FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
-------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _______________
Commission File No. 33-84132
COMMUNITY INVESTORS BANCORP, INC.
(Exact name of registrant as specified in its charter)
Ohio 34-1779309
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
119 South Sandusky Avenue
Bucyrus, Ohio 44820
(Address of principal (Zip Code)
executive office)
Issuers' telephone number, including area code: (419) 562-7055
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
As of February 11, 2000, the latest practicable date, 1,207,288 shares of the
registrant's common stock, $.01 par value, were issued and outstanding.
Page 1 of 17 pages
<PAGE>
INDEX
Page
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition 3
Consolidated Statements of Earnings 4
Consolidated Statements of Comprehensive Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
PART II - OTHER INFORMATION 16
SIGNATURES 17
2
<PAGE>
<TABLE>
Community Investors Bancorp, Inc.
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
December 31, June 30,
ASSETS 1999 1999
<S> <C> <C>
Cash and due from banks $ 3,257 $ 2,142
Federal funds sold 120 724
Interest-bearing deposits in other financial institutions - 631
------- -------
Cash and cash equivalents 3,377 3,497
Investment securities available for sale - at market 5,284 3,847
Investment securities held to maturity - at amortized cost, approximate market
value of $3,492 and $3,647 as of December 31, 1999 and June 30, 1999 3,592 3,664
Mortgage-backed securities available for sale - at market 10,170 11,670
Mortgage-backed securities held to maturity - at amortized cost, approximate market
value of $827 and $872 as of December 31, 1999 and June 30, 1999 841 913
Loans receivable - net 94,091 89,922
Property acquired in settlement of loans 212 50
Office premises and equipment - at depreciated cost 703 720
Federal Home Loan Bank stock - at cost 1,454 1,363
Accrued interest receivable on loans 87 65
Accrued interest receivable on mortgage-backed securities 59 69
Accrued interest receivable on investments and interest-bearing deposits 96 86
Prepaid expenses and other assets 68 127
Prepaid federal income taxes - 23
Deferred federal income taxes 242 208
------- -------
Total assets $120,276 $116,224
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 80,179 $ 79,954
Advances from the Federal Home Loan Bank 28,591 25,291
Advances by borrowers for taxes and insurance 5 1
Accrued interest payable 394 369
Other liabilities 199 192
------- -------
Total liabilities 109,368 105,807
Stockholders' equity
Preferred stock, 1,000,000 shares authorized, no par value; no shares issued - -
Common stock, 4,000,000 shares authorized, $.01 par value; 1,660,850 shares issued 17 17
Additional paid-in capital 7,118 7,084
Retained earnings, restricted 8,686 8,370
Shares acquired by stock benefit plans (532) (610)
Less 445,166 and 442,166 shares of treasury stock - at cost (4,214) (4,189)
Accumulated other comprehensive income - unrealized losses on securities
designated as available for sale, net of related tax effects (167) (255)
------- -------
Total stockholders' equity 10,908 10,417
------- -------
Total liabilities and stockholders' equity $120,276 $116,224
======= =======
</TABLE>
3
<PAGE>
<TABLE>
Community Investors Bancorp, Inc.
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share data)
Six months ended Three months ended
December 31, December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Interest income
Loans $3,523 $3,436 $1,775 $1,706
Mortgage-backed securities 330 228 162 198
Investment securities 311 309 162 116
Interest-bearing deposits and other 24 107 15 50
----- ----- ----- -----
Total interest income 4,188 4,080 2,114 2,070
Interest expense
Deposits 1,758 1,819 881 907
Borrowings 739 595 395 340
----- ----- ----- -----
Total interest expense 2,497 2,414 1,276 1,247
----- ----- ----- -----
Net interest income 1,691 1,666 838 823
Provision for losses on loans 39 52 17 26
----- ----- ----- -----
Net interest income after provision
for losses on loans 1,652 1,614 821 797
Other income
Gain on sale of investment securities - 6 - 6
Gain (loss) on sale of repossessed assets 14 (2) 12 (2)
Other operating 148 125 80 68
----- ----- ----- -----
Total other income 162 129 92 72
General, administrative and other expense
Employee compensation and benefits 563 570 294 287
Occupancy and equipment 67 64 33 34
Federal deposit insurance premiums 24 23 12 12
Franchise taxes 65 79 33 38
Expenses of property acquired in settlement of loans 26 14 18 10
Data processing 120 100 61 49
Other operating 236 234 127 128
----- ----- ----- -----
Total general, administrative and other expense 1,101 1,084 578 558
----- ----- ----- -----
Earnings before income taxes 713 659 335 311
Federal income taxes
Current 317 227 151 131
Deferred (79) (8) (39) (27)
----- ----- ------ -----
Total federal income taxes 238 219 112 104
----- ----- ------ -----
NET EARNINGS $ 475 $ 440 $ 223 $ 207
===== ===== ====== =====
EARNINGS PER SHARE
Basic $.42 $.38 $.20 $.18
=== === === ===
Diluted $.41 $.37 $.19 $.18
=== === === ===
</TABLE>
4
<PAGE>
<TABLE>
Community Investors Bancorp, Inc.
