board Assistant Vice President and Treasurer
Co-owner Auck Dostal Agency
Assistant Vice Presidents
Philip E. Harris Jane A. Cremeans
Plant Manager, Distribution Timothy G. Heydinger
Center - The Timken Company Kimberly B. Roe
John D. Mizick General Counsel
Certified Public Accountant Cory and Cory
Mizick, Miller & Company, Inc. 221 S. Poplar Street
Bucyrus, Ohio 44820
D. Brent Fissel
Dentist Special Legal Counsel
Elias, Matz, Tiernan & Herrick, LLP
Michael J. Romanoff 734 15th Street, N.W., 12th Floor
Owner Romanoff Jewelers Washington, DC 20005
Co-owner Val-Castings, Inc.
and Allure Designs, Inc. Transfer Agent and Registrar
Registrar & Transfer Company
Honorary Directors 10 Commerce Drive
John T. Bridges Cranford, NJ 07016
Retired Plant Manager -
General Electric Company Independent Auditors
Grant Thornton LLP
Richard L. Cory Suite 900
Attorney at law - Cory and Cory 625 Eden Park Drive
Cincinnati, Ohio 45202
Herbert Kraft
Farmer and Retired Salesman - Investment Banker & Financial Advisor
Moorman Feed Sales Keefe, Bruyette & Woods, Inc.
211 Bradenton
Thomas P. Moore Dublin, Ohio 43017
Retired President and General Manager -
Brokensword Broadcasting Co. Major Market Makers
McDonald & Company Sec., Inc.
Friedman, Billings, Ramsey & Company
Sweney, Cartwright & Company
50
<PAGE>
ANNUAL REPORT ON FORM 10-KSB
A copy of Community Investors Bancorp, Inc.'s Annual Report on Form 10-KSB, as
filed with the Securities and Exchange Commission, is available without charge
to stockholders of record by writing to:
Brian R. Buckley
Vice President
Community Investors Bancorp, Inc.
P.O. Box 749
119 S. Sandusky Avenue
Bucyrus, Ohio 44820
BRANCH ADDRESSES AND MANAGERS
Main Office
P.O. Box 749
119 S. Sandusky Avenue
Bucyrus, Ohio 44820
South Branch - Dieann Frost New Washington - Sharon Carman
Sandusky Avenue & Marion Road 115 S. Kibler Street
Bucyrus, Ohio 44820 New Washington, Ohio 44854
Automated Teller Machine
1661 Marion Road
Bucyrus, Ohio 44820
STOCKHOLDER SERVICES
Registrar and Transfer serves as primary transfer agent and as dividend
disbursing agent for Community Inventors Bancorp, Inc. shares. Communications
regarding changes of address, transfer of shares, lost certificates and
dividends should be sent to:
Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016
1 (800) 525-7686
51