<CAPTION>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Six months ended Three months ended
December 31, December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net earnings $ 475 $ 440 $ 223 $ 207
Other comprehensive income, net of tax:
Unrealized holding gains (losses) on securities during the period,
net of tax $45, $49, $9 and $45 for the respective periods. 88 (95) (18) (88)
Reclassification adjustment for realized gains
included in earnings, net of tax of $2 - (4) - (4)
---- ---- ---- ----
Comprehensive income $ 563 $ 341 $ 205 $ 115
==== ==== ==== ====
Accumulated comprehensive loss $(167) $(113) $(167) $(113)
==== ==== ==== ====
</TABLE>
5
<PAGE>
<TABLE>
Community Investors Bancorp, Inc.
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended December 31,
(In thousands)
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 475 $ 440
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Amortization of discounts and premiums on loans,
investments and mortgage-backed securities - net 14 (5)
Amortization of deferred loan origination fees (35) (50)
Depreciation and amortization 29 22
Provision for losses on loans 39 52
Amortization expense of stock benefit plans 113 156
(Gain) loss on sale of repossessed assets (14) 2
Federal Home Loan Bank stock dividends (50) (40)
Increase (decrease) in cash due to changes in:
Accrued interest receivable on loans (22) 11
Accrued interest receivable on mortgage-backed securities 10 (71)
Accrued interest receivable on investments and
interest-bearing deposits (10) 173
Prepaid expenses and other assets 59 92
Accrued interest payable 25 36
Other liabilities 7 (10)
Federal income taxes
Current (11) (200)
Deferred (79) (8)
------- -------
Net cash provided by operating activities 550 600
Cash flows provided by (used in) investing activities:
Proceeds from maturity of investment securities 4 4,332
Proceeds from sale of investment securities - 4,996
Purchase of investment securities designated as available for sale (1,500) (3,078)
Purchase of investment securities designated as held to maturity - -
Purchase of mortgage-backed securities designated as available
for sale - (15,740)
Principal repayments on mortgage-backed securities 1,713 1,839
Loan principal repayments 12,661 22,191
Loan disbursements (16,957) (24,732)
Purchase of office premises and equipment (12) (142)
Proceeds from sale of repossessed assets 117 146
Purchase of Federal Home Loan Bank stock (42) (452)
------- -------
Net cash used in investing activities (4,016) (10,640)
------- -------
Net cash used in operating and investing
activities (subtotal carried forward) (3,466) (10,040)
------- -------
</TABLE>
6
<PAGE>
<TABLE>
Community Investors Bancorp, Inc.
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the six months ended December 31,
1999 1998
<S> <C> <C>
Net cash used in operating and investing
activities (subtotal brought forward) $ (3,466) $(10,040)
Cash flows provided by (used in) financing activities:
Net increase in deposit accounts 225 2,872
Proceeds from Federal Home Loan Bank advances 25,000 12,000
Repayment of Federal Home Loan Bank advances (21,700) (2,165)
Advances by borrowers for taxes and insurance 4 8
Purchase of treasury stock (25) (643)
Dividends on common stock (158) (148)
------- -------
Net cash provided by financing activities 3,346 11,924
------- -------
Net increase (decrease) in cash and cash equivalents (120) 1,884
Cash and cash equivalents at beginning of period 3,497 2,793
-------- -------
Cash and cash equivalents at end of period $ 3,377 $ 4,677
======== =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ 294 $ 378
======== =======
Interest on deposits and borrowings $ 2,472 $ 2,378
======== =======
Supplemental disclosure of noncash investing activities:
Transfers from loans to repossessed assets $ 328 $ 128
======== =======
Unrealized gains (losses) on securities designated as available
for sale, net of related tax effects $ 88 $ (99)
======== =======
</TABLE>
7
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six and three months ended December 31, 1999 and 1998
1. Basis of Presentation
The accompanying unaudited consolidated financial statements were prepared
in accordance with instructions for Form 10-QSB and, therefore, do not
include information or footnotes necessary for a complete presentation of
consolidated financial position, results of operations and cash flows in
conformity with generally accepted accounting principles. Accordingly, these
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto of Community Investors Bancorp, Inc.
(the "Corporation") included in the Annual Report on Form 10-KSB for the
year ended June 30, 1999. However, in the opinion of management, all
adjustments (consisting of only normal recurring accruals) which are
necessary for a fair presentation of the financial statements have been
included. The results of operations for the six and three month periods
ended December 31, 1999 are not necessarily indicative of the results which
may be expected for an entire fiscal year.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Corporation and its wholly owned subsidiary, First Federal Savings and
Loan Association of Bucyrus (the "Association"). All significant
intercompany items have been eliminated.
3. Earnings Per Share
Basic earnings per share is computed based upon the weighted-average common
shares outstanding during the period less shares in the ESOP that are
unallocated and not committed to be released. Weighted-average common shares
deemed outstanding, which gives effect to 79,272 unallocated ESOP shares,
totaled 1,139,396 and 1,139,379 for the six and three month periods ended
December 31, 1999. Weighted-average common shares deemed outstanding, which
gives effect to 92,709 unallocated ESOP shares, totaled 1,150,103 and
1,137,419 for the six and three month periods ended December 31, 1998.
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
1,161,065 and 1,158,331 for the six and three month periods ended December
31, 1999. Weighted-average common shares deemed outstanding for purposes of
computing diluted earnings per share totaled 1,195,797 and 1,180,709 for the
six and three month periods ended December 31, 1998. Incremental shares
related to the assumed exercise of stock options included in the calculation
of diluted earnings per share totaled 21,669 and 18,952 for the six and
three month periods ended December 31, 1999, and 45,694 and 43,290 for the
six and three month periods ended December 31, 1998. Options to purchase
19,521 shares of common stock with a weighted-average exercise price of
$10.72 were outstanding at December 31, 1999, but were excluded from the
computation of diluted earnings per share for the three and six months ended
December 31, 1999 because their exercise prices were greater than the
average market price of the common shares.
8
<PAGE>
Community Investors Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six and three months ended December 31, 1999 and 1998
4. Effects of Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," which requires entities
to recognize all derivatives in their financial statements as either assets
or liabilities measured at fair value. SFAS No. 133 also specifies new
methods of accounting for hedging transactions, prescribes the items and
transactions that may be hedged, and specifies detailed criteria to be met
to qualify for hedge accounting.
The definition of a derivative financial instrument is complex, but in
general, it is an instrument with one or more underlyings, such as an
interest rate or foreign exchange rate, that is applied to a notional
amount, such as an amount of currency, to determine the settlement
amount(s). It generally requires no significant initial investment and can
be settled net or by delivery of an asset that is readily convertible to
cash. SFAS No. 133 applies to derivatives embedded in other contracts,
unless the underlying of the embedded derivative is clearly and closely
related to the host contract.
SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
beginning after June 15, 2000. On adoption, entities are permitted to
transfer held-to-maturity debt securities to the available-for-sale or
trading category without calling into question their intent to hold other
debt securities to maturity in the future. SFAS No. 133 is not expected to
have a material impact on the Corporation's financial statements.
9
<PAGE>
Community Investors Bancorp, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward-Looking Statements
In addition to historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties.
Economic circumstances, the Corporation's operations and the Corporation's
actual results could differ significantly from those discussed in the
forward-looking statements. Some of the factors that could cause or contribute
to such differences are discussed herein but also include changes in the economy
and interest rates in the nation and the Corporation's market area generally.
Some of the forward-looking statements included herein are the statements
regarding management's determination of the amount and adequacy of the allowance
for loan losses and the effect of certain recent accounting pronouncements.
Discussion of Financial Condition Changes from June 30, 1999 to December 31,
1999
At December 31, 1999, the Corporation's assets totaled $120.3 million, an
increase of $4.1 million, or 3.5%, over the level reported at June 30, 1999. The
increase in assets was funded primarily through an increase in advances from the
Federal Home Loan Bank of $3.3 million, combined with growth in the deposit
portfolio.
Liquid assets (i.e. cash, interest-bearing deposits, investment securities, and
mortgage-backed securities available for sale) decreased by $255,000 during the
six month period, to a total of $22.4 million at December 31, 1999, as
maturities of mortgage-backed securities of $1.7 million and a $120,000 decrease
in cash and cash equivalents were partially offset by purchases of investment
securities totaling $1.5 million. The purchases include government agency
securities and bear a weighted average interest rate of 8.25%. The purchases
were financed using fixed rate callable advances from the Federal Home Loan
Bank, coupled with previously mentioned maturities of mortgage-backed
securities. Regulatory liquidity amounted to 12.33% at December 31, 1999.
Loans receivable totaled $94.1 million at December 31, 1999, an increase of $4.2
million, or 4.6%, over June 30, 1999. Loan disbursements amounted to $17.0
million and were partially offset by principal repayments of $12.7 million. The
volume of loan disbursements during the six months ended December 31, 1999
decreased by $7.8 million, or 31.4%, from the same period in 1998 due to rising
interest rates and less refinancing activity. The allowance for loan losses
totaled $515,000 at December 31, 1999, as compared to $591,000 at June 30, 1999.
Nonperforming loans totaled $361,000 at December 31, 1999, as compared to
$912,000 at June 30, 1999. The allowance for loan losses represented 142.7% of
nonperforming loans as of December 31, 1999 and 64.8% at June 30, 1999. Although
management believes that its allowance for loan losses at December 31, 1999, is
adequate based upon the available facts and circumstances, there can be no
assurance that additions to such allowance will not be necessary in future
periods, which could adversely affect the Corporation's results of operations.
10
<PAGE>
Community Investors Bancorp, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Discussion of Financial Condition Changes from June 30, 1999 to December 31,
1999 (continued)
Deposits totaled $80.2 million at December 31, 1999, an increase of $225,000, or
0.3%, over June 30, 1999 levels. Management continued its efforts to achieve a
moderate rate of growth through marketing and pricing strategies.
Advances from the Federal Home Loan Bank totaled $28.6 million at December 31,
1999, an increase of $3.3 million, or 13.0%, over June 30, 1999 levels. The
increase resulted primarily from fixed-rate advances used to fund loan growth
and the purchase of investment securities, as previously discussed.
Stockholder's equity totaled $10.9 million at December 31, 1999, an increase of
$491,000, or 4.7% over June 30, 1999 levels. The increase resulted primarily
from net earnings of $475,000 coupled with amortization of stock benefit plans
which were partially offset by repurchases of 3,000 shares of treasury stock at
an aggregate price of $25,000 coupled with dividend payments on common stock
totaling $158,000.
The Association is required to meet minimum capital standards promulgated by the
Office of Thrift Supervision (OTS). At December 31, 1999, the Association's
capital was well in excess of such minimum capital requirements.
Comparison of Operating Results for the Six Month Periods Ended December 31,
1999 and 1998
General
The Corporation's net earnings totaled $475,000 for the six months ended
December 31, 1999, an increase of $35,000, or 8.0%, over the $440,000 of net
earnings reported for the same period in 1998. The increase in earnings resulted
primarily from a $25,000 increase in net interest income and a $33,000 increase
in other income, which were partially offset by a $19,000 increase in federal
income tax expense.
Net Interest Income
Net interest income increased by $25,000, or 1.5%, for the six months ended
December 31, 1999, compared to the 1998 period. Interest income on loans
increased by $87,000, or 2.5%, due primarily to a $7.2 million increase in the
average net portfolio balance of loans outstanding year-to-year, partially
offset by a decline in the average yield. Interest income on investment and
mortgage-backed securities and interest-bearing deposits increased by $21,000,
or 3.3%, due primarily to an increase in the average portfolio balance
outstanding.
Interest expense on deposits decreased by $61,000, or 3.4%, due primarily to a
decline in the cost of deposits year-to-year, which was partially offset by a
$2.7 million increase in the average balance of deposits outstanding. Interest
expense on borrowings increased by $144,000, or 24.2%, due primarily to a $4.4
million increase in the weighted-average balance of Federal Home Loan Bank
advances outstanding.
11
<PAGE>
Community Investors Bancorp, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Six Month Periods Ended December 31,
1999 and 1998 (continued)
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $25,000, or 1.5%, to a total of $1.7 million
for the six months ended December 31, 1999. The interest rate spread amounted to
approximately 2.73% in the 1999 six month period, as compared to 3.07% during
the 1998 period, while the net interest margin totaled approximately 3.08% in
1999, as compared to 3.54% in 1998.
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 $39,000 provision for losses on loans during the six month period ended
December 31, 1999, a decrease of $13,000 from the comparable 1998 period. The
current period provision reflects the growth in the loan portfolio integrated
with an overall decrease in nonperforming loans, which consists substantially of
one- to four-family residential mortgage loans that management deems to have
adequate levels of collateralization. There can be no assurance that the loan
loss allowance of the Association will be adequate to cover losses on
nonperforming assets in the future.
Other Income
Other income increased by $33,000, or 25.6%, for the six months ended December
31, 1999, compared to the same period in 1998, due primarily to a $16,000
increase in gain on sale of repossessed assets, coupled with an increase in
service fees on deposit accounts and transactions.
General, Administrative and Other Expense
General, administrative and other expense increased by $17,000, or 1.6%, during
the six months ended December 31, 1999, compared to the same period in 1998.
This increase resulted primarily from a $20,000, or 20.0%, increase in data
processing expense, which was partially offset by a $14,000, or 17.7%, decrease
in franchise tax expense. The increase in data processing expense resulted
primarily from an increase in item processing transaction levels, coupled with
increased costs attendant computer system upgrades.
Federal Income Taxes
The provision for federal income taxes increased by $19,000, or 8.7%, during the
six months ended December 31, 1999, as compared to the same period in 1998. Net
earnings before income taxes increased by $54,000, or 8.2%, compared to the six
months ended December 31, 1998. The effective tax rates were 33.4% and 33.2% for
the six months ended December 31, 1999 and 1998, respectively.
12
<PAGE>
Community Investors Bancorp, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three Month Periods Ended December 31,
1999 and 1998
General
The Corporation's net earnings totaled $223,000 for the three months ended
December 31, 1999, an increase of $16,000, or 7.7%, over the $207,000 of net
earnings reported for the same period in 1998. The increase in earnings resulted
primarily from a $15,000 increase in net interest income and a $20,000 increase
in other income, which were partially offset by an $8,000 increase in federal
income tax expense.
Net Interest Income
Net interest income increased by $15,000, or 1.8%, for the three months ended
December 31, 1999, compared to the 1998 period. Interest income on loans
increased by $69,000, or 4.4%, due primarily to a $8.0 million increase in the
average net portfolio balance of loans outstanding year-to-year, partially
offset by a decline in the average yield. Interest income on investment and
mortgage-backed securities and interest-bearing deposits decreased by $25,000,
or 6.9%, due primarily to a decrease in the average portfolio balance
outstanding.
Interest expense on deposits decreased by $26,000, or 2.9%, due primarily to a
decline in the cost of deposits year-to-year, which was partially offset by a
$2.5 million increase in the average balance of deposits outstanding. Interest
expense on borrowings increased by $55,000, or 16.2%, due primarily to a $2.3
million increase in the weighted-average balance of advances from the Federal
Home Loan Bank outstanding.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $15,000, or 1.8%, to a total of $838,000 for
the three months ended December 31, 1999. The interest rate spread amounted to
approximately 2.62% in the 1999 three month period, as compared to 2.60% during
the 1998 period, while the net interest margin totaled approximately 2.92% in
1999, as compared to 2.90% in 1998.
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 $17,000 provision for losses on loans during the three month period ended
December 31, 1999, a decrease of $9,000 from the comparable 1998 period. The
current period provision reflects the growth in the loan portfolio integrated
with an overall decrease in nonperforming loans, which consists substantially of
one- to four-family residential mortgage loans that management deems to have
adequate levels of collateralization. There can be no assurance that the loan
loss allowance of the Association will be adequate to cover losses on
nonperforming assets in the future.
13
<PAGE>
Community Investors Bancorp, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three Month Periods Ended December 31,
1999 and 1998 (continued)
Other Income
Other income increased by $20,000, or 27.8%, for the three months ended December
31, 1999, compared to the same period in 1998, due primarily to an increase in
service fees on deposit accounts and transactions.
General, Administrative and Other Expense
General, administrative and other expense increased by $20,000, or 3.6%, during
the three months ended December 31, 1999, compared to the same period in 1998.
This increase resulted primarily from a $12,000, or 24.5%, increase in data
processing expense, which was partially offset by a $5,000, or 13.2%, decrease
in franchise tax expense. The increase in data processing expense resulted
primarily from an increase in item processing transaction levels, coupled with
increased costs attendant computer system upgrades.
Federal Income Taxes
The provision for federal income taxes increased by $8,000, or 7.7%, during the
three months ended December 31, 1999, as compared to the same period in 1998.
Net earnings before income taxes increased by $24,000, or 7.7%, compared to the
three months ended December 31, 1998. The effective tax rate was 33.4% for each
of the three months ended December 31, 1999 and 1998.
Year 2000 Compliance Matters
As with all providers of financial services, the Association's operations are
heavily dependent on information technology systems. During the three year
period leading up to January 1, 2000, the Association addressed the potential
problems associated with the possibility that the computers that control or
operate the information technology system and infrastructure may not have been
programmed to read four-digit date codes and, upon arrival of the year 2000, may
have recognized the two-digit code "00" as the year 1900, causing systems to
fail to function or to generate erroneous data.
As part of the awareness and assessment phases of its action plan related to the
Year 2000 problem, the Association identified the operating systems that it
considers critical to the on-going operations of the Association.
14
<PAGE>
Community Investors Bancorp, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Year 2000 Compliance Matters (continued)
Of the systems that the Association identified as mission-critical, the most
significant is the on-line core account processing system that is performed by a
third party service provider, Intrieve, Inc. The service provider converted its
hardware to a new Year 2000 compliant system. The Association's conversion to
this new system was completed during the fourth calendar quarter of 1998.
The Association realized no technology-related problems upon arrival of January
1, 2000, and had no interruption of services to its customers. The Association
could incur losses if loan payments are delayed due to Year 2000 problems
affecting any major borrowers in the Association's primary market area. Because
the Association's loan portfolio is highly diversified with regard to individual
borrowers and types of businesses and the Association's primary market area is
not significantly dependent upon one employer or industry, the Association does
not expect, and to date has not realized, any significant or prolonged
difficulties that will affect net earnings or cash flow.
15
<PAGE>
Community Investors Bancorp, Inc.
PART II
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities and Use of Proceeds
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K: None.
Exhibits
15: Independent Accountants' Report
27: Financial Data Schedule for the six
months ended December 31, 1999.
16
<PAGE>
Community Investors Bancorp, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: By: /s/John W. Kennedy
John W. Kennedy
President and Chief
Executive Officer
Date: By: /s/Robert W. Siegel
Robert W. Siegel
Assistant Vice President
Controller and Treasurer
17
Independent Accountants' Report
Board of Directors
Community Investors Bancorp, Inc.
119 South Sandusky Avenue
Bucyrus, Ohio 44820
We have reviewed the accompanying consolidated statements of financial
condition, earnings, comprehensive income, and cash flows of Community Investors
Bancorp, Inc. as of December 31, 1999, and for the three and six-month periods
then ended. The financial statements are the responsibility of the Corporation's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial condition as of June 30,
1999, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for the year then ended (not presented herein) and in our report
dated August 19, 1999, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated statement of financial condition as of June 30, 1999,
is fairly stated, in all material respects, in relation to the consolidated
statement of financial condition from which it has been derived.
/s/GRANT THORNTON LLP
Cincinnati, Ohio
February 11, 2000
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 3,257
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 120
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,454
<INVESTMENTS-CARRYING> 4,433
<INVESTMENTS-MARKET> 4,319
<LOANS> 94,091
<ALLOWANCE> 515
<TOTAL-ASSETS> 120,276
<DEPOSITS> 80,179
<SHORT-TERM> 0
<LIABILITIES-OTHER> 598
<LONG-TERM> 28,591
0
0
<COMMON> 17
<OTHER-SE> 10,891
<TOTAL-LIABILITIES-AND-EQUITY> 120,276
<INTEREST-LOAN> 3,523
<INTEREST-INVEST> 641
<INTEREST-OTHER> 24
<INTEREST-TOTAL> 4,188
<INTEREST-DEPOSIT> 1,758
<INTEREST-EXPENSE> 2,497
<INTEREST-INCOME-NET> 1,691
<LOAN-LOSSES> 39
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,101
<INCOME-PRETAX> 713
<INCOME-PRE-EXTRAORDINARY> 475
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 475
<EPS-BASIC> .42
<EPS-DILUTED> .41
<YIELD-ACTUAL> 3.08
<LOANS-NON> 0
<LOANS-PAST> 361
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 591
<CHARGE-OFFS> 115
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 515
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 515
</TABLE>
